3.7. SR 07-18-2005
Item # 3.7.
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 Alliance Machine, Inc.
Project
Attachments
. July 11,2005 Staff Report re: Alliance Machine, Inc. Project
Issue
At its July 11, 2005 meeting the EDA reviewed a request by Alliance Machine, Inc. for Tax
Rebate (Abatement) Financing from the City of Elk River in the amount of $103,978. 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, EWers &
Assoc. to complete a financial 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 Alliance Machine, Inc. Project.
ITEM # 8.
MEMORANDUM
TO: Economic Development Authority
FROM: Catherine Mehelich, Director of Economic DevelopmentM
DATE: July 11,2005
SUBJECT: Consider Tax Rebate Financing Assistance and Sale of EDA
Property for Alliance Machine, Inc.
Attachments
. Northstar Business Park Preliminary Plat
. Purchase Agreement Form
Issue
Staff has been working with Alliance Machine, 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 2.84-acres of EDA property to the
company
Project Descri~??7
Established in , :Alliance Machine, Inc. conducts light, precision machining of plaSllC
and metal components for national and international clients in the aerospace, medical,
defense and computer industries. The company is owned and managed by father and son,
Pat Provo and Bryan Provo. Bryan is a graduate of Elk River High School. The company
currently employs 30 full-time staff with an average hourly wage of $20.00. Within two years
of the expansion the company proposes to create 9 new jobs with a minimum hourly wage
of $15.00.
The company currently leases 18,000sf in Maple Grove and is seeking a suitable location
within the northwest metro area to relocate and expand in time for the lease expiration.
Alliance Machine proposes to construct an 18,000 square foot light industrial building in
which the company would occupy 100% of the space. The 2.84-acre lot also accommodates
and additional10,000sf for Alliance's desired future expansion.
Consider Tax Rebate Financing Assistance and
Sale of EDA Property for i\lliance Machine, Inc.
July 11,2005 EDA Meeting
Page 2 of2
Sale of EDA 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 $208,007. 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: 2.84-acres minus gas line easement @ $2.00/sf $208,007
Eligible Assistance: $25,000 x ~ new jobs at $15/hr $225,000
q
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 receiv-ing 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. .
Alliance Machine 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 follo'wing actions for the Alliance Mahchine
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 2. 84-acres
of ED A property, Northstar Business Park, to Alliance Machine, Inc.
S: \Industrial Siting\Alliance Machine \Memos \ 7 .11.05 EDA.doc
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PURCHASE AGREEMENT
RELATING TO
{Q)~ffi\\Fu
A LOT IN NORTHSTAR BUSINESS PARK,
SHERBUAATE COUNTY, MIl\TNESOTA
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. Alliance Machine, Inc., Attention:
(the IIBuyer").
This Agreement sometimes refers to Seller and Buyer individually as a "Party" and collectively
as the "Partiesll.
2. Prol>ertv. The real property that is the subj ect 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 IIProperty"). The property is vacant land. The Plat ofNORTHST 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 of the Plat of NORTH STAR 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 Hearin!:!. 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
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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 acknowledges 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
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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. Conveyance 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
subj ect of an Obj ection 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) Within 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
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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 ofa 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 oftitle 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. Closine. 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 Mfidavit (Form 117-M)
evidencing the absence of bankruptcies, 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;
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(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 16(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 ALTAJACSM 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, but 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 ofa 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
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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 II 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;
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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 BUSll\1ESS PARK., Seller will have already paid any real estate taxes due
and payable in that year in connection with the recording of the 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 ofNORTHSTAR 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 of NORTH STAR 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 NORTHST AR BUSINESS PARK. If the Date of Closing occurs in
a year following the year in which the plat of NORTHST 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.
1 787559vl
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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, S 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 actual knowledge 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 knowledge
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 Inspection 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 TillS SECTION 17;
Al\1]) 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 TillS AGREEMENT. SUBJECT TO BUYER'S RIGHT TO
TERMINATE TillS AGREEMENT PURSUANT TO SECTION 18, BUYER IS
PURCHASING THE PROPERTY IN "AS IS" CONDITION RELYING ONLY ON THE
REPRESENTATIONS SET FORTH IN SECTION 15.
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8
18. Buver's Contin2:encies. 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 ofNORTHSTAR BUSINESS 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 abatement 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 by Minnesota
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
17B7559vl
9
Section 18 terminates, and the Parties must proceed pursuant to the other provisions of this
Agreement.
19. Seller's Contineencies. 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. Assienment. 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
1787559v1
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 Eamest 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 of this Al!reement. Sections 13, 18,20 and 22(b) of this
Agreement allow Buyer to terminate this Agreement under certain conditions. Section 19 allows
Seller to terminate 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 oftermination 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 oftermination 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.
17875591'1
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 ofthis 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 A2reement. 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.
1787559vl
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28. Governin2: 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.
1 787559vl
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Dated:
1787559v1
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:
1787559v1
BUYER:
By
Its
By
Its
15