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HomeMy WebLinkAbout9F - Acquisition of Property CITY COUNCIL AGENDA REPORT MEETING DATE: December 18, 2000 AGENDA #: 9F PREPARED BY: Frank Boyles, City Manager AGENDA ITEM: DISCUSSION: ISSUES: OO-/3L CONSIDER APPROVAL OF A RESOLUTIO~CQUIRING PROPERTY. History: The City Council has sought to acquire land to eliminate blight and to facilitate progress in the Downtown Redevelopment project. Over the past few months through the efforts of numerous members of the City Council, we have been successful in negotiating purchase agreements for two properties. Current Circumstances: The subject properties are a .83 acre property on Franklin Trail commonly known as T J Towing. The other is a 30'x40' parcel on Main Street occupied by Hennen Insurance. The purchase agreement for T J Towing provides for a payment of $180,000. The Seller is responsible for completing a Phase II Environmental Assessment. He is also responsible for removal of all vehicles, parts, tires, fence and structures from the property prior to closing. The City is buying the bare ground. If the Phase II reveals there are significant clean-up costs then either party has the right to negotiate cost-sharing or terminate the agreement. The Phase II is underway. Eleven tests borings where made on the property. Field results are promising but the lab results will be the final word. The Hennen property acquisition utilizes a Contract for Deed. Under the Contract, the City will pay $47,901 for the property through four equal installments paid on January 3rd of each year. Mr. Hennen will retain possession and use of the property until the fin~1 payment is made on January 3, 2004 or until (and if) the City exercises its right to accelerate final payment and take possession of the property. Such action could occur before or after 2004. If after, the City does not need the property by 2004, we would negotiate a rental agreement with Mr. Hennen. Conclusion: The City Council should review the purchase documents to determine if they concur with the terms of the contracts. The T J Towing property should be cleaned up. The property owner has confirmed a willingness to sell and has entered into the purchase agreement voluntarily. Considering the development potential of this area, the development of the ring road and the desire to remove blight, the acquisition of this property is prudent from a public policy perspective. 16200 Eagle Creek Ave. S.E., Prior Lake, Minnesota 55372-1714 / Ph. (612) 447-4230 / Fax (612) 447-4245 1:\COUNCIL\AGNRPTS\2000\ 1218_9F .DOC AN EQUAL OPPORTUNITY EMPLOYER The Hennen property acquisition, while not large, is an opportunity for the City to remove potential obstacles to the long-term redevelopment of the Downtown area. The agreement is structured so that the existing business remains in place until the property is actually needed. ALTERNATIVES: (1) Adopt a Resolution authorizing the acquisition of both properties. (2) Adopt a Resolution authorizing the acquisition of one property. (3) Take no action. RECOMMENDED MOTION: Alternative (1). The Resolution contemplates that the City Council will wish to create tax increment redevelopment or development districts in both areas to reimburse itself for related expenditures and assist related projects. 1:\COUNCIL\AGNRPTS\2000\1218_9F.DOC RESOLUTION OO-XX A RESOLUTION AUTHORIZING ACQUISITION OF REAL PROPERTY Motion By: Second By: WHEREAS, the City desires to remove blight from the corporate limits of Prior Lake and encourage the redevelopment of the Priordale Mall / Ring Road area; and WHEREAS, the City Council intends to reimburse itself for development and redevelopment related expenses including property acquisition costs contemplated in this resolution through tax increment financing; and WHEREAS, the City Council desires to support Downtown redevelopment efforts; and WHEREAS, the .83 acre TJ Towing Property at 16675 Franklin Trail contains blight and substandard structures and is available for purchase; and WHEREAS, the 30'x40' Hennen Property at 16220 Main Street which will ultimately be redeveloped as part of the Downtown revitalization effort is available for purchase; and WHEREAS, purchase agreements satisfactory to Buyer and Sellers have been voluntarily negotiated and executed by the Sellers. Now THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF PRIOR LAKE, MINNESOTA that: 1. The recitals as set forth above are included herein in their entirety as if fully set forth. 2. The acquisition of each parcel is hereby approved. 3. The Mayor and City Manager are authorized to execute all necessary documents to effectuate the transactions. 4. Funding for the acquisitions will be drawn from the General Fund Reserve Balance. PASSED AND ADOPTED THIS 18TH DAY OF DECEMBER, 2000. YES NO Mader Mader Ericson Ericson Gundlach Gundlach Petersen Petersen Zieska Zieska City Manager, City of Prior Lake 16200 Eagle Creek Ave. S.E., Prior Lake, Minnesota 55372-1714 / Ph. (612) 447-4230 / Fax (612) 447-4245 AN EQUAL OPPORTUNITY EMPLOYER "----".._-~~"._-_.