HomeMy WebLinkAbout5J - CJF Holdings Development Contract (Project #EP06-191)
MEETING DATE:
AGENDA #:
PREPARED BY:
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4646 Dakota Street S.E.
Prior Lake, MN 55372-1714
CITY COUNCIL AGENDA REPORT
OCTOBER 19, 2009
5J
LARRY POPPLER, ASSISTANT CITY ENGINEER
CONSIDER APPROVAL OF A RESOLUTION CONSIDERING A REQUEST
TO AMEND THE CJF HOLDINGS LLC DEVELOPMENT CONTRACT CITY
PROJECT #EP06-191
Introduction
In order to facilitate CJF Holdings, LLC ("Developer") ability to construct a
building on property located on Welcome Avenue, utilities needed to be
extended to the site. The City and Developer entered into a Development
Contract that addresses, in pertinent part, the City's request that the Developer
(1) oversize the utilities and (2) construct an extension of the utilities from its
existing location to Welcome Avenue to serve the CJF Holdings building site.
This agenda report requests the City Council approve an amendment to the
Development Contract for the reasons set forth in this report.
Historv
CJF Holdings LLC has completed construction of a new building on its
property located on Welcome Avenue, north of CSAH 21, east of Industrial
Circle, west of Rainbow Parkway, and south of Markley Lake. In order to
construct the building, the Developer extended sewer and water services from
the existing utilities located northwest of Industrial Circle to its property on
Welcome Avenue. At the City's request, the Developer oversized the utilities
to accommodate future growth.
On May 19th, 2008, the City and the Developer entered into a Development
Contract for the Project. As a part of the project, the Developer was
reimbursed for the extension of sewer and water to Industrial Circle. The
reimbursement also included over-depth to serve future annexation areas and
indirect costs associated with the City portion.
Current Circumstances
The Development Contract included provisions for the payment of the standard
development fees by the Developer in the amount of $75,600. The Contract
also required the Developer to provide security of $447,406 for the utility work
and other site requirements. The City requested the Developer to oversize
part of the utility service and to extend the utilities to Industrial Circle so that
the services are available for future development.
The Development Contract describes how the developer will be reimbursed for
(1) the oversizing and (2) the extension of the utilities to Industrial Circle.
Because of time constraints this project did not go through the Chapter 429
process that would have allowed the City to specially assess the project to the
benefitted properties. The City and Developer, working together, came up with
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a bifurcated mechanism to reimburse the Developer. The City has
reimbursed the Developer $175,950 from the Trunk Fund for extension and
over-depth of the utilities from the Maintenance Garage to Industrial
Circle.{Point A to Point B.)
The work to extend the utilities from Industrial Circle to Welcome Avenue
(Point B to Point C) is not eligible for payment from Truck Funds at this time.
As a part of the Development Contract, the Developer is owed $201,354 for
this work. The Developer agreed to postpone payment until such time as other
properties are developed and/or connected and the City collects connection
fees. The calculation in the Development Contract of how much the City owes
the Developer for this work was based on the bids received by the Developer.
Construction projects seldom come in for the exact bid amount. The
Development Contract provides that if the cost to oversize is less or greater
than provided for in the Contract, the reimbursement to the Developer will be
adjusted accordingly. Since cost is a material term in the Development
Contract, any increase in cost needs to be approved by the City Council in the
form of an amendment to the Development Contract.
The work associated with the project has been completed by the Developer in
accordance with the plans. During construction, the Contractor on the project
encountered field conditions that necessitated additional work. These included
poor soil conditions, undocumented pipes, and ground water. These
unforeseen conditions required the Contractor to increase material quantities
and add work including additional aggregate, stabilizing rock, dewatering of the
trenches, and increased pipe materials.
Based on the final numbers, the Development Contract should be amended to
increase the reimbursement to the Developer by an additional $37,904.00 for
the extension of the utilities from the location near the Maintenance Garage to
Industrial Circle (Point A to Point B). A second amendment to the
Development Contract should be made to the amount owed to the Developer
for extending the utilities from Industrial Circle to Welcome Avenue (Point B to
Point C). The reimbursement should be revised from $201,354 to
$193,745.00. This sum will be paid as connection fees are collected from
other properties in the area.
ISSUES:
Construction Costs
The Development Contract contemplates the need to make adjustments to the
amounts owed to the Developer. The adjustments are calculated based on the
bid costs and the actual costs. The City performed inspection on the project
and the items encountered in the field are legitimate.
FINANCIAL
IMPACT:
The City's final total reimbursement is $407,599.00. $213,864 is funded out of
the Trunk Fund. The remaining $193,745 will be collected from property
owners at the time of hook up.
ALTERNATIVES:
The City Council has the following alternatives:
1. Adopt a Resolution authorizing execution of an amendment to the
Development Contract with the CJF Holdings LLC.
2. Deny the Resolution authorizing the Development Contract.
3. Defer this item and provide staff with specific direction.
Staff recommends Alternative #1.
RECOMMENDED
MOTION:
A motion and second to adopt a Resolution authorizing the execution of an
amendment to the Development Contract for CJF Holdings LLC and
authorizing the Mayor and City Manager to sign the amendment to the
Development Contract.
Reviewed by:
Franf!:j ~~anager
A RESOLUTION APPROVING AMENDMENT NO.1 TO THE CJF HOLDINGS LLC
DEVELOPMENT CONTRACT
Motion By:
Second By:
WHEREAS, On May 19, 2008, the Prior Lake City Council approved the Development Contract for
CJF Holdings; and
WHEREAS, CJF Holdings has completed the improvements in accordance with the Development
Contract; and
WHEREAS, As part of the project the Developer completed certain oversizing improvements as
requested by the City and is requesting reimbursement for those improvements in the
amount of $37,904.00 in accordance with the Development Contract.
