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4.4. SR 11-09-1998'ity of iveF TO: VFROM: DATE: SUBJECT: MEMORANDUM Item #6.4. Mayor & City Council Paul T. Steinman, Director of Economic Development November 9, 1998 Holt/Jackson Site Update Issue Staff recently received an offer for the purchase of the site located at the corner of Holt and Jackson. The purpose of this agenda item is to provide an update to the Council on the this offer and to direct staffto provide a response. Background Mark A. Davis and Associates, Inc. has made an offer for this site in the amount of $300,000. He has also requested that the City of Elk River be responsible for paying his real estate commission in the amount of $24,000. The net amount the city would receive from this transaction would be $276,000. The offer would require the site to be rezoned to allow construction of an office building for dental and orthodontist related services. Staff verbally responded to Mark A. Davis and Associates that it would not recommend approval of the offer to the City Council at this time. Staff suggested that a more appropriate offer would be one within which the city would net out approximately $350,000. Mr. Davis indicated that his client would then have to increase the offer to $350,000 and pay his related real estate commission. This would mean that his client would have to put more than $75,000 additional on the table in order to make this deal work. Mr. Davis indicated his client would be unlikely to do so at this time. 13065 Orono Parkway · P.O. Box 490 · Elk River, MN 55330 · TDD & Phone: (612) 441-7420 · Fax: (612) 441-7425 Recommendation Staff recommends the Council authorize a written response to the attached offer from Mark A. Davis and Associates, Inc. rejecting such offer. Attachments · Commercial purchase agreement from Mark A. Davis and Associates October 15, 1998 Mr. Paul Steinman City of Elk River 13065 Orono Parkway Elk River, MN 55330 Re: Purchase Agreement Dear Paul: Please find enclosed, a purchase and commission agreement for the Holt & Jackson site owed by the City of Elk River. While the price that we have offered doesn't meet your asking price, I believe that it's a fair offer based on the amount of useable land that is available to development. Please call me when you get back on Tuesday. We are extremely interested in moving forward with the development of this site. Sincerely, .~ ~ /----.. Mark A. Davis Corporate Real Estate Services Foshav Tcwcr, Suite 1111 · ?[;lr,.l~h:"tC .~\\'t.'lltlu Minneapolis, Minnesota 55402 October 15, 1998 Mr. Paul Steinman City of Elk River 13065 Orono Parkway Elk River, MN 55330 Re: Commission Agreement Dear Paul: This letter shall serve as our Agreement for the payment of a real estate commission if a sale of the property, known as the Holt & Jackson Site, is completed with my client, James C. Block. The City of Elk River agrees to pay Mark A. Davis & Associates, Inc., a real estate commission of 8% of the gross sales price paid by my client. The commission shall be paid at the closing of the sale out of the sale proceeds. Example: If the gross sales price agreed to between the parties is $300,000, the commission payable to Mark A. Davis & Associates, Inc. at closing would be: $300,000 x 8% = $24,000. If this Agreement is acceptable, please signify by having an authorized person from the City of Elk River sign below and return one copy to my attention. Sincerely, / Mark A. Davis AGREED TO AND ACCEPTED: City of Elk River By: Its: Dated: CorI;m'ate Real Es[ate Services ,~l~ ,Form No. 1519CLPA I (New) Miller-Davis Legal Forms, Mpls (612) 332-5144 --~CEWEDOF James C. Block D ate: COMMERCIAL-INDUSTRIAL PURCHASE AGREEMENT This form approved by the Minnesota Association of REALTORS*, which disclaims any liability arising out of use or misuse of this form. (~etober :[5, 1998 the sum of Twenty Thous@nd--- 00/100-- ($ 20,000. O0 ..... ) DOLLARS Check (,~, ........... h,ch~ as earnest money and in part payment for the purchase of property at 2.94 ~ere vneant land parcel plus Outlot g(Holt k J~ckson Site)situated in the Countyof Sherbu,-n~ , State of Minnesota, and legally described as follows: S e e ~tt~eho, d Exhibit together with the following personal property: ~7one. all of which property the undersigned has this day sold to the Buyer for the sum of: Three Hundred Thous~nd- ($ 300,000. O0 ) DOLLARS, which the Buyer agrees to pay in the following manner: Earnest money herein paid $ 20. 000. O0 and $280 ? 