__. -----,---.--.---------....--......- REAL ESTATE PURCHASE AGREEMENT THIS AGREEMENT ("Agreement") made and entered into this day of ,2000, by and between the CITY OF PRIOR LAKE, a Minnesota municipal corporation, whose address is 16200 Eagle Creek Avenue, Prior Lake, Minnesota 55372-1714 (referred to herein as "Buyer"), and THOMAS J. KORTSCH, principal of T.J. TOWING, a Minnesota company, whose address is 17536 Marschall Road, Jordan, MN 55352 (referred to herein as "Seller"). IN CONSIDERATION of the mutual covenants and agreements herein, it is hereby mutually agreed by Seller and Buyer as follows: SECTION 1. SALE AND PURCHASE OF LAND 1.1) Seller shall sell to Buyer and Buyer shall purchase from Seller, upon the terms and conditions hereof, the following property) all collectively referred to as the "Subject Property"): 1.1.1) The land in Scott County, Minnesota, commonly known as 16675 Franklin Trail S.E., Prior Lake, MN 55372 and legally described on Exhibit "A" attached hereto and incorporated herein, together with all right, title and interest in and to any roads, alleys or right-of-ways adjoining or servicing such land, along with easement appurtenant thereto. SECTION 2. PURCHASE PRICE 2.1) The purchase price for the Subject Property ("Purchase Price") shall be One Hundred Eighty Thousand and no/100 Dollars ($180,000) payable by Buyer to Seller by check on the date of closing. SECTION 3. TITLE MATTERS 3.1) Seller shall furnish to Buyer within twenty (20) days hereof a current commitment for the issuance of a 1987/1990 AL T A Form B owner's policy of title insurance ("Commitment") issued by a Title Insurance Company acceptable to Buyer ("Title") in the amount of the Purchase Price, committing to insure that Buyer will have good and marketable title to the Subject Property, free of any and all standard and other exceptions to title, except matters to which Buyer may consent in writing. 3.2) In the event any exceptions are listed in the Commitment for title insurance that are not acceptable to Buyer, Buyer will have twenty (20) days after receipt of the title commitment by Buyer to object in writing, itemizing those exceptions that Buyer objects to. Seller shall promptly cause these exceptions to be removed. If the Seller fails to remove the same within the time allowed for closing on the Subject Property, the Buyer shall have the right to terminate this Agreement. 1 SECTION 4. CLOSING 4.1) The closing ("Closing") shall be at a location designated by Buyer, and shall occur on the earlier of (i) thirty (30) days after the date that Buyer gives notice to Seller that the contingencies contained in Sections 7.2, 7.3, 7.5, and 7.6 have been satisfied, waived, or removed or (ii) within one hundred twenty (120) days after execution of this agreement ("Closing Date"). 4.2) On the Closing Date, Sellers shall deliver to Buyer possession of the Subject Property vacant and free of any and all improvements, fixtures, personal property and debris including, but not limited to all structures, buildings and foundations, fences, motor vehicles and parts together with any trash, garbage, rubbish, personal property and all other personal property not included in the sale of the Subject Property. The removal of such improvements, fixtures, personal property, and debris shall be performed to the satisfaction of Buyer, in Buyer's sole discretion. Sellers shall not remove any dirt, trees, shrubs, or other natural growth, except as is necessary to keep the Subject Property in a neat and orderly condition. 4.3) On the Closing Date, Sellers shall execute and deliver to Buyer: 4.3.1) A duly executed Warranty Deed, subject only to the exceptions consented to by Buyer in writing; 4.3.2) A customary affidavit that there are no unsatisfied judgments of record, no actions pending in any state or federal courts, not tax liens, and no bankruptcy proceeding filed against Seller, and no labor or materials have been furnished to the Subject Property for which payment has not been made, and that to the best of Seller's knowledge there are no unrecorded interests relating to the Subject Property; and 4.3.3) A certificate on a form acceptable to Buyer that all of the covenants, representations and warranties of Seller as set forth in Section 5 are true and correct as of the Closing Date. 4.3.4) 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. 4.3.5) The Abstract of Title to the Subject Property, if the Subject Property is Abstract property and the Abstract is in Seller's possession or control. 