HomeMy WebLinkAbout9D AGREEMENTS MAIN & HASTINGS
16200 Eagle Creek Avenue S.E,
Prior Lake, MN 55372-1714
MEETING DATE:
AGENDA #:
PREPARED BY:
CITY COUNCIL AGE
AGENDA ITEM:
CONSIDER APPROVAL OF A RESOLUTION AUTHORIZING THE MAYOR
AND CITY MANAGER TO ENTER INTO AGREEMENTS WITH RESPECT TO
CITY-OWNED PROPERTY AT HASTINGS AND MAIN AVENUE: 1)
DEVELOPMENT AGREEMENT, 2) AGREEMENT FOR PURCHASE OF
CITY-OWNED PROPERTY, AND 3) LEASE AGREEMENT FOR PUBLIC
PARKING LOT
DISCUSSION:
Introduction
The purpose of this agenda item is to request that the City Council authorize
the execution of three legal agreements for the development of the Main
Avenue/Hastings property.
History
Attached is the agenda report from the October 3, 2005, City Council meeting
which recites the history of this project. At the October 3, 2005, meeting the
City Council asked that there be more aggressive guarantees to expedite
development of the parcel or return the parcel to City ownership with penalties
should the developer breach the agreement.
Current Circumstances
Since the October 3, 2005, meeting we have conducted teleconferences and
e-mail correspondence to identify how the City Council concerns could be
addressed in the agreement. We believe that the enclosed agreements
address the Council's concerns. Changes to each agreement are summarized
below and each red-lined document:
AQreement with reoard to City-owned property
. Paragraph 5 adds the language "or as extended by the development
agreement regarding building permit issuance.
. Paragraph 10 is revised to allow the City to rescind the sale and retain the
purchase price if construction is not commenced by April 7, 2006.
. Paragraph 11 clarifies that the developer does not lose the $15,000
security if they take action within timelines as may be extended by the
development agreement.
. Paragraph 16 indicates that both parties are represented by Counsel.
Development aQreement
. Paragraph 3 clarifies that if construction does not commence by April 7,
2006, the developer loses any payments made for extensions granted as
well as the initial $15,000 security.
· Paragraph 3 indicates that the building will be completed within 14 months
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ISSUES:
FINANCIAL
IMPACT:
ALTERNATIVES:
RECOMMENDED
MOTION:
of April 6. 2006.
. Paragraph 5 clarifies the notification requirements, the amounts lost and
the City's right to retain the property if construction is not undertaken by
April 6, 2006,
. Paragraph 5 provides fifteen (15), rather than thirty (30) days for the
developer to cure a breach.
. Paragraph 7 indicates that the remaining portions of the original $15,000
will be released once the final certificate of occupancy is issued.
. Paragraph 7 clarifies the date the parking lot lease begins based upon
construction impact upon the lot's use by the public.
· Paragraph 8 acknowledges that both sides are represented by attorneys.
. Paragraph 9 indicates that the agreement is recorded against the property
and released upon certificate of occupancy.
. Paragraph 10 indicates the agreement survives the closing.
Parkina lot lease
This is an agreement the Council has not yet seen. It allows the developer to
lease the public parking lot next to the building for five (5) years commencing
in April or May 2006 (the date the construction impacts the public's use of the
lot). The cost of the lease for the five-year term is $1,000 per month. This
lease amount can be adjusted after the initial five years. For the life of the
lease, four stalls (adjacent to Main) are reserved for two-hour public parking.
The entire lot is available for public use after 6 p.m., Monday through Friday,
and after Noon on Saturday and all day Sunday. The City pays any taxes
which may become due. Both parties are responsible for insurance.
The agreements are now clear that if extensions are needed to secure a
building permit, the developer owes the City $15,000 for each such 45-day
period. Since the permit has not been issued by October 3, 2005, the
developer has provided us with a $15,000 check and signed copies of each
agreement. We are preparing a written procedure for building permit issuance
to address the developer's concern that he applies on time, but the City's delay
places him in the next 45-day period.
The sale of this property will provide $200,000. The addition of a $1 million
building to the property will provide additional tax base. The new building will
allow new businesses to move downtown to continue our revitalization efforts.
1. Adopt the resolution authorizing execution of all three agreements.
2. Modify the agreements and adopt an amended resolution.
3. Take no action and provide staff direction.
Alternative #1.
I\COUNCIL\AGNRPTS\2005\ 101705
for
& Malll.DOC
16200 Eagle Creek Avenue S,E,
Prior Lake, MN 55372-1714
MEETING DATE:
AGENDA #:
PREPARED BY:
AGENDA ITEM:
DISCUSSION:
CITY COUNCIL AGENDA REPORT
October 3, 2005 <"
~~nk Boyles, City ManageJ{
CONSIDER APPROVAL OF A SOLUTION AUTHORIZING
THE MAYOR AND CITY MANAGER TO ENTER INTO A
DEVELOPMENT AGREEMENT AND AN AGREEMENT
REGARDING THE PURCHASE OF CITY -OWNED PROPERTY
AT HASTINGS AND MAIN AVENUE.
