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PRELIMINARY DEVELOPMENT AGREEMENT
(39th and Central Project)
THIS AGREEMENT, dated this 23rd day of May, 2006, by and between the Columbia
Heights Economic Development Authority, a body politic and corporate under the laws of
Minnesota (the "Authority") and Sherman Associates, Inc. (the "Developer"):
WITNESSETH:
WHEREAS, the Authority desires to promote redevelopment of certain property within
the City of Columbia Heights, which property is legally described in Exhibit A attached hereto
(the "Property"); and
WHEREAS, the Authority owns one parcel of the Property described on Exhibit A as
3939 Central Avenue (the "Authority Parcel"), and has commenced efforts to negotiate purchase
agreements to acquire the balance of the Property; and
WHEREAS, the Developer has requested the Authority to explore the use of certain
public assistance, financial and otherwise, to assist with such activities, hereafter referred to as
the "Redevelopment"; and
WHEREAS, the Authority has determined that it is in the Authority's best interest that
the Developer be designated sole developer of the Property during the term of this Agreement;
and
\XlHEREL1~S, the Authority and the Developer are ,villing fLl1d desirous to undertake the
Redevelopment if (i) a satisfactory agreement can be reached regarding the Authority's
commitment for public assistance necessary for the Redevelopment; (ii) satisfactory mortgage
and equity financing, or adequate cash resources for the Redevelopment can be secured by the
Developer; and (iii) the economic feasibility and soundness of the Redevelopment; and
(iv) satisfactory resolution of zoning, land use, site design, and engineering issues, and other
necessary preconditions have been determined to the satisfaction of the parties; and
WHEREAS, the Authority is willing to evaluate the Redevelopment and work toward all
necessary agreements with the Developer if the Developer agrees to reimburse the Authority for
its costs relating to the Redevelopment even if the Redevelopment is abandoned or necessary
agreements are not reached under the tenus of this Agreement.
NOW, THEREFORE, in consideration of the foregoing and of the mutual covenants and
obligations set forth herein, the parties agree as follows:
1. Negotiations between the parties shall proceed in an attempt to formulate a
definitive development contract ("Contract") based on the following:
(a) the Developer's proposal for the redevelopment (when submitted) together
with any changes or modifications required by the Authority;
(b) such documentation regarding economic feasibility of the Project as the
Authority may wish to undertake during the term of this Agreement; and
(c) other terms and conditions of this Agreement.
2. It is the intention of the parties that this Agreement: (a) documents the present
understanding and commitments of the parties; and (b) will lead to negotiation and execution of
a mutually satisfactory Contract for the Redevelopment prior to the termination date of this
Agreement. The Contract (together with any other agreements entered into between the parties
hereto contemporaneously therewith) when executed, will supersede all obligations of the parties
hereunder.
3. During the term of this Agreement, the Developer shall:
(a) By November 1,2006, submit a proposal to the Authority, which proposal
must show the location, size, and nature of the proposed Redevelopment, including
sample floor layouts, renderings, elevations, and other graphic or written explanations of
the Redevelopment. The proposal shall be accompanied by a preliminary schedule for
the starting and completion of all phases of the Redevelopment.
(b) Submit an over-all cost estimate for the design and construction of the
Redevelopment.
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(d) Undertake and obtain such other preliminary economic feasibility studies,
income and expense projections, and such other economic information as the Developer
may desire to further confirn1 the economic feasibility and soundness of the
Redevelopment.
(e) Submit to the Authority the Developer's financing plan showing that the
proposed Redevelopment is financially feasible.
(f) Furnish satisfactory, financial data to the Authority evidencing the
Developer's ability to undeliake the Redevelopment.
(g) Assist and cooperate with the Authority, at Authority's request, in efforts
to secure purchase agreements to acquire the balance of the Property.
4. During the term of this Agreement, the Authority agrees to:
(a) Commence the process necessary to undertake such public assistance as is
necessary pursuant to the terms of the proposal.
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(b) Proceed to seek all necessary information with regard to the anticipated
public costs associated with the Redevelopment.
(c) Estimate the Authority's level and method of financial participation, if
any, in the Redevelopment and develop a financial plan for the Authority's participation.
(d) Continue efforts to secure purchase agreements to acquire the balance of
the Property.
5. It is expressly understood that execution and implementation of the Contract shall
be subject to:
(a) A determination by the Authority in its sole discretion that its
undertakings are feasible based on (i) the projected tax increment revenues and any other
revenues designated by the Authority; (ii) the purposes and objectives of any tax
increment, development, or other plan created or proposed for the purpose of providing
financial assistance for the Redevelopment; and (iii) the best interests of the Authority.
(b) A determination by the Developer that the redevelopment is feasible and
in the best interests of the Developer.
6. This Agreement is effective from the date hereof through November 1, 2006.
After such date, neither party shall have any obligation hereunder except as expressly set forth to
the contrary herein.
