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5.0. EDSR 04-10-2006ITEM # 5. rover MEMORANDUM TO: Economic Development Authority FROM: Heidi Steinmetz, Assistant Director of Economic Development DATE: April 10, 2006 SUBJECT: Consider Northern Natural Gas Encroachment Agreement for Lot I, Block I of Northstar Business Park Attachments • Encroachment Agreement • Location Map Purpose The purpose of this memorandum is to provide the EDA with the following: • Background & issue regarding the attached Encroachment Agreement • Kequested action Background A Northern Natural Gas (NNG) main easement runs between the northern and southern property lines of Noxthstax Business Park. Permanent structures cannot be built in this easement, however driveways ox parking lots axe allowed conditional upon entering into an encroachment agreement with NNG. Last October, the EDA approved a Mutual Driveway Easement Agreement with CDI fox a mutual driveway to be constructed by CDI over a portion of the EDA's Lot 1, Block 1. CDI has entered into an Encroachment Agreement with NNG fox CDI's portion of the driveway that covers the NNG easement. Issue The attached Encroachment Agreement between the EDA and NNG is required by NNG fox the EDA's portion of the property that is included in the mutual driveway and covers the NNG easement It has been reviewed by the EDA's attorney at Briggs & Morgan. Consider Northern Natural Gas' P:neroachment Ageeemen[ foe Lo[ 1, Block 1 of Norehsea[ Bus'inesn Park April 1Q 2006 HllA Meeting Pagc 2 of 2 In summary, the Encroachment Agreement states that if something goes wrong within the encroachment area (unless it is caused by NNG), the EDA would be held entirely responsible fox any damages/claims. Requested Action Staff recommends that the EDA consider approving the Encroachment Agreement with with Northern Natural Gas for Lot 1, Block 1 of Noxthstax Business Park fox the following reasons: The October 2005 Mutual Driveway Easement Agreement between the EDA and CDI holds CDI liable if they disrupt the gas line within the encroachment area. • The Encroachment Agreement is automatically assignable when the EDA sells the property. File No.: Line & Tract no.: ENCROACHMENT AGREEMENT This instrument made and entered into this day of , 2006, by and between NORTHERN NATURAL GAS COMPANY, a Delaware corporation, (hereinafter referred to as "Northern"), with principal offices at P.O. Box 3330, Omaha, Nebraska, 68103-0330, and The Economic Development Authority of the City of Elk River ("EDA"), a Minnesota public Corporation, (hereinafter referred to as "Owner"). WITNESSETH THAT: WHEREAS, Northern is the holder of an Easement granted by D.E. Henderson and Naomi Henderson, husband and wife, on July 20rh, 1965, covering the following described premises in Sherburne County, Minnesota: The South half of the Northwest Quarter (S%zNW'/a) and the Northeast Quarter of the Southwest Quarter (NE%<S W'/4) and that part of the Southeast Quarter of Southwest Quarter (SE'/4SW'/<) lying North and East of the Railroad Right-of- way all in Section Two (2), Township Thirty-two (32), Range Twenty-six (26); and which Easement was recorded on the 13th day of August, 1965, as Instrument NO. 101600, and defined by a Modification and Amendment of Easement recorded on the 21st day of November, 1977 as Instrument No. 144842 and further modified by an Addendum to Pipeline Easement recorded on the 18th day of May, 1984 as Instrument No. 181910; all in the Office of the County Recorder for Sherburne County, Minnesota (hereinafter collectively referred to as "Easement"); and WHEREAS, pursuant to the authority contained in said Easement, Northern has constructed and currently operates and maintains a 3-inch pipeline (MNB67701) and an 8-inch pipeline (MNB67702), along with the right to install additional facilities from time to time (hereinafter referred to as "Pipeline Facilities"), across and through the above described premises; and WHEREAS, Owner is the present owner of the following described real property, with Pipeline Facilities situated upon the following described land in Sherburne County, Minnesota (hereinafter referred to as the "Owned Premises"): Lot I, Block 1, NORTHSTAR BUSINESS PARK, being part of the NE'/4SW%< and that part of the SE'/aSW'/4 lying North and East of the Railroad Right-of-way of said Section 2, Township 32, Range 26; WHEREAS, Owner acknowledges that O'Brien Holdings, Inc. ("O'Brien"), the owner of Lot 2, Block 1, plans to construct a hard surface driveway (hereinafter referred to as "Encroachment") upon and within