Introduction
The purpose of this agenda item is to receive City Council
authorization to enter into two agreements prepared by the City
Attorney which set forth the legal relationship, default provisions,
penalties and securities with respect to a new downtown
development proposed for the Main Avenue and Hastings city-
owned lot.
History
The City owns a 49' X 145' parcel at the intersection of Main
Avenue and Hastings. On June 6, 2005, the City Council awarded
a proposal to sell this property for development to Rock Creek
Designers and Builders, represented by Dan Schaefer. The
transaction is subject to the conditions contained in the request for
proposal and the proposal submitted by Rock Creek Designers
and Builders. In addition to authorizing the sale of the property in
the amount of $200,000, the City Council directed that the
developer and City enter into a development agreement by
October 7, which is 120 days from the Council's June 6 action.
Current Circumstances
The City Attorney has prepared two documents. The first is an
agreement regarding the purchase of City-owned property. The
second is a development agreement. The agreement sets forth
the terms of the purchase transaction and the responsibilities of
each party. The development agreement specifies the timeline
within which various actions are to take place which ultimately end
with the issuance of a permanent certificate of occupancy. The
document also defines default and the penalties in the event of a
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breach of the agreement. The document seeks to assure that title
to the land does not transfer to Rock Creek until we are certain
that the building will be constructed in accordance with the RFP,
proposal and development agreement.
On August 18, 2005, the City Attorney and staff met with Mr.
Schaefer and his attorney to review the documents. We agreed
that Mr. Schaefer's attorney would "red-line" the document and
then return it to the City Attorney for review and modification. The
documents as revised by the City Attorney are attached. We
believe that the documents protect the City satisfactorily, but raise
some policy questions for the Council.
During the meeting with Mr. Schaefer and his attorney regarding
the agreements drafted by the City Attorney, Mr. Schaefer
indicated that Rock Creek Designers and Builders may not be able
to meet one or more of the deadlines set out in their RFP proposal
and memorialized by the City Attorney in the development
agreement. Specifically, Rock Creek indicated it would provide
"financing satisfactory to the City" by August 27, 2005, and begin
construction by November 1, 2005. At the August 18 meeting, Mr.
Schaefer indicated that he would not be able to obtain construction
financing until 50 percent of the space is pre-rented. This could
put off construction until the pre-leased space requirement is met.
During the meeting we tried to accommodate this dilemma while
protecting the City. One of the City's preliminary objectives in
disposing of the property using our RFP process was to avoid a
developer acquiring the property for speculation and not building,
but turn the property over after the value of the property
appreciated. To avoid this, the development agreement sets out a
timeline for substantial milestones.
Proof of construction financing is a significant event on the
timeline. Therefore, the City proposed extending the schedule
upon the developer paying $15,000 for each forty-five day delay.
The $15,000 increments would remain in place until
commencement of construction which must occur no later than
forty-five (45) days.
The developer proposed the $15,000 increments should be
returned if the developer commences construction by April 7,
2006, rather than November 1, 2005, as proposed by the
developer in response to the City's RFP. The City Attorney
disagrees. The City Council should provide the City Attorney with
input regarding whether the Agreement, which is in your agenda
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ISSUES:
FINANCIAL
IMPACT:
ALTERNATIVES:
RECOMMENDED
MOTION:
package, should be revised and what revisions should be made, if
any, in light of the comments by the developer's attorney.
The developer has submitted a completed site plan and a
conditional use permit application. The conditional use permit
request is required in the C-3 (Downtown) district for buildings in
excess of 35 feet tall. The proposed building is to be 42 feet tall.
The Planning Commission heard and approved this request at its
September 26, 2005, meeting.
The key issue is whether the Council believes that the documents
protect the City against various contingencies. A considerable
amount of effort has been spent both by the developer's attorney
and the City Attorney crafting language which is satisfactory to the
developer, but also addresses the City's concerns. We believe
that the documents before you accomplish their intended objective.
If the Council approves the two attached documents, we will
complete a lease agreement for City Council consideration. The,
lease would authorize the developer to use the majority of the
public parking lot to the south of this parcel during normal business
hours for five years at a cost of $1 ,000 per month. A portion of the
lot would remain available for public use, and all of the lot would be
available to the general public on weekends and evenings.
The purchase price of this property is $200,000, which is in excess
of the $128,000 appraised value. The City did purchase the LBJ
Grain property for $5,000 and waiver of the Downtown special
assessment of $1 ,071. Any title work will be the City's
responsibility. The City Attorney's fees are reimbursed by the
developer. The parking lease revenues would be set aside in a
fund for future parking facilities.
