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HomeMy WebLinkAbout05(L) - Adoption of Resolution Authorizing the Mayor and City Manager to enter into a Preliminary Development Agreement with The Beard Group, Inc. ReportDMNORTH #7131330 v2 1 PRELIMINARY DEVELOPMENT AGREEMENT THIS PRELIMINARY DEVELOPMENT AGREEMENT (this “Agreement”) is entered into this ____ day of _________, 2020, by and among the City of Prior Lake, a Minnesota municipal corporation (the “City”), and The Beard Group, Inc., a Minnesota corporation (the “Developer”): WITNESSETH: WHEREAS, the City desires to promote development of certain property located on the corner of Main Avenue SE and Pleasant Street SE, in the City of Prior Lake, Minnesota, which property is depicted on Exhibit A attached hereto (“Property”); and WHEREAS, Developer, or a special purpose entity to be formed by the Developer for the purpose of completing this project, is interested in developing a market rate apartment building on the Property (“Development”); and WHEREAS, the City and Developer are interested in discussing and further planning for the Developer’s proposal for the Development; and WHEREAS, the City and Developer are interested in obtaining site control over the Property; and WHEREAS, Developer has indicated to the City that it will seek business subsidy assistance from the City to make the Development feasible; and WHEREAS, the City is willing to discuss with Developer available public subsidies for the Development; and WHEREAS, various land use, zoning, and subdivision issues and actions related to the Development and the Property are required to be approved by the City in order to fac ilitate the Development by the Developer; and WHEREAS, the City agrees to cooperate with the Developer to review, process and consider all as required by law various land use, zoning, and subdivision issues and actions related to the Development and the Property in order to facilitate the Development by the Developer; and WHEREAS, the City is willing to consider and Developer is desirous to undertake the Development if (i) the City and/or Developer can obtain site control of the Property, (ii) a satisfactory agreement can be reached regarding the parties obligations with respect to the Development; (iii) satisfactory mortgage and equity financing, or adequate cash resources for the Development can be secured by Developer; and (iv) the feasibility and soundness of the Development and other necessary preconditions have been determined to the satisfaction of each of the parties. NOW, THEREFORE, in consideration of the foregoing and of the mutual covenants and obligations set forth herein, the parties agree as follows: DMNORTH #7131330 v2 2 1. Future Negotiations. The parties agree to continue negotiations in an attempt to formulate a definitive plan for the following: (a) Obtaining site control over the entirety of the Property; (b) Review and consideration of the proposed Development, including all design, land use, zoning and subdivision approvals and any necessary development agreements or contracts; and (c) Other terms and conditions of this Agreement. 2. Statement of Intent. Although not conclusive or binding on either party, it is the intention of the parties that this Agreement: (a) documents the present understanding and commitments of the parties; (b) will lead to negotiation and execution of a mutually satisfactory development agreement or contract prior to the termination date of this Agreement; and (c) will lead to appropriate land use, zoning, and subdivision application or applications. The development agreement or contract (together with any other agreements entered into between the parties hereto contemporaneously therewith) when executed and any land use, zoning, and subdivision approvals, will supersede all obligations of the parties hereunder. 3. Term; Duties. (a) During the term of this Agreement, the City agrees to: (i) Obtain site control over 16306 Main Ave SE, Prior Lake, MN 55372 (“Parcel 1”); (ii) Proceed to seek all necessary information with regard to the anticipated public costs, if any, associated with the Development. (iii) Should negotiations be successful, enter into a development agreement with the Developer for the Development. (b) During the term of this Agreement, Developer agrees to: (i) Obtain site control over 16298 Main Avenue SE, Prior Lake, Minnesota (“Parcel 2”) and 4656 Pleasant Street SE, Prior Lake, Minnesota (“Parcel 3”); (ii) Conduct a due diligence review of the Property, including without limitation: title, survey, environmental (Phase I & Phase II reports), soils, and market studies. (iii) Develop and submit its detailed proposal, including the plans and specifications, for development of the Development. DMNORTH #7131330 v2 3 (iv) Obtain approval by the City (including its Engineer, Planning and Inspection Department, and any other governing authority) for approval of the site plan, exterior elevations and finishes, and PUD approval. (v) Obtain any other necessary governmental approval from any governing authority. (vi) Obtain financing on terms acceptable to Developer, including but not limited to public subsidies (such as pay-as-you-go TIF in a mutually agreeable amount), private loans and equity investment. (vii) Should negotiations be successful, enter into a development agreement with the City for the Development. 4. Business Subsidies; TIF. (a) The City understands that the Developer is seeking business subsidy assistance from the City. During the term of this Agreement, Developer shall: (i) Submit to the City a design proposal to be reviewed by the City showing the location, size, and nature of the proposed Development, including layouts, renderings, elevations, and other graphic or written explanations of the Development. The design proposal shall be accompanied by a proposed schedule for the starting and completion of the Development. (ii) Submit an over-all cost estimate for the design and construction of the Development. (iii) Submit a time schedule for the Development. (iv) Undertake and obtain such other preliminary economic feasibility studies, income and expense projections, and such other economic information as Developer may desire to further confirm the economic feasibility and soundness of the Development. (v) Submit to the City the Developer’s financing plan showing that the proposed Development is financially feasible. (vi) Furnish satisfactory, financial data to the City evidencing Developer’s ability to undertake the Development. (vii) Furnish information in its possession and assist the City with obtaining all available business subsidy assistance. (b) Developer understands that the Tax Increment Financing sought for the proposed Development must be obtained as outlined by law. The City agrees in any development agreement or contract entered into as contemplated herein that the City will review and consider such financing as allowed by law, but no provision shall be DMNORTH #7131330 v2 4 construed as an affirmative approval of such financing until such time that a separate Tax Increment Financing agreement is entered into by both parties. 