000.00 , cash, on ---, the date of closing aml4he-balan~e, of 4;. by t:imm c,,i~,g-ar, r~n-on4he,alta~hed addoad~m. 1. DEED/MARKETABLE TITLE: Subject to performance by the Buyer, the Seller agrees to execute and deliver a .. C enera 1 Warranty Deed conveying marketable title to said premises subject only to the following exceptions: (a) Building and zoning laws, ordinances, State and Federal regulations. (b) Restrictions relating to use or improvement of the premises without effective forfeiture provision. (c) Reservation of any minerals or mineral rights to the State of Minnesota. (d) Utility and drainage easements which do not interfere with present improvements. (e) Rights of tenants as follows: N one, 2. REAL ESTATE TAXES. Real estate taxes due and payable in the year of closing shall be prorated between Seller and Buyer on a calendar year basis to the actual date of closing unless otherwise provided in this Agreement. Real estate taxes payable in the years prior to closing shall be paid by Seller. Real estate taxes payable in the years subsequent to closing shall be paid by Buyer. 3. SPECIAL ASSESSMENTS. [Strike out one.] B~FL"~I~I;L'glll;SSDJ~I~ROl~'l~.tr, S:OI~'I~IlgD~SELLER SHALL PAY on the date of closing all installments of special assessments certified for payment with the real estate taxes due and payable in the year of closing. [Strike out one.]-B~:ER SH~I: ASSL4ME/SELLER SHALL PAY ON DATE OF CLOSING all other special assessments levied as of the date of this Agreement. [Strike out one.]-BtWER~E~SD3IE/SELLER SHALL PROVIDE FOR PAYMENT OF special assessments pending as of the date of this Agreement for improvements that have been ordered by the City Council or other governmental assessing authorities. (Seller's provision for payment shall be by payment into escrow of 11/2 times the estimated amount of the assessments.) If a special assessment becomes pending after the date of this Agreement and before the date of closing, Buyer may, at uyer s option: (a) B ' ' Assume payment of the pending special assessment without adjustment to the purchase price; or (b) Require Seller to pay the pending special assessment (or escrow for payment of same a sum equal to l'A times the projected pending assessment) and Buyer shall pay a commensurate increase in the purchase price of the properly, which increase shall be the same as the estimated amount of the assessment; or (c) Decl~e this Agreement null and void by notice to Seller, and earnest money shall be refunded to Buyer. Seller shall pay on date of closing any deferred real estate taxes or special assessments payment of which is required as a result of the closing of this sale. 4. PRORATIONS. All items customarily prorated and adjusted in connection with the closing of the sale of the property herein including but not limited to rents, operating expenses, interest on any debt assumed by Buyer, shall be prorated as of the date of closing. It shall be assumed that the Buyer will own the property for the entire date of the closing. DAMAGES TO REAL PROPERTY. If there is anv loss or damage to the property between the date hereof and the date of closing, for any reason, the risk of loss shall be on the Seller. If the property is destroyed or substantially damaged before the closing, this Purchase Agreement shall become null and void, at Buyer's option. Buyer shall have the right to terminate this Purchase Agreement within 30 days after Seller notifies Buyer of such damage. Upon said termination, the earnest money shall be refunded to Buyer and Buyer and Seller agree to sign a cancellation of Purchase Agreement. MNCI:PA-I 01/93) 8. 9. 10. 11. ,I~1~ Form No. 1519CIPA 2 (New) Miller-Davis Legal Forms, Mpls (612) 332-5144 COMMERCIAL-INDUSTRIAL PURCHASE AGREEMEN~r Address Holt & Jackson Site Page 2 EXAMINATION OF TITLE. Within a reasonable time after acceptance of this Agreement, Seller shall furnish Buyer with an Abstract of Title or a Registered Property Abstract certified to date including proper searches covering bankruptcies and State and Federaljudgments, liens, and levied and pending special assessments. Buyer shall have 10 business days after receipt of the Abstract of Title or Registered Property Abstract either to have Buyer's attorney examine the title and provide Seller with written objections or, at Buyer's own expense, to make an application for a title insurance policy and notify Seller of the application. Buyer shall have 10 business days after receipt of the commitment for title insurance to provide Seller with a copy of the commitment and written objections. Buyer shall be deemed to have waived any title objections not made within the applicable I0 day period set forth above, except that this shall not operate as a waiver of Seller's covenant to deliver a Warranty Deed, unless a Warranty Deed is not specified above. If any objection is so made, Seller shall have 10 business days from receipt of Buyer's written title objections to notify Buyer of Seller's intention to make title marketable within 120 days from Seller's receipt of such written objection. If notice is given, payments hereunder required shall be postponed pending correction of title, but upon correction of title and within 10 days after written notice to Buyer