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3.6. SR 07-18-2005 Item # 3.6. MEMORANDUM TO: Mayor and City Council FROM: Catherine Mehelich, Director of Economic Developmen~ DATE: July 18, 2005 SUBJECT: Call a Public Hearing to Consider Tax Rebate (Abatement) Financing and Business Subsidy for Crystal Distribution, Inc. Project Attachments . July 11, 2005 Staff Report re: Crystal Distribution, Inc. Project Issue At its July 11,2005 meeting the EDA reviewed a request by Crystal Distribution, Inc. for Tax Rebate (Abatement) Financing from the City of Elk River in the amount of $138,470. The project description and proposed terms of the assistance, including job and wage goals, are included in the attached staff report to the EDA. The EDA directed staff to complete the due diligence for processing the application and for the city's fInancial advisor, Ehlers & Assoc. to complete a Mancial analysis of the request. MN State Statutes require public entities to hold a public hearing prior to awarding tax abatement assistance. In addition, the MN Business Subsidy Law requires public entities to hold a public hearing prior to granting a business subsidy over $100,000. A copy of the Tax Rebate Financing application and recommendation will be provided at the Council's public hearing. Recommendation The EDA and staff recommends that the Council call for a public hearing on August 15, 2005 at 6:30 p.m. to consider the Tax Rebate (Abatement) Financing request and business subsidy for the Crystal Distribution, Inc. Project. ITEM I 7. MEMORANDUM TO: Economic Development Authority FROM: Catherine Mehelich, Director of Economic DevelopmentM DATE: July II, 2005 SUBJECT: Consider Tax Rebate Financing Assistance and Sale of EDA Property for Crystal Distribution, Inc. Attachments . Northsw: Business Park Preliminary Plat . Purchase Agreement Form Issue Staff has been working with Crystal Distribution, Inc. for the past several months to identify a site and financing assistance to relocate and expand the company's operations to Elk River. The EDA is asked to review and consider the following actions: . Recommend the Council call a public hearing on the proposed Tax Rebate Financing assistance request and business subsidy to the company . Call a public hearing on the proposed sale of 3.7 -acres of EDA property to the company Proiect Description Established in 1994, Crystal Distribution, Inc. (CDI) primarily fabricates sheet metal into custom curb adapters which are used to replace existing roof top equipment with the new roof top equipment. The roof top units are sold to heating, ventila.tion and air conditioning (HV AC) distributors across the nation and into Canada. The company is owned and managed by Pat O'Brien and his wife, Bobbie J o. The company currendy employs 31 full- time staff with an average hourly wage of $21.46. Within two years of the expansion the company proposes to create 15 new jobs with a minimum hourly wage of $15.00. The company currendy leases 22,000sf in Maple Grove and is seeking a suitable location within the northwest metro area to relocate and expand in time for the lease expiration. CDI proposes to construct a 30,000 square foot light industrial building in which the company would occupy 100% of the space. The 3.7 -acre lot also accommodates and additional 12,000sf for CDT's desired future expansion. Consider Tax Rebate Financing Assistance and Sale of ED A Property for Crystal Distribution, Inc. July 11, 2005 EDA Meeting Page 2 of2 Sale of ED A Property Staff has been working with Attorney Tom Bray of Briggs & Morgan to draft the attached purchase agreement form for the sale of the EDA property within Northstar Business Park. The property is proposed to be sold for the purchase price of $2.00 per square foot, with exception to property that is encumbered by the Northern Natural Gas line easement. The purchase agreement includes the statutory requirements for the sale of EDA property. Minnesota Statutes require the EDA to provide notice and hold a public hearing prior to the sale of property, review building plans and specs and a reversion clause if the project is not completed as agreed. Proposed Tax Rebate Financing Assistance Staff has proposed financing assistance in the form of a pay-as-you-go Tax Rebate Financing note to the company in an amount up to 100% of the land cost at $276,942. The amount of the assistance has been established based on providing a land cost write down of $25,000 per new job to be created at a minimum hourly wage of$15.00. Using the following formula the project is eligible to receive 100% write down on the land cost through a pay-as-you-go TRF note: Land Cost: 3.7-acres minus gas line easement @ $2.00/sf Eligible Assistance: $25,000 x 15 new jobs at $15/hr $276,942 $375,000 Staff recommends that the TRF assistance be provided 50/50 by the City and Sherburne County with the company receiving 90% of the annual TRF and the EDA receiving 10% of the annual TRF (to reimburse itself for expenses not included in the sale price of $2.00/ sf) for a maximum period of up to is-years. CDI has submitted the City's TRF application and fee. Per the City's TRF policy, any requests over the amount of $25,000 requires financial review and but-for analysis by the city's financial advisor, Ehlers & Associates. The review and recommendation will be completed prior to the Council calling for a public hearing on the TRF request. Actions Requested Staff recommends the EDA consider the following actions for the CDI project: . Direct staff to complete the due diligence for the Tax Rebate Financing review process and recommend the City Council call for a public hearing on the Tax Rebate Financing assistance request and business subsidy. . Call a public hearing for Monday, August 8 at 5:30 p.m. regarding the sale of 3.7-acres of EDA property, Northstar Business Park, to Crystal Distribution, Inc. S:\Industrial Siting\CDI\Memos\ 7.11.05 EDAdoc .. i N "'/;:..; ~52 ~ "'0. "UN d~~ z .: ~ ~~! ,. i ~ffiN (j~ . [;! III $ It I I: I I "jl h ~ ~! I t-. ~- J e~g~ !:l ~I ~ 5_ -, li I" I "iir ~I I; 0'_1 !gr o . hI ~ ~ ~ h ~- ~ ~ ~ ~ ~ ~ ~ ~ $ aR :!,. ..:I -. ih b.ft S I = b , S I ~ ~~ l . I , , ~ t:~7 I' - I I , ------+ I I I , I I /"\""-_ I; /Y/ , ----, I /, ' 1 I 1......"