HomeMy WebLinkAbout7B - Argus Development Inc.AGENDA NUMBER:
PREPARED BY:
SUBJECT:
DATE:
7B
BRUCE LONEY, ASSISTANT CITY ENGINEER
CONSIDER ASSIGNMENT AND ASSUMPTION
DEVELOPMENT AGREEMENT BETWEEN THE CITY
PRIOR LAKE AND ARGUS DEVELOPMENT, INC.
APRIL 18, 1994
OF
OF
INTRODUCTION:
BACKGROUND:
DISCUSSION:
This Agenda item is for the Council to approve or not approve the
Assignment and Assumption of the Developer's Agreement for the
Hidden View development between the City of Prior Lake and
Argus Development, Inc. to D. R. Horton, Inc.
The plat known as Hidden View was platted in 1993 by Argus
Development, Inc. and a Developer's Agreement was entered into
by the City and Developer on July 19, 1993. This spring, D. R.
Horton, Inc. has entered into a contract to purchase the Hidden
View development, and has requested the City's consent to the
Assignment and Assumption of Argus Development, Inc.'s
olSligation of the development. Attached to this Agenda Report is
a letter dated March 30, 1994, from Eric H. Golatz, Attorney
representing D. R. Horton, Inc. to City Attorney Glenn Kessel.
In the Developer's Agreement, on Section 11, Titled
"Assignment", the Developer cannot transfer the Agreement to
another party without prior written approval of the City. On April
5, 1994, City Attorney Kessel sent a letter to Mr. Golatz which is
attached to the Council Agenda outlining the requirements which
are as follows:
The City Attorney is to review and approve the Assignment
and Assumption Agreement between Argus Development,
Inc. and D. R. Horton, Inc. The main concern is for the
City to be ensured that D. R. Horton, Inc. has assumed all
of Argus Development, Inc.'s obligations for the July 19,
1993, Developer's Agreement.
That D. R. Horton, Inc. provide a copy of the Irrevocable
Letter of Credit in their name to the City of Prior Lake for
the remaining amount and time as per the Developer's
Agreement. This Letter of Credit must be reviewed and
approved by the City Attorney.
4629 Dakota St. $.E., Prior Lake, Minnesota 55372-1714 / Ph. (612) 447-4230 / Fax (612) 447-4245
AN EQUAL OPPORTUNITY EMPLOYER
ALTERNATIVES:
RECOMMENDATION:
ACTION REQUIRED:
AGF_..418.ENG
City Attorney Kessel has been in contact with the Attorney for D.
R. Horton, Inc. and he feels that the Assignment and Assumption
approval can be granted contingent upon the receipt, review ~nd
approval by the City Attorney. A consent of assignment of
contract letter from the City to the Developer would be sent upon
approval from the City Attorney and if Council approves a motion
for the consent.
The Assignment provision in the current Developer's Agreement
requires written approval of thc City. In future Developer's
Agreements, the Council may want to revise the Agreement to
require prior written approval of the City Manager. This change
would allow the Assignment to be handled administratively and
not require a Council action.
The alternatives are as follows:
Approve a motion approving the Assignment and
Assumption of Development Agreement of Hidden View
Plat between the City of Prior Lake and Argus
Development, Inc. to the City and D. R. Horton, Inc.
contingent upon a review and approval of the Assignment
and Assumption Agreement between Argus Development,
Inc. and D. R. Horton, Inc. by the City Attorney and
contingent upon review and approval of the Letter of Credit
from D. R. Horton, Inc. to the City of Prior Lake by City
Attorney.
2. Deny the previous mentioned motion.
3. Table this item for a specific reason.
The recommendation is to approve the motion in Alternative No. 1.
Also staff is recommending that furore Developer's Agreements
allow the consent of the Assignment of contract to occur upon
written approval from the City Manager.
Approve a motion approving the Assignment and Assumption of
Development Agreement of Hidden View Plat between the City of
Prior Lake and Argus Development, Inc. to the City and D. R.
Horton, Inc. contingent upon review and approval of the
Assignment and Assumption of Agreement between Argus
Development, Inc. and D. R. Horton, Inc. by the City Attorney and
contingent upon the review and approval of the Letter of Credit
from D. R. Horton, Inc. to the City of Prior Lake by the City
Attorney.
