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HomeMy WebLinkAbout9A Purchase of Hayes Property 4580 Dakota�i PR ip U 4646 Dakota Street SE Prior Lake_ MN 55372 CITY COUNCIL AGENDA REPORT MEETING DATE: September 6, 2011 AGENDA #: 9A PREPARED BY: Kelly Meyer, Asst. City Manager PRESENTED BY: Kelly Meyer AGENDA ITEM: CONSIDER APPROVAL OF A RESOLUTION AUTHORIZING THE MAYOR AND CITY MANAGER TO ENTER INTO THE CITY'S STANDARDIZED PURCHASE AGREEMENT FOR PROPERTY AT 4580 DAKOTA STREET AND AUTHORIZ- ING EXPENDITURE OF FUNDS. DISCUSSION: Introduction The purpose of this agenda item is to outline the terms of the purchase for the property located at 4580 Dakota Street SE, and ask the Council to authorize fund- ing from the General Fund Reserve for purchase, repair and rental of the property. Histo The property in questions is a 1 Y2 story walkout with a detached garaged located just west of City Hall abutting the City Hall westerly property line. The house is 1600 sq. ft. with 4 bedrooms and is approximately 70 years in age. The lot over- looks Little Prior with a wooded slope and some significant topography changes that are managed with a large retaining wall on the westerly portion of the proper- ty. The lot size is approximately 75'x 200.' As the Council is aware, the property is currently vacant due to the passing last summer of Mrs. Hayes. The family approached the City inquiring whether the City would be interested in purchasing the property. The most likely use of the proper- ty would be for a future City Hall parking lot should the redevelopment of the Church property force an end to the City's current arrangement with the Church. Current Circumstances At the Council's June 6, 2011 meeting, staff outlined the benefits and challenges to acquiring the property and asked the Council to provide direction as to whether staff should enter into negotiations for the property. The Council authorized staff to proceed to negotiate an agreement with the following parameters: 1. Sales price not to exceed $160,000 (the City's appraised value); and 2. Intent to lease the house at market rate through a leasing company. In negotiating the contract language, the Seller's position was that the City take the property in "as is" condition. Staff believed that in order to take the property in that condition, the City needed to understand any repairs needed to make the property livable for a tenant. Over the course of the last month, Facilities Manager Al Friedges has inspected the property, identified required repairs, and collected estimates for the work. Staff has also been in contact with a property management company who has es- timated potential rents and outlined its fees. Conclusion This report will outline the terms of the purchase and ask Council to consider en- tering into the Purchase Agreement and authorizing the property repairs. ISSUES: As a summary, the staff initially identified the following benefits /challenges to ac- quiring the property. Benefits Challenges City controls the property long -term Small Lot; limited number of parking spaces for until it is needed. the cost of acquisition and construction install ductwork to upper level. ($15,625 per stall largely due to the retaining Miscellaneous carpentry repairs: rebuild deck stairs, reset wall required Purchase price is reflective of today's City will not want to invest in improving the market. property beyond minimum maintenance, which Miscellaneous clean -up: interior painting, landscape clean may affect any re -sale if the City doesn't ulti- up, add fencing along retaining wall. mately construct the parking lot. Market rate rents should provide addi- Property is removed from the tax rolls once the tional revenue and offset the City's City no longer rents it. costs for carrying the property until the p arking lot is constructed. Defers demolition and uses the house Could be gaps in revenue due to rental turno- which the family will appreciate). ver. If the City determines it does not need Potential for future maintenance costs. the property in the future, there is po- tential to re -sell in a future (presumably better ) market. Essential Repairs This property is nearly 70 years old and has not been lived in for the past year. It has suffered some disrepair during that time. Staff has identified the repairs re- quired to make the property livable and their estimated costs as follows. Repair Estimated Cost Mitigation of lower level mold and certification of removal. $12,900 Replace furnace, remove upper level gas heaters and $9,300 install ductwork to upper level. Miscellaneous carpentry repairs: rebuild deck stairs, reset $3,410 garage on foundation, framing and finishing of ductwork to upper