5. Feasibility. It is expressly understood that execution and implementation of any development agreement or contract (together with any other agreements entered into between the parties hereto contemporaneously therewith) and any land use, zoning and subdivision approvals shall be subject to: (a) A determination by the City in their sole discretion that their undertakings are feasible based on (i) satisfaction of City Code requirements; (ii) the purposes and objectives of any development plan created or proposed for the Development; and (iii) the best interests of the City. (b) A determination by Developer that the Development is feasible and in the best interests of Developer. 6. Effective Date; Expiration. This Agreement is effective from the date hereof through ___________, 20___. After such date, neither party shall have any obligation hereunder except as expressly set forth to the contrary herein. 7. Costs; Escrow. Developer shall be solely responsible for all costs incurred by Developer. In addition, upon the full execution of this Agreement, the Developer will reimburse the City the sum of $5,000.00 per quarter up to $25,000 for their Administrative Costs (as defined below) for its evaluation of the Developer’s proposal; provided, however, if this Agreement is terminated, the City shall not be entitled to any further reimbursements. For the purposes of this Agreement, the term “Administrative Costs” means out of pocket costs incurred by the City, together with staff and consultants (including engineering, legal, financial adviser, environmental advisor, planning advisor, etc.), all attributable to or incurred in connection with the review of the development agreement or contracts (together with any other agreements entered into between the parties hereto contemporaneously therewith) and review and approvals of any land use, zoning and subdivision applications for the Property, the negotiation and preparation of the definitive development agreement, and other documents and agreements in connection with the Development. Any application or administration fee generally collected by the City for applications such as the Developer may file in relation to the Development will not be collected but only to the extent that the costs to be paid by those fees are instead paid by this escrow. 8. Termination. This Agreement may be terminated upon thirty (30) days written notice by either the City to Developer, or Developer to the City, if: (a) An essential precondition to the execution of a contract cannot be met; or DMNORTH #7131330 v2 5 (b) if, in the respective sole discretion of the City or Developer, an impasse has been reached in the negotiation or implementation of any material term or condition of this Agreement. 9. Sole Developer. Developer is designated as sole developer of the Development of the Property during the term of this Agreement. Once the City obtains site control over Parcel 1, they agree not to market Parcel 1 or to make, accept, negotiate, or otherwise pursue any other offers for sale or purchase of Parcel 1 until this Agreement expires or is terminated pursuant to Section 8 herein. 10. Severability. If any portion of this Agreement is held invalid by a court of competent jurisdiction, such decision shall not affect the validity of any remaining portion of the Agreement. 11. Breach; Waiver. In the event any covenant contained in this Agreement should be breached by one party and subsequently waived by another party, such waiver shall be limited to the particular breach so waived and shall not be deemed to waive any other concurrent, previous or subsequent breach. 12. Notice. Notice or demand or other communication between or among the parties shall be sufficiently given if sent by mail, postage prepaid, return receipt requested or delivered personally: (a) City: City of Prior Lake 4646 Dakota St. SE Prior Lake, MN 55372 Attn: Casey McCabe (b) Developer: The Beard Group, Inc. 750 Second St. NE Hopkins, MN 55343 Attn: William H. Beard 13. Counterparts. This Agreement may be executed simultaneously in any number of counterparts, all of which shall constitute one and the same instrument. 14. Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the state of Minnesota. Any disputes, controversies, or claims arising out of this Agreement shall be DMNORTH #7131330 v2 6 heard in the state or federal courts of Minnesota, and all parties to this Agreement waive any objection to the jurisdiction of these courts, whether based on convenience or otherwise. 15. Additional Actions. The parties hereto understand that additional and separate actions, for which no obligation is created hereunder, will be required before any of the parties are obligated to take various actions with respect to the Development. Those actions include, but are not limited to: (a) Obtaining site control of the entirety of the Property; (c) Zoning, comprehensive plan, and subdivision approvals for any land use or development proposed by Developer; and (d) Review of any Tax Increment Financing arrangement, or other business subsidy, as required by law. 16. Incorporation. The Recitals set forth in the preamble to this Agreement and the Exhibits attached to this Agreement are incorporated into this Agreement as if fully set forth herein. [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK] DMNORTH #7131330 v2 7 IN WITNESS WHEREOF, the Developer and City have caused this Agreement to be duly executed as of the day and year first above written. DEVELOPER: THE BEARD GROUP, INC. By: Its: DMNORTH #7131330 v2 8 CITY: CITY OF PRIOR LAKE, MINNESOTA By: Kirt Briggs Its: Mayor And By: Jason Wedel Its: City Manager DMNORTH #7131330 v2 A-1 EXHIBIT A DEPICTION OF PROPERTY [Insert Depiction]