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HomeMy WebLinkAbout20190722_EDA_Minutes ECONOMIC DEVELOPMENT AUTHORITY (EDA) MINUTES OF THE SPECIAL MEETING OF JULY 22, 2019 The meeting was called to order at 5:00 pm by President Szurek. Members Present: Murzyn, Schmitt, Buesgens, Novitsky, Williams, Herringer, and Szurek. Members Absent: Williams Staff Present: Kelli Bourgeois (City Manager), Aaron Chirpich (Community Development Director), Joe Kloiber (Finance Director), and Nicole Tingley (City Clerk/Recording Secretary). PLEDGE OF ALLEGIANCE- RECITED CONSENT AGENDA 1. Approve the minutes from the Regular Meeting of May 28, 2019 and June 24, 2019. 2. Approve Financial Report & Payment of Bills for June 2019-Resolution 2019-09 Question from Members: Herringer inquired what the Center Point Energy bill was for. Chirpich answered that it was for the single family home on Central Ave. Herringer asked for clarification on the downtown parking expenditures. Kloiber explained that the EDA is responsible for the ongoing costs of the two parking ramps and the surface lot by the library. Kloiber stated ongoing costs include property insurance, irrigation water bills and storm water charges. Motion by Murzyn, seconded by Novitsky, to approve the consent agenda as presented. All ayes. MOTION PASSED. RESOLUTION NO. 2019-09 A RESOLUTION OF THE ECONOMIC DEVELOPMENT AUTHORITY OF COLUMBIA HEIGHTS, MINNESOTA, APPROVING THE FINANCIAL STATEMENTS FOR THE MONTH OF JUNE 2019, AND THE PAYMENT OF THE BILLS FOR THE MONTH OF JUNE 2019. WHEREAS, the Columbia Heights Economic Development Authority (the “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 2019 has been reviewed by the EDA Commission; and A-1 582649v3CL205-73 EDA Special Meeting Minutes Page 2 July 22, 2019 WHEREAS, the EDA has examined the financial statements and finds them to be acceptable as to both form and accuracy; and WHEREAS, the EDA Commission has other means to verify the intent of Section 469.096, Subd. 9, including but not limited to Comprehensive Annual Financial Reports, Annual City approved Budgets, Audits and similar documentation; and WHEREAS, financials statements are held by the City’s Finance Department in a method outlined by the State of Minnesota’s Records Retention Schedule, NOW, THEREFORE BE IT RESOLVED by the Board of Commissioners of the Columbia Heights Economic Development Authority that it has examined the referenced financial statements including the check history, 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 check history as presented in writing is approved for payment out of proper funds; and BE IT FURTHER RESOLVED this resolution is made a part of the permanent records of the Columbia Heights Economic Development Authority. ORDER OF ECONOMIC DEVELOPMENT AUTHORITY Passed this 22nd day of July, 2019 Offered by: Murzyn Seconded by: Novitsky Roll Call: All ayes President Attest: Recording Secretary th The EDA adjourned to an Executive Session at 5:10 pm to discuss the possible purchase of 230 40 Avenue NE, pursuant to Minnesota Statutes 13D.05. The EDA re-convened the regular meeting at 5:32 pm. BUSINESS ITEMS 1. Discuss Acquisition of 3989 Central Avenue NE Chirpich reminded members that on May 28, 2019 the EDA discussed the potential acquisition and redevelopment of The NE Business Center site located at 3989 Central Avenue. At that meeting, staff updated the Board on the status of negotiations with the owner, TIF eligibility for the site, and introduced the multi-family development concept for the site as proposed by Alatus, LLC. Since the A-2 582649v3CL205-73 EDA Special Meeting Page 3 July 22, 2019 May 28 meeting, staff has worked to move the project forward per the direction given by the EDA, and staff now recommends moving forward with the purchase of the property. The key components, and updates for the project are summarized below.  TIF Eligibility: The engineering firm LHB has completed the formal analysis of the site and building, and they have determined that the project will qualify for the creation of a redevelopment TIF district. Staff from the City’s public finance consulting firm, Ehlers have reviewed the preliminary project pro-forma prepared by Alatus LLC, and they have determined that the project will be able to generate sufficient tax increment to complete the redevelopment. The final TIF structure will be negotiated during the land use approval process and finalized before the property is sold to the city’s chosen development partner.  Purchase Agreement: Staff has worked to negotiate terms for the purchase that are agreeable to the seller and acceptable to staff. A copy of the agreement is attached to this report. The primary elements of the agreement are as follows: 1.The contract purchase price is $2.8M. 2.The EDA will pay $200,000 earnest money to seller upon execution of the purchase agreement by both parties. 3.The EDA will reimburse seller for the 1st half of property taxes that have been paid by the seller. The amount of the 1st half taxes is $51,088.88 (three parcels). 4.The closing shall take place on or before August 2, 2019.  Cell Antennae Lease: The title commitment has revealed an existing rooftop cell antenna lease agreement that is recorded against the property. The lease originated in 2011, and was assumed by the current owner during their acquisition of the building in 2015. The lease term is forty years, and the agreement has an expiration date of July 1, 2051. Despite the long-term nature of the current lease agreement, the lease holder has a desire to remove their equipment from the building, as they have suffered from intermittent power outages and disruptions to service due to vandalism and theft. The lease holder actually approached the city in search of alternate tower locations on city property before they were aware of the EDA’s intention to acquire the building. Staff has made the lease holder aware of the EDA’s plans for the site, and has negotiated a preliminary framework for the relocation of the cell antennae as part of the redevelopment project.  