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8.2. SR 04/20/2009'-i// city of Elk -~-~ River REQUEST FOR ACTION To Item Number Ci Council 8.2. Agenda Section Meeting Date Prepared by Administration A ri120, 2009 Lori ohnson, Ci Administrator Item Description Reviewed by Petition, Waiver and Agreement for the Cancellation of Certain Special Assessments and for the Levying and Deferral of Special Reviewed by Assessments Action Requested Approve petition, waiver and agreement for the cancellation of certain special assessments and approve levying and deferral of special assessments. Background/Discussion City Attorney Peter Beck has drafted a petition, waiver and agreement for the cancellation of certain special assessments and approve levying and deferral of special assessments (Agreement) between FMM Family Limited Liability Partnership and the City of Elk River to handle future special assessment payments for property formerly owned by Frank and Mary Jo Miske. The Miskes entered into a contract for deed with a developer for a project known as River Park. The property was assessed for trunk water and sewer improvements as requested for the development of the property; a portion of the special assessment levied remains outstanding, payable in future years. The developer is now transferring all of its right to the property back to the original property owner. The owner intends to use the property for agricultural purposes, not residential development. Therefore, the owner has requested that the City provide relief for the future assessment payments. The Agreement cancels the existing assessment and reassesses it at a predetermined amount once the property is developed subject to the terms of the agreement. It does not forgive the assessment; rather, it delays the assessment indefuutely until the property is developed at some point in the future. Financial Impact The assessment payments on this property will be deferred until the property is assessed. There are no outstanding bonds payable on the project; therefore, the delay of payment does not adversely affect the City. Attachments ^ Petition, Waiver and Agreement for the Cancellation of Certain Special Assessments and for the Levying and Deferral of Special Assessments Action Motion by Second by Vote Follow Up S:\Council\Lori\2009\Spedal Assessment Deferral Miske 04 20 09.doc PETITION, WAIVER AND AGREEMENT FOR THE CANCELLATION OF CERTAIN SPECIAL ASSESSMENTS AND FOR THE LEVYING AND DEFERRAL OF SPECIAL ASSESSMENTS This Petition, Waiver and Agreement ("Agreement") is entered into this day of , 2009 by and between the City of Elk River, a Minnesota municipal corporation ("City") and FMM Family Limited Liability Partnership, a Minnesota limited liability partnership ("Owner"). WHEREAS, Owner owns fee title to certain land located within the City of Elk River, legally described as Outlot D, River Park; Outlot B, River Park Second Addition; and Outlot D, River Park Second Addition (the "Property"); and WHEREAS, the Property, together with certain adjacent land then owned by Frank A. Miske, Jr. and Mary Jo Miske, husband and wife, and Owner, was sold by Frank A. Miske, Jr. and Mary Jo Miske, husband and wife, and Owner, to U.S. Home Corporation ("Developer") pursuant to a Contract for Deed dated December 14, 2004; and WHEREAS, it was Developer's intent to develop all of the Property it acquired pursuant to the Contract for Deed for a project known as "River Park" (the "Project"); and WHEREAS, Developer subsequently entered into a Development Agreement ("Development Agreement") with City for development of the Project; and WHEREAS, Developer has developed a portion of the Project, but has not yet proceeded to develop that portion of the Property which is the subject of this Agreement; and WHEREAS, pursuant to the Development Agreement the Property was assessed for certain City installed public improvements, including trunk sanitary sewer and water main ("Trunk Improvements") at the rate of $6,955 per acre (the "Existing Assessments"); and WHEREAS, Developer and Owner have made payments on the Existing Assessments, and all payments due as of the date of this Agreement have been made; and WHEREAS, the payments due on the Existing Assessments in calendar year 2009 have been certified by the City to Sherburne County; and WHEREAS, Owner will therefore make the May 15, 2009 and October 15, 2009 installment payments on the Existing Assessments; and WHEREAS, there will remain after payment of the May 15, 2009 and October 15, 2009 payments the following principal balances on the Existing Assessments: Outlot D, River Park: $4,739.52 per acre; Outlot B, River Park Second Addition: $5,577.71 per acre; Outlot D, River Park Second Addition: $5,578.95 per acre; and WHEREAS, development of the Property is not contemplated to occur for a number of years; and WHEREAS, Developer and Owner have therefore entered into an agreement to cancel the Contract for Deed entered into between them, and Developer has delivered to Owner a quit claim deed transferring all of its rights, title and interest in the Property to Owner; and WHEREAS, Owner intends to return the Property to agricultural uses rather than residential development; and WHEREAS, use of the Property for agricultural purposes will not support payment of the Existing Assessments, nor will use of the Property for agricultural purposes require the installation of utilities which will make use of the Trunk Improvements installed by City; and WHEREAS, Owner has therefore requested that City cancel the Existing Assessments and defer payment on any future assessments until such time as the Property is developed; and WHEREAS, City is willing, due to the unique circumstances outlined above, to cancel the Existing Assessments, but only on condition that Owner petition for and agree to pay special assessments for the Trunk Improvements at such time as the Property is developed. NOW THEREFORE, in consideration of the mutual promises and conditions hereinafter contained, it is hereby agreed as follows: 1. Owner represents and warrants that it is the sole fee owner of the Property and that the Owner's representative signing this Petition, Waiver and Agreement is authorized to do so by Owner. 