1. Motion and second to adopt a resolution authorizing the Mayor
and City Manager to execute the agreement regarding the
purchase of City-owned property and the development
agreement for the Main Avenue and Hastings property.
2. Take no action.
Alternative 1.
1:\CUl!M 'l"i\CNf\I' !.S\2n05\1 003t1" ,k\doj'ment agrennent !lH';lin"s&!vIain,L)UC
AGREEMENT REGARDING THE PURCHASE OF CITY OWNED PROPERTY
This Agreement is entered into this _day of ,2005 by and between the City of
Prior Lake, Minnesota, a Minnesota municipal corporation (hereinafter "City"), and Rock Creek
Designers & Builders, LLC, a Minnesota Limited Liability Corporation (hereinafter
"Purchaser"),
RECITALS
WHEREAS, the City is the owner of two parcels of land on unimproved real property
located at Main A venue and Hasting Streets in the City of Prior Lake, Scott County, Minnesota
("Property"), as legally described on Exhibit A attached hereto and incorporated herein; and
WHEREAS, on May 2, 2005 the City Council pursuant to applicable State Statutes and
City Code requirements declared the Property surplus and authorized the City Manager to
undertake a sealed competitive Request for Proposal process to dispose of the Property; and
WHEREAS, on June 6, 2005 the City Council accepted the Proposal from Purchaser, in
the amount of Two Hundred Thousand and no/lOO Dollars ($200,000,00), to purchase the
Property, subject to entering into an agreement with the City to construct the structure described
in the Purchaser's response to the City's Request for Proposals ("Proposal"), dated May 27,2005
and which is attached hereto and incorporated herein as Exhibit Band
WHEREAS, this Agreement is intended to set forth the terms and conditions under which
the City will (1) enter into a real estate purchase agreement with the Purchaser and (2) close with
the Purchaser on the sale of the Property; and
WHEREAS, the process hereinafter described in this Agreement for the sale and
purchase of the Property is designed to ensure that the Purchaser is not acquiring the Property to
hold until the value of the Property exceeds the Purchaser's purchase price,
NOW THEREFORE, based on the mutual promises and covenants set forth herein, the
sufficiency of which is not disputed, the parties agree as folIows:
1, The Recitals set forth above are incorporated herein as if fully set forth,
2, The City will sell Purchaser the Property for the total Purchase Price of Two
Hundred Thousand and no/IOO Dollars ($200,000,00), subject to the terms and conditions
described in this Agreement and the purchase agreement attached hereto and incorporated herein
by reference (hereinafter "Purchase Agreement"),
3. The Purchaser shall prepare plans for the construction of a three-story commercial
retail and office building, Each floor of the building will be approximately four thousand eight
hundred (4,800) square feet. The architecture of the building, in the judgment of the Planning
Director and City Engineer of the City, shall be consistent with the rendering and narrative
description of the building submitted with the Purchaser's Proposal. The height of the proposed
Building requires a conditional use permit ("CUP"), The application for the CUP and the
preliminary Building Plans shall be submitted to the City on or before August 26, 2005,
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4, The Purchaser shall provide the City proof of construction and permanent
financing, satisfactory to the City's Finance Director, for the construction of the building
described in Paragraph 3 by August 26, 2005.
5, The Purchaser shall apply for and secure a building permit for the building
described in Paragraph 3 on or before October 7, 2005.3. 2005. or as extended Dursuant to the
Develovment Al!reement attached as Exhibit C.
6, Purchaser shall not be in default under this Agreement or the Purchase Agreement
for the Property due to delays caused by acts of God, acts of riot or terrorism, weather conditions
which delay construction, shortages of material and/or labor, delays caused by entities or persons
over whom or conditions over which Developer has no control.
7, The Mayor and City Manager shall execute the Purchase Agreement within five
(5) days of the issuance of a building permit for the building referenced in Paragraph 5 above,
8, On or before the date for the closing as provided for in the Purchase Agreement,
the Purchaser shall execute a Development Agreement with the City, a copy of such
Development Agreement attached as Exhibit C and incOIporated herein ("Development
Agreement"), The Development Agreement shall be required to be executed by the parties
designated therein to assure that the Purchaser constructs the building for which the building
permit is issued, The Development Agreement sets out a project development timeline and the
City's remedies in the event the Purchaser fails to meet the project development timeIine,
9, The City and Purchaser shall close on the sale of the Property within ten (10)
business days from the date the Purchase Agreement is executed by both parties.