7. The Developer shall be solely responsible for all costs incwicd by the Developer.
In addition, the Developer shall reimburse the Authority for the following costs:
(a) Upon execution of this Agreement, the Developer has deposited with the
Authority funds in the amount of $5,000, receipt of which the Authority hereby
acknowledges. The Authority may apply such deposit to pay any "Authority Costs,"
which means: reasonable and necessary out-of pocket-costs incurred by the Authority
from and after May 23,2006, in each case based on actual time spent in connection with
rendering assistance and advice to the Authority as evidenced by itemized bills and
invoices for (i)the Authority's financial advisor in connection with the Authority's
financial participation in redevelopment of the Property, (ii)11e Authority's legal counsel
in cOlmection with negotiation and drafting of this Agreement and any related agreements
or documents, and any legal servict;S related to the Authority's or City's participation in
redevelopment of the Property; (iii)~lY appraiser retained by the Authority in connection
with conveyance of any portion of the Property by the Authority to the Devc;loper or in
connection with determination of the level of public assistance; and (iv)~onsu1tants
retained by the Authority for plmming, 0flvinmm@Rtal levie;;, and traffic engineering for
_ development of the Property. Ai Developer's reqoost" b~tPo more gften than menthly,
1Jie Authority will provide Developer with a writt~:rePdrt on current and anticipated
expenditures for Authority Costs, including invoices or other comparable evidence.
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(b) If at any time during the term of this Agreement the Authority
determines that the amounts deposited by Developer are insufficient to pay Authority
Costs, the Authority may notify the Developer in writing as to any additional amount
required to be deposited. The Developer must deposit such additional funds within 20
days after receipt ofthe Authority's notice.
(c) Upon tennination of this Agreement in accordance with its terms,
the Authority will return to the Developer the balance of any funds deposited under this
section that are on hand as of the date of receipt of the notice of termination, and less any
Authority Costs incurred through the date of receipt of the notice of termination. For the
purposes of this paragraph, Authority Costs are considered to be incurred if they have
been paid, relate to services perfornled, or are payable under a contract entered into, on or
before the date of receipt of the notice of termination.
This Section 7 shall survive tennination of this Agreement and shall be binding on the
Developer regardless of the enforceability of any other provision of this Agreement.
8. This Agreement may be tenninated upon 5 days written notice by the Authority to
the Developer if:
(a) an essential precondition to the execution of a contract cannot be met; or
(b) if, in the sole discretion of the Authority, an impasse has been reached in
the negotiation or implementation of any material term or condition of this Agreement or
the Contract; or
(c) The Authority detennines that its Administrative Costs will exceed the
amount initially deposited for such purpose under Section 7(b), and the Developer does
not deliver additional security to the Authority pursuant to Section 7(b) of this
Agreement.
If the Authority terminates the Agreement under this Section 8, the Developer shall
remain liable to the Authority under Section 7(b) of this Agreement for Administrative Costs
incurred by the Authority through the effective date of termination.
9. The Developer is designated as sole developer of the Property during the term of
this Agreement. The Authority owns the Authority Parcel, but otherwise makes no
representations or warranties as to control, access or ownership of the Property. The Authority
agrees that during the ternl of this Agreement the Authority will not enter into agreements with
any other party to convey the Authority Parcel or to facilitate redevelopment of any portion of
the Property.
10. In the event that the Developer, its heirs, successors or assigns, fail to comply
with any of the provisions of this Agreement, the Authority may proceed to enforce this
Agreement by appropriate legal or equitable proceedings, or other similar proceedings, and the
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Developer, its heirs, successors or assigns, agree to pay all costs of such enforcement, including
reasonable attorneys' fees.
11. If any portion of this Agreement is held invalid by a court of competent
jurisdiction, such decision shall not affect the validity of any remaining portion of the
Agreement.
12. In the event any covenant contained in this Agreement should be breached by one
party and subsequently waived by another party, such waiver shall be limited to the particular
breach so waived and shall not be deemed to waive any other concurrent, previous or subsequent
breach. This Agreement may not be amended nor any of its terms modified except by a writing
authorized and executed by all parties hereto.
13. Notice or demand or other communication between or among the parties shall be
sufficiently given if sent by mail, postage prepaid, return receipt requested or delivered
personally:
(a) As to the Authority:
Columbia Heights Economic Development Authority
590 40th Avenue NE
Columbia Heights, MN 55421
Attn: Robert Streetar
(b) As to the Developer:
Sherman Associates, Inc.
233 Park Avenue South
C1_~':.L._ 1"){\ 1
"UllC; L,V 1
Milmeapolis, MN 55415
Attn: Loren Brueggeman
14. This Agreement may be executed simultaneously in any number of counterparts,
all of which shall constitute one and the same instrument.
