HomeMy WebLinkAbout9B - Keyland Homes
MEETING DATE:
AGENDA #:
PREPARED BY:
REVIEWED BY:
AGENDA ITEM:
DISCUSSION:
FISCAL IMPACT:
ALTERNATIVES:
CITY COUNCIL AGENDA REPORT
SEPTEMBER 21, 1998
9B
JANE KANSIER, PLANNING COORDINATOR
DONALD RYE, PLANNING DIRECTOR
CONSIDER APPROVAL OF DEVELOPERS AGREEMENT
WITH H & S, L.L.C. (KEYLAND HOMES) CONCERNING
THE PURCHASE OF 0.5 ACRES IN THE BUSINESS OFFICE
PARK
Historv: On January 5, 1998, the City Council approved a
modification to TIF District 2-1 which provided for the expansion or'
the District. The expansion was necessary to accommodate the
acquisition of approximately one-half acre of land by H & S, LLC
(Keyland Homes) adjacent to its existing site.
Current Circumstances: The next step in the process is to approve the
developers agreement (see attached). Following execution of the
developers agreement, the sale can be completed.
The Issues: There do not appear to be any outstanding issues with
respect to this developer's agreement.
Conclusion: Approval of the developer's agreement is necessary to
complete the sale of this property. This agreement is consistent with
the City Council's approval of the expansion of the TIF district.
Cost Recoverv Analvsis: The sale of this property will allow the
expansion of the Keyland Homes building. If the developer completes
the project prior to December 15, 2003, the TIF district expiration
date, he is eligible for a partial reimbursement of the developer
payments. However, this addition will result in an increased tax base
to the City, the County and the School District. If the developer fails
to complete the project by 2003, there will be no reimbursement of the
developer payments.
Bud!!et Imoact: The City budget will not be affected by approval of
the developers agreement.
The City Council has three alternatives:
162/)~8e~~'f>J~etff~~~?rs,E" Prior Lake, Minnesota 55372-1714 / Ph, (612) 447-4230 / Fax (612) 447-4245
AN EQUAL OPPORTUNITY EMPLOYER
RECOMMENDED
MOTION:
REVIEWED BY:
I :\98files\98tif\horkey98 ,doc
1. Approve the developers agreement as presented.
2. Approve the developers agreement with specified modifications
3. Do not approve the developers agreement
Motion to approve the developers agreement as submitted and
authorize execution 1 the agreement
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'1;'
RUG-24-1998 15:36 FROM
TO [12]
P.02
...~ADYAIICE
J~ ftJI'DevekJpmeftt, lilt.
TO:
Don Rye
FROM:
Roger Guenette
DATE:
August 24, 1998
RE:
Summary of Land Sale Transaction with Gary Horkey (Keyland Homes)
In October 1993, the EDA conveyed approximately 1.7 acres of property to Gaxy Horkey as a site
for the Keyland Homes development. The uses of funds for the project were as follows: ,
Land & Infrastructure
Administrative Expense
Interest ExpenSe .
TOTAL
$160,000
l5~000
53~15S
$228,155
To finance these costs the sources of funds were as follows:
Developer Payments
TIF Revenue
TOTAL
$ 3,500
225.000
$228,500
. At the present time the BDA is conveying' an additional.5 acres of property to Mr. Horkey to
facilitate a pOtential expansion of Keyland Homes. The uses offunds are as follows:
Land & Infrastructure
Administrative Expense
Interest Expense
TOTAL
$46,754
9,500
10.277
$66,531
To finance these costs, the sources of funds are as follows:
Developer Payments
TOTAL
$66531 *
$66,531
It In the event that Mr. Horkey implement~ a facility expansion within the remaining timeframe of the
existing TIF district (2003), he would be eligible for a partial reimbursement of the proposed developer
payments.
Development
and Finance
Specialists
CORpORAT!: OFI'IC.S:
P.O. Box 48269
Mpls.. MN 55448-0269
Phone: (012) 7>>7741
r:ox: (612) 755-5393
P.O, Box ~027
Mcnkoto. MN 56002-30'-7
Pl;1one: (507) 387-71 17
Fox: (507) 387-61 15
TOTRL P.02
DEVELOPMENT AGREEMENT
BY AND BETWEEN
THE CITY OF PRIOR LAKE
AND
H & S, L.L.C.
Initiated: October, 1993
Amended and
Restated: March, 1998
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TABLE OF CONTENTS
ARTICLE I DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
SECTION 1.1 DEFINITIONS . . . . , . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .". . . . . . . . . . . . . . . . . . . . . . 2
ARTICLE II REPRESENTATIONS AND WARRANTIES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
SECTION 2.1 REPRESENTATIONS AND WARRANTIES OF THE CITY. . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
SECTION 2.2 REPRESENTATIONS AND WARRANTIES OF THE DEVELOPER ..................... 5
ARTICLE III UNDERTAKINGS BY DEVELOPER AND CITY. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
SECTION 3,1 SALES AND PURCHASE OF THE DEVELOPMENT PROPERTY. . . . . . . . . . . . . . . . . . . . . . . 7
SECTION 3,2 PURCHASE PRICE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
SECTION 3,3 TITLE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
SECTION 3A.COST ESTIMATE RELATING TO ACQUISITION OF THE DEVELOPMENT
PROPERTY, INFRASTRUCTURE, SITE IMPROVEMENTS AND SOIL CORRECTION .................. 7
SECTION 3,5 ASSESSMENT AGREEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
SECTION 3.6 REIMBURSEMENT: DEVELOPER PAYMENTS AND TAX INCREMENT REVENUES ........ 8
SECTION 3,7 GUARANTEE OF PAyMENTS...... ... . . . ., .., . . . . . . ... ..... . .. .. . . .... .... . 9
SECTION 3,8 TAXES AND SPECIAL ASSESSMENTS ........................................ 9
SECTION 3,9 SUBORDINATION. . , . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
ARTICLE IV EVENTS OF DEFAULT .......................... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11 .
SECTION 4,1 EVENTS OF DEFAULT DEFINED . . . . . . . . . . . . . . . . . . . , . , , , , . . . . . , . . . . . . . . , , . . 11
SECTION 4,2 REMEDIES ON DEFAULT .............,.........",....,........,......... 11
SECTION 4,3 NO REMEDY EXCLUSIVE ......,....................".,...............". 12
SECTION 4.4 NO IMPLIED WAIVER ...,.,................,.,.......,.....,............. 12
SECTION 4,5 AGREEMENT TO PAY ATTORNEY'S FEES AND EXPENSES ,........ . . . . . . . . . . , . . . 12
SECTION 4,6 INDEMNIFICATION OF CITY. . . . . . ... . . . . . .. . . . . , . . , . . . . . . . . .. .. . ..... . . . . .. 12
ARTICLE V INSURANCE . . . . . , , . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . , . . . 14
SECTION 5,1 INSURANCE. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
ARTICLE VI ADDITIONAL PROVISIONS ...........................,..............,........ 15
SECTION 6,1 RESTRICTIONS ON USE ..... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
SECTION 6,2 CONFLICTS OF INTEREST ................................................ 15
SECTION 6,3 TITLES OF ARTICLES AND SECTIONS ....................................... 15
SECTION 6.4 NOTICES AND DEMANDS ...........................................,.... 15
SECTION 6,5 COUNTERPARTS ....................................................... 15
SECTION 6.6 LAW GOVERNING ...................................................... 15
SECTION 6.7 SEVERABILITY. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
SECTION 6,8 PROMPT PAYMENT OF SUBCONTRACTORS.. .... . .... ...... . ... ........... .. .