\ , -1~1 ), ( \ .- ~............. I! I ~ - il " \../ -'I I l- =~ I.... I\..) \ , Isl.......bili I "> ( 'I' \ , S y-- $:i I \.... / \ ,\, \/ : ;I~ 1 I ~ ,\ .)........ ...... ...... I ;:;a 1 : I --\ '/~ .-\......... ---r! III I -1 I _\ . ".~ - 1 \- I M a r I -...... -- I d/ T--+--,,-}J-~_________\___L ,,'_ .;.- -"-:1 -- ...,-'\ - -- -'-' ':"IE) \ ,..-......- /-'r --j I '1-.___'-.>-+-'1_- L--...J- // I Ii: PURCHASE AGREEMENT RELATING TO \Q)~~\f1 A LOT IN NORTRSTAR BUSINESS PARK, SHERBURNE COUNTY, MINNESOTA 1. Parties. The parties to this Purchase Agreement are: a. The Economic Development Authority of the City of Elk River, a body corporate and politic organized pursuant to Minnesota Statutes, Section 469.090 to 469.1082,13065 Orono Parkway, Elk River, MN 55330-5600, Attention: Executive Director, (the "Seller"); and b. Crystal Distribution Inc., Attention: (the "Buyer"). This Agreement sometimes refers to Seller and Buyer individually as a "Party" and collectively as the "Parties". 2. Property. The real property that is the subject of this Agreement is located in the City of Elk River, Sherburne County, Minnesota and is the property depicted as Lot _, Block _, on the Preliminary Plat of NORTH STAR BUSINESS PARK. Sherburne County, Minnesota (the "Property"). The property is vacant land. The Plat of NORTHST AR BUSINESS PARK. is not recorded. As set forth in Section 18( d), Buyer's obligations under this Agreement are contingent upon Seller's recording ofthe Plat ofNORTHST AR BUSINESS PARK. on or before the Date of Closing, as defined in Section 11. The term "Property", as used in this Agreement includes all hereditaments and appurtenances to the Property. The Parties do not contemplate the conveyance of any personal property pursuant to this Agreement. 3. Purchase and Sale. Subject to Section 4, Seller agrees to sell the Property to Buyer pursuant to the terms of this Agreement, and Buyer agrees to purchase the Property from Seller pursuant to the terms of this Agreement. 4. Public Rearm!:!. Before Seller may convey the Property to Buyer, Seller's Board must hold a hearing on the proposed sale and must determine that the sale is in the best interest of the City of Elk River and its people and furthers Seller's general plan of economic development. Within a reasonable period after Buyer submission of a signed copy of this Purchase Agreement to Seller, Seller will publish the required notice of and hold the hearing required by Minnesota Statute Section 469.105, Subd. 2. If, at the hearing, Seller's Board does not adopt a resolution approving a sale pursuant to the terms of this Agreement, Buyer may terminate this Agreement pursuant to Section 18(f), or Seller may terminate this Agreement pursuant to Section 19(a). If Seller's Board adopts a resolution approving a sale pursuant to the terms of this Agreement and a taxpayer appeals Seller's decision in accordance to Minnesota Statute Section 469.105, Subd. 3, Seller must give Buyer written notice of the appeal, and Buyer may terminate this Agreement pursuant to Section 18( f) or Seller may terminate this Agreement 178761Ov1 pursuant to Section 19(b). If neither Buyer nor Seller terminates this Agreement pursuant to Section 18(f) or Section 19(b), within five (5) business days of Seller's delivery of written notice of an appeal to Buyer, all time periods provided for in this Agreement will be tolled pending the outcome of such appeal. If neither Buyer nor Seller terminates this Agreement pursuant to Section 18(f) or Section 19(b) and a District Court finds in favor of the party taking the appeal, this Agreement automatically terminates and Seller must return the Earnest Money to Buyer. 5. Purchase Price. The purchase price for the Property is Dollars ($ ) (the "Purchase Price"). [The purchase price will be determined by multiplying the gross square footage of the Property, less the square footage of any portion of the Property subject to the existing, recorded easement in favor of Northern Natural Gas Company, by $2.00.] 