10, The document of conveyance for the sale of the Property shaIl contain a rescission
provision, The City shaIl be entitled to rescind the sale of the property AND retain the Purchase
Price of the Property ifthe Purchaser breaohes 8fI)' onhe applicable terms and conditions offails
to commence construction. as described in the Development Agreement, ineluding the projeet
aevelopment timeline speoified tHerein.on or before Avril 7. 2006, Purchaser acknowledges that
the City selected Purchaser's bid to purchase the Property based on the Purchaser's
representations to the City of its intent to develop the Property as provided for herein and in
accordance with the Development Agreement. Purchaser agrees that the City is entitled to regain
fee title to the Property and retain the Purchase Price in the event of a aafawlt of tRe applieal3le
provisions in the Development Agreement; but only after Purehaser Ras recei'/ed notice of a
defalllt and 8fI opportunity to cure the default.Purchaser fails to commence construction on or
before Avril 7. 2006, Upon the completion of the improvements to be constructed by the
Purchaser on the Property in accordance with the terms and conditions hereof, and the issuance
of a certificate of occupancy by the City, the Purchaser's Cash Deposit (defined below) provided
for shall be released,
I I. If Purchaser fails to enter into the Purchase Agreement within five (5) business
days from the date the building permit is issued or close on the Property within the time specified
in Paragraph 62 of this Agreement the City may, in its sole discretion, terminate this Agreement
and retain the Purchaser's cash deposit in the amount of Fifteen Thousand Dollars ($15,000.00)
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(the "Cash Deposit") together with anv extension payments provided it)!' in the Development
Agreement.. The Purchaser agrees that the City is entitled to retain the Cash Deposit and any
extension payments made as damages owed to the City for the delay Purchaser caused in the
development ofthe Property consistent with the City's 2030 Vision and Strategic Plan,
12, Purchaser may assign this Agreement to the affiliate of Purchaser which will
develop the Property. This Agreement is not otherwise assignable by the Purchaser or its
affiliate without the prior written consent of the City Council, which consent may be withheld by
the City for any reason whatsoever.
13, There shall be no amendments to this Agreement 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 Agreement shall not be a waiver or release,
14. If any portion, section, subsection, sentence, clause, paragraph, or phrase of this
Agreement is for any reason held invalid by a court of competent jurisdiction, such decision shall
not affect the validity of the remaining portions of this Agreement. This Agreement shall survive
the closing on the Property,
15, This Agreement shall be governed by the laws of the State of Minnesota,
16, Both parties to this Agreement have been represented bv coullsel during the-
negotiations, drafting and execution of this Agreement.9
IN WITNESS WHEREOF, the Seller and Buyer have executed this Agreement as of
the day and year first above written,
CITY OF PRIOR LAKE
By:
Frank Boyles, City Manager
By:
Jack Haugen, Mayor
ROCK CREEK DESIGNERS & BUILDERS,
LLC
By:
Its
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c.........,...,..,..............................................................................,..,.."'''''.'''''')
Formatted: Indent: First line: 0.5"
.............................................................................................................~.....
STATE OF MINNESOTA )
) ss,
COUNTY OF SCOTT :)
The foregoing instrument was acknowledged before me this _ day of
, 2005, 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 day of
, 2005, by , President of Rock Creek Designers &
Builders, LLC, a Minnesota limited liability company, on its behalf,
Notary Public
THIS INSTRUMENT WAS DRAFTED BY:
Suesan Lea Pace, Esq,
Halleland, Lewis, Nilan & Johnson
600 U.S. Bank Plaza South
220 South Sixth Street
Minneapolis, MN 55402-4501
612-338-1838
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EXHIBIT A
LEGAL DESCRIPTION OF THE PROPERTY
5
EXHffiIT B
PROPOSAL FROM PURCHASER DA TED MAY 27, 2005
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EXHIBIT C
DEVELOPMENT AGREEMENT
This Agreement is entered into this _ day of , 2005 by and between the City
of Prior Lake ("City"), a Minnesota municipal corporation and Rock Creek Designers &
Builders, LLC ("Developer"), a Minnesota Limited Liability Corporation,
RECITALS
WHEREAS, the City and Developer have executed a Purchase Agreement dated
, 2005, which Purchase Agreement is attached hereto and incorporated herein
as Exhibit 1; and
WHEREAS, the sale of the Property is subject to an AGREEMENT REGARDING THE
PURCHASE OF CITY OWNED PROPERTY dated ,2005, which Agreement
is attached hereto and incorporated herein as Exhibit 2; and
WHEREAS, the City sold Developer real property located at Main Street and Hasting
A venue, Prior Lake, Scott County, Minnesota as legally described in the aforementioned
Agreement in the preceding recital; and
WHEREAS, the Developer submitted a written proposal to the City dated May 27,
2005, which proposal is attached hereto and incorporated herein as Exhibit 3; and
WHEREAS, the City desires to ensure that the property sold to the Developer IS
developed as set forth in Developer's proposal.
NOW THEREFORE, based on the mutual promises and covenants set forth herein, the
sufficiency of which is not disputed, the parties agree as follows:
1, The Recitals set forth above are incorporated herein as if fully set forth herein,
2, The Developer shall execute this Development Agreement on and after October 7,
2005 but before the date of Closing as provided for in the Purchase Agreement. The Cash
Deposit provided to the City with Developers' proposal dated May 27, 2005 shall remain in
place as security for performance pursuant to this Development Agreement.
