HomeMy WebLinkAboutEDA AGN 07-26-05
CITY OF COLUMBIA HEIGHTS
590 40th Avenue N.E., Columbia Heights, MN 5542]-3878 (763) 706-3600 TDD (763) 706-3692
Visit Our Website at: www.ci.columbia-heights.mn.us
EDA COMMISSIONERS
Don Murzyn Jr.
Patricia Jindra
Bruce Kelzenberg
Gary L. Peterson
Bruce Nawrocki
Bobby Williams
Tammera Ericson Diehm
ECONOMIC DEVELOPMENT AUTHORITY
REGULAR MEETING
7:00 P.M., TUESDAY, JULY 26, 2005
CITY HALL, CONFERENCE ROOM 1
AGENDA
1. CALL TO ORDER/ROLL CALL
2. PLEDGE OF ALLEGIANCE.
3. CONSENT AGENDA,
(These items are considered to be routine by the EDA Board of Commissioners and will be enacted
as part of the Consent Agenda by one motion.)
A. MOTION: Move to approve the consent ae:enda items as listed below:
1) Approve EDA Meetine: Minutes for June. 2005.
2) Approve the Financial Report and Pavment of Bills
4. PUBLIC HEARING
A. Adopt Resolution 2005-11. Sale of Propertv to Huset Park Development Corp.
MOTION: Move to open the public hearing.
MOTION: Move to close the public hearing.
MOTION: Move Adopt Resolution 2005-11, Authorizing the Sale of Property to the Huset Park
Development Corporation; and therefore, to authorize the President and Executive Director to
enter into an agreement for the same.
5. ITEMS FOR CONSIDERATION
A. Request Approval and Modifications to the Schafer Richardson Contract for Private
Development
MOTION: Move to approve the letter for Modifications to the Schafer Richardson Contract for
Private Development dated July 8,2005, and authorize the authorities representative to execute
same.
B. Sarna Development Agreement- 40th & University
MOTION: Move to Approve a Development Agreement with David M. Sarna, James A. Sarna
and James J. Sarna for the redevelopment ofthe City owned property at 40th & University area as
outlined in the business points of the staff memo and furthermore; to authorize the President and
Executive Director to enter into an agreement for the same.
7. ADJOURNMENT
Walter R. Fehst, Executive Director
The EDA does not discriminate on the basis of disability in the admission or access to, or treatment or employment in, its
accommodation will be provided to allow individuals with disabilities to participate in all EDA services, programs, and
activities. Auxiliary aids for handicapped persons are available upon request when the request is made at least 96 hours in
advance. Please call the EDA Secretary at 706-3669 to make arrangements (TDD 706-2806) for deaf or hearing impaired
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H:\edaAgenda2005\ 7 -26-2005
'THE CITY OF COLUMBIA HEIGHTS DOES NOT DISCRIMINATE ON THE BASIS OF DISABILITY IN EMPLOYMENT OR THE PROVISION OF SERVICES
EQUAL OPPORTUNITY EMPLOYER
ECONOMIC DEVELOPMENT AUTHORITY (EDA)
REGULAR MEETING MINUTES
June 28, 2005
CALL TO ORDER/ROLL CALL
President, Murzyn Jr., called the meeting to order at 7:06 p.m.
Present: Don Murzyn Jr., Patricia Jindra, Bruce Nawrocki, Tammera Ericson Diehm, Gary L.
Peterson and Bruce Kelzenberg
Absent: Bobby Williams
PLEDGE OF ALLEGIANCE
CONSENT AGENDA
Approval of Minutes of April 26. 2005
Financial Report and Pavment of Bills
Nawrocki asked who Bruce Kortz is and why are we paying Mark Nagel's salary. Jindra stated
Kortz is an extra maintenance man at Parkview Villa. Streetar stated Nagel is working for
Walker and is being paid by them. Nawrocki stated he thought the employee salaries came out of'
the management contract fees not Parkview 's budget. Streetar stated they don't get any more
money than what is in the budget, but if anyone gets sick, they have the ability to use the budget
funds to cover and that he would check into this for Nawrocki.
MOTION by Peterson, second by Jindra, to Adopt the consent agenda items as listed. All ayes.
Motion Carried.
ITEMS FOR CONSIDERATION
Goal Settin2
Streetar presented a Power point presentation highlighting the Community Development Goal
Setting process.
In 2002 the Citv Council established the followinfl floats: 1) redevelop the Ind. Park; 2) evaluate
the Development of S. Lomianki Park; 3) redevelop 4dh and University; 4) Evaluate Options for
Parkview Villa North/South (NEI); 5) improve the housing stock; 6) increase the tax base; 7)
redevelop 3 ih & Central; 8) redevelop Mady 's Bowl site; 9) promote Columbia Heights and 10)
redevelop the Radiator Shop at 4201 Central (Kmart) and redevelop 4dh and Jackson to Van
Buren (3ih and Stinson).
The development highlights were as follows: 1) Redevelopment- a) Grand Central Lofts, with
231 units of new housing; b) Parkview-with 548 units of new housing, providing park dedication
and 4.2 million dollar increase in property taxes and c) Profile Tool, which was also a part of
the Industrial Park Redevelopment project; and 2) Predevelopment- a) 39'h & Central, b) 3i &
Central, c) 825 4Ft Avenue, and d) 4dh & University where we acquired 2 homes, a gas station,
a portion of another property and a small business office.
Economic Development Authority Meeting Minutes
June 28, 2005
Page 2 of7
Under Housing staff has initiated the following: 1) GMHC- Home Rehabilitation Rebate
Program; 2) Housing Resource Center, that offers guidance to residents for such things as home
improvement loans, and construction scopes; 3) The Housing Replacement Program is funding
received through GMHC and Met Council received to purchase homes in Columbia Heights for
new housing; and 4) Rising to New Heights, staff assists the residential group with their annual
Housing Fair. Future items include the Point of Sale Program and the Home Rehabilitation Tax
Abatement Program.
Other Important Achievements are: 1) Central Avenue Design Guidelines developed; 2)
Planning Application Process & Fees- the fees have been updated and the forms were redone to
make it easier for contractors and residents to fill out; 3) Information Handouts and Application
Materials on City Web Site- Cher Bakken has done an excellent job of putting together new
handouts, permit forms, and redevelopment documents for the departments portion of the City
Website, which helps applicants and is time saving for staff.
Grants Dollars taken in the past 3 years are: 1) $1,634,500 from DEED; 2) $1,376,600 from
Anoka County CDBG; 3) $665,200 Metropolitan Council; 4) $145,000 from MN Housing
Finance Agency; 5) $1,000 from the Economic Development Association of Minnesota; and 6)
$500 from CenterPoint Energy for a total of $3,822,800.
Investment- this is the lh year our budget has been on hold, in 2006 our budget will be $499,000
and in 2003 it was $503,000, which is a -$4,000. Budget reduction absorbed is -$60,000 with
our labor reduction at a -433 hours.
Goals- The 5 external goals are: 1) continue to provide quality services with limited funding; 2)
to understanding and adapt to the demographic changes in the City-Cher Bakken has taken an
on-line Spanish course and has been working with the residents and contractors that come in for
permits and homesteading; 3) improve the City's Housing Stock-which we have already
discussed; 4) attract new residents and retain existing homeowners to promote household growth
and stabilize the tax base, which we have done by working with the Rising to New Heights group
and GMHC; and 5) continue to redevelop the City's Commercial and Industrial Property.
To improve the Citv housim! stock we have invested: 1) $15,000 with Housing Resource Center;
2) $35,000 in the Home Rehabilitation Rebate Program; 3) Zero dollars in the Home
Remodeling and the Point of Sale program and Home Rehab Tax Abatement Program are things
we would like to focus.
Redevelopment Proiects in the last 24-36 months: 1) Industrial Parkfrom 2002-2010 (8 years);
2) 3gth & Central from 2003-2009 (6 years); 3) Kmart from 2002-2009 (7 years); 4) Point of Sale
from 2005-2006 (1 year); and 5) 4dh & University from 2002-2006 (1year).
Redevelopment Opportunities and Challenges: 1) Heritage Heights Neighborhoodfrom 2005-
2010 (5 years); 2) 4gth & Central/Liquor Store from 2005-2008 (3 years); 3) 825 41st
A venue(NEI) from2004-2006 (3 years); 4) 3ih & Central starting in 2006 for 2 years; 5) 3ih &
Stinson starting in 2006 for 3 years; 6) Community Center starting in 2006 for 2 years; and 7)
non-conforming Houses starting in 2006 for 7 years.
Economic Development Authority Meeting Minutes
June 28, 2005
Page 3 of7
The board can choose one of two options for staff to work on. Option A, would be to hold the line
for the Industrial Park, 3!Jh & Central, Kmart, Point of Sale and 40th & University. With Option
B, staff would work on all of option A projects, plus Heritage Heights and 49th & Central at a
cost of $68,000 to hire an additional staff person. Streetar asked what the board would like to
do.
Fehst stated he has talked with staff on the possibility of additional staff to work on these
projects, felt there is a need, with the funds coming in, it would be feasible, now is the time to
build on what we have started in the last couple of years. Randy's time is coming to an end with
the City, we need someone that can take over, then when there is a change in staff we can keep
going, and strongly recommended additional staffing.
Murzyn, Jr. asked Peterson what the City Council felt about this. Peterson stated these are the
priorities we need to address, the opportunities available to us.
Ericson Diehm stated the $68,000 is a small cost for services to add an additional person to the
Community Development Department, this is a good time to keep going with redevelopment,
many developers are coming to us to redevelop sites in our City and we shouldn't stretch our
staff too thin where they will want to walk away.
Kelzenberg felt staff in Community Development has worked very hard and if we need another
staff person the $68,000 is not a lot of money to invest into our City's future.
Streetar stated the new person would write the grants we need for redevelopment projects in the
City. Nawrocki stated the grants and CDBG funding for development should go to outside
contractors for demo, and asbestos removal.
Fehst stated Nawrocki didn't realize how fortunate we are to have the staffwe have, with their
abilities, and quick response working to redevelop this City, in the inter-ring suburbs it is hard
to get people to redevelop the area.
Bruce Nedegaard, 4!Jh & Central, stated he is also working on the Ramsey Town Center where
the City has two full time people to work on the project, he is also the one that brought the
redevelopment idea to City Council for 4!Jh to 4th., The first thing people ask when they come to
see the Grand Central Loft models is what are we going to do with the run down areas to the
south and north of the project. He realizes the City is facing a budget crunch, but if you don't
hire the staff needed to accomplish this, you might as well stop here and people won't come to
Columbia Heights. Ericson Diehm, agreed that we need to spend money to upgrade the City in
order to keep our residents and encourage new residents to reside here.
Motion by Peterson, second by Kelzenberg, to recommend City Council approve hiring an
additional staff person as soon as possible for the Community Development Department.
Economic Development Authority Meeting Minutes
June 28, 2005
Page 4 of7
Nawrocki asked what positions are currently approved, contracted, and what positions we have
that aren't approved. Streetar stated that Randy, Cher, Shelley, Larry, himself, are approved
positions and the planner position, which needs to be filled. Currently we have a part time
contract planner. We have a reduction in staff of 790 hours from Mark Nagel's position.
Nawrocki stated Community Development has more people than the City ever had in that
department and that previous staff have accomplished just as much. Streetar stated he has gone
back in the files 15 years and did not see anywhere that we had as much grant dollars in a 3-
year period, with the amount of staff we have.
Ericson Diehm stated Mr Nawrocki, you have a lot that you've done for this City, you've done
some wonderful things for this community and we thank you for that, but whenever our current
staff does something they should be commended for, you knock them down, why can't you be in
agreement with the rest of us and for once thank our staff for all of their hard work.
Peterson stated the issue is clear, we need help now, when a business opportunity comes to us,
we need to act on it and asked to call for a vote.
Upon Vote: Jindra- aye, Nawrocki- nay, Ericson Diehm- aye, Kelzenberg- aye, Peterson- aye,
Murzyn- aye. Motion Carried.
Sarna Ae:reement for 40th & Universitv Redevelopment
Schumacher stated at the last EDA meeting in April, developer Jim Sarna and real estate
representatives, Tom and Gordy Solz, introduced a general concept plan to construct a 6,000 sq
ft restaurant on the corner of 4dh & University. The boards directed staff to work with Mr.
Sarna to prepare a Preliminary Development Agreement. The agreement in the packet will run
for 90 days, while negotiations between the EDA and Sarna's proceed in an attempt to formulate
a definitive development contract proposing economic feasibility and soundness, equity
financing, cash resources, site design and engineering issues. The key issues 1) is this the type of
development the board wants to see on this site 2) will it be successful 3) does it meet the
economic feasibility and soundness test and 4) are the building standards acceptable. There are
some residents present tonight that would like to discuss things like alley access, street access,
and set backs tonight, which are good issues to discuss, however, these issues will be addressed
at another meeting, tonight we are here to determine whether or not the board wants a
restaurant at this location.
Gordy Solz, real estate advisor for Mr. Sarna stated this is the right priced restaurant for the
residents in the community, this type of restaurant would present a good facade on that corner, it
will have good access, Sarna's have been in the business for over 30 years, started with gas
stations, which are all sold at this time, the Sarna's work with the community by listening to their
comments and concerns, they keep up their property, shrubbery and the grounds are always keep
up, they own 2 tobacco shops which are very successful (one in Columbia Heights and one on
University), they haven't owned a restaurant before, but they know how to run a successful
businesst.
Economic Development Authority Meeting Minutes
June 28, 2005
Page 5 of7
Nawrocki stated his concerns are: 1) that the basement would someday possibly be a banquet
room; 2) rooftop seating, where are the people going to park when there is only about 80
parking spots available to the site; 3) the sales price of$75,000 for the land is a steal, the City
has already incurred expenses to buy, clear, and prepare the land for development; 4) the
concerns of the neighbors is important and should be addressed upfront and 5) important to look
at the residential area parking problems. Nawrocki also stated he would hope the restaurant
would be successful, but certainly could not predict this.
Murzyn, Jr. asked if the Planning and Zoning Commission doesn't address the issues of alley
and sidewalks. Fehst stated they do and as Schumacher stated before we are only approving a
Predevelopment Agreement.
Murzyn, Jr. asked Peterson what amount the EDA and Williams-Peterson Partnership agreed on
for the land. Peterson stated it was $75,000.
Murzyn, Jr. asked Schumacher if Ehlers had the chance to perform the full review. Fehst stated
they did not, but we do have the ultimate choice to review these items. Schumacher stated the
review done by Stacie Kvilvang of Ehlers was done the same way she would with any other
agreement.
Peterson stated we have parking requirements in the City and the Sarna's would have to meet
our requirements, there are some utilities that are on the site, there is the MGS building, who is
going to pay to tear it down, the residents want an alley access, this is something that needs to be
negotiated, we have a good solid proposal here and it is certainly better than the last two that we
have had for that site, they have a tenant ready to move it, they have a plan, they would be good
partners with the City. Ericson Diehm, agreed we didn't hurt when we signed the agreement with
Haugland or Williams-Peterson, and neither one went through.
Murzyn, Jr. asked Schumacher why we have Ehlers look at the proforma for us. Schumacher
stated it is standard procedure. Murzyn, Jr. stated it is difficult for him to approve an
agreement, as Ehlers hasn't received all of the information from the developer yet. Schumacher
stated the information would come at a later date once the restaurant has been established.
Nawrocki felt there is some merit to having a restaurant on this corner, it is not a restaurant, it
will be a sport bar. The Star Bar started out as a restaurant, and is now an entertainment
center. Fehst stated he has to go to Champs in New Brighton to get good food, which irritates
him to go to another City and get a good meal.
Ericson Diehm stated we didn't put Haugland or Peterson- Williams Partnership through all of
these questions. Nawrocki stated he doesn't approve of a sports bar, and doesn't particularly
like champs.
Sarna stated if the board passes the Preliminary Agreement tonight, they want to provide a
restaurant that is up to date with other restaurants somewhere between Redstone and
Applebee's.
Economic Development Authority Meeting Minutes
June 28, 2005
Page 6 of7
Motion by Peterson, second by Ericson Diehm, to Approve the Preliminary Development
Agreement with James J. Sarna, James A. Sarna and David M. Sarna for the redevelopment ofthe
City owned property at 40th & University Avenue; and furthermore, to authorize the President and
Executive Director to enter into an agreement for the same.
Nawrocki asked for the residents present to comment.
Mike Gondek, 344 4dh Avenue, stated City Council members have been responsive to his
questions, would like to see the Sarna's working a little closer with the residents.
Joyce Shellito, 403 Summit Street, approximately15 years ago the Industrial Park was going to be
revitalized, they fought for parking, her daughter has been partying with one of the Sarna's and
told her that they are wonderful people. Residents have concerns with: 1) the possible noise; 2)
will the residents be assessed for 5th Street; 3) the idea of a banquet hall, is needed in the City; 4)
the walkway is important; 5) a holding pond for water is needed and 6) who will be responsible
for renovation of the alley. The residents aren't against the project, but are asking the board to
please look into these issues. Fehst stated he would check into the 5th Street assessing issue for
her.
Murzyn, Jr. stated he hoped she would trust the board to look into these issues.
Upon Vote: Jindra- aye, abstained- Nawrocki, Ericson Diehm- aye, Kelzenberg- aye, Peterson-
aye, Murzyn, Jr.- aye. Motion Carried.
Set Public Hearine: for Sale of Propertv to Huset Park Development Corporation
Schumacher stated the EDA, through condemnation owns the property located at 450 38th
Avenue (Steel Tech) and per the Contract for Private Development with Huset Park Development
Corporation, the EDA would convey title of the property to the developer. In order to do this, the
board must hold a public hearing.
Motion by Peterson, second by Ericson Diehm, to set a Public Hearing for the Sale of Property to
the Huset Park Development Corporation on Tuesday, July 26,2005 at approximately 7:00 p.m. in
City Hall Conference Room 1.
Upon Vote: Jindra- aye, Nawrocki- nay, Ericson Diehm- aye, Kelzenberg- aye, Peterson- aye,
Murzyn, Jr.- aye. Motion Carried.
Rvland Homes Marketine: and Sales Trailer
Streetar stated Ryland wants to put a sales trailer on the burger king site. They are requesting
this because there really isn't any other spot to put it and what a wonderful way to market the
City. The lease states through December but they called today to ask the board to extend it
through January 2006. Ryland would be responsible to replace the site at the time of vacating it
to its original status. The City Attorney has prepared the short-term lease agreement in the
packet for review.
Murzyn, Jr. asked if it would be likely that we have the option to move them off the site earlier
than the time in the agreement. Streetar stated there is a 30-day termination clause in the
contract to provide for this.
Economic Development Authority Meeting Minutes
June 28, 2005
Page 7 of7
Motion by Peterson, second by Jindra, to approve the lease authorizing Ryland Homes to place a
temporary sales trailer at the Burger King site from June through January of2006; and
furthermore, to authorize the President and Executive Director to enter into an agreement for the
same.
Nawrocki stated he didn't know of any other business the City would let use our property, we
should charge Ryland a nominal fee.
Peterson stated it is one of the cities mud holes, the developers would be putting down some
blacktopping, and cleaning up the property for the City.
Friendly Amendment: Kelzenberg offered a friendly amendment to the motion to change it to
$1.00 per month for rental of the space. The originator agreed to the amendment.
Upon Vote: Jindra- aye, Nawrocki- nay, Ericson Diehm- aye, Kelzenberg- aye, Peterson- aye,
Murzyn- aye. Motion Carried.
ADMINISTRATIVE REPORTS
Communitv Visionine: for the CBn Redevelopment
Streetar introduced Kirsten Partenheimer, an intern that has joined our staff since Kim Green
left. Kirsten is helping staff out with the CBD Redevelopment and other projects like sign
enforcement.
Partenheimer stated she wanted to update the board on the community visioning for the CBD
redevelopment project. Two meetings were held in May, one with business and property owners
and the other with residents. Both groups discussed their issues, concerns, and hopes for the
area, which will be used to identify the prevalent challenges and opportunities to be addressed in
the next planning stage. Both groups identified fastfade improvements, street beautification, such
as trees and flowers, proper street lighting and measures to increase safety would create an area
residents could be proud of Participants cited blighted buildings, too little visibility on the
street and poor visual appearances as additional concerns.
39th & Central Avenue
Streetar stated the real estate agent for three parcels across from 39th and Central contacted him
with interest in selling the properties to the City for redevelopment.
ADJOURNMENT
Motion by Nawrocki, second by Ericson Diehm to adjourn the meeting at 9:40 pm. All ayes.
Motion Carried.
Respectfully submitted,
Cheryl Bakken
Community Development Secretary
H:\EDAminutes2005\6-28-2005
COLUMBIA HEIGHTS ECONOMIC DEVELOPMENT AUTHORITY (EDA)
Meeting of: July 26, 2005
AGENDA SECTION: Consent Agenda ORIGINATING EXECUTIVE
NO: DEPARTMENT: EDA DIRECTOR
APPROVAL
ITEM: Financial Report and Payment of Bills BY: Cher Bakken BY:
DATE: July 14, 2005
BACKGROUND:
The bound Financial Report for the month of June 2005 draft Resolution 2005-10 is attached for review.
The enclosed Financial Report lists the Summary (white), the Check History (Green), the Expenditure
Guideline with Detail (blue) and Revenue Guideline with detail (yellow) for each fund and department
and the Parkview Villa North and South [mancials (white). The reports cover the activity in the calendar
(fiscal) year from January 1 through June 30, 2005.
RECOMMENDATION:
Staff will be available to answer specific questions. If the report is satisfactorily complete, we
recommend the Board take affirmative action to receive the Financial Report and approve the payment
of bills.
RECOMMENDED MOTION:
Move to approve Resolution 2005-10, Resolution of the Columbia Heights Economic Development
Authority (EDA) approving the Financial Statement and Payment of Bills for the month of June 2005.
EDA ACTION:
H:\EDAConsent2005\June Fin Rep 2005
EDA RESOLUTION 2005-10
RESOLUTION OF THE COLUMBIA HEIGHTS ECONOMIC DEVELOPMENT
AUTHORITY (EDA) APPROVING THE FINANCIAL STATEMENT FOR JUNEAND
PAYMENT OF BILLS FOR THE MONTHS OF JUNE 2005.
WHEREAS, the Columbia Heights Economic Development Authority (EDA) is required by
Minnesota Statutes Section 469.096, Subd. 9, to prepare a detailed financial statement which
shows all receipts and disbursements, their nature, the money on hand, the purposes to which the
money on hand is to be applied, the EDA's credits and assets and its outstanding liabilities; and
WHEREAS, said Statute also requires the EDA to examine the statement and treasurer's
vouchers or bills and if correct, to approve them by resolution and enter the resolution in its
records; and
WHEREAS, the financial statement for the month of June 2005 and the list of bills for the
month of June 2005 are attached hereto and made a part of this resolution; and
WHEREAS, the EDA has examined the financial statement and the list of bills and finds them
to be acceptable as to both form and accuracy.
NOW, THEREFORE BE IT RESOLVED by the Board of Commissioners of the Columbia
Heights Economic Development Authority that it has examined the attached financial statements
and list of bills, which are attached hereto and made a part hereof, and they are found to be
correct, as to form and content; and
BE IT FURTHER RESOLVED the financial statements are acknowledged and received and
the list of bills as presented in writing are approved for payment out of proper funds; and
BE IT FURTHER RESOLVED this resolution and attachments are to be made a part of the
permanent records ofthe Columbia Heights Economic Development Authority.
Passed this _ day of
,2005.