NOW THEREFORE, BE IT HEREBY RESOLVED BY THE CITY COUNCIL OF PRIOR LAKE,
MINNESOTA as follows:
1. The recitals set forth above are incorporated herein.
2. The Mayor and City Manager are authorized to execute on the City's behalf Amendment No. 1
to the Development Contract for CJF Holdings LLC.
3. The City is authorized to reimburse $37,904.00 to CJF Holdings LLC for the Oversizing
Improvements.
4. The reimbursement shall be paid from the following accounts: Trunk Sewer Fund Account #
502-50084-519: $37,904.00.
PASSED AND ADOPTED THIS 19th DAY OF OCTOBER 2009.
YES
NO
I Haugen
I Erickson
I Hedberg
I LeMair
I Millar
Haugen
Erickson
Hedberg
LeMair
Millar
Frank Boyles, City Manager
www.cityofpriorlake.com
R\Council\2009 Agenda Reports\ 10 19 09\Perfo~~rne~~d. 9800 / Fax 952.447.4245
DEVELOPMENT CONTRACT
CJF HOLDINGS LLC
AMENDMENT NUMBER 1
PROJECT#EP06-191
This AMENDMENT NUMBER 1 ("Amendment") to the DEVELOPMENT CONTRACT
dated May 19,2008, for CJF Holdings is entered into this 19th day of October, 2009, by and between
the City of Prior Lake, a Minnesota municipal corporation ("City"), and ClF Holdings LLC., a Minnesota
limited liability corporation (the "Developer"). Based on the mutual promises and covenants set forth
herein, the sufficiency of which is not disputed, the City and the Developer (collectively "Parties") agree
as follows:
1. OVERSIZING. Paragraph 28 of the Development Contract reimbursed the Developer for
the extension of sanitary sewer to Industrial Circle and to W elcome Avenue. Paragraph C. of the
Development Contract discussed a Contract amendment dictating final oversizing costs once construction
had concluded.
A. The City shall reimburse the Developer a total of $37,904.00 for the additional costs
associated with the construction of the extension of sanitary sewer to Industrial Circle. The final cost for
extension of sanitary sewer to Industrial Circle is $213,854.00. This includes the construction cost for the
extension of sanitary sewer to Industrial Circle ($159,253.00), over-depth for sanitary sewer ($31,688.00),
and plus 12% ($22,913) for engineering and construction staking. The Developer was previously
reimbursed a total $175,950.00 based on the initial bid, but additional work was authorized by the City
due to unforeseen site conditions.
Subparagraphs B of Paragraph 28 of the Development Contract for ClF Holdings is hereby
amended as follows:
B. The City shall reimburse the Developer an amount of $159,925.00 as connection fees are
collected from other Industrial Park properties for the extension of sewer and water from Industrial Circle
to Welcome Avenue. This amount was calculated as the construction cost ($172,172.00) of the utilities,
plus 12% ($21,573) ofthe original bid ($179,780) for engineering and construction staking, less the sewer
and water connection charge reimbursement ($33,820.00) to ClF Holdings on May 19th, 2008. The total
construction cost for the extension of sewer and water from Industrial Circle to W elcome Avenue is
$193,745.00. This construction cost does not include the Developer's site utility costs.
2. MISCELLANEOU~.
A. Amendments. All of the provisions of the DEVELOPMENT CONTRACT for
ClF Holdings, with the exception of these amendments, shall remain in full force and effect, unless
otherwise amended. No additional amendments to this Development Contract shall be valid unless in
writing, signed by the parties and approved by resolution of the City Council. The City's failure to
promptly take legal action to enforce this Development Contract shall not be a waiver or release.
B. Severability. If any portion, section, subsection, sentence, clause, paragraph, or
phrase of this Amendment is for any reason held invalid, such decision shall not affect the validity of the
remaining portion of this Amendment.
C. Assignment. The Developer may not assign this Amendment without the prior
written approval of the City Council which approval shall not unreasonably be withheld. The Developer's
obligation hereunder shall continue in full force and effect even if the Developer sells one or more lots, the
entire Plat, or any part of it.
D. Interpretation. This Amendment shall be interpreted in accordance with and
governed by the laws of the State of Minnesota. The words herein and hereof and words of similar
import, without reference to any particular section or subdivision, refer to this Amendment as a whole
rather than to any particular section or subdivision hereof. Titles in this Amendment are inserted for
convemence of reference only and shall be disregarded in constructing or interpreting any of its
proVIsIOns.
E. Jurisdiction. This Amendment shall be governed by the laws of the State of
Minnesota.
CITY OF PRIOR LAKE:
By:
Jack G. Haugen, Mayor
By:
Frank Boyles, City Manager
DEVELOPER:
By:
Its:
STATE OF MINNESOTA )
( ss.
COUNTY OF SCOTT)
The foregoing instrument was acknowledged before me this day of , 20
by Jack G. Haugen, Mayor, and by Frank Boyles, City Manager, of the City of Prior Lake, a Minnesota
municipal corporation, on behalf of the corporation and pursuant to the authority granted by its City
Council.
NOTARY PUBLIC
STATE OF MINNESOTA )
( ss.
COUNTY OF )
The foregoing instrument was acknowledged before me this
20_, by
day of
NOTARY PUBLIC
DRAFTED BY:
City of Prior Lake
4646 Dakota Street
Prior Lake, Minnesota 55372