level, patch ceilings showing water damage Miscellaneous clean -up: interior painting, landscape clean $2,500 materials (labor up, add fencing along retaining wall. provided by City sta TOTAL $28,110 Retaining Wall In addition to the above repairs to the property, the City also had WSB & Asso- ciates, consulting engineers, come out to inspect the large retaining wall on the westerly side of the property. The wall is approximately 85 feet long and slopes up to a maximum of 10 feet high. It is roughly 600 square feet overall. The wall has started to fail over time, but could realistically stand for many years. If the wall does fail, more than likely it would be a small section at a time. The City out- lined 3 options for addressing the retaining wall. Option Cost Cost (1) Reinforce the wall by installing additional $15,000 (materials only) checks, property viewings, collecting security de- soldier supports with helical tiebacks. Additional costs for labor. Would Management Fee: collecting rents, coordinating need to be contracted out. (2) Reinforce the wall by installing wet cast $22,000 (materials, engineering block next to the existing wall and backfill costs, and subcontractor) voids with granular material. (3) Maintain status quo until such time as the Costs deferred until there is a fail - wall fails. Complete some re- grading and ure, or the wall is reconstructed as possible drain tiling to alleviate some of the part of the construction of the run -off. Conduct annual inspections. parking lot. At this time, staff is recommending option (3). Property Management Fees Staff has not identified a specific management company at this time, but has soli- cited estimates for rental rate and management fees in order to assess what the City can expect for revenue from the property. Item Cost Estimated Monthly Rent $1250/mo. plus re taxes & utilities Leasing Fee: solicitation of renters, background Equivalent to 1 month's rent checks, property viewings, collecting security de- p osit Management Fee: collecting rents, coordinating $100 /mo. maintenance requests, accounting statements, conduct routine property inspections, enforce leas- es and evictions, 24 -hr. availabilit FINANCIAL The costs to acquire and repair the property, as well as the estimates for future IMPACT: costs to construct the parking lot (including retaining wall) are summarized below: Purchase Price of Property $160,000.00 Initial Repairs $28,110.00 $186,110.00 Demolition of Structures (est) $20,000.00 Construction of Lot/Retaining Wall (est) $70,000.00 TOTAL $276,110.00 The funds for the purchase and repair of the property are proposed to be drawn from the General Fund Reserve ($186,110.00). Future funds required for the de- molition of the buildings and construction of the parking lot and retaining wall would be planned into the Capital Improvement Program or drawn from the rents generated by the property. ALTERNATIVES: 1. Motion and Second to adopt a Resolution authorizing the Mayor and City Manager to enter into the City's Standardized Purchase Agreement as mod- ified for the purchase of property located at 4580 Dakota Street SE, and au- thorizing expenditure of funds for purchase and repair of the property in an amount not to exceed $186,110.00. 2. Take no action (in which case staff will advise the Seller accordingly). RECOMMENDED MOTION: As the Council deems appropriate. PRIp� U �INNES��� 4646 Dakota Street SE Prior Lake, MN 55372 RESOLUTION 11 -xxx A RESOLUTION AUTHORIZING THE MAYOR AND CITY MANAGER TO ENTER INTO THE CITY'S STANDARDED PURCHASE AGREEMENT AS MODIFIED FOR THE PURCHASE OF PROPERTY LOCATED AT 4580 DAKOTA STREET SE, AND AUTHORIZING EXPENDITURE OF FUNDS FOR PURCHASE AND REPAIR OF THE PROPERTY IN AN AMOUNT NOT TO EXCEED $186,110.00. Motion By: Second By: WHEREAS, The City's 2030 Vision and Strategic Plan identifies a goal to ensure there is sufficient parking to meet downtown needs now and in the future; and WHEREAS, The property located as 4580 Dakota Street SE is available for purchase and is located directly adjacent to City Hall in the downtown area; and WHEREAS, The property would be used for employee parking for City Hall at some time in the future when other current parking areas are redeveloped thereby maintaining the on- street and police parking for City Hall customers; and WHEREAS, The property can be leased and rents earned to offset the carrying costs until such time as the property is needed for parking; and WHEREAS, Initial investment in repair of the property is required in order for it to be rentable. 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 hereby authorizing to enter into the City's standardized purchase agreement as modified. 