ARTICLE VII DEVELOPER'S OPTION TO TERMINATE AGREEMENT .............................. 16
SECTION 7.1 THE DEVELOPER'S OPTION TO TERMINATE .................................. 16
SECTION 7.2 ACTION TO TERMINATE ................................................. 16
SECTION 7.3 EFFECT OF TERMINATION ................................................ 16
SECTION 7.4 LIMITATION OF DAMAGES. ................................................ 16
EXHIBIT A DESCRIPTION OF DEVELOPMENT DISTRICT ...................................... A-1
EXHIBIT B DESCRIPTION OF DEVELOPMENT PROPERTY. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B-1
EXHIBIT C TAX INCREMENT FINANCING PLAN. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . G-1
EXHIBIT D ASSESSMENT AGREEMENT ................................................... D-1
EXHIBIT E ACQUIRED PROPERTY DEED .................................................. E-1
EXHIBIT F LEASE AGREEMENT WITH KEYLAND HOMES, INC. .................................. F-1
EXHIBIT G GUARANTEE OF DEVELOPER. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . G-1
DEVELOPMENT AGREEMENT
THIS AGREEMENT, made as of the day of , 1998, by and between the City of Prior Lake,
Minnesota (the "City"), a Minnesota municipal corporation and H & S, L.L.C., a Minnesota limited liability company,
(the "Developer"), "
WITNESSETH:
WHEREAS, pursuant to Minnesota Statutes, Section 469.124 through 469.134 the City has formed City
Development District No.2 (the "Development District") the legal description of which is attached hereto as Exhibit
A and has adopted a development program therefore (the "Development Program"); and
WHEREAS, pursuant to the provisions of Minnesota Statutes, Section 469.174 through 469.179 as amended,
(hereinafter the "Tax Increment Act"), the City has created, within the Development District, an Economic
Development District No. 2-1 (the "Tax Increment District"), the legal description of which is attached hereto as
Exhibit B and adopted a tax increment financing plan modification on January 5, 1998, therefore (the "Tax
Increment Plan") which provides for the use of tax increment financing in connection with development within the
Development District; and
WHEREAS, the City will request the County to certify the original tax capacity of the Tax Increment District
pursuant to Section 469.177 of the Tax Increment Act; and
Whereas, the City has agreed to sell and the Developer has agreed to purchase the Development Property
in consideration of the terms and conditions contained in this Agreement; and
WHEREAS, in order to achieve the objectives of the Development Program and particularly to make the land
in the Development District available for development by private enterprise in conformance with the Development
Program, the City has determined to assist the Developer with the financing of the Development Property and Site
Improvements (as defined herein) on the Development Property (as defined herein) as more particularly set forth
in this Agreement; and
WHEREAS, the City believes that the development of a certain Project (as defined herein) and the construction
of the Project, and fulfillment of this Agreement are vital and are in the best interests of the City will result in
increased employment and preservation/enhancement ofthe tax base and is in accordance with the public purpose
and provisions of the applicable state and local laws and requirements under which the Project has been
undertaken and is being assisted.
NOW, THEREFORE, in consideration of the premises and the mutual obligations of the parties hereto, each
of them does hereby covenant and agree with the other as follows:
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ARTICLE I
DEFINITIONS
Section 1.1. Definitions. All capitalized terms used and not otherwise defined herein shall have the following
meanings unless a different meaning clearly appears from-the context:
Acauired Propertv Deed means a warranty deed, substantially in the form of the deed attached to this
Agreement as Exhibit E-1, used to convey the Development Property from the EDA to the Developer;
Aareement means this Agreement, as the same may be from time to time modified, amended or supplement-
ed;
Business Dav means any day except a Saturday, Sunday or a legal holiday or a day on which banking
institutions in the City are authorized by law or executive order to close;
Certificate of Completion means the certification in the form of the certificate attached hereto as Exhibit A of
the Acquired Property Deed and hereby made a part of this Agreement, provided to the Developer pursuant to
Section 4.2 of this Agreement;
City means the City of Prior Lake, Minnesota;
Countv means Scott County, Minnesota;
Developer means H & S, L.L.C.;
Development District means the real property described in Exhibit A;
Development Proaram means the development program approved in connection with the Development
District;
Development Propertv means the real property described in Exhibit B of this Agreement;
EDA means the Prior Lake Economic Development Authority;
Excess Tax Increment Revenues means annual Tax Increment Revenues generated from the Project in excess
of the revenues required to reimburse the City for funds advanced to write down the cost of Administration, Land
Acquisition and related Infrastructure improvements;
Infrastructure means the municipal utilities, roadways, grading and excavation improvements specified, bid
and contracted for by the City of Prior Lake within the Waterfront Passage Business Park;
Leaal and Administrative Expenses means the fees and expenses incurred in connection with the adoption
of the Tax Increment Financing Plan, preparation of this Development Agreement and ongoing Administration;
~vent of Default means any of the events described in Section 4.1;
Pavment Date means July 15, 1998, and each December 15 and July 15 of each year thereafter to and
including December 15, 2005; provided, that if any such Payment Date should not be a Business Day, the Payment
Date shall be the next succeeding Business Day;
Proiect means the approximate 18,000 square foot production/warehouse facility constructed in 1994, and
any future expansions of said facility to be located on the Development Property; .
Site Improvements means excavation, grading, filling, utility improvements and extensions, landscaping and
access and parking preparations;
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~tate means the State of Minnesota;
Tax Increments means the tax increments derived from the Tax Increment District created in accordance with
the provisions of Minnesota Statutes, Section ~69.177;
:Tax Increment Act means the Tax Increment Financing Act, Minnesota Statutes, Sections 469.174 through
469.179, as amended;
Tax Increment District means Economic Development District No. 2-1 established on September 20, 1993 and
modified on January 5,1998, on property legally described in the Tax Increment Financing District No. 2-1 Plan
attached as Exhibit C, qualified as an economic development district under the Tax Increment Act;
Tax Increment Financina Plan means the plan approved for the Tax Increment District;
Unavoidable Delavs means delays, outside the control of the party claiming its occurrence, which are the
direct result of strikes, other labor troubles, construction material shortages relating to building frame or envelope,
unusually severe or prolonged bad weather, acts of God, fire or other casualty to the Project and/or Site
Improvements, site conditions including the existence of environmental problems, litigation commenced by third
parties which, by injunction or other similar judicial action or by the exercise of reasonable discretion, directly
results in delays, or acts of any federal, state or local governmental unit which directly result in delays.
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ARTICLE II
REPRESENTATIONS AND WARRANTIES
Section 2.1. Representations and Warranties of the City. The City makes the following representations and
warranties:
(1) The City is a municipal corporation and has the power to enter into this Agreement and carry out its
obligations hereunder.
(2) The Tax Increment District shall be an "economic development district" within the meaning of Minnesota
Statutes, Section 469.174, Subdivision 12 and will be created, adopted and approved in accordance with the terms
of the Tax Increment Act.
(3) The development contemplated by this Agreement is in conformance with the development objectives
set forth in the Development Program and delineated in the Tax Increment Financing Plan attached hereto as
Exhibit C.
(4) The City has acquired the Development Property and transferred the Development Property to the EDA.
The EDA will convey title to the Development Property to the Developer for uses in accordance with the Plan and
this Agreement.
(5) The City is not a party to any unrecorded contract or agreement affecting the Development Property. that
will be binding on the Developer or that will prevent the Developer from completing, owning and operating the
Minimum Improvements as required by this Agreement.
(6) There are no claims, actions, suits or other proceedings outstanding to which the City is a party,
resolution of which could have a materially adverse effect on the Development Property, the Minimum
Improvements, or the transactions contemplated by this Agreement.
(7) The City has not incurred any obligation or liability (contingent to otherwise) for brokerage or finder's fee
or agent's commissions or other like payment in connection with this Agreement or the transaction contemplated
herein.
(8) The City has no knowledge of any requirements to construct pending on the Development Property to
accommodate storm water retention.
(9) To finance the costs of the activities to be undertaken by the City and Developer, the City proposes,
subject to the further provisions of this Agreement, to apply Tax Increment generated by the Tax Increment District
and other revenues identified within this Agreement, to reimburse public and private costs incurred in the
acquisition of the Development Property installation of Infrastructure and Legal and Administrative Expenses as
further provided in this Agreement.
(10) The City has not received any notice from any local, state or federal official that the activities of the
Developer or the City or third parties with respect to the Development Property or any immediately adjacent
property mayor will be in violation of any environmental law or regulation (other than those notices, if any, of which
the Developer has been notified). The City is not aware of any state or federal claim filed or planned to be filed
by any party relating to any violation of any local, state or federal environmental law, regulation or review
procedure, with respect to such property and the City is not aware of any violation of any local, state or federal
law, regulation or review procedure which would give rise to a valid claim under the Minnesota Environmental
Rights Act or other state or federal environmental statute.
(11) The City shall make findings required by Section 469.175, Subdivision 3, ofthe Tax Increment Financing
Act for the Tax Increment District, and set forth in writing the reasons and supporting facts for each determination.
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(12) The City will not unreasonably delay, withhold, or condition any consent or action requested of it by the
Developer or otherwise contemplated by this Agreement provided such consent or requested action complies with
all applicable local, state or federal laws or regulations or this Agreement.
Section 2.2. _ Representations and Warranties of the Developer. The Developer makes the following
representations and warranties:
(1) The Developer has power to enter into this Agreement and to perform its obligations hereunder and is
not in violation of any local, state or federal laws.
(2) The Developer is a duly organized limited liability company, validly existing under the laws of this State
and has full power and authority to enter into this Agreement and carry out the covenants contained herein.
(3) The Developer will cause the Project to be installed in accordance with the terms of this Agreement, the
Development Program and all local, state and federal laws and regulations (including, but not limited to, environ-
mental, zoning, energy conservation, building code and public health laws and regulations).
(4) Subject to Unavoidable Delays, the Developer will obtain or cause to be obtained, in a timely manner,
all required permits, licenses and approvals, and will meet, in a timely manner, all requirements of all applicable
local, state, and federal laws and regulations which must be obtained or met before the Project may be lawfully
installed.