the parties shall perform this Purchase Agreement according to its terms. If no such notice is given or if notice is given but title is not corrected within the time provided for, this Purchase Agreement shall be null and void, at option of Buyer; neither party shall be liable for damages hereunder to the other and earnest money shall be refunded to Buyer; Buyer and Seller agree to sign cancellation of Purchase Agreement. If title to the property be found marketable or be so made within said time, and Buyer shall default in any of the agreements and continue in default for a period of 10 days, then and in that case the Seller may terminate this contract and on such termination all the payments made upon this contract shall be retained by Seller as liquidated damages, time being of the essence. This provision shall not deprive either party of the right to enforce the specifice performance of this contract provided this contract has not been terminated and provided action to enforce such specific performance shall be commenced within six months after such right of action shall arise. POSSESSION. Seller shall deliver possession of the property on the date of closing. REPRESENTATIONS AND WARRANTIES. See attached addendum. TIME IS OF THE ESSENCE FOR ALL PROVISIONS OF THIS CONTRACT. WELL DISCLOSURE STATEMENT. Buyer has received the well disclosure statement required by Minnesota Statutes Sec. 1031.235. BUYER AND SELLER INITIAL: Buyer(s) Seller(s) ADDENDA. Attached are (number) one addenda which are made a part of this Agreement. · MISCELLANEOUS PROVISIONS. (a) Survival. All of the warranties, representations, and covenants of this Agreement shall survive and be enforceable after the closing. (b) Entire Agreement; Modification. This Agreement constitutes the cot :plete ngreement between the parties and supercedes any prior oral or written agreements between the parties regarding the property. 'fhere are no verbal agreements that change this Agreement and no waiver of any of its terms will be effective unless in a writing executed by the parties. (c) Successors and Assigns. If this Agreement is assigned, all provisions of this Agreement shall be binding on successors and assigns ACCEPTANCE DEADLINE. This offer to purchase, unless accepted sooner, shall be null and void at 11:59 P.M. 13. , and in such event all earnest money shall be refunded to Buyer. NOTICE t~:.~k ~.. 7)?v~,q i~"~rk A. D~v~a & Aasomi~tea, ina Represents Buyer ,^~,. ,c~ ~,~, Represents THIS IS A LEGALLY BINDING CONTRACt. IF NOT UNDERSTOOD, SEEK COMPETENT ADVICE. Dated: SELLER SELLEI~ j' t y of Elk River Dated: October 15, 199B SELL~NT MNCI: PA-2 (11/93) Exhibit A The description of the land, situated in Sherburne County, Minnesota, is as follows: That part or the Southeast Quarter of the Northwest Quarter of Section 27, Township 33 North, Range 26 West, Sherburne County, Minnesota, that lies easterly of the easterly line of Holt Street Northwest and its southwesterly extension as dedicated in the recorded plot of RIDGEWOOD EAST 3Ro ADDITION in the files of the Sherburne County Recorder and which lies easterly of the easterly line of Lot 4, Block 3 in said plat and which lies westerly of Line 1 described below: Line 1: Beginning at the point of intersection of the east and west quarter line of said Section 27 and a line run parallel with and distant 190 feet westerly of Line 2 described below: thence run northerly at right angles to said east and west quarter line for 50 feet: thence run northeasterly to a point on a line run parallel with and distant 100 feet westerly of said Line 2, distant 150 feet northerly of its intersection with said east and west quarter line: thence run northerly along said 100 foot parallel line for 1200 feet and there terminating; Line 2: Beginning at a point on the south line of said Section 27, distance 612.2 feet east of the south quarter corner thereof; thence run northwesterly at an angle of 73 degrees 16 minutes 00 seconds with said south section line for 2313.40 feet; thence deflect to the right at an angle of 21 degrees 26 minutes 00 seconds for 2000 feet and there terminating. ADDENDUM TO PURCHASE AGREEMENT Between James C. Block, as Buyer and the City of Elk River, as Seller, dated October 15, 1998. A. Contingencies - The contingencies of the Buyer under paragraphs 1 and 2 below, are subject to the Buyer's approval within 60 days following the date this Agreement is executed by both Parties and the contingencies of the Buyer under paragraphs 3, 4, 5 and 6 below, are subject to the Buyer's approval within 120 days following the date this Agreement is executed by both Parties, all as to the suitability of the Property for Buyer's proposed use, in Buyer's sole discretion, as follows: A satisfactory soil and environmental review of the Property, including the results of any soil testing, hazardous waste and