MOTION BY:
SECONDED BY:
AYES:
NAYS:
Don Murzyn, Jr. President
Attest by:
Cheryl Bakken, Assistant Secretary
H :\Resolutions2005\EDA2005-1 0
eetmg 0: uly ,
AGENDA SECTION: Public Hearing ORIGINATING EXECUTIVE
NO: DEPARTMENT: EDA DIRECTOR
APPROVAL
ITEM: Adopt Resolution 2005-11, Authorizing BY: Randy Schumacher BY:
the Sale of Property to Huset Park DATE: July 20,2005
Development Corporation
COLUMBIA HEIGHTS ECONOMIC DEVELOPMENT AUTHORITY (EDA)
M f J I 26 2005
BACKGROUND:
The Columbia Heights Economic Development Authority is the owner of real estate acquired through
condemnation located at 450 38th Avenue NE, Columbia Heights, MN (Steel Tech).
The Economic Development Authority has previously agreed in the Contract for Private Development
between EDA and Huset Park Development Corporation, dated October 25, 2004, that the EDA will
convey title of the property to the developer for redevelopment purposes consistent with the contract.
Prior to the approving ofthe sale, the board of commissioners must hold a public hearing on the question
of whether the EDA should sell the property to the developer.
Move: to open the Public Hearing.
RECOMMENDATION: Staff recommends Adopting Resolution 2005-11, a Resolution approving the
Sale of property located at 450-38th Avenue to the Huset Park Development Corporation.
RECOMMENDED MOTION:
Move to Close the Public Hearing.
Move to Adopt Resolution 2005-11, Authorizing the Sale of Property to the Huset Park Development
Corporation; and therefore, to authorize the President and Executive Director to enter into an agreement
for the same.
Attachments
EDA ACTION:
h:\consent Form200S\EDA Public Hearing Sale of Property-Huset Park Dev.
RESOLUTION NO. 2005-11
COLUMBIA HEIGHTS ECONOMIC DEVELOPMENT AUTHORITY
COUNTY OF ANOKA, STATE OF MINNESOTA
RESOLUTION AUTHORIZING SALE OF PROPERTY
WHEREAS, the Columbia Heights Economic Development Authority (the "EDA") is
owner of real estate acquired through condemnation located at 450 - 38th Avenue N.E., Columbia
Heights, MN, and which is legally described in Exhibit "A" attached hereto ("Property"); and
WHEREAS, the EDA has previously agreed in that certain Contract for Private
Redevelopment between the EDA and Huset Park Development Corporation ("Redeveloper") dated
October 25, 2004, that the EDA will convey title of the Property to the Redeveloper for
redevelopment consistent with said contract; and
WHEREAS, prior to adoption of this resolution, the Board of Commissioners held a public
hearing, after proper notice pursuant to Minn. Stat. S 469.105, at which they provided the
opportunity for public comment on the question of whether the EDA should sell the Property to the
Developer.
NOW THEREFORE, BE IT RESOLVED BY THE BOARD OF COMMISSIONERS OF
THE COLUMBIA HEIGHTS ECONOMIC DEVELOPMENT AUTHORITY, AS FOLLOWS:
1. Conveyance of the Property by the EDA to the Redeveloper in accordance with the
provisions of said Contract for Private Redevelopment is approved.
2. The Executive Director and President of the EDA are hereby authorized and directed
to execute all appropriate documents to convey title of the Property to the Redeveloper in
accordance with the Contract for Private Redevelopment between the EDA and Huset Park
Development Corporation.
3. The Executive Director and President of the EDA, staff and consultants are hereby
authorized and directed to take any and all additional steps and actions necessary or convenient in
order to accomplish the intent of this Resolution.
Adopted this _ day of
,2005.
Don Murzyn, Jr., President
Cheryl Bakken- Secretary
RJL-263516vl
CL205-25
EXHIBIT A
PARCEL G (Abstract) (PIN No. 35-30-24-34-0002) (450 - 38th Avenue N.E.)
Property Address: 450 - 38th Avenue NE, Columbia Heights, Minnesota 55421.
Legal Description of Property to be Acquired:
Lot 3, Auditor's Subdivision No. 50
Together with vacated and to be vacated streets and alleys accruing thereto upon vacation and
appurtenant easements if any.
According to the map or plat thereof on file and of record in the office of the County Recorder in
and for Anoka County, Minnesota
EXCEPT:
That part of Lot 3, Auditors Subdivision Number 50, Anoka County, Minnesota which lies
southeasterly of the following described line;
Said line commences at the northwest comer of said Lot 3: thence south 89 degrees
55 minutes 31 seconds east, on an assumed bearing, along the north line of said Lot
3 a distance of 143.15 feet to the point of beginning of said line; thence
southwesterly on a non-tangential curve a distance of 83.69 feet, said curve has a
radius of 815.00 feet, a central angle of 05 degrees 53 minutes 02 seconds, a chord
length of 83.66 feet and a chord bearing of south 38 degrees 02 minutes 41 seconds
west to the south line of said Lot 3, and there terminating.
According to the map or plat thereof on file and of record in the office of the County Recorder in
and for Anoka County, Minnesota.
RJL-263516vl
CLZ05-25
A-l
COLUMBIA HEIGHTS ECONOMIC DEVELOPMENT AUTHORITY (EDA)
Meeting of: July 26, 2005
AGENDA SECTION: Items for Consideration ORIGINATING EXECUTIVE
NO: 5-A DEPARTMENT: EDA DIRECTOR
APPROVAL
ITEM: Request Approval and Modifications to BY: Randy Schumacher BY:
the Schafer Richardson Contract for DATE: July 20, 2005 ~.
Private Development
BACKGROUND: Pursuant to section 8.2 ofthe Schafer Richardson Development Agreement, the
developer is allowed to transfer portions ofthe redevelopment property to qualified sub-developers upon
the approval of the authorities board of commissioners, and developer may also assign certain rights and
obligations under the redevelopment agreement to the sub-developers in connection with such a transfer.
Schafer Richardson is proposing a transfer of a portion of the redevelopment property to Ryland
Homes Inc. and proposes to assign some ofit's rights and obligations. The EDA's legal counsel, Steve
Bubul, will be present to review the proposed modifications and answer any questions.
RECOMMENDATION: Staff recommends Approval of the letter for Modifications to the Schafer
Richardson Contract for Private Development dated July 8,2005.
RECOMMENDED MOTION: Move to approve the letter for Modifications to the Schafer
Richardson Contract for Private Development dated July 8, 2005, and authorize the authorities
representative to execute same.
Attachments
EDA ACTION:
h:\consent Form200S\Schafer Richardson Contract for Private Dev.mod~ficat~on
FAEG RE
&:
BENSON
llP
UNtTED STATES I ENGLAND I GERMANY I CHINA
JOHN H. HERMAN
JHerman(alfaegre.com
612.766.8908
July 8, 2005
Robert Streetar
Executive Director
Columbia Heights Economic Development Authority
590 - 40th Avenue NE
Columbia Heights, Minnesota 55421
Re:
rovals and Modifications b
Dear Mr. Streetar:
This letter (the "Letter of Approval") is submitted to you in connection with that
certain Contract for Private Redevelopment dated as of October 25,2004 (the
"Redevelopment Agreement"), by and between Huset Park Development Corporation (the
"Redeveloper"), the City of Columbia Heights, and the Columbia Heights Economic
Development Authority (the "Authority"). All capitalized terms used in this Letter of
Approval without definition herein shall have the meanings given to those terms by the
Redevelopment Agreement.
As you know, in connection with the Huset Park portion of the Downtown CBD
Redevelopment Project (the "Project"), Redeveloper has now successfully concluded the
negotiation of the first critical sale of a portion of the Redevelopment Property, and the
assignment of certain development rights pursuant to the Redevelopment Agreement, to a
prospective Subdeveloper, The Ryland Group, Inc. ("Ryland'). By this Letter of Approval,
Redeveloper is pleased to formally advise the Authority of this accomplishment and to
request certain consents, approvals, modifications and confirmations (collectively, the
"Approvals") pursuant to the Redevelopment Agreement, as contemplated therein and as set
forth more specifically below.
We have also previously discussed the needed Approvals with your staff, the
Authority's financial consultant, Ehlers & Associates ("Ehlers"), and your legal counsel
(collectively the "City Representatives"), specifically as such Approvals relate to the
conditions precedent to the Closings defined in that certain the Purchase Agreement by and
between the Redeveloper and Ryland (the "Purchase Agreement"). In that regard, we have
provided the City Representatives with copies of the fully-executed Purchase Agreement,
and an additional copy is attached to this Letter of Approval for your convenience as
Exhibit A.
2200 WELLS FARGO CENTER I 90 SOUTH SEVENTH STREET I MINNEAPOLIS MINNESOTA 55402-3901
TELEPHONE 612-766-7000 I FACSIMILE 612-766-1600 I WWW.FAEGRE.COM
July 8, 2005
Page 2
Request for Board Approvals
Pursuant to Section 8.2 of the Redevelopment Agreement, the Redeveloper is authorized to
Transfer portions of the Redevelopment Property to qualified Subdevelopers upon the
approval of the Authority's board of commissioners, and Redeveloper may also assign
certain of Redeveloper's rights and obligations under the Redevelopment Agreement to the
Subdevelopers in connection with such a Transfer.
As stated above, Redeveloper now proposes a Transfer of a portion of the Redevelopment
Property (the "Ryland Property") to Ryland pursuant to the Purchase Agreement; and, in
connection therewith, the Redeveloper proposes to assign (and Ryland proposes to assume)
certain of Redeveloper's rights and obligations with respect to the Ryland Property under the
Redevelopment Agreement pursuant to the form of Assignment and Assumption Agreement
attached to this Letter of Approval as Exhibit B (the "Assignment").
Therefore, the Redeveloper has requested, and the Authority's board of commissioners has
now taken, all necessary action to approve the following Approvals, and the board of
commissioners has further authorized the Authority Representative to indicate such approval
by signing this Letter of Approval.
1. Approval of Ryland as a Subdeveloper and of the Assignment to Ryland. The
Authority hereby approves: (i) Ryland as a Subdeveloper, (ii) the Transfer of the
Ryland Property to Ryland pursuant to the Purchase Agreement, and (iii) the form
and consummation of the Assignment.
2. Amendments to Development Agreement. The Authority hereby approves of and
agrees to the following amendments to the Redevelopment Agreement:
(i) Revised DEED Grant Covenants. It having been determined that the
requirements of the DEED Grant Agreement require only ten percent (10%) of
the units to be at affordable levels (and that the provisions of Section 4.5 of the
Redevelopment Agreement required twenty percent (20%) as regards Phase I),
Section 4.5 is hereby modified to require that the Redeveloper and any
Subdeveloper of Phase I under the Development Agreement shall only be
obligated to complete a minimum often percent (10%) of the Minimum
Improvements at a base price level at or below one hundred ten percent
(110%) of the maximum affordable price under Met Council guidelines in
effect in the year of the sale of such Minimum Improvements. Further it is
agreed that the term "base price level" for purposes of this Section 4.5 shall
mean the price of the finished unit as offered by the Redeveloper or any
Subdeveloper, exclusive of purchaser options and upgrades. The unit as
offered at the "base price level" shall qualify, without any upgrades or options,
for issuance of a City certificate of occupancy.
July 8, 2005
Page 3
(ii) Timing of Issuance of Refinancing Notes. In connection with the Refinancing
ofthe Initial Notes by the Authority pursuant to Section 3.10 ofthe
Redevelopment Agreement, the Authority agrees that upon Redeveloper's
request, the Authority will issue a Refinance Note:
(a) Upon completion of eighty percent (80%) of the housing units in any
Subdeveloper Parcel; and
(b) Upon completion of fifty (50) or more additional housing units, in the
aggregate, in anyone or several Subdeveloper Parcel(s) which has (or
have) already met the requirement of Sub-Paragraph 2(ii)(a) above.
With respect to the provisions of this Paragraph 2(ii), Redeveloper shall
endeavor to request issuance of such Refinancing Notes no more often than
once per calendar year. Redeveloper shall pay (and will not be reimbursed for
from tax increments or the proceeds of any Refinancing Notes) the increased
costs, if any, incurred by the Authority or City as a direct result of (I) issuance
of Refinancing Notes more frequently than once in any calendar year, or (2)
the reasonable administrative burdens associated with calculating tax
increment generated from multiple specific housing units (compared to
increment from an entire block or other easily identified area); all as such
increased costs are determined by the Authority in its sole discretion, after
consultation with its financial advisor. Further, before issuance of any
Refinancing Notes, Redeveloper shall provide the Authority with the parcel
identification numbers for all properties from which tax increment will be
pledged.
(iii) No Other Modification: Counterparts. Except as provided by this Letter of
Approval, the Redevelopment Agreement remains unmodified and in full force
and effect.
[Remainder of Page Left Blank, Signature Page Follows]
July 8, 2005
Page 4
Please acknowledge your agreement to the foregoing on behalf of the Authority by executing
and returning to the undersigned the additional copy of this Letter of Approval enclosed for
that purpose.
Sincerely,
F AEGRE & BENSON LLP
GLLJ,I~
John H. Herman, Attorney for Redeveloper,
HUSET PARK DEVELOPMENT
CORPORATION, on behalf of the
Redeveloper
Approved and Authorized by the Board on July _,2005.
COLUMBIA HEIGHTS ECONOMIC
DEVELOPMENT AUTHORITY, COLUMBIA
HEIGHTS, MINNESOTA, a Minnesota public
body corporate and politic
By:
Its:
Robert Streetar
Executive Director
Acknowledged and agreed to this _ day of July, 2005.
July 8, 2005
Page 5
EXHIBIT A
Copy of Purchase Agreement
July 8, 2005
Page 6
EXHIBIT B
Form of Assignment
BXECUTION copy
AGREEMENT OF PURCHASE AND SALE
(FINISHED LOTS)
THIS AGREEMENT OF PURCHASE AND SALE (this "Agreement'') is made and
entered into effective as of April 18, 2005 (the "Effective Date''), is entered into by HUSET
PARK DEVELOPMENT CORPORATION. a Minnesota corporation ("Seller") and THE
RYLAND OROUP, INC., a Maryland corporation ("Buyerj. In consideration of the mutual
promises contained in this Agreement, and for other good and valuable consideration, the receipt
and sufficiency of which 8{e hereby acknowledged, Buyer and Seller (sometimes collectively
referred to as the "Partiesj agree as follows:
1. Definitions. Capitalized terms that are not defined when first used in this Agreement
have the meanings set forth below.
A Additional ProDem: That certain real property contemplated to be developed
by Seller or its assigns as legally described on E:dibit 0 attached hereto and
incorporated herein.
B. Assl2nment and AssamDtion Asn-eement: Such tenn shall have the meaning
assigned thereto in Section 9.0 herwf.
C. Authorities: All federal, state and local governmental and quasi-governmental
agencies, bodies. entities, boards and authorities that have jurisdiction over the
Property. the fumishing of utilities or other services to the Property. or the
subdivision, improvement, development, occupancy, sale or use of the Property.
including without limitation, the Federal Housing Administration and the
Veterans Administration.
D. Broker: None.
E. Buver's Conditions Precedent: Such tenn shall have the meaning assigned
thereto in Section 9 hereof.
F. JJtt: City of Columbia Heights, Minnesota.
O. C1os1n2: The act of settlement of the purchase and sale of all or part of the
Property at which Seller conveys title to Buyer by delivery' of a deed or deeds as
to a part of the Property and Buyer delivers the applicable Purchase Price per
Home to Seller. This Agreement contemplates that there win be multiple
Closings.
H. CIosin2 Dates: Bither the date of the Initial Closing or the date of any
subsequent Closing. The Parties contemplate that (i) there will be four (4)
Closings, plus an early Closing for the acquisition of Lots for model homes (as
contemplated by Section 5 hereof), and (ii) the Closings shall occur as set forth on
the Takedown Schedule.
I. ComnletloD Guarantv: That certain completion guaranty to be executed and
delivered to Seller by Buyer at each Closing, pursuant to which Buyer shall
guarantee to Seller completion (subject to delays duo to force majeure) of the
Homes con~1ated to be constructed on the Lots acquired at such Closing by
the ,,-tUne therefor as establisbed pursuant to SectlOD 26(8) of this Agreement
It is undentood that this obligation will be part of the Assignment and
Assumption Agreement with respect to the Development Agreement and that,
pursuant thereto, the possibility of extensions of such deadlines will exist with the
agreement of the BDA. Failure to satisfy the terms of the Completion Guaranty
sball be a default thereunder and a draw event pursuant to the Completion Letter
of Credit; provided, however, that other than recourse against the Completion
Letter of Cndit, such default \Dlder the Completion Guaranty shall be non-
recourse to Buyer. Each Home shall be conclusively deemed completed as
provided in Section 16(C), below. Buyer agrees to exercise good faith,
commercially reasonable efforts (not including the payment of overtime or
exeroise of extraordinary scbeduling or constnJcti.on measures) to complete
. construction of the respective Homes by the deMlines provided therefor by the
Development Agreement, notwithstanding delays in completion of the
Development Work; provided, however, that the failure to do so shall not
constitute a default by Buyer lDlder this Agreement (except with respect to this
SeetlOD 1(1) and Seetion 1(J) below).
J. ComDleClOD Letter of Cred.lt: That irrevocable letter of credit to be delivered to
Seller at each Closing in an amount equal to the product of Twenty Thousand
Dollars ($20,000.00) times the number of Lots being acquired at such Closing,
which Completion Letter of Credit shall secure the obligations of the Buyer under
the Completion Guaranty as provided in Section 16 of this Agreement
Ie. ComDletloD Letter of Credit Escrow A2I'eemeJIt: That certain escrow
agreement to be entered into among Seller, Buyer and Escrow Agent, in a
mutually agreeable fonn to be completed during the Feasibility Period and
thereafter attached hereto and incorporated herein as EDalbit S, relating to the
procedures for draws under a Completion Letter of Credit; provided however that
if Seller's lender insists upon holding the Completion Letter of Credit as direct
security, then Buyer shall agree to. transfer of the Completion Letter of Credit
from Escrow Agent to such lender upon terms and conditions substantially similar
to those contained in the Completion Letter of Credit Escrow Agreement.
L. DeveloDlD.eIlt A2reemeDt: That certain Contract for Private Redevelopment
dated October 25, 2004 by and among Seller, the City and the EDA.
M. DeveloDmeDt ProDertv: The Property pIuS the Additional Property.
N. DeveloDIDCDt Work: Such term shall have the meaning assigned thereto in
Section loA. of the Schedule of Development.
2
BB.
CC.
o.
DoeumeDU: All engineering,. environmental (including without limitation
Seller's Environmental Reports), economic, soils. marketing and other studies,
surveys, maps, drawings, plans, reports and appraisals that relate in any way to
the Property which arc in Seller's possession or arc otherwise reasonably
available to Seller.
P.
Ea....est MODev: Any cash or letter of credit delivered by Buyer to Seller or
Escrow Agent hereunder.
IDA: The Columbia Heights Economic Development Authority.
Escrow Atm!e~Dt: That certain escrow agreement to be entered into among
Seller, Buyer and Escrow Agent relating to the Eamest Money, substantially in
the form attached hereto and iDCOlpOrated herein as Exhibit E.
Q.
R
s.
Elerow AftDt: Pint American Title Insurance Company, or another mutually
acceptable title company.
FeasibWtv Period: The period beginning on the day after the Effective Date and
ending ninety (90) days thereafter.
T.
u.
Fee Owaen: The owners of fee title to those parcels comprising the Property
which have not been acquired by Seller as of the Bffective Date.
Homes: The Ryland Product to be constructed by Buyer on the Lots.
ImDrovemeDts: Such term shall have the meaning assigned thereto in
SeedoD l.A of the Schedule of Development.
Initial Closln.: The Closing at which Buyer shall purchase the Initial Lots,
excluding the earlier purchase Lots for model homes as contemplated hereunder.
IDltlaI ClosIQ2 Date: A date fifteen (IS) days after all Buyer's ~ns
Precedent have been satisfied or waived in writing as to the Initiaf~ts..: _ ~
Parties contemplate that the Initial Closing Date will be on or about JUly 1, 2005. )
Initial Lots: The Lots to be purchased at the Initial Closing, as designat~
Site Plan.
v.
W.
x.
Y.
z.
AA.
Lenl Reouirements: The rules, regulations, laws, ordinances, standards,
approved plans and other requirements of the Authorities.
Lots: Condominium and/or townhouse lots within the Property, as reflected on
the plat(s) contemplated by SeedoD 9.H. hereof.
Outside Date: lanuary 1.2006, at which time this Agreement shall, except as
otherwise expressly set forth in this Agreement, terminate at the option of Buyer
if the contingencies as to Buyer's performance hereunder as to the Initial Lots
3
have not been satisfied. Upon such termination, the Parties shall have such rights
and responsibilities as are otherwise set forth in this Agreement.
DD. Permitted Exceotfons: Collectively, (i) drainage and utility easements which do
not affect proposed improvements, do not increase the cost of coDSt:rueting such
proposed improvements and do not adversely affect 1D8I'btability of any Lot or
suitability of any Lot for Buyer's PWP08e8, (ii) applicable building and zoning
laws, and (iii) those other matters of record or otherwise affecting the Property
subject to which Buyer agrees to take title.
BE. Pro Rata Purellase Price: The product of the number of Homes authorized by
the City to be constructed on the Lots to be purchased at any Closing times the
Purchase Price per Home.
FF. Prooeny: The real property containing approximately 21.4 acres located in the
City of Columbia Heights, County of Anoka, as more particularly described on
EDaibIt A attached hereto, which is or will be subdivided into Lots on which the
City shall have authorized the construction of at least two hundred eighty five
(285) Homes, plus all easements. rights of way. permits, approvals, privileges and
entitlements appurtenant thereto, and all right, title and interest in and to all streets
and water courses adjacent to, abutting or serving the real property.
00. Puchue Price oer Home: Thirty-nine Thousand One Hundred and 001100
Dollars ($39,100.00).
HH. RvlaDd Product: The condominium and townhouse Homes that Buyer intends to
build on the Property.
"------::>" .
n. SeIledule orDeveloolDeJ.t: Exhibit I, wJ9ch details Seller's responsibilities with
regard to development of tho Lots. ."
J]. Seller's Eavironmental ReDQrts: Collectively, those certain environmental
reports with respect to the Property identified on Emlbit M attached hereto and
incolpOrated herein.
KK. Site Pia: That certain site plan of the Property and the Additional Property
attached hereto and incorporated herein as Exhibit B.
LL. Takedown ScJaedule: The schedule (or purchase of Lots hereunder attached
hereto and incorporated herein as Exhibit N.
MM. Total Purehue Price: The product of the nwuber of Homes authorized by the
City to be constructed on the Property times the Purchase Price per Home.
Assmning that the City authorizes the construction of two hundred eighty five
(285) Homes on the Property, the Total Purchase Price for the Property shall be
Eleven Million One Hundred Forty-Three Thousand Five Hundred and 001100
Dollars ($11,143,500.00).
4
NN. Ua4erlvlD2 Parchase AtzreemeDts: All those certain purchase agreements now
or bcreafter entered into by Seller and the respective Fee Owners under which
Seller shall acquire parts of the Property not heretofore acquired by Seller. All
such agreements in existence on the Effective Date arc descn'bed on Exhibit R
attached hereto and incorporated herein..
2. Purchase aDd Sale. Subject to the terms and conditions of this Agreement, Seller agrees
to sell to Buyer, and Buyer agrees to purchase ftom Seller, the Property in fee simple.
3. Itamest MODev..
A Debe" 01 Eames. MODev. Within five (5) days after the Effective Date, Buyer
sball deliver to Escrow Agent an unconditional, iaevocable letter of credit in the
principal amount of $500,000.00 (the "Letter of Credit") issued by a recognized
financial institution r-sonably acceptable to BU)'BI' and Seller, which Letter of
Credit shall have a tenn expiring on or after the Outside Date and sba11 be
sublbntilllly in the form lIftached hereto 8Dd incorporated herein as Emlbft D.
Buyer, Seller and Escrow Agent shall enter into the Earnest Money Escrow
Agreement contemporaneously with Buyer's deposit into escrow of the Letter of
Credit The term "Earnest Money" shall include any cash or Letter of Credit,
including any replacements or renewals thereo( held by the Escrow Agent pursuant
to the Eamest Money Escrow Agreement.
B. ADDHeatloD of Eamest MODev. The Earnest Money shall be reduced at or after
each Closing in the following incremc:o.ts: (i) to Four Hundred Fifty Thousand
Dollars ($450.000) following the Initial Closing; (ii) to Three Hundred Sevfllty-
five Thousand Dollars ($375,000) following the Second Closing; and (iii) to Two
Hunc:lnxl and Fifty Thousand Dollars ($250,000) following the Third Closing.
The Escrow Agent and Seller shall cooperate with Buyer to effect such reductions
in any Letter of Credit, and, to the extent requested by the issuer of the Letter of
Credit, Escrow Agent and Seller shall sign authorizations and similar documents
evidencing consent to the reduction. In the event that Buyer fails to effect such
reduction in the Earnest Money for any reason whatsoever, the principal amount
available to be drawn under the Letter of Credit shall nonetheless be deemed
reduced by the amounts set forth above, and the Seller shall under, no
circumstances submit any sight draft or other request for payment under the Letter
of Credit for, or be entitled to receive under the Letter of Credit, any amount in
excess of the aggregate principal amount of the Letter of Credit, as so reduced.
This SabseetioD 3.B. shall survive each Closing and any tennination of this
Agreement The Letter of Credit shall be released at the final Closing.
c. Renewal of Letter of Credit. If the expiration date of the Letter of Credit is
prior to the date upon which the last Lot is to be acquired by Buyer, then not later
than the thirtieth (30th) day before the expiration of such Letter of Credit, Buyer
sha11 deliver to Escrow Agent a renewal or replacement thereof having the effect
of renewing the expiring Letter of Credit or replacing it with a new Letter of
Credit in the appropriate amount.
5
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D. Authorlzatlon. In order for Buyer to effectuate an extension. reduction or
caocelIation of the Letter of Credit, Seller and Escrow Agent agree to sign and
deliver to Buyer an authorization letter in form. of Attachment B to Exhibit D.
4.
Buver InvestlndoD: Rl2ht ofED~.
A Buver IDvestf2atfoD. At any time during the Feasibility Period or theteafte.r so
long as this Agreement has not been terminAted, Buyer shall have the right to
investigate tide and to make such investigations, studies and tests with respect to
the Property as Buyer deems necessuy or appropriate to determine the feasibility
of purcha.sing the Property. Seller shall endeavor in good faith to obtain and
deliver to Buyer within fourteen (14) days after the Effective Date written
permission 1iom each of the Fee Owners for Buyer's exercise of its rights under
this SeetiOIl 4. Buyer acknowledges that certain Fee Owners may not grant such
permission. Notwithstanding anything contained herein to the contrary, the
Feasibility Period as to any Lot subject to an Underlying Purchase Agreement
shall be extended to the later of (i) ninety (90) days after the Effective Date, or
(ii) sixty (60) days after Seller shall deliver to Buyer written permission to
exercise Buyer's rights under this SeedOD 4 as to such Lot. Under no
ciroumstaoces shall any examination of the Property be deemed to constitute a
waiver or relinquishment on Buyer's part of its rights to rely on the covenants
{made by Seller hereunder. If Buyer elects to proceed with the acquisition of the
Property on the terms herco( Buyer shall give written notice thereof to Seller
prior to expiration of the Feasibility Period ("Buyer's Approval Noticej. If
Buyer fails to provide Buyer's Approval Notice, then this Agreement shall be
deemed tenninated whereupon the Earnest Money shall be returned to Buyer. .
Thereafter no Party hereto shall have any further obligation or liability to the
oth<< with respect to the transactions contemplated by this Agreement except for
Buyer's indemnification of Seller pursuant to SubseedOD 4.B. hereo( which sball
swvive such termination. In order to facilitate Buyer's investigation of the
enviromnental condition of the Property, Seller shall cause the enviromnenta1
consultants preparing Seller's Environmental Reports to execute and deliver to
Buyer reliance letters with respect to Seller's Environmental Reports addressed to
-............ (Buyer and otherwise in fonn acceptable to Buyer in its reasonable discrmoD,
,,~thin thirty (30) days after the Effective Date. With respect to any
Environmental Reports prepared for the EDA, Seller and Buyer sball jointly
request BOA and the applicable environmental consultant to provide to Buyer
reliance letters as to such reports. Seller shall also deliver to Buyer, within ten
(10) days of the Effective Date, copies of all Underlying Purchase Agreements
(with, at Seller's option, all prices redacted).
B. Rl2ht of Entrv. During the Feasibility Period and at any time the'l'cafter so long
as this Agreement has not been terminated., Seller shall permit Buyer, its
employees, agents, contractors and subcontractors (after giving Seller reasonable
prior verbal notice thereof), to enter upon the Property and while thereon make
surveys. take measurements, perfonn test borings or other tests of surface and
subsurface conditions, make engineering, environmental and other studies and
6
inspect the PropeJ;ty; provided, however, that Buyer's rights under this sentence
are subject, as to portions of the Property not owned by Seller, to receipt of
permission from the applicable Fee Owner therefor. Seller shall cooperate with
Buyer and ahall provide to Buyer within five (5) days after the Effective Date, at
no cost to Buyer, all Docwncnts and othel' pertincot infonnation relating to the
Property which are in Seller's possession or control. If Buyer exercises its rights
under the provisions of this subsection, it aha1l (i) keep the Property free of any
liens or thUd-party claims resulting therefrom; (ii) indMnnitY Seller against any
liability or expense for iojuries to or death of persons or damage to property
arising from the exercise by Buyer of the rights hereunder that are not the result of
any act or omission of Seller or Seller's agents, employees or contractors and
(Iii) use commercially reasonable efforts not to materially interfere with any wodc:
of Seller or.the BDA on the Property; and (iv) if Closing does not occur for any
reason (other than a default by Seller in performing its obligations hereunder) as
to particular Lots, restore as nearly as practicable such Lots substantially to their
condition imftHlJ(fiately beforo such exercise. The iDdP.mnification provisions of
this subsection sball survive the termination of this Agreement. To effect this
indemnification, Buyer shall obtain comprehensive general liability insurance,
with commercially reasonable terms and limits, and shall lWIle Seller as
additional insured on the same terms as provided in SeedOD 6.A.
C. 812D.: Sales TraBer: Stol'al!'C of EoulDment. From and after the Effective Date
until such time as this Agreement has been terminated, Buyer shall have the right
to place signs and a sales trailer on the Property and to conduct marketing
activities thereon, all in areas approved by the Seller, such approval not to be
unreasonably withheld or delayed. Seller shall also reasonably cooperate with
Buyer, if necessary and upon written request from Buyer, to allow Buyer to ose
space on the Property for storage of construction equipment and materials that
Buyer and its contractors aDd their subcontracton may from time to time require.
In connection with Buyer's exercise of its rights hereunder, Buyer shall (i) keep
the Property free of any liens or third-party claims resulting therefrom, (ii) clean
up any debris from. the Property and restore the Property after Buyer's use as
nearly as practical substantially to its coridition immediately before such axereise jf
Buyer does not purchase it, and (Hi) indl'lmnifY Seller against any liability or
expense for injuries to or death of persons or damage to property arising from
Buyer's exercise of its rights hereunder that are Dot the result of any act or
omission of Seller or Seller's agents, employees or contractors.
5. TakecloWD ReaairemeDu. As its minimum Lot "takedown" requirements, Buyer shall
complete the purchase of the number of Lots contemplated for purchase at such Closing
on the Takedown Schedule; provided, however, that Buyer's takedown requirements
sba1l be cumulative (i.e., to the extent Buyer has exceeded its Lot takedown requirements
set forth on the Takedown Schedule, Buyer's minimum takedown requirements at the
next following Closing shall be reduced accordingly). The Lots which Buyer anticipates
acquiring at each Closing are designated on the Site Plan (c.g. the Lots to be acquired at
the Initial Closing are designated as "Initial Closing Lots", the Lots to be acquired at the
second Closing are desi8J'Ated as "Second Closing Lots", etc.). Notwithstanding the
7
foregoing to the contrary, Buyer may substitute Lots to be acquired at each C1osin&
subject to Seller's prior written approval, not to be unreasonably withhel~ delayed or
conditioned. At each Closing, Seller shall also transfer and convey to Buyer all outlots or
other common areas adjaccot or appurtenant to the Lots being purchased at such Closing
or which are otherwise necessary for access to or the use or development of such Lots,
for no additional consideration. NotwitbstarJdi11g the foregoing to the contrary, Buyer
may at its option eJect to purcbase Lots for model homes prior to the Initial Closing on
not less than fifteen (1 S) days prior written notice to Sener. In addition, Buyer shall have
the right to purchase Lots after any Closing and prior to tho next scheduled Closing 80
long as Buyer shall provide to Seller written notice of Buyer's intention to purchase such
Lots and designating the Lots which Buyer desires to purohase at such Closing (i) if
Buyer desires to acquire such Lots OD or after December 1 of any calendar year through
May 1 of tho following year, on or before the preceding October I, or (ii) if Buyer desires
to acquire such Lots at any time from May 2 through November 30 of any calendar year,
at least sixty (60) days prior to the proposed Closing Date.
6. CIosblt~..
A. 1bc Initial Closing shall take place on the Initial ClosiDg Date, and Closing on the
acquisition by Buyer of the balance of the Property sba1I, subject to Buyer's right
to accelerate the pun:base of certain Lots as set forth in ScedOD 5 above, occur as
contemplated on the Takedown Schedule. Closings shall occur at the offices of
Buyer or Escrow Agent during normal business hOUlS or at such other location as
Buyer and Seller may mutuaUy agree. If and to the extent necessary for the
performance of Seller's development obligations hereunder, Buyer shall grant to
Seller. its agents and contractors, a temporary easement to enter upon any portions
of the Property previously acquired by Buyer and designated. as streets or roads on
the "Final Plat" or "Preliminary Plat" (as those terms arc defined in Section 9.8),
as the case may be, for purposes of allowing access to any Lots in the Property
not theretofore purchased by Buyer. on such tenus as shall be mutually acceptable
to Seller and Buyer. Pursuant to the terms of such easement agreement (i) Seller
shall obtain and maintain for the term of such casement a policy of
comprehensive public liability insurance with a reputable insurance company
liceosed to do business in Minnesota which policy shall have combined coverage
limits ofnot less tban 53,000,000, shall name Buyer as an additional insured, and
shall provide that the same shall not expire or be terminated, revoked or amended
without at least thirty (30) days written notice to Buyer, and (il) Seller shall
indl'lmnify and hold Buyer harmless from and against any and all liability,
damages, claims, causes of action, costs or other expcoscs. including without
limitation reasonable attorneys' fees, paid, incurred or asserted against Buyer
arising out of or related to any act or omission of Seller, its agents, employees or
contractors on, about or relating to said Lots. So long as Buyer completes its
obligations hereunder with respect to purchase of the Lots. such easement shall
teDninate upon (i) the acquisition by Buyer of all of the Property or (ii) the
tenninatiOll of this Agreement for reasons other than default by Buyer hereunder.
8
B. Subject to the adjustments provided for herein, Buyer shall pay at each Closing
the Pro Rata Purchase Price by wire transfer. Buyer shall also (i) execute and
deliver to SeUer a Completion Guaranty as to the Homes to be constructed on the
lots being acquired at such Closing, (iI) execute and deliver to the Escrow Agent
the applicable Completion Letter of Credit EBaow Agreement, and (ili) deliver to
the Escrow Agent a Completion Letter of Credit to secure the obligations of
Buyer under the applicable Completion Guaranty.
C. Upon payment of the Pro Rata Pwchase Price applicable to each Closin& Seller
shall execute, acknowledge, and deliver to Buyer the closing docmnents Set forth
on Exhibit C as to the lots being purchased at such Closing. Upon payment of
the Total Purchase Price, Escrow Agent shall return any Letter of Credit deposited
with the Escrow Agent as Earnest Money.
D. Each Party sball execute, acknowledge, seal and deliver, after the Effective Date.
including at or after any Closing, such fiuther assurances, instruments md
documents as the other may reasonably request in order to fulfill the intent of this
Agreememt and the transactions contemplated hereby.
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B. ( AU reaI.estate taxes levied against th~ Lots shall be adjusted and prorated betw~
~, "---( the Parties as of the day of each ClOSIng and shall thereafter be assumed and patd
"- by Buyer. SeUer shall pay, as of the date of each Closing. all special as'cssments,
whether levied or pend"'&. relating to the Lots or the development of the
Property, along with all other public or governmental charges imposed or
constituting a lien against the Initial Lots as of the day of Closing, it being the
intention of the Parties that Seller sball pay all special assessments relating to the
{- , Property (or any other related property being developed. by Seller) arising from
I r.!..) the development thereof as contemplated hereby. Any tax proration based on an
estimate shall be subsequently readjusted upon receipt of a tax bill The
obligation to adjust shall survive Closing.
(.
F. Buyer shall be responsible for and shall pay as to the lots being acquired
hereunder, all park dedication fees, and shall be responsible for SAC and WAC
fees (as opposed to trunk fees, which arc payable by Seller) imposed by the City
or any other Authority as a condition to issuance of building pennits for the
respective Lots.
G. The cost of documentary stamps, transfer taxes and recording fees (other than the
deeds conveying title to the respective Lots to Buyer) shall be the sole
~nsibility of the Seller. Notwithstanding the foregoing, Seller shall pay at
each Closing. without any contribution ftom Buyer. (i) any agricultural Ian~
rezoning, recapture or roll-back tax due, or deferred taxes under Minnesota's
"Green Acres" laws in connection with the conveyance or deed under any county.
state, municipal or local Jaw, regulation or ordinance (or any similar tax or
assessment), and (ii) the cost of preparing release documents, if any, and the
recording thereof for any lien releases required to be obtained by Seller in order to
convey title to the Initial Lots in accordance with Section 7.
9
H. Buyer sbaIJ be entitled to a credit against the Pro Rata Purchase Price being paid
at each Closing in an amount equal to any park dedication fee credits or SAC or
WAC credits due or available to Soller and allocable to the Homes to be
constructed on the portion of the Property being acquired at such Closing (such
allocation to be based on the total credit available to Seller divided by tho total
number of residontial dwelling units contemplated to be constructed on the
Development Property based on Seller's then current development plan).
7. TItle ad Sarvev.
A. Within ten (10) days after the Effective Date, Seller sbaI1 at its cost, provide to
Buyer a title insurance commitment (ALTA Form B) from the Escrow Agent (the
"Title Commitment" along with copies of all items noted as exceptions to title
(the 'T'Jtle Documem:sj. nJlmi~g Buyer as the proposed iDSUftld and dated not-
earlier than sixty (60) days prior to the Effective Date. TitIe to the Property shall
be good and marketable of record. insurable at standard rates by a nationally
recognized titIe insurance company selected by Buyer, free and clear of all liens.
eocumbranc:es, encroachments, coveaants, conditions, restrictions, CUl'!meots,
limitations and violation notices from any Authority other than the Pennitted
Exceptions. Funds payable by Buyer at any Closing may be used to payoff any
existing liens, real property taxes, encumbrances or violation penalties, including
accrued interest thereon.
B. If Buyer determines that tha:e are titIe defects other than those deemed to be
acceptable to Buyer, Buyer shall notify Soller, in writing. of such title defects (the
"Buyer's Title Objections'') within twenty (20) days after receipt by Buyer of the
Title Commitment. the TItle Documents and the "Survey," as defined below, and
Seller shall exercise all due diligence to resolve the same and remove such
objcctioDS u soon as reasonably possible thereafter. If Seller &ils to do so to
Buyer's satisfaction within the next following one hundred twenty (120) day
period, Buyer may either (i) cure the title defect(s) at Seller's cost and expense
not to exceed 520,000.00 (other than monetaty liens), or (ii) accept title in its then
current CODdition, or (ill) torminate this Agreement; provided, however, that
Buyer shall not be permitted to teIminatc this Agreement based on any Buyer's
Title Objection if Seller shall have caused the City, EDA or other applicable
Authority to initiate condemnation proceedings as necessary to cure such Buyer's
Tide Objection and such proc-'inV (a) are being pursued in good faith and in a
diligent manner and (b) have not been diamissed, terminated or otherwise
resolved without cure of such Buyer's Title Objection. Buyer shall not be
required to object to monetary liens or encumbrances or real property taxes due
and payable, and the Parties agree that such items will be released, at Seller's
expense, as of each Closing.
C. Seller shall obtain and provide a survey of the Property (the "Survey") within
twenty (20) days following the Effective Date of this Agreement; which Survey
shall (i) be certified to Buyer and Escrow Agent; (ii) be prepared in accordance
with the minimum standard detail requirements, (including all optional items
10
specified on Table A thereto but expressly excluding topographical contour lines)
established by ALTAlACSM in 1999 and (Ui) include a floodplain and wetland
certification by the surveyor certifying the absence of the same from any portion
of the Property. Such survey shall not be required to show the location of any
buildings or other structures which arc intended to be demolished by SeIler as part
of the Development W01k. In the event the Survey reflects casements,
encroachments, overlaps, or other defects not contained in the Permitted
Exceptions to title, Seller sball have the same rights and duties relating to the
remedy of such Survey defects as are provided in Seetl08 7.B. pertaining to the
remec:iy of title defects. All costs incurred by Seller in obtaining the Survey, and
any revisions or corrections thereto, shall be paid by Seller.
The Feasibility Period shall be deemed extended one (1) day for each day beyond the deadlines
stated in SubseetioJu 7.A and 7.C for delivery of the Title Commitment, Title Documents and/or
Survey until SeUer delivers the same.
8. CODde.....doD. H after the Effective Date and prior to Closing all or a substantial part
of the Property is taken or threatened to be taken by eminent domain or condemnation
(other than condemnation proceedings initiated by the City or EDA as necessary for any
such Authority to convey title to portions of the Property to Seller as contemplated
hereunder), Buyer may elect either (a) to terminate this Agreement, as to some or all of
the Property, in which event the Earnest Money sba1I be returned or reduced prorata
based on the acreage of the Property deleted from the Agreement and the Agreement as
to any portion of the Property deleted, shall be null and void and of no further force or
effect, or (b) to consummate Closing as herein provided, in which event Seller shall pay
or assign all condemnation awards or payments in respect of the Property to Buyer at
Closing. H the Agreement is termi'1ated in full pursuant to this Section, the Earnest
Money shall be returned to Buyer and neither Party shall have any 1Urtber rights, duties,
obligations or liabilities, at law or in equity, arising out of or relating to this Agreement
except for those that specifically survive termination of this Agreement punuant to other
sections hereof.
9. Buver'. Conditio.. Preeeden. to Settlement. Buyer's obligation to acquire the Lots
shaU be conditioned upon the satisfaction (or Buyer's written waiver thereof) of each of
the conditions precedent set forth in this Section 9 (collectively, "Buyer's Conditions
Precedent") as of the date of the proposed Closina IS to such Lots. However,
notwithstaoding the fact that Buyer may exercise its right to waive each or any of such
Buyer's Conditions Precedent for any one or more of ~ Lots, any such waiver shall
(i) not be a waiver of such Buyer's Conditions Precedent insofar as any Lots for which
Buyer has not consummated Closing arc concerned and (il) not be deemed a release of
Seller of any of its obligations to perform development work concerning such Lots, as
required hereunder, or any other obligation of Seller hereunder as to which Buyer may
require the establishment of a post-Closing escrow to assure such performance. The
Buyer's Conditions Precedent are as follows:
A. Title. Buyer shall have received, at Buyer's cost, a title policy insuring title to the
Property, as required under Section 7 hereof. subject only to the Permitted
11
Exceptions, including such endorsements as shall be reasonably required by
Buyer, and otherwise in form and substance acceptable to Buyer.
B.. DeveloDment. Seller shall have completed the Improvements in accordance with
the Schedule ofDcvclopment, shall have completed Seller's responsibilities under
the Development R.esponsibility Checklist attached hereto 88 Eulblt J, sha1I
have delivered the Completion Certificate tb.c:lRfor (the form of which is attached
88 Exhibit G), and shall have completed any repairs required by the Inspection
Report therefor (the Conn of which is attached 88 Exhibit B). In additiou, Seller
sbaII be required to certify the completion of the Improvements and the
Development Work to the extent tbat Seller's engineering firm is unable or
lDlwilling to do so. Notwithstanding the foregoing to the contrary, Buyer agrees
not to delay Closing pending the coiDpletion of items identified on the Inspection
Report so long as (i) such items would not, if completion thereof is delayed,
prevent or delay the issuance by the City of a building permit or, upon
completion, an occupancy permit for the Home to be constructed by Buyer on
such Lot and (ii) Seller establishes the "Completion Escrow" contemplated UDder
SectlOD 7(d) of the Schedule of Development.
C. SeDer Performaac," Seller shall have otherwise performed all material
covenants, agreements and obligations and complied with all material conditions
required by this Agreement to be pc:rlonned or complied with by SeIler prior to
each Closing, and Seller's representations and warranties shall be true and correct
in all material respects.
D. Montorlum. There shall exist no condition reIatiDg to or materially affecting the
Lots or the development and sale thereof (1DC1uding, but DOt limited to, a general
moratorium imposed or III1DOUDCCd by any Authority or utility soppHer), that is not
within the sole control and responsibility of Buyer, that would result in any
Authority restricting, reducing, delaying or dtaying pennits necessary for the
development, construction, use or occupancy of the Property as a residflll1tial
development or any utility supplier delaying or denying sanitary sewer, water,
natural gas, electricity or telephone connections wi1h respect to the Property.
E. Reoreseatadonl. Each of Seller's representations and wammties set forth in
secUo. 16 sba11 be true as of the date of each Closing and Seller shall so certify in
writing at each Closing.
F. Other CoDdldoDs. There shall exist no condition relating to the Lots either on-
site or off-site (including a moratorium) that is not within the sole control and
responsibility of Buyer and which would result in any Authority delaying or
denying pcnnits necessary for the constructio~ use or occupancy of the Homes
when application is made therefor.
G. EDviroDmeatal ConditioDI. Buyer shall have approved the environmental
condition of the Property and Buyer shall have in good faith determined that
Buyer shall not be potentially exposed to any (i) fcc, expense, cost, obligation or
12
liability in regard to the Property, or (ii) impairment to Buyer's construction
operations or marketing efforts with respect to the Homes, by reason of (A) any
infonnation set forth, or omitted to be addressed, in any environmental audit on or
relating to the Property or in the immediately SUl'l'OUl1di.na geographical area
wherein the Property is located, or (B) any oxisting condition on any portion of
the Property, which existing condition raises any health or environmental issue
with respect to the Property or such geographical area. In addition, at each
Closing, Buyer sbalI, in Buyer's good faith determination, be satisfied that the
environmental condition of the portion ofPropcrty to be convoyed at such Closing
(i) bas not negatively (in Buyer's good faith, reasonable opinion) changed since
the em of the Feasibility Period and (ii) meets all applicable standards of the
MinfUl$Ota Pollution Control Agency ("MPCA") and/or the Minnesota
Department of Health or any other applicable Authority for residential
development and UIC. Tho Parties acknowledge that environmental remediation
of certain "ContamhUltion" (as defined below) of the Property as identified in
Seller's EnvironmNlfsl Reports is required, such remediation is being conducted
by the EDA. Buyer shall not terminate this Agreement because of the non-
satisfaction of the condition precedent set forth in this Secdoa 9.G. solely because
of such identified and pre-existing ConfSllminAtion if the MPCA shall have issued
a certificate of completion, partial certificate of completion, andlor other
applicable administrative assurances as to the applicable Lots under the MPCA's
V olwtary Investigation and Cleanup Program. ("VIC Program") which
{i) expressly allows reuse of the applicable portion of the Property for residential
purposes (ii) provides for a release of Buyer from any liability fot any such pre-
existing Contamination and (ill) is otherwise acceptable to Buyer (including,
without limitation, Buyer's environmental engineer) in its reasonable discretion.
Notwi~i"g the foregoing to the contrary, Buyer shall not. be required to
purchase any Lots hereunder if such Lots are subject to deed restrictions based on
the presence of ContAmipaUon on or under such Lots unless Buyer shall approve
such deed restriction in writing in its sole, absolute and unlimited discretion.
Soller agrees to submit the Property to the VIC Program. to complete or cause
completion of aU environmental remediation required by the MPCA and to seck
the foregoing certificates of completion or partial certificates of completion
diligently and in good faith. For purposes hereof, the term "Contamination"
means the uncontaincd presence of any "hazardous waste," "hazardous
substance," "hazardous material" or any "oil. petroleum products and their by
products." as such terms arc defined by any federal, state, COWlty or local Jaw,
ontinancc, regulation or requirement applicable to any portion of the Property (as
amended from time to time), at or arising from the Property that may require
remediation, removal or cleanup under any applicable law. With respect to the
Initial Closing. but only the Initial Closing. the contingency contained in this
Secdoa '.G. sbal1 also apply to Lots otherwise to be conveyed in the Second
Closing up to a total aggregate of one hundred six (106) Lots.
H. Zoamsr. Buyer's obligations to purchase the Property hereunder are expressly
conditioned upon the Property being zoned MXD-Mixed Use (Transit Oriented
Mixed Use) or a parallel successor category to allow the type, number and size of
13
Homes contemplated in the Site Plan, with no new conditions imposed or changes
in zoning after the end of the Feasibility Period unless such conditions or changes
are acceptable to Buyer in its sole discmion.
L S.bdtvidoD. Seller sball have, at Seller's expense, received all necessary City (or
otbea- applicable Authority) approvals of a preliminary plat (the "Preliminary Plat'')
of the Property into loti authorized by the City to contain approximately two
hundred eighty-five (28S) Homes, as depicted on the Site Plan and a final plat
("Final PJat", and collectively with the Preliminaty Plat the .'Plats") of the Lots
being acquired at such Closing consistent with the Prelim~ Plat, in each case
subject 0Dly to those stipulatious and CODditions as are acceptable to Buyer in its sole
aDd absolute discretion. The applicable Final Plat sball be in recordable form as of
the date of each Closing and all applicable Authority approvals of such FiDal Plat
shaD have been given. Buyer shall have approved the Plats, which aba11 provide for
all eaJl"!Menm that may be 11eCeSS8l'y to provide the Lots with inal'ess and egress to
aod from a public roadway and access to all utilities intended to service each of the
Lo1B, including, without limitation, any and all stoJm water facilities and drainage
ea&emeI1tB associated thea-ewitb. Buyer sball cooperate with Seller in obtaining
approval f01' the Plats and shall execute any documents reasoaably requested by
Seller in connection therewith. If Buyer detennines at any time that Seller C8DD0t
obtain such approvals, tbm Buyer may cancel this Agreement by notice to Seller
and Esaow Agcut and have the Earnest Money returned. The Parties acknowledge
that final platting of the Property shall occur in phases COlTeSpODding to the Property
to be conVC)'M at each Closing.
J. DeveloDment A2reement. Buyer shall have received and.. approved the
Development Agreement or any other agreement required by the City or any
Authority in connection with development of the Property or construction of Ryland
Product thereon. .
K. AltDroval of Homes. Any Authority and any homeowner's association that have
the right to approve the design of the Ryland Product shall have done so in
writing.
L. ReeotmitiOD bv Lender of Rovers Risrh~ Seller shall have provided to Buyer
a written agreement in form acceptable to Buyer in its J:'eaSn'1able discretion, from
any lender holding a mortgage or other lien on all or a portion of the Property
providing that, should such party succeed to fee ownership of the Property, or a
portion thereof; such party shall recognize the rights of Buyer hereunder and,
unless and until this Agreement shall be teDnin.ated as provided herein, shall
transfec title to each Lot to Buyer as provided hereunder, upon tender of
performance by Buyer as required hereunder. So long as any such lender
provides, in fonn reasonably acceptable to Buyer, an agreement recognizing
Buyer's rights hereunder and agreeing not to disturb the same, Buyer agrees to
negotiate in good faith an agreement subordinlltil'l& on teans reasonably
acceptable to Buyer, this Purehase Agreement to the lien of any first mortgage
encwnbering the Property.
14
M. AIIlnmeat of Develooment A2reemeat. Seller shall have assigned to Buyer,
and Buyer sba1l have assumed, pursuant to an agreement in form and substance
acceptable to the Parties in their reasonable discretion, certain specific obligations
of Seller lDlder the Development Agreement with respect to (and limited to)
construction of the Homes on the Lots (the "Assignment and Assumption
Agreement'). The Parties shall negotiate the form and terms of such Assignment
and Assumption Agreement between the Effective Date and the end of the
Feasibility Period. 1)e form of Aui~t and Assunlptinn Agr-n"fl.ftt!9
negotiated sball be used for ~" and ev~ C1nAinl1 conducted punn,smt tQ this
A:;;;;t, provided however that each such ~ancl =ation
At executed by the Parties at each such Clos. lS1tl'! n lih9se
Lots and other DOrtions of the Property which are to be tnm.r~ fr9Bl ieller to
~ at such Closing.
N. COIDDletioD Gaarantv. Seller and Buyer shall have agreed on the form of the
Completion Guaranty. The Parties shall negotiate the form thereof in good faith
between the Effective Date and the end of the Feasibility Period, and the
Completion Guaranty so negotiated (as applicable to the Lots then being
purchased) shall be deliv=d by Buyer at each and every Closing.
o. Cost-S.arlnll A2I"eeDleDt. Seller and Buyer shall have agreed on the terms of a
cost-sharing agreement relating to use maintenance, repair BDdIor replacement of
private roadways on the perimeter of the Development Property, common
landscaping or other amenities benefiting both the Property aDd the Additional
Property (the "Cost-Sharing Agreement''). Buyer and Seller sball negotiate the
terms of the Cost-Sharing Agreement diligently and in good faith and shall seek
to finalize the form thereof prior to the end of the Feasibility Period.
P. "hUe ImDrovemeDts.
(i) As a condition to Initial Closing occurring. the City (or BOA) shall
have accepted bids for and shall have ordered in the construction of Huset
Parltway and all other public improvements which benefit the Property
and which are to be performed or constructed by the City under the
Development Agreement (the "City Public Improvements").
(il) As a condition to each Closing thereafter, the City shall have
completed the construction of the City Public Improvements, except for
landscaping or other elements that do not limit the use of the Lots to be
conveyed at the Closing.
Q. Ame.IUes. Seller and Buyer shall have agreed on plans and specifications for the
construction by Seller of the tot lot and gazebo reflected on the Site Plan and the
mailboxes for each of the Lots.
10. Seller', Conditio... Precedent to Settlement. Seller's obligation to 1ransfcr title to the
Lots at each Closing shall be conditioned upon:
lS
A. AssamotloD of DeveloDmeDt A2reemeat. Buyer having assuined, pursuant to a
written agreement in form and substance acceptable to Seller in its reasonable
discretion, the obligations of Seller under the Development Agreement with
respect to (and limited to) COnstructiOD of the Homes on the Lots being pumhased
at such Closing. Seller acknowledges that Buyer shall not assume any such
obligations if and to the extent the remedy for breach theceof would require
specific performance as to the actual construction of the subject Homes.
B. AeaaJsItloD or Title to the Prooertv. Seller sball have acquired fee title to the
parcels of real property compiising the Lots to be traDsfcrrcd to Buyer at such
Closing from any Fee Owners.
C. DeIIverv of. ComDletloD Guaranty aDd ComDletloD Letter of Credit. Buyer
sball have (i) executed and delivered to Seller the Completion Guaranty as to the
Homes to be constructed on the Lots purchased by Buyer at such Closing, (ii)
executed and delivered the applicable Completion Letter of Credit Escrow
Agreement, and (ill) delivered to Escrow Agent a Completion Letter of Credit to
secure such Completion Guaranty.
D. City ADDroval of SeoDe of Work. Within thirty (30) days after the Effective
Date, the City shall have approved the scope of Seller's obligations under
Exhibits I and J hereto. If this condition is not satisfied by the end of such thirty
(30) day period, Seller may terminate this Agreement by written notice to Buyer;
provided, however, that such condition shall be deemed satisfied unless Seller
shall terminate this Agreement by written notice to Buyer given within ten (10)
business days after receipt from Buyer of written request for confirmation of the
satis&ction or waiver of such contingency (given after the expiration of such 30-
day period). Following the Effective Date, Seller shall seek such approval
diligently and in good faith.
11. Rbk of Lon. The Property shall be held at the risk of Seller until Closing thereon.
12. Poaession. At each Closing, Seller shall deliver exclusive possession and occupancy of
the Lots being acquinKl at such Closing to Buyer free and clear of any claims of any third
parties to possession thereof. At such time of delivery of exclusive possession, Buyer
shall be entitled to place model units and related signage on any Lot purchased and may
conduct sales and marbting activities from such model units.
13. Default.
A. Baver Default. If Buyer is the dcfaulting Party, because of the difficulty in
calculating damages, the Parties agree that Seller's sole and exclusive remedy at
law or in equity sbal1 be limited to the right to terminate this Agreement and
retain the Eamest Money, including any interest accrued thereon, as liquidated
damages: provided, however, that if for whatever reason Buyer fails to take
available credits against the Purchase Prioe per Home as set forth in SeetloD 3.B.
hereo~ Scllcr may only retain as liquidated damages that portion of the Earnest
16
Money which would have been nmaining had Buyer appropriately taken such
credits. Other than the specific remedy expressly set forth in this S.bIedioD
13.A., Seller hereby waives any and all right and remedy, at law or in equity, to
which Seller may otheJ:Wise have been entitled by reason of Buyer's defimlt,
including any right in equity to seek specific perfOl'D18DCe of this Agreement by
Buyer' and any right at law to seek damages ftom. Buyer. Upon a default
hereunder by Buyer, after required notice and expiration of the applicable cure
period, Seller 8ball be entitled to distribution of the Earnest Money on the terms
and subject to the conditions set forth in the Escrow Agreement.
B. SeDer Default. If Seller is the defaulting Party, Buyer shall be entitled to (i) with
or without waiving such default or breach, proceed with the purchase of the Property
pursuant to the remaining terms of this Agreement; (nj terminate this Agreement
lDdIor (iii) exercise any and all rights and seek any and all remedies which Buyer
may hold or to which it may be entitled at law or in equity. In the event of any
defiw1t by Seller hereunder, or in the event this Agreement shall otherwise
terminate for lC8SOns other than Buyer's default hereunder, the Earnest Money
shall immediately be returned to Buyer on the terms and subject to the conditions
set forth in the &crow Agreement; provided, however, such rctum shall not limit
Buyer's rights and remedies set forth above, including the right to seek damages (not
to exceed an aggregate maximum in the same amount as is held as oftbe date of any
such default by Sener and/or the Bscrow Agent as Eamest Money hereunder, based
on SeUer's de&u1t, mLalW}l&~tation or bRach ofwmanty in addition to seeking
specific performance of 1bis Agreement in equity. In addition to the foregoing, in
the event that Seller sbaJJ default in the performaoce of any of its development or
constroction obligatious hereunder, and if such default shall continue after notice
and expiration of the cure period provided in SubsecdoD 13.C. below, Buyer may
(but shall have no obligation to) take such steps as it deems necessary to cure such
defimlt and sball thereafter be entitled to offset the costs and expenses incurred in
connection therewith against any further amounts due and payable to Sener
hereunder. Buyer hereby waives any claims for lost profits or other consequential
dmn~.
c. Care Period. Notwithstanding the provisions of SubseetioDl 13.A. and B.
above, no defiwlt by either Party hereto shall result in a termination or limitation
of any rights of such Party hereunder unless and until the other Party shall have
notified the defaulting Party in writing of said default, and the defaulting Party
shall have failed to cure said default within thirty (30) days after the receipt of
said written notice.
14. Notlees. Any notice to be given pursuant to this Agreement shall be given in accordance
with E:daiblt P.
15. Broken. Each Party represents and W8lT8Ilts to the other that, it has not used the services
of any real estate agent, broker or finder with respect to the transactions contemp1ated
hereby. Bach Party agrees to indemnify and hold harmless the other against and fiom any
inaccuracy in such Party's representation under this Section. This indemnification shall
17
SUlVive the delivery oCthe deed and shall not merge therein. Buyer acknowledges that an
affiliate of Seller is a liccmsed real estate broker, but such affitiSlltl! has not participated in
this, traDsaction in that capacity.
16. ReDreseatatioas a..d Wa......tles.
A. Muma' ReDresentations. To induce each other to enter into this Agreement,
each of the Parties hereby represents and wmants to the other, except as provided
in Sabseedoa 21.J.. that (i) it has been duly authorized and empowered to enter
into this Agreement and to pcrfonn fully its obligations hereunder, (ii) such
obligations constitute the valid and binding obliptions of such Party, enforceable
in accordance with their terms, and (ill) that no further consents of any other
person, entity, public body or com are required in connection with this
Agreement and tho performance of all obligations hereunder, except as may
01berwise be expressly set forth in the Development Agreement.
B. Seller'. Warnaties and ReDreseatatio.... For purposes of this Agreement, the
phrase "Seller's knowledge" shall mean tho actual (but not the constructive)
knowledge of Bradley Schafer. To induce Buyer to enter into this Agreement,
Seller represents and warrants to Buyer:
1. CondemnadoD, Etc. To the Seller's knowledge, and except as
contemplated by the Development Agreement (or as may be initiated in
response thereto) there is no pending or threatened: (i) condemnation
proceeding or other litigation relating to or otherwise affecting Seller
and/or any or all of the Lots, or (ii) except as contemplated by this
Agreement, reclassification of any or all of the Property for local zoning
purposes, or (iii) reassessment or reclassification of any or all of the
Property for state or local real property taxation purposes.
2. VlolatloDs. To the Seller's knowledge there is no pending or threatened
notice, suit or judgment from any Authority relating to any violation at the
Lots.
3. CoatamtaaUon. Seller has no knowlodge of any environmental reports,
tests or audits regarding any portion of the Property other than the Seller's
Environmental Reports.
4. Litigation. Except as otherwise expressly described in or contemplated
by the Development Agreement, to the Seller's knowledge, there is no
litigation, arbitration or proceeding pending. threatened, before any court
or administrative agency or any other condition that relates to or affects
the Property, Seller's interest therein, Seller's performance hereunder,
Buyer's intended use ofthc Property, or which will result in a lien. charge,
encumbrance or judgment against any part of or any interest in the
Property.
18
s. VtUlda. All utility services necessary for the development of the
Property and for CODStructioD and occupancy of the Homes thereon (e.g.,
water, sewer, electricity, telephone, and, if availablo to tho Property, gas
and cable TV are or will at tho time oflbe applicable Closing be available
as required by the Schedule of Development, and, to Seller's knowledge,
there is no pending or threatened moratorium OD, or other impediment to,
immediate sewer aDd water availability which is applicable to any portion
of the Property.
6. Accea. On or before the applicable Closing Date, each Lot will front on
or will have direct access to a private street or public, platted street.
7. No Breach. The execution and delivery of this Agr=nent by Seller, the
execution aDd delivery of every other document and instrument delivered
pUIBU8Jlt hereto by or on bcbalf of Seller, and the consummation of the
transactions contemplated hereby will not (A) constitute or result in the
breach of or demult under any oml or written agreement to which Seller is
a party or which atfects the Property; (8) constitute or result in a violation
of any on:ter, decree, or iDJuncti.on with respect to which Seller and/or the
Property is bound; (C) cause or entitle any party to have a right to
accelerate or declare a defiwlt under any oral or written agreement to
which Seller is a party or which affects the Property; and/or (D) violate
any provision of any municipal, state or federal law, statutory or
otherwise, to which Seller or the Property is or may be subject.
8. No .Contracts. Except this Agreement and the Development Agreement,
Seller has not entered into any other contracts, agreements or
understandi~. verbal or written, for the sale or transfer of any portion of
the Property.
9. No Commitments. Except as described in this Agreement and the
Development Agreement, Seller has not made and has no knowledge of
any commitments to any Authority, school board, church or other religious
body, or to any other orpni'7...tiOD, group or individual relating to the
Property which would impose any obligations upon Buyer to make any
contributions of money or land or to install or maintain any improvements
or wbich would interfere with Buyer's ability to use, develop or improve
the Property as herein contemplated.
10. DeslgnatioDS/IUstoric Use. To the Seller's knowledge, there is no current
or pending desigoatioo of all or any portion of the Property, or of the area
or district in which the Property is located, as an historic dis1ri~ si~
building. baulefield, structure, object or other resource on the National
Register of Historic Places or any other similar list or survey maintained
by any federal. statc; county, municipal or private authority, such that the
Property or any portion thereoC is or may become subject to development
restrictions oor does Seller have any knowledge that any such designation
19
is contemplated. To the Seller's knowledge, the Property docs not contain
any cemeteries or graveyards.
11. Ol'laalzation. Seller is a corporation duly orpni".ed. validly existing and
in good &tamil'lg under the laws of the state of Minnesota and has full
power and authority to seU the Property.
12. Development Fluaachal. Any financing obtained by Seller and secured
by a mortgage or other lien encumbering the Property does and will
provide for the unconditional release from the lien of such mortgage of
Lots purcbased by Buyer hereunder upon payment of an amount no
greater than the Pro Rata Purchase Price for such Lot u provided
hereunder.
c. S.rvIvaL The representations and wmanUes of the Parties set forth in this
SectIon 16 shall survive each Qosing for a period of one (1) year. Seller shall
notify Buyer in writing immediately if any representation becomes untrue or
misleading in light of information obtained by Sener after the Effective Date.
Each Party agrees to reimbUlle and indlllmftify, defend and hold harmless the
other aDd their respective successors and _ps, ftom and against all liability,
damages (excluding indirect or CODSequcntial damages) and losses whatsoever,
including reasonable attorneys' fees, resulting from any breach of warranty or
covenant or misrepresentation made by the indemnifying Party herein or in any
documcnt, certificate or exhibit given or .delivered in connection herewith. This
indemnification is in addition to any remedies set forth in Section 13.
D. Notice of Cban2c in Reoresentatlon. Both Parties agree to provide timely
written notice to the other Party of any fact, circumstance or condition, which
would cause any representation or warranty by the notifying Party to be or
become false or misleading in any material respect in light of information
obtained by the notifying Party after the Effective Date.
17. Arbitration. The Parties agree that eXcept for equitable remedies, which Buyer may
pursue in court, all disputes hereunder shall be settled by binding arbitration conducted
by". neutral arbitrator selected by the American Arbitration Association, or other third-
party arbitration orpn;'7.a1ion agreed upon by the Parties, at its offices closest to the
Property. The arbitration shall be conducted according to the American Arbitration
Association Coounereial Arbitration Rules or such other procedures as may be agreed
upon by the Parties. The Parties agree to <a> join into the arbitration proceeding
hereunder or (b) join any other arbitration proceeiti"g being conducted by, persons or
entities related to the dispute that may be necessary to completely resolve the dispute.
The atbitration shall determine all rights and obligations under this Agreement and the
award of the arbitrator shall be final. bindiDg and enforceable in the absence of ftaud.
The arbitrator shall have the authority, power and right to award damages and provide for
other remedies as arc available at law or in equity in accordance with the laws of such
State, except that the arbitrator shall have no authority to award incidental or punitive
damages under any circumstances (whether they be exemplary damages, treble damages
20
or any other penalty or punitive type of damages) regardless of whether such damages
may be available under the laws of such State. The Parties hereby waive their right, if
any, to recover consequential or punitive damages in connection with any BIbitrated
dispute or controversy. Nothing in this SeeUOD 17 shall limit or restrict either of the
Parties ftom --'"1\1 statutory cancellation of this Agreement under Minnesota Statutes,
Section SS9.21 in tho event of default hereunder by the other Party which is not eurcd
within tho applicable cure period.
18. Delav.
A. In the event that all Buyer's Conditions Precedent to any Closing bave not been
satisfied or waived in writing by Buyer on or before the Outside Date (m d1e case
of the Initial Closing) or the scheduled Closing Date (for any subsequent
Closing), then either Party may extend tho Outside Date or Closing Date, as the
case may be, and delay each subsequent Closing Date for one extension period of
ODe hundred twenty (120) days (an "Extension Period") by written notice to the
other Party. If neither party bas provided such notice however within ten (10)
days, then Buyer may thereafter terminate this Agreement by written notice to
Seller.
B. Both prior to tho Outside Date and during any Extension Period, both Buyer and
SeDer agree to exercise good faith efforts to satisfy any Buyer's Conditions
Precedent to the extent satist3ction thereof is within the reasonable control of
Seller.
C. It: after any Extension Period provided in SeetioD 18.A above, any Buyer's
Condition Precedent or Sener's Condition Precedent remains unsatisfied, either
Party may, by written notice to the other Party, specifying the then unsatisfied
condition precedent, terminate this Agreement as to all remAini.,g Lots or as to
any affected Lot; provided, however, in the event that Seller shall deliver to Buyer
written notice of termination as set forth above in this Subsection 18.C. (a
"Seller's Termination Notice"), this Agreement shall remain in full force and
effect if Buyer shall provide to Seller within ten (10) days after receipt of Seller's
Term.ination Notice written waiver of any Buyer's Conditions Precedent not
theretofore satisfied or waived in writing. in which event the Parties shall proceed
to Closing as to the applicable Lots within fifteen (IS) days thereafter.
D. In the event this Agreement is terminated pursuant to this Section and/or
Section 13.B.t all Eamest Money shall be returned to Buyer and neither Party
shall thereafter have any liability to the other hereunder other than those liabilities
and obligations which by tho express terms of this Agreement are intended to
survive such termination.
B. Nothing in this SedloD 18 is intended, nor shall be construed, to limit or impair in
any way whatsoever Buyer's entitlement to avail itself of Section 13, in the event
the satisfaction of any Buyer's Condition Precedent is within the control of Seller,
21
and Seller has failed to utilize its commercially reasonable best efforts to cause
the same to be satisfied.
19. Defeetive Lot. Following any Closing in the event that Buyer, through no fault of Buyer,
<a> C8DDOt secure all Jequired permits for constmction of the Homcs proposed by Buyer
upon any Lot which was the subject of such Closing because of the soil condition or other
condition of Cbc Lot not caused by any act or nogligeoco of Buyer or which is not Buyer's
express respoDSlDility hereunder, (b) discovers fill materials, peat or othc% soil CODditions
unsuitable to support standard footings fur such structures OJ: (c) discovers any
Contaminflfioo on or UDder sUch Lot, then such Lot shall be deemed a "Defective Lot" aDd,
if the detective cm1ttition remains UDC1I1'ed tOr a period of thirty (30) da)'l after the date of
such notice, BU)'a' shall have the right to reconvey such Lot to Seller. The purchase price to
be paid by Seller to Buya' for any such Defective Lot shall be the Purchase Price paid for
such Lot by Buyer, plus anyexcavatiowCODStruction costs theretofore incurred by Buya- in
connection with such lot through the date of discovery, plus any and all recording costs and
settIement costB paid by Buyer. In the event a reconveyanco to Seller of a Defective Lot
occurs hemmdc:r, then Seller shall bear the entire cost of my (a> m:ording fee and lien
certificate aud (b) state, county or other MCOrdation tax, documeo.tary stamp tax or other
transfer tax iJJcum,d in ~ the deed to any such Defective Lot Additionally, the
provisions of SeetIoD , shall similarly apply to such reconveyance transaction, but the
words "Buyer" and "Seller," respectively, as the SIIIIlC appearthcrein, shall read "Seller" and
"Buyer," respectively. This SectioD 20 shall survive each Closing.
20. GeDeraL
A. EDtire A2I'eemeDt. This Agreement constitutes the final and entire agreement
between the Partics and they shall not be bound by any terms, covenants,
conditio~ representations or warranties not expressly contained herein. This
Agreement may not be amended except by written instrument executed by both
Partics.
B. Partial IDvaliditv. If anyone or mon: of the provisions COQtained in this
Agreement shall for any reason be held invalid, illegal or unenforceable in any
respect, such invalidity, illegality, or unenforceability shall not affect any other
provision hereof, and this Agreement sba1l be construed as if such invalid, illegal
or unenforceable provision had never been contained herein.
C. Time of tbe Euenee. Time is of the essence of this Agreement and the
performance of the terms and conditions hereof.
D. Saeeesson aDd ,b.dos. This Agreement sbaIl be binding upon and shall inure
to the benefit of the Parties and their respective legal representatives, successors
and assigns. Seller shall not assign this Agreement or its rights hereunder to any
person, other than an entity at least 51% of the ownership in wbich is owned by
Seller or the principals of Seller (an <<Affiliated Entity"). In the event of any such
assignment, Seller sball remain liable for the perfonnance of Seller's obligations
22
hereunder. Seller aha1l give timely written notice to Buyer of any such
assignment to an Affiliated Entity.
E. CouDterDarts. This Agreement may be executed in counterparts, each of which
shall be deemed an original and all of which together shall constitute one and the
same instrument.
F. Headlnn. The ~qgs of tho Sections, subsections, paragraphs and
subparagraphs hereof arc provided for convenience of reference only, and shall
not be coDSidered in construing their contents.
G. EIhibits. Each writing or plat or plan referred to h<<ein as being attached hereto
as an exhibit or otherwise designated herein as an exhibit is incorporated heroin
by reference and made a part hereof: The following exhibits arc attached hereto:
Exhibit A
ExhIbit B
EDibit C
EDlblt D
Ed...lt E
Edalblt F
EdalbltG
Exldblt B
. Eulbit I
Exhibit I
EDlblt K
EDalbit L
Exhibit M
Eddblt N
Exhibit 0
Eddbit P
Exhibit Q
Eddblt R
Exhibit S
Legal Description ofPropcrty
Site Plan
Closing Documents
Form of Letter of Credit
Form ofEamest Money Escrow Agreement
Notices
Completion Certificate
Inspection Report
Schedule of Development
Development RespoDSlDility Checklist
Grading Plan
Se11cr's Landscape Plan
Ust of Seller's Environmental Reports
Takcdown Schedule
Description of Additional Property
Intentionally Omitted
Form of Completion Letter of Credit
Description of Underlying Purchase Agreements
Form of Completion Letter of Credit Escrow Agreement
H. TIme Periods. Any and all references in this Agreement to time periods which
are specified by reference to a certain number of days refer to calendar days.
unless "business days" is otherwise expressly provided. Therefore, if (i) the last
date by which a Closing is permitted to occur hereunder, or (ii) any date by which
a Party is required to provide the other Party with notice hereunder, occurs on a
Saturday or a Sunday or a banking holiday in the jurisdiction where the Property
is located, then and in any of such events, such applicable dates shall be deemed
to occur, for all purposes of this Agreement, on that calendar day which is the
next, succeeding day, which is not a Saturday, Sunday or banldng holiday.
23
I. No Pal1DerslliDs. Nothing in this Agreement sball be deemed in any way to
create between the Parties any :relationship of partnership, joint venture or
association, and the Parties disclaim the existence thereof:
1. Baver', Coroorate Policv. Seller hereby acknowledges to and confirms with
Buyer that Seller has been apprised of the corporate policy of Buyer to the effect
that all contracts entered into by Buyer in regard to the purchase or development
of land are not valid unless signed by Kipling W. Scott, Executive Vice President
of Buyer.
K. Waivers. No Party shall be deemed to have waived the exercise of any right
which it holds hereunder unless such waiver is made expressly and in writiDa (and
no delay or omission by any Party hereto in exercising any such right shall be
deemed a waiver of its future exereise). No such waiver made as to any instance
involving the exercise of any such right shall be deemed a waiver as to any other
such iDstance, or any other such right.
L. Choice of Law. 'Ibis Agreement shall be giVeD effect and construed by
application of the law oftbe State of Minnesota.
M. Memo....dam of Parehue A2reemeat. Buyer shall have the right to place of
record against the Property a memorandum confirming its interest in the Property
under this Purchase Agreement, and Seller sbaIl cooperate with Buyer in
executing any such document reasonably requested by Buyer.
N. Attornevs' rees. In the event any legal action or arbitration proceeding between
the Parties regarding this Agreement or the Property (an "Action"), the prevailing
Party shall be entitled to payment by the non-prevailing Party of its reasonable
attorneys' fees and litigation or arbitration expenses as determined in the course
of the proceeding.
o. CODstractiOD. Seller and Buyer agree that this Agreement has been thoroughly
negotiated in good faith and that, if any ambiguity sba11 arise hereunder, there
shall be no presumption that either Party drafted this Agreement or shall have
such ambiguity resolved against either Party by virtue of its role in drafting or
preparing this Agreement.
P. ABcln." CoveDIDt. Seller shall use its good faith, reasonable efforts to
cooperate with Buyer in Buyer's efforts to comply with the requirements ofF ASB
Interpretation #46 provided that, in so cooperating, Seller shall incur no material
amount of expense. Buyer shall request from Seller only the minimum
information required to comply with F ASB InteIprctation #46. Buyer agrees to
hold all Seller information regarding Buyer's compliance with F ASB
Interpretation #46 in strict confidence. Such obligation shall survive Closing.
21. DeveloDmeDt of the Additional Prouertv. Buyer understands and acknowledges that
SeUer in~s to develop, or cause others to develop, the Additional Property for, among
other uses, resideDtial uses. Nevertheless. as an inducement to Buyer to purchase the
24
Property, Seller hereby agrees that prior to the completion of ninety five percent (95%) of
the Ryland. Product Seller sball not cause or. allow construction on the Additional
Property of any townhouse or condominium dwelling Wlits which are substantially
similar in size, price and quality to the Ryland Product being coDStructed on the Property.
NotwithstsaMI"1 the foregoing. toWDhouse or condominium units which are otherwise
substantially similar in size, price and quality to the Ryland Product but which are part of
a multi-uDit building contaiDing tbrcc (3) or more stories at least one story of which
consists of residential Oats sbal1 not be regarded as substantially 'similar to the Ryland
Product. In the event Seller or any successor as owner and/or developer of any portion of
the Property contemplates any residential development of the Additional Property, Seller
shall provide written notice thereof to Buyer, including a detailed description of the
proposed residential structures to be constructed thereon (a "Seller Development
Notice"). In the event that Buyer determines that such proposed residential structures
will violate this SectIoa 12, Buym' sbaJ1 provide to Seller written notice within fifteen
(1 S) days after receipt of the Seller Development Notice whereupon Buyer and Seller
shall negotiate in good faith for a period of thirty (30) days to resolve such dispute. If,
however, iuch dispute is not resolved within such 30-day period, such dispute shall be
resolved through arbitration in accordance with the provisions of SeetlOD 17 bc:reof.
Seller shall execute a memorandum of the foregoing restriction (the "Restriction
Memorandum") in form reasonably requested by Buyer, for recordiDg against the
Additional Property. Upon recordation of the Restriction Mcm.oJ'Rtlltnm, Buyer sball
execute and deliver to the Escrow Agent memoranda which shall release the foregoing
restriction in foIDlS reasonably requested by Seller for recording against the Additional
Property (and/or each lot subsequently created therefrom) (collectively the "Release
Memoranda"). Contemporaneously with the delivery of the Release Memoranda, Buyer
shall deliver Buyer's irrevocable ins1ructiODS to the Escrow Agent, in trust, to record the
Release Memoranda against the Additional Property (and/or each lot subsequently
created therefrom) upon the cadier of (i) the issuance by the City of a certificate of
occupancy on such lot for dwelling units thereon which are not substantially similar to
the Ryland Product being constructed on the Property and/or (ii) the sale of all Homes
constructed or to be constructed by Buyer on the Property (the "Release Instructions").
The Parties agree that this Sectioa 21 shall survive Closing and be explicitly imposed
upon any Subdcveloper of the Additional Property. Notwithstanding anything contained
in this Agreement to the contrary, (a) the Restriction Memorandum sball not be binding
on any lending institution acquiring any portion of the Additional Property through
foreclosure or bona fide deed in lieu of foreclosure, and (b) if this Agreement is
terminAt;cd based on a default hereunder by Buyer, then the provisions of this Section
shall be null and void.
22. RBrht of Flnt Nesr:OtlatfOD. In the event that Seller determines that any portion of the
Additional Property is suitable for development of residential structures similar in size,
price and quality to the Ryland Product being constructed on the Property, Seller aball,
prior to entering into any agreement for the sale of any such portion of the Additional
Property to a third party, give to Buyer written notice of the availability of such portion
of the Additional Property (an "Availability Notice"). In the event that Buyer shall
provide to Seller, within fifteen (IS) days after receipt ofthc Availability Notice. written
notice that Buyer is interested in acquiring the available portion of the Additional.
25
Property. Seller agrees to negotiate exclusively. diligently and in good faith with Buyer
for a period of thirty (30) days thereafter for the sale of such portion of the Additional
Propst)' to Buyer. In the event that, despite the diligent and good faith efforts of Buyer
to Seller DO agreement has been reached with Buyer for the terms on which Seller shall
convey the available portion of the Additional Property to Buyer. Seller sba1l be free to
:market the same, and enter into agreements for the sale of the same, to third parties
without fbrther obligation to Buyer as to such available portion of the Additional
Property. Buyer.s rights of first negotiation with respect to the balance of the Additional
Property shall, however, continue in full force and affect in accordance with the terms of
this SedlOD 22. .
23. UaderlvIDt! Purchase At!reeDleDtI.
A Seller shall perform in a timely manner all of its eluties, obligations and covenants
under the Underlying Purchase Agreements.
B. Seller shall provide to Bu~ copies of any surveys, environmental reports, soil
ICpOrts or title insurance commitm.eDts, or other similar reports or documents
relating to the Property which are in Seller's possession or are provided to Seller
by any of the Fee Owners, with any comments or objections thereto provided by
Seller to such Fee Owners.
C. Sener will not. without the prior written consent of Buyer, (i) consent to or waive
any default by any of the Fee Owners under the Underlying Purchase Agreement
or any Wlure by any of the Fee Owners to perform such Fee Owner's obligations
under the respective Underlying Purchase Agreement. (rl) enter into any
amendment. waiver. termination or rescission of any of the Underlying Purchase
Agreements or any material provisions thereof that would prevent. limit. restrict
or inhibit Seller in any material respect from performing Seller's obligations
under this Agreement or which would be binding upon Buyer following any
Closing hereunder.
D. Seller agrees to promptly (aDd in any event prior to the expiration of any
applicable cure period) notify Buyer in writing of Seller's receipt of any notice of
defiwlt or the notice of any happening of an event or the existence of any
condition which, with the giving of notice of the passage of time, or both, would
constitute a default under the Underlying Purchase Agreements.
E. Seller agrees to promptly provide Buyer (and Buyer's legal counsel) at the
addresses set forth on EDibit F hereto, copies of any notices sent or received by
Seller under any oftbe Underlying Purchase Agreements.
24. Perform.nee Uader DevelQDDlent A2reement.. Seller shall perform all of its eluties and
obligations under the Development Agreement in a timely manner, and shall not be or
become in default thereunder. Seller shall provide to Buyer, within ten (10) days after
receipt thereof, copies of any notices given to Seller by either the City or the EDA under
the terms of the Development Agreement In the event that City or the BDA defaults in
26
its obligations in the Development Agreement to construct and complete the City Public
Improvements as and when contemplated under the Development Agreement, SeUer
agrees to exClCise, diligently and in good faith, all remedies available to it under the
Development Agreement to cause construction thereof to be completed. If construction
thereof has not been completed with six (6) months after notice from Buyer to SeUer of
such default by the BDA and/or the City, Seller further agrees, upon written request from
Buyer, to make a non-exclusive assignment to Buyer of Seller's rights and remedies
UDder the Development Agreement with respect to the failure to complete such
coDStluction.
25. Afl'ordllbDitv CoveIlant. Buyer agrees that at least ten percent (Ioo,,) of the Homes
constructocl on the Property sball be offered for sale to the public with a base price (i.e., a
price which includes only those improvements necessary for the purchaser of such Home
to obtain an occupancy pcmlit for such Home under applicable City ordinances and
which excludes, without limitation, all added options and upgrades) equal to or less than
110% of 1he then current "maximum affordable price under Met Council guidelines in
effect in the year of sale," as determined in accordance with Section 4.5 of the
. Development Agreement (the "Affordability Covenant"). Notwithstanding the foregoing
to the coo.trary, to the extent that the Affordability Coveoant has been fully satisfied with
respect to the Development Property, Buyer shall thereafter be released from its
obligation to construct affordable units on the Property. The provisions of this
Seetloa 25 shall survive each Closing.
26. ComuletloD Guarantv.
A. ConlPletion Letter of Credit. Buyer will provide a Completion Letter of Credit
guaranteeing the completion of homes on lOOOA ofthc number of Lots acquired in
any Closing contemplated in this Agreement (each such take-down a
"Subdcveloper Parcel''). For example, if Buyer acquires 70 Lots in the initial
Closin& Buyer will provide a Completion Letter of Credit for 51.4 Million.
B. ADoroval ofSubdcvelQl)el Parcels bv Authority. As a condition precedent to
Buyer's obligations under this ~ Seller sbal1, as part of the approval of
Buyer as an assignee under the Redevelopment Agreement and this Agreement,
obtain the approval of the Authority of (i) the four contemplated takc-downs of
lAta as separate Subdcvelopcr Parcels, as provided under Section 9.2(b) of the
Redevelopment Agreement, for purposes ofmecting the Completion of
Construction requirement under Section 4.3 of the Redevelopment Agreement and
(ii) a minimwn time for each such Subdeveloper Parcel for compliance with the
8oo;:, completion obligation under such Section 4.3 of the Redevelopment
Agreement ofnot less than three years from time of Closing and conveyance of
the Lots in the applicable Subdeveloper Parcel. such time for completion to be
approved as provided in Section 4.3 (c) of the Redevelopment Agreement.
C. Release of Completion Letter of Credit Each Completion Letter of Credit would
be released or reduced, as applicable. once Buyer has satisfied any of the
following conditions:
27
1. Upon completion of8oolO of the Homes on Lots in a Subdevelopcr Parcel,
i.e., if the Subdeveloper Parcel has 70 lots, upon completion of 56 Homes,
the Completion Letter of Credit for that Subdeveloper Parcel will be
reduced by 8oo/.;
2. Upon completion of SO or more additional Homes in the aggregate in any
one or several Subdeveloper Parce1(s), each ofwbich has met the 80010
C?Ompletion requirement, the Completion Letter of Credit will be reduced
by the nmnber of Homes completed times $20,000;
3. Upon the issuance of the Refinancing Note based on the tax increment
from any Lot, the Completion Letter of Credit for such Lot shall be
released; or
4. In the event the Available Tax Increm~ as defined in the
Redevelopment Agreement, based on actual Anoka County Assessor's
market value for the Homes on Lots completed, exceeds the amount
projected. and \1tiH7.ed in the sizing of the Initial Notes issued applicable to
the mticipatcd constnJction on such Lots, the Completion Letter of Credit
for the Subdevc10per Parcel in which the Lot is located shall be reduced
by an amount that reflects such excess incremental value.
For purposes oftbis section a Home shall be deemed completed either upon the
iJsuaDcc by the City of a certificate of OCCUPancy or upon Buyer providing a
certificate of an architect, registered in the State of Minnesota, certifying that the
Home is substantially complete and ready for occupancy. In addition, any
Completion Letters of Credit, if not previously released, shall be released once
Buyer has completed Homes on 100% oCthe aggregate Lots purchased by Buyer
hereunder or upon the payment in full of the Initial Notes.
D. CoUateral PI~e of ColllPletion Letter of Credit. Buyer hereby consents to the
assigament for collateral purposes ofthc Completion Letter of Credit from Seller
to any penon providing financing or acquiring the Initial Notes, as defined in the
Redevelopment Agreement, provided, in no event shall the party receiving the
collateral pledge have any rights other than those of Seller hereunder. Seller shall
notify Buyer of any such pledge and shall provide Buyer with a copy of the
applicable pledge agreement.
E.' Claims against the Letter of Credit. Extension Interest Costs. If financing secured
by or provided by a holder of the Initial Notes becomes due at a time following
the initial tbree-year term of such financing when Buyer has not yet completed all
of the Homes in a Subdeveloper Parcel, Buyer shall, upon written request from
Sellea-, agree to extend the Completion Letter of Credit on any such uncompleted
Home for an additional term (on an annual basis, up to a maximum of three
additional years), as specified by SeDer. In addition, Buyer shall also pay an
annual amo\Dlt to Seller equal to the then applicable interest rates for the loan or
funding of the Initial Notes times $20,000 tinies the number of Lots on which
Buyer bad failed to complete Homes. The purpose of this provision is to offset
28
the interest costs of carrying the Initial Notes beyond the anticipated initial tenn
oft:bree yem, required due to non-complotion of Homes. IfSell<< receives
oftiwtiw,g tax increment payments that reduce this cost, it shall reduce the
paymeot obligation of Buyer under this Subsection. Payment oftbe interest
amount hereunder shall be made monthly, not later than the S* day oCthe month.
Any necessary roconciliation related to offsetting tax increment received by
Seller, under this Subsection, sball be paid not later than MJRh 1 of the
succeeding year.
F. Claim Aaainm: Letter of Credit ComoIetion Default Seller agrees it will not have
a claim against and will not draw against a Completion Letter oCCredit, except
upon the occurrence of one of the following events:
1. Buyer fails to provide a renewal or replacement Completion Letter of
Credit not less than IS days prior to the expiration of an outsbllvling
Completion Letter of Credit; or
2. Buyer fails to complete construction of Homes on a Subdevelopel' Parcel
in compliance with this Agreement, the Authority fails or refuses to agree
to an extension of tile applicable completion default date undec Section 4.3
(0) of the Redevelopment Agreement, and the Authority commences
action to withhold Available Tax Increment attributable to the defaulting
Subdeve10per Parcel under Section 9.2 of the Redevelopment Agreement.
Both putiea agree to use their best efforts to obtain from the Authority any
exteDsions needed in the completion obligation WIder the Redevelopment
Contract to avoid a default in the completion obligations and a need to
draw upon the Completion Letter of Credit.
G. R8finsmclnlJ Notes. Buyer and Seller agree to cooperate with one another and use
their best efforts to allow issuance of the Refinancing Notes, as defined and
contemplated in the Redevelopment Agreement, as promptly as possl'ble in
connection with the completion of the Homes. If the Refinancing Notes are
issued based upon completion of a number of Homes less than the minimum
number the Authority under the redevelopment Agrecmon.t approves as efficient
(ounentlyanticipated to be SO completed Homes)(each a "Small Issue"), then any
additional issuance costs for the Refinance Notes of the Small Issue, not approved
to be paid by the Authority from the proceeds of such Refinance Notes sball be
paid by Buyer; provided however that (i) except in case of default, any suoh Small
Iasue shall be made only at Buyer's request or with Buyer's prior consent and (ii)
such additional issuance costs of the Refinance Notes of the Small Issue shall not
exceed S% of the amount thereof without Buyer's prior written consent.
H. Tax Increment Reimbursement to Buyer. In the event the Completion Letter of
Credit is drawn against hereunder, and thereafter tax increment payments on the
Initial Notes are made, Seller or any successor holder or pledgee of the Initial
Notes shall agree that Buyer shall be reimbursed by the amount of tax increment
payments made, if and to the extent Seller or such other Initial Note Holder
29
receives from the Authority any tax increment payments in excess of the amounts
necessary to payoff outstanding amounts of the Initial Notes.
I. Survival. The terms of this Section shall survive all Closings. Delivery of the
Completion Letter of Credit and the obligations of the Buyer and Seller under this
Section shall be subject to documentation in the Completion Guaranty to be
delivered in connection with the applicable Closing.
27. Exhibits Each of the exhibits attached to this Agreement is incorporated herein by
reference. Any exhibit not available at the time this Agreement is executed shall be
agreed upon, initialed and attached by the parties as soon after execution as it is
practicable, but failure to attach any exhibit shall not affect the validity of this Agreement
unless the parties are in material disagreement as to the contents of such exhibit.
IN WITNESS WHEREOF, the parties hereto have executed under seal this Agreement as of the
Effective Date.
SELLER:
HUSET PARK DEVELOPMENT
co~~esota corporation
By: I
Its:
30
IN WITNESS WHEREOF, the parties hereto have executed under seal this Agreement as of the
Effective Date.
SELLER:
HUSET PARK DEVELOPMENT
CORPORATION, a Minnesota corporation
By:
Its:
BUYER:
THE RYLAND GROUP, INC., a Maryland
corporation /'
By: ~ fJ
Kipfing W. tt, Executive Vice President
And: (j...1.. ___
Wayne J. Soojian, Operational Vice President
. .
~
[Signature page for Agreement of Purchase and Sale/Columbia Heights)
2164954vS
AGREEMENT OF SALE
by ud betweeD
BUSET PARK DEVELOPMENT CORPORATION, as SeDer
ad
THE RYLAND GROUP, INC"t as Bayer
EXHIBIT A
lLe2a1 DeserIDtIon of Prooertvl
A-I
AGREEMENT OF SALE
by and between
HUSET PARK DEVELOPMENT CORPORATION, as SeDer
..d
THE RYLAND GROUP, INC., as Buyer
EXHIBIT A
lLenI DeseriDdoD of Prooertv)
PARCEL 2
3801 Sib Street NE - Ray E. Ells
All of Lots 29, 30, 31 and all of Lot 28, except the East 13 feet of said Lot 28, in Block 83, and
the vacated 14 foot alley North and adjacent to said above described property, aU in Columbia
Heights Annex to ~n~1is, Anoka County, Minnesota. Also that part of Block "F" of
Columbia Heights Annex to h4'inn~1ia, Anoka Cowlty, Minnesota, described as follows:
Beginning at the Southwest comer of said Block "F'; thence East along the North line of alley a
distance of I S2.S feet; thence North on a line running parallel with the Bast line of Sth Street
Northeast to its intersection with the Southeasterly line of 39th Avenue Northeast as opened;
thence Southwesterly along said Southeasterly street line to its intersection with the Bast line of
Sth Street Northeast, thence South along said East street line to the point ofbegjnning.
AND
The north half of that part of the vacated alley as dedicated in the plat of "Columbia Heights
Annex to Minneapolis, AnOD County, Minnesota", lying easterly of the northerly extension
across it of the west line of the cast 13 feet of Lot 28, Block 83, said plat of "Columbia Heights
Annex to ~n~lis, Anoka County, Minnesota", and lying westmly of a line drawn parallel
with and distant 152.S feet east of the east line of Fifth Street, NE, said parallel line is also being
the west line of Tract A. Registered Land Survey No. IS9.
(Torrens Property, Certificate No. 76382)
Tract A, Registered Land Survey No. 1 S9
(Torrens Property, Certificate No. 79188)
PARCEL 3
3800 S" Street, u..c, a Minnesota limited liability company
A-I
AU of Lots 7 and. 8, Rearrangement of Block E, Columbia Heights Ann~ Anoka County,
Minnesota.
That part of Lots 5, 6 and 9, said Rearrangement of Block E, Columbia Heights Annex, lying
Easterly of the East line ofUnivmity Avenue NE, except that part th<<eoflying Northerly md
Westerly of the following described line:
Commencing at the Northeast comer of said Lot 5, in said Rearrangement of Block E, Columbia
Heights Annex; thence South 30 degrees 19 minutes 23 seconds Bast on an assumed bearing
along the Easterly line of Lots 1 through 8 in said Rcmangeme.ot of Block E, a distance of32.33
feet to a Y.a" iDsidc diameter iron pipe monument capped RL.S. 10832, the actual point of
beg;nning; thence South. 69 degrees 45 minutes 19 seconds West a distance of 107.77 feet to a
%" inside diameter iron pipe monument capped R.L.S. 10832; thence South 5 I degrees 48
minutes 07 seconds West a distance of 11S.26 feet to a Y.a" inside diameter iron pipe monument
capped LL.S. 10832, tbcnce South 1 degree. 03 minutes 07 seconds East a distance of 54.97 feet
to a~" inside m.~ iron pipe monument capped R.L.S. 10832, thence South 89 degrees 41
minlrteA 39 seconds West a distanCe of 134.51 feet, m~ or less, to a point on the Easterly line of
University Avenue NE distant 734.92 feet Southerly from the intersection of said Easterly line of
said University Avenue NE and the Northarly line of Lot 1 in said Rearrangement of Block E,
Columbia Heights Annex, and there terminmng.
EXCEPT
That part of Lot 5, described as follows:
Commencing at the Northeast comer of said Lot 5, thence South 30 degrees 19 minutes 23
seconds Bast on an assumed bearing along the Easterly line of said Lot 5 a distance of 332.33
feet to a ~" inside diameter iron pipe monument capped R.L.S. 10832, to the actual point of
beginning. thence South 89 degrees 45 minutes 19 seconds West a distance of 107.77 feet to a
W' inside diameter iron pipe monument capped R.L.S. 10832; thence South 51 degrees 48
minutes 07 seconds West a distance of 27.64 feet; thence North 89 degrees 10 minutes 53
seconds Bast a diltance of 138.61 feet to the Easterly line of said Lot s; thence North 30 degrees
19 minutes 23 seconds West along said Easterly line of said Lot S a distance of 18.04 feet to the
point ofbegimrlng and thero tenninating.
Lots 41 and 42, Block 70, Columbia Heights Annex to Minneapolis, except those portions
thereof taken for street or highway purposes.
Lots 43-54, inclusive, Block 70, said Columbia Heights Annex to Minneapolis.
That part of Block E, Columbia Heights Annex to Minneapolis, Anoka County, Minnesota,
descn"bed as follows:
Beginning at the Southeast comer of Block E; theDCC North along the West line of Fifth Street
NE, 171.6 feet; thCllCC Northwesterly along the Southwesterly line of Lookout Placet 182 fect;
thence Southwesterly to a point in the Northeasterly line of alley and in the Northwesterly radial
boundary line of the above dcscnDcd part of said Block 70, said radial boundary line being
produced to the Northeasterly line of said alley; thence along said Northeasterly line of alley
A-2
Southeasterly to the North line of Thirty-Eighth Avenue NE; thence Bast along the North line of
Thirty-Eighth Avenue to the point ofbcgimring.
Vacated Edgemoar Place lying Easterly of the Easterly line of University Avenue NE and
Northerly oftbe North line of3Sth Avenue NE.
The vacated alley lying Easterly of and adjacent to Block 70, Columbia Heights Annex to
MiDneapo~ and bounded on the West by the Bastedy line of University Avenue NE and
bounded on the South by the Northerly line of 38th Avenue NE.
Lots 7 through 12, inclusive, Block 69, Columbia Heights Annex to Minneapolis; the vacated
alley. in Block 69, Columbia Heights .Annex to Minneapolis, lying Southerly of the Westerly
exteosion of the South line of the Northerly 12.5 feet of Lot 11 in said Block 69; and vacated
Lookout Place lyins Southerly of the Westerly extension of the South line ofthc Northerly 12~S
feet of Lot 11 in said Block 69.
That part of Block 98, Columbia Heights Annex to Minneapolis, lying Easterly of the East line
of University Avenue NE.
(Abstract Property)
Lots 13, 14, IS, 16, Block 69, Columbia Heights Annex to Minneapolis, and that part of Lot 17,
Block 69, Columbia Heights Annex to Min~1is, lying Southerly of the Westerly extension of
the North line of the South half of Lot lOin said Block 69.
(Torrens Property, Certificate No. 87560)
Lots 9 through 20, inclusive, Block 2, First Subdivision of Block F, Cobnnbia Heights,
Minnesota, Anoka County, Minnesota.
Lot 12, Block 1, First Subdivision of Block F, Columbia Heights, Minneso~ Anoka County,
Minnesota.
The West half of that vacated alley lying Easterly of Lots 18, 19 and 20 in said Block 2, First
Subdivision of Block F, Columbia Heights, Minnesota.
That vacated alley lying between Lots 9, 10 and lIon the East and Lots 12 through 17,
inclusive, on the West, in said Block 2, First Subdivision of Block F, Columbia Heights,
Minnesota.
That vacated street lying between Lot 12, Block 1, on the East and Lots 9, 10 and 11, Block 2, on
the West, all in said First Subdivision of Block F, Columbia Heights, Minnesota.
A tract of land bounded on the North by the Southerly line of First Subdivision of Block F,
Columbia Heights, Minnesota, bounded on the West by the West line of Block 2 in said First
Subdivision of Block F, Columbia Heights, Minnesota, produced Southerly; bowtded on the East
A-3
by the Bast line ofBtock 1 in said First Subdivision of Block F, Columbia Heights, Minnesota,
produced Southerly, and bounded on the South by a line parallel with and 10 feet distant
Northwesterly (measured at right angles) from the center line of the main tract of the
~in~polis, Sl Paul and Sault Ste. Marie Railroad Company's so called Columbia Heights
Spur.
(.Abstract Property)
BUCKLES PARCEL
The land referred to in this Commitment is situated in the State of Minnesota, County of Anoka,
and descn"bed as follows:
Lots One (1) and Two (2), together with that portion of the North oneIbalf (N ~) of 38% Avenue
North Bast abuttins said lots, heretofore vacated, Block Tbrcc (3), all in 2- Subdivision of Block
F, Columbia Heights ADnex according to the plat thereof on file and of record in the office ofthc
Register ofDcecls in and for said Anoka County, Minnesota.
PHARO PARCEL
The land referred to in this Commitment is situated in the State of Minnesota, County of Anoks,
and described u follows:
Lot 27 and the Bast 13 feet of Lot 28, Block 83, Columbia Heights Annex to Minneapolis; and
Lots 24, 25 and 26, Block 83, and the vacated alley North and adjacent to said lots, Columbia
Heights Annex to Minneapolis, Anoka County, Minnesota.
22913I8Y1
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AGREEMENT OF SALE
. by and betweeD.
BUSET PARK DEVELOPMENT CORPORATION, as SeDu
aDd
THE RYLAND GROUP, lNe., as Buyer
EXHIBIT B
(Site Plan)
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AGREEMENT OF SALE
by aDd betweeD
BUSET PARK DEVELOPMENT CORPORATION, as SeDer
aDd
THE RYLAND GROUP, INC., as Buyer
EXHIBIT C
(Closln2 DoeameDts to be DeUvered to Baver)
(a) A certified copy of the resolution of Seller's Board of Directors authorizing and
approving this Agreement and the transactiqns contemplated herein and the execution of
the Agreement and the closing documents;
(b) A limited warranty deed which conveys fee simple title to the Lots being
purchased at such Closing, in form acceptable to Buyer (the "Deedji
(0) A Foreign Investment in Real Property Tax Act ("FIRPTA'') certification in
confonnancc with the requirements ofFJRPT A;
(d) All consents which may be required from any third person or entity in connection
with the sale ofthc Property;
(e) A title affidavit as to those items or facts within Seller's control in fonn typically
required by Buyer's title insurance company and sufficient to allow such title company to
delete the "standard exceptions" in a title insurance policy;
(f) An estoppel letter from the City certifying to Buyer that Seller is not in default
under the Development Agreement and has completed all Improvements relating to the
Lots then being purchased.
(g) The Assignment and Assumption Agreement;
(h) The Completion Letter of Credit Escrow Agreement;
(i) The Cost-Sharing Agreement;
G> Lien releases. affidavits and other documents satisfactory to counsel for Buyer.
indemnifying Buyer from aU liability and expense, including attorneys' fees, that Buyer
may incur in connection with unfiled mechanics' liens for any work completed or
materials furnished at or about the Property prior to Closing;
(k) Releases of Lots being purchased from any mortgages, security interests or other
liens securing any indebtedness of Seller; and
(I) Such other documents or instruments as may be required by other provisions of
this Agreement or reasonably required by Buyer to effectuate the Closing.
C-l
All of the documents and instruments to be delivered by Seller pursuant to this Exhibit
sball be in folUl and substance reasonably satisfactory to counsel for Buyer.
C-2
"
AGREEMENT OF'SALE
by aad betweea
HUSET PARK DEVELOPMENT CORPORATION, as Seller
aDd
THE RYLAND GROUP, INC., .. Buyer
EXHIBIT D
tLetter of Credit)
Expiry Date:
.20_.
.20_,
Date:
for negotiation at the counters of
having an address at
Applicant:
The Ryland Group, Inc.
24025 Park Sorrento
Suite 400
Calabasas, CA 91302
Beneficiary:
(the "Escrow Agent'')
Dear Sirs:
in the amount of
.00), which is
. having an
. bearing the
"Drawn under documentary credit No. of
Bank" accompanied by the original of this Letter of Credit and
the signed statement addressed to us in the form attached hereto as Attachment A and
incoIpOratcd herein by this reference.
We hereby issue in your favor this standby letter of credi~
and No/1OO U.S. Dollars ($
available by negotiation of your draft at sight drawn on
address at
clause:
0-1
Notwitbitanding anything set forth herein to the contrary. this Letter of Credit shall
remain in force unti11he "Expiry Date" specified above.
This Letter of Credit sets forth in full the terms of our undertaking to you. Such
undertaking shall not in any way be modified, amended or ampHtied by reference to any
document or instrument referred or related to herein and any such reference shall not be deemed
to incorporate herein by reference any such document or instnDnent.
The original of this Letter of Credit must be presented to us with any drawings hereunder
for our endorsement of any payments effected by us.
If cancellation of this Letter of Credit is required before the expiry date stated herein as
extended from time to time, the original of this Letter of Credit must be returned to us
accompauied by the Seller's letter requesting cancellation.
Except as expIeSSly provided herein, this Letter of Credit is subject to the Uniform
Customs and Practices for Documentary Credits (1993 Revision), International Chamber of
Commerce Publication No. 500. .
Very truly yours,
[AUTHORIZED SIGNATIJRE ON BEHALF OF
ISSUER]
0-2
AITACHMENT A TO FORM OF LETI'ER OF CREDIT
Attached to and made a part of Irrevocable Letter of Credit No. . dated
.200S issued by flSSUBRl to
("Seller") as Beneficiary for the account of
The Ryland Group, Inc. ("Buyer").
STATEMENT
The undersigned, being a beneficiary under Irrevocable Letter of Credit No.
(the "Letter of Creditj hereby certifies and cepIesents that (a) Buyer is in default of its
obligation under that certain Agreement of Sale between Buyer and Seller, dated
.2005 (the "Agreementj; (b) as required by subsection 13(C) of the Agreement,
Seller has given Buyer the attached written thirty (30) days' notice to cure such default; and (c)
Buyer has failed to cure such default within the aforesaid thirty (30) day cure.
ESCROW AGENT:
By:
Name:
Title:
D-3
ATIACHMBNT B TO FORM LE'ITER OF CREDIT
Date:
The Ryland Group, Inc.
24025 Park Sorrento
Suite 400
Calabasas;CA 91302
Ref: Letter of Credit #
AND
[Issuing Bank Name and Address]
As beneficiary of the above-referenced Letter of Credit, we request that the fonowing actions (8)
be taken as evidenced by our initials and signature below:
Please tniliaJ:
REDUCE the amount from $
$
EXTEND the expiry date from
to
to
CANCEL this letter of credit effective immediately.
Enclosed herewith arc the original Letter of Credit documents, including
the amendments thereto.
(Note: if any of these documents are not included with thir letter, you
must specify each missing document and explain the reason why they are
not being returned)
Authorization:
The Ryland Group, Inc.
By:
Title:
By:
Title:
D-4
~
AGREEMENT OF SALE
by and between
HUSET PARK DEVELOPMENT CORPORATION, u SeDer
and
THE RYLAND GROUP, INC., as Buyer
EXHIBIT E
(Form of Earnest Monev Eserow A2reemeatl
This Escrow Agreement ("Escrow Agreement'') is entered into as of this _ day of
April, 2005, by and among Huset Park Development Corporation, a Minnesota corporation
("Seller''), The Ryland Group, Inc., a Maryland corporation ("BuyCl"'), and First American Title
Insurance Company ("Escrow Agent''). .
WHEREAS, Seller and Buyer have entered into an Agreement of Purchase and Sale
dated April 18, 2005 (the "Sale Agreement") for the purchase and sale of the Property (as
defined in the Sale Agreement), a copy of which has been attached as Schedule 1 to this Escrow
Agreement; and
WHEREAS, Buyer and Seller desire to enter into an agreement with Escrow Agent
pursuant to which Buyer shall deposit the Earnest Money, as defined in the Sale Agreement, as
required under the Sale Agreement.
NOW, THBREFORE, in consideration of the mutual covenants contained in this Escrow
Agreement and other good and valuable consideration, the receipt and legal sufficiency of which
are hereby acknowledged, the parties agree as follows:
1. Letter of Credit. Seller hereby acknowledges receipt from Buyer of Letter of Credit No.
issued by ("Issuer") for the benefit of Seller in the face
amount of $500,000 (the "Letter of Credit'').
2. Renewal of Letter of Credit. The Sale Agreement provides that not later than thirty (30)
days before the expiration of the Letter of Credit or any replacement thereof, Buyer sba11 deliver
to Escrow Agent a renewal or replacement thereof having the effect of renewing the Letter of
Credit, which renewal or replacement Letter of Credit shall be in the same amount and form as
the Letter of Credit and shall be irrevocably issued for the one year period commencing on the
expiration of the Letter of Credit. Upon deposit by Buyer of any such replacement and/or
renewal ofa Letter of Credit, Escrow Agent shall provide a copy thereof to Seller. If Buyer fails
to renew or replace the Letter of Credit on or prior to the thirtieth (30th) day prior to its
expiration. upon receipt of written notice from Seller on or prior to renewal or replacement
thereof by Buyer, which notice demands that the Letter of Credit be cashed, Escrow Agent shall
promptly notify Buyer and, if Buyer fails to provide a renewal or replacement thereof to Escrow
Agent within five (5) business days thereafter, Escrow Agent shall draw down the Letter of
Credit, and Escrow Agent shall hold the proceeds pursuant to this Escrow Agreement. In such
E-I
event, Buyer shall have the right to deliver to Escrow Agent a replacement letter of credit, in the
form and amount required pursuant to the Sale Agreement, in which event Escrow Agent shall
pay all Letter of Credit proceeds then held by Escrow Agent to Buyer.
3. Draws on Letter of Credit
(a) Buyer, Seller and Escrow Agent agree that, subject only to the provisions of
Section 2 above (which provisions sba1I control in the event of directions by Seller to
draw on the Letter of Credit under the circumstances set forth in Section 2) and except as
otherwise provided in Section 3(b) below, Escrow Agent sba11 not (i) draw upon the
Letter of Credit, or (ii) disburse the Letter of Credit or any proceeds thereot: unless
Escrow Agent receives either (a) joint written instructions executed by both Buyer and
SeDer (a "Direction"), (b) a final non--appea1able onter to draw on the Letter of Credit or
with respect to the disposition of the Letter of Credit or any proceeds thereof from a
federal or state court of competent jurisdiction or an arbitrator selected pursuant to
Seedon 17 of the Sale Agreement (an "Order") or (c) there is a Demand Notice given
under Section 3(b) hereof and the "Other Party" fails to object as and when specified in
Subsection 3(b), in which events Escrow Agent sball then draw on the Letter of Credit
and I or disburse the Letter of Credit or any proceeds thereof in accordance with such
Direction, Order or Demand Notice, as the case may be. In the event a Direction, Order
or Demand Notice directs Escrow Agent to pay money to Seller and Escrow Agent is
holding the Letters of Credit, Escrow Agent shall draw on the Letters of Credit and pay
the proceeds thereof in accordance with the terms of such Direction, Order or Demand
Notice.
(b) In the event either (i) Seller or Buyer obtains an Order directing Escrow Agent to
draw on any Letter of Credit or disburse any Letter of Credit or any proceeds, or
(ii) either Seller or Buyer believes that it is entitled to receive all or any part of the
proceeds from any draw on the Letter of Credit pursuant to the terms of the Sale
Agreement, the requesting Party (the "Requesting party") shall be required to present to
Escrow Agent an affidavit (the "Demand Notice"), executed under oath by an authorized
representative of the Requesting Party, certi.f}1ns to Escrow Agent that in the case of
(i) above, an Order has been issued ~ the Requesting Party is entitled to an or a portion
of the proceeds of tile Letters of Credit, or proceeds thereat as the case may be or, in the
case of (ii), above, stating in reasonable detail the basis for the Requesting Party's request
for a draw on the Letter of Credit and disbursement o(the proceeds thereof. Upon receipt
of the Demand Notice, Escrow Agent shall (i) deliver a copy of the Demand Notice to the
other Party (the "Other Party") as provided in SeetloD 5 below, and (ii) it; within four (4)
blllQness days after the date on which the Demand Notice is deemed to be delivered to the
Other Party (pursuant to SeetJoD 5 below), Escrow Agent has not received 1iom the Other
Party a notice ("Objection Notice") objecting to Escrow Agent's compliance with the
Demand Notice, Escrow Agent sba11 comply with the tcnns of the Demand Notice.
4. Obiection Notices. If Escrow Agent receives an Objection Notice from either Seller or
Buyer within the time period set forth in SectiOD 3 above, then Escrow Agent shall refuse to
comply with the Demand Notice then in question. Notwithstanding the immediately preceding
sentence, if the Party that delivers the Objection Notice does not (i) commence arbitration under
SeeUoD 17 of the Sale Agreement or litigation by filing a complaint or action for a declaratory
B-2
judgment in an appropriate court of competent jurisdiction ("Litigation''), and (ii) provide notice
and a oopy of such complaint, arbitration petition or action for declaratory judgment to Escrow
Agent and the Other Party within thirty (30) days after dolivery of the then-applicable Objection
Notice, then Escrow Agent shall comply with the Demand Notice and disburse in accordance
therewith. In the event litigation or arbitration is filed as contemplated above, Escrow Agent
shall draw on the Letter of Credit or disburse the Letter of Credit or any Cash as provided either
under the tams of the resulting Order or Directions.
S. NQJices. Notices hc:reunder shall be deemed properly delivered when and if either
(i) persooally delivered; or (ii) one (1) business day after deposit with Federal Express or other
colIJJJlereial overnight courier; or (ill) three (3) business days after deposit in the u.s. Mail, by
registered or certified mail. return receipt requested, postage prepaid, to the parties as set forth
below:
H to Buyer:
Buyer:
Region Office:
with a copy to:
with a copy to:
H to Seller:
Seller:
The Ryland Group, Inc.
7600 Executive Drive
Edina, Minnesota 55444
Attn: Mr. Wayne J. Soojian, Operational Vice President
The Ryland Group, Inc.
2195 Fields Parltway
Suite 230
Deer Park, UIinois 60010
Aun: Kipling W. Scott, Executive Vice President
Timothy J. Gcckle, Esq.
Senior Vice President and Gcnecal Counsel
The Ryland Group, Inc.
2402S Park Sonen.1:o, Suite 400
Calabasas, CA 91302
Thomas M. Hart, Esq.
Winthrop & Weinstinc, P.A
Suite 3500
225 South Sixth Street
Minncapo~ MN 55402
Huset Park Development Corporation
615 First Avenue N.E., Suite 500
Minneapolis, MN 55413
Attn: Bradley I. Schafer or Kit Richardson
E-3
With a copy to:
10hn H. Herman, Esq.
Faegrc & Benson
2200 Wells Fargo Center
90 South 7th Street
Minneapolis, MN S5402
.
6. Escrow ObJiRatioDS. The parties agree that, except 88 otherwise expressly provided
herein, the actions o( and the relationship between, Buyer and SeUer shall' be governed by the
terms of the Sale .Agreement In all events and under all circums~ the ultimate rights and
obligations of Seller and Buyer shall be strictly governed and contiolled by the terms and
provisions of the Sale Agreement, rather than this Escrow Agreement. In the event of any
conflict between the teDns and provisioDS of the Sale Agreement and this Escrow Agreement
with respect to the escrow established hereby, the terms and provisions of this Escrow
Agreement sball control. Notwithstanding the existence of the Sale Agreement or any teferences
herein to the Sale Agreement, the parties agree that Escrow Agent (but not Seller and Buyer)
shall be governed solely by the terms and provisioDS of this Escrow Agreement Subject to
SectlODl 3 and 4 above, the parties furthermore agree that Escrow Agent is hereby expressly
authorized to regard, comply with and obey any and all orders, judgments or decrees entered or
issued by any court, and, in case Escrow Agent obeys and complies with any such order,
judgment or decree of any court, it shall not be liable to either of the parties hereto or to any
other penon, firm or corporation by reason of such compliance. Seller and Buyer jointly and
severally agree to pay Escrow Agent, upon demand, all such costs and expenses incurred by
Escrow Agent in fulfilling its obligations under this Escrow Agreement including, but not limited
to, any and all costs and expenses, including attorneys' fees and legal expenses, incurred by
Escrow Agent in connection with any litigation or other controversy by reason of or arising out
of this Escrow Agreement, other than litigation, threatened litigation or other controversy which
arises out of Escrow Agent's failure to comply with the provisions ofSeetloDs 3 or 4 above. All
fees of Escrow Agent shall be charged one-half (1/2) to Seller and ono-half (112) to Buyer.
7. AUornevs' Fees. In the event of any arbitration or litigation, threatened litigation or other
controversy between Seller and Buyer conceming the draw on or return or disbursement of the
Letter of Clcdit or any Ca$b, the prevailing Party shall be entitled to receive ftom the non-
prevailing Party its reasonable costs incurred in connection with such arbitration or litigation,
threatened arbitration or litigation or other controversy, including (but not limited to) tea80nable
attorneys' fees.
8. Countemarts. This Escrow Agreement may .be executed in counterparts, each of which
shall constitute an original, but all of which together shall constitute one and the same
instrument.
9. Succ.cssors and Assi2llS. This Agreement shall be binding upon and shall inure to the
benefit of the parties and their respective legal representatives, successors and assigns. Seller
shall not assign this Agreement or its rights hereunder to any person, other than an entity at least
51% ofthc ownership in which is owned by Seller or the principals of SeUer (an "Affiliated
Entity''). In the event of any such assignment, Seller shall remain liable for the performance of
Seller's obligations hereunder. Seller shall give timely written notice to Buyer of any such
assigrnnent to an Affiliated Entity.
E-4
Soller:
Buyer:
TIlE RYLAND GROUP, INC.,
a Maryland corporation
HUSET PARK. DBVBWPMENT,
CORPORATION a Minnesota limited
liability company
By:
By:
Its:
Its:
ACC~fED BY ESCROW AGENT:
FIRST AMERICAN TITLE INSURANCE COMPANY
By:
Its:
E-S
AGREEMENT OF ~A' .E
by and between
BUSET PARK DEVELOPMENT CORPORATION, u SeDer
and
THE RYLAND GROUP, lNe., u Buyer
EXHIBIT F
(NoUea)
Any notice to be giVeD to any Party hereto in connection with this Agreement shall be in writing
and shall be deemed received (a> on the date delivered if hand delivored by receipted hand
delivery or by facsimile and (b> two (2) days after postmarlc if sent postage prepaid by certified
or regiBtercd mail, return receipt requeated. Notices to the Parties sha1I be sent to their addresses
set forth below. Either Party, by written notice to the other, may change its address to which
notices are to be sent. The Parties shall copy Escrow Agent on all notices sent hereunder, but
failure to notifY Escrow Agent shall not be deemed a failure of notice to a Party to whom notice
has been given.
Baver's Address lDivlslo.l:
The Ryland Group, Inc.
7600 Executive Drive
Eden Prairie, MN 55344
Attn: Mr. Wayne J. Soojian
Telecopy: (952) 229-6024
The Ryland Group, Inc.
2195 Fields Patkway
Suite 230
Deer Park, Dlinois 60010
Attn: Mr. Kipling Scott
Re2iOD OMee:
WIth . C9DV to:
Timothy J. Geckle
Senior Vice President and General Counsel
The Ryland Group, Inc.
24025 Park Sorrento, Suite 400
Calabasas, CA 91302
Telecopy: (818) 223-7685
F-l
and
Thomas M. Hart, Esq.
Winthrop & Weinstine, P.A.
Suite 3500
225 South Sixth Street
Minneapolis, MN 55402
Escrow Ae:ent's Address:
First American Title Insurance Company
1900 Midwest Plaza West
801 Nicollet Mall
Minneapolis, MN 55402
Attention: Gail Holt
Seller's Address:
Huset Park Development Corporation
615 First Avenue N.E., Suite 500
Minneapolis, MN 55413
Attention: Bradley Schafer
Telecopy 612-359-5840
Voice 612-359-5858
With a cOPV to:
John H. Herman, Esq.
Faegre & Benson
2200 Wells Fargo Center
90 South 7th Street
Minneapolis, MN 55402
Telecopy 612-766-1600
Voice 612-766-8908
F-2
AGREEMENT OF SALE
by and betweea
HUSET PARK DEVELOPMENT CORPORATION, as SeDer
and
THE RYLAND GROUP, INe., u Buyer
EXHIBIT G
IComDletloD Certificate)
I. ~by certify to The Ryland Group, IDe. ("Buyer'') that I am. the President of Huset Park
Development Corporation, a Minnesota ("SeUer"), under that certain Agreement of Sale between
Seller and Buyer dated March --' 2005, (the "Agreement"), that the Improvements and
Development.Work applicable to Lots have been completed in accordance
with the provisions of the Agreement applicable thereto and in accordance with all laws,
regulations and requirements of any Authorities.
Date:
.200
HUSET PARK DEVELOPMENT
CORPORATION,
a Minnesota corporation
By:
Its:
I, an engineer licensed to practice in the State of Minnesota,
do hereby certify to The Ryland Group, Inc. that I bave inspcctcd the Improvements and the
Development Work required to be completed by Seller in accordance with the Agreement and
that the Improvements and Development Work comply in all respects with the laws, regulations
and rules of the Authorities having jurisdiction and that all agreements with all Authorities or
utility companies have been irrevocably funded and that bonds or letters of credit where required
by the Authority or such utility company have been posted to ensure the perfonnance of the
development obligations of Seller, including, without limitation that all roadway improvements
have been or will be funded.
By:
Name:
Title:
License No.:
Date:
6-1
AGREEMENT OF SALE
by aDd between
BUSET PARK DEVELOPMENT CORPORATION, as Seller
ad
THE RYLAND GROUP, lNe., as Buyer
EXHIBIT H
aDBDdoD ReDOrt)
AD iDstalled Improvements, including cums, gutters, clearing, rough grading, storm sewers,
sanitary sewers and laterals, water mains and latcn1s and paved streets, on the following lots
were found to be complete and free of damages. except as noted below:
LOT NUMBERS
REMARKS
APPROVED:
HUSBT PARK DEVELOPMENT
CORPORATION,
a Minnesota corporation
THE RYLAND GROUP, INC.,
a Maryland corporation
By:
Its:
By:
Its:
. 200 (Date of Inspection)
H-I
AGREEMENT OF SALE
by ad between
HUSET PARK DEVELOPMENT CORPORATION, u SeRer
ad
THE RYLAND GROUP, INC., as Buyer
EXHIBIT I
(Schedule of DeveloDDlentl .
1. GeBeral Obll2atlou.
a) Se11erf at Seller's cxpcose, shall develop the Lots so that all Lots will have the
following improvements ("Improvements'j installed and actions (the
"Development Work") accomplished in regard to the same. To the extent any of
the Improvements or the Development Work are or may be intended to be owned
privately and as such are not (i) bonded or otherwise co11atera1i.zed with the
appropriate Authority by Seller and (ii) subject to the standards and inspection
requinments of such Authorities, such improvements and Development Work
shall nevertheless be installed, completed and accomplished in aecordance with
the staDdards established by the appropriate Authority for public facilities and
public improvements which are similar in nature and cbaracter.
b) Seller shall complete, or cause to be completed, all Development Wode,
expeditiously, in a good and workmanlike manner, in accordance with all of the
tams of this Agreement and in compliance with all Legal Requirements. All
materials used for the Development Work shall be new first-class materials.
Seller sha1l, at its expense, obtain and post all bonds and other security necessary
or required for completion of the Development Work by any Authority or by any
utility company for utilities and pay all off-site costs associated with completion
of the Development Work. Seller shall provide to Buyer, following completion
by Seller of ita Development Work, as-built surveys locating all utilities with both
horizontal and vertical elevations, and all site development construction drawings.
All utility connections shall be staked and marked to actual connection depth.
c) Seller shall not be deemed to have completed the Development Work unless and
until Seller sbalI have provided Buyer with a Completion Certificate signed by an
authorized officer or partner of Seller, as appropriate, and an engineer licensed to
practice in the State where the Property is located, in form attached to this
Agreement as Exhibit G, Soller shall also make available to Buyer copies of all
bondsf documents, plats, reports and correspondence supporting such certificate.
2. Pre-CIosiD2. The Improvements to be installed and the Development Work to be
completed by or on behalf of Seller prior to Closing (subject to being done post-Closing,
1-1
in accordance with the Agreement, and with a suitable escrow for the costs thereof in
accordance with the provisions ofSeetloD 7.d. hereof) are as follows:
a) OeariD2. GracUD2 and ComnaetfoD.
(i) Seller shall provide for overall grading and clearing of the Property.
Seller shall perform rough grading to the extent required so that no major
cutting or 1illing on any Lot is required. Seller shall deliver to Buyer
within ten (10) days after the Effective Date, a pad grading plan (the
"Omding Plan") that will provide for buildable pads equal to the minimmn
building envelope. as established for each residential building on eacb Lot
pursuant to the final site plan prepared by Seller and approved by Buyer
(the "Building Pads"). Buyer s1uill promptly review and approve the
Grading Plan. Once the parties agree on the Grading Plan the plan shall
be attached hereto as Exhibit K. Thereafter. any grading changes
required as a result of changes made by Buyer to tho Grading Plan will be
at Buyer's expense. Any dispute between Buyer and Seller,regarding the
source of any subsequent required grading changes will be resolved by the
chief engineer for the City of Columbia Heights. Minnesota, whose
detmminAtion shall be final.
(ii) Seller shall complete initial (mass) grading of aU Lots in accordance with
the Grading Plan. In the event that, prior to construction of a residential
building on a Lot it becomes necessary to install yant inlets in order to
drain adequately any portion of the yard, Seller sba1l install, at Buyer's
request, each such yard inlet. Seller shall be responsible for any retaining
walls necessary or required in order to mass grade the Lots in accordance
with the Grading Plan. In the event of an inconsistency between the
approved Grading Plan and the terms hereof, the Grading Plan shall
control.
(iii) Lot fill shall consist of well to moderately well-graded soils consisting of
sands, silts, clays and gravel, and shall be free ftom detrimental quantities
of debris. muck, peat, roots, grass, leaves, humus, sewage and other
organic material. clods, lumps, balls of clay and frozen materials. Prior to
the placement of lot fill, Seller shall remove all topsoil, root matter,
organic materials, large stones, debris, and any unstable material to the
depth at which a stable subgradc is achieved. Prior to the placement of fill
on the prepared subgrade, Seller shall proof roll the area to delineate, or
determine by other acceptable means. any potentially soft or unstable
areas. These areas must be undercut by Seller to stable materials and
backfilled with suitable fill and properly compacted.
(iv) Seller shall compact all fill areas within the Lots as necessary in order to
comply with the structural requirements of a two-story residential single
family or townhouse building, as the case may be, and in any event to
provide not less than 2,500 pounds per square foot bearing capacity.
1-2
Seller shall provide Buyer written certification &om a liceascd geo-
technical engineer that all controlled fiUs placed on the Lots have been
properly placed in accordance with all Authorities' requirements. Seller
shall provide Buyer with copies of all soil reports, compaction reports and
tests performed on the Lots. Buyer may exclude from this Agreement any
. Lot which fails to meet such Authorities' requirements.
(v) Seller shall verify the degree of compaction achieved on lot fill by
continuous monitoring and testing by an approved independent testing
agency. The results sball be submitted to Buyer for Buyer's review within
two weeks after completion of the wolt. Compactions are to be made, as
to each Lot, to a depth equal to the highest footing elevation of the
building planned for the Lot applicable. The grade of all Lots, when
measured at lot comers and building pads, shall deviate no more than .3
foot from the grade shown on the Grading Plan (allowing for the grading
hold-down). Seller sball provide Buyer as-built drawiDp indicating the
final rough grade and allow Buyer to spot check grades in the field to
assure compliance.
(vi) As part of Seller's grading obligations, Seller sha1I stockpile topsoil in
accor:dancc with the Grading Plan approved by Buyer and seed it, in
accordance with standards set forth by the City of Columbia Heights.
Minnesota. Seller shall provide Buyer as-built drawings indicating the
final rough gndc and allow Buyer to spot check grades in the field to
assuro compliance.
b) . Sewer Service. Operational and adequate public sanitary sewer service shall be
brought to each Lot. Sewer services shall be brought into each Lot at a mimm'mJ'l
of five feet (5') past the public utility trench and at a depth adequate to serve the
basement portion, if any, of such dwelling unit; but which depth in any event shall
not exceed nine feet (9') below the finish grade elevation of the curb upon which
the Lot fronts. In addition, multi-family pre-installed sewer services shall be
brought into the building pads as specified by Buyer and set forth on Exhibit 0
attached hereto and incorporated herein. Seller shall permanently and clearly
mll'k locations of all sewer service stubs. All sewer mains sball be located in a
public right-of-way adjacent to each Lot, and any and all applicable off.site sewer
extensions shall be installed and operational and all development fees applicable
thereto paid in full by Seller. Buyer shall only be responsible to pay On-Lot
sewer house connection charges. .
c) Water Service. Operational and adequate public water service shall be brought
to each Lot. Water services shall be brought into each Lot in which tho curb box
for each service is located a minimum of five feet (S') past the public utility
trench and at a depth adequate to provide protection from fteczing. In addition,
multi-family p~installed water services shall be brought into the building pads as
specified by Buyer and set forth OD Exhibit 0 attached hereto and incorporated
1-3
herein. Seller shall permanently and clearly mark locations of all water service
stubs. All water mains shall be located in a public right~f-way adjacent to each
Lot, and any and all applicable off-site water exteasions shall be iDstalled and
operaticma1 and all development fees applicable thereto paid in full by the Seller.
Buyer shall only be responsible to pay On-Lot water house connection charges.
In addition. Buyer shall install. at Buyer's expense. each water meter within the
dwelling unit on each Lot. The Seller shall provide lawn inigation water services.
d) Storm Drains. All storm drainage systems. storm sewers and other drainage
&ciIities shall be installed by Sener. as are necessary to serve the Property and as
required by any Authority.
e) Roaclwavs and Parldasr Areal. Curbs, gutters. curb cuts, streets. roads, alleys.
includiog access to a public thoroughfare, sball be installed by Seller as required
by. and in accordance with, the standards established therefor by the appropriate
Authority. With respect to any of the Improvemcmts, which require paving. such
paving shall be installed by Seller through the base coone concrete or asphalt
(whichever may be applicable). The wear course (final lift) of paving shall be
installed within one year after installation of the base course.
l) Sklew.11rL Seller shall install all sidewalks shown on the approved plans. Seller
and Buyer acknowledge that no sidewaJb arc required for the Property other than
those shown on the approved plans. If any sidewalks installed by Seller settle and
crack without fiwlt of Buyer at any time prior to the later of (i) one (1) year &om
completion of such sidewalk or (il) thC, expiration of any wammty given to the
City with respect to such sidewalk, Seller shall repair and restore the same to the
condition required hereunder.
g) UUUtles. Seller shall provide for such underground electric. telephone, and if
available at the Property. gas and television cable lines for each Lot as will be
necessary to service the dwelling units to be constructed on such Lot (collectively,
the "Utilities"). Buyer will coordinate in a timely fashion with the appropriate
utility company for the installation of secondary service for the Utilities to each of
the dwelling units to be constructed on each of tho Lots; but Seller shall pay prior
to the Initial Closing all fees payable in connection with such primary service to
any utility company in coDl1CCtion with such service, and Buyer shall not be
obligated to reimburse Seller for any portion of such costs incurred by Seller.
h) Storm Water Manaf!emeDt. SeUer shall design, construct, maiDtain and operate
all stonn water management and temporary sediment control. facilities necessary
to service the Property, and shall pay all storm sewer or stonnwater fees imposed
by the City or any related Authority. Once Buyer has pmcbascd a Lot, Buyer
shall be responsible. at Buyer's expense. for the installation of erosion control
devices on individual Lots as required for the construction of the residential
building(s) to be constmctcd thereon. At any time, and from time to time. when
such storm water management or temporary sediment control facilities are no
longer necessary for the Property. Seller shall, in a manner acceptable to Buyer,
1-4
convert such facilities to permanent devices, or if not needed as permanent
devi~ shall baclrtill (and if located within a Buildina Pad, shall compact the
soils affected thereby in accordance with the requirements of item 2(g) of this
Schedule of Development) water mauaaement or temporary lINIiment control
facilities are no longer necessary for the Property, Seller sbaIl, in a manner
acceptable to Buyer, convert such facilities to permanent devices, or if not needed
as permanent devices, shall backfill (and if located within a Building Pad, shall
compact the soils affected thcRby in accordance with the requirements of item
2(g) oftbis Schedule of Development) 8Dd fully stabilize the areas comprising the
same in a manner acceptable to Buyer consistent with any architectural covenants
encumbering the Property. Seller shall remain responsible for the design,
construction, mainMnanr..e and operation of all such storm water management and
temporary sediment control facilities on all Lots, lUltil closing the sale of such
Lots to Buyer, and on all roadways.
i) En2iDeerlD2 Controls. SeIler shall set lot final comer irons.
j) EntltlelDellt to Permit. Solely as regards the obligations of Seller to provide
buildable and pcrmittable Lots in accordance with the Asreement, but not as
regards matters which are the responsibility of Buyer hereunder, development of
the Lots sball be completed by Seller so that Buyer may obtain any and all
permits, including, but not limited to, building permits and upon completion of
tho Homo, a use and occupancy permit, or similar permits ftom any and all
authorities having jurisdiction for the construction, completion, use and
occupancy of any Homes contemplated to be constructed on the Lots without
resort to or requirement of extraordinary construction methods.
3. CeUUleatloDL Seller shall provide Buyer a soils engineer's certification certified to
Buyer by Seller's soils engiDeer (who must have at least $2,000,000 professiona11iabillty
insurance with Buyer named as an additional insured) on any Lots that require placement
of controlled fills, along with ail compaction reports for the Lots. .
4. Post CloslD2.
a) Dedication. Seller sbaIl cause all roads Shown on the plats and plans for the
Property, and all other improvements, to the extent the same are intended to be
public, to be transferred to the applicable Authorities and accepted for
maintenance by tho applicable Authorities at the earliest practicable date. Seller
sba11 install final concretelbituminous (whichever may be applicable) topping as
and when required by the appropriate Authority.
b) LudseaD1D2. Buyer's sole obligation with respect to any landscaping within the
Property sball be limited to Buyer's obligation to install. at Buyer's expense, the
landscaping required by any Authority to the extent such IJlooscaping is located
within any Lot acquired by Buyer and in any interior common area. Sellor sbaIl
install all buffer landscaping required on any public right of way abutting the
Property and all landscaping within common areas, in accordance with the
I-S
landscaping plan approved by the City of Columbia Heights, Minnesota. Sellers'
landscaping plan is attached hereto as E:d1Iblt L. All monmnents and related
lmdscaping shall be installed at Seller's cost, subject to prior approval tb.ereofby
Buyer, not to be unreasonably withheld, delayed or conditioned.
c) Lints ad Sins. Seller sball install streetlights and street signs for the property,
as and when required by the appropriate Authority.
5. Fha.. IlDDrovemeats. In addition to, and without limiting, the obligations set forth
above, Seller shall (a) upon completion of its Development WOl'k, promptly cause the
removal fiom the Property of all trash and debris related to such activities, (b) CODStruct
any tot Lots or other recreational structures or amenities shown on any plats or plans for
the Lots or otherwise required by 811 authority in regard to the Lots, and (c) complete any
additioual tasks. actions and lUldatakings shown as the respoDS1oility of Seller on thc
Responsibility Checklist attached to this Schedule of Development.
6. CoDfllct or Amhlnltv. In the event there is any conflict between the text portions of
this Schedule of Development and the text portions of the Agreement, on the ODC hand,
and the itemization. and responsibility designations set forth on the Rcsponsibility
Checklist, on the other band, the text portions of this Schedule of Development and the
Agreement shall govan and control. NotwithstaDding anything to the contrary set forth
elsewhere hemin, if any item. identified herein as "Post Closing" is required by any
Authority to be pecformed prior to the issuance of necessary permits to BUyer for the
construction of any Home, then such item sba1I be deemed a "Pre-Closing" item
hereunder (or shall be subject to a suitable escrow for completion, to allow the permit
issuance, in accordance with the Agreement and Section 7(d) hereof).
7. Insnectlon of Develooment.
a) Following Sellers' completion of the Development Work in accordance with the
Schedule of Development for each group of Lots to be purchased, ("Inspection
Group") and Sellers' delivery of the "Completion Certificate" therefore in form
attached as Emlblt G, Seller sball notify Buyer so that representatives of Seller
and Buyer together may inspect the Improvements affecting such Inspection
Group at a mutually agreeable time. At such inspection, Buyer and Seller shall
inspect the Improvements then existing and establish a list of damages or
deficiencies, if any, then existing with respect to the same. Such damages or
deficiencies (collectively, "Dcficienciesj sball be detailed on a written inspection
report in the form attached hereto as Exhibit B and Buyer and Seller shall
determine at the time whether such Deficiencies are of such a nature as to require
correction prior to Closing. If such Deficiencies require correction prior to
Closing. then Seller shall promptly correct such Deficiencies and deliver another
Completion Certificate and notice to Buyer for a further inspection. At such time
as Buyer and Sellor agree that any Deficiencies do not require correction prior to
Closing. then the parties sball authorize Closing to occur, with punchlist items to
be repaired or otherwise corrected to Buyer's satim,ction, at Seller's expense,
1-6
within thirty (30) days following the date of such inspection, unless otherwise
agreed between the parties.
b) At the time that Buyer completes its construction activities on all o.f the Lots
acquired by Buyer hcrcundcr, Buyer shall notify Seller thereof so that
nlprese.ntatives of Seller and Buyer together may once again inspect the
Improvements affecting the Lots. At such inspection, Buyer and Seller shall once
again inspect the Improvements and establish another list of Deficiencies, if any,
caused by Buyer's construction activities. Such Deficiencies shall once again be
detailed on a written inspection report in the. form attached hereto as Exhibit R.
Buyel" shall within thirty (30) days following the date of such inspection. repair or
otherwise correct, at Buyer's expense, all damages to the Improvements set forth
on the iDspcction report to the extent the same have been caused by the activities
of Buyer, its employees. agents, contractors and subcontractors. Following the
completion by Buyer of any such repairs or oth<< corrections, Buyel" shall notify
Seller of such completion. and upon joint Inspection and agreement that such
Deficiencies have been corrected by initialioa the Inspection Report, thereafter,
all of Buyer's responsibilities in respect to the Improvements, shall cease in aU
RSpects. Sener shall be irrevocably and unconditionally deemed to have released
Buyer, its employees, agents, contractors and subcontractors nom all such
responsibility upon the carlier to occur of (i) the thirtieth (30th) day following the
date of Buyer's and Seller's completion of the Inspection Report, as aforesaid, or
(ii) the date upon which Seller is released nom any surety bonds, performance
bonds, or such other security given by Seller to the appropriate Authority.
c) Notwithstanding anything to the con1rary set forth in this subsection. Seller shall
remain responsible for (and shall repair at Seller's expense in a timely manner)
any defects in the Improvements which could not readily and clearly have been
ascertained at the time of the inspections contemplatcd herein and which were not
caused by Buyer, its employees, agents, contractors and subcontractors. The
provisions of this Subsection shall survive Closing. This obligation sball
terminate as to the respective Improvements contemporaneously upon the
tennioation or expiration of Buyer's warranties with respect to the Ryland
Product on the Lots served by such Improvements or on which such
Improvements are located, as the case may be.
d) Buyer shall have the option, in Buyer's sole discretion, to elect to close on the
Property prior to the completion of aU Development Work: or correction of any
Deficiencies on the Lot(s) provided that the requirement for Seller to complete the
Development Work in accordance with the Schedule ofDevolopment shall remain
in full force and effect. Seller shall deposit into escrow with the Escrow Agent, to
be held by Escrow Agent in an interest:-bearing account at the direction of Seller,
an amount of money equal to one and on~uarter (1.25) times the amount
budgeted by Seller to complete the items that have not been completed as of
Closing ( the "Completion Escrow"). FolloWing completion of the unfinished
Development Work or correction of the Deficiencies, and inspection in
accordance with this Section 7 of this Schedule of Development, Buyer shall
1-7
authorize the Escrow Agent to release the Completion Escrow to Seller. In the
event 1hat the Deficiencies arc not corrected or the nnfini!llhed Development Work
is not completed within thirty (30) days after Closing. or such other amount of
time that the Parties agree is reasonable, then Buyer shall be entitled to complete
the unfiniJll,erj Development Went or corroct the Deficiencies and upon
submission of reasonable docwnentation of the costs thereof to Escrow Agen~
sball be reimbursed from the Completion Escrow and the Seller (to the extent the
Completion Escrow is insutlicient to cover the expenses). Any excess remaining
in the Com~letioD Escrow, including interest, ifany, shall be returned to Seller.
8. IndemniftcadoD. Seller agrees to indemnify and hold Buya' harmless from any and all
claims, liability, damages (excluding indirect and consequential damages), causes or
causes of action, costs and other expenses, including without limitation reasonable
attorneys' fees, asserted against or paid by Buyer arising out of, in coanection with or
otherwise relating to the failure of Seller to perfonn any of its duties, covenants or
obligatiODl set forth in the Schedule of Development, the Responsibility Checklist or
otherwise arising or existing under this ~t or the Development Agreement. This
obligation sball tcrmioate 88 to the respective Improvements contemporaneously upon the
termination or expiration of Buyer's warranties with respect to the Ryland Product on the
Lots served by such Improvements or on which such Improvements are located, as the
case may be.