(5) To the best of the Developer's knowledge after reasonable investigation, the Developer has not received
any notice or communication from any local, state or federal official that the activities of Developer or the City with
respect to the Development Property mayor will be in violation of any environmental law or regulation. As of the
date of the execution of this Agreement, Developer is aware of no facts the existence of which would cause it to
be in violation of any local, state or federal environmental law, regulation or review procedure which would give
any person a valid claim under the Minnesota Environmental Rights Act.
(6) The construction of the Project would not be undertaken by the Developer, and in the opinion of the
Developerwould not be economically feasible within the reasonably foreseeable future, without the assistance and
benefit to the Developer provided for in this Agreement.
(7) To the best ofthe Developer's knowledge after reasonable investigation, neither the execution and delivery
of this Agreement, the consummation of the transactions contemplated hereby, nor the fulfillment of or compliance
with the terms and conditions of this Agreement is prevented, limited by or conflicts with or results in a breach of,
the terms, conditions or provision of any contractual restriction, evidence of indebtedness, agreement or instrument
of whatever nature to which the Developer is now a party or by which it is bound, or constitutes a default under
any of the foregoing.
(8) The Developer will cooperate fully with the City with respect to any litigation commenced with respect to
the Project provided. however, that any such litigation settled by the City which would require payment by the
Developer would require that the City obtain the prior written consent of the Developer.
(9) The Developer personally guarantees and agrees to pay the total amount of any costs, charges, expenses
and attorneys fees reasonably incurred or paid at any time by City because of any Event of Default by Developer
as to any stipulation, agreement, and covenant of this Agreement, resulting in any suit or proceeding at law or in
equity to which the City shall become a party in reference to the Developer's interest in the Property or the Project.
(10) The Developer will cooperate fully with the City in resolution of any traffic, parking, trash removal or
public safety problems which may arise in connection with the construction and operation of the Project.
(11) The Developer will participate in a Site Plan Review by the City's Development Review Committee and
the City Planning Commission. and will comply with all terms and conditions as set forth within the City's design
5
standards and covenants for the Waterfront Passage Business Park and as reasonably enforced by said
Development Review Committee and Planning Commission.
(12) Barring Unavoidable Delays, the Project will be completed by December 31, 2003, such that the City
will issue a Certificate of Completion on or before that date. The City has no knowledge of anything which would
prevent the Project from being completed by December 31, 2003, subject to Unavoidable Delays, including within
its knowledge, an estimate of the reasonable time for review of the Project by the City and its agencies and
commissions.
(13) The Developer and Keyland Homes, Inc. shall execute a lease agreement for the lease of the
Development Property on or before the closing date on the Development Property in substantially the form of
Exhibit F attached hereto. The lease payments shall be personally guaranteed by the Developer and the term of
the lease shall extend through December 15,2003.
:
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ARTICLE III
UNDERTAKINGS BY DEVELOPER AND CITY
Section 3.1. Sales and Purchase of the Develooment Prooertv. The City, via the EDA, agrees to sell, and
Developer agrees to purchase the Development Property.
Section 3.2. Purchase Price. In 1993 the Developer agreed to pay the EDA the Purchase Price of $160,000
for 1.8 acres of Development Property, plus interest carrying costs, Legal and Administrative fees to be remitted
pursuant to the schedule of payments delineated in Section 3.6 of this Agreement.
At the present time, the Developer has agreed to pay the EDA an additional $56,254 for .53 acres of
Development Property, plus interest carrying costs, Legal and Administrative fees to be remitted pursuant to the
schedule of payments delineated in Section 3.6 of this Agreement.
Section 3.3. Title. City, at its option, will obtain and shall deliver to Developer an updated abstract of title or
a commitment for an owner's title insurance policy (AL T A Form B - 1987) issued by Scott County Abstract and Title,
Inc. as agent for Chicago Title Insurance Company naming the Developer as the proposed owner-insured of the
Development Property in the amount of the Purchase Price (the "Commitment"). The Commitment shall have a
current date as its effective date and shall commit to insure marketable title in Developer, free and clear of all
mechanics' lien claims, questions of survey, unrecorded interests, rights of parties in possession or other
exceptions. The Commitment shall set forth all levied real estate taxes and special assessments and shall contain
such endorsements as Developer may require. Said commitment shall have attached copies of all instruments of
record which create any easements or restrictions which are referred to in Schedule B of the title commitment.
Developer will be allowed 20 days after receipt of the abstract or the Commitment and the Survey (as hereinafter
defined) to make an examination thereof and to make any objections to the marketability to the Development
Property, said objections to be made by written notice or to be deemed waived.
Ifthe title to the Development Property I as evidenced by the abstract or the Commitment and Survey, together
with any appropriate endorsements, is not good and marketable of record in City and is not made so by the Date
of Closing, Developer may either:
(a) Terminate this Agreement by giving written notice to the City in which event this Agreement shall become
null and void and neither party shall have any further rights or obligation hereunder; or
(b) Elect to accept the title in its unmarketable condition by giving written notice to the City, in which event
the Developer shall hold back funds from the portion of the Purchase Price payable at the closing to cure the
defects and apply said holdback funds for the reasonable costs of curing such defects, including reasonable
attorneys' fees, and pay the unexpended balance to City. (If the amount of said holdback cannot be mutually
agreed to by the City and the Developer, the issuer of the Commitment shall determine the amount of said
holdback).
Section 3.4. Cost Estimate Relatina to Acauisition of the Development Property. Administration and
Infrastructure. The parties agree that the acquisition of the Development Property and Infrastructure to be
constructed by the City are essential to the successful completion of the Project. The costs of the acquisition of
the Development Property and Infrastructure, which shall include engineering and all other costs directly related
thereto together with the Legal and Administrative expenses relating to the initial transaction between the City and
Developer in 1993, are estimated as follows:
Land Acquisition
and Infrastructure
Administrative Expenses
Interest Expense
TOTAL
$160,000
15,000
53.155
$228,155
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Sources of funding for reimbursement of City costs for the initial Project are as follows:
Tax Increment Revenues
TOTAL
$225.000
$225,000
"
Cost estimates for the purchase of additional Development Property pursuant to this amended Agreement are
estimated as follows:
Land Acquisition and Infrastructure
Administrative Expenses
Interest Expense
TOTAL
$46,754
9,500
10.277
$66,531
Sources of funds for reimbursement of City costs for the additional Project are identified as follows:
Developer Payments &
Tax Increment Revenues
TOTAL
$66.531
$66,531
(1) The Developer made an initial payment of $3,500 to the EDNCity upon closing the initial Land Acquisition
in 1993. In December 1997, the Developer made an initial payment of $6,254 to the EDNCity for the acquisition
of additional Development Property. Reimbursement for the balance of City costs shall occur via Developer annual
payments as are outlined in Section 3.6 of this Agreement. To the extent that Excess Tax Increment Revenues. are
available as defined herein, the Developer is eligible to receive reimbursement. :
(2) The City has undertaken actions for the acquisition of the Development Property and construction of
Infrastructure within the Waterfront Passage Business Park. The cost tethe City for these actions is $206,754.
(3) The City will utilize Tax Increment Financing revenues generated from the Project along with Developer
payments to obtain reimbursement for $291,531 of Land Acquisition, Administrative, Infrastructure costs and interest
carrying costs. To the extent that Tax Increment Revenues and Developer payments exceed the amount necessary
to satisfy reimbursement of City costs for Land Acquisition, Administrative,lnfrastructure and interest carrying costs,
the City will pay Excess Tax Increments to the Developer.
Section 3.5. Assessment Aqreement. The parties covenant that, effective January 2, 1994, the Development
Property shall have a minimum market value of $431,000 for purposes of determining tax capacity. Developerwill
not challenge any market valuation of the Development Property determined by the Scott County Assessortor taxes
assessed on or after January 2, 1994 to the extent that such valuation is at or below $431,000. Should the Scott
County Assessor for any year up to and including 2003, establish a market value for taxes payable in such year
in excess of $431,000, the Developer may challenge at the Board of Equalization or by filing a tax petition or by
such other method as permitted by law, the valuation as determined by the Assessor but only to the extent that
the value exceeds $431,000.
Section 3.6. Reimbursement: EDA Pavments. City Pavments. Develooer Pavments and Tax Increment
Revenues.
(1) The EDNCity shall receive Developer payments for sale of the Development Property to the Developers
as follows:
September, 1993 -- $3,500.00
December, 1997 -- $6,254.00
July 1,1998 -- $5,023.10
January 1, 1999 -- $5,023.10
July 1, 1999 -- $5,023.10
January 1, 2000 -- $5,023.10
July 1, 2000 - $5,023.10
January 1, 2001 -- $5,023.10
July 1, 2001 -- $5,023.10
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J
i
January i. 2002
July i. 2002
January i. 2003
July i. 2003
January 1, 2004
-- $5.023.10
-- $5.023.10
-- $5.023.10
-- $5,023.10
-- $5.023.10
The semi-annual payments beginning on July 1, 1998. represent amortization of a $50,000 balance factored
at a 6% interest rate. The Developer may prepay the Land Acquisition and Administrative Costs. in which event
interest expenses will be adjusted to the date of such prepayment.