3. Funds for the purchase and repair of the property as outlined in the Staff Report dated September 6, 2011, shall be drawn from General Fund Reserves in an amount not to exceed $186,110.00. PASSED AND ADOPTED THIS 6TH DAY OF SEPTEMBER 2011. YES NO M ser M ser Erickson Erickson Hedber - Hedberg Keeney Keene - Soukup Souku Frank Boyles, City Manager CADocuments and Settingslcgreen\My Documents\SharePoint Drafts\Hayes purchase - reso.doc PURCHASE AGREEMENT THIS PURCHASE AGREEMENT is made this between the CITY OF PRIOR LAKE, a Minnesota municipal corporation, with offices at 4646 Dakota Street SE, Prior Lake, Minnesota ( "Buyer"), and PATRICK HAYES, as personal representative of the ESTATE OF DELORES HAYES, whose address is ( "Seller"). IN CONSIDERATION of the promises and covenants contained in this Agreement and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, Seller and Buyer agree as follows: 1. Sale of Property Seller agrees to sell to Buyer, and Buyer agrees to buy from Seller the real property located in Prior Lake, Minnesota, and legally described as follows: West 75 feet of the East 120 feet of Lots 3 — 6, Block 7, CITY OF PRIOR LAKE, Scott County, Minnesota PID #250010530 Address: 4580 Dakota Street SE, Prior Lake, MN 55372 together with all improvements, easements and rights benefiting or appurtenant thereto (collectively referred to as the "Property "). 2. Purchase Price and Manner of Payment The total purchase price (the "Purchase Price ") to be paid by Buyer to Seller for the Property shall be ONE HUNDRED AND SIXTY THOUSAND AND 00/100 DOLLARS ($160,000.00), payable in full in cash by City of Prior Lake check or by wire transfer on the Date of Closing (as defined in Paragraph 4 of this Agreement). 3. Acceptance Deadline The offer to purchase contained in this Agreement (the "Offer") shall be revoked and shall be null and void on July 30, 2011 at 11:59 p.m. (the "Acceptance Deadline "), unless the Buyer and Seller has accepted the Offer by the Acceptance Deadline. In order to constitute acceptance of the Offer, Seller and Buyer must execute this Agreement and provide a copy of the fully executed Agreement to Buyer in the manner provided for giving notices specified in Paragraph 17 of this Agreement. 4. Closina and Possession The closing of the purchase and sale contemplated by this Agreement (the "Closing ") shall be on or before September 1, 2010 or such other date as may be mutually agreed to by the parties (the "Date of Closing" or "Closing Date "). The Closing shall take place at the offices of a title company selected by Buyer (the "Title Company ") or at such other place as may be agreed to by the parties. The parties shall deliver the following documents at Closing: a. Seller's Closinq Documents On the Closing Date, Seller shall execute and deliver to Buyer the following (collectively, "Seller's Closing Documents "): Warranty Deed The Warranty Deed, free and clear of all encumbrances, liens, covenants, conditions, easements, restrictions, reservations, and assessments, except as shown in the attached Exhibit B (the "Permitted Encumbrances "). Seller must comply with all necessary requirements in order to perfect the conveyance of the property, including but not limited to satisfying all Title Company requirements related to the estate of Delores Hayes and the satisfaction of any heirs to the estate. Seller's Affidavit An Affidavit of Title by Seller indicating that on the Closing Date there are no outstanding, unsatisfied judgments, tax liens or bankruptcies against or involving Seller or the Property; that there has been no skill, labor or material furnished to the Property for which payment has not been made or for which mechanic's liens could be filed; and that there are no other unrecorded interests in the Property. iii. FIRPTA Affidavit A non - foreign affidavit, properly executed and in recordable form, containing such information as is required by IRC Section 1445(b) (2) and its regulations. iv. Abstract of Title The Abstract of Title to the original parcel must be provided in order for the Title Company to prepare a stub abstract for the Property to be purchased at the Buyer's sole cost and discretion. V. Well Certificate If there is a well located on the Property, a Well Disclosure Certificate signed by Seller in the form required by law. vi. Title Documents Seller will provide all other documents necessary as determined by the Title Company in order to provide clear and marketable title to Buyer, including but not limited to a Warranty Deed to Seller from Buyer, or such other person or entity that holds the fee title to the Property, free and clear of all encumbrances, liens, covenants, conditions, easements, restrictions, reservations and assessments, except the Permitted Encumbrances. Costs and recording fees for said documents will be borne by the Seller. b. Buyer's Closing Documents On the Closing Date, Buyer will execute and deliver to Seller the following (collectively, "Buyer's Closing Documents "): Purchase Price The sum of One Hundred and Sixty Thousand and 00/100 Dollars ($160,000.00) by check or wire transfer. Title Documents Such Affidavits of Purchaser, Certificates of Value or other documents as may be reasonably required in order to record the Seller's Closing Documents. 5. Possession of Proaertv Seller shall vacate the Property, including the removal of all personal property, as of the Closing Date. 6. Closina and Other Costs Seller and Buyer agree to the following allocations of costs regarding this Agreement. a. Seller's Closinq Costs Seller shall pay (i) the cost of obtaining and recording any documents necessary to make title to the Property marketable as provided in -2- this Agreement; (ii) the cost of the title insurance commitment as provided in this Agreement, (iii) the cost of preparing the Seller's Closing Documents, and (iv) any other cost or expenses allocated to Seller under this Agreement. b. Buyer's Closing Costs Buyer shall pay (i) the cost of preparing the Buyer's Closing Documents, (ii) the closing fee charged by the Title Company, (iii) the premium for any title insurance policy purchased by Buyer, and (iv) any other cost or expense allocated to Buyer under this Agreement. C. Real Estate Taxes and Special Assessments General real estate taxes payable in 2010 and all prior years shall be paid by Seller. ii. Real estate taxes payable for the first half of 2011 (due May 16th) shall be paid by Seller. Real estate taxes due and payable for the second half of 2011 (due October 17th) shall be prorated between the parties as of the Closing Date. iii. Seller shall pay all special assessments levied, pending, or constituting a lien against the Property as of the Closing Date, if any, including without limitation any installments of special assessments (including interest) payable with general real estate taxes in 2011 (the "Special Assessments "). In the event that the amount of the Special Assessments is unknown as of the Date of Closing, Seller shall escrow with the Title Company on the Date of Closing one and one -half (1.5) times the estimated amount of the Special Assessments. Upon receipt of notification of the actual amount of the Special Assessments, the Title Company shall pay such amount from the escrowed funds. Any escrowed funds remaining after payment of the actual amount of the Special Assessments shall be disbursed to Seller. In the event that the escrowed funds are not sufficient to pay the actual amount of the Special Assessments, Seller shall deposit with the Title Company such additional amounts as may be necessary to fully pay the actual amount of the Special Assessments. Seller shall pay such additional amount to the Title Company within fourteen (14) days of the date of notice from Buyer or the Title Company that the escrowed funds are not sufficient to pay the actual amount of the Special Assessments d. Services: Seller shall provide proof that all expenses for gas, electric, cable, water, sewer, garbage and any other service provided to the Property as of the Closing Date have been paid in full. e. Miscellaneous L In addition to those costs and expenses allocated to and /or to be paid or assumed by Seller pursuant to this Agreement, Seller agrees to pay any other closing costs and expenses customarily paid by sellers and Buyer agrees to pay any other closing costs and expenses customarily paid by buyers. IN Seller hereby indemnifies Buyer for any claim, cost, or damage related to any brokerage fee due because of this Agreement. 7. Title Evidence As soon as reasonably possible but no later than thirty (30) days after the date of this Agreement, Seller shall, at Seller's sole cost and expense, deliver the following to Buyer (collectively, the "Title Evidence "): a. A commitment by the Title Company to issue an ALTA Form B 1990 Owner's Policy of Title Insurance, in an amount equal to the Purchase Price, to insure Buyer's title to the Property (the "Title Commitment "), including copies of documents referenced in Schedule B thereof. The Title Commitment shall have an effective date of no earlier than the date of this Agreement. The Title Commitment shall include affirmative coverages for appurtenant easements, if any. The Title Commitment shall obligate the Title Company to delete standard exceptions from the Title Commitment and the policy upon the Title Company's receipt of a satisfactory survey of the Property, a seller's affidavit in the form described in Paragraph 4a(iii) and a buyer's affidavit in the form described in Paragraph 4b(ii). b. Within ten (10) days of the date of this Agreement, Seller shall deliver to Buyer a copy of any survey of the Property in Seller's Possession. Buyer may, at Buyer's sole cost and expense, have a current survey of the Property prepared by a surveyor registered under the laws of State of Minnesota. Such survey shall be certified to Buyer and the Title Company, and the certification language shall be reasonably acceptable to Buyer (the "Survey "). The Survey shall meet the current Minimum Standard Detail Requirements for ALTA/ACSM Title Surveys. 