Sales History: At the May 28 EDA meeting, the Board requested additional information regarding the recent sales history for the property to inform the Boards opinion of the $2.8M asking price. Recorded documents for the property reveal that the property was returned to Venture Bank through foreclosure in 2014 with an outstanding mortgage balance of $4,129,302. The property was then sold by the bank to the current owner in 2015 for a price of $2,200,000.  Valuation: In addition to the recent sales history, staff consider the following points important when assessing the contract sales price of $2.8M: A-3 582649v3CL205-73 EDA Special Meeting Page 4 July 22, 2019 1.The current taxable market value for 3989 Central Avenue is $2,893,500. 2.The purchase of 3989 Central Avenue will secure the permanent ownership of the adjacent parking ramp by the EDA. The current taxable market value for the parking ramp property is $2,231,000. 3.The EDA will recover its costs through the re-sale of the property, as the $2.8M asking price has been vetted by Alatus and Ehlers, and found acceptable within the broader project budget.  Alatus Status: Following the May 28 EDA meeting, the Board directed staff to work with Alatus LLC, as the preferred development partner for the site. Since that meeting, staff has worked with Alatus to refine their development plans and complete additional due-diligence. Alatus will be at the meeting to share their preliminary site plan and provide a project overview. As previously discussed with the EDA, Alatus will share a concept development plan that includes a new City Hall space incorporated into their project. If the EDA approves the purchase, staff will begin working with Alatus on the land use approval process immediately. However, staff wants to note that agreement to purchase the building in no way commits the city to locating City Hall at 3989 Central Avenue, and Alatus has confirmed that they have a viable project without hosting City Hall on the site.  Summary: The redevelopment of 3989 Central Avenue is a critical component of the city’s broader revitalization goals for the Central Avenue commercial corridor. Staff believes that the timing is right to pursue control of the property so the EDA can determine what is developed on the site. The EDA is fortunate to have a capable and willing development partner for the project in Alatus. However, it is the opinion of staff that the decision to purchase the property stands on its own, and the site should be acquired with or without participation by Alatus as developer. STAFF RECOMMENDATION: Staff recommends that the EDA Board approve the acquisition of 3989 Central Avenue. Bob Lux, founder and president of Alatus presented to the Economic Development Authority. Lux started off by sharing a description of the company Alatus and other multi-family residential projects that the company has completed including Latitude 45 in Minneapolis, Berkman Apartments in Rochester, and Ironwood Apartments in New Hope. Lux then provided an overview of their concept plan for 3989 Central Avenue stating that the existing building and parking ramp would be demolished. Lux provided details on various components and features including 5 floors of multi-family residential with 240-270 units, City Hall on the first floor, a pocket park, a dog area, underground parking lot, move-in garage, and top floor sky lounge. Lux also noted that the natural gas would not be hooked up individually to each unit by using a VRF system which would create energy efficiency. Questions/comments from members: Herringer asked what amount of parking spots are included. Lux stated that there would be 230 underground spaces and 80 first floor spaces. He added that 12 spaces would be for electric vehicles with the capability of making all spaces for electric vehicles in the future. A-4 582649v3CL205-73 EDA Special Meeting Page 5 July 22, 2019 Buesgens inquired about adding solar panels to the building. Lux responded that they would look into it, but would not be able to commit due to regulations with Xcel Energy. Lux stated that a more likely solution would be an offsite solar garden in the future. Novitsky, Murzyn, and Szurek commented that they liked the concept. Murzyn inquired about the logistics of the City Hall space and how long the developer anticipated on owning the space. Lux answered that the City would own the City Hall space and that they are locked in to owning the property for at least 10 years. Schmitt commented that the property has water issues and flooding and asked how run off would be addressed. Lux stated that the run-off would stay on the property by utilizing underground tanks. Additionally, Schmitt commented that the City uses the proposed dog area space for snow and asked where snow would be put. Lux responded that the parking spaces are covered so snow removal would not be required. Herringer stated that he is not in favor of the City owning the property without a developer. Chirpich stated that he thinks that the City and Alatus would be able to work into a predevelopment quickly, but there are a couple of items that need to be determined first. Chirpich noted that that cellular antennas relocation would need to be determined and that City Staff needs feedback on relocating City Hall to the development. Szurek asked about the timeline for relocating the cellular antennas and selling of the property to Alatus. Chirpich stated that he has been in discussion with the cell companies and shared that they are willing to be gone by Spring 2020 and that they have been exploring the idea of mobile tower trucks. Chirpich deferred to Lux regarding purchase. Lux stated that they would like to purchase the property as soon as the cell tower agreement is completed and city approvals are finished including a decision regarding relocating City Hall. Lux commented that the project would be possible with another use for the space