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4.5. SR 12-01-2014 City of Elk=' Request for Action River To Item Number Mayor and City Council 4.5 Agenda Section Meeting Date Prepared by Consent December 1, 2014 Cal Portner, City Administrator Item Description Reviewed by Houlton Property Farm Lease Agreement Reviewed by Action Requested Approve,by motion,a lease agreement with the Houlton Olson Family LLP to allow for agriculture purposes on city property. Background/Discussion The Houlton family will close on the sale of their Elk River farmstead to The Trust for Public Land (TPL). TPL will convey the property to the City of Elk River with deed restrictions. The Houlton family has an outstanding deferred utility assessment on the property,which must be satisfied at the closing. The family has asked to allow continuing land lease for agriculture purposes with the intent of recovering some of the amount paid on the deferred assessments. The tillable land will be transitioned to prairie grass over the next few years. It is to the benefit of prairie grass restoration to have the farmed land seeded with crops during this process. The city position is that if the Lessard-Sams Outdoor Heritage Council (L-SOHC) is okay with the land being leased for agriculture use until restoration is complete,the city has no objection. The lease does not provide for a minimum or maximum amount of time in which the property will be used for agricultural purposes. The lease holds the city harmless from decisions by the L-SOHC which may restrict agricultural use or lease payments. Financial Impact N/A Attachments ■ Houlton Agriculture Lease Agreement P0WIAEO 0 NaA f RE] Lease Agreement Between City of Elk River and Houlton Olson Family, LLP This Agreement ("Agreement') entered into the day of September, 2014, by and between the City of Elk River ("City") and Houlton Olson Family, LLP ("Owner"). WHEREAS, Owner is the current owner of a property located within the City commonly known as the Houlton Farm(the "Property"); and WHEREAS, Owner intends to sell the Property to The Trust for Public Land (the "Trust"); and WHEREAS, the Trust intends to donate the Property to the City; and WHEREAS, the Trust will obtain the funds to acquire the Property through a grant from the Lessard-Sams Outdoor Heritage Council ("LSOHC"); and WHEREAS, the grant will be made pursuant to a grant agreement with LSOHC ("Grant Agreement") which will govern future use of the Property and require that the Property be restored over time to natural habitat; and WHEREAS, Owner will, at the time of sale of the Property, pay all special assessments levied or pending against the Property, including certain deferred trunk sewer and water assessments in the amount of$ (the "Deferred Assessments"); and WHEREAS, Owner desires to recover some or all of the amount it pays for the Deferred Assessments by leasing a portion of the Property for agricultural purposes and keeping the proceeds of lease payments; and WHEREAS, upon taking ownership of the Property, the City intends to commission a master plan for the restoration and operation of the Property as natural habitat; and WHEREAS, during this study period and potentially beyond, the Property will likely not be open for public use and, if approved by the LSOHC, could be available for agricultural purposes; and WHEREAS, keeping the land in agricultural production until such time as actual restoration work is ready to begin on that portion of the land is beneficial to the restoration process and helps avoid the propagation of weeds and invasive and undesirable species; and WHEREAS, the City has no objection to Seller keeping the proceeds from an agricultural lease of a portion of the Property until all or a portion of the Property is restored to natural habitat provided the right of Owner to lease the Property for agricultural purposes, and to keep the proceeds of lease payments is approved by LSOHC. NOW, THEREFORE, the City and Owner agree as follows: A. The recitals first set forth above are incorporated by reference as if fully set forth herein. B. The rights and obligations herein shall survive any sale, conveyance or transfer of the Property by Owner, including but not limited to the conveyance of the Property to the Trust. C. The City agrees that all portions of the Property used as tillable ground as of the date of this Agreement shall be kept, maintained and used as tillable ground until such time as restoration commences. D. The City and Owner agree that any agreement between them with respect to the Property, including this Agreement is subject to the terms of the Grant Agreement with LSOHC and the approval of the LSOHC. Therefore, this Agreement shall be void and of no effect unless the Grant Agreement and the LSOHC allow agricultural use of the Property as a benefit to the restoration process, and allow Owner to receive the proceeds of agricultural lease payments. E. City and Owner agree that City may begin restoration work on all or any part of the Property at any time and that there are no guarantees to the length of time the Property may be used for agricultural purposes. F. City and Owner agree that if lease payments are received by Owner and the LSOHC subsequently objects to Owner's receipt of the lease payments and/or requests or demands return of the lease payments to the LSOHC or the City, Owner will promptly return said lease payments as directed by LSOHC or the City and will hold the City harmless and defend the City from any claims by the LSOHC or any other third party to the lease payments. G. City will, by December 15, 2014, and by October 15 of each subsequent year, advise Owner as to the acreage, if any, which will be available for agricultural purposes the following year. Owner shall not have the right to lease any portion of the Property for agricultural purposes until this notice is received from the City. H. Owner will, by December 31 of each year, report to the City the total lease payments received by Owner during that year. I. City and Owner agree that Owner may assign its interest in this Agreement to any other party as determined by Owner in its sole and absolute discretion. J. This Agreement shall be in effect from the date herein until terminated as follows: 1. Immediately, upon written notice to either party that the LSOHC objects to agricultural use of the Property and/or the receipt by Owner of lease payments for agricultural use. 2. Immediately, upon written notice to either party that this Agreement, or any actions taken by the parties pursuant to this Agreement, has been determined by the LSOHC to be inconsistent or in conflict with the Grant Agreement. 2 3. Immediately, upon written notice of either party to the other of its termination of this Agreement. 4. When the total lease payments received by Owner for lease of the Property for agricultural purposes equals the total amount of the Deferred Assessments. All lease payments received by Owner in excess of the amount of the Deferred Assessments shall be returned to the City and used for restoration of the Property. 5. Regardless of which reason 1-4, above, the Agreement is terminated, if the Agreement is terminated while crops are in the ground, Owner shall have the right (if the Agreement is terminated by the City) or the obligation (if the Agreement is terminated by Owner) to harvest the crops and receive the lease payment due through the harvesting, unless the LSOHC determines, in their sole discretion, that harvesting the crops would be inconsistent or in conflict with the Grant Agreement. CITY OF ELK RIVER By John J. Dietz Its Mayor AND Tina Allard Its City Clerk HOULTON OLSON FAMILY, LLLP By: Its 760437.DOCX 3