6. HRSR 10-02-2006ITEM ~ 6.
t~ver
MEMORANDUM
TO: Housing & Redevelopment Authority
FROM: Catherine Mehelich, Director of Economic Developmentl~%~~
DATE: October 2, 2006
SUBJECT: Consider Directing Staff to Proceed with the Acquisition of
Properties Described as 716 and 720 Main Street
Attachments
Draft Purchase Agreement
Memo from Attorney Mary Ippel, Briggs & Morgan, dated August 29, 2006.
Background
At its June 26, 2006 meeting the HRA directed staff to commission an appraisal of the
buildings and in August the HRA authorized staff to begin negotiations for purchase
agreement terms upon the appraisal outcome at or below the seller's asking price,.
The appraisal was completed in late July and the values supported the offer of $720,000.
Staff has been in negotiations with the seller since August. Staff reports that we are close to
reaching general agreement on purchase terms as provided in the attached draft purchase
agreement, contingent upon the HRA's approval
In summary the agreement proposes that the HRA purchase the properties in the amount of
$720,000 under a 5-year contract for deed at 6% interest, with a down payment of $216,000
to be funded by existing HRA reserves and semi-annual capital payments (to be offset by
lease revenue). Under the agreement the HRA accepts the existing lease with O'Reilly
Automotive.
Issue
State statutes require that prior to the HRA's undertaking of property acquisition that a
redevelopment plan is prepared and approved by the City Council. The attached memo
dated August 29, 2006 from Attorney Mary Ippel at Briggs & Morgan outlines the process
necessary precedent to the HRA's purchase of property for redevelopment purposes.
Purchase of 716 & 720 Main Street Properties
October 2, 2006 HRA Meeting
Page 2 of 2
Requested Actions
• Provide feedback and direction to staff regarding the draft purchase agreement
terms.
• Authorize staff to proceed with all necessary steps to enact the purchase agreement
as presented.
Next Steps
Upon the HRA's direction, staff will refine the purchase agreement with the seller and
prepare a redevelopment plan, both items for the HRA's review and action at its November
6`" meeting. Upon the HRA's approval of the redevelopment plan, it will be forwarded to
the Planning Commission fox review and to the City Council for public hearing and final
approval in December along with approval of the acquisition.
PURCHASE AGREEMENT DRAFT
RELATING TO
716 & 720 MAIN STREET -ELK RIVER, MINNESOTA
Dated: September _, 2006
Parties. The parties to this Purchase Agreement are:
a. Houlton Investment Company, a Minnesota corporation, [insert address],
Attention: Bill Houlton (the "Seller"); and _
b. The Housing and Redevelopment Authority in and for the City of Elk
River, 13065 Orono Parkway, Elk River, Minnesota 55330, Attention: Cathy Mehelich
(the "Buyer").
This Agreement sometimes refers to Seller and Buyer individually as a "Party" and collectively
as the "Parties".
2. Pro er .The real property that is the subject of this Agreement is located at 716
and 720 Main Street, in the City of Elk River, Sherburne County, Minnesota and is legally
described on the attached Exhibit A (the "Property"). The primary improvements located on the
Property are two buildings. The term "Property", as used in this Agreement includes all
improvements and fixtures located on the Property and 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. 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. Purchase Price. The purchase price for the Property is Seven Hundred Twenty
Thousand Dollars ($720,000) (the "Purchase Price").
5. Payment Terms. Upon Seller's full performance of Seller's obligations under
this Agreement, Buyer must:
a. Tender $216,000.00 to Seller in certified funds or wire transferred funds.
b. Execute a contract for deed attached in the form as Exhibit B (the
"Contract for Deed") and deliver it to Seller pursuant to Section 8(b)(ii).
6. Conveyance Terms. Upon Buyer's full performance of Buyer's obligations under
this Agreement, Seller must execute the Contract for Deed and deliver it to Buyer pursuant to
Section 8(a)(ii).
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7. Possession. Upon Buyer's full performance of Buyer's oblig tions under this
Agreement, Seller must deliver possession of the Property to Buyer, subject t~t
persons and entities identified as tenants under the leases described on Exhi ~C. a er i~~
responsible for transferring any electric, natural gas and sewer and water uti i ies a are m
Seller's name to Buyer's name. Rent due in the month in which the Date of Closing occurs will
be pro-rated on a per diem basis between Seller and Buyer. Seller must pay to Buyer, at Closing,
an amount equal to the difference, if any, between the sum of the amounts that Seller has
received pursuant to Section 5 of the lease between Seller and B&B Automotive, Inc. dated
September 26, 2003 as extended by the lease modification agreement between Seller and
O'Reilly Automotive, Inc. dated June 13, 2006 (the "O'Reilly Lease") calendar year 2006 and the
amounts which Seller has actually paid in 2006 for real estate taxes and special assessments due
and payable in 2006 with respect to the property that is the subject of the lease and the insurance
premiums Seller has paid in 2006 for insurance on the property that is the subject of the Lease.