environmental review of the Property. Buyer shall diligently pursue obtaining such testing to completion. Seller agrees to provide Buyer with copies of all soil or environmental reports previously obtained by or in the possession of Seller. An updated survey of the Property to be provided by Seller at Seller's sole cost and expense. The survey shall be performed by a Registered Land Surveyor properly licensed to practice in the State of Minnesota and reasonably acceptable to the Buyer. The survey shall show the location of all buildings, easements and utilities thereon and such other information as is customary in Minnesota. Buyer shall make any objections to such survey in writing within the aforementioned contingency period or such objections shall be deemed to be waived. Buyer shall be allowed a minimum of 20 days to review and make any objections to the survey from the date said survey is provided to Buyer from Seller. 3. Determination that the access to the Property (ingress/egress) as well as signage approved by the City of Elk River for the Property is found acceptable to the Buyer. 4. A satisfactory review of any restrictive covenants governing the development, use and/or ownership of the property, if any. Approval of the development plan for the Property and zoning for Buyer's proposed use by the City of Elk River. Confirmation that utilities are available to adequately serve the property, when improved as contemplated by the Buyer and that the Property is not within the flood plain. Buyer shall diligently pursue such approvals, as required, to completion. 6. Receipt of an acceptable commitment for financing of the project. Seller shall allow Buyer and Buyer's agents, access to the Property without charge and at all reasonable times for the purpose of Buyer's investigation and testing the same pursuant to the aforementioned contingencies. Buyer shall pay all costs and expenses of such investigation and shall hold Seller harmless from all costs and liabilities relating to the Buyer's activities. In the event the Buyer is not satisfied with any of the above conditions, in its sole discretion, Buyer may terminate this Agreement by giving written notice to the Seller on or before the above stated contingency date. If this Agreement is effectively terminated hereunder, the Earnest Money shall be canceled and returned to the Buyer and neither party shall have any further liability or obligation to the other party except for Buyer's obligations set forth above with regard to any activities conducted by it or its agents upon the Property. Jo Closing Date - The date of closing shall be within 15 days after Buyer has removed or waived all contingencies. Governing Law - This Agreement is being executed, delivered and is intended to be performed in the judicial district in which the property is located, and the substantive laws of the State of Minnesota will govern the validity, construction and enforcement of this Agreement. Assignment - The rights of the Buyer under this Agreement may not be assigned in whole or in part without the prior written consent of the Seller, unless the Buyer assigns the Agreement to a partnership entity or limited liability corporatior, in which Buyer has an interest, in which case Seller's approval shall not be required. Amendment - Neither this Agreement nor any of the provisions hereof can be amended, changed, waived, discharged or terminated, except by an instrument in writing signed by both parties. Attorneys' Fees, Waiver of Jury Trial - If either party institutes an action or proceeding against the other relating to the provisions of this Agreement or any default hereunder, the unsuccessful party to such action or proceeding will reimburse the successful party therein for reasonable expenses of attorneys' fees, disbursements, and costs, and litigation expenses incurred by the successful party, in an amount awarded by a court. The parties each hereby waive the right (if any) to trial by jury in any such action or proceeding. Notices - Any notice, payment, demand or communication required or permitted to be given by any provision of this Agreement will be in writing and will be deemed to have been given when delivered personally or on the third (3re) business day after the same is sent by certified mail, postage and charges prepaid, directed to the party entitled thereto at the address first listed above. Construction of the Agreement - The Buyer and Seller have each read and fully understand the terms of this Agreement; each has had the opportunity to have this Agreement reviewed by counsel. The rule of construction providing that ambiguities in a contract shall be construed against the drafter shall not apply. Binding Effect - This Agreement will inure to the benefit of and bind the respective successors and assigns of the parties hereto. Brokerage - Seller and Buyer each