3. Developer shall construct a three-story commercial retail and office building on
the Property consistent with its May 27, 2005 proposal, and in conformance with the building
plans for the building approved by the City, The height of the building will require a
conditional-use permit ("CUP") from the City, The Developer's J3f8J38sa! provides for a specific
Project Development Timeline set forth as follows, to wit:
a. Submit Land Development RFP:
b, Execute City Development Agreement:
c. Submit CUP Application and Preliminary Building
Plans Building Plans for City Review:
May 27, 2005
October 7,2005
August 26, 2005
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d, Submit Plans for and Secure a Building Permit:
e, Provide Financing Satisfactory to City:
f, Close on Purchase of Property:
g, Commence Construction:
h, Complete Construction
October 3,2005 ::
August 26, 2005
October 22, 2005:
November I, 2005*
Fourteen (14) months from
commencement of construction
Sixty (60) days from completion
of construction
), Final Certificate of Occupancy
whieh the parties hereto reatHrtR, aaeJ3t and ratify.
* Subject to paid extensions described below.
Developer's financing requires that fifty percent (50%) of the building be leased (the
"Fifty Percent Lease Requirement") prior to funding of the construction loan and commencement
of construction, If Developer has not met the Fifty Percent Lease Requirement and obtained a
building permit by October 3, 2005, this deadline may be extended by Developer, in increments
of forty-five (45) days, but in no event to later than January 3, 2006, The first extension shall run
from October 3, 2005 through November 17, 2005 and the second extension, if exercised, will
run from November 18, 2005 through January 3, 2006, As a condition to the grant of each
extension of forty-five (45) days, Developer shall pay to the City--et>-a cashier's check in,.the
sum of Fifteen Thousand and no/lOO Dollars ($15,000,00), in advance, If Developer fails to
commence construction on or before April 7, 2006, Developer forfeits all payments made for
each extension and the Cash Denosit and, in addition, the City shall have the rescission right
described in paragraph 5 below.
Construction must be completed within fourteen (14) months from commencement of
construction (Ami! 7. 2006) and the final certificate of occupancy must be obtained with sixty
(60) days thereafter.
4. Developer shall construct the building and complete the project described in
Exhibit 3 in accordance with the Project Development Timeline formally set out in Paragraph 3
above, The failure of the Developer to meet any of the dates set forth in the Project
Development Timeline shall constitute a material breach of this Development Agreement.
5, In the event Developer fails to commence construction, as deseribes herein, on or
before the deadline, as provides for above,Anril 7. 2006. the City shall pnr, ide the Developer
with (I) ,'..ritteR ~Notice of the breach describing the breaoh aRa (2) a specifiecl amouRt of time
withiR whieh te eHre the breaeh or if sHeh <Jure reqHires FRElre thllfl fineeR (IS) says to eOFRJ31ete,
sl:leh additional time liS reasonably requirecl proyided Developer eomAleaees eure within five (5)
days from reeeipt of Retiee, In the eyeRt the De'/eloper E1ees RElt eare tRe bread'!. wit-hin the tilHe
previcled fer iR the Netiee, the City shall ha':l:l the right to!!ive Develoner notice that it is
immediatelv~ (1)rescindlng the sale of the Property, (2) retainlngthe Cash Deposit in addition to
the Purchase Price paid for the Property by the Purchaser, and (3) retaining each of the Fifteen
Thousand and no/lOO Dollar ($15,000,00) extension payments described above, If the sale of
the property is rescinded the City shall be entitled to retain the Purchase Price. the Cash Deposit
and the extension payments and the peveloper hereby agrees to reconvey the Property to the
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City by appropriate documents of conveyance approved by the City. Upon commencement of
construction by Developer, the right of rescission shall terminate and the City shall release the
termination right by execution and delivery of a quit claim deed to the Property. To commence
construction, Developer must commence construction of foundation footings and foundation, at a
cost of not less that $100,000, and must enter into a construction loan in an amount sufficient to
fund, together with Developer's equity, the completion of construction,
In the event of breach of this Development Agreement, other than a breach of the
construction commencement date, the City shall provide Developer with (1) written notice of the
breach describing the breach and (2) a period of fifteen (15) days within which to cure the
breach, In the event Developer does not cure the breach within the said tfl.i.!:trfifteen (I5) day
period, the City shall have the right to: (1) draw upon the Fifteen Thousand and/no Dollars
($15,000,00) Cash Deposit, (2) retain each of the Fifteen Thousand and nollOO Dollars
($15,000,00) extension payments described above, and (3) seek. specific performance of this
Agreement by Developer.