8. Title Examination, Title Corrections and Remedies Within ten (10) business days of Buyer's receipt of the last item of Title Evidence and within ten (10) business days of Buyer's discovery of a defect in the marketability of Seller's title to the Property which defect was not reasonably ascertainable from the Title Evidence, Buyer shall deliver written objections thereto to Seller (the "Objections "). Seller shall have sixty (60) days from receipt of the Objections to make title marketable. Upon receipt of the Objections, Seller shall, within ten (10) business days, notify Buyer of Seller's intention to make title marketable within the 60 -day period. Liens or encumbrances for liquidated amounts that can be released by payment or escrow from proceeds of closing shall not delay the closing. Cure of the defects by Seller shall be diligent and prompt. Pending correction of title, the payments required hereunder shall be postponed, but upon correction of title, and within ten (10) days after written notice to the Buyer, the parties shall perform this Agreement according to its terms. a. If notice is given and Seller makes title marketable, then upon presentation to Buyer and proposed lender of documentation establishing that title has been made marketable, and if not objected to in the same time and manner as the original title objections, the Closing shall take place within ten (10) business days or on the scheduled Closing Date, whichever is later. b. If notice is given and Seller attempts in good faith to make title marketable but the 60 -day period expires without title being made marketable, Buyer may declare this Agreement null and void by notice to Seller, and neither party shall be liable for damages hereunder to the other. sm C. If Seller does not give notice of intention to make title marketable, or if notice is given but the 60 -day period expires without title being made marketable due to Seller's failure to make good faith attempts to make title marketable, Buyer may, as permitted by law, pursue any one or more of the following: Proceed to closing without waiver or merger in the deed of the Objections and without waiver of any remedies, and may: (1) Seek damages, costs, and reasonable attorney's fees from Seller as permitted by law; or (2) Undertake proceedings to correct the objections to title; Rescind of this Purchase Agreement by notice as provided herein, in which case the Purchase Agreement shall be null and void; iii. Seek damages from Seller, including costs and reasonable attorney's fees, as permitted by law; iv. Seek specific performance, including costs and reasonable attorney's fees, within six (6) months after such right of action arises. d. If title is marketable, or is made marketable as provided herein, and Buyer defaults in any of the agreements herein, Seller may cancel this Agreement as provided by statute and retain all payments made hereunder as liquidated damages. e. If title is marketable, or is made marketable as provided herein, and Seller defaults in any of the agreements herein, Buyer may, as permitted by law: Seek damages from Seller, including costs and reasonable attorney's fees; or Seek specific performance, including costs and reasonable attorney's fees, within six (6) months after such right of action arises. 9. Inspections Buyer may perform such inspections of the Property as Buyer, in Buyer's sole discretion, deems appropriate (the "Inspections "). The Inspections shall be done at Buyer's sole cost and expense. Buyer and Buyer's agents shall have the right, upon reasonable advance notice to Seller, to go upon the Property to perform the Inspections. Buyer is purchasing the Property in it's "AS IS" and "WITH ALL FAULTS" condition and waives any right to object to the condition of the Property. 