(2) The City shall receive reimbursement for Acquisition. Administrative. Infrastructure Improvements and
interest carrying costs made on behalf of the Developer under Section 3.4 through the receipt of Developer
payments and Tax Increment Revenues generated from Tax Increment Financing District No.2-i. Following is a
schedule of anticipated Tax Increment payments to be made available for reimbursement of City costs:
Schedule of Pavment
Payment to City Via Tax Increment Revenues
July 15. 1995 - $12,500
December 15.1995 - $12.500
July 15, 1996 - $12,500
December 15.1996 - $12.500
July 15, 1997 - $12,500
December 15, 1997 - $12,500
July 15,1998 - $12,500
December 15, 1998 - $12,500
July 15, 1999 - $12,500
December 15,1999 - $12,500
July 15, 2000 - $12.500
December 15,2000 - $12,500
July 15, 2001 - $12,500
December 15,2001 - $12,500
July 15, 2002 - $12,500
December 15. 2002 - $12,500
July 15, 2003 - $12.500
December 15,2003 - $12,500
.'
(3) Pursuant to Section 3.4, the Developer is eligible to receive reimbursement of expenditures for land
acquisition. Payment of this reimbursement is contingent upon the availability of Excess Tax Increment Revenues
following reimbursement of City costs as defined herein. In order for Excess Tax Increment Revenues to be
available. the Developer must construct an expansion to the approximate 18,000SF facility that WaS initially
developed and the Tax Increment Revenues must exceed that $12,500 semi-annual amount identified on the
schedule of payment within Section 3.6 herein. The maximum amount of Excess Tax Increment Revenues available
for reimbursement to the Developer will be $56,254.
Section 3.7. Guarantee of Pavments. In the event that the tax increment revenues are less than the amounts
due to the City for any of the specific payment dates commencing July is. 1995 through December 15,2003
pursuant to what is depicted on the schedule within Section 3.6 (2). the Developer will remit the amount of the
shortfall to the City on or before each of these dates. The Developer is also obligated to and guarantees the
payments to the EDAlCity for the purchase of the additional Development Property as identified within Section
3.6(1).
(1) Developer shall not be liable to the City for any shortfall in the tax increment revenues resulting from
actions taken by the City or failure of the City to take any action which results in a reduction in the tax increment
revenues, unless such actions by the City involve enforcement of regulatory standards or requirements necessary
to maintain the health. safety or welfare of the community and/or its residents.
Section 3.8. Taxes and Special Assessments. Real estate taxes due and payable prior to the year of closing
shall be paid by the City; thereafter. real estate taxes shall be paid by the Developer. On or prior to the Date of
Closing, City shall pay all special assessments. whether or not then due. then levied against the Development
Property or pending for improvements with respect to which, as of the Date of Closing, the letting of contracts has
been duly authorized by appropriate governmental action.
.,
9
Section 3.9. Subordination. The City shall subordinate as may be necessary to enable the Developer to
secure the financing for the Project, provided that such subordination does not release the Developer from its
obligation under this Agreement and related Assessment Agreement.
10
ARTICLE IV
EVENTS OF DEFAULT
Section 4.1. Events of Default Defined. The following shall be "Events of Default" under this Agreement and .
the term "Event of Default" shall mean whenever it is used in this Agreement anyone or more of the following
events:
(1) Failure by the Developer to pay when due any amount required to be paid by the Developer under this
Agreement as amended or any related agreement.
(2) Failure by the Developer to timely pay any ad valorem real property taxes assessed with respect to the
Development Property.
(3) Failure by the Developer to cause the installation of the Project to be completed pursuant to the terms,
conditions and limitations of this Agreement.
(4) The holder of any mortgage on the Development Property or any improvements thereon, or any portion
thereof, commences foreclosure proceedings as a result of any default under the applicable mortgage documents.
(5) Failure by the Developer to substantially observe or perform any other covenant, condition, obligation or
agreement on its part to be observed or performed under this Agreement.
(6) If the Developer shall
(A) file any petition in bankruptcy or for any reorganization, arrangement, composition, readjustment,
liquidation, dissolution, or similar relief under the United States Bankruptcy Act of 1978, as amended or under
any similar federal or state law; or
(B) make an assignment for the benefit of its creditors; or
(C) admit in writing its inability to pay its debts generally as they become due; or
(0) be adjudicated a bankrupt or insolvent; or if a petition or answer proposing the adjuration of the
Developer, as a bankrupt or its reorganization under any present or future federal bankruptcy act or any
similar federal or state law shall be filed in any court and such petition or answer shall not be discharged or
denied within ninety (90) days after the filing thereof; or a receiver, trustee or liquidator of the Developer, or
of the Project, or part thereof, shall be appointed in any proceeding brought against the Developer, and shall
not be discharged within ninety (90) days after such appointment, or if the Developer, shall consent to or
acquiesce in such appointment.
Section 4.2. Remedies on Default. Whenever any Event of Default referred to in Section 4.1 occurs and is
continuing, the City, as specified below, may take anyone or more of the following actions after the giving of thirty
(30) days' written notice to the Developer, but only if the Event of Default has not been cured within said thirty (30)
days. The City shall not be required to elect, in the notice required herein, the remedy it will pursue.
(1) The City may suspend its performance under this Agreement until it receives assurances from the
Developer, deemed adequate by the City, that the Developer will cure its default and continue its performance
under this Agreement.
(2) The City may cancel and terminate this Agreement, except that no cancellation may be effective at any
time that the Developer is proceeding in good faith to cure the defect and/or reasonable assurances to the City
as required in (1) above, or if there exists a good faith dispute with the City, mortgagee or creditor as to an event
of default as defined above, and the Developer posts an irrevocable letter of credit in a form satisfactory to the City
Attorney in an amount reasonably adequate to cure the alleged default.
11
In the event that subsequent to conveyance of the Development Property to the Developer by the City and
prior to receipt by the Developer of the Certificate of Completion for the entire Project, and subject to the terms
of any First Mortgage, if an Event of Default as defined under this Agreement is not cured within thirty (30) days
after written notice to do so, then the City shall have the right to re-enter and take possession of the Acquired
Property and any portion of the Project thereon and to terminate (aQd revest in the Qity pursuant to the provisions
of this Section subject only to any superior rights in any holder of a First Mortgage acquiesced in by the City
pursuant to this Agreement) the estate conveyed by the acquired Property Deed to the Developer, it being the
intent of this provision, together with other provisions of this Agreement, that the conveyance of the acquired
Property to the Developer shall be made upon the condition that, in the event of any default under this Section on
the part of the Developer and failure on the part of the Developer to cure such default within the period and in the
manner stated in such subdivision, the City may declare a termination in favor of the City of the title and of all the
Developer's rights and interests in and to the Acquired Property conveyed to the Developer, and that such title and
all rights and interests of the City, and any assigns or successors in interest of the Developer,and any assigns or
successors in interest to and in the Acquired Property, shall revert to the City, but only if the events stated in this
Agreement have not been cured within the time period provided above, or, if the events cannot be cured within
such time periods, the Developer does not provide assurance to the City, reasonably satisfactory to the City, that
the events will be cured as soon as reasonably possible.
(3) The City may take any action, including legal or administrative action, which may appear necessary or
desirable to enforce performance and observance of any obligation, agreement, or covenant of the Developer
under this Agreement.
Section 4.3. No Remedv Exclusive. No remedy herein conferred upon or reserved to the City is intended
to be exclusive of any other available remedy or remedies, but each and every such remedy shall be cumulative
and shall be in addition to every other remedy given under this Agreement or now or hereafter existing at law or
in equity or by statute. No delay or omission to exercise any right or power accruing upon any default shall impair
any such right or power or shall be construed to be a waiver thereof, but any such right and power may be
exercised from time to time and as often as may be deemed expedient.
Section 4.4. No Implied Waiver. In the event any agreement contained in this Agreement should be breached
by any party and thereafter waived by any other 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 hereunder.
Section 4.5. Aoreement to Pav Attornev's Fees and Exoenses.
(1) Whenever any Event of Default occurs and the City shall employ attorneys or incur other expenses for the
collection of payments due or to become due or for the enforcement of performance or observance of any
obligation or agreement on the part of the Developer herein contained, the Developer agrees that it shall, on
demand therefor, pay to the City the reasonable fees of such attorneys and such other expenses so incurred
by the City.
(2) In the event the City fails to perform its' obligations required by this Agreement, and upon 10 days written
notice to the City of said failure, the City agrees to pay to the Developer its reasonable costs and expenses,
including its reasonable attorney's fees, incurred by the Developer to enforce the City's obligations.