Seller is responsible for collecting any and all rent due on or before the Date of Closing. If one
or more tenants are delinquent in the payment of rent due on or before the Date of Closing, rent
received after the Date of Closing will be credited first to the payment of rent due after the Date
of Closing. Buyer will tender to Seller any rent received after the Date of Closing that is in
excess of the rent due after the Date of Closing for application to rent due but not paid prior to
the Date of Closing provided Seller, at closing, provides Buyer with written notice of the
amount, if any, of delinquent rent due as of the Date of Closing. Seller must tender to Buyer, at
closing, an amount equal to the amount of all security deposits (and interest earned on security
deposits and payable to a tenant under the terms of the tenant's lease, if any) and must also tender
to Buyer an amount equal to all prepaid rent Seller has received on or before the Date of Closing.
Before delivering possession of the Property to Buyer, Seller must remove all personal property,
refuse and debris from the Property (except for personal property of Tenant). If Seller does not
remove all personal property, refuse and debris from the Property before Seller's delivery of
possession of the Property to Buyer, Buyer may declare such personal property, refuse and
debris abandoned and dispose of such materials in any manner which Buyer deems appropriate.
Buyer is entitled to recover from Seller all costs associated with Buyer's disposal of personal
property, refuse or debris left on the Property subsequent to Buyer's acceptance of possession
thereof. Should Seller refuse to pay such amounts upon demand, Buyer may initiate a legal
action against Seller to recover such amounts along with any costs and attorneys fees which
Buyer incurs in connection with such action.
8. Closin .The Parties must meet at the offices of Buyer at 9:30 a.m., on December
22, 2006 (the "Date of Closing"), at which time:
a. Seller must:
(i) execute and/or deliver to the closing agent, with copies to Buyer,
and make arrangements to have the closing agent record or file in the appropriate
county land records any documents necessary to establish the marketability of
Seller's title to the Property, subject only to Permitted Encumbrances;
(ii) execute the Contract for Deed and deliver it to Buyer;
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(iii) execute and deliver to Buyer and Buyer's title 'nsurer if an an
appropriate Minnesota Uniform Conveyancing Form Affida 't~ ,
117-M or 118-M) evidencing the absence of bankruptcies, ~u gmen s, ax lens or
corporate dissolution proceedings involving parties with the same or siiru ar
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;
(iv) deliver to Buyer an appropriate corporate resolution authorizing
Seller's conveyance of the Property to Buyer and identifying the individual or
individuals authorized to execute the Contract for Deed and any other documents
provided for in this Agreement;
(v) execute and deliver to Buyer anon-foreign affidavit in recordable
form containing such information as is required under IRC Section 1445(b)(2)
and any regulations relating thereto;
(vi) execute and deliver to the closing agent, Buyer or other appropriate
party appropriate Federal Income Tax Reporting Forms;
(vii) execute and deliver to Buyer an original Estoppel Certificate in the
form attached as Exhibit D executed by each person or entity identified as a
Tenant under a Lease referenced in Exhibit C hereto;
(viii) execute and deliver to the closing agent, with a copy to Buyer, a
completed Minnesota Department of Health Well Disclosure Certificate or
include on the Contract for Deed the statement "The Seller certifies that the Seller
does not know of any wells on the described real property" or the statement "I am
familiar with the property described in this instrument and I certify that the status
and number of wells on the described real property have not changed since the
last previously filed well disclosure certificate:" followed by Seller's signature;
(ix) execute and deliver to the closing agent, with copies to Buyer, and
make arrangements to have the closing agent record or file in the appropriate
county land records, the affidavits described in Minnesota Statutes, § 116.48,
Subd. 6 and § 11 SB.16, Subd. 2 if required;
12; and
(x) deliver to Buyer the Date Down Certificate described in Section
(xi) pay or provide evidence of payment of the following: the cost of
providing the Evidence of Title as defined in Section 9; the fees due upon the
recording any documents necessary to place record title in the condition provided
for in this Agreement; real estate taxes and, if applicable, levied or pending
special assessments pursuant to the provisions of Section 11; the commission or
fee due any real estate agent that Seller has employed in connection with this
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transaction; and one-half of Title's fee to conduct and insure he closing of this
transaction. DRAFT
b. Buyer must:
(i) tender the Purchase Price to Seller pursuant to the provisions of
Section 5 above;
(ii) execute the Contract for Deed and deliver it to Seller; and
(iii) pay or provide evidence of payment of the following: Buyer's pro-
rata share of real estate taxes pursuant to Section 11; the premium for Buyer's
owner's policy of title insurance; the fees due upon the recording the Contract for
Deed; and one-half of Title's fee to conduct and insure the closing of this
transaction.