now designated for a city hall, but they think City Hall is a very nice complimentary use. Motion by Szurek, seconded by Schmitt, to waive the reading of Resolution 2019-10, there being ample copies available to the public. All ayes. MOTION PASSED. Motion by Buesgens, seconded by Novitsky, to adopt Resolution 2019-10, a Resolution Approving the Purchase Agreement with 500 LLC for the acquisition of 3989 Central Avenue NE, Columbia Heights, MN 55421, and the appropriation of funds for the purchase from the Authority’s Redevelopment Fund. All ayes. MOTION PASSED. COLUMBIA HEIGHTS ECONOMIC DEVELOPMENT AUTHORITY RESOLUTION NO. 2019-10 RESOLUTION APPROVING PURCHASE AGREEMENT BETWEEN THE COLUMBIA HEIGHTS ECONOMIC DEVELOPMENT AUTHORITY AND 500, LLC BE IT RESOLVED BY the Board of Commissioners ("Board") of the Columbia Heights Economic A-5 582649v3CL205-73 EDA Special Meeting Page 6 July 22, 2019 Development Authority (the "Authority") as follows: Section 1.Recitals. 1.01. The Authority and 500, LLC (the “Seller”) desire to enter into a purchase agreement (the “Purchase Agreement”) pursuant to which the Authority will acquire certain property in the City located at 3989 Central Avenue NE (the “Property”) from the Seller for economic development purposes. The Property is described in Exhibit A attached hereto. 1.02. Pursuant to the Purchase Agreement, the Authority will purchase the Property from the Seller for a purchase price of $2,800,000 plus related closing costs, which shall, subject to approval by the City Council of an interfund loan for a portion of such purchase price (the “Interfund Loan”), be appropriated from the Authority’s Redevelopment Fund. 1.03. The Authority finds that acquisition of the Property is for the purpose of eventual disposition of such Property for economic development and revitalization of this area of the City, as authorized pursuant to Minnesota Statutes, Sections 469.090 to 469.1081, and in itself has no relationship to the City’s comprehensive plan. Prior to any disposition of the Property to a third party, the Authority shall transmit the plans for such disposition to the Planning Commission of the City for its findings as to compliance with the City’s comprehensive plan, in accordance with Minnesota Statutes, Section 462.356, subd. 2 Section 2. Purchase Agreement Approved. 2.01. The Authority hereby ratifies and approves the actions of Authority staff in negotiating and preparing the Purchase Agreement. The Authority approves the Purchase Agreement in the form presented to the Authority and on file at City Hall, subject to approval of the Interfund Loan by the City Council and to modifications that do not alter the substance of the transaction and that are approved by the President and Executive Director, provided that execution of the Purchase Agreement by those officials shall be conclusive evidence of their approval. 2.02. Authority staff and officials are authorized to take all actions necessary to perform the Authority’s obligations under the Purchase Agreement as a whole, including without limitation execution of any documents to which the Authority is a party referenced in or attached to the Purchase Agreement, and any other documents necessary to acquire the Property from the Seller, all as described in the Purchase Agreement. Approved this 22nd day of July, 2019, by the Board of Commissioners of the Columbia Heights Economic Development Authority. _________________________________ President ATTEST: __________________________________ Secretary A-6 582649v3CL205-73 EDA Special Meeting Page 7 July 22, 2019 EXHIBIT A PROPERTY PARCEL 1 (Abstract and Torrens Property): Lot 32, Block 6, Reservoir Hills, Anoka County, Minnesota. Lots 25 through 28, Block 1, Walton's Rearrangement of Lots 33 and 34, Block 6, Reservoir Hills, Anoka County, Minnesota. The vacated alley adjacent to Lots 25 through 28, Block 1, Walton's Rearrangement of Lots 33 and 34, Block 6, Reservoir Hills, Anoka County, Minnesota. Those parts of Lots 28 through 31, Block 6, Reservoir Hills; Lots 23. and 24, Block 1, Walton's Rearrangement of Lots 33 and 34, Block 6, Reservoir Hills; and of the vacated alley adjacent to Lot 24, Block 1, Walton's Rearrangement of Lots 33 and 34, Block 6, Reservoir Hills; lying southwesterly and westerly of the following described line: Beginning at a point on the south line of Block 1, Walton's Rearrangement, said point being 18.00 feet West of the southeast corner of Lot 23, of said Block 1, Walton's Rearrangement; thence Northerly on a line 18.00 feet West of and parallel with the east line of Lot 23 a distance of 87.00 feet; thence on a straight line to a point on the north line of Lot 30 of said Block 6, Reservoir Hills, said point being 47.23 feet Easterly of the northwest comer of said Lot 30 and there terminating. The following portion of the above description being registered land: That part of Lot Twenty-three (23), Block (1), Walton's Rearrangement of Lots Thirty-three (33) and Thirty-four (34), Block Six (6), Reservoir Hills, lying southwesterly and westerly of the following described line: Beginning at a point on the South line of said Block 1, Walton's Rearrangement, said point being 18.00 feet West of the southeast comer of Lot 23 of said Block 1, Walton's Rearrangement: thence Northerly on a line 18.00 feet West of and parallel with said east line of Lot 23, a distance of 87.00 feet; thence on a straight line to a point on the north line of Lot 30 of said Block 6, Reservoir Hills, said point being 47.23 feet Easterly of the northwest comer of said Lot 30 and there terminating. PARCEL 2 (Abstract Property): Those parts of Lots 27 through 31, Block 6, Reservoir Hills and those parts of Lots 23 and 24, Block 1, Walton's Rearrangement of Lots 33 and 34, Block 6, Reservoir Hills and of the vacated alley abutting Block 1, "Walton's Rearrangement of Lots 33 and 34, Block 6, Reservoir Hills", as dedicated in said plat, lying within the following described tract: Commencing at a point on the