LEONAROt STREET AND DEINARD
I"ROP'ESSIONAL ASSOCIATION
SUITI' 2300
ISO SOUTH FIFTH STR~-rT
MINNEAPOLIS, MINNE:$OTA
TELEPHONE {~1~)
IrACSIN ILIC {SI~)
March 30, 1994
LOMMEN, NELSON. COLE
& STAGEBERG, P.A.
1994
7
WRITIrR's DIRECT DIAL NUMBER
(612) 335-1509
Mr. Glenn R. Kessel
Lommen, Nelson, Cole & Stageberg
1800 IDS Center
80 South 8th Street
Minneapolis, MN 55402
Re:
Assignment and Assumption of Development
Agreement Between the City of Prior Lake and
Argus Development, Inc.
Dear Mr. Kessel:
D.R. Horton, Inc.-Minnesota, a Minnesota corporation ("D.R.
Horton"), has a contract to acquire certain assets of Argus
Development~ Inc., and Joseph M. Miller Construction, Inc.
(together, "Argus") including property in the Hidden View
subdivision in the City of Prior Lake..
D.R. Horton is aware that the subdivision is subject to that
certain unrecorded Contract for Development of Land in the City
of Prior Lake, Minnesota, between City of Prior Lake and Argus
Development, Inc., dated July 19, 1993 (the "Contract").
D.R. Horton is also aware that performance by Argus under
the Contract is secured by Irrevocable Letter of Credit No.
28107A, in the original amount of $156,141.25, in favor of the
City drawn on Construction Mortgage Investors Co. ("CMIC"). The
city has informed D.R. Horton that the amount of the letter of
credit was reduced to $41,690.75 on November 23, 1993.
D.R. Horton's contract with Argus provides that D.R. Horton
will assume Argus' obligations under the Contract and the letter
of credit as of the date of the closing of the acquisition. D.R.
Mr. Glenn R. Kessel
March 30, 1994
Page 2
Horton has obtained CMIC's consent to the assignment and
assumption of Argus' obligations under the Contract and the
letter of credit.
Please provide the City's acknowledgement of and consent to
the assignment and assumption of Argus' obligations under the
Contract by having the appropriate city official execute and
return the enclosed consent.
If you have any questions or require any further
information, please call me at 335 1509, or John Kuehn at 335
1717. The parties intend to close the transaction on April 4,
1994, and would like to have the city's consent before that date,
if possible.
Thank you for your prompt attention to this matter.
Very truly yours,
LEONARD, STREET AND DEINARD
ehg\drhor ton\ consent s · cry
1800 IDS Center
80 South Eighth Street
Minneapolis, ldinnesota 55402
(612) 339-8131
Minnesota WATS (800)
FAX (612) 339=8064
LOMMEN
~ L_i'
LAW FIRM
Lommen. Nelso~ Cole & SMgeberg. P.A.
Glenn R. Kessel
Attorney at Law
Minneapolis Office
(612) 336-9338
Southalde Office Plaza, Suite 2A
1810 Crestview Drive
Hudson, WI 54016
(715) 386-8217
Twin City Line (612) 436-808S
FAX (71:5) 386-8219
April 5, 1994
Mr. Eric H. Galatz
Leonard, Street and Deinard
150 South Fifth Street, Suite 2300
Minneapolis, MN 55402
Re:
Assignment and Assumption of Development Agreement Between
the City of Prior Lake and Argus Development, Inc.
Dear Mr. Galatz:
Prior to the City of Prior Lake consenting to the assignment and
assumption of the Contract for Development between the City and
Argus Development, Inc., we would like to review a draft of the
Assignment and Assumption Agreement executed between Argus
Development, Inc. and your client, D.R. Horton, Inc.-Minnesota, a
Minnesota corporation. We want to ensure that your client has
assumed all of Argus' obligations in the July 19, 1993 Contract
with the City.
Also, please provide a copy of the Irrevocable Letter of Credit
No. 28107A which indicates that it is now for the account of your
client in favor of the City for the remaining amounts of the
Letter of Credit.
Please give me a call should you have any questions regarding
these requests.
Very truly yours,
LOMMEN, NELSON, COLE & STAGEBERG, P.A.
GRK:dh
cc: Bruce Loney
Larry Anderson
Glenn R. Kessel