9. Evidence of Title. Within fourteen (14) days of the date of this Agreement,
Seller must, at Seller's sole cost and expense, deliver the following to Buyer a commitment from
a title insurer reasonably acceptable to Buyer ("Title") to issue an ALTA form 1992 Owner's
Policy of Title Insurance, in the amount of the Purchase Price, insuring Buyer's title to the
Property (the "Title Commitment"). The Title Commitment must include affirmative coverages
for appurtenant easements, if any. Buyer will promptly obtain, at Buyer's cost, an ALTA/ACSM
Land Title Survey of the Property (the "Survey"). (The Title Commitment and the Survey are
referred to herein as the "Evidence of Title".)
10. 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
marketability of Seller's actual and record title to the Property and request that Seller make
Seller's title marketable ("Objections"). Any covenants, conditions, restrictions, easements or
other rights evidenced by a recorded instrument disclosed in Schedule B of the Title
Commitment to which Buyer does not object within the ten (10) day period set forth above shall
be deemed a permitted encumbrance and shall be referenced as a permitted encumbrance in
Section 2 and Section 3 of the Contract for Deed. Within ten (10) 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 before
the Date of Closing. 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 do so on or
before the Date of Closing, Buyer must either:
a. terminate this Agreement pursuant to the procedures set forth in Section
21 below;
b. notify Seller that Buyer waives an Objection. If Buyer waives an
Objection, the matter giving rise to the Objection is deemed a permitted encumbrance and
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shall be referred to as a permitted encumbrance in Section 2 and Se ion 3 of the Contrac
for Deed and the Parties must fully perform their obligations under t i~~e~r1F. ~'
If Buyer does not notify Seller of Buyer's election to terminate this Agreem
subsection (a) above or waive Buyer's Objection pursuant to subsection (b) above before the
Date of Closing, this Agreement automatically terminates, and Buyer must deliver an executed
and recordable quit claim deed to the Property to Seller to evidence the termination of this
Agreement.
11. 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 all real estate taxes, all
special assessments and any penalties and interest thereon that are due and payable with
respect to the Property;
b. On or before the Date of Closing, Seller must pay or provide for the
payment of all special assessments levied or pending against the Property as of the date
of this Agreement, including special assessments certified for payment with the current
year's real estate taxes;
c. Subject to Section 7, Buyer and Seller must pro rate the real estate taxes
that are due and payable in the year of closing on a per-diem basis using a calendar year,
to the Date of Closing. The Parties must pro-rate the real estate taxes using current year
real estate tax information, if available, and, if current year 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.
d. Buyer must pay all real estate taxes that are due and payable in the years
following the year of closing and all special assessments other than special assessments
Seller is obligated to pay pursuant to Section 11(b).
12. Seller's Representations and Warranties. Seller makes the following
representations and warranties to Buyer:
a. The individuals executing this Agreement on behalf of Seller represent to
Buyer that they have the legal and corporate authority to execute this Agreement on
behalf of Seller and to bind Seller. Seller represents and warrants to Buyer that Seller has
the legal and corporate authority to enter into this Agreement and to sell the Property.
b. Seller represents and warrants that there has been no labor or materials
furnished to the Property for which payment has not been paid.
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c. Seller represents and warrants that Exhibit C is a true ~omp~ lii
all leases affecting the Property (the "Leases"); the current tenants 1~\ J s t
"Tenants") and the amount of all security deposits relating to the Le ses.
d. Seller represents and warrants that there are no unrecorded mortgages,
contracts, purchase agreements, options, leases (except for the Leases), easements or
other agreements or interests relating to the Property.
e. Seller represents and warrants that there are no persons, other than the
Tenants, in possession of any portion of the Property other than pursuant to a recorded
document.
f. Seller represents that, to the best of Seller's actual knowledge, that there
are no encroachments or boundary line questions affecting the Property.
g. Seller represents that Seller is the record fee owner of the Property.
h. Seller represents and warrants that the Property has legal access to a public
right of way.
i. Seller represents that, to the best of Seller's actual knowledge, the Property
and the improvements thereon, if any, are not in violation of any statute, law, ordinance
or regulation.
j. 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 or involving any portion of Property, and no third
party has threatened Seller with commencement of any such action, litigation,
investigation, condemnation or administrative proceeding.
k. Seller represents and warrants that Seller is not in default in the
performance of any of Seller's obligations under any mortgage, contract for deed, lease,
easement agreement, covenant, condition, restriction or other instrument relating to the
Property.
1. Seller represents that to the best of Seller's actual knowledge, there are no
wells, septic systems, or underground or above ground storage tanks, of any size or type
located on the Property.
m. To the best of Seller's knowledge, the Property has not been used for
methamphetamine production.
n. 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
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"Hazardous Substance" includes but is not limited to substances deft ed as "hazardous
substances," "toxic substances" or "hazardous wastes" in the Compr ~~~T
Environmental Response Compensation Liability Act of 1980, as en e , C.