south line of said Block 1, Walton's Rearrangement distant 18.00 feet west of the southeast corner of Lot 23, said Block 1, Walton's Rearrangement; thence northerly on a line 18.00 feet west of and parallel with the east line of said Lot 23, a distance of 87.00 feet, to the actual point of beginning of the tract to be described; thence continuing northerly on the extension of said line to the north line of Block 6, Reservoir Hills; thence westerly along said north line of Block 6, to a point being 47.23 feet easterly of the northwest corner of Lot 30, Block 6, Reservoir Hills; thence southeasterly, to the point of beginning; Excepting therefrom Tract A, Registered Land Survey No. 250, Anoka County, Minnesota. PARCEL 3 (Torrens Property): Tract A, Registered Land Survey No. 250, Anoka County, Minnesota. A-7 582649v3CL205-73 EDA Special Meeting Page 8 July 22, 2019 PARCEL 4 (Abstract and Torrens Property): Non-exclusive right to the use of the Parking Ramp as set forth in Part II, Article I, Construction and Use of Parking Ramp, in the Management Agreement for Parking Facilities and Lease of the Plaza Property, between the Housing and Redevelopment Authority in and for the City of Columbia Heights, and Terry Evenson, dated July 20, 1982, recorded February 9, 1983, as Doc. No. 124953 (Torrens) and as Document No. 607127 (Abstract), which was assigned by Terry Evenson to Zaidan Holdings, Inc., by the Assignment of Management Agreement, dated June 27, 1988, recorded July 26, 1988 as Doc. No. 177292 (Torrens) and as Doc. No. 816367 (Abstract), which was thereafter assigned by Zaidan Holdings, Inc. to Mobilia, Ltd., by the Assignment of Management Agreement, dated March 10, 1988, recorded September 4, 1997 as Doc. No. 300560 (Torrens) and as Doc. No. 1295184 (Abstract), which was thereafter assigned by Mobilia Ltd., to Lake-State Properties, Inc., by the Assignment of Parking Agreements, dated July 14, 1997, recorded September 4, 1997 as Doc. No. 300561 (Torrens) and as Doc. No. 1295185 (Abstract), and which was thereafter assigned by Lake-State Properties, Inc., to Equity Partners, LLC, by the Assignment of Parking Ramp Lease, dated October 30, 2002, recorded November 13, 2002 as Doc. No. 412198 (Torrens) and as Doc. No. 1730236 (Abstract), and which was thereafter assigned by Equity Partners, LLC, to Stadium Village Properties, LLC, by the Assignment and Assumption of Parking Ramp Lease, dated April 3, 2008, recorded April 4, 2008 as Doc. No. 494729.002 (Torrens) and as Doc. No. 1999840.002 (Abstract). PURCHASE AGREEMENT This Purchase Agreement (“Agreement”) is made this _______ day of July, 2019, by and between 500, LLC (“Seller”) and the Columbia Heights Economic Development Authority, a public body politic and corporate and political subdivision of the State of Minnesota, and its successors and assigns (“Buyer”). 1.PROPERTY. Seller is the owner of property located at 3989 Central Avenue NE, in the City of Columbia Heights, Minnesota, which is legally described on the attached Exhibit A (“Property”). 2.OFFER/ACCEPTANCE .In consideration of and subject to the terms and provisions of this Agreement, Buyer offers and agrees to purchase and Seller agrees to sell and hereby grants to Buyer the exclusive right to purchase the Property and all improvements thereon, together with all appurtenances. All fixtures located on the Property on the date of this Agreement are included in the purchase of the Property. 3.PURCHASE PRICE FOR PROPERTY AND TERMS. PURCHASE PRICE: a.The total purchase price for the Property is: Two Million Eight Hundred Thousand Dollars ($2,800,000.00) (“Purchase Price”). TERMS: b. 1. EARNEST MONEY: The sum of Two Hundred Thousand Dollars ($200,000.00) earnest money shall be paid by Buyer to Seller (“Earnest Money”) upon execution A-8 582649v3CL205-73 EDA Special Meeting Page 9 July 22, 2019 of this Agreement. The Earnest Money is nonrefundable, subject to Sections 13 and 14 hereof. 2.BALANCE DUE SELLER: Buyer agrees to pay by check or wire transfer on the Closing Date (as hereinafter defined) any remaining balance due on the Purchase Price according to the terms of this Agreement. 3. DEED/MARKETABLE TITLE: Subject to performance by Buyer, Seller agrees to execute and deliver a Limited Warranty Deed conveying marketable fee simple title to the Property to Buyer, free and clear of any mortgages, liens or encumbrances other than matters created by or acceptable to Buyer, subject only to the exceptions (the “Permitted Exceptions”) provided in Schedule B-II of the title commitment issued to the Seller by Old Republic Title on May 28, 2019 and provided to the Buyer (the “Title Commitment”), which Schedule B-II is attached hereto as Exhibit B. 4. DOCUMENTS TO BE DELIVERED AT CLOSING BY SELLER. In addition to the Limited Warranty Deed required at Section 3.b.3. above, Seller shall deliver to Buyer on the Closing Date: a. An affidavit from Seller sufficient to remove any exception in Buyer’s policy of title insurance for mechanics’ and materialmens’ liens and rights of parties in possession; b. A “bring-down” certificate, certifying that all of the warranties made by Seller in this Agreement remain true as of the Closing Date; c. Affidavit of Seller confirming that Seller is not a foreign person within the meaning of Section 1445 of the Internal Revenue Code; d. A statement that Seller does not know of any wells on the Property; e. Any notices, certificates, and affidavits regarding any private sewage systems, underground storage tanks, and environmental conditions as may be required by state or federal statutes, rules or regulations; f. An affidavit by Seller in form reasonably acceptable to the Buyer, certifying that there are no purchase agreements, options, or other interests in the Property currently in effect with any third parties, except as disclosed in the Title Commitment; and g. Any other documents reasonably required by Buyer’s title insurance company or attorney to evidence that title to the Property is marketable and that Seller has complied with the terms of this Purchase Agreement. In addition, on the Closing Date, the Seller and Buyer will execute and record a termination (including a mutual release) of the Management Agreement for Parking Facilities and Lease of the Plaza Property A-9 582649v3CL205-73 EDA Special Meeting Page 10 July 22, 2019 dated July 20, 1982, and filed on February 9, 1983 in the office of the Anoka County Recorder as Document No.607127 and in the office of the Anoka County Registrar of Titles as Document No. 124953. 