4.3.6) Well Certificate. If there is a well located on the Subject Property, a Well Disclosur~ Certificate signed by Seller in the form required by law. pi1d. ~ 4.4) Seller shall pay at Closing all general real estate taxes levied against the Subject Prope due' f 0' and payable for all years prior to the year of Closing, the balance of all special assessments levie or pending against the Subject Property as of the Closing Date, and any deferred taxes. sel~ler .shall all the general real estate taxes levied against the Subject Property due and payable in e year of Closing. Buyer shall not assume thr unpaid balance of any special assessments. fl.. o/rk J,- h; ~ 11~ "7 cA.uSi-~ NO D~lt/l.. 4.5) Seller shall pay at Closing: '" lir( . T/( 4.5.1) state deed tax; 4.5.2) all costs of updating the abstract of title and all costs associated with obtaining a title insurance commitment, including name searches, tax searches, bankruptcy searches, and property inspection fees; 2 T 4.5.3) recording fees for corrective instruments required to remove encumbrances and place marketable title in Buyer's name; 4.6) Buyer shall pay at Closing: 4.6.1) all recording fees and charges relating to the filing of the Warranty Deed; 4.6.2) title insurance premiums; and 4.6.3) the closing fee charged by Title Company. SECTION 5. COVENANTS, REPRESENTATIONS AND WARRANTIES OF SELLER 5.1) Seller, as an inducement to Buyer to enter into this Agreement, and as part of the consideration therefor, represents, warrants, and covenants with Buyer and its successors and assigns that: 5.1.1) There are no leases, options, purchase agreements, rights to redeem, tenancy agreements, or rights of occupancy, written or verbal, and no person or party has, or will have any rights of adverse possession, regarding or arising out of the occupancy of the Subject Property. 5.1.2) Sellers will maintain in force insurance against public liability from such risk and to such limits as in accordance with prudent business practice and suitable to the Subject Property from the date hereof to the Closing Date; 5.1.3) To the best of Seller's knowledge, no entity or person has, at any time: a) "released" or actively or passively consented to the "release" or "threatened release" of any Hazardous Substance (as defined below) from any "facility" or "vessel" located on or used in connection with the Subject Property; or b) taken any action in "response" to a "release" in connection with the Subject Property; or c) otherwise engaged in any activity or omitted to take any action which could subject Seller or Buyer to claims for intentional or negligent torts, strict or absolute liability, either pursuant to statue or common law, in connection with Hazardous Substances (as defined below) located in or on the Subject Property, including the generating, transporting, treating, storage, or manufacture of any Hazardous Substance (as defined below. The terms as set within quotation marks above shall have the meaning given to them in the Comprehensive Environmental Response and Liability Act, 42 U.S.C. Sec. 9601 et seq., as amended ("CERCLA") and any state environmental laws. "Hazardous Substances" means hazardous waste, toxic substances, formaldehyde, urea, polycholorinated biphenyls, asbestos, petroleum, natural gas, synthetic has usable for fuel or mixtures thereof, any materials related to any of the foregoing, and substances defined as "hazardous substances", "toxic substances", "hazardous waste", "pollutant", or "contaminant" in CERCLA, Resource Conservation and Recovery Act as amended, 41 U.S.C. Sec. 9601 et sea., the Clean Water Act, 33 U.S.C. Sec. 1251 et sea., any state laws regarding environmental matters, or any regulations promulgated pursuant to any of the foregoing statues. Seller shall indemnify Buyer, its successors and assigns, against, and shall hold Buyer, its successors and assigns, harmless from, any and all losses, liabilities, claims, fines penalties, forfeitures, damages, administrative orders, consent agreements and orders, and the costs and expenses incident thereto, 3 including, without limitation, reasonable attorneys' fees, consultants' fees and laboratory fees, which may at any time be imposed upon, incurred by or awarded against Buyer as a result of or in connection with the breach of any of the above representations and warranties. Consummation of this Agreement by Buyer with knowledge of any such breach by Seller shall not constitute a waiver or release by Buyer of any claims arising out of or in connection with such breach. 5.1.4) To the best of Seller's knowledge, no person or entity (including Seller), has, at any time ever installed, used or removed any underground storage tank on or in connection with the Subject property~ e'''pf M Id;~f.hd ,~ "~1 pJ"l'JI ~p.r ~ 5.1.5) As part of this agreement, Sellers shall execute the well disclosure certificate attached hereto as Exhibit "B". Sellers shall deliver the well certificate to Buyer on the date of execution of this agreement. Sellers warrant that all statements set forth in the well certificate are true, accurate and complete to the best of Seller's knowledge. 