§9601, et seq., and substances defined as "hazardous wastes," "hazar ous su s ances,
"pollutants, or contaminants" as defined in the Minnesota Environmental Response and
Liability Act, Minnesota Statutes, § 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).
o. Seller represents that, to the best of Seller's actual knowledge, no activity
has been undertaken on the Property that would cause or contribute to the discharge of
pollutants or of fluids into any water source or system, the dredging or filling of any
waters or the discharge into the air of any emissions that would require a permit under the
Federal Water Pollution Control Act, 33 U.S.C. § 1251 et seq. or the Clean Air Act, 42
U.S.C. §7401 et seq. or any similar state law or local ordinance.
p. Seller represents and warrants that Seller has not engaged a real estate
agent to represent Seller and assist in the transaction.
If, at any time prior to the Date of Closing, Seller acquires actual knowledge of events or
circumstances which render the representations set forth in this Section 12 inaccurate in any
respect, Seller must promptly notify Buyer, in writing. Seller will indemnify Buyer, its
successors and assigns, against and will hold Buyer, its successors and assigns harmless from,
any expenses or damages, including reasonable attorneys fees, that Buyer incurs because of the
Seller's breach of any of the above warranties; the inaccuracy of any of the above representations
when made; or Seller's failure to promptly notify Buyer if, before the Date of Closing, the
representations set forth above become inaccurate. The representations, warranties and
indemnification set forth above survive the closing of this transaction and the execution of the
Contract for Deed. At closing, an authorized representative of Seller must execute and deliver to
Buyer a certificate of Seller certifying that the representations contained in this Section 12 are
true as of the Date of Closing or, if such representations are no longer true, describing, in detail,
the reasons why the representations are no longer true (the "Date Down Certificate").
13. Buyyer's Representations and Warranties. Buyer hereby represents and
warrants to Seller as follows:
a. Buyer hereby represents and warrants to Buyer that (i) Buyer is a housing
and redevelopment authority duly organized and validly existing pursuant to Minn. Stat.
Ch. 469; (ii) Buyer has full right and authority to enter into this Agreement, subject to
Buyer's compliance with the requirements of Minn. Stat. Section 469.029; (iii) each
person signing on behalf of Buyer is authorized to do so.'
b. Buyer has not engaged a real estate agent to represent and assist Buyer in
this transaction.
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14. Indemnifications. n ~ ~1
a. Seller must indemnify and defend Buyer against and 6hf l~i ~r ~isTn71~Ss
from any and all claims, causes of action, administrative orders, cost , xpen s
liabilities of every kind and nature and howsoever originating and existing, arising out of
Seller's operation or ownership of the Property prior to the Date of Closing, whether
currently known or unknown including, but not limited to, claims for environmental
contamination of the Property and including Buyer's attorneys fees and costs incurred in
defending against claims to establish or enforce such liabilities.
b. Buyer must indemnify and defend Seller and hold Seller harmless from
any and all claims, causes of action, administrative orders, costs, expenses and liabilities
of every kind and nature howsoever originating and existing, arising out of any and all
the Buyer's operation or ownership of the Property subsequent to the Date of Closing,
including, but not limited to claims for environmental contamination of the Property and
including Seller's attorneys fees and costs incurred in defending claims to establish or
enforce such liabilities.
15. Seller's Disclosure and Buyer's Inspection. Seller must deliver to Buyer such
of the following as are currently in Seller's possession or readily available to Seller at no cost
within seven (7) days of the date of this Agreement:
a. any construction or "as built" drawings or specifications for the
improvements located on the Property;
b. any manuals and other documents in Seller's possession or available to
Seller relating to the operation and maintenance of fixtures and equipment located on the
Property, including but not limited to, telephones, heating, cooling, plumbing and
electrical systems;
c. any maintenance and repair records relating to the improvements or
equipment located on the Property;
d. any environmental assessments or reports relating to the Property;
any leases relating to the Property; and
f. any abstracts of title to the Property.
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 and the improvements located thereon, including specifically the presence or
absence of hazardous substances, petroleum products and asbestos in, on, or about the Property.
Seller agrees to cooperate with Buyer in this regard including making personnel available for
orientations on various systems located within the improvements located on the Property. 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.
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16. Buyer's Contingencies. Buyer's obligations under this Agr ~ t~ntingen
a. Seller's timely performance of each of Seller's obligati n i
Agreement;
b. Buyer's determination that the representations set forth in Section 12 are
true, when made, and remain true as of the Date of Closing.
c. Buyer's determination in Buyer's sole discretion, based on the information
and inspections described in Section 15 above and any other relevant information that the
condition of the Property and improvements is acceptable to Buyer.
d. Buyer's Board's approval and ratification of this Agreement on or before
December 4, 2006.