6. Earnest Monev. Seller's execution of this Agreement aclmowledges Buyer's deposit of earnest money in the amount of $15,000.00 (the "Earnest Money"). Buyer must deposit the Earnest Money with Seller. Seller may commingle the Earnest Money with other funds of Seller. Seller has no obligation to invest the Earnest Money, and if Seller elects to invest the Earnest Money, any interest which the Earnest Money earns is the property of Seller. Earnest Money in the possession of Seller remains the property of Buyer until paid to Seller pursuant to Section 8 below or until Buyer defaults in the performance of Buyer's obligations under this Agreement and Seller terminates this Agreement pursuant to the provisions of Section 22(a) in which case Seller may retain the Earnest Money. If Seller defaults in the performance of Seller's obligations under this Agreement, Buyer may terminate this Agreement pursuant to the provisions of Section 22(b), and the Seller must return Earnest Money to Buyer. Seller must also return the Earnest Money to Buyer if Buyer terminates this Agreement pursuant to Section 13, Section 18 or Section 20 or if Seller terminates this Agreement pursuant to Section 19. Upon Seller's full performance of Seller's obligations under this Agreement, the Earnest Money must be delivered to Seller and applied towards payment of the Purchase Price pursuant to the provisions of Section 8(a) below. 7. Plans and Specifications. Within 14 days of the date of this Agreement, Buyer must deliver plans and specifications for the improvements Buyer intends to construct on the Property ("the Plans and Specifications") to Seller for review as required by Minnesota Statutes, Section 469.105, Subd. 7. The Plans and Specifications must include (a) a site plan showing all proposed buildings and above ground improvements; (b) floor plans; and ( c) exterior elevations (all sides). The Plans and Specifications must be as detailed as the plans and specifications that City of Elk River requires in connection with the issuance of a building permit. The Plans and Specifications must provide for the construction of the improvements described therein in a manner that conforms to all applicable federal, state and local laws, statute, ordinances and regulations. Seller must notify Buyer, within ten (10) business days of Buyer's submission of complete Plans and Specifications to Seller, that Seller either approves or rejects the Plans and Specifications. If Seller does not notify Buyer within the ten (10) business day period that it has approved or rejected the Plans and Specifications, Seller is deemed to have approved the Plans and Specifications. Seller must include in any written notice rejecting the Plans and Specifications, in whole or in part, specifics as to Seller's basis for rejecting the Plans and Specifications. If Seller notifies Buyer that Seller is rejecting the Plans and Specifications, in whole or in part, Buyer must submit new or revised Plans and Specifications to the Seller within 1787610vl 2 twenty (20) days after Buyer receives written notification from Seller of Seller's rejection of the Plans and Specifications. Within five (5) business days after Buyer's submission of new or revised Plans and Specifications to Seller, Seller must notify Buyer that Seller either approves or rejects the new or revised Plans and Specifications. If Seller does not notify Buyer within the five (5) business day period that is has approved or rejected the new or revised Construction Plans, Seller is deemed to have approved them. Seller's approval Plans and Specifications pursuant to this Section 7 constitutes approval for purposes of this Agreement only. Seller's review and approval or disapproval of Plans and Specifications pursuant to this Agreement is not intended to and does not satisfy any requirements of the City of Elk River's ordinances and is not intended as a substitute for any plan review provided for therein. The provisions of this Section 7 relating to submissions, approval, rejection and resubmission of Plans and Specifications continue to apply until Seller has approved the Plans and Specifications. If Seller has not approved Plans and Specifications on or before the Date of Closing, either Buyer or Seller may terminate this agreement pursuant to Section 18 or Section 19 respectively. 8. Payment Terms. Upon Seller's full performance of Seller's obligations under this Agreement, Buyer must: a. Authorize Seller to retain the Earnest Money; and b. Tender the balance of the Purchase Price to Seller in wire transferred funds. 9. Convevance Terms. Upon Buyer's full performance of Buyer's obligations under this Agreement, Seller must execute and deliver to Buyer a Warranty Deed conveying fee title to the Property to Buyer subject only to: a. Building, zoning and subdivision statutes, laws, ordinances and regulations; b. Reservations of minerals or of mineral rights in favor of the State of Minnesota, if any; c. The lien of real.estate taxes and special assessments not yet due and payable; and d. Covenants, conditions, restrictions, easements, encumbrances or other defects in title which are disclosed by the Evidence of Title, as defined in Section 12, and which are not the subj ect of an Obj ection, as defined in Section 13, or which are the subject of an Objection that Buyer has waived pursuant to the provisions of Section 13(b). e. As required by Minnesota Statutes, Section 469.105, the following covenants in favor of Seller: (i) Withill one year of the Date of Closing, as defined in Section 11, Buyer must complete the construction of the improvements described in the Plans and Specifications Seller approves pursuant to Section 7, as evidenced by the City 1787610VI 3 of Elk River's issuance of a Certificate of Occupancy, and devote the property to use as a ; and (ii) Buyer must not transfer title to the Property within one year of the Date of Closing without the consent of Seller which consent Seller will not unreasonable withhold or delay. f. A right of re-entry for breach of either of the covenants described at 9{ e )(i) or 9(e)(ii). If Buyer violates either of the covenants set forth at 9(e)(i) or 9(e)(ii), Seller may commence an action in Sherburne County District Court seeking a judicial decree from the District Court that the Warranty Deed is canceled, that title to the Property reverts to Seller and that the Purchase Price is forfeited to the Seller, all as set forth in Minnesota Statute Section 469.105, Subd. 6. The forgoing is Seller's sole and exclusive remedy in the event of a breach of the covenants described in Section 9{ e )(i) or 9{ e )(ii). Seller hereby agrees that if Buyer grants a third party a mortgage which constitutes a first lien on the Property and uses the proceeds of the loan the mortgage securers to finance the construction of the improvements described in the Plans and Specifications Seller approves pursuant to Section 7, a transfer of title from Buyer to the mortgagee pursuant to a foreclosure of the mortgage shall be deemed to have the consent of Seller for purposes of Minnesota Statute Section 469.105, Subd. 5 and covenant described in Subsection e(ii) above. (hereinafter, collectively, the "Permitted Encumbrances"). 10. Possession. Upon Buyer's full performance of Buyer's obligations under this Agreement, Seller must deliver possession of the Property to Buyer. 11. Closin2. The Parties must meet at the offices of Seller at 13065 Orono Parkway, Elk River, Minnesota at 9:30 a.m., on , 2005, or at such other place or other date as the Parties may establish by written agreement or pursuant to the provisions of Sections 11 below (the "Date of Closing"), at which time: a. Seller must: (i) execute and deliver to Buyer the deed described in Section 9 above. Seller will include on the deed the statement "The Seller certifies that the Seller does not know of any wells on the described real property." (ii) execute and deliver to Buyer and Buyer's title insurer, if any, an appropriate Minnesota Uniform Conveyancing Form Affidavit (Form 117-M) evidencing the absence ofbanlauptcies, judgments, tax liens involving parties with the same or similar names as the Seller and evidencing the absence of mechanic's lien rights affecting the Property, unrecorded interests affecting the Property, persons in possession of the Property and known encroachments or boundary line questions affecting the Property; 1787610vl 4 (iii) execute and deliver to Buyer a non-foreign affidavit in recordable form containing such information as is required under IRC Section 1445(b)(2) and any regulations relating thereto; (iv) provide Buyer or Title, as defined in Section 10 with the information necessary to complete a Minnesota Certificate of Real Estate Value; and (v) payor provide evidence of payment of the following: the cost of providing the Evidence of Title as defined in Section 12; the State Deed Tax due upon the execution of the deed described in Section 9; real estate taxes and, if applicable, levied or pending special assessments pursuant to the provisions of Section 14; the fee or commission Buyer owes to Buyer's Agent, as defined in Section l6(b), up to but not in excess of 4% of the Purchase Price; and one-half of Title's fee to conduct and insure the closing of this transaction. b. Buyer must: (i) Tender the Purchase Price to Seller pursuant to the provisions of Section 6 above; and (ii) Payor provide evidence of payment of the following: the premium for Buyer's owner's policy of title insurance, if any; the changes for any endorsements to Buyer's title insurance policy that Buyer elects to purchase; the recording fee due upon the recording the deed from Seller to Buyer; all costs associated with Buyer's financing, if any, including mortgagee's title insurance policy costs and premiums, if any; any fee or commission Buyer owes to Buyer's Agent in excess of 4% of the Purchase Price; and one-half of Title's fee to conduct and insure the closing of this transaction. 12. Evidence of Title. Within U days of the date of this Agreement, Seller must, at Seller's sole cost and expense, deliver to Buyer a .commitment from ("Title") to issue an ALTA Form 1992 Owner's Policy of Title Insurance, in the amount of the Purchase Price, identifying Buyer as the proposed insured (the "Title Commitment"). After receiving the Title Commitment, Seller will promptly forward the Title Commitment to and instruct to prepare ALTAlACSM survey (the "Survey") of the Property certified to Seller, Buyer, and Title. Buyer may instruct to also certify the survey to Buyer's lender. Seller will pay the cost of the base ALTAlACSM survey. If Buyer requests that additional items be included in the survey including, hq.t not limited to, "Table A" items, Buyer must pay any additional fees or cost associated with the additional survey work. The Title Commitment and Survey are referred to, collectively, in this Agreement as the "Evidence of Title." 13. Examination of Title. Within ten (10) business days of Buyer's receipt of the last item of the Evidence of Title or within ten (10) days of Buyer's discovery of a defect in the marketability of Seller's title to the Property which defect was not reasonably ascertainable from the Evidence of Title, Buyer may give Seller written notice of alleged defect(s) in the 1787610vl 5 marketability of Seller's actual or record title to the Property and request that Seller make Seller's title marketable (an "Objection"). The Permitted Encumbrances described in Sections 7(a) and 7(b) may not serve as a basis for an Objection. Any defect in the marketability of Seller's title to the Property which Buyer does not object to, in writing, within the time period set forth above, is a Permitted Encumbrances. Within five (5) business days of Seller's receipt of Buyer's Objection(s), Seller must notify Buyer, in writing, if Seller will attempt to make Seller's title to the Property marketable. If Seller notifies Buyer that Seller will attempt to make Seller's title to the Property marketable, Seller must use commercially reasonable efforts to do so within one hundred twenty (120) days from Seller's receipt of Buyer's Objection, and, if necessary, the Date of Closing must be rescheduled accordingly. If Seller makes Seller's title marketable within the one hundred and twenty (120) day period, Seller must notify Buyer, in writing, and the Parties must close pursuant to the terms of the Agreement. The new "Date of Closing" must be the date fifteen (15) days from the date Seller notifies Buyer that Seller's title is marketable. If Seller notifies Buyer that Seller does not intend to make Seller's title marketable or if Seller notifies Buyer that Seller intends to make Seller's title marketable but, notwithstanding Seller's use of commercially reasonable efforts, Seller is unable to make Seller's title marketable within one hundred twenty (120) days from Seller's receipt of Buyer's Objection, Buyer may either: a. terminate this Agreement pursuant to the procedures set forth in Section 23 below; or b. notify Seller that Buyer waives Buyer's Objection. If Buyer waives Buyer's Objection, the matter giving rise to such Objection will be deemed a Permitted Encumbrance and the Parties must fully perform their obligations under this Agreement. The Parties must establish a new Date of Closing by mutual agreement, but if the Parties cannot establish a new Date of Closing by mutual agreement, the Date of Closing will be the date fifteen (15) days from the effective date of Buyer's notice to Seller that Buyer waives Buyer's Objection. If Buyer does not notify Seller of Buyer's election to terminate this Agreement pursuant to subsection (a) above or waive Buyer's Objection pursuant to subsection (b) above within fifteen (15) days of Buyer's receipt of notice from Seller that Seller does not intend to make Seller's title to the Property marketable or the expiration of the one hundred twenty (120) day period provided for above, as the case may be, this Agreement automatically terminates; Buyer must deliver an executed and recordable quit claim deed to the Property to Seller to evidence the termination of this Agreement; and Seller must return the Earnest Money to Buyer. 14. Real Estate Taxes and Special Assessments. The Parties must pay the real estate taxes (which term, as used in this Agreement, must include service charges assessed against real property on an annual basis pursuant to Minnesota Statutes 429.101) and special assessments as follows: a. On or before the Date of Closing, Seller must pay the real estate taxes, special assessments and any penalties and interest thereon that are due and payable with respect to the Property, on or before the Date of Closing; 1787610\11 6 b. On or before the Date of Closing, Seller must payor provide for the payment of all special assessments levied or pending against the Property as of the Date of Closing, including special assessments certified for payment with the current year's real estate taxes; and c. Buyer and Seller must pro rate the real estate taxes, if any, which are payable in the year of closing on a per-diem basis using a calendar year, to the Date of Closing. If the Date of Closing occurs in the year in which Seller records the plat of NORTHSTAR BUSINESS PARK., Seller will have already paid any real estate taxes due and payable in that year in connection with the recording ofthe plat of NORTH STAR BUSINESS PARK.. For purposes of the pro-ration described in this Section 14(c), the real estate taxes due and payable with respect to the property in the year in which Seller records the plat of NORTH STAR BUSINESS PARK., will be calculated by multiplying the amount of the real estate taxes due and payable in that year for all of the property subject to the plat ofNORTHSTAR BUSINESS PARK by a fraction the numerator of which is the square footage of the Property and a denominator of which is the square footage of all lots in NORTHSTAR BUSINESS PARK. If the Date of Closing occurs in a year following the year in which the plat of NOR THST AR BUSINESS PARK is recorded, the current year real estate tax information will be used, if available, and if current year real estate tax information is not available using the amount of the real estate taxes due and payable in the year immediately preceding the year of closing. Any such pro-ration is final and no subsequent adjustments, refunds or additional payments must be made. 15. Seller's Representations. Seller makes the following representations to Buyer: a Seller represents that, to the best of Seller's actual knowledge, there is no action, litigation, governmental investigation, condemnation or administrative proceeding of any kind pending against Seller with respect to the Property or otherwise involving any portion of Property, and no third party has threatened Seller with commencement of any such action, litigation, investigation, condemnation or administrative proceeding. b. Seller represents that, to the best of Seller's actual knowledge, there are no wells located on the Property. c. Seller represents that, to the best of Seller's actual knowledge, there are no underground or above ground storage tanks of any size or type located on the Property. d. Seller represents that, to the best of Seller's actual knowledge, there are no Hazardous Substances located on the Property; .the Property is not subject to any liens or claims by government or regulatory agencies or third parties arising from the release or threatened release of Hazardous Substances in, on or about Property; and Property has not been used in connection with the generation, disposal, storage, treatment or transportation of Hazardous Substances. For purposes of this Agreement, the term "Hazardous Substance" includes but is not limited to substances defined as "hazardous substances," "toxic substances" or "hazardous wastes" in the Comprehensive Environmental Response Compensation Liability Act of 1980, as amended, 42 U.S.C. 1787610vl 7 g9601, et seq., and substances defined as "hazardous wastes," "hazardous substances," "pollutants, or contaminants" as defined in the Minnesota Environmental Response and Liability Act, Minnesota Statutes, g 115B.02. The term "hazardous substance" must also include asbestos, polychlorinated biphenyls, petroleum, including crude oil or any fraction thereof, petroleum products, heating oil, natural gas, natural gas liquids, liquified natural gas, or synthetic gas useable for fuel (or mixtures of natural gas and synthetic gas). If, at any time prior to the Date of Closing, Seller acquires actuallmowledge of events, circumstances or facts which render the representations set forth in this Section 15 inaccurate in any respect, Seller must immediately notify Buyer, in writing. Buyer's acceptance of the deed described in Section 9 from Seller and payment of the Purchase Price to Seller with lmowledge that one or more of the matters set forth above are not as represented constitutes Buyer's waiver or release of any claims due to such misrepresentation. 16. Buver's Representations. Buyer hereby represents to Seller as follows: a. The individuals executing this Agreement on behalf of Buyer represent and warrant that they have the authority to execute this Agreement on behalf of Buyer and to bind Buyer. Buyer represents that Buyer has the full and complete authority to enter into this Agreement and to purchase the Property. b. Buyer represents that Buyer has engaged C. B. Richard Ellis ("Buyer's Agent") to act as Buyer's real estate agent in connection with this transaction. Buyer represents that Buyer has not engaged anyone else to act as Buyer's agent in this transaction. 17. Buver's Insl?ection and "AS IS" Sale. At all times prior to the Date of Closing, Buyer and its agents have the right, upon reasonable notice to Seller, to go upon the Property to inspect the Property and to determine the condition of the Property including, specifically, the presence or absence of Hazardous Substances, in, on, or about the Property. Buyer agrees to indemnify and defend Seller from and to hold Seller harmless against any and all claims, causes of action or expenses, including attorneys fees, relating to or arising from Buyer's or Buyer's agents or contractors presence on the Property prior to the Date of Closing. Buyer agrees to repair any damage to the Property caused by such inspections and to return the Property to substantially the same condition as existed prior to Buyer's inspection. BUYER ACKNOWLEDGES THAT BUYER IS PURCHASING THE PROPERTY IN RELIANCE ON THE REPRESENTATIONS OF SELLER SET FORTH IN SECTION 15; ON BUYER'S INSPECTION OF THE PROPERTY PURSUANT TO THIS SECTION 17; AND ON BUYER'S JUDGMENT REGARDING THE SUFFICIENCY OF SUCH INSPECTIONS. BUYER IS NOT RELYING ON ANY WRITTEN OR ORAL REPRESENTATIONS, WARRANTIES OR STATEMENTS THAT SELLER OR SELLER'S AGENTS HAVE MADE EXCEPT FOR THE REPRESENTATIONS SET FORTH IN SECTION 15 OF THIS AGREEMENT. SUBJECT TO BUYER'S RIGHT TO TERMINATE THIS AGREEMENT PURSUANT TO SECTION 18, BUYER IS PURCHASING THE PROPERTY IN "AS IS" CONDITION RELYING ONLY ON THE REPRESENTATIONS SET FORTH IN SECTION 15. 1787610vl 8 18. Buver's Coutiu2eucies. Buyer's obligations under this Agreement are contingent on: a. Buyer's determination, based on the inspections described in Section 17 above and any other relevant information, that the condition of the Property is acceptable to Buyer; b. Buyer's acquisition of a commitment for financing, acceptable to Buyer in Buyer's sole and absolute discretion, sufficient to permit Buyer to close on the acquisition of the Property; c. Buyer's determination, that Buyer will be able to obtain all zoning or rezoning approvals, variances, conditional use permits, operating permits or other federal, state or local approvals or permits (collectively, "Permits") necessary for Buyer's intended use of the property as a d. Seller's recording of the plat of NORTHSTAR BUSlNESS PARK on or before the Date of Closing; e. The City of Elk River and Sherburne County having adopted appropriate tax abatement financing resolutions approving the tax abatem~nt financing and City of Elk River and Buyer having executed a mutually acceptable form of tax abatement financing agreement; f. Seller having satisfied the notice and hearing requirements set forth in Minnesota Statute Section 469.105, Subd. 2; having made findings and a decision that the sale is advisable and having entered its findings on its records as required bYMinnesota Statute Section 469.105, Subd. 3 and either (i) no taxpayer having filed an appeal within the twenty (20) day time period described in Minnesota Statute Section 469.105, Subd. 3; or (ii) the time periods during which a taxpayer may appeal the District Court's decision . having expired, on or before the Date of Closing; and g. The City of Elk River having let contracts for the construction of street, sanitary sewer, storm sewer and water main improvements which, when completed, will be sufficient to support Buyer's intended use of the Property as a Buyer must use commercially reasonable efforts to satisfy the contingencies described in Sections 18(a), 18(b) and 18(c) on or before the date.sixty (60) days after the Effective Date, as defined in Section 29. If Buyer does not satisfy one or more of the contingencies described in Sections 18(a), 18(b) or 18(c) on or before the date sixty (60) days after the Effective Date, or if one or more of the contingencies described in Sections 18( d), 18( e), 18(f) or 18(g), are not satisfied on or before the Date of Closing, Buyer may terminate this Agreement pursuant to the procedures set forth in Section 23. If Buyer does not notify Seller, in accordance with the requirements of Section 23, on or before the date sixty (60) days after the Effective Date that Buyer is exercising one or more of the contingencies described in Sections 18(a), 18(b) or 18(c), or if Buyer does not notify Seller, in accordance with the requirements in Section 23, on or before the Date of Closing that Buyer is exercising one or more of the contingencies described in Sections 18(d), 18(e), 18(f) or 18(g). Buyer's right to exercise the contingencies described in this 1787610vl 9 Section 18 terminates, and the Parties must proceed pursuant to the other provisions of this Agreement. 19. Seller's Conting:encies. Seller's obligations under this Agreement are contingent on: a. Seller's Board (i) determining that the sale contemplated by this Agreement is in the best interest of the City of Elk River and its people and furthers Seller's general plan of economic development; and (ii) adopting a resolution approving a sale pursuant to the terms of this Agreement at a hearing called and held in accordance with the requirements of Minnesota Statutes Section 469.105, Subd. 2; b. No taxpayer filing an appeal within the twenty (20) day time period described in Minnesota Statutes 469.105, Subd. 3; c. Buyer having submitted and Seller having approved Plans and Specifications pursuant to Section 7 on or before the Date of Closing. If one or more of the contingencies described in this Section 19 are not satisfied, Seller may terminate this Agreement pursuant to Section 23. 20. Condemnation. If a public or private entity with the power of eminent domain commences condemnation proceedings against all of any part of the Property, Seller must immediately notify Buyer, and Buyer may, at Buyer's sole option, terminate this Agreement pursuant to Section 23 below. Buyer has twenty (20) days from Buyer's receipt of Seller's notice to Buyer to exercise Buyer's termination right. If Buyer does not terminate this Agreement within said twenty (20) day period, the Parties must fully perform their obligations under this Agreement, with no reduction in the Purchase Price, and Seller must assign to Buyer, on the Date of Closing, all of Seller's right, title and interest in any award made or to be made in the condemnation proceedings. Seller must not designate counsel, appear or otherwise act with respect to any such condemnation proceedings without Buyer's prior written consent unless Buyer fails to respond within seven (7) days to a request for such written consent. 21. Assig:nment. Buyer may not assign Buyer's rights or obligations under this Agreement to a third party without the written consent of Seller. Seller may grant or withhold Seller's consent to an assignment in Seller's sole and absolute discretion. 22. Default. If either Party defaults in the performance of any of the Party's obligations under this Agreement, the non-defaulting Party may, after written notice to the defaulting Party, suspend performance of its obligations under this Agreement, and the rights of the non-defaulting Party are as follows: a. Buyer's Default. If Buyer defaults in the performance of any of Buyer's obligations under this Agreement, Seller has the right to terminate this Agreement pursuant to Minnesota Statutes, Section 559.21 and retain the Earnest Money. If one or more of the representations set forth in Section 16 are inaccurate, when made or if Buyer defaults in the performance of one or more of Buyer's obligations under Section 17, Seller may commence an action for damages against Buyer in Sherburne County District 1787610vl 10 Court, and. if Seller prevails in such an action, Seller is entitled to recover from Buyer Seller's reasonable attorneys fees and costs. The remedies set forth in this Section 22(a) are Seller's sole and exclusive remedies in the event of Buyer's default. b. Seller's Default. If Seller defaults in the performance of any of Seller's obligations under this Agreement, Buyer may: (i) terminate this Agreement pursuant to Section 23 below, in which case Seller must return the Earnest Money to Buyer; (ii) initiate a civil action to compel Seller's specific performance of Seller's obligations under this Agreement provided that Buyer commences such action within six (6) months of the date of Seller's default. If Buyer prevails in any such action for specific performance, Buyer may also recover Buyer's reasonable attorneys fees and costs; or (iii) If anyone or more of the representations set forth in Section 15 are inaccurate, when made, Buyer may commence an action for damages against Seller in Sherburne County District Court, and if Buyer prevails in such action, Buyer may also recover from Seller Buyer's reasonable attorneys fees and costs. The remedies set forth in this Section 22(b) are Buyer's sole and exclusive remedies in the event of Seller's default. . 