15. This Agreement shall be governed by and construed in accordance with the laws
of the state of Minnesota. Any disputes, controversies, or claims arising out of this Agreement
shall be heard in the state or federal courts of Minnesota, and all parties to this Agreement waive
any objection to the jurisdiction of these courts, whether based on convenience or otherwise.
16. The Developer hereby agrees to protect, defend and hold the Authority and its
officers, elected and appointed officials, employees, administrators, conmlissioners, agents, and
representatives harmless from and indenmified against any and all loss, cost, fines, charges,
damage and expenses, including, without limitation, reasonable attorneys fees, consultant and
expert witness fees, and travel associated therewith, due to claims or demands of any kind
whatsoever arising out of (i) the development, marketing, sale or leasing of all or any part of the
Property, including, without limitation, any claims for any lien imposed by law for services,
labor or materials furnished to or for the benefit of the Property, or (ii) any claim by the state of
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Minnesota or the Minnesota Pollution Control Agency or any other person pertaining to the
violation of any pennits, orders, decrees or demands made by said persons or with regard to the
presence of any pollutant, contaminant or hazardous waste on the Property; and (iii) or by reason
of the execution of this Agreement or the performance of this Agreement. The Developer, and
the Developer's successors or assigns, agree to protect, defend and save the Authority, and its
officers, agents, and employees, harmless from all such claims, demands, damages, and causes of
action and the costs, disbursements, and expenses of defending the same, including but not
limited to, attorneys fees, consulting engineering services, and other technical, administrative or
professional assistance. This indenmity shall be continuing and shall survive the performance,
termination or cancellation of this Agreement. Nothing in this Agreement shall be construed as a
limitation of or waiver by the Authority of any iImnunities, defenses, or other limitations on
liability to which the Authority is entitled by law, including but not limited to the maximum
monetary limits on liability established by Minnesota Statutes, Chapter 466.
17. The Developer, for itself, its attorneys, agents, employees, former employees,
insurers, heirs, administrators, representatives, successors, and assigns, hereby releases and
forever discharges the Authority, and its attorneys, agents, representatives, employees, former
employees, insurers, heirs, executors and assigns of and from any and all past, present or future
claims, demands, obligations, actions or causes of action, at law or in equity, whether arising by
statute, common law or otherwise, and for all claims for damages, of whatever kind or nature,
and for all claims for attorneys' fees, and costs and expenses, including but not limited to all
claims of any kind arising out of the negotiation, execution, or performance of this Agreement
between the parties.
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IN WITNESS WHEREOF, the Authority has caused this Agreement to be duly executed
in its name and behalf and its seal to be duly affixed hereto and the Developer has caused this
Agreement to be duly executed as of the day and year first above written.
[Sherman Associates, Inc.]
By George E. Sherman, President
Its
By
Its
S-l
COLUJVIBIA HEIGHTS ECONOMIC
DEVELOPMENT AUTHORITY
By ~4c:
Its Executive Director- Walter R'. Fehst
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EXHIBIT A
3939 Central Avenue
PIN # 36-30-24-32-0252
The South 180 feet of the NOlih 330 feet of Block 4, Walton's Rearrangement of Lots 33 and 34,
Block 6, Reservoir Hills, except the East 165 feet thereof, according to the recorded plat thereof,
and situate in Anoka County, Minnesota
3919 Central Avenue
PIN # 36-30-24-33-0148
Block 4, Walton's Rearrangement of Lots 33 and 34, Block 6, Reservoir Hills, excepting there from
however, the two following described tracts:
Tract 1:
The north 330 feet thereof.
Tract 2:
Commencing at the Southwest comer of Block 4, Walton's Rearrangement of Lots 33 and 34,
Block 6, Reservoir Hills; thence Northerly along the West line of said Block 4, 100 feet; thence
Easterly parallel with the South line of said Block 4, 183 feet; thence Southerly parallel with the
West line of said Block 4, 100 feet to a point within said South boundary line; thence Westerly
along the South line of said Block 4, 183 feet to the point of beginning, according to the plat
thereof on file or of record in the office of the County Recorder, Anoka County, Minnesota.
3901 Central Avenue
PIN # 36-30-24-33-0149
That part of Block numbered 4, of Walton's Rearrangement of Lots 33 and 34, Block 6, Reservoir
Hills, described as follows:
Commencing at the southwest comer of Block 4, Walton's Rearrangement of Lots 33 and 34,
Block 6, Reservoir Hills; thence northerly along the west line of said Block 4, 200 feet; thence
easterly parallel with the south line of said Block 4, 183 feet; thence southerly parallel with the
west line of said Block 4, 100 feet to a point within said south boundary line; thence westerly
along the south line of said Block 4, 183 feet to the point of beginning, Anoka County,
Milmesota.
Together with all hereditaments and appurtenances belonging thereto, subject to the following
exceptions:
Subject to reservations, restrictions and easements of record, if any; and subject to liens and
encumbrances placed upon the premises by the Grantee herein arising on or after July 31, 1981.
A-I