If Buyer determines that one or more of the contingencies described in this Section 16 has not
been satisfied, Buyer may, by written notice to Seller prior to the Date of Closing, terminate this
Agreement pursuant to Section 21 below.
17. Casualty Loss. If the improvements on the Property are substantially damaged
prior to closing, Seller must immediately notify Buyer, in writing, of such damage and provide to
Buyer, along with Seller's written notification, copies of all insurance policies or agreements
relating to or otherwise covering the Property. Within twenty (20) days of Buyer's receipt of
Seller's notice Buyer may, at Buyer's option, terminate this Agreement pursuant to Section 21
below. If Buyer does not terminate this Agreement within said twenty (20) day period, the
Parties must fully perform their obligations under this Agreement, and Seller must assign to
Buyer Seller's rights to any and all insurance proceeds which Seller is entitled to receive on
account of such casualty loss. If, prior to the Date of Closing, the improvements on the Property
are damaged less than substantially, Seller must repair such damage, and the Parties must
proceed pursuant to the provisions of this Agreement with the Date of Closing extended for a
period of time not to exceed one hundred twenty days. For purposes of this Section 18 the term
"substantially damaged" must mean damage that requires repairs which cost more than 10% of
the Purchase Price. At the request of either Party, the Parties must engage a real estate appraiser
licensed in the state of Minnesota to determine the cost of repairing damage to the Property.
Buyer must select the appraiser from a list of three appraisers which Seller must prepare and
deliver to Buyer within ten (10) days of the occurrence of damage to the improvements located
on the Property. Each Party must pay one-half of the appraiser's fee.
18. Relocation Benefits. Seller represents and warrants to Buyer that Seller does not
occupy any portion of the Property, and Seller acknowledges and agrees that, therefore, Seller is
not a "displaced person" within the meaning of Minnesota Statutes, Section 117.50, Subdivision
3 and is not entitled to any relocation assistance, services, payments or other benefits pursuant to
Minnesota Statutes, Chapter 117 or any other applicable federal or state law. In addition to the
foregoing, Seller is waiving, releasing and forever discharging any relocation assistance, services
and benefits under Minnesota Statutes, Chapter 117 and the Uniform Relocation Assistance and
Real Property Acquisition Policies Act of 1970, United States Code, title 42, sections 4601 to
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4655, as amended by the Surface Transportation and Uniform Relocation A sistance ct of 198
and regulations adopted thereon (collectively "UR.A"). Seller acknowledge ~~l T
advised that under the URA, if Seller were eligible to relocation assistance, ervices an ene~ts
under the URA (which Seller is not), Seller may have been entitled to reesta is ent expenses,
the costs of moving personal property and assistance in finding a relocation site as well as
documenting any claim under the URA ("Relocation Benefits"). As a material condition to this
Agreement, Seller waives, releases, discharges and promises to bring no claim whether legal or
administrative for Relocation Benefits.
19. Assignment. Buyer may not assign Buyer's rights and obligations under this
Agreement to a third party without the written consent of Seller, which consent Seller shall not
unreasonably withhold.
20. 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 may at Seller's option, either:
(i) terminate this Agreement pursuant to Minnesota Statutes, Section
559.21; or
(ii) initiate an action to compel Buyer's specific performance of
Buyer's obligations under this Agreement provided that Seller commences such
action within three (3) months of the date of Buyer's default. In any such action
for specific performance, Seller may also recover Seller's attorneys fees and costs.
The remedies set forth in this Section 20(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, at Buyer's option, either:
(i) terminate this Agreement pursuant to Section 21, below in which
case Buyer will not be entitled to recover damages from Seller; or
(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 three (3) months of the date of Seller's default. In any such action
for specific performance, Buyer may also recover Buyer's attorneys fees and
costs.
The remedies set forth in this Section 20(b) are Buyer's sole and exclusive remedies in the event
of Seller's default.
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g 21. Termy ation of this A~ree>~ nt. Sections 10, 16, 17 and 2 o hi~~~
A reement allow Bu er to terminate this A Bement under certain conditio s o
procedures must govern the Parties exercise of their termination nghts:
a. Buyer must notify Seller, in writing, of Buyer's intent to terminate this
Agreement.
b. Buyer's notice must recite the Section of this Agreement that authorizes
Buyer's termination of this Agreement and must describe the facts and circumstances
which Buyer asserts justify termination under the referenced Section.
c. Buyer's notice of termination is effective as of the date Buyer deposits the
notice of termination with the United States Postal Service, with all necessary postage
paid, for delivery to Seller via certified mail, return receipt requested at the address set
forth in Section 1 above. If Buyer 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 Seller actually receives the notice of termination. Buyer must also mail a copy of
the notice of termination to the Parties respective attorneys as provided for in Section 24
below.
d. If Seller disputes Buyer's right to terminate this Agreement, Seller must so
notify Buyer, in writing, within three (3) business days of Seller's receipt of Buyer's
notice of termination.
e. If Seller does not dispute Buyer's right to terminate the Agreement, Buyer
must execute and delivery to Seller a recordable quit claim deed evidencing the
termination of this Agreement.
f. If either Party disputes the validity of an attempted termination of this
Agreement, that Parry 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 the costs and reasonable attorneys' fees which such Party incurs in the
action from the non-prevailing Party.
g. Section 20(a) provides for Seller's termination of this Agreement under
certain circumstances. Seller's termination of this Agreement pursuant to Section 20(a) is
governed by Minnesota Statutes, Chapter 559 and not by this Section 21.
22. Time. Time is of the essence for all provisions of this Agreement.
23. Survival of Terms. The Parties' obligations under this Agreement and the
representations and warranties which the Parties have recited in this Agreement survive Seller's
delivery of the Contract for Deed to Buyer and the closing of this transaction.
24. Notices. All notices provided for in this Agreement must be in writing. The
notice is 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
1941727x5 1 1
Party delivers a notice provided for in this Agreement in a different manner c~e~e
preceding sentence, notice is effective as of the date the other party actually t >c .
The Party sending the notice must also mail a copy of the notice to the Parti s respective
attorneys via first class United States mail at the addresses set forth below:
Attorney for Buyer: Briggs and Morgan, P.A.
2200 First National Bank Building
332 Minnesota Street
St. Paul MN 55101
651.808.6600
Attn: Thomas Bray
Attorney for Seller:
25. Full Agreement. 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.
26. Governing Law. This Agreement has been made under the laws of the State of
Minnesota and such laws control its interpretation.
Dated:
HOULTON INVESTMENT COMPANY:
By
Its
By.
Its
1941727v5 1 2
Dated:
DRAFT
HOUSING AND REDE
AUTHORITY IN AND FOR THE CITY OF
ELK RIVER
By_
Its
By_
Its
1941727x5 13
EXHIBIT A
Legal Description of the Property DRAFT
i9ai~z~~s ~ A-1
`X~~a~Te DRAFT
Contract for Deed
[see attached form]
B-1
1941727v5
EXHIBIT C
Schedule of Tenants and Leases
DRAFT
NAME OF TENANT LEASE DATE AMOUNT OF SECURITY
DEPOSIT
1941727v5 C-1
EXHIBIT D
FORM OF ESTOPPEL CERTIFICATE DRAFT
1941727v5 D- I
BRIGGS AND MORGAN
2200 FIRS"I' NA"fIONAL BANK BUILDING
332 MINNESO"I'A STREET
SAIN"f PAUL, MINNESO'T'A 55101
TELEPiIONE (651) 808-6600
FACSIMILE (651) 808-6450
PROFESSIONAL ASSOCIATION
August 29, 2006
VIA E-MAIL
Cathy Mehelich
Community Development Director
Elk River City Hall
13065 Orono Parkway
Elk River, MN 55330-5600
Dear Cathy:
WRI'1'1?R'S DIRECT DIAL
(651) 808-6620
WRI"I'ER'S E-MAIL
mippel@briggs.com
It is my understanding that the Elk River Housing and Redevelopment Authority (the
"HRA") is contemplating the purchase of certain real estate within the City of Elk River pursuant
to a contract for deed. It is proposed that at some point the existing structures on the land would
be demolished and a public parking ramp would be constructed.
The HRA has the authority under Minnesota Statutes, Section 469.001 to 469.047 to
undertake housing projects, housing development projects or redevelopment projects or a
combination of those projects. This project would qualify as a redevelopment project and prior
to undertaking a redevelopment project, Minnesota Statutes, Section 469.028 requires that when
an HRA determines that a redevelopment project should be undertaken, it shall apply to the
governing body of the City in which the project is located for approval. The application shall be
accompanied by a redevelopment plan, a statement of the method proposed for financing the
project, and the written opinion of the Planning Commission. Before approving any
redevelopment plan, the governing body of the City shall hold a public hearing thereon after
published notice in a newspaper general circulation in the municipality at least once not less than
10 days nor more than 30 days prior to the date of the hearing.
The HRA shall not proceed with the project unless the governing body of the City finds
by resolution that:
1. the land in the project area would not be made available for redevelopment
without the financial aid to be sought;
2. the redevelopment plans for the redevelopment areas in the locality will afford
maximum opportunity, consistent with the needs of the locality as a whole, for the
redevelopment of the areas by private enterprise; and
1940157v1 MINNEAPOLIS OFFICE • IDS CENTER • WWW.BRIGGS.COM
MEMBER - LEX MUNDI, A GLOBAL ASSOCIATION OF INDEPENDENT' LAW FIRMS
BRIGGS AND MORGAN
Cathy Mehelich
August 29, 2006
Page 2
3. the redevelopment plan conforms to a general plan for the development of the
locality as a whole.