6, The Notice provided for in Paragraph 5 shall be sent to:
Rock Creek Designers & Builders, LLC
16817 Duluth Avenue, SE
Prior Lake, MN 55372
7, If Developer meets the completion construction date, eacR of tRe FifteeR
Thousand IHld noilOO Dollars ($15,000,00) extension l3aymeflts described above sRall be
returned to DeveI0f.leF, f.lrsyiaea, Rswever, the Fifteen Thousand and noll 00 Dollars
($15,000,00) Cash Deposit shall continue to be held by the City and reduced, to tRe eRtefltin the
event of Develooer's default. in an amount determined by the City, atin its sole discretion, until
the final certificate of occupancy is issued, at which time the letter of creaitall or. if aoolicable.
the remainin!.! amount of the Cash Deoosit shall be released,
For purposes of this Agreement, the construction completion date shall be June 7. 2007.
which is fourteen (14) months after the date Developer is required to commence construction,
Thereafter. the Developer shall have sixty (60) days to obtain a final certiJicate of occupancyJor
the Property, Developer agrees that, upon tbe oonstruotion oompletion date, on Mav 1. 2006.
Developer shall lease the City-owned parking lot located adjacent to the Property. If Develooer
intends to utilize the Citv-owned oarkin!.! lot for construction of the buildin!.! Drior to Mav I.
2006. the Lease shall start on the date of such use.
On Mav 1. 2007. or earlier as required in Ihis paragraph. the Developer shall execute and
deliver to the City two (2) originals of the Parking Lot Lease, attached hereto as Exhibit 4, to the
City OR tbe esastmetisa eeml3letioR date and the City shall execute the two (2) originals and
return one (1) fully-signed original to Developer within five (5) days of the construction
completion date,
8. Both oarties acknowledge that thev have been reoresented bv le!.!al counsel in
connection with the acquisition of the Property, this Development Agreement and the Parking
Lease, Le!.!al counsel for the oarties have both been involved in drafting this Agreement,
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-[ Deleted: the date that Developer may
I obtain a temporary certificate of
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9, This A2:reement shall be recorded a2:ainst the ProDertv and released UDon issuance
of the final Certificate of Occuoancv,
10. This A2:reement shall survive the closin2: on the sale of the ProDertv and the
deliverv of the deed to the Develooer and shall be enforceable after the closin2: in accordance
with the terms and conditions contained herein. The doctrine of mer2:er shall not aDDlv to this
A2:reement.
l.L-Ihe Developer shall indemnify, defend and hold the City, its City Council,"
agents"employees, attorneys and representatives harmless against any and all claims, demands,
actions, suits, proceedings, liens, losses, costs, expenses, obligations, liabilities, damages,
recoveries or deficiencies, including interest, penalties, and attorneys' fees, that the City incurs
or suffers, which arise out of, result from or relate to this Development Agreement. Nothing
herein shall require Developer to indemnify, defend or hold the City harmless from any
intentional tort, reckless or negligent acts of the City or its employees, representatives and
agents.
lb This Developmerit Agreement may not be assigned by Developer, other than to"
the affiliate of Developer which will develop the Property, without the prior written consent of
the City, The City is not obligated for any reason to consent to an assignmentJl, If any portion,
section, subsection, sentence, clause, paragraph, or phrase of this Development Agreement is
declared invalid by a court of competent jurisdiction, such decision shall not affect the validity of
the remaining portion of this Development Agreement.
H.. There shall be no amendments to this Development Agreement unless in writing,
signed by the parties and approved by a resolution of the City Council.
15, This Development Agreement shall be governed by the laws of the State of
Minnesota.
~Developer shall not be in default under this Agreement or the Purchase-
Agreement for the Property due to delays caused by acts of God, acts of riot or terrorism,
weather conditions which delay construction, shortages of material and/or labor, delays caused
by entities or persons over whom or conditions over which Developer has no control.
CITY OF PRIOR LAKE
By:
Frank Boyles, City Manager
By:
Jack Haugen, Mayor
DN: 256930
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"I)eleted: _________J
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line: 0.5", Numbered + Level: 1 +
Numbering Style: 1, 2, 3, ... + Start
at: 1 + Alignment: Left + Aligned at:
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0.5", Tabs: Not at 0.5"
DEVELOPER:
ROCK CREEK DESIGNERS & BUILDERS,
LLC
By:
Its:
STATE OF MINNESOTA )
) ss.