23. Termination ohhis Aereement. Sections 13, 18,20 and 22(b) of this Agreement allow Buyer to terminate this Agreement under certain conditions. Section 19 allows Seller to terininate this Agreement under certain conditions. The following procedures govern the exercise of those termination rights: a. The party that desires to terminate this Agreement (the "Terminating Party") must notify the other party (the "Non-Terminating Party"), in writing, of the Terminating Party's intent to terminate this Agreement. b. The Terminating Party's notice must recite the Section of this Agreement that authorizes the Terminating Party's termination of this Agreement and must describe the facts and circumstances which the Terminating Party asserts justify termination under the referenced Section. c. The Terminating Party's notice of termination is effective as of the date the Terminating Party deposits the notice of termination with the United States Postal Service, with all necessary postage paid, for delivery to the Non-Terminating Party via certified mail, return receipt requested, at the address set forth in Section 1. If the Terminating Party delivers a notice of termination in a different manner than described in the preceding sentence, the notice of termination is effective as of the date the Non- Terminating Party actually receives the notice of termination. The Terminating Party must also mail a copy of the notice of termination to the Parties respective attorneys as provided for in Section 26 below. 1787610vl 11 d. If the Non-Terminating Party disputes the Terminating Party's right to terminate this Agreement, the Non-Terminating Party must so notify the Terminating Party, in writing, within five (5) business days of the Non-Terminating Party's receipt of the Terminating party's notice of termination. e. If the Non-Terminating Party does not dispute the Terminating Party's right to terminate the Agreement, Buyer must execute and delivery to Seller a recordable quit claim deed or other recordable instrument evidencing the termination of Buyer's rights in the Property, and upon the receipt of such a quit claim deed or other instrument, Seller must return the Earnest Money to Buyer. f. If the Parties dispute the validity of an attempted termination of this Agreement, either Party may initiate a civil action in a court of competent jurisdiction to determine the status of this Agreement, and the Party that prevails in any such action is entitled to recover its reasonable attorneys' fees and costs in the action from the non- prevailing Party. 24. Time. Time is of the essence for all provisions of this Agreement. 25. Survival of Terms. The Parties' obligations under this Agreement survive Seller's delivery of a deed to Buyer and the closing of this transaction. 26. Notices. All notices provided for in this Agreement must be in writing. The notice must be effective as of the date two days after the Party sending such notice deposits the notice with the United States Postal Service with all necessary postage paid, for delivery to the other Party via certified mail, return receipt requested, at the address set forth in Section 1 above. If Party delivers a notice provided for in this Agreement in a different manner than described in the preceding sentence, notice must be effective as of the date the other party actually receives the notice. The Party sending the notice must also mail a copy of the notice to the Parties' respective attorneys via first class United States mail at the addresses set forth below: Attorney for Buyer: Attorney for Seller: Briggs and Morgan, P.A. 332 Minnesota Street, Suite W2200 Saint Paul, MN 55101 Attn: Mr. Thomas L. Bray 27. Full Al!reement. The Parties acknowledge that this Agreement represents the full and complete agreement of the Parties relating to the purchase and sale of the Property and all matters related to the purchase and sale of the Property. This Agreement supersedes and replaces any prior agreements, either oral or written, and any amendments or modifications to this Agreement must be in writing and executed by both Parties to be effective. 1787610vl 12 28. Governine Law. This Agreement has been made under the laws of the State of Minnesota and such laws must control its interpretation 29. Effective Date. This Agreement is effective as of the _ day of , 2005 (the "Effective Date"); provided, however, if Seller and Buyer each execute this Agreement without having completed the blanks in this Section 29, the Effective Date is the later of the dates inserted on the signature pages of this Agreement. 1787610vl 13 Dated: 178761Ov1 SELLER: THE ECONOMIC DEVELOPMENT AUTHORITY OF THE CITY OF ELK RIVER, a body corporate and politic, organized under Minnesota Statutes, Chapter 469 By Its President By Its Vice President By Its Executive Director 14 Dated: 1787610vl BUYER: By Its By Its 15