A redevelopment plan is defined to be a plan approved by the governing body of the City
which provides an outline for the development or redevelopment of the area and is sufficiently
complete: (1) to indicate its relationship to definite local objectives as to appropriate land uses;
and (2) to indicate general land uses and general standards of development and redevelopment. I
have enclosed an example of a Redevelopment Plan for your review.
If you have any additional questions, please do not hesitate to contact me.
Very truly yours,
isi Mary ~. Ippel
Mary L. Ippel
MLUtfy
Enclosure
1940157v1
REDEVELOPMENT PLAN
FOR
MUNICIPAL CENTER PROJECT
DATED MARCH 9, 2005
ECONOMIC DEVELOPMENT AUTHORITY OF THE
CITY OF RAMSEY, MINNESOTA
1723662x4
TABLE OF CONTENTS
Page
L INTRODUCTION AND LEGAL BASIS ...........................................................................1
A. Intent ............................................................ ............................................................1
B. Statement ...................................................... ............................................................1
C. Redevelopment Area Boundaries ................ ............................................................1
D. Statement of Authority ................................. ............................................................2
E. Findings and Declaration ............................. ............................................................2
II. RED EVELOPMENT PROGRAM .......................... ............................................................2
A. Redevelopment Plan Objectives .................. ............................................................2
B. Land Use ...................................................... ............................................................3
C. Redevelopment Activities ............................ ............................................................3
D. Financing Plan ............................................. ............................................................4
E. Development Standards ............................... ............................................................4
F. Environment Controls .................................. ............................................................5
G. Administration of Project ............................. ............................................................5
H. Modification of Plan .................................... ............................................................5
Exhibit A -Redevelopment Area Boundary Map
Exhibit B -Budget
1723662x4 1
INTRODUCTION AND LEGAL BASIS
A. Intent
The Economic Development Authority of the City of Ramsey,
Minnesota (the "EDA"), proposes to establish a Redevelopment
Project Area as described herein (the "Redevelopment Area"), in
connection with the development of Ramsey Town Center,
including the acquisition and betterment of a municipal center
consisting of police, city hall facilities and related parking within
Ramsey Town Center. The City of Ramsey, Minnesota (the
"City") will lease the municipal center from the EDA with an
option to purchase pursuant to a lease with option to purchase
agreement. Revenue bonds in the principal amount not to exceed
approximately $19,200,000 are proposed to be sold by the EDA to
finance the redevelopment project costs associated with the
municipal center. The revenue bonds will be secured by the
payments to be made by the City under the lease with option to
purchase agreement.
In the remainder of the Redevelopment Area the EDA proposes to
facilitate, as appropriate, private development by acquiring land
and preparing it for private development and by constructing
public infrastructure improvements.
B. Statement
The City and EDA have determined that development has not
occurred within the Redevelopment Area by private enterprise in
accordance with the goals and objectives of the EDA and the City.
It has been found that the Redevelopment Area is potentially more
useful and valuable for contributing to the public health, safety and
welfare than has been realized under existing development.
The development of these parcels in accordance with the goals and
objectives of the EDA and the City are not attainable in the
foreseeable future without the intervention of the EDA and the
City in the private development process. The EDA has prepared
this Redevelopment Plan, thereby making the land useful and
valuable for contributing to the public health, safety and welfare.
C. Redevelopment Area Boundaries
The boundaries of the Redevelopment Area are outlined on the
Redevelopment Area Boundary Map, Exhibit A.
All land included in the Project Area is within the legal boundaries
of the City.
1723662v4
D. Statement of Authority
Minnesota Statutes Section 469.001-469.047 (Housing and
Redevelopment Authority Act) grants municipalities the authority
to designate redevelopment areas within the boundaries of the
municipalities. Within these areas, the municipality may adopt a
redevelopment plan and establish a project consistent with the
municipality's public purpose. The project as contemplated by this
plan consists of a redevelopment project as defined in Section
469.001, Subdivision 14. In connection with the municipal center,
the lease with option to purchase agreement is authorized under
Minnesota Statutes, Section 465.71.
E. Findings and Declaration
The City and the EDA make the following findings:
The land in the Redevelopment Area would not be made available for
redevelopment without the financial aid sought.
2. The Redevelopment Plan for the Redevelopment Area in the City will
afford maximum opportunity consistent with the needs of the locality as a
whole, for the redevelopment of the area by private enterprise.
3. The Redevelopment Plan conforms to the general plan for development of
the City as a whole.
