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4.2. ERMUSR 01-08-2013 Elk River Municipal Utilities UTILITIES COMMISSION MEETING TO: FROM: Elk River Municipal Utilities Commission Troy Adams, P.E. —General Manager John Dietz—Chair Daryl Thompson—Vice Chair Al Nadeau—Trustee MEETING DATE: AGENDA ITEM NUMBER: January 8, 2013 4.2 SUBJECT: Purchase of Property 1627 Main Street(Parcel ID#75-411-0240) BACKGROUND: At the August 2012 Utilities Commission meeting, the Commission authorized staff to contact the owner of 1627 Main Street NW (Parcel ID#45-411-0240)regarding the purchase of that property. This property is north of ERMU's Field Services building. At this time, this property is not listed for sale. Because of this property's location, it would be desirable for the Utilities acquisition for future expansion, storage, or parking needs. This property would be subject to property tax until it is used for a municipal function. The owner is interested in selling this property to the Utilities. With the consent of the owner, staff contracted with a local company to have an appraisal done. The appraised value was calculated at $150,000. The property was determined to be "in good condition with no deferred maintenance noted." DISCUSSION: Staff has had preliminary discussions with the owner. The parties have tentatively agreed upon a purchase amount of$159,500. Utilities legal counsel has drafted a purchase agreement. ACTION REQUESTED: Staff recommends the Utilities Commission approve the proposed purchase agreement and authorize staff to purchase and close on 1627 Main Street NW(Parcel ID#75-411-0210). ATTACHMENTS: • Purchase Agreement for 1627 Main Street NW (Parcel ID#75-411-0210). ', P / IElfl I ? Page 1 of t �NATUR Reliable Public Power Provider P OWE RrD To Sravr PURCHASE AGREEMENT This Purchase Agreement ("Agreement") is made as of January _, 2013 (the "Effective Date"), between THERESA LEE, a single Minnesota resident ("Seller"), and ELK RIVER MUNICIPAL UTILITIES, a Minnesota municipal utility("Buyer"). In consideration of the mutual covenants and agreements hereinafter contained, Seller and Buyer agree as follows: 1.) SALE AND PURCHASE OF PROPERTY. Seller will sell to Buyer, and Buyer will purchase from Seller, a parcel of real property (the "Property") commonly known as 1627 Main Street, Elk River, in the County of Sherburne, State of Minnesota, legally described in the attached Exhibit A, together with improvements, easements, air rights and other rights benefiting or appurtenant to the Property. 2.) PURCHASE PRICE AND MANNER OF PAYMENT. The total purchase price ("Purchase Price") to be paid by Buyer to Seller for the Property shall be One Hundred Fifty-nine Thousand Five Hundred and No/100s Dollars ($159,500.00). The Purchase Price, plus or minus any pro- rations and other adjustments required hereunder, shall be paid in cash, wire transfer, or guaranteed funds on the Closing Date(as hereinafter defined). 3.) CONDITIONS TO BUYER'S OBLIGATIONS. The obligations of Buyer under this Agreement are conditional upon satisfaction or waiver by Buyer of each of the following on or before the forty-fifth (456) day after the Effective Date (the "Due Diligence Period"), except as otherwise set forth below: (a) Title. Title is found acceptable by Buyer based on the Title Evidence (as hereinafter defined), or is made acceptable, in accordance with the requirements and terms of Section 5 below. (b) Performance of Seller's Obligations. Seller performs all of the obligations required to be performed by Seller under this Agreement, as and when required by this Agreement, including, without limitation, allowing Buyer and Buyer's agents' access to the Property without charge at all reasonable times for the purpose of investigation and testing. Buyer will pay all costs and expenses of such investigation and testing and will indemnify Seller and the Property from all costs and liabilities relating to Buyer's activities. Buyer will repair and restore any damage to the Property caused by or occurring as a result of Buyer's testing and return the Property to substantially the same condition as existed before Buyer's entry. Buyer will give Seller twenty-four (24) hours advance written notice of such investigations and shall not unreasonably disturb Seller's during such investigations. (c) Inspection and Testing. Buyer determines that the Property is suitable for its intended use and that there are no objectionable issues disclosed by: (i) Physical inspection of the Property by Buyer and/or its agents; and (ii) surveys, soil tests, engineering inspections, hazardous waste and environmental assessments and other tests