COUNTY OF SCOTT )
The foregoing instrument was acknowledged before me this _ day of
, 2005, 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 day of
, 2005, by , President of Rock Creek Designers &
Builders, a Minnesota limited liability company, on its behalf,
Notary Public
DRAFTED BY:
City of Prior Lake
16200 Eagle Creek Avenue SE
Prior Lake, Minnesota 55372
DN: 256930
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11
r...........----....,....,....,---...---'-...----'--'-'-J
Deleted: '
~...._----_._...._.._--_.._......__.......__..._-_...._--
EXHffiIT 1
PURCHASE AGREEMENT
ON: 256930
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12
EXHIBIT 2
AGREEMENT REGARDING THE PURCHASE OF CITY ON PROPERTY
DN: 256930
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13
DN: 256930
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EXHffilT 3
DEVELOPER'S MAY 27, 2005 PROPOSAL
14
EXHIBIT 4
PARKING LOT LEASE
DN: 256930
STPL-Word:~
15
LEASE AGREEMENT
THIS AGREEMENT made and entered into this 3rd day of October, 2005, by and between
Rock Creek Designers and Builders, LLC (hereinafter collectively referred to as 'Tenant'? and
the CITY OF PRIOR LAKE, a Minnesota municipal corporation (hereinafter referred to as
"Landlord').
RECITALS
Whereas, Landlord presently owns certain property located in the City of Prior Lake, County of
Scott, Minnesota legally described as Block 3, Lot 7, Town of Prior Lake (hereinafter "Leased
Premises'), as identified in Exhibit A.
Whereas, it is the intention and desire of the Landlord and Tenant to enter into a Lease
Agreement whereby Tenant will lease said Lease Premises from Landlord upon the terms and
conditions set forth in this Agreement.
IT IS MUTUALLY AGREED:
(1) Recitals. The foregoing Recitals are made a part of this Agreement.
(2) Leased Premises. Landlord hereby leases to Tenant and Tenant hereby rents of and
from Landlord the Lease Premises, subject to the terms and conditions of this Lease
Agreement.
(3) Term. The term of this Lease Agreement shall be for a period of five (5) years, effective
the 1 st day of April, 2006, and terminating on the 31 st day of March, 2011, both dates
inclusive. Provided however, that this Lease Agreement may be terminated by the
Landlord by providing six (6) months written notice to the other party. This lease may be
renewed in one year increments at the mutual agreement of the Landlord and Tenant.
(4) Rent. Tenant shall pay to Landlord, payable at the address designated in this Lease
Agreement for service of notice upon Landlord, or at such other place as Landlord may
designate in writing to Tenant, as rent, exclusive of any other charge provided for to be
paid by Tenant in this Lease.
(a) For the lease month, the sum of One-thousand dollars ($1,000.00) per month,
payable on or before the 15th of each month. Landlord may, at its option, increase
the rent on each renewal, beginning April 1, 2011, Landlord shall notify Tenant in
writing of any increase not less than thirty (30) days prior to August 1 of the year of
the increase.
(b) If the termination date of the Lease falls on a date other than the first day of a
month, Tenant shall pay to Landlord on said date rental for the number of days
remaining in the calendar month, including said first date computed at a daily rate
ON: 267376
of one-thirtieth (1/30) of the monthly rental hereinafter specified. "Lease year" shall
mean the twelve (12) month period beginning on the first day of the term and each
succeeding and consecutive twelve (12) month period thereafter.
(5) Environmental Matters. Landlord represents and warrants that Landlord has no
knowledge of the presence or the release of any hazardous materials as defined under
the State and Federal Environmental Protection Laws nor has Landlord received any
notice of any such violations from any entity, including the Minnesota Pollution Control
Agency and the Federal Environmental Protection Agency.
(6) Use of Premises.
6.1 Tenant Use. Tenant shall use the leased premises as a parking lot during the
term of the Lease. Tenant shall have full use of the lot Monday through Friday from 7:30
a.m. to 6 p.m., and Saturdays from 8 a.m. to 12 p.m. (noon). During non-business
hours and holidays, the lot shall be available for use by the public.
6.2 Public Use. During the term of the lease, the Tenant shall reserve four (4)
parking stalls along Main Avenue for the use of the public. Such parking stalls shall be
signed as available to the public and limited to two (2) hour parking.
(7) Real Estate Taxes and Assessments. Landlord shall pay all real estate taxes as
applicable and all installments of special assessments, and any taxes in lieu thereof,
which may be levied upon or assessed against the Lease Premises during the term of
this Lease.
(8) Care of Leased Premises; Maintenance and Repairs. Tenant shall maintain the
Leased Premises in a clean and sanitary condition as its intended use as a private
parking lot and shall be responsible to return the premises to Landlord at the conclusion
of this Lease in as good condition and repair as existed at the commencement of this
Lease. Tenant shall have the right to re-stripe and realign the parking spaces for better
efficiency subject to the approval of the City's Public Works Director.
(9) AssiQnment or Sublease. Tenant may not assign or transfer this Lease, or sublease the
whole or any part of the Leased Premises, without the prior written consent of the
Landlord.
(10) Liabilitv Insurance.
10.1 Tenant shall maintain liability insurance on the premises naming Landlords as
co-insureds in the amount of $600,000 during the term of this Lease and shall hold the
Landlord harmless from any claims arising out of Tenant's use of the Leased Premises.