Section 4.6. Indemnification of Citv.
(1) The Developer, its successors and assigns, its agents, employees and/or contractors of the Project
releases from and covenants and agrees that the City, its governing body members, officers, agents, including the
independent contractors, consultants and legal counsel, servants and employees thereof (collectively the "City")
shall not be liable for and agrees to indemnify and hold harmless the City against any loss or damage to property
or any injury to or death of any person occurring at or about or arising out of the design, construction, mainte-
nance, or use by Developer, its successor, assigns, agents, employees, or contractors of the Project, provided that
the foregoing indemnification shall not be effective for any actions of the City that are not contemplated by this
Agreement.
(2) Except for any willful misrepresentation or any willful or wanton misconduct of the City, the Developer
agrees to protect and defend the Indemnified Parties, now and forever, and further agrees to hold the aforesaid
12
harmless from any claim, demand, suit, action or other proceeding whatsoever by any person or entity whatsoever
arising or purportedly arising from the actions or inactions ofthe Developer (or if other persons acting on its behalf
or under its direction or control) under this Agreement, or the transactions contemplated hereby or the acquisition,
construction, installation, ownership, and operation of the Project; and shall, in any event and without regard to
any fault on the paJ:t of the City, apply-to any pecuniary loss or penalty (including interest tl'lereon from the date
the loss is incurred or penalty is paid by the City at a rate equal to the Prime Rate) as a result of the Project
causing the Tax Increment District to not qualify or cease to qualify as a "economic development" under Section
469.174, Subdivision 12.
(3) All covenants, stipulations, promises, agreements and obligations of the City contained herein shall be
deemed to be the covenants, stipulations, promises, agreements and obligations of the City and not of any
governing body member, officer, agent, servant or employee of the City, as the case may be.
13
ARTICLE V
INSURANCE
Section 5.1. Insurance. The Developerwill provide and maintain or cause to be maintained at all times during
the process of constructing the Project (and, from time to time at the request of the City, furnish the City with proof
of payment of premiums on):
(1) Builder's risk insurance, written on the so-called "Builder's Risk -- Completed Value Basis", in an amount
equal to one hundred percent (100%) of the insurable value of the Project at the date of completion, and with
coverage available in nonreporting form on the so-called "all risk" form of the policy; the interest of the City shall
be protected in accordance with a clause in form and content satisfactory to the City naming the City as a loss
payee and containing language providing the City with notice of proposed cancellation.
(2) Comprehensive general liability insurance naming the City as an additional insured (including operations,
contingent liability, operations of subcontractors, completed operations and contractual liability insurance) together
with an Owner's Contractor's Policy with limits against bodily injury and property damage of not less that
$1,000,000 for each occurrence (to accomplish the above-required limits, an umbrella excess liability policy may
be used); and
(3) Worker's compensation insurance, with statutory coverage for all persons engaged in the construct}on
of the Project. .'
14
ARTICLE VI
ADDITIONAL PROVISIONS
Section 6.1. Restrictions on Use. The Developer agrees for itself that it shall devote the Development -
Property to, and in accordance with, the uses specified in this Agreement. The Developer shall not assign, transfer
or convey the Agreement without the prior written consent of the City except Developer may lease the Development
Property to KeyJand Homes, Inc.
Section 6.2. Conflicts of Interest. No member of the governing body or other official of the City shall
participate in any decision relating to the Agreement which affects his or her personal interests or the interests of
any corporation, partnership or association in which he or she is directly or indirectly interested. No member,
official or employee of the City shall be personally liable to the City in the event of any default or breach by the
Developer or successor or on any obligations under the terms of this Agreement.
Section 6.3. Titles of Articles and Sections. Any titles of the several parts, articles and sections of the
Agreement are inserted for convenience of reference only and shall be disregarded in construing or interpreting
any of its provisions.
Section 6.4. Notices and Demands. Except as otherwise expressly provided in this Agreement, a notice,
demand or other communication under this Agreement by any party to any other shall be sufficiently given or
delivered if it is dispatched by registered or certified mail, postage prepaid, return receipt requested, or delivered
personally, and
(1) in the case of the Developer is addressed to or delivered personally to:
H & S, L.L.C.
17021 Fish Point Rd.
Prior Lake, MN 55372
(2) in the case of the City is addressed to or delivered personally to the City at:
Frank Boyles, City Manager
City of Prior Lake
16200 Eagle Creek Ave. S.E.
Prior Lake, Minnesota 55372
or at such other address with respect to any such party as that party may, from time to time, designate in writing
and forward to the other, as provided in this Section.
Section 6.5. Counteroarts. This Agreement may be executed in any number of counterparts, each of which
shall constitute one and the same instrument.
Section 6.6. Law Governinq. This Agreement will be governed and construed in accordance with the Jaws
of the State of Minnesota.
Section 6.7. Severabilitv. To the extent any portion of this Agreement is held unenforceable by a court of
competent jurisdiction, the remaining provisions of this Agreement shall remain effective; as if, the unenforceable
provision had never been included herein.
Section 6.8. Promot Pavment of Subcontractors. The Developer and/or Contractor hired by the Developer
shall insert the following language in any contract relating to the Project: The Contractor shall pay any
subcontractor within ten (10) days of the Contractor's receipt of payment by the City for undisputed services
provided by the subcontractor. If the Contractor fails within that time to pay the subcontractor any undisputed
amount for which the Contractor has received payment by the City, the Contractor shall pay interest to the
subcontractor on the unpaid amount at the rate of 1 1-/2 percent per month or any part of a month. The minimum
monthly interest penalty payment for an unpaid balance of $100 or more is $10. For an unpaid balance of less
15
that $100, the Contractor shall pay the actual interest penalty due to the subcontractor. A subcontractor who
prevails in a civil action to collect interest penalties from the Contractor shall be awarded its costs and
disbursements, including attorney's fees, incurred in bringing the action.
16
ARTICLE VII
DEVELOPER'S OPTION TO TERMINATE AGREEMENT
Section 7.1. Tl:le Developer's Option to Terminate. This Agreement may be terminated by Developer, if (i)
the Developer is in compliance with all material terms of this Agreement and no Event of Default has occurred; and
(ii) the City fails to comply with any material term of this Agreement, and, after written notice by the Developer of
such failure, the City has failed to cure such noncompliance within ninety (90) days of receipt of such notice, or,
if such noncompliance cannot reasonably be cured by the City within ninety (90) days, of receipt of such notice,
the City has not provided assurances, reasonably satisfactory to the Developer, that such noncompliance will be
cured as soon as reasonably possible.
Section 7.2. Action to Terminate. Termination of this Agreement pursuant to Section 7.1 must be ac-
complished by written notification by the Developer to the City within thirty (30) days after the date when such
option to terminate may first be exercised. A failure by the Developer to terminate this Agreement within such
period constitutes a waiver by the Developer of its rights to terminate this Agreement due to such occurrence or
event.
Section 7.3. Effect of Termination. If this Agreement is terminated pursuant to this Article VII, this Agreement
shall be from such date forward null and void and of no further effect; provided, however, the termination of this
Agreement shall not affect the rights of either party to institute any action, claim or demand for damages suffered
as a result of breach or default of the terms of this Agreement by the other party, or to recover amounts which had
accrued and become due and payable as of the date of such termination. Upon termination of this Agreement
pursuant to this Article VII, the Developer shall be free to proceed with the Project at its own expense and witliout
regard to the provisions of this Agreement; provided, however, that if the City financed improvements on behalf
of the Developer, the Developer is oblig,ated for reimbursement of the expenses as set forth in Section 3.4.
Section 7.4. Limitation of Damaoes. By May 1, 1998, if the Developer in its sole discretion is unable to secure
adequate financing, acceptable construction bids, satisfactory appraisal report, satisfactory Phase I environmental
assessment or the parties to this Agreement are unable to reach mutual agreement on construction and related
terms and conditions as set forth within the City's design standards and covenants for the Waterfront Passage
Business Park, then the Developer shall have the option to terminate this Agreement by sending the City written
notice on or before May 15, 1998. Upon termination,in accordance with this Section, the Developer agrees to
execute and deliver to the City such documentation as the City shall deem necessary to effectively cancel this
Agreement.
17
IN WITNESS WHEREOF, the City has caused this Agreement to be duly executed in its name and on its
behalf and its seal to be hereunto duly affixed, and the Developer has caused this Agreement to be duly executed
in its name and on its behalf, on or as of the date first above written.
r- ;-2
/,!
'/& S, LL~C"
THE CITY OF PRIOR LAKE
'-
By
Its
By
Its
Drafted by:
Advance Resources for Development, Inc.
P. O. Box 3027, Mankato, MN 56002
This is a signature page to the Development Agreement dated as of
between the City of Prior Lake and H & S, L.L.C..