and inspections of the Property performed by Buyer or provided by Seller pursuant to Section 3(b)(4) above; and 1. (d) Document Review. Buyer determines, that it is satisfied with its examination and analysis of all documents in relating to the Property including, without limitation, the following(collectively, the "Documents"): (i) statements for taxes, assessments and utilities payable in the current and two(2) prior calendar years for the Property; and (ii) blue prints, surveys, plats or other depictions relating to the Property and improvements that are in Seller's possession or control or are otherwise obtained by Buyer. (e) Board Approvals. Elk River Public Utilities Commission authorizes and approves the transaction contemplated in this Agreement. If any condition set forth in this Section 3 has not been satisfied or waived by Buyer before the expiration of the Due Diligence Period, then Buyer may terminate this Agreement at any time on or before the expiration of the Due Diligence Period by written notice to Seller (a "Termination Notice"). Upon such termination, neither Seller nor Buyer will have any further rights or obligations under this Agreement, except for the covenants made in Sections 3(b)(1), Section 7(e), Section 12 and subsection 16(l), and the remedies provided in Section 14 hereof that will survive termination of this Agreement, whether the termination is effected by Seller or Buyer(the"Surviving Covenants"). 4.) SURVEY. Buyer may elect to have an ALTA/ACSM survey of the Property(the "Survey") prepared by a Minnesota registered surveyor. 5.) TITLE MATTERS. Title examination will be conducted as follows: (a) Seller's Title Evidence. Seller will cause the Title Insurer to furnish Buyer a commitment ("Commitment") for an ALTA 2006 Owner's Policy of Title Insurance in the amount of the Purchase Price within fifteen(15) business days after the Effective Date. The Commitment must commit to insuring marketable title to the Property in Buyer, deleting the so-called "standard exceptions." The Commitment shall include complete and accurate copies of all matters described in Schedule B thereof The Commitment, the Schedule B documents and the Survey(if any)shall collectively be referred to as the "Title Evidence". (b) Buyer's Objections. Buyer will notify Seller of any objections ("Objections") to matters disclosed in the Title Evidence within fifteen(15) business days after receiving the last item of the Title Evidence. Any Objections which can be cured by the payment of a fixed sum of money including, without limitation, payment of any mortgages, judgments, liens or other encumbrances (the "Payment Objections"), which remain as of the expiration of the Due Diligence Period shall be paid at Closing from the Closing proceeds. If all non- Payment Objections are not cured prior to the expiration of the Due Diligence Period, Buyer will have the option to do any of the following by notice provided to Seller: (1) Termination. Terminate this Agreement pursuant to Section 3, on or before the expiration of the Due Diligence Period, and upon such termination, neither Seller nor Buyer shall have any further rights or obligations under this Agreement, except for the Surviving Covenants; or (2) Waiver. Waive the Objections and close the transaction contemplated by this Agreement as if such Objections had not been made OR waive the Objections pending Seller's cure of the Objections at or before Closing, in which case, Buyer's right to terminate this Agreement under Section 3 will extend until Closing. 2. (c) Title Policy. On or before the Closing, Title Insurer will furnish to Buyer an owner's title insurance policy("Title Policy") issued by Title Insurer pursuant to the Commitment, or a suitably marked up Commitment initialed by the Title Insurer undertaking to issue a Title Policy within a reasonable time in the form required by the Commitment, as approved by Buyer. 6.) CLOSING AND POSSESSION. The closing of the purchase and sale contemplated by this Agreement (the "Closing") will occur on or before the fifth (5`h) business day after the expiration of the Due Diligence Period (the "Closing Date"). The Closing shall be an escrow closing and both parties shall deliver all required documents and funds to the Title Insurer on or before the Closing Date. Seller will remove all personal property and debris and deliver the Property in a broom clean condition on the Closing Date. (a) Seller's Closing Documents. On the Closing Date, Seller will execute and/or deliver to Buyer the following(collectively,the"Seller's Closing Documents"): (I) Deed. A General Warranty Deed, in recordable form, conveying marketable