Tenant shall provide Landlord with a copy of the insurance certificate. In no case does
City, by virtue of entering into this Lease Agreement with Tenant, waive the protections
and statutory limitations provided by Minnesota Statutes Chapter 466. Landlord shall
ON: 267376
2
maintain liability insurance on the Leased Premises in an amount not less than $600,000
naming Tenant as additional insured.
10.2 The Landlord and Tenant each hereby releases the other, to the extent of its
insurance coverage, from any and all liability for any loss or damage caused by fire or
any of the extended coverage casualties or any other casualty insured against, even if
such fire or other casualty shall be brought about by the fault or negligence of the other
party, or any persons claiming under it.
10.3 Nothing in this Lease shall be deemed to release either party hereto from liability
for damages resulting from the fault or negligence of said party or its agents, except that
in no event does City waive the statutory protections and limitations provided for in
Minnesota Statutes Chapter 466 or any other State and/or Federal laws limiting
governmental liability.
(11) Relationship of the Parties. Nothing contained in this Lease shall be deemed or
constructed by the parties hereto or by a third party to create the relationship of principal
and agent or of partnership or of joint venture or of any association whatsoever between
Landlord and Tenant. It shall be expressly understood and agreed that neither the
method of computation of rent nor any other provisions contained in this Lease
Agreement nor any act or acts of the parties hereto shall be deemed to create any
relationship between Landlord and Tenant other than the relationship of Landlord and
Tenant.
(12) Notices. All notices and communications of similar legal import from either Landlord or
Tenant to the other, shall be in writing and shall be considered to have been duly given
or served if sent by first class certified or registered mail, return receipt requested,
postage prepaid, to the other party or parties at its address set forth below, or to such
other address as such party may hereafter designate by written notice to the other party
or parties:
If to Landlord:
Frank Boyles, City Manager
City of Prior Lake
16676 Fish Point Road
Prior Lake, MN 55372
If to Tenant:
Dan Schaefer
Rock Creek Designers and Builders, LLC.
16817 Duluth Avenue
Prior Lake, MN 55372
(13) Importance of Each Covenant. Each covenant and agreement on the part of one party
is understood and agreed to constitute an essential part of the consideration for each
covenant and agreement on the part of the other party.
ON: 267376
3
(14) Waiver. The receipt of rent by Landlord with knowledge of any breach of this Lease by
Tenant or of any default on the part of Tenant in the observance or performance of any
of the obligations or covenants of this Lease shall not be deemed to be a waiver of any
provision of this Lease. Payment of rent by Tenant with knowledge of any breach of this
Lease by Landlord of any default on the part of Landlord in the observance or
performance of any of the obligations or covenants of this Lease Agreement shall not be
deemed to be a waiver of any provisions of this Lease. No failure on the part of any
Landlord or Tenant, as the case may be, to enforce any obligations or covenant herein
contained, or any waiver of any right hereunder by Landlord or Tenant, as the case may
be, unless in writing, shall discharge or invalidate such obligation or covenant or affect
the right of Landlord or Tenant, as the case may be, to enforce the same in the event of
any subsequent breach or default.
(15) Invaliditv. If any part of this Lease or any provision hereof shall be adjudicated by a
Court of competent jurisdiction to be void or invalid, then the remaining provisions hereof
not specifically so adjudicated to be invalid, shall be executed without reference to the
part or portion so adjudicated, insofar as such remaining provisions are capable of
execution.
(16) GoverninQ Law. This Lease Agreement shall be subject to and governed by the laws of
the State of Minnesota and all questions concerning the meaning and intention of the
terms of this Lease and concerning the validity hereof and questions relating to
performance hereunder shall be adjudicated and resolved in accordance with the laws of
that State.
(17) Definition of Landlord and Tenant Joint and Several Liabilitv. The word "Landlord"
and "Tenant" used herein shall include the plural thereof, and the necessary changes
required to make the provisions hereof apply to corporations, partnerships, associations
or men or women shall be construed as if made. If two or more parties are referred to
collectively under one designation, the liability of each shall be joint and several.
(18) HeadinQs. The headings of the paragraphs and subparagraphs of this Lease Agreement
are for convenience of reference only and do not form a part hereof and shall not be
interpreted or construed to modify, limit or amplify such paragraphs and subparagraphs.
(19) Parties in Interest. This Lease Agreement shall inure to the benefit of and be binding
upon the heirs, executors, administrators, successors and assigns of Landlord and
Tenant.
(20) Counterparts. This Lease Agreement may be executed in any number of counterparts,
each of which shall be deemed to be an original, but all of which shall constitute one and
the same instrument.
DN: 267376
4
TENANT:
Dan Schaefer, President
Rock Creek Designers and Builders, LLC
LANDLORD:
CITY Of PRIOR LAKE
Jack Haugen, Mayor
frank Boyles, City Manager
DN: 267376
5