5. TITLE EXAMINATION/CURING TITLE DEFECTS. Seller has obtained and delivered to Buyer the Title Commitment for the Property. Buyer has examined the same and hereby waives any objections to title based on the Title Commitment. Buyer reserves the right to object to any encumbrances to title that arise between the date of this Purchase Agreement and the Closing Date. 6. ENVIRONMENTAL INVESTIGATIONS. Buyer acknowledges that it has received copies of environmental reports previously received by the Seller, and that it is purchasing the Property AS-IS. 7. REAL ESTATE TAXES AND SPECIAL ASSESSMENTS. Seller shall pay all real estate taxes, interest and penalties, if any, relating to the Property for the years prior to the year of closing. Provided that this transaction shall close as provided herein, Buyer agrees to pay taxes for the year of closing and all taxes for years thereafter. Buyer shall assume all special assessments regarding the Property which are levied or pending as of the Closing Date, including portions which would otherwise have been payable in future installments. The parties agree and acknowledge that Seller has paid first- half 2019 real estate taxes relating to the Property. Buyer shall reimburse Seller for such first-half taxes at Closing. 8. CLOSING DATE. The date of closing shall be seven (7) days following the execution of this Purchase Agreement by both parties, but no later than August 2, 2019 (“Closing Date”). Delivery of all th papers and the closing shall be made at the offices of Buyer, 590 40 Avenue NE, Columbia Heights, MN 55421 or at such other location as is mutually agreed upon by the parties. All deliveries and notices to Buyer shall be made as provided in Section 16 of this Agreement. 9. POSSESSION/UTILITIES. Possession. a. Seller agrees to deliver possession of the Property to Buyer not later than the Closing Date, in its “AS-IS” condition, with no obligation to remove any personal property, junk, or debris. Utilities. b. Seller shall pay all utility charges, if any, prior to the Closing Date. 10. SELLER’ WARRANTIES. Seller hereby represents and warrants to Buyer and Seller will represent and warrant to Buyer as of the Closing Date that: Mechanics' Liens. a. Seller warrants that, prior to the closing, Seller shall pay in full all amounts due for labor, materials, machinery, fixtures or tools furnished within the 120 days immediately preceding the closing in connection with construction, alteration or repair of any structure upon or improvement to the Property caused by or resulting from any action of Seller. Notices. b. Seller warrants that Seller has not received any notice from any governmental authority other than the City of Columbia Heights, Minnesota as to violation of any law, ordinance or regulation in connection with the Property. A-10 582649v3CL205-73 EDA Special Meeting Page 11 July 22, 2019 Tenants. c. Seller warrants that that there are no tenants or third parties in possession of the Property. Broker Commission. d. Seller has not utilized the services of any real estate broker, in connection with the transaction contemplated by this Purchase Agreement, and that no broker, agent, or representative has been engaged or shall be entitled to any commission in connection with such transaction. Seller agrees to indemnify, defend and hold Buyer harmless from the claims of any broker, real estate agent or similar party claiming through Seller. Legal Proceedings. e. To the best of Seller’s knowledge, other than as disclosed to Buyer, there are no legal actions, suits or other legal or administrative proceedings, pending or threatened, that affect the Property or any portion thereof, and Seller has no knowledge that any such action is presently contemplated. Legal Capacity. f. Seller has the legal capacity to enter into this Agreement. Seller has not filed, voluntarily or involuntarily, for bankruptcy relief within the last year under the United States Bankruptcy Code, nor has any petition for bankruptcy or receivership been filed against Seller within the last year. Methamphetamine Production. g. To the best of Seller’ knowledge, methamphetamine production has not occurred on the Property. Seller’ representations and warranties set forth in this paragraph shall be continuing and are deemed to be material to Buyer’s execution of this Agreement and Buyer’s performance of its obligations hereunder. All such representations and warranties shall be true and correct on or as of the Closing Date with the same force and effect as if made at that time; and all of such representations and warranties shall survive closing, and shall not be affected by any investigation, verification or approval by any part hereto or by anyone on behalf of any party hereto. Any claim by Buyer against Seller for a breach of this Section 10 shall be deemed waived if not asserted by Buyer within sixty (60) days of Closing. BUYER ACKNOWLEDGES AND AGREES THAT, EXCEPT AS OTHERWISE PROVIDED HEREIN, HAVING BEEN GIVEN THE OPPORTUNITY TO INSPECT THE PROPERTY AND REVIEW AVAILABLE INFORMATION AND DOCUMENTATION AFFECTING THE PROPERTY, BUYER IS RELYING SOLELY ON ITS OWN INVESTIGATION OF THE PROPERTY AND REVIEW OF SUCH INFORMATION AND DOCUMENTATION. BUYER ACKNOWLEDGES AND AGREES THAT NO REPRESENTATIONS OR STATEMENTS HAVE BEEN MADE BY SELLER IN ORDER TO INDUCE BUYER TO ENTER INTO THIS TRANSACTION OTHER THAN AS EXPRESSLY STATED HEREIN, BUYER HAS NOT RELIED UPON ANY REPRESENTATIONS OR STATEMENTS OTHER THAN AS EXPRESSLY STATED HEREIN, AND NO PERSON OTHER THAN NED ABDUL (OR ANYONE TO WHOM HE HAS DELEGATED HIS AUTHORITY BY WAY OF RESOLUTION OR POWER OF ATTORNEY) SHALL BE AUTHORIZED TO MAKE ANY REPRESENTATIONS, STATEMENTS, OR WAIVERS ON BEHALF OF SELLER. BUYER FURTHER ACKNOWLEDGES AND AGREES THAT, EXCEPT AS EXPRESSLY PROVIDED HEREIN, THE SALE OF THE PROPERTY AS PROVIDED A-11 582649v3CL205-73 EDA Special Meeting Page 12 July 22, 2019 FOR HEREIN IS MADE ON AN “AS-IS, WHERE IS” CONDITION AND BASIS WITH ALL FAULTS AND CONDITIONS (ENVIRONMENTAL AND ALL OTHER), AND THAT SELLER HAS NO OBLIGATION TO MAKE ANY REMEDIATION, REPAIRS, REPLACEMENTS OR IMPROVEMENTS WHATSOEVER. 11. CLOSING COSTS/RECORDING FEES/DEED TAX. Seller shall pay: (a) the cost of any documents required to clear title or to evidence marketable title, to the extent required by this Purchase Agreement; (b) costs of the Title Commitment and any title search and examination fees; (c) the state deed tax; and (d) any other operating costs of the Property up to the Closing Date. Buyer shall pay: (a) any environmental investigation costs; (b) costs of title insurance and endorsements; and (c) closing fees customarily charged by the title company. Each party shall pay its respective real estate broker and attorneys’ fees. 12. INSPECTIONS. Buyer, its employees and agents, shall be entitled to a general walkthrough inspection within two days of the Closing Date. 13. RISK OF LOSS. If there is any loss or damage to the Property between the date hereof and the Closing Date, for any reason including fire, vandalism, flood, earthquake or act of God, the risk of loss shall be on Seller. If the Property is destroyed or substantially damaged before the Closing Date, this Purchase Agreement shall become null and void, at Buyer’s option. At the request of Buyer, Seller agrees to sign a cancellation of Purchase Agreement and to return Buyer’s Earnest Money. 14. DEFAULT/REMEDIES. If Buyer defaults under this Purchase Agreement, Seller has the right to terminate this Purchase Agreement by giving written notice of such election to Buyer, which notice shall specify the default. If Buyer fails to cure such default within 5 days of the date of such notice, Seller shall terminate this Purchase Agreement and may retain the Earnest Money as Seller’s liquidated damages, time being of the essence of this Purchase Agreement. The termination of this Purchase Agreement (and retention of the Earnest Money) will be the sole remedies available to Seller for such default by Buyer, and Buyer will not be further liable for damages. If Seller defaults under this Purchase Agreement, Buyer shall have the right (i) to terminate this Purchase Agreement (in which case Buyer shall be entitled to a refund of the Earnest Money), or (ii) to enforce and recover from Seller specific performance of this Purchase Agreement. The termination of this Purchase Agreement (and refund of the Earnest Money), or the enforcement and recovery from Seller of specific performance of this Purchase Agreement, shall be the sole remedies available to Buyer for such default by Seller, and Seller shall not be further liable for damages. 15. RELOCATION BENEFITS; INDEMNIFICATION. Seller acknowledges that it is not being displaced from the Property as a result of the transaction contemplated by this Purchase Agreement and that it is not eligible for relocation assistance and benefits or in the event that Seller is eligible for relocation assistance and benefits, that the Purchase Price includes compensation for any and all relocation assistance and benefits for which Seller may be eligible. The provisions of this paragraph shall survive closing of the transaction contemplated by this Purchase Agreement. 16. NOTICE. Any notice, demand, request or other communication which may or shall be given or served by the parties, shall be deemed to have been given or served on the date the same is personally served upon one of the following indicated recipients for notices or is deposited in the United States A-12 582649v3CL205-73 EDA Special Meeting Page 13 July 22, 2019 Mail, registered or certified, return receipt requested, postage prepaid and addressed as follows: SELLER: 500, LLC Attn: Ned Abdul 510 First Avenue North, Suite 600 Minneapolis, MN 55403 BUYER: Columbia Heights Economic Development Authority Attn: Executive Director th 590 40 Avenue NE Columbia Heights, MN 55421 With a copy to: Martha Ingram, Esq. Kennedy & Graven, Chartered 470 U.S. Bank Plaza 200 South Sixth Street Minneapolis, MN 55402 17. ENTIRE AGREEMENT. This Purchase Agreement, including exhibits attached hereto, and any amendments hereto signed by the parties, shall constitute the entire agreement between Seller and Buyer and supersedes any other written or oral agreements between the parties relating to the Property. This Purchase Agreement can be modified only in a writing properly signed on behalf of Seller and Buyer or their respective successors or assigns. 18. SURVIVAL. Notwithstanding any other provisions of law or court decision to the contrary, the provisions of this Purchase Agreement shall survive closing. 