represent to the other that except for Mark A. Davis and Mark A. Davis & Associates, Inc. ("Broker"), neither party has contacted or used a broker in this matter and each agrees to defend, indemnify and hold the other harmless from any claim for real estate brokerage commission asserted as a result of dealings claimed to have been conducted with such party. Seller agrees to pay Mark A. Davis & Associates, Inc. a real estate commission upon closing of the transaction, at closing, pursuant to the attached commission agreement. Seller's Representations and Warranties 1. Litigation. There is no action, litigation, investigation, condemnation or other proceeding of any kind pending or to the best of Seller's knowledge threatened against Seller or any portion of the property. In the event Seller becomes aware of any such proceeding prior to closing, Seller shall promptly notify Buyer of such proceeding. 2. Foreign Taxpayers, 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. 3. Violations. Seller has not received any written notice from any federal, state, county, or local authority having jurisdiction over the Property of any violation of any law, regulation, ordinance, code or order affecting the Property. 4. Survival of Representations and Indemnification. All representations, covenants and warranties shall be true and correct on the day of closing as if made on and as of such date. Each of the representations and warranties made in this Purchase Agreement will survive the Closing Date and shall remain operative in full force and effect indefinitely regardless of any investigation at any time made by or on behalf of the Buyer and shall not be deemed merged in any document or instrument so executed and/or delivered by Seller. Obligations Upon Closing 1. Closing Costs. Seller shall pay the Deed Tax imposed upon the transfer of the Property to Buyer and the cost of recording any instruments, conveyances or other documents required to perfect or evidence the marketability of Seller's title to the Property. Buyer shall pay for the recording of the Warranty Deed to be executed and delivered by Seller under this Agreement and any such Mortgage Registration Tax for any Mortgage upon the property by the Buyer. Closing Documents Seller shall provide at closing the following documents: a) Warranty deed; b) Seller's Affidavit; c) Executed Well Disclosure Form; d) Certification of Real estate Value; and e) FIRPTA Affidavit. Further Instrument -- Each of the parties hereto will on the Closing date or such other date as the other party may request, without cost or expense to the party so requesting, execute and deliver or cause to be executed or delivered to such other party, such further instruments of transfer and conveyance and will take such other action as may be reasonably required to more effectively consummate the transactions contemplated by this Agreement. Environmental - Seller warrants that to the best knowledge of Seller, no toxic or hazardous substances or wastes, pollutants or contaminants (including without limitation, asbestos, urea formaldehyde, the group of organic compounds known as polychlorinated biphenyl, petroleum products including gasoline, fuel oil, crude oil, and various constituents of such products, and any hazardous substance as defined in the Comprehensive Environmental Response Compensation and Liability Act of 1980 ("CERCLA", 42 U.S.C. 9601-9657, as amended) have been generated, treated, stored, released or disposed of, or otherwise placed, deposited in or located on the Property. To the best knowledge of the Seller, there are no nor have there been any substances or conditions in or on or emanating from the Property that may support a claim or cause of action under CERCLA or any federal, state or local environmental statues, regulations, ordinances or other environmental regulatory requirements. To the best knowledge of Seller, no above ground or underground tanks are located in or about the Property or have been located under, in or about the Property and have been subsequently removed or filled. There are no known water wells on the Property. Seller has disclosed to Buyer all environmental reports and studies with respect to the Property which are in Seller's possession. Seller agrees to indemnify, defend, and hold harmless from and against all liabilities, losses, damages, injuries, costs (including reasonable attorney's fees), expenses, penalties and claims of any and every kind whatsoever paid, incurred or suffered by, or asserted against Buyer that result from or arise out of the presence on or prior to possession under the Warranty Deed, of any pollutant on or under the Property. For the purposes of this Agreement, "Pollutant" means and includes all items referenced in Section N above. Buyer: James C. Block Seller: City of Elk River ~~--/~ By: By: Date: /(~ *" ! ~'*-- dT~ Date: