HomeMy WebLinkAboutContract 1778Execution Copy
PRELIMINARY DEVELOPMENT AGREEMENT
THIS AGREEMENT is made and entered into this//~, day of May, 2004, by and
between the COLUMBIA HEIGHTS ECONOMIC DEVELOPMENT AUTHORITY, a public
body politic and corporate (the "Authority"); the CITY OF COLUMBIA HEIGHTS, a municipal
corporation under the laws of Minnesota (the "City") and SCHAFER RICHARDSON, INC., a
Mimaesota corporation (the "Developer").
WITNESSETH:
WHEREAS, the Authority desires to promote redevelopment of certain property within the
City, which property is described in Exhibit A attached hereto (the "Property"); and
WHEREAS, the Authority has caused to be prepared a redevelopment analysis of an area
that includes the Property, titled Industrial Area Redevelopment Plan (the "Redevelopment Study");
and
WHEREAS, the Developer has proposed a multi-phase redevelopment project including
housing and commercial uses (the "Redevelopment"), consistent with the Redevelopment Study,
and which is depicted on the preliminary site plan attached hereto as Exhibit B.
WHEREAS, the Developer has proposed that the first phase of the Redevelopment would
consist of approximately 145 housing units (approximately 17 traits per acre) and approximately
15,000 square feet of commercial (together, "Phase I") to be located on the portion of the site plan
identified on Exhibit C (the "Phase I Property"), attached hereto;
WHEREAS, the Developer currently owns a substantial portion of the Property, in
particular, most of Phase I, and expects to acquire the balance of the Property, either by vokmtary
purchase or from the Authority after acqnisition by the Authority for redevelopment; and
WHEREAS, the City has approved the Redevelopment Study and intends to commence
various zoning and land use changes in the portion of the city that includes the Property, consistent
with mhd necessary for the Redevelopment; and
WHEREAS, the Authority has completed a substandard building analysis of the Phase I
Property for the pmrposes of evaluating eligibility for a redevelopment tax increment financing
district, and has also completed (as part of the Redevelopment Study) a preliminary blight analysis
of the Property as a whole, and has determined preliminarily that the Property qualifies as a
"redevelopment project" within the meaning of Minnesota Statutes, Sections 469.001 to 469.047
(the "HRA Act"); and
WHEREAS, the Developer has requested the Authority to explore the use of certain public
assistance, financial and otherwise, to assist with the Redevelopment; and
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WHEREAS, the Developer has requested the City to explore the tmdertaldng of various
municipal capital investments in furtherance of the Redevelopment, as contemplated in the
Redevelopment Study, including roadways, utility infrastructure and open space improvements (the
"Public Infrastructure"); and
WHEREAS, the Authority has received certain grants (the "Environmental Grants") from
the Minnesota Department of Employment and Economic Development ("DEED") and the
Metropolitan Council (the "Met Council") to finance pollution remediation on the Phase I Property
and the Developer has requested the City and Authority to explore the availability of other grants
and assistance from tlzird parties for the remainder of the Property in support of the Redevelopment;
and
WHEREAS, the Authority and City have determined that it is in the City and Authority's
best interest that the Developer be designated sole developer of the Property during the term of this
Agreement; and
WHEREAS, the Authority, City and the Developer are willing and desirous to undertake
the Redevelopment if (i) a satisfactory agreement can be reached regarding the Authority's
commitment for public assistance necessary for the Redevelopment; (ii) satisfactory mortgage and
equity financing, or adequate cash resources to undertake the Redevelopment can be secured by the
Developer; and (iii) the economic feasibility and sounch~ess of the Redevelopment is determined
following appropriate financial analysis by the Authority; (iv) satisfactory resolution of zoning, land
use, site design, and engineering issues, and other necessary preconditions have been determined to
the satisfaction of the parties; (v) final analysis of the Property in phases subsequent to Phase I
indicate the Property quarries for area wide redevelopment and the use of tax increment financing;
and (vi) the City determines to proceed with appropriate governmental actions supportive of the
Redevelopment related to zoning, land use and other approvals, determines to undertake the Public
Infrastructure, and approves any other necessary, similar matters; and
WHEREAS, the Authority is willing to evaluate the Redevelopment and work toward all
necessary agreements with the Developer, if the Developer agrees to reimburse the Authority for
certain outside consulting costs relating to the Redevelopment, even if the Redevelopment is