, 1998, by and
18
STATE OF MINNESOTA )
): ss
COUNTY OF SCOTT )
The foregoing instrument was acknowledged before me this day of . 1998,
by Wes Mader and Frank Boyles the Mayor and the City Manager, respectively, ofthe City of Prior Lake, Minnesota,
a municipal corporation.
Notary Public
STATE OF MINNESOTA )
): ss
COUNTY OF SCOTT )
The foregoing instrument was acknowledged before me thisd.[y ~y of
by H & S, L.L.C.. '.
i1I1 C\,{A ~+-
()
.1998,
c~d ;\ i/Yc_ xl' cJ"J.&~J________
.. l Notary Public 0-
19
EXHIBIT A
Legal Description of Development District No.2
All of the Southeast Quarter of Section 1, Township 114, Range 22, Scott County, Minnesota.
And that part of the East 1/4 of the Southwest Quarter, Section 1 , Township 114, Range 22, Scott
County, Minnesota, lying northerly of the northerly right-of-way of Eagle Creek Avenue (County Road
21). The west line of said East 1/4 shall be parallel with the east line of said Southwest Quarter.
Waterfront Passage Addition, Cottonwood Condominium CIC No. 1026 and that part of the Southwest
Quarter, Section 1, Township 114, Range 22, Scott County, Minnesota, lying southerly of the Northerly
right-of-way of Eagle Creek Avenue (County Road 21) and southeasterly ofthe southeasterly right-of-
way line of Franklin Trail (County Road 39) except for that part of BORGERDING SECOND ADDITION,
according to the recorded plat thereof, lying within said Southwest Quarter.
AND
Block 1, Lot 3 and Outlot A, Langhorst First Addition; Block 1, Lot 1, Cates Addition; the southerly one-
half of Lot 2, Block 14, Prior Lake; and, Section 10, Township 114, Range 22, 3.62 acres in Government
Lot 5 lying north and west of Highway 13.
A-1
EXHIBIT B
Legal Description of Development Property
Lot 2, Block 2, WaterFront Passage Business Park
AND
That part of Lot 1, Block 2, WATERFRONT PASSAGE ADDITION, according to the recorded plat thereof, Scott
County, Minnesota lying northwesterly of the following described line:
Beginning at the southeast corner of Lot 2, Block 2, of said plat; thence North 00 degrees, 10 minutes, 44
seconds East plat bearing along the east line of said Lot 2, a distance of 228.00 feet to the northeast corner of said
Lot 2; thence South 89 degrees, 49 minutes, 16 seconds East along the easterly extension of the north line of said
Lot 2, a distance of 100.52 feet; thence South 00 degrees, 10 minutes, 44 seconds West a distance of 228.00 feet
to the intersection with the south line of said Lot 1; thence North 89 degrees, 49 minutes, 16 seconds West along
the said south line, a distance of 100.52 feet to the point of beginning.
B-1
EXHIBIT D
ASSESSMENT AGREEMENT
1994
THIS AGREEMENT, dated as of this 5 day of Ju 1 y ,)j9~ by and among the City of Prior
Lake (the "City"), ~ad:~ro:e~"4((<x, ('Developer") , and the Assessor for Scott County (the .Assessor"):
A & H Enterprises, L.L.C.
WITNESSETH
WHEREAS, on or before the date hereof the City and Developer have entered into a Development
Agreement dated as of 20 September , 1993 (the .Agreement"), regarding certain real property
located in the City (the "Development Property") which property is legally described on Exhibit A attached
hereto and hereby made a part hereof;
WHEREAS, it is contemplated that pursuant to said Agreement, the Developer will undertake the
development of an 18,000 sq. ft. production/warehouse facility and related improvements (the .Project") on the
Development Property;
Whereas, the City and Developer desire to establish a minimum market value for the portion of the
Development Property and the improvements constructed or to be constructed thereon, pursuant to Minnesota
Statutes, Section 469.177, Subdivision 8;
WHEREAS, the Developer has acquired the Development Property; and
Whereas, the City and the Assessor have reviewed plans and specifications for the Project:
NOW, THEREFORE. the parties to this Agreement, in consideration of the promises, covenants and
agreements made by each to the other, do hereby agree as follows:
1. As cf January 2, 1994 and thereafter until December 31, 2003, the minimum market value which
shall be assessed for the Project shall be not less than $431,000.
2. The minimum market value herein established shall be of no further force and effect and this
Agreement shall terminate on December 31, 2003.
3. This Agreement shall be promptly recorded by the Developer along with a copy of Minnesota
Statutes, Section 469.177, Subdivision 8, attached as exhibit B and hereby made a part hereof, with
the County Recorded of Scott County, Minnesota. The Developer shall pay all costs of recording.
4. The assessor represents that he has reviewed the plans and specifications for the improvements
and the market vale previously assigned to the land upon which the improvements are to be
constructed, and that the .minimum market value" as set forth above is reasonable.
5. Neither the preamble nor provisions of this Agreement are intended to modify, or shall they be
construed as modifying, the terms of the Agreement between the City and the Developer.
6. This Agreement shall inure to the beneftt of and be binding upon the successors and assigns of the
parties.
D-l
~rxC>l.~~~
A & H E erprises, L.L.C.
y ~// /~~
.... -Ga HorKey, President/Secretary
BY !?/y ~A~
- Cecil Anderson, : vi c e Pre sid e n t / T rea sur e r
A & H Enterprises.
Signature page for Assessment Agreement by and among the City of Prior Lake, Minnesota" ~wtaiXd:M~lXlEtS<
,. C:~and the Assessor for Scott County.
D-2
,IN WITNESS WHEREOF, the City, the Developer and the Assessor have caused this Agreement to be
executed in their names and on their behalf ail as of the date set forth above. .
THE CITY OF PRIOR LAKE, MINNESOTA
(SEAL) BY: 'ir",?u' ~
" ;dio. And..n. Mar
BY: . / ltl ~~ ,-//'---,
Frank ~Ylesi. crf Manager
Signature page for Assessment Agreement by and among ~ty of Prior Lake, Minneseta, A & H Enterprises,
L.L.C. and the Assessor fer Scott County.
---
-
D-3
SI'ATE OF MINNESOTA )
) SS.
COUNTY OF SCOTT )
1994
This instrument was acknowledged before me this 5 day of Ju 1 Y,ID19:I;1by Gary
Horkey and Cecil Anderson, Pre s'. / S ecr eta ry and V ice Pr es . / 'T'r po, respectively, A & H
Enterprises, L.L.C., a Minnesota Corporation.
c;{c1/2l'V~~ Y-Ic7/:~
Not~ry Public V
'\
: KARIN S. HORKEY
8 NOTARYPU. BLlG-MINNESOTA
. . DAKOTA COUNTY
My C(mmlSSlOO Expires OCT 7.1i91
'T
STATE OF MINNESOTA )
) SS.
COUNTY OF SCOTT )
This instrument was acknowledged before me this 20 day of September ,1994, by Lydia
Andren, the Mayor and Frank Boyles, the City Manager of the City of Prior Lake, Minnesota.
'-~-u!/ f1A~
Notary Public (I
~ BERNICE A. JULKOWSKI
f.tIJ!.~r.;:..! ,..:',\ NOTARY PUBUC..ot.lINNESOTA
\ ~ SCOTT COUNTY
. My Comm. Exp. Oct. 1 e.. 19S6
..
THIS INSTRUMENT WAS DRAFTED BY:
Advance Resources for Development, Inc.
P. O. Box 3027
Mankato, MN 56002-3027
D-4
c.......,~SENT TO ASSESSMENT AGREEMENT
The -p I"'~ ::,td..LiA[ . of ?rlcr GLl.. kL S~iL 1S6-M-'!cJ
(the "Bank"), does hereby cansent to all terms, conditiens and provisions of the foregoing Assessment
Agreement and agrees that, in the event it purchases the Development Property at a foreclosure sale or
acquires the Development Frcpgrty through a deed in lieu of foreclosure or otherwise in satisfaction or the
indebtedness owed by the Developer, it and its respective successors and assigns, shall be bound by all terms
and conditions of the Assessment Agreement, induding but not limited to the provision which requires that the
minimum market value of the Development Property shall be not less than $431,000 as of Januarj 2, 1994 and
thereafter.
IN WITNESS WHEnEOF, we have caused thisoconsent ta Assessment Agreement to be executed in its
name and on its behalf as of this -/..()~ day of / U/11 , 199iJ.
8Y:
\4 o.~J\~ .
Bob Barsness
ITS: President
'-
..; ~,..
-
STATE OF MINNESOTA )
) SS.
COUNTY OF SCOTT )
This instrument was acjy"1~wledw:d bef?r~rr~ thjs It! day of L-. 19~ by Bob
Barsness, the President of ~.f~ ~ I.A~. a Corporat$'n, on behaif of the Corporation.