II. REDEVELOPMENT PROGRAM
A. Redevelopment Plan Objectives
The EDA, through implementation of this plan, seeks to achieve
the following objectives:
1. To provide for the least costly and most efficient municipal facilities for
the City required to provide adequate City services to the region.
2. To promote and seek the orderly and harmonious development of the
Redevelopment Area.
3. To provide logical and organized land use for the entire Redevelopment
Area consistent with the Comprehensive Land Use Plan and the Zoning
Ordinance of the City.
4. To promote the prompt development of property in the Redevelopment
Area with a minimal adverse impact on the environment.
1723662v4 2
5. To provide general design guidance in conjunction with a suitable
development contract in order to enhance the physical environment of the
area.
6. To provide adequate utilities and other public improvements and facilities,
to enhance the Redevelopment Area and the City for new and existing
development.
7. To assist the financial feasibility of private projects to the extent necessary
and where there is a corresponding level of public benefit.
8. To enhance the overall economy of the City and surrounding area by
retaining current, and providing additional employment opportunities for
the residents of the City and surrounding community.
9. To increase the City's tax base by providing critical public infrastructure
improvements for the City.
10. To stimulate development and investment within the Redevelopment Area
by private interests.
B. Land Use
The proposed land use for the Redevelopment Area is Town
Center Subdistrict No. 1 (mixed use core). Public owned and
operated facilities necessary for the public health, safety and
welfare are permitted uses in the Redevelopment Area.
C. Redevelopment Activities
1. Acquisition
The City owns the property in the Redevelopment Area on which
the municipal facilities will be located. Other than that property,
other property in the Redevelopment Area maybe acquired by the
EDA if and when required to facilitate development or
redevelopment within the Redevelopment Area.
2. Relocation
It is not expected that any persons will be displaced as a result of
this Redevelopment Plan.
3. Municipal Facilities and Public Improvements.
The EDA proposes to cause the municipal to be constructed and
leased to the City under a lease with option to purchase agreement.
The City proposes to construct two parking ramps, AUAR
1723662x4
roadways, Phase I roadways and utility improvements and Phase II
roadways and utility improvements within the Redevelopment
Area. A description of these improvements and the location of
where these improvements will be installed is on file with the City.
D. Financing Plan
Project Budget
Attached hereto as Exhibit B is a budget which details estimated
development costs associated with constructing and equipping the
municipal center as currently contemplated and installing public
improvements. The items of cost and the costs thereof shown in
the budget are estimated to be necessary based upon information
now available. It is anticipated that the items of cost and the costs
thereof shown in each category in the budget may decrease or
increase, but that the total project cost will not exceed the amount
shown above.
2. Source of Funds and Security
The City is entering into the lease with option to purchase
agreement with the EDA pursuant to Minnesota Statutes, Section
465.71. The lease with option to purchase agreement is payable
from general sources including taxes, and its payment is not
limited to a specific fund or specific source of revenues. Sources
of funds for public improvements include rates and charges,
assessments and other available funds of the EDA or City.
3. Bond Issue Details
The EDA will issue approximately $19,200,000 in public project
revenue bonds to finance the construction of the municipal center.
It is anticipated that the City will issue general obligation
improvement bonds to finance the public improvements to be
constructed within the Redevelopment Area.
E. Development Standards
The EDA will consider among other things, the following factors
when evaluating development proposals for projects within the
Redevelopment Area seeking public assistance and support:
Degree to which redevelopment objectives are provided for or enhanced.
2. Consistency with this plan and the City of Ramsey's Comprehensive Plan.
1723662v4 4
F. Environmental Controls
It is presently anticipated that the proposed development in the
Redevelopment Area will not present major environmental
problems. All municipal actions and public improvements will be
carried out in a manner that will comply with applicable
environmental standards. The environmental controls to be
applied within the area are contained within the codes and
ordinances of the City.
G. Administration of Municipal Center Project
The City Council has authorized the EDA to be responsible for
seeing that the contents of this Plan as it relates to the Municipal
Center are implemented.
H. Modification of Plan
A Redevelopment Plan maybe modified at any time. The
modification must be adopted by the EDA and the City, upon
notice and after the public hearing required for the original
adoption of the Redevelopment Plan.
Changes that do not alter or affect the exterior boundaries and do
not substantially alter or affect the general land use established in
the plan, shall not constitute a modification of the Redevelopment
Plan, nor require approval by the City.
1723662x4
EXHIBIT A
Description of the Redevelopment Area and Boundary Map
See attached
1723662v4 A-I
EXHIBIT B
Municipal Center Project:
Estimated construction and related expenses
Discount Factor
Costs of Issuance
Debt Service Reserve
Total Issue (Rounded)
Budget
1723662v4 B-1
$17,374,322
242,880
43,500
1,539,298
19,200,000