abandoned or necessary agreements are not reached under the terms of this Agreement; and
WHEREAS, the City is willing to proceed with land use, zoning and environmental actions
related to the Property and the Redevelopment, that are necessary preconditions of the
Redevelopment, and to evaluate and work toward all necessary agreements with the Developer, if
the Developer agrees to reimburse the City for certain outside consulting costs related to the
Redevelopment, even if the Redevelopment is abandoned or necessary agreements are not reached
under the terms of this Agreement;
NOW, THEREFORE, in consideration of the mutual covenants and obligations of the
parties hereto,, the Authority and the Developer hereby agree as follows:
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Section 1. Negotiation of Redevelopment Contract. The Authority, City and the
Developer will proceed to negotiate in good faith regarding a definitive development contract
regarding the Property and the Redevelopment (the "Contract"), based on the terms and
conditions outlined in this Agreement. It is the intention of the parties that this Agreement
documents their present understanding and commitments and that if the conditions described in
this Agreement can be fulfilled to the satisfaction of the Authority, City and the Developer, the
parties will enter into a Contract. The Contract (together with any other agreements entered into
between the parties hereto contemporaneously therewith) when executed, will supersede all
obligations of the parties hereunder. Notwithstanding anything to the contrary herein, the
respective obligations of the Authority to make any final approvals, acquire any property or provide
any financial assistance described in this Agreement, the City to undertake any final municipal
approvals and any construction of Public Infrastructure and the obligations of Developer to
commence construction of the Redevelopment on the Property, are subject to execution of a
Contract approved by, respectively, the governing bodies of'the City and Authority and by the
Developer. All references in this Agreement to actions by any party after execution of a Contract
represent statements of current intent for negotiation of the Contract.
Section 2. Authority and City Ageements and Undertakings.
(a) The City and Authority accept and approve the preliminary site plan attached at Exhibit B
as the conceptual framework for the Redevelopment, subject to the following additional
terms and conditions:
approval of the required comprehensive plan amendments, rezonings, replatting,
Environmental Assessment Worksheet (EAW), any other state or federal necessary
permits, after the associated City and public/agency review process has been duly
undertaken;
inclusion of the following range of uses:
~- approximately 15,000 sq. ft. of commercial uses within Phase I;
> approximately 450 for-sale residential units in several phases to be built in
response to market demand
> new Public Infrastructure
(b)
Upon execution of the Contract, the Authority will commence the Phase I pollution
remediation actions described in the Environmental Grants, in accordance with all the
terms and conditions of the grant agreements with DEED and the Met Council, and
will investigate and use its best efforts to obtain additional similar funding for the
balance of the Property.
(c) Upon execution of the Contract, the City will similarly seek appropriate funding for
any Public Infrastructure for the Redevelopment to the extent reasonably available.
(d) During the term of this Agreement,
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(1)
the City will initiate a comprehensive plan amendment for the Property,
consistent with the site plan shown in Exhibit B;
(2)
the City will initiate rezoning of the Property consistent with the
comprehensive plan amendment and Exhibit B; and
(3)
the Authority or City, as appropriate, will take lead responsibility in
initiating an EAW for the Redevelopment and seeking any other approvals
or grants, for Phase I or the balance of the Redevelopment where the City
or Authority is the proper applicant for any state or federal governmental
approvals or grants for the Redevelopment;
provided that the City or Authority, as the case may be, will not consider final
approval regarding any such matters until execution of a Contract; and further
provided that nothing in this Agreement limits the authority of the City or Authority
in making such final decisions as are required by law or City ordinances for the
Redevelopment.
(e)
Upon execution of the Contract, and after Developer's exhaustion of reasonable
efforts to acquire all portions of the Property that are not currently owned or
controlled by Developer by private negotiations, the Authority will agree to acquire
such property through negotiation or exercise of its powers of eminent domain, to the
extent permitted by law and subject to all the terms and conditions of the Contract.