,
.J .
d//JAUA~/!)~
I Notarj Fubiic (J
&..~ BERNICE A JULKOWSKJ
..!J NOTARY PUBlIC" MINNESOTA
seon COUNTY
Ml' -Ut fdyComm.~.Oct.1e.1996
'. . lll* <Mt\l.llH.~
D-5
1.",.:f\TiF1CA TION BY COUNTY ASSESSOR
The undersigned, having reviewed the plans and specifications for the improvements to be constructed
and the market value assigned to the land upon which the improvements are to be constructed, and being of
the opinion that the minimum market value contained in the forgoing Agreement appears reasonable, hereby
certifies as follows: The undersigned Assassor, being legally responsible for the assessiTJent of the above
described property, hereby certifies that the market value assigned to such land and improvements upon
completion of the improvements to be c~nstructed thereon shall not be less than $431,000 as of Januarj 2,
1994 and thereafter.
~!. /L1L
County Assessor for Scott County
STATE OF MINNESOTA )
) SS.
COUNTY OF SCOTT )
This instrument Was ackncwledged befcre me this
Arnoldi, the COL:nty Assessor of Scott Ccunr;l,
1
da'! of a-P I
4 _.,
{/
, 1 sse!.- by Leroy T.
/--} .
(/ /~ .// -.I
'><:!Lu f.../'-'L ~ //1-< /;'/77 /
Nafo/1 P-6biic ______.__..__.
v I ~ JOYCE M-:--GilBRN;:H-f
f ~~I-j NOTARY PUBUC-MINNESOTA ;
I ~ SCOTT CCXJNTY .
L ....,. Comm. Exp/tes Juit 28. 1997
..........--.~-.........-...~ ........
Signature page fer Assessment ,~greeme"t cy and among the City of Prier Lc.ke, Minnesota, A. & H Enterprises,
L.L.C and the A.ssessor for Scott County,
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EXHIBIT A TO ASSESSMENT AGREEMENT
That part of the Southwest Quarter of Section 1, Township 114, Range 22, Scott County,
Minnesota described as follows;
A strip of land 228.00 feet in width the southerly line of which is described as follows:
Commencing at the southeast comer of said Southwest Quarter; thence on an asswned bearing of
North 89 degrees 49 minutes 16 seconds West along the South line of said Southwest Quarter a
distance of 354.00 feet to the point of beginning of the line to be described; thence on an asswned
bearing of North 89 degrees 49 minutes 16 seconds West along the South line of said Southwest'
Quarter a distance of 310 feet and there terminating.
Upon platting of the property by the City it is anticipated that the legal description for the parcel will
be identified as Lot 2, Block 2, Waterfront Passage Business Park.¤
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Subd. S. ASSESS:\IE\ _ AGREE)IE\"TS. An authority may l.. 2r into a "Y;t:en a~~e~~-
r.:ent agreement \\ith any person e~tabli~hing a minimur:1 market value of la:;d, ex.:stir:g
impro\'eme!lt~1 or improvements to be con~tructed in a district, if the property is o\\l1ed or
\\ill be owned by the person. The rrj:1imum market value established by an asses~mer.t
2gTeement may be fL"\ed, or increase cr decrease in later years from the initial minimum
market value. If an alITeement is ful!'! executed before July 1 of an assessment Year. the
. . ~ - ...
market nlue as pro\ided under the agyeement must be used by the r.ounty or locai assessoi'
as the ta..xable market value of the orooertv for that assessment. Acreements executed on or
~ ..
after Julv 1 of an assessment year become effecth'e for assessment purposes in the follo\\in~
asseSSir.ent year. An assessment agree:nent terminates on the earliest of the date on which
conditions in the assessment agreement for termination are satisfied, the termination date
speciried in the agreement, or the dat.2 when tax increment is no longer paid to the authority
under section 469.176, subdhision 1. The assessment agreement shall be presented to the
county assessor, or city assessor ha\ing the powers of the county assessor, of the jurisdiction
in which the ta..x increment financing district and the property that is the subject of the
agyeeme:-:t is located. The asseS5-8r shall re\iew the plans and specificaUons for the
impro\'ement.s to be constructed, review the market value pre\iously assigned to the land
upon which the impro\'ements are to be constructed and, so long as the minimum market
value contained in the assessment agreement appears, in the judgment of the assessor, to be
a reasonable estimate, shall execute the follo\\ing cer"Jfication upon the agreer.:ent:
The undersigned assessor, beir.g legally responsible for the assessme:it of the above
de~cribed property, certifies thc.c the market values a.ssigned to the land and impro\Oe-
ments are reasonable.
T1-:e 2.ssess~e!1t agre(:r::e::t 5;;a:1 t,e r:]ed for rece,rd and recorded in tlie ot::C:2 (,f the cc:~r.~y
recor~E:- c.r the ;-eS:5~rGr (f :::::e:: cf eae:' co:.:~ty \\-here the real es:cte or c..~y par: ~hE-re(lf is.
sitt.;a~ed. /o_.:"ter t!':e ag-reer::e;,: t::ccr.:e5 etfecti"e for a~se:3sme:'ot D\..:r;JOSes. tr.e aSSEssor s::a;1
\'a!ue t::e property under sec:io:; 273,11, except that. the market nL.:e 2.ss:s:-:ec: si":a!l ;;ot be
less tb.:1 the rr:inir:1Um mar:-:i:::: '"2.;1':: es~bEshed by tt:e 2..Ssessmer.t agyeeme;:t. lr.e assess,:,r
may assip a market \-alue ~o ~he ;"cperty in Excess of the mir.:mu!":1 market. ,02.]\..:::: es:ablis;-:ed
by the G.Ssessment a~eer::e:-,t. 1::e C',),l1er of the property may seek. through t::e eXi::rcisE of
admi:1ist:ati..-e a:1d legal re;:-;ed:Es, a ;eGuction in market \"alue for prope!\:y t.2....'\ p'-:r;:;O~ES, but
;:0 city assessor, county 2...Ssessr.:,r, c'J1.'::1ty auditor, beard of re\-:eo,,', board of e~'..:al:.z:iti('n.
ccrn:::lSs:c;:Er of re\Oenue, Gl" c:-t::: cf this st..?~e shall g:ar:t a red:..:ction of t!":2 ;::2.r~.:~t \'2.l'Je
below the :-nir.:::1'.l!":1 r.:arket ,o::.:'..:e e::GJ!fshed cy the ~::essmer.t ag-:'eeme:;t dur.;;g tlie t<:!TI
of the ag:-ee::1ent filed of rec~d re5~d;ess of ac~ual market .,-alues whic:' :i:ay res:it from
;-co..,..n1.....o. conC::'''''i.lction or'" :~"""'/"'......_-""_..- dec::.-....+:~n or d:mi~u..:G-. b~" ....r:\. C"'l.-~ ;-c::'''''''ed r\'t"
UI 0 'oIP"::", 1- '.. . -, j.oj~,_ v' <:...~;:~, _ C" clI.....c'l .' .. oj; " l..j I, .' ao,.. G _;:,., :;.~ '-:- . "'_
umns'..:.rea. except In the caSE CI acq:..::s;tlOrl or reacqu:s:tlon of tne property by a puol;c entlty.
Recordi::g an assessment ag-ree:::e:1t constitutes notice of the 2gTeemE::it to anyor.e who
acquires any. int.erest in the !a;:d or irr:pro'"ements that is subject to the 2.SSESSir.eDt
agTeeme::t, and the agyee:ne::t is bindbg upon them.