10. Representations and Warranties by Seller Seller makes the following representations to Buyer as of the date of this Agreement and as of the Date of Closing: a. Authority Seller represents and warrants to Buyer that Seller has the requisite power and authority to enter into this Agreement and the Seller's Closing Documents to be signed by Seller; that the execution, delivery and performance -5- by Seller of such documents do not conflict with or result in violation of any judgment, order, or decree of any court or arbiter to which Seller is a party; and such documents are valid and binding obligations of Seller, and are enforceable in accordance with their terms. b. Title to Propert y . Seller owns or will own on the Closing Date, the Property free and clear of all encumbrances, liens, covenants, conditions, easements, restrictions, reservations, and assessments, except the Permitted Encumbrances. C. Assessments Seller has received no notice of actual or threatened special assessments or reassessments of the Property, other than those potential assessments from the construction of the Ring Road. d. Environmental Laws To the best of Seller's knowledge, no toxic or hazardous substances or wastes, pollutants or contaminants (including, without limitation, asbestos, urea formaldehyde, the group of organic compounds known as polychlorinated biphenyls, petroleum products including gasoline, fuel oil, crude oil and various constituents of such products, and any hazardous substance as defined in the Comprehensive Environmental Response, Compensation and Liability Act of 1980 ( "CERCLA ", 42 U.S.C. §9601 -9657, as amended) have been generated, treated, stored, released or disposed of, or otherwise placed, deposited in or located on the Property, nor has any activity been undertaken on the Property that would cause or contribute to (i) the Property becoming a treatment, storage or disposal facility within the meaning of, or otherwise bring the Property within the ambit of, the Resource Conservation and Recovery Act of 1976 ( "RCRA "), 42 U.S. C. §6901 et. sea ., or any similar state law or local ordinance, (ii) a release or threatened release of toxic or hazardous wastes or substances, pollutants or contaminants, from the Property within the meaning of, or otherwise bring the Property within the ambit of, CERCLA, or any similar state law or local ordinance, or (iii) the discharge or pollutants or effluents into any water source or system, the dredging or filling of any waters or the discharge into the air of any emissions, that would require a permit under the Federal Water Pollution Control Act, 33 U.S.C. §1251 et. seq ., or the Clean Air Act, 42 U.S.C. §7401 et. seq ., or any similar state law or local ordinance, except as disclosed in the reports of Agassiz Environmental Systems and Midwest Analytical Services. To the best of Seller's knowledge, there are no substances or conditions in or on the Property that may support a claim or cause of action under RCRA, CERCLA or any other federal, state or local environmental statutes, regulations, ordinances or other environmental regulatory requirements, including without limitation, the Minnesota Environmental Response and Liability Act, Minn. Stat. §1158 ( "MERLA ") and the Minnesota Petroleum Tank Release Cleanup Act, Minn. Stat. §115C, except as disclosed in the reports of Agassiz Environmental Systems and Midwest Analytical Services. e. Rights of Others to Purchase Property To the best of Seller's knowledge, there are no unrecorded mortgages, contracts, purchase agreements, options, rights of first refusal, leases, easements or other agreements or interests relating to the Property and there are no persons in possession of any portion of the Property, except as may be disclosed by the Title Evidence; In Seller's Defaults Seller is not in default in the performance of any of Seller's obligations or liabilities under any easement agreement, covenant, condition, restriction or other instrument relating to the Property. g. FIRPTA Seller is not a "foreign person," "foreign partnership," "foreign trust," or "foreign estate" as those terms are defined in Section 1445 of the Internal Revenue Code. h. Proceedings There is no action, litigation, investigation, condemnation or proceeding of any kind pending or, to the best knowledge of Seller, threatened against Seller or the Property. Wells Seller certifies that Seller does not know of any "Wells" on the described Property within the meaning of Minn. Stat. §1031. This representation is intended to satisfy the requirements of that statute. Private Sewer Systems Seller certifies that Seller does not know of any private sewer system on or serving the Property, nor have any been installed or removed during Seller's ownership of the Property. k. Compliance To the best of Seller's knowledge, the Property fully conforms with all applicable statutes, laws, codes, ordinances and restrictions including all zoning, platting, subdivision and use laws