19. BINDING EFFECT. This Agreement binds and benefits the parties and their successors and assigns. Buyer shall have the right to assign this Agreement without the prior consent of the Seller. Following such assignment, Buyer shall promptly provide the Seller with a copy of the executed Assignment and Assumption Agreement, pursuant to which the assignee shall assume all responsibilities and obligations of the Buyer under this Agreement. (the remainder of this page intentionally left blank) IN WITNESS WHEREOF, the undersigned have executed this Agreement on the date and year above. A-13 582649v3CL205-73 EDA Special Meeting Page 14 July 22, 2019 Buyer: Seller: Columbia Heights Economic Development 500, LLC Authority By: ________________________________ By: ________________________________ ___________________________ Its: President By: ________________________________ Its: Executive Director EXHIBIT A Legal Description of Property PARCEL 1 (Abstract and Torrens Property): Lot 32, Block 6, Reservoir Hills, Anoka County, Minnesota. Lots 25 through 28, Block 1, Walton's Rearrangement of Lots 33 and 34, Block 6, Reservoir Hills, Anoka County, Minnesota. The vacated alley adjacent to Lots 25 through 28, Block 1, Walton's Rearrangement of Lots 33 and 34, Block 6, Reservoir Hills, Anoka County, Minnesota. Those parts of Lots 28 through 31, Block 6, Reservoir Hills; Lots 23. and 24, Block 1, Walton's Rearrangement of Lots 33 and 34, Block 6, Reservoir Hills; and of the vacated alley adjacent to Lot 24, Block 1, Walton's Rearrangement of Lots 33 and 34, Block 6, Reservoir Hills; lying southwesterly and westerly of the following described line: Beginning at a point on the south line of Block 1, Walton's Rearrangement, said point being 18.00 feet West of the southeast corner of Lot 23, of said Block 1, Walton's Rearrangement; thence Northerly on a line 18.00 feet West of and parallel with the east line of Lot 23 a distance of 87.00 feet; thence on a straight line to a point on the north line of Lot 30 of said Block 6, Reservoir Hills, said point being 47.23 feet Easterly of the northwest comer of said Lot 30 and there terminating. The following portion of the above description being registered land: That part of Lot Twenty-three (23), Block (1), Walton's Rearrangement of Lots Thirty-three (33) and Thirty-four (34), Block Six (6), Reservoir Hills, lying southwesterly and westerly of the following described line: Beginning at a point on the South line of said Block 1, Walton's Rearrangement, said point being 18.00 feet West of the southeast comer of Lot 23 of said Block 1, Walton's Rearrangement: thence Northerly on a line 18.00 feet West of and parallel with said east line of Lot 23, a distance of 87.00 feet; thence on a straight line to a point on the north line of Lot 30 of said Block 6, Reservoir A-14 582649v3CL205-73 EDA Special Meeting Page 15 July 22, 2019 Hills, said point being 47.23 feet Easterly of the northwest comer of said Lot 30 and there terminating. PARCEL 2 (Abstract Property): Those parts of Lots 27 through 31, Block 6, Reservoir Hills and those parts of Lots 23 and 24, Block 1, Walton's Rearrangement of Lots 33 and 34, Block 6, Reservoir Hills and of the vacated alley abutting Block 1, "Walton's Rearrangement of Lots 33 and 34, Block 6, Reservoir Hills", as dedicated in said plat, lying within the following described tract: Commencing at a point on the south line of said Block 1, Walton's Rearrangement distant 18.00 feet west of the southeast corner of Lot 23, said Block 1, Walton's Rearrangement; thence northerly on a line 18.00 feet west of and parallel with the east line of said Lot 23, a distance of 87.00 feet, to the actual point of beginning of the tract to be described; thence continuing northerly on the extension of said line to the north line of Block 6, Reservoir Hills; thence westerly along said north line of Block 6, to a point being 47.23 feet easterly of the northwest corner of Lot 30, Block 6, Reservoir Hills; thence southeasterly, to the point of beginning; Excepting therefrom Tract A, Registered Land Survey No. 250, Anoka County, Minnesota. PARCEL 3 (Torrens Property): Tract A, Registered Land Survey No. 250, Anoka County, Minnesota. PARCEL 4 (Abstract and Torrens Property): Non-exclusive right to the use of the Parking Ramp as set forth in Part II, Article I, Construction and Use of Parking Ramp, in the Management Agreement for Parking Facilities and Lease of the Plaza Property, between the Housing and Redevelopment Authority in and for the City of Columbia Heights, and Terry Evenson, dated July 20, 1982, recorded February 9, 1983, as Doc. No. 124953 (Torrens) and as Document No. 607127 (Abstract), which was assigned by Terry Evenson to Zaidan Holdings, Inc., by the Assignment of Management Agreement, dated June 27, 1988, recorded July 26, 1988 as Doc. No. 177292 (Torrens) and as Doc. No. 816367 (Abstract), which was thereafter assigned by Zaidan Holdings, Inc. to Mobilia, Ltd., by the Assignment of Management Agreement, dated March 10, 1988, recorded September 4, 1997 as Doc. No. 300560 (Torrens) and as Doc. No. 1295184 (Abstract), which was thereafter assigned by Mobilia Ltd., to Lake-State Properties, Inc., by the Assignment of Parking Agreements, dated July 14, 1997, recorded September 4, 1997 as Doc. No. 300561 (Torrens) and as Doc. No. 1295185 (Abstract), and which was thereafter assigned by Lake-State Properties, Inc., to Equity Partners, LLC, by the Assignment of Parking Ramp Lease, dated October 30, 2002, recorded November 13, 2002 as Doc. No. 412198 (Torrens) and as Doc. No. 1730236 (Abstract), and which was thereafter assigned by Equity Partners, LLC, to Stadium Village Properties, LLC, by the Assignment and Assumption of Parking Ramp Lease, dated April 3, 2008, recorded April 4, 2008 as Doc. No. 494729.002 (Torrens) and as Doc. No. 1999840.002 (Abstract). A-15 582649v3CL205-73 EXHIBIT B Schedule B-II of Title Commitment THIS COMMITMENT DOES NOT REPUBLISH ANY COVENANT, CONDITION, RESTRICTION, OR LIMITATION CONTAINED IN ANY DOCUMENT REFERRED TO IN THIS COMMITMENT TO THE EXTENT THAT THE SPECIFIC COVENANT, CONDITION, RESTRICTION, OR LIMITATION VIOLATES STATE OR FEDERAL LAW BASED ON RACE, COLOR, RELIGION, SEX, SEXUAL ORIENTATION, GENDER IDENTITY, HANDICAP, FAMILIAL STATUS, OR NATIONAL ORIGIN. The Policy will not insure against loss or damage resulting from the terms and provisions of any lease or easement identified in Schedule A, and will include the following Exceptions unless cleared to the satisfaction of the Company: 1. Any defect, lien, encumbrance, adverse claim, or other matter that appears for the first time in the Public Records or is created, attaches, or is disclosed between the Commitment Date and the date on which all of the Schedule B, Part I - Requirements are met. 2. Rights or claims of parties in possession not shown by the public records. 