5.1.6) Seller represents and warrants to Buyer that Seller has the requisite of 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 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. 5.1.7) Seller owns the Subject Property free and clear of all encumbrances, liens, covenants, conditions, easements, restrictions, reservations, and assessments, except those listed as exceptions to the Commitment. 5.1.8) Seller has received no notice of actual or threatened special assessments or reassessments of the Subject Property. 5.1.9) 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 subject Property. 5.1.10) 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. 5.1.11) 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 Subject Property. 5.1.12) Seller certifies that Seller does not know of any private sewer system on or serving the Subject Property, nor have any been installed or removed during Seller's ownership of the subject Property. 5.1.13) There are no encroachments or boundary line issues affecting the Subject Property. 5.1.14) The Subject 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. 5.1.15) The subject Property is served by the following public and private utility services: electric, gas, storm sewer, water, sanitary sewer and telephone, all of which services are available in adequate capacities to properly service the Subject Property. Seller has received no notice of actual or threatened reduction or curtailment of any utility service now supplied to the subject Property. All utility 4 _ h'.~'___'''~'_''''''W'' ___, ,,-,,_,___'~_~"___'__'_"_>_'''''' _.,-~."-~.._-....,,-~._..~,,._~.... .~- ~-- lines reach the boundaries of the Subject Property through public rights-of-way Or valid private easements, the interest of Seller in which shall be assigned by Seller to Buyer on the Closing Date. 5.1.16) Seller has no knowledge of any defects in the physical condition of the Subject Property, except as follows: .. /..ri< NOl1le~ / I 5.2) The covenants, representations, and warranties contained in Section 5 shall be deemed to benefit Buyer and its successors and assigns and shall survive any termination or expiration of this Purchase Agreement or the giving of the Deed. All of Seller's covenants, representations and warranties in this Agreement shall be true as of the date hereof and of the Closing Date, and shall be a condition precedent to the performance of Buyer's obligations hereunder. If Buyer discovers that any such covenant, representation, or warranty is not true, Buyer may elect prior to closing, in addition to any of its other rights and remedies, to cancel this Agreement, or Buyer may postpone the Closing Date up to ninety (90) days to allow time for correction. SECTION 6. ENVIRONMENTAL INVESTIGATION AND TESTING 6.1) Seller shall have Omni Environmental, Inc. complete all investigation and tests necessary, and prepare a Phase II Environmental Assessment Worksheet to be reviewed Buyer and Seller within forty- five (45) days of the date of acceptance of this Agreement. Seller shall assume all costs of preparing the Phase II Environmental Assessment Worksheet. If the Phase II Environmental Assessment Worksheet reveals that the Subject Property contains contamination, ,the parties may elect to re- negotiate the terms of this Agreement and allocate the costs of the cleanup, which renegotiation and allocation shall be agreed to in writing by the parties within twenty (20) days after the receipt of the Phase II Environmental Worksheet. If no such agreement is reached within such twenty (20) day time period, Buyer shall have twenty (20) days thereafter to elect to terminate this Agreement or to complete the purchase of the Property and assume the costs of the cleanup, and Buyer shall provide written notice to Seller of its election within such additional twenty (20) day time period. Upon such termination, neither party shall have any further rights or obligations under this Agreement. 6.2) Buyer may perform such inspections of the Subject 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, at all reasonable times, to enter upon the Subject property to perform the Inspections. SECTION 7. CONTINGENCIES The obligations of Buyer under this Agreement are contingent upon each of the following: 7.1) The representations and warranties of Sellers set forth in Section 5 of this Agreement must be true as of the date of this Agreement and on the Closing Date, and Sellers shall have delivered to Buyer at Closing a certificate dated the Closing Date, signed by Sellers, certifying that such representations and warranties are true as of the Closing Date; 7.2) Buyer is satisfied in its sole discretion with the results of any survey performed by Buyer, or verification of the Seller's Survey, the cost of which is to be assumed by Buyer. 7.3) Title shall have been found acceptable, or been made acceptable, in accordance with the requirements and terms of this Agreement. 5