.A..I'l assessment 2IITeement rr.av be modified or termina~~d bv mutual consent of the currem
parties to the ae:reement. ~fodhlcc.::ion or ter:nin2don of an assessment 2.g-reement m:.:.st be
aporo',-ed by the go\'erning bod:, of the municipalit~.. If the estimated marht yalue for the
prope!'i.\' for the most recenth' a';ailable assessment is Jess than the minimt:m market \'alue
established by the aSSeSSrT.Ent acre~:;'lent for thc..t or an... latH year and if bond counsel dO€5
not conclude that termination of the agTeement is necessary to presenoe the tax exempt status
of outstanding- bonds or refunding bonds to be issued, the modification or tennination of the
assessment a,greement also must be aooroyed bv the go\Oerning- bodies of the county and the
school district A document modii\ing' or terminating an agreement. including records of the
municipality', county, and school district aporoval. must be filed for record, The assessor's
re\ie\".' and certification is not reauired if the dOCument terminates an ag-rEement, A chan~e
to an 2gyeement not full:\" execu:ed bEfore Juh' 1 of an assessment ~,ear is not effect:\'e for
asseSSI':lent purposes for that 2..Ssessznent yec..r, If c..:1 assessment ag-reement has bEe~
modirled or prematurely ter.:;in~:E:d. a person mav seek a reduction in markE-t \-alue or ta..'"\
throu~h the exercise of a:!y ad=:1::-...:::::-a:i\"€ or le{;al ren;ed~', The remedy' may' not pro\ide for'
redudo:1 of the market \'G.!~e below t.he min;m~m pro\ided under a modiried a.::::eSSITient
acreer::Ent that remair.s in ef:ect. 1:1 no en'r.t ",(iy a reduction be ~OUE::t :or a \"ec:..r ocr:er
than t::e cur.-ent taxes pa\-c..t!e YeGr. " . ,
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EXHIBIT E
ACQUIRED PROPERTY DEED
THIS INDENTURE between the City of Prior Lake (the "City'1, the Prior Lake Economic Development Authority, organized
pursuant to the Laws of Minnesota (the "Grantor"), and H & S, L.L.C., a limited liability company existing under the laws of
Minnesota, (the "Grantee'~:
WITNESSETH, that Grantor in consideration of the sum of fifty six thousand two hundred fifty-four dollars, ($56,254) to be paid
semi-annually and other good and valuable consideration, as set forth in an Agreement entered into by the Grantor and Grantee
the receipt whereof is hereby acknowledged, does hereby grant, bargain, conveys and warrants to the Grantee, its successors
and assigns forever, all the tract or parcel of land lying and being in the County of Scott and State of Minnesota described on
Attachment A attached hereto (such tract or parcel of land is hereinafter referred to as the "Property'1:
To have and to hold the same, together with the hereditaments and appurtenances thereunto belonging or in anyway
appertaining, to the said Grantee, its successors and assigns, forever, provided as follows:
1. It is understood and agreed that this Deed is subject to the covenants, conditions,. restrictions and provisions of an
agreement entered into between the City and Grantee on the day of , 1998, entitled "Development Agreement"
(hereafter referred to as the "Agreement'~, and that the Grantee shall not voluntarily convey this property, or any part thereof.
without the consent of the Grantor and the City until a certificate of completion releasing the Grantee from certain obligations of
said Agreement as to this Property or such part thereof then to be conveyed, has been placed of record. This provision shall in
no way prevent the Grantee from making transfers permitted by the Agreement or mortgaging this Property in order to obtain
funds for the purchase of Property hereby conveyed and for erecting improvements thereon in conformity with the Agreement,
any applicable redevelopment plan and applicable provisions of the zoning ordinances of the City.
Promptly atter completion of the improvements in accordance with the provisions of the Agreement, the City will furnish the
Grantee with a Certificate of Completion in the form attached to this Deed as Attachment A. Such certification by the City shall
be (and the certification itself shall so state) a conclusive determination of satisfaction and termination of the agreements and
covenants of the Agreement and of this Deed with respect to the obligation of the Grantee, and his successors and assigns,
other than those provisions of the Development Agreement relating to assessment of the Property, All remaining obligations of
the Grantee, pursuant to the Agreement and this Deed shall be personal only.
All certifications provided for herein shall be in such form as will enable them to be recorded with the County Recorder of
Scott County, Minnesota, If the Grantor or the City shall refuse or fail to provide any such certification in accordance with the
provisions of the Agreement and this Deed, the Grantor and the City shall, within ten (10) days after written request by the
Grantee, provide the Grantee with a written statement indicating in adequate detail in what respects the Grantee has failed to
complete the improvements in accordance with the provisions of the Agreement or is otherwise in default, and what measures or
acts will be necessary, in the opinion of the Grantor and the City, for the Grantee to take or perform in order to obtain such
certification.
2. In the event that an Event of Default occurs under Section 4,1 of the Agreement and the Grantee herein shall fail to cure
such default within the period and in the manner stated in Section 4,2 of the Agreement, then the Grantor shall have the right to
re-enter and take possession of the Property and to terminate and revest in the Grantor the estate conveyed by this Deed to the
Grantee, its assigns or successors in interest, in accordance with the terms of the Agreement.
IN WITNESS WHEREOF, the Grantor and the City has caused this Deed to be duly executed in their behalf by its President,
Mayor and Executive Director and has caused its corporate seal to be hereunto affixed this _ day of , 1998.
(Seal)
Robert Barsness, President, EDA
Frank Boyles, Executive Director, EDA
Wes Mader, Mayor
STATE OF MINNESOTA )
) SS.
COUNTY OF SCOTT )
On this day of , 1998, before me personally appeared Robert Barsness, the
President; Frank Boyles, Executive Director and Wes Mader, Mayor, to me personally known who by me duly sworn
did say that they are the President and Executive Director for the City of Prior Lake Economic Development
Authority (the "Grantor") and Mayor for the City of Prior Lake, Minnesota (the "City"), named in the foregoing
instrument; that said instrument was signed on behalf of said Grantor and City pursuant to a resolution of its
Economic Development Authority and City Council; and said Robert Barsness, Frank Boyles and Wes Mader
acknowledges said instrument to be the free act and deed of said.
Notary Public
Notary Public
1:;"
EXHIBIT A TO ACQUIRED PROPERTY DEED (EXHIBIT E)
CERTIFICATE OF COMPLETION AND RELEASE OF FORFEITURE
WHEREAS, the City of Prior Lake, Minnesota (the "City"), the Prior Lake EC,onomic Development Authority (the
"Grantor"), organized and operating pursuant to laws of the State of Minnesota, by a Deed recorded in the Office of
the County Recorder or the Registrar of Titles in and for the County of Scott and State of Minnesota, as Deed
Document Number _, has conveyed to H & S, L.L.C., (the "Grantee"). in the State of Minnesota, the following
legally described property, to wit:
That part of Lot 1, Block 2, WATERFRONT PASSAGE ADDITION, according to the recorded plat thereof, Scott
County, Minnesota lying northwesterly of the following described line:
Beginning at the southeast corner of Lot 2, Block 2, of said plat; thence North 00 degrees, 10 minutes, 44
seconds East plat bearing along the east line of said Lot 2, a distance of 228.00 feet to the northeast corner of said
Lot 2; thence South 89 degrees, 49 minutes, 16 seconds East along the easterly extension of the north line of said
Lot 2, a distance of 100.52 feet; thence South 00 degrees, 10 minutes, 44 seconds West a distance of 228.00 feet
to the intersection with the south line of said Lot 1; thence North 89 degrees, 49 minutes, 16 seconds West along
the said south line, a distance of 100.52 feet to the point of beginning.
WHEREAS, Grantor has no knowledge of wells being located on the Development Property; and
WHEREAS, said Deed incorporated and contained certain covenants and restrictions, the breach of V>{hich by
the Grantee, its successors and assigns, would result in a forfeiture and right of re-entry by the Grantor, its'
successors and assigns, said covenants and restrictions being set forth in said Deed and in a Development
Agreement executed by and between the City and the Grantee and dated , 1998 (The "Development
Agreement"); and
WHEREAS, the Grantee has to the present date performed said covenants and conditions insofar as it is able
in a manner deemed sufficient by the Grantor to permit the execution and recording of this certification:
NOW, THEREFORE, this is to certify that all building construction and other physical improvements specified to
be done and made by the Grantee have been completed and the above covenants and conditions in said Deed and
Development Agreement have been performed by the Grantee therein and that the provisions for forfeiture of title
and right to reentry for breach of condition subsequent by the Grantor, contained therein, are hereby released
absolutely and forever insofar as they apply to the land described herein, and the County Recorder the Registrar of
Titles in and for the County of Scott and State of Minnesota is hereby authorized to accept for recording and to
record the filing of this instrument, to be a conclusive determination of the satisfactory termination of the covenants
and conditions of said Deed and the Development Agreement which would result in a forfeiture by the Grantee, its
successors and assigns, the right of the Grantor, its successors and assigns, to re-enter and take possession of the
property as set forth in said Deed and the Development Agreement, and that said Deed and the Development
Agreement shall otherwise remain in full force and effect.
IN WITNESS WHEREOF, the Grantor has caused this Agreement to be duly executed in its name and on its
behalf and its seal to be hereunto duly affixed, and the Developer has caused this Agreement to be duly executed in
its name and on its behalf, on or as of the date first above written.
H & S, L.L.C., DEVELOPER
THE CITY OF PRIOR LAKE
PRIOR LAKE ECONOMIC
DEVELOPMENT AUTHORITY
~~~ /IJA---
BY
ITS
BY
ITS
EXHIBIT G
GUARANTEE
H & S, L.L.C., and all its members hereby unconditionally guarantee the performance of each and every covenant
and obligation under Article III of the Development Agreement.
~~~~
Member
Member
STATE OF MINNESOTA )
} S5.
COUNTY OF SCOTT }
On the :J.l..Y tL")day of Ac\.{'t-'LQ.-!-, 1998, before me, a Notary Public, with and for said County personally
appeared Gary Horkey and , to me personally known, being each by me duly sworn
did say that they are all of the members of H&S, L.L.C., a Minnesota limited liability company, named in the
foregoing instrument; and that said instrument was signed on behalf of the company and acknowledged said
instrument to be the free act and deed of said limited liability company.
~I
. f/}7.
. Not Public
d aJoj /J2Al
-O~
Notary Public