3. Any encroachment, encumbrance, violation, variation or adverse circumstance affecting the Title that would be disclosed by an accurate and complete land survey of the Land. 4. Easements or claims of easements not shown by the public records. 5. Any lien, or right to a lien, for services, labor or material heretofore or hereafter furnished, imposed by law and not shown by the public records. 6. Taxes or special assessments which are not shown as existing liens by the public records. 7. General and special taxes and assessments as hereafter listed, if any (all amounts shown being exclusive of interest, penalties and costs): A. Real estate taxes payable in 2019 are $95,399.56 and are half paid. Base tax $94,036.66 Property Identification No. 36-30-24-32-0110 (Parcel 1) Real estate taxes payable in 2019 are $6,617.91 and are half paid. Base tax $6,564.68 Property Identification No. 36-30-24-32-0261 (Parcel 2) Real estate taxes payable in 2019 are $160.28 and are half paid. Base tax $160.28 Property Identification No. 36-30-24-32-0258 (Parcel 3) NOTE: There are no delinquent taxes of record. B. There are no levied or pending assessments of record. 8. Rights or claims of tenants, as tenants only, in possession under unrecorded leases. 9. Minerals and mineral rights reserved by the State of Minnesota as shown by recital on the Certificate of Title. (Parcels 1 and 3) 10. Mineral and mineral rights reserved by the State of Minnesota as evidenced by a Conveyance of Forfeited Lands dated February 25, 1946, filed March 7, 1946, as Document No. 115817. (Parcel 1) 11. Roadway and utility easement shown in Quit-Claim Deed dated September 17, 1981, filed October 20, 1981, as Document No. 580233 (Abstract); and in Quit Claim Deed dated October 23, 1981, November 6, 1981, as Document No. 581375 (Abstract). (Parcels 1 and 2) 12. Easements for utility and roadway purposes reserved in Quit Claim Deed dated December 30, 1983, filed February 24, 1984, as Document No. 636379 (Abstract), and filed January 18, 1984, as Document No. 131492 (Torrens). (Parcels 2 and 3) 13. Easement for road, public sidewalk and landscape purposes created by Second Amended Findings of Fact, Conclusions of Law, and Order Transferring Title and Possession Pursuant to Minn. Stat. Section 117.042 filed January 14, 2002, as Document Nos. 1636936 (Abstract) and 388444 (Torrens); and by Final Certificate of Attorney for Petitioner filed February 18, 2005, as Document No. 1973084.002 (Abstract) and as Document No. 481861.002 (Torrens). (Parcels 1 and 2) 14. Terms and conditions of Management Agreement for Parking Facilities and Lease of the Plaza Property dated July 20, 1982, filed February 9, 1983, as Document Nos. 607127 (Abstract) and 124953 (Torrens), by and between the Housing and Redevelopment Authority in and for the City of Columbia Heights, a public body corporate and politic, referred to as "Agency," and Terry Evenson, a single person, referred to as "Redeveloper". Grants Redeveloper a leasehold interest and right of first refusal in Parcels 2 and 3 and a right to use and option to purchase other land. The interest of redeveloper was assigned to Zaidan Holdings, Inc., a Canadian corporation, by Assignment of Management Agreement for Parking Facilities and Lease of the Plaza Property dated June 27, 1988, filed July 26, 1988, as Document Nos. 816367 (Abstract) and 177292 (Torrens). The interest of redeveloper was further assigned to Mobilia, Ltd., a Delaware corporation, by Assignment of Management Agreement for Parking Facilities and Lease of the Plaza Property dated March 10, 1995, filed September 4, 1997, as Document Nos. 1295184 (Abstract) and 300560 (Torrens). The interest of redeveloper was further assigned to Lake-State Properties, Inc., a Minnesota corporation, by Assignment of Parking Agreements dated July 14, 1997, filed September 4, 1997, as Document Nos. 1295185 (Abstract) and 300561 (Torrens). The interest of redeveloper was further assigned to Equity Partners LLC, a limited liability company, by Assignment of Parking Ramp Lease dated October 30, 2002, filed November 13, 2002, as Document Nos. 1730236 (Abstract) and 412198 (Torrens). The interest of redeveloper was further assigned to and assumed by Stadium Village Properties, LLC, a Minnesota limited liability company, in Assignment and Assumption of Parking Ramp Lease dated April 3, 2008, filed April 4, 2008, as Document Nos. 1999840.002 (Abstract) and 494729.002 (Torrens). Stadium Village Properties, LLC, as redeveloper, acquired the fee simple interest in Parcels 2 and 3 by Quit Claim Deed dated December 16, 2009, filed January 7, 2010, as Document Nos. 2012461.003 (Abstract) and 500344.002 (Torrens). The interest of Stadium Village Properties, LLC was assigned to Venture Bank, a Minnesota banking corporation, by Assignment and Assumption of Management Agreement for Parking Facilities, Lease of the Plaza Property and Option to Purchase the Parking Property dated June 9, 2014, filed June 23, 2014, as Document Nos. 2084704.003 (Abstract) and 523989.003 (Torrens). The interest of Venture Bank was assigned to 500, LLC, a Minnesota limited liability company, by Assignment and Assumption of Management Agreement for Parking Facilities and Lease of the Plaza Property dated May 27 2015, filed June 9, 2015, as Document Nos. 2110051.002 (Abstract) and 531067.002 (Torrens). Affected by Affidavit dated April 4, 2019, filed April 9, 2019, as Document No. 2224133.001 (Abstract). (Not filed in Torrens) (Affects Parcels 2 and 3 and other land. A number of the above documents also appear as memorials on the Torrens Certificate for Parcel 1, but do not appear to affect that land) 15. Terms and conditions of an unrecorded Lease and Assignment, as shown by Memorandum of Rooftop Lease and Partial Assignment Agreement dated June 10, 2011 and June 13, 2011, filed August 23, 2011, as Document Nos. 2023971.003 (Abstract) and 505589.003 (Torrens), by and between Stadium Village Properties, LLC, a Minnesota limited