4.2. SR 11-22-1993
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IIi{ River
ITEM 4.2.
TO:
FROM:
MAYOR & CITY COUNCIL
WILLIAM RUBIN, ED COORDINAT~~
NOVEMBER 17, 1993
DATE:
SUBJECT: DEVELOPMENT AGREEMENT FOR OFFICE
PROJECT AT MAIN STREET AND
FREEPORT AVENUE
INTRODUCTION
On August 16, 1993, the Elk River City Council approved a tax
increment amendment to support an office-townhouse project at
Main Street and Freeport Avenue. Therefore, it is in order to
execute an agreement with the developer.
BACKGROUND
The Development Agreement outlines the terms and conditions by
which the developer, The Chuba Company, will be reimbursed for
the demolition and site preparation costs associated with this
redevelopment project. A copy of the Development Agreement is
attached to this memo.
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The Elk River Housing and Redevelopment
a party to this agreement. This is
agreeing to fund fifty percent of the
to a maximum of $25,000.
Authority (HRA) is also
done in light of the HRA
redevelopment costs, up
As with the 1992 project, Mr. Dennis Chuba, owner of The Chuba
Company, is guaranteeing the performance of his company.
Should The Chuba Company fail to perform under the terms of the
Development Agreement, Mr. Chuba is liable for any action the
City of its HRA may pursue in enforcing the agreement.
ACTION REQUESTED
The Elk River City Council is asked to approve the Development
Agreement with The Chuba Company.
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P.O. Box 490 · 13065 Orono Parkway · Elk River, MN 55330 · (612) 441-7420 · Fax: (612) 441-7425
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DEVELOPMENT AGREEMENT
THIS DEVELOPMENT AGREEMENT entered into this ____ day of
November, 1993, by and between the City of Elk River, Minnesota
(City), the Elk River Housing and Redevelopment Authority
(HRA), The Chuba Company (Developer), and Dennis Chuba (Chuba).
WHEREAS, Developer and Chuba propose to construct an 8,900
gross square foot office condominium building (the Project) on
property (the Development Property) legally described as
follows:
Lots 1, 2, and 3, Block 21, Village of Elk River,
Sherburne County, Minnesota. (PID No. 75-405-2110 and PID
No. 75-405-2120); and,
WHEREAS, Developer, has represented to the City that the
Project will have a minimum market value for tax valuation
purposes of $565,000; and,
WHEREAS, Developer has requested assistance from the City
with demolition of the existing structures on the Development
Property and site preparation of the Development Property for
the Project; and,
WHEREAS, the City Council of the City of Elk River has
determined that redevelopment of the Development Property and
construction of the Project is consistent with the City's
Growth Management Plan and Zoning Ordinance; and,
WHEREAS, the City Council of the City of Elk River has
determined that the Project is consistent with the purposes of
the City of Elk River Development District No. 1 and Tax
Increment Financing District No. 1 and No.3; and,
WHEREAS, the City Council of the City of Elk River has
amended the Tax Increment Financing Plans for TIF District No.
1 and No. 3 to provide assistance to the Project; and,
WHEREAS, the City Council of the City of Elk River has
approved Tax Increment Financing assistance to the Project for
demolition and site preparation, in an amount not to exceed
$50,000, subject to the execution of this Development
Agreement; and,
WHEREAS, the Elk River HRA resolved to fund fifty percent
(50%) of the demolition and site preparation cost, up to a
maximum of $25,000.
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NOW, THEREFORE, the parties hereto agree as follows:
1. Developer Obliqations.
Developer covenants and agrees as follows:
to acquire fee title to the Development Property;
to demolish and clear existing structures from
the Development Property;
To develop and construct an 8,900 gross square
foot or larger office condominium building with a
minimum market value of $565,000; and
to complete construction of the Project and
obtain a Certificate of Occupancy for the office
condominium building no later than January 1,
1995.
2. City Obliqations.
City covenants and agrees to reimburse the Developer
for:
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the actual cost of demolition and removal of the
existing structures on the Development Property;
and
the actual cost of site preparation of the
Development Property for construction of the
Project.
3. Chuba Obligations.
The obligation of Chuba under this Development
Agreement shall be as guarantor of the performance of
Developer. If Developer fails to perform pursuant to
the terms of this Development Agreement, Chuba agrees
that the City may pursue either Developer or Chuba
individually, or both, to recover any sums due the
City pursuant to this Development Agreement.
4. Reimbursement Procedure.
Developer will be reimbursed for its actual costs of
demolition and site preparation, upon satisfaction of
the following conditions:
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Developer must complete demolition of the
existing structures on the Development Property
and complete site preparation of the Development
Property for the Project;
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Developer must submit to the City evidence
satisfactory to the City, in the City's sole
discretion, of the actual cost for said
demolition and site preparation;
The City Council of the City of Elk River must
approve payment pursuant to the terms of this
Development Agreement.
5. Default.
Developer shall be in default under the terms of this
agreement if:
Developer seeks reimbursement for any costs not
authorized by this agreement; or
Developer seeks reimbursement for any costs in
excess of Developer's actual costs for demolition
and site preparation; or
Developer fails to obtain a Certificate of
Occupancy for the Project on or before January 1,
1995; or
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the market value of the Project for tax valuation
purposes, as of January 1, 1995, is less than
$565,000.
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Remedies on Default.
If Developer is in default under the terms of this
agreement, the City may exercise one or more of the
following remedies:
the City may terminate this Development Agreement;
the City may refuse to make payment to or
reimburse Developer for demolition and site
preparation costs provided for in this agreement;
the City may, if payment has already been made to
Developer, bring an action against Developer
and/or Chuba for recovery and repaYment of all
sums paid to Developer, and for City's reasonable
attorney's feet and such other expenses incurred
by the City in seeking to recover payments made
to Developer;
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the City may exercise any other remedies which it
may have at law.
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IN WITNESS WHEREOF, the City, Developer, and Chuba have
caused this agreement to be executed by their duly authorized
representatives.
CITY OF ELK RIVER
By:
John J. Dietz
Its: Vice Mayor
By:
Patrick D. Klaers
Its: City Administrator
ELK RIVER HRA
By:
Richard Hinkle
Its: Chairman
THE CHUBA COMPANY
By:
Dennis Chuba
Its:
DENNIS CHUBA
STATE OF MINNESOTA
SSe
COUNTY OF SHERBURNE
The foregoing instrument was acknowledged before me this
day of November, 1993, by John J. Dietz, the Vice Mayor
of the City of Elk River, on behalf of the City of Elk River.
Notary Public
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STATE OF MINNESOTA
ss.
COUNTY OF SHERBURNE
The foregoing instrument was acknowledged before me this
day of November, 1993, by Patrick D. Klaers, the City
Administrator of the City of Elk River, on behalf of the City
of Elk River.
Notary Public
STATE OF MINNESOTA
ss.
COUNTY OF SHERBURNE
the
the
The foregoing instrument was acknowledged before me this
day of November, 1993, by Richard Hinkle, the Chairman of
Elk River Housing and Redevelopment Authority, on behalf of
Elk River Housing and Redevelopment Authority.
Notary Public
STATE OF MINNESOTA
ss.
COUNTY OF SHERBURNE
The foregoing instrument
day of November, 1993, by
of THE CHUBA COMPANY,
on behalf of the corporation.
was acknowledged before me this
, the
a Minnesota Corporation,
Notary Public
.
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STATE OF MINNESOTA
ss.
COUNTY OF SHERBURNE
The foregoing instrument was acknowledged before me this
____ day of November, 1993, by Dennis Chuba.
Notary Public