and all building, energy and environmental codes and regulations. To the best of Seller's knowledge, all improvements are located entirely within the boundary lines of the Property and do not encroach upon any adjacent property and no improvements on any adjacent property encroach upon the Property. Access To the best of Seller's knowledge, the Property abuts on and has direct vehicular access to a public road or has driveway access to public roads by permanent, irrevocable easements which will be conveyed to Buyer on the date of closing, and Seller has no knowledge of any fact or condition which would result in the termination of such access. M. Seller makes no representation or warranty as to the suitability of the Property or as to the physical condition thereof for any purpose whatsoever. Buyer agrees that the Property is being purchased and accepted by Buyer in its present condition, AS IS and WITH ALL FAULTS, and Buyer hereby assumes the risk that adverse past, present or future physical characteristics and conditions may not have been revealed by its inspection or investigation. Seller will indemnify Buyer, and Buyer's successors and assigns, against, and will hold Buyer, and Buyer's successors and assigns, harmless from, any expenses or damages, including reasonable attorney's fees, that Buyer incurs because of the breach of any of the above representations and warranties, whether such breach is discovered before or after Closing. Consummation of this Agreement by Buyer with knowledge of any such breach by Seller will not constitute a waiver or release by Buyer of any claims due to such breach. Each of the representations and warranties set forth above shall survive the Closing. -7- 11. Representations and Warranties of Buyer Buyer represents and warrants to Seller that Buyer is a duly organized municipal corporation under the laws of the State of Minnesota; that Buyer is duly qualified to transact business in the State of Minnesota; that Buyer has the requisite power and authority to enter into this Agreement and the Buyer's Closing Documents to be signed by Buyer; such documents have been, or will have been by the Date of Closing, duly authorized by all necessary action on the part of Buyer and have been duly executed and delivered; that the execution, delivery and performance by Buyer of such documents do not conflict with or result in violation of Buyer's governing documents or any judgment, order, or decree of any court or arbiter to which Buyer is a party; and such documents are the valid and binding obligations of Buyer and enforceable in accordance with their terms. Buyer will indemnify Seller, and Seller's successors and assigns, against, and will hold Seller, and Seller's successors and assigns, harmless from, any expenses or damages, including reasonable attorney's fees, that Seller incurs because of the breach of any of the above representations and warranties, whether such breach is discovered before or after Closing. Each of the representations and warranties set forth above shall survive the Closing. 12. Buyer's Contingencies The obligations of Buyer under this Agreement are contingent upon each of the following: a. Representations and Warranties The representations and warranties of Seller contained in this Agreement shall be true at the time this Agreement is executed and on the Closing Date as if made on the Closing Date. b. Title Title shall have been found acceptable, or been made acceptable, in accordance with the requirements and terms of this Agreement. C. Performance of Seller's Obligations Seller shall have performed all of the obligations required to be performed by Seller under this Agreement, as and when required by this Agreement. d. Survey Buyer shall be satisfied, in Buyer's sole discretion, with any Survey if provided in connection with 7b herein. e. Inspections The results of any Inspections shall be satisfactory to Buyer, in Buyer's sole discretion. Unless each of the above contingencies is satisfied, removed, or waived by Buyer one day before the Date of Closing, Buyer shall have the right to cancel this Purchase Agreement by giving Seller written notification of Buyer's election to so cancel. Upon delivery of such written notification, this Purchase Agreement shall be null and void, and Seller and Buyer agree to execute a cancellation of this Purchase Agreement. 13. Operation Prior to Closing During the time period between the date of this Agreement and the Closing Date (the "Executory Period "), Seller shall operate and maintain the Property in the ordinary course of business in accordance with prudent and reasonable business standards. Seller shall execute no contracts, leases, or other agreements regarding the Property during the Executory Period which extend beyond the Closing Date without the -8- prior written consent of Buyer, which consent may be withheld by Buyer, in Buyer's sole discretion. 