2. Owner petitions the City of Elk River: A. To cancel the Existing Assessments for Trunk Improvements levied against the Property. 2 B. To levy special assessments against the Property for the Trunk Improvements (the "New Assessments") at the following rates for calendar year 2010: Outlot D, River Park: $4,739.52 per acre; Outlot B, River Park Second Addition: $5,577.71 per acre; Outlot D, River Park Second Addition: $5,578.95 per acre. Owner understands and agrees that the rates set forth above for the New Assessments will increase by three percent on January 1, 2011, and by an additional three percent on January 1 of each successive year until Owner or its successor makes payment of the New Assessments. C. To defer payment of the New Assessments. Owner understands and agrees that once the Property, or any portion therefore, is subdivided and a final plat is recorded, the New Assessments for that portion of the Property subdivided will be due and payable in six equal semiannual payments with unpaid interest at the City's then current interest rate for similar public improvement assessments, unless otherwise provided in a Development Agreement for such subdivision. 3. In consideration of City's agreement to cancel the Existing Assessments, levy the New Assessments at the rate of $5,513.62 per acre, and defer payment of the New Assessments until such time as the Property, or any portion thereof, is subdivided, Owner: A. Agrees to make the May 15, 2009 and October 15, 2009 payments due on the Existing Assessments. B. Specifically waives any objection to the City's design and installation of the Trunk Improvements, including any objection to the final design of the Trunk Improvements, any objection to the final location of the Trunk Improvements, any objection to the procedure pursuant to which the City ordered the Trunk Improvements installed, and any objection to the City's failure to strictly follow the notice and other requirements of Minnesota Statutes, Chapter 429 with respect to ordering the Trunk Improvements installed. C. Expressly waives objection to any irregularity with regard to the levying of the New Assessments against the Property, expressly waives any claim that the amount of the New Assessments is excessive and expressly waives all rights of appeal, including any rights under Chapter 429, Minnesota Statutes, from the New Assessments. 3 D. Expressly agrees and warrants that the New Assessments will be paid as provided in this Agreement. E. Expressly agrees that the Trunk Improvements have increased the fair market value of the Property by an amount equal to or in excess of the amount of the Existing Assessments, plus the annual increase in the amount of the New Assessments. F. Expressly agrees that the amount of the Existing Assessments is reasonable, fair, and equitable. G. Expressly agrees that the New Assessments shall constitute a lien against the Property in the amounts levied and as increased each year as provided in this Agreement, and that this lien shall run with the Property and be binding on Owner's successors and assigns. H. Expressly agrees to provide notice of this Petition, Waiver and Agreement to any purchaser of the Property or lender. I. Expressly agrees to record a copy of this Petition, Waiver and Agreement against the Property. 4. In consideration of the Owner's Petition and consent to the levying of the New Assessments for the Trunk Improvements as provided in this Agreement, including the annual three percent increase in the amount of the New Assessments, City agrees to cancel the Existing Assessments effective October 30, 2009 and to defer payment of the New Assessments as provided in this Agreement. City's obligation to cancel the Existing Assessments, levy the New Assessments and defer payment of the New Assessments shall not become effective unless and until Owner has made the May 15, 2009 and October 15, 2009 payments due on the Existing Assessments. If those payments have not been received by Sherburne County on or before October 30, 2009, the Existing Assessments will not be cancelled and City shall have no further obligation to Owner under this Agreement. 5. The Development Agreement requires that drainage and utility easements be granted to the City over all ponding areas necessary to serve the Project, including three ponding areas located on the Property. Developer has requested that the Property be released from the Development Agreement, and City has agreed to do so, provided that Owner delivers drainage and utility easements over the three ponding areas. Therefore: A. City shall provide its standard form drainage and utility easement document and legal descriptions for the three ponding areas, generally described as follows: 4 i. A ponding area not to exceed 4 acres generally in the area of the existing pond on Outlot D, River Park; ii. Two ponding areas, not to exceed two acres in total, generally in the area of the two existing smaller ponds on Outlot D, River Park Second Addition. B. Owner will execute and deliver to City drainage and utility easements for the three ponding areas on the City's form. C. Upon execution of this Agreement, payment of the May 15, 2009 and October 15, 2009 payments due on the Existing Assessments, and delivery of drainage and utility easements over the three ponding areas in a form acceptable to City, City shall deliver to Owner a release which shall release the Property from any further obligations under the Development Agreement. IN WITNESS WHEREOF, City and Owner have caused this Agreement to be duly executed and to become effective as of the day and year first above written. CITY OF ELK RIVER By: Stephanie Klinzing Its: Mayor Subscribed and sworn to before me this day of , 2009. Notary Public 5 CITY OF ELK RIVER By: Tina Allard Its: City Clerk Subscribed and sworn to before me this day of , 2009. Notary Public OWNER By: Its: Subscribed and sworn to before me this day of , 2009. Notary Public THIS INSTRUMENT WAS DRAFTED BY: GRAY, PLANT, MOOTY, MOOTY & BENNETT, P.A. (PKB) 500 IDS Center 80 South Eighth Street Minneapolis, MN 55402 Telephone: (612) 632-3000 GP:2544279 v3 6