(f)
Upon execution of the Contract, the Authority expects to provide tax increment
financing to pay public redevelopment costs associated with development of the
Property, subject to all terms and conditions of the Contract. The parties currently
anticipate that the public redevelopment costs may include one or more of the
following items:
Costs of acquisition of the Property for the Redevelopment; and
· Demolition and relocation of existing uses; and
· Site cleating, grading, and environmental remediation not funded by the
Environmental Grants; and
· Construction of the Public Infi'astructure, to the extent not otherwise funded by
sources available to the City, and including certain Public Infrastructure that may
be constructed by the City; and
· Other costs for which tax increment or other available public funds may be legally
spent, to the extent necessary to allow the Redevelopment to proceed.
(g) Upon execution of the Contract, the Authority expects to provide tax increment
financing through issuance to Developer of one or more taxable "pay as you go" tax
increment revenue notes, with the principal amounts and interest rate determined by
the parties based on analysis of the financing gap necessary to make development of
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the Property financially feasible. If requested by Developer, upon completion of each
phase of the redevelopment, the Authority expects to refinance the taxable notes
associated with the relevant phase through issuance of one or more tax-exempt
revenue notes, subject to market conditions, opinion of the Authority's bond counsel,
and all other terms and conditions reasonably required by the Authority. The
Authority and City may require such refinancing to be coordinated with other City
financing undertaken during the same period, such that issuance of the tax-exempt
revenue notes does not impair the ability of the City to designate its own bonds as
"qualified tax-exempt obligations" within the meaning of Section 265(b)(3) of the
Internal Revenue Code of 1986, as amended.
(h) Upon execution of the Contract, the City will consider appropriate other financial
options in connection with the Public Infrastructure.
(i)
Upon execution of this Agreement the Authority will commence activities to establish
a new redevelopment tax increment financing district encompassing the Property, and
will initiate any additional studies necessary to qualify the Property as a
"redevelopment project" for the purposes of the HRA Act. The Authority and City
will schedule consideration of the tax increment financing district and any other
necessary findings as soon as legally possible under Minnesota law, and will certify
such tax increment financing district at such time as agreed by the parties in the
Contract.
(J)
During the term of this Agreement, the Authority and City may hold any public
hearings or meetings they deem necessary to obtain public feedback and input
regarding the Redevelopment.
(k) The Authority and City will use their best efforts to enter into a definitive Contract
with the Developer by August 31, 2004.
Section 3. Developer A~eements and Undertakings.
(a)
The Developer acknowledges and accepts the general terms and conditions for
implementation of the master site plan as described in Section 2(a) hereof and to
undertake a Redevelopment consistent with the adopted Redevelopment Study and
Contract.
(b)
The Developer will use its best efforts to acquire all portions of the Property not
currently owned or controlled by Developer by voluntary negotiation, prior to
requesting any Authority acquisition.
(c) During the term of this Agreement, the Developer will use its best efforts to complete
the follOwing tasks:
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submit to the Authority a project schedule that provides for commencement of
construction of Phase I in the spring of 2005;
submit to the Authority an updated site plan of the Phase I area and subsequent
Phases, including any requested flexibility in the scale, phasing and location of
uses, and which indicates all major Public Infrastructure required for each phase
of the Redevelopment;
submit to the Authority a detailed pro forma for at least the Phase I portion of the
Redevelopment, describing all sources and use of funds and providing sufficient
detail for the Authority to determine any financing gap and the need for tax
increment assistance;
to the extent practicable, submit to the City applications for replatting of the Phase
I Property to accommodate Phase I of t. he Redevelopment;
cooperate with the City and Authority and their engineering, legal, environmental
and planning and fiscal consultants, by providing all necessary information in a
timely manner for completion of the EAW and all necessary engineering
feasibility studies for the Public Infrastructure, all zoning and land use approvals,
the project feasibility analysis and tax increment "but for" analysis and any and all
other necessary governmental actions.
(d) The Developer will cooperate with the Authority in all activities necessary to establish
a redevelopment tax increment financing district encompassing the Property.
(e)
The Developer will cooperate with the City and Authority in planning for and
participating in any meetings referenced in Section 2(j), all to the extent reasonably
requested by the City or Authority.
(f) The Developer will Use its best efforts to enter into a definitive Contract with the
Authority by August 31, 2004.
Section 4. City and Authority Costs. (a) Upon execution of this Agreement, the
Developer has deposited with the Authority funds in the amount of $25,000, receipt of
which the Authority hereby acknowledges. The Authority may use such funds only to
pay "Authority Costs," which term means out-of pocket-costs incurred by the City or
Authority after December 1, 2003 for: (i) the Authority's financial advisor in connection
with the Authority's financial participation in redevelopment of the Property, including
without limitation all costs related to establishment of any development or tax increment
financing districts, (ii) the City or Authority's legal counsel in connection with
negotiation and drafting of this Agreement, the Contract and any related agreements or
documents, and any legal services related to the Authority's financial participation in
redevelopment of the Property; (iii) any consultants retained in connection with analysis
of the Property for eligibility for designation as a redevelopment project or as a
redevelopment tax increment financing district; (iv) any consultants retained in
connection with the preparation and approval of an EAW and any other state or federal
approval for the Redevelopment; and (v) consultants retained by the City and Authority
for planning, environmental review, and engineering for the Redevelopment, including
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the zoning and land use approvals and Public Infrastructure feasibility studies and
approvals and applications for any additional grant funding. Costs in connection with the
environmental remediation of Phase I shall not be Authority Costs and shall be funded by
the grants obtained for such purpose. In addition City and Authority staff costs and costs
and expenses shall not be Authgrity Costs.
(b) At any time, but not more often than monthly, the City or Authority may request
payment of Authority Costs, and the Developer agrees to pay all Authority Costs in excess of the
initial deposit, within ten days of the City or Authority's written request, supported by suitable
billings, receipts or other evidence of the amount and nature of Authority Costs incurred. The
maximum amount the Redeveloper shall be obligated to pay for all Authority Costs before
execution of the Contract shall not exceed $100,000, without a further approval by the
Developer. The City and Authority shall provide a budget to the Developer not later than June 1,
2004 indicating the anticipated areas of City and Authority activity and anticipated cost estimates
from the various consultants. Upon completion of the budget, the Authority, City and Developer
will negotiate regarding any need to modify the above maximum expenditure limit. Thereafter,
at Developer's request, but no more often than monthly, the Authority will provide Developer
with a written report on current and anticipated expenditures for Authority Costs, including
invoices or other comparable evidence of costs incurred for the Property.
(c) Upon termination or expiration of this Agreement in accordance with its terms, the
Authority will return to the Developer any balance of funds deposited under this Section, after
paying all Authority Costs incurred through the date of receipt of the termination notice or the date
of expiration, as the case may be. If a Contract is executed, the parties agree to negotiate and
include in the Contract terms regarding reimbursement for Authority Costs as eligible tax increment
expenses to the extent permitted by law.
Section 5. Exclusive Development Rights. During the term of this Agreement, the
Authority agrees that it will not negotiate or contract with any other party concerning the
redevelopment of the Property. The Developer shall not assi~o-n or transfer its rights under this
Agreement in full or in part, or enter into any subcontracts to perform any of its obligations
hereunder, without the prior written consent of the Authority, which consent will not be
unreasonably withheld. Notwithstanding the foregoing, the Developer may transfer and assign
its rights hereunder to an entity controlled by the same persons as the Developer without consent.
Section 6. Effect of Approvals. No approval given by the Authority hereunder or in
connection herewith shall be deemed to constitute an approval of the development of the
Property for any purpose other than as stated herein and the process outlined in this Agreement
shall not be deemed to supersede, any concept review, conditional use permit, vacation,
subdivision, rezoning or other zoning or planning approval process of the City or Authority
relative to the development of real estate or condition of receiving grant funds.
Section 7. 'Term ofAgeement. (a) This Agreement shall be effective for a period of 180
days from the date hereof, with mutually approved extensions for a period of not more than an
additional 90 days (which extensions may be approved on behalf of the City and the Authority by
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the City Manager of the City). If for any reason a Contract has not been entered into by the
parties within the term of this Agreement or any mutually approved extension thereof, this
Agreement shall be null and void and neither party thereafter shall have any liability or
obligations to the other except as other~vise provided in Section 4 hereof.
(b) This Agreement may be terminated by either party upon 30 days' written notice to the
other if a party fails to perform any of its obligations hereunder, and fails to cure the default
within 30 days after receipt of written notice thereof. Upon termination under this Section 7(b),
neither party thereafter shall have any liability or obligations to the other except as otherwise
provided in Section 4 hereof.
(c) Any extension or renewal beyond the term set forth in section (a) hereof requires
approval by the Authority's board of commissioners and the City's city council.
Section 8. Severabilit¥. If any portion of this Agreement is held invalid by a court of
competent jurisdiction, such decision shall not affect the validity of any remaining portion of this
Agreement.
Section 9. Notices. Notice or demand or other communication between or among the
parties shall be sufficiently given if sent by mail, postage prepaid, remm receipt requested or
delivered personally:
(a)
As to the Authority:
Columbia Heights Economic Development Authority
590 40th Avenue NE
Columbia Heights, MN 55421
Att'n: Executive Director
(b)
As to the City:
City of Columbia Heights
590 40th Avenue NE
Columbia Heights, MN 55421
Attn: City Manager
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(c)
As to the Developer:
Schafer Richardson, Inc.
500 First Avenue NE
Minneapolis, MN 55413
Attention: Brad Schafer
Section 10. Counterparts. This Agreement may be executed simultaneously in any number
of counterparts, all of which shall constitute one and the same instrument.
Section 11. Effective Laws. This Agreement shall be construed in accordance with the
law of Minnesota.
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IN WITNESS WHEREOF, the Authority, City and Developer have caused
Agreelnent to be duly executed in its name and behalf.
SCHAFER RICHARD~/~NC.
By
Its President
COLUMBIA HEIGHTS ECONOMIC
DEVELOPMENT AUTHORITY
IBtsYExe~t~or~ R~~. F~ l~st
this
CITY OF COLUMBIA HEIGHTS, MINNESOTA
~//Its Mayor- Julielme ~ko~)~J
By ~~/~~./~~'-
Its City IVl~a~ge{- Walter R. Fehst
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EXHIBIT A
Description and Map of the Property
Address
550 39th Avenue NE
620 39th Avenue NE
3801 5th Avenue NE
515 38th Avenue NE
517 38th Avenue NE
3800 5th Street NE
3901 5th Street NE
450 38th Avenue NE
317 37th Avenue NE
3700 5th Street NE
PIN
35'30-24-34-0040 (Building)
35-30-24-43-0060 (Land)
35-30-24-43-0047
35-30-24-34-0024 (Building)
35-30-24-34-0039 (Land)
35-30-24-34-0014
35-30-24-34-0013
35-30-24-34-0041
35-30-24-34-0035
35-30-24-34'-0002
35-30-24-34-0004
35-30-24-34-0003
Note: In case of inconsistency between parcel list and the following map, the map controls.
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Exhibit A- Prop.try Boundary Map
Columbia Hdghts ~conoml¢ I:~n~prnentAuffmdt~
$che~'er Richardson, Inc.
Prellmine~ Developmer~t Agreement
100 0
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~, NE
Exhibit B. Preliminary $1tit Plan
Columbia Haigh'm Economic Bevelop~nt~
$chefer Richardson, Inc.
Preliminary Development Agreement
100
sm-245852v7 1 3
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EXHIBIT C
Description and Map of Phase I Property
Address
550 39th Avenue NE
620 39th Avenue NE
3801 5th Avenue NE
515 38th Avenue NE
517 38th Avenue NE
3901 5th Street NE
PIN
35-30-24-34-0040 (Building)
35-30-24-43-0060 (Land)
35-30-24-43-0047
35-30-24-34-0024 (Building)
35-30-24-34~0039 (Land)
35-30-24-34-0014
35-30-24-34-0013
35-30-24:34-0035
Note: In case of inconsistency between parcel list and the following map, the map controls.
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EXhibit C - Phase I Boundary Map
C~umbla Heights Economic I~rr~nt A~
Schafer Richardson, Inc.
Prellminsry Develoj~er~t Agreement
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