9. SeIf-BelD. In addition to any other right or remedy provided herein, in the event Seller
fails to perfonn any of its duties, covenants or obligatiODl set forth in the Schedule of
Development, the Responsibility Checklist or otherwise arising or existing under this
Agreement or the Development Agreement, Buyer may (after notice and expiration of the
Cure period provided in SeedOD 13.C), cure such default through the exercise of self-
help, whereupon Seller shall be obligated to reimburse Buyer immediately for all costs
and charges incuJTed by Buyer in curing such default, plus an amo1U1t equal to ten percent
(10%) tbereofto cover Buyer's overhead and administrative expense in so doing. This
obligation sball terminate 88 to the respective Improvements contemporaneously upon the
termination or expiration of Buyer's warranties with respect to the Ryland Product on the
Lots served by such Improvements or on which such Improvements aro located, as the
case JPBY be.
1-8
COLUMBIA HEIGHTS ECONOMIC DEVELOPMENT AUTHORITY (EDA)
Meeting of: July 26, 2005
ITEM: Sarna Development Agreement- 40th &
University
BY: Randy Schumacher
DATE: July 20, 2005
EXECUTIVE
DIRECTOR
APPROVAL
BY:
AGENDA SECTION: Items for Consideration
NO: 5-B
ORIGINATING
DEPARTMENT: EDA
BACKGROUND:
At the April 26, 2005, Economic Development Authority meeting, Developer lim Sarna and Real
Estate Representatives, Tom and Gordie Solz, introduced a general concept plan to construct a 6,000
sq. ft. restaurant on the comer of 40th and University that is presently owned by the EDA. The Board
consensus was to work with Mr. Sarna in preparing a Preliminary Development Agreement. At the
June 28th EDA meeting, the Board approved the Preliminary Development agreement to run for a 90-
day period. Negotiations with city staff have proceeded in an attempt to formulate a definitive
development contract, based on the developer's proposed documentation regarding economic
feasibility and soundness, site design, and engineering issues.
The following business points have been recommended by staff for inclusion in the Final Development
Agreement and have been generally accepted by the developer:
1. Purchase price. Purchase price for the property will be $75,000 cash upon c1osing.(See Ehlers
letter dated July 18, 2005, and the Sarna rebuttal dated July 19, 2005).
2. Platting. The plat would assemble all the existing lots into one lot which would clearly
identify necessary easements, designate zoning and land use of the proposed development and
identify any jurisdictional control.
3. Lookout Place. The City would take all necessary administrative action to vacate Lookout
Place. All cost associated with this action, along with the physical removal ofthe street section,
would be the responsibility of the developer. The City would reserve the right to maintain
easements for all existing utilities. The City would vacate Lookout Place so that the developer
would own the entire fee interest in the vacated portion of Lookout Place. All costs associated
with the closure of Lookout Place relating to the construction of curb and gutter on the south
end of Lookout Place would be the responsibility of the developer.
4. 322 40th Ave (MGS Bldg). The developer would be responsible for the removal of 322 40th
Ave, and all associated costs of site preparation.
5. Alley. The developer would construct a 14.ft alley to tie into the existing alley to the most
easterly portion of the redevelopment property. This alley would be dedicated pursuant to the
plat and would be constructed as a concrete alley to tie into Summit St. The cost for the
construction of the alley would be paid by the developer and shall meet all city requirements.
6. Ponding. The City's Storm Water Management Ordinance allows a monetary fee to be paid in
lieu of providing on site ponding. The developer is wishing to pay the fee in lieu, which the
Engineer is estimating to be between $30,000-$40,000. These dollars will be used for upsizing
the discharge storm sewer pipe to 5th Street.
PAGE 2
Meeting of: July 26, 2005
AGENDA SECTION: Items for Consideration ORIGINATING EXECUTIVE
NO: 5-B DEPARTMENT: EDA DIRECTOR
APPROVAL
ITEM: Sarna Development Agreement- 40th & BY: Randy Schumacher BY:
University DATE: July 20, 2005
7. University Ave turn-back. City staffis working with MN DOT in the process of vacating the
east 30 feet of University Avenue. The City would then give this 30 foot turn-back over to the
adjacent property owners abutting this roadway. The City would have no costs associated with
removal of the bituminous or any landscaping responsibility. c#O
8. New Access for 3901 Lookout Place (ME Global). It would be the responsibility ofthe
developer to provide an alternative access point onto Lookout Place for this property.
9. Sidewalk. The developer will be constructing a sidewalk adjacent to the alley to be constructed
at the developer's sole cost and expense meeting all city requirements.
10.334 40th Ave (Gondek). The developer would agree to enter into an easement to grant access
through the development property for 334 40th Ave to provide access to their existing
driveway/garage. However, this easement would terminate upon the sale of the property or the
termination and use of the basement overhead garage door.
11. Design Guidelines. The developer must meet all existing design guidelines for the
construction of their building.
12. Variance. The parking setback shown on their site plan adjacent to University Avenue
indicates a 5 foot setback. City Ordinance requires 15 feet. They are requesting a variance to
the parking setback requirement. They feel an exception should be granted due to the fact
there will be an additional 30 foot green area between the parking lot and University Avenue
with the vacation of the frontage road.
RECOMMENDATION: Staff recommends to approve a Development Agreement with David M.
Sarna, James A. Sarna and James J. Sarna for the redevelopment of the City owned property at 40th &
University area as outlined in the business points of the staffmemo, subject to EDA Board amendments
and modifications.
RECOMMENDED MOTION: Move to Approve a Development Agreement with David M. Sarna,
James A. Sarna and James J. Sarna for the redevelopment of the City owned property at 40th &
University area as outlined in the business points of the staffmemo, subject to EDA Board amendments
and modifications, and furthermore; to authorize the President and Executive Director to enter into an
agreement for the same.
Attachments
EDA ACTION:
e
EHLERS
& ASSOCIATES INC
o
::!:
w
:E
To: Randy Schumacher - City of Columbia Heights
From: Stacie K vilvang - Ehlers and Associates
Subject: 40th and University Retail Redevelopment
Date: July 18, 2005
On June 22, 2005, our office completed a review of a 6,000 sq/ft restaurant development proposal from
Mr. James 1. Sarna. At the time of the review, not all information was provided in order to complete a
thorough analysis. In addition, concerns were raised over the developer's lack of experience in owning
and running a restaurant (even though he runs a couple of other successful businesses). We requested that
this information be provided so a final analysis could be completed. l'
On July 6, 2005, Randy Schumacher and I met with Real Estate Property Advisors, representatives for the
developer, regarding required information and to discuss the project further. At that time they provided
us with the majority of the requested information. However, they did not provide the following:
1. Actual rate of bank financing and term. They stated that was private information and the developer
was not willing to provide it. I requested that they provide an estimate for analysis purposes and they
provided it.
2. They did break out construction costs by shell and tenant improvements, however, they did not break
out design, engineering, lighting and landscaping so this is stilI in a lump sum with shell construction.
3. They did state that the developer was going to be working with someone with restaurant experience
but did not provide any written detail on who would be involved or their level of involvement. We
requested that they provide this information in writing and to date, staff nor I have received anything.
Based upon the updated information received, following are my comments:
1. The developer is proposing to purchase 1.074 acres of land from the EDA for $75,000. This
equates to a per square foot cost of $1.60. If you add the cost of demolition into the land cost, the
price stilI falls exceedingly below the Metropolitan Area standards of $7 to $15 sq/ft for similar
restaurant sites.
2. Cost for design, site work and construction of the shell are still in a lump sum. Currently this cost
is estimated at $158 sq/ft. A high quality shell can be constructed for $90 to $100 sq/ft. Without
knowing the breakout of design and site work, I can not ascertain the validity of the number for
review against industry standards.
3. Developer is financing 80% of the project and providing 20% in equity. This is a typical
financing split. The loan rate they provided of 6.5% for 10 years mayor may not be feasible and I
would prefer to hear from the owner where he thinks the bank financing terms will be.
4. Based upon their sources and uses, cash-on-cash (Cae) return in the first year of 80% IS
excessive (shows they can pay more for land).
Randy Schumacher
40th and University Retail Redevelopment
July 18,2005
Page 2
Recommendation:
Based upon the updated review, the developer can afford a higher purchase price for land than proposed.
I would recommend that the EDA have a limited restricted appraisal completed for the site so that an
independent party can determine . an appropriate land price for this type of development or other
commercial development. It is my understanding that one can be completed within one to two weeks and
in my opinion would be the best safeguard for the EDA to assure they receive fair market value for the
land, justification for public review and scrutiny of the land transfer and assure they maximize their return
on their investment so they can capitalize other redevelopment projects.
In addition, I would recommend that the developer provide the EDA with a letter stating who his
experienced restaurant partners are and the role they will play to give the EDA comfort on the ability of
the restaurant to succeed.
Please contact me at 651-697-8506 if you have any questions or require further information.
liVID M. SAlIII JAMES I. SONl JAMES J. 51111
2501 UNIVERSITY AVENUE NORTHEAST
MINNEAPOLIS, MINNESOTA 55418
Phone 612- 789-6240
July 19, 2005
City of Columbia Heights
Economic Development Agency
Attn.: Chairman Murzyn
RE: Ehlers Memo
Dear Chairman Murzyn And Committee Members:
We would like to answer the Ehlers Memo and present our view of what has been stated by their associate
Stacie Kvilvang. attached to this letter is a letter from Northeast Bank which shows theiJ; position on this project
and of us as businessmen. We believe their confidence is expressed very sufficiently. .. We nor the bank can be
expected to express an interest rate when we do not know when or if we will own the property. We gave a
guesstimate to her which we felt should have been sufficient to do her work.
She should have been able to figure the cost of the construction and see that our costs were well in line with what
should be expected for a 6000 square foot restaurant.
We are not going to divulge who we are working with or will be working with this far in advance of even breaking
ground. We have spoken to some people who wish to join us in this venture, but just cannot put them in jeopardy
of losing their present positions.
Ms. Kvilvang insists that $7 to $15 a square foot is the price being paid for property in the Twin Cities. Actually.
prices are being paid even higher-but they are across from an Dale or the Mall of America or Downtown
Minneapolis. Her price should be based on the land in the Columbia Heights area, not in Bloomington, Male
Grove or in Minneapolis. The assessed value by; Anoka County for commercial property on -lOth Avenue within
six blocks ofthe University Site run from a low of $2.60 to a high of $4.90 with the majority in the $3.90 to $4.00
range. We are offering around $1.60 per square foot PLUS the cost of:
A building demolition
Removal of bituminous surface and concrete from Lookout Place
Removal of bituminous surface and concrete from University frontage road
Removal of concrete and asbestos from the gas station site
Building a 200+ foot sidewalk.
Building a 100+ foot alley
Construction of a holding pond or payment of fees for water runoff
Other costs for fixing problems created by vacating the streets
The cost for these items are expected be to be well over $125,000.00 which adds over $3.50 per square foot and
added to the $1.50 purchase price comes to $4.00 per square foot. Ms. Kvilvang also does not take into account
the fact that over half this lot is unbuildable because of the easement created by the utilities beneath Lookout Place.
Building on the Northeast corner a structure any larger than the 900 square foot situated there now or on the
Northwest corner either unless a triangular structure is called for. The building which is planned for this
property is situated the only place on the site which is practical. The only way to createl another area is to move
the utilities to the edge of the property at a cost of $80.00 to $100.00 per foot.
Ms Kvilvang"s review is seriously flawed and she should have done more diligent investigation into this site
using more plausible comparisons and looked at the City Engineers list of what must be done to the property other
then demolition of the building at 334 40tha Avenue.
Sincerely,
David M. Saran
James A. Saran
James 1. Saran
..
. NortIreost
. Bank
Strength oj a Leader. Hand oj a Friend.
24 June 2005
City of Columbia Heights
Planning and Finance Department
590 40th Ave NE
Columbia Heights MN 55421-3878
77 Broadway Street NE
Minneapolis. MN 55413
Ph 612-379-8811
Fx 612-362-3262
RE: Southeast Quadrant 40th St. and University Ave.
Mr. James A. Sarna, et ai, has been a long time satisfactory customer at Northeast Bank.
He has owned, established, or built a series of successful retail business~ over the past
20 years.
He has approached us and we have had lengthy discussions regarding a new venture at
the above location. The size of the project is somewhat over $2 Million dollars. We
have discussed with Jim a loan approaching $1.7 Million dollars to support new
construction and build out for the purpose of operating a restaurant on this site. Based on
our history with the Sarnas, we believe a loan for this project is probable.
Important terms remain to be negotiated, and neither the bank nor the borrower, shall be
legally bound until the final documents have been signed by the respective parties.
Robert A. Jensen
Senior Vice President
RAJ:nad
DlVID M. SlRII JlMES I. sail JlMES J. sail
250 I UNIVERSITY AVENUE NORTHEAST
MINNEAPOLIS, MINNESOTA 554 18
Phone 612-789-6240
July 19,2005
Economic Development Agency
City of Columbia Heights
Attn.: Chairman Murzyn
RE: NEIGHBORHOOD SCREENING.
Dear Chairman Murzyn and Economic Development Committee Members
Kevin Hansen, City Engineer, asked for the type of plants, trees and bushes that were to be used to the Easterly
perimeter of the 40th and University Development. Attached is the plan showing only the"plantings that are to be
used on that portion of the development which are adjacent to a neighbors lot or lots.
Please notice the sidewalk which is planned to be constructed to the right of the greenery and follow it down to the
mouth of the alley which now enters Lookout. It runs across that area and is constructed to the East and then turns
South to the right of the greenery and is placed between the greenery and the planned alley down to Summit Street.
Also please note that the driveway entering the property from 40th Avenue has been moved East to provide more
distance from University A venue to help with the safety and ease traffic turning onto 40th.
The plan also shows a five foot setback from the West property line. Because of the 30 foot greenery which we
expect to be on the MnDOT portion of the frontage road. This will help to create more parking in the lot and not
detract from the looks or safety which is usually created by the normal fifteen foot set back. We will be applying for
a variance for this change.
Sincerely,
David M. Sarna
James A. Sarna
James J. Sarna
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Planning and Zoning Commission
7:00 PM, July 6, 2005
Michael Gondek
Castle Distributing Inc
334-40th Ave NE
Columbia Heights MN
763-788-8200
And
325 Summit Street
Property owner
CITY OF COLUMBIA HEIGHTS
PLANNING AND ZONING COMMISSION
NOTICE OF PUBLIC HEARING
Notice is hereby given that the Planning and Zoning Commission of the City of Columbia Heights will conduct a
public hearing in the City Council Chambers of City Hall at 590 40lll Avenue NE on Tuesday, July 6,2005, at 7:00
p.m for 3 proposed street and alley vacations are described below:
#1 That part of39ll1 Avenue NE as opened, Colwnbia Heights Annex to Minneapolis, Anoka
County, Minnesota, lying northwesterly of Block F of said Columbia Heights Annex to
Minneapolis and registered land survey no. 159, Anoka County, Minnesota, and lying
easterly and southeasterly of the following described line:
Beginning at the NW comer of said Block F; thence N 00 degrees, 07 minutes, 50
seconds E, assumed bearing al~ng the W line of said Block F and its northerly extension a
distance of33.53 ft;thence northeasterly a distance of 136.06 feet along a non-tangential
curve concave to the SE having a radius of735 ft, a central angle of 10 degrees, 36
minutes, 24 seconds, and a chord that bears N 53 degrees, 26 minutes, 07 seconds E;
thence N 58 degrees, 44 minutes, 19 seconds E, tangent to said curve, a distance of
368.46 ft; thence northeasterly a distance of 51.35 ft, along a tangential-eurve, concave to
the SE having a radius of276.01 ft, and a central angle of 10 degrees, 39 minutes, 38
seconds to the intersection of the southeasterly line of said 39111 Avenue NE as opened, .
said line also being the northwesterly line of said registered land survey no. 159, and
described line there tenninating.
#2 That part of 38tb Avenue NE, as dedicated in the Plat of Columbia Heights Annex to
Minneapolis, lying W of the southerly extension of the westerly right of way of Fifth
Street NE and lying E of a line drawn from the NW comer of Lot 1, Auditor's
Subdivision No. 50 to the SW comer of Block 98, Columbia Heights Annex to
Minneapolis.
#3 That part of Lookout Place and that part of the vacated alley, as dedicated in the plat of
Columbia Heights Annex to Minneapolis, lying N of the westerly extension of the S line
of the northerly 12.5 ft of Lot 11 and lying S of the westerly extension of the N line of the
Shalf of Lot 10.
You are sent this notice because you own property within 350 feet of the subject property. All
persons having an interest will be given an opportunity to be heard at the public hearing. Notice is hereby
given that all persons having an interest will be given an opportunity to be heard. For questions, contact
Perry Thorvig, Senior Planner, at (763) 706-3673.
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Parking lot at 334-40th Ave NE was designed to have cars enter from 40th Ave and exit on
to Lookout Place. This has been the case for over 55 years.
Parking lot is approximately 30 foot wide. With a normal size van being 18.5' long it
would be impossible to drive in from 40th Ave NE and exit back to 40th Ave. The parking
lot needs to remain drive threw, aligned to at lease an ally to enable customer to exit lot.
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Trucks can only access the basement garage door by backing in from Lockout Place. This
door is the only truck entrance for the 5000 Sq Ft basement. Some accommodation must
be made to allow truck with trailer access to the basement. Other wise the entire
basement will be useless.
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Entrance of house at 325 Summit Street
All Sarna's drawing shows the new alley less than 5 feet from the bottom step of the front
door of the house at 325 Summit Street. I was told that there would be a sound barrier
and trees between the house and any use the city would have for the property in front of
the house. If the alley is placed as it appears on the Sarna's drawing (city option B) there
would be no room for any sound barrier or trees.
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House on 49th Ave NE
Please note that the city took the land because ,he alley or road 'Nas too close to the house
on 49th Ave NE. Please note that there is more than 5 feet to the fence and the actual
house less the lean to is at least another 10 feet away. If the side of the house on o.+9th Ave
NE deserves more that a IS-foot buffer zone would not the 325 Summit house deserve at
least the same considering that this is the front of the house.
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Elemetal :VIE Global :i1c, North parking lot at 3 P:VI Tuesday July 5, 2005
:--rote: To the south of the proposed Sarna's Restaurant are two underused parking lots for
the Elemetal :VIE Global Inc o{fice building. The city may want to look at other options
for parking sights for the Sarna's Restaurant other than those currently being proposed.
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Elemetal ME Global Inc. South parking lot at 3 PM Tuesday July 5,2005
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July 'l, 2005
Summary
It is my hope that any plan approved by the Columbia Heights Planning and Zoning
Commission for the development on 40th Ave and University does not affect the adjacent
property home owners and businesses in a seriouly negative way that includes but are not
limited to the following concerns:
· That t.he parking lot of the business at 334-40th Ave is not dead-ended which
would force their customer to have to back out of the parking lot on to 40th Ave.
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· That nothing be allowed that would not allow truck/trailer access to the West side
basement garage door entrance at the business at 334 40th Ave.
· That any approved plan would allow for sufficient space in from of the front door
of the house at 325 Summit Street to 1llow enough space to get out of :he house,
and for a functional sound barrier wall camoutlaged with trees that would be
pleasing to the eye. Please consider what you feel would be appropriate if this
were your house
I want to thank all of the members of the Columbia Heights Plan.l1ing and Zoning
Commission for taking the time in addressing these concerns and the other concerns of
the neighborhood.
I also \vant to invite all of the members of Columbia Heights PlaMing and Zoning
Commission to allow me to give you a guided tour of properties mentioned loove.
Sincerely,
?vfichael Gondek
763-738-8200
Castle
" 2!~'~a!2~un~~g, Inc.
334 40th Av NE · Columbia Heights MN 55421-271 7 · 763-788-8200 Phone. 763-788-0025 Fax
July 26, 2005
Columbia Heights
Economic Development Authority
590 40th Ave NE
Columbia Heights MN 55421
Dear Commissioners:
'"'
My building at 334-40th Ave is a 10,000 square foot building of two floors of 5,000 square feet per floor.
The lower level has two doors. One 3' door opening onto the alley on the southwest comer of the building
and a 9' main freight door on the southeast end of the building with truck access to the building's lower
level to Lookout Place. Any elimination of truck access to this door makes the lower level of 5,000 square
feet unusable for any business purpose.
I have expressed my concern about this issue to the city manager, to the city EDA department and to the
City Council members since I learned of the intentions to close off portions of Lookout Place adjacent to
my building. I have always been assured that I would retain truck access to the lower freight door and to
the upper loading dock would be retained.
In the Agenda for the July 26th 2005 (EDA) meeting the city staffis suggesting: (Page 2 Point #10) "The
developer would agree to enter into an easement to grant access through the development property for
334-401h Ave to provide access to their existing driveway/garage. However. this easement would
terminate upon the sale of the property or the termination and use of the basement overhead garage door."
This is totally unacceptable. Not having truck access to the lower level freight door would make the lower
level of the building unusable and devalue the building considerably at time of sale. This easement should
not have any expiration clause.
I ask that:
· Add to the first sentence grant truck access of 16' wide by 35' long & ''with exit privileges
through parking lot"
"The developer would agree to enter into an easement to grant truck access of 16' wide by 35'
long through the development property for 334-40th Ave to provide access to their existing
driveway/garage ''with exit privileges through parking lot"
· The Columbia Heights (EDA) strikes the sentence:
"However, this easement would terminate upon the sale of the property or the termination and use
of the basement overhead garage door."
Thank you for your concerns in this matter.
Michael Gondek
Page 1 of 1
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http://www.allnigs.com/efnmaltoc/toc.asp
7/26/2005
Page I of 1
XII, 609.02: Limitations on Ability to Sell (06/30/02)
Generally, the project documents cannot restrict the unit owner's right to sell, transfer, or convey his or
her unit. However, they may provide for limitations that restrict occupancy to persons of certain age
groups, as long as the limitations are legally valid and necessary to maintain the character of the
particular project.
The project documents may provide that, in the event of a proposed sale by a unit owner, the owners'
association will be granted the right of first refusal to purchase the unit (or to provide' a substitute buyer)
at the same price and under the same terms and conditions that would be offered to any other purchaser,
as long as
· the right to purchase is exercisable only as a means of insuring owner-occupancy of the unit that is
being sbld, or for some other lawful purpose that serves the best interests of the owners' association
and its members;
· the right to purchase and the manner in which the owners' association exercises it comply with
applicable law; and .
· the right to purchase may be exercised only if the owners' association gives the unit owner written
notice of its intent to exercise the option within 30 days after it received the unit owner's notice of
the proposed sale and then only if the owners' association (or its substitute buyer) has the ability to
exercise due diligence in completing the purchase of the unit promptly and properly.
The owners' association should not be given this right of first refusal with respect to any lease, sale, or
transfer of a unit in connection with a mortgage foreclosure (or the acceptance of a deed in lieu of
foreclosure) or with respect to any sale or transfer by the mortgage holder or other party who acquired
the unit in connection with the foreclosure or deed-in-lieu.
http://www.allregs.comlefumal doc/ doc.asp? doc=&path=fumalselling/part - xii/xii -ch-6/xi i -... 7/26/2005
Page 1 of 1
XII, 609.03: Leasing Restrictions (06/30/02)
The project documents must require that any lease or rental agreement be in writing and be subject to the
requirements of the documents and the owners' association. They generally should not include
restrictions relating to the term of any lease or rental agreement.
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http://www.allregs.com!efumal doc/ doc. asp? doc=&path=fnmaJselI inglpart - xii/xii -ch-6/xii -... 7/26/2005