14. Brokers The Buyer is not represented by any broker. The Seller shall bear the responsibility for any brokerage fee incurred on its behalf. 15. Survival All of the terms, conditions, representations, warranties, and indemnifications contained in this Agreement shall survive and be enforceable after the Closing. 16. Notices Any notice required or permitted to be given by either party upon the other is given in accordance with this Agreement if notice is directed to Seller by delivering notice personally to any one of the undersigned of sellers; or if notice is directed to Buyer, by delivering notice personally to any one of the undersigned buyers; or if mailed in a sealed wrapper, properly addressed, by United States registered or certified mail, return receipt re- quested, postage prepaid; or if transmitted by facsimile, copy followed by mailed notice as above required; or if deposited cost paid with a nationally recognized, reputable overnight courier, properly addressed as follows: If to Seller: If to Buyer: City of Prior Lake 4646 Dakota Street SE Prior Lake, MN 55372 Attn: Kelly Meyer, Asst. City Manager with a copy to: Suesan L. Pace, Esq., City Attorney for City of Prior Lake 4646 Dakota Street SE Prior Lake, MN 55372 Notices shall be deemed effective on the earlier of the date of receipt or the date of deposit as aforesaid; provided, however, that if notice is given by deposit, that the time for response to any notice by the other party shall commence to run one (1) business day after any such deposit. Any party may change its address for the service of notice by giving written notice of such change to the other party, in any manner above specified, ten (10) days prior to the effective date of such change. 17. Miscellaneous Governina Provisions This Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective heirs, legatees, representatives, successors, and assigns. This Agreement shall be construed and interpreted in accordance with the laws of the State of Minnesota. No failure on the part of a party to this Agreement to exercise, and no delay in exercising, any rights contained in the Agreement shall operate as a waiver of such rights, nor shall any single or partial exercise of any rights hereunder preclude any other or further exercise of such rights or the exercise of any other right. The remedies provided in this Agreement are cumulative and not exclusive of any other remedy provided by law or equity. All terms and words used in this Agreement shall be construed to include any other number and any other gender as the context or sense of this Agreement or of any paragraph of this Agreement may require as if such terms or words had In been fully and properly written in the appropriate number and gender. Any exhibits to this Agreement are a part of this Agreement. Captions are provided for convenience and ease of reference only and do not affect or modify the terms of any of the provisions of this Agreement. All of the provisions of this Agreement are separable, so if any provision of this Agreement is held to be ineffective by a court of competent jurisdiction, the remaining provisions of this Agreement shall remain in full force and effect unless the invalidated provision is so fundamental to this Agreement that the remaining provisions do not reflect the parties' intent. This Agreement contains the entire agreement of the parties with respect to the subject matter of this Agreement and supersedes any and all prior Agreements and understanding between the parties with respect to the same. The terms of this Agreement have been cooperatively negotiated by and among the parties hereto, and this Agreement shall not be construed against any party hereto as its author. This Agreement may be modified only by a written instrument executed by both parties. There are no third party beneficiaries of this Agreement, intended or otherwise. Time is of the essence for each and every term of this Agreement. This Agreement may be executed in counterparts and, upon execution, each counterpart shall be considered an original. IN WITNESS WHEREOF, Seller and Buyer have executed this Agreement as of the date first written above. SELLER: BUYER: CITY OF PRIOR LAKE By: Patrick Hayes, Personal Representative Mike Myser, Mayor Of the Estate of Delores Hayes By: Frank Boyles, City Manager -10- EXHIBIT A PERMITTED ENCUMBRANCES Covenants, conditions, easements, restrictions, and reservations of record approved in writing by Buyer. 2. Real estate taxes not due and payable.