portions of the confines of Northern's 75-foot wide Easement as depicted on Exhibit "A", with this written consent; and Document Prepared by/Returned to: Northern Natural Gas Co., ATTN: ROW Dept., 1650 W. 82ntl St., Bloomington, MN 55431 -1- IS40432v4 WHEREAS, Owner and O'Brien are parties to that certain Mutual Driveway Easement Agreement dated as of November 2005 (the "Driveway Easement"), with respect to the Encroachment pursuant to which Owner and O'Brien set forth their respective rights and obligations with respect to the driveway and the Easement Area (as defined in the Driveway Easement); and WHEREAS, Owner has been advised by Northern that Northern is a natural gas transmission company and that Northern operates a high pressure underground natural gas pipeline through the Owned Premises; and WHEREAS, Owner and O'Brien have requested permission from Northern to maintain, use, and enjoy the Encroachment upon portions of Northern's Easement and in close proximity to Northern's Pipeline Facilities; and WHEREAS, Northern is willing to grant such permission upon the terms and conditions set forth as follows. NOW, THEREFORE, in consideration of the mutual covenants, terms and conditions hereinafter set forth, the parties hereto agree as follows: 1. Northern hereby grants permission to Owner to maintain, operate and use upon the Owned Premises and upon and in close proximity to Northern's Pipeline Facilities, the said Encroachment, subject to the following conditions: A. Any future Owner (excluding the EDA) assumes all risks for damages, injuries, or loss to either property or persons, which may be incurred by Owner or its agents, invitees, or licensees present on or in the vicinity of the Easement and in any way associated with said Encroachment, unless caused by the negligence or willful misconduct of Northern, its agents or employees. Northern hereby acknowledges and agrees that the EDA did not construct and does not have any obligation to maintain or repair the Encroachment under the terms of the Driveway Easement and accordingly, notwithstanding anything to the contrary herein, so long as the EDA is the "Owner" of the Owned Premises, the EDA shall have no liability to Northern whatsoever in connection with the Encroachment unless caused by the gross negligence or willful misconduct of the EDA, its agents and employees. B. That the permission granted herein is limited exclusively to the proposed Encroachment within Northern's Easement. Owner shall not alter the grade or permit such alteration anywhere on the land upon which Northern has reserved its easement rights, without the prior express written consent of Northern, which consent shall not be unreasonably withheld. C. That Owner shall at all times conduct all its activities on said Easement in such a manner as not to materially interfere with or impede the operation of Northern's Pipeline Facilities and activities in any manner whatsoever. D. That Owner shall not plant any trees or shrubs within the confines of Northern's Easement without the prior express written consent of Northern, which consent shall not be unreasonably withheld. 2. Any Owner (other than the EDA) agrees to indemnify, protect, and hold Northern, its pazent, affiliates, subsidiaries, and their directors, officers, employees, representatives, and agents harmless from and against any and all actions or causes of action, claims, demands, liabilities, loss, damage, injury, suit, proceeding, judgment, cost, or expense of whatever kind or nature, including but not limited to reasonable attorneys' fees, arising from or as a result of any incident, act, action, cause of action, negligence, transaction or omission of such Owner (excluding the EDA) in connection with, or incidental to the operation, maintenance, or use of the said Encroachment with and upon the Easement except where such loss, cost, liability, or expense was proximately caused by the negligence or willful misconduct of Northern or its agents or employees. 3. All repair and maintenance work performed by Northern on its existing or additional Pipeline Facilities located on the Owned Premises shall be performed in a reasonable workmanlike manner and Northern shall restore the surface and grade of the Owned Premises where the work is performed. 1840432v4 5. The Parties hereto understand that this Agreement in no way constitutes a waiver by Northern of its rights to enjoy its Easement. 6. It is expressly agreed to by and between the parties hereto that if Owner is in material violation of any terms or conditions set forth in this Agreement, Northern, at its option, may terminate this Agreement upon thirty (30) days' notice to the Owner and Owner's failure to cure such violation; provided that, if the nature of such violation is such that it requires more than 30 days to cure, Owner shall have such reasonable additional period to cure as long as owner is diligently pursuing such cure. In the event of such termination, Owner shall immediately remove any and all of said Encroachment which may be situated on the Easement, or if Owner fails to remove any and all of said Encroachment, Northern may, at its option, remove said Encroachment at the expense of Owner and without any liability whatsoever. It is further agreed that the failure by Northern to exercise such option as to any such violation shall not constitute a waiver of Northern's future right to exercise such option as to the same or any future violation. Notwithstanding the foregoing or anything else herein to the contrary, during the time that the EDA is the "Owner" of the Owned Premises, Northern shall have no right to remove the Encroachment or require the EDA to remove the Encroachment without the EDA's prior written consent. 7. The provisions of the Easement, and all rights, powers, privileges, and duties, obligations, and liabilities created thereby, remain in full force and effect and are not affected hereby except to the extent and in the manner set forth above. 8. The Owner (which for purposes of this section shall exclude the EDA) of the Owned Premises agrees to indemnify, defend and hold Northern, its parent and affiliated companies, and the directors, officers and employees of any such corporate entities harmless from and against any liability, damage, claims, loss, cause of action, suit, proceeding, judgment, cost (including the cost or expense of environmental response, removal or remediation activities), fees or expense, including reasonable attorney's fees arising from: (1) non-compliance with any laws, regulations and orders applicable to the ownership or the operation and maintenance of the said Encroachment on the Owned Premises described herein, and (2) any incidents, acts, releases, negligence, transactions or omissions by Owner, or conditions on or affecting the Easement created by Owner that would (i) contribute to or constitute a violation of any local, state or federal environmental rule, regulation, law orjudicial order, (ii) result, in whole or in part, in any requirement to clean up or otherwise remedy or remediate a condition, (iii) give rise to any lien, liability, injunction, order, restriction, claim, expense, damage, fine or penalty, or (iv) adversely affect human health or the environment at or near the Easement. 9. This instrument and the covenants and agreements herein contained shall extend to and be binding upon the heirs, executors, administrators, successors, and assigns of the parties and the benefits of this Agreement shall run with the land. IN WITNESS WHEREOF, the parties have executed this instrument the day and year first above written. "NORTHERN" NORTHERN NATURAL GAS COMPANY By Glen R. Hass Agent and Attorney in Fact STATE OF NEBRASKA ) )SS COUNTY OF DOUGLAS ) "OWNER" ECONOMIC DEVELOPMENT AUTHORITY OF THE CITY OF ELK RIVER Name: Its: The foregoing instrument was acknowledged before me, a Notary Public duly commissioned and qualified in and for said county and state, on this day of 2005 by Glen R. Hass, the Aeent and Attorney-in-Fact of Northern Natural Gas Company. 1840432v4 (SEAL) Notary Public My Commission Expires STATE OF ) )SS COUNTY OF ) The foregoing instrument was acknowledged before me, a Notary Public duly commissioned and qualified in and for said county and state, on this day of , 2005 by the of the Economic Development Authority of the City Of Elk River, a body corporate and public organized pursuant to Minnesota Statutes Section 469.090 to 469.1082, on behalf of the body corporate and public. (SEAL) Notary Public My Commission Expires 1840432v4 ~~ ~~ R T~ ~~ j `rte ~ \ j \. oar~LOr A \I BL ~~~ ., ~~ ~ti ~~~ i ----- - -~ APRROX. SITE .i ~F~ I ~I ~I F'fA Sam/ O'/O ~~ ~\~ EOA i ~ ~i i ~ j ~ ~ ~ ,~ ~. ~~ ~ ~. 2 ~ ~ ~ j ~ ~'I coi I ~ ~ ~ - I I~~- ~a V '° \ _ _ _- --- I^' z mA ~~ ~ I i r- -- ------ ~- ~ ----_--_=~-~------- -- ~~- ~ \ ~ _ ..... ~ ~ ~ Z ~'. ,_ _ ~ LL I ~_ ~ f~ ~ `~ ~ I ,~~. ~ ~~ 4 I , ' I ~ ~\ ~~ ~ ~Lp~K -po ~ ~, o~ ~a '~ ~ ~ ~~ ~` N I ~ ~ `~ raj \.___ ~ \ I ___ -~ , \ "~ ~~ ill ''~IOU7LOT A `~ ,/ I' '! I ~ ~' ~ P P R I j i j ~I i `~ j j I ~- Location Ma acy or P N El -~-~ R1Ver Case Number: NORTHSTAR BUSINESS PARK