title to the Property to Buyer, free and clear of all encumbrances, other than those encumbrances not objected to or waived pursuant to Section 5 above; (2) Seller's Affidavit. The standard owner's affidavit as may be required by the Title Insurer to issue the Title Policy in the form required by Section 5 above; (3) Well Disclosure Statement. A Well Disclosure Statement, properly executed and in recordable form, disclosing any wells existing on the Property or, if no wells,a statement to that effect on the deed; (4) Original Documents. Seller shall deliver to Buyer all original documents and any other documents that may be necessary for Buyer to operate the Property; and (5) Other Documents. All other documents reasonably determined by Buyer to be necessary to transfer the Property to Buyer free and clear of all encumbrances, except those encumbrances identified in the Commitment, which are not objected to or waived pursuant to Section 5 herein. (b) Buyer's Closing Documents. On the Closing Date, Buyer will execute and/or deliver to Seller the following(collectively, "Buyer's Closing Documents"): (1) Purchase Price. The balance of the Purchase Price to be paid; and (2) Title Documents. Such affidavits of Buyer or other documents as may be reasonably required by the Title Insurer in order to issue the Title Policy required by Section 5 above. 7.) PRORATIONS. Seller and Buyer will make the following pro-rations and allocations at Closing: (a) Title Insurance and Closing Fee. Seller will pay the costs of the Commitment, the related title searches and a GAP endorsement. Buyer will pay the premium for the Title 3. Policy and the cost of any other endorsements Buyer desires. Seller and Buyer will each pay one-half of any reasonable and customary closing fee or charge imposed by the Title Insurer or its designated closing agent. (b) Deed Tax. Seller will pay all state deed tax due on the deed to be delivered by Seller under this Agreement. (c) Real Estate Taxes and Special Assessments. Seller will pay all general real estate taxes payable in all years prior to the year in which the Closing occurs, and any deferred or Green Acres real estate taxes. Seller and Buyer will prorate the general real estate taxes payable in the year of Closing as of the Closing Date based upon the calendar year. Seller will pay, on or before the Closing Date, all special assessments levied or constituting a lien against the Property, as of the Closing Date, including, without limitation, all installments of special assessments, including interest, payable in the year of Closing. Buyer will pay all installments of special assessments, including interest, payable in the years after Closing. (d) Recording Costs. Seller will pay the cost of recording all documents necessary to place record title in Seller in the condition warranted by Seller in this Agreement. Buyer will pay the cost of recording all other documents. (e) Attorneys' Fees. Seller and Buyer will each pay its own attorneys' fees in connection with the preparation and negotiation of this Agreement and the Closing, except that a party defaulting under this Agreement or any of its respective Closing Documents will pay the reasonable attorneys' fees and court costs incurred by the non-defaulting party to enforce its rights regarding such default. 8.) REPRESENTATIONS, WARRANTIES AND INDEMNITY BY SELLER. All of the representations and warranties of Seller contained in this Agreement will be true on the Effective Date and on the Closing Date as if made on the Closing Date. Seller will indemnify Buyer and its successors and assigns against, and will hold Buyer and its successors and assigns harmless from, any expenses or damages, including reasonable attorneys' fees, which Buyer incurs because of the breach of any of the above representations and warranties, whether such breach is discovered before or after Closing. Seller represents and warrants to Buyer as follows: (a) Authority. Seller's execution, delivery, and performance of this Purchase Agreement does not conflict with or result in a violation of any judgment, order, or decree of any court or arbiter to which Seller is a party, or any agreement by which Seller is bound; this Purchase Agreement is and Seller's Closing Documents will be a valid and binding obligation of Seller, enforceable in accordance with its terms. (b) Title to Property. Seller owns fee title to the Property. (c) Mechanic's Liens. All labor and materials that have been provided to the Property will be fully paid for before to the Closing Date. (d) Compliance with Laws. To the best of Seller's knowledge, the Property and the current use thereof fully complies with all existing local, state, and federal regulations concerning the maintenance and operation of the Property, including zoning, building, health 4. and safety, fire safety, and environmental codes and laws and such use is a legal conforming use. No notice of violations of the same have been received. (e) Litigation and Other Matters. Seller has received no notice, and has no knowledge of any pending notice, of a violation of any statutes, ordinances,regulations,judicial decrees, or orders, or the pendency of any lawsuits, administrative or arbitration hearings, governmental investigations, proceedings, applications, petitioners, or other matters affecting the Property or the use thereof. (f) Rights of Others to Purchase Property. Seller has not entered into any other contracts, agreements or understandings, whether oral or written, for the sale of all or any portion of the Property, and there are no existing rights of first refusal or options to purchase all or any portion of the Property, or any other rights of others that might prevent the consummation of this Agreement. (g) Utilities and Wells. The property is currently connected to City water and sewer systems and electricity service. There are no wells or individual sewage treatment systems on or serving the Property. (h) FIRPTA. Seller is not a "foreign person," "foreign partnership," "foreign trust" or "foreign estate,"as those terms are defined in Section 1445 of the Internal Revenue Code. (i) Assessments. Seller has not received any notice of any actual or proposed special assessments or reassessments of the Property. Q) Termination of Contracts. As of Closing, Seller has terminated all agreements that extend beyond closing. Seller will indemnify Buyer for any costs, expenses or damages incurred in terminating any agreements that were not so terminated. 9.) REPRESENTATIONS, WARRANTIES AND INDEMNITY BY BUYER. Buyer represents and warrants to Seller that Buyer is a Minnesota municipal utility; that Buyer is duly qualified to transact business in the State of Minnesota; that Buyer has the power and authority to execute this Agreement and any Buyer's Closing Documents signed by it; that all such documents have been duly authorized by all necessary action on the part of Buyer and at the Closing shall have been duly executed and delivered; 10.) DAMAGE. If, prior to the Closing Date, all or any part of the Property is damaged by fire, casualty, the elements or any other cause ("Damages"), Seller will immediately give notice to Buyer of any Damages, and, at Buyer's option (to be exercised by notice to Seller within thirty(30) days after receipt of Seller's notice), this Agreement will terminate and neither Seller nor Buyer will have any further rights or obligations under this Agreement, except for the Surviving Covenants. If Buyer does not elect to terminate this Agreement, Seller will promptly and diligently commence to repair the Damage and return the Property to its condition before to the Damage. If the Damage is completely repaired before the Closing Date, then the Purchase Price will not be reduced, and Seller will retain the proceeds of all insurance related to the Damage. If the Damage is not completely repaired prior to the Closing Date, then Buyer will complete the repairs after the Closing Date and will be entitled to receive the proceeds of all insurance related to Buyer's completion of the repairs. 5. 11.) BROKER'S COMMISSION. Each party represents to the other that it has not engaged any party as a broker in connection with the transactions contemplated by this Agreement. Seller will indemnify Buyer from and against any and all liability to which Buyer may be subjected by any broker's, finder's, or similar fee with respect to the transactions contemplated by this Agreement to the extent such fee is attributable to any action undertaken by or on behalf of Seller or any affiliate of Seller, including any claim by Seller's Broker or any employee or agent of Seller's Broker. Buyer will indemnify Seller from and against any and all liability to which Seller may be subjected by reason of any broker's, finder's, or similar fee with respect to the transactions contemplated by this Agreement to the extent such fee is attributable to any action undertaken by or on behalf of Buyer. 12.) ASSIGNMENT. Neither Seller nor Buyer may assign its rights under this Agreement for any other purpose,without the prior written consent of the other party. 13.) REMEDIES. Time is of the essence of this Agreement. If Seller fails to perform any of its obligations under this Agreement, Buyer may: (i) terminate this Agreement; or (ii) commence an action for specific performance of this Agreement within six (6) months after the termination of this Agreement. Such termination of this Agreement or specific performance action will be the only remedies available to Buyer for a default by Seller, and Seller will not be liable for damages. If Buyer defaults in performance of its obligations under this Agreement, Seller will have the right to terminate this Agreement in the manner provided by Minn. Stat. Sec. 559.21 or 559.217. Termination of this Agreement will be the only remedy available to Seller for a default by Buyer, and Buyer will not be liable for damages or specific performance. 14.) NOTICES. Any notice required or permitted to be given under any provision of this Agreement will be in writing and will have been given in accordance with this Agreement, if it is: (i)delivered personally; (ii) sent by facsimile (with electronic verification) to the respective number set forth below; or (iii)mailed, by United States certified mail, return receipt requested, postage prepaid, or deposited cost paid with a nationally recognized, reputable overnight courier, properly addressed as follows: If to Seller: If to Buyer: Theresa Lee Elk River Municipal Utility 1627 Main Street Attn: Troy Adams, General Manager Elk River, MN 55330 P.O. Box 430 Elk River, MN 55330 Notice will be effective, and the time for response to any notice by the other party will commence to run, on the dated successfully transmitted by personal delivery or facsimile or one(1) business day after any such mailing or deposit, as applicable. Either Seller or Buyer may change its facsimile number and/or address for the service of notice by giving notice of such change to the other party, in any manner above specified,ten(10)days prior to the effective date of such change. 15.) MISCELLANEOUS. The section and paragraph headings or captions appearing in this Agreement are for convenience only, are not a part of this Agreement, and are not to be considered in interpreting this Agreement. This written Agreement constitutes the complete agreement between Seller and Buyer and supersedes any prior oral or written agreements between them regarding the Property. There are no oral agreements that change this Agreement, and no amendment of any of its terms will be effective unless in writing and executed by both Seller and Buyer. This Agreement binds and benefits Seller and Buyer and their respective 6. • successors and assigns. This Agreement has been made under, and will be interpreted and controlled by,the laws of the State of Minnesota. No waiver of the provisions of this Agreement will be effective unless in writing, executed by the party to be charged with such waiver. No waiver will be a continuing waiver or waiver in respect of any subsequent breach or default, either of similar or different nature, unless expressly stated in writing. This Agreement may be executed in any number of counterparts and each such counterpart will be an original instrument, but all such counterparts together shall constitute but one Agreement. If any provision of this Agreement is determined by a Court of Law to be invalid or unenforceable, the Court may modify that provision to be within the limits of enforceability or validity, if feasible; however, if the offending provision cannot be so modified, it may be stricken and all other provisions of this Agreement in all other respects shall remain valid and enforceable. Upon Closing, Buyer will neither assume nor undertake to pay, satisfy or discharge any liabilities, obligations or commitments of any Seller other than those specifically agreed to between the parties and set forth in this Agreement. All of the covenants, representations and warranties of this Agreement, or in any schedule, exhibit, certificate, or document delivered in connection with this Agreement will survive and be enforceable after the Closing. At any time and from time to time after the Closing Date, each party shall, upon request of another party, execute, acknowledge and deliver all such further and other assurances and documents, and will take such action consistent with the terms of this Agreement as may be reasonably requested to carry out the transactions contemplated herein, and to permit each party to enjoy its rights and benefits hereunder. [Signature page(s) to follow] 7. Seller and Buyer have executed this Agreement as of the Effective Date. BUYER: ELK RIVER MUNICIPAL UTILITIES, a Minnesota municipal utility By: Name: Its: SELLER: Theresa Lee, a single person 8. EXHIBIT A TO PURCHASE AGREEMENT Legal Description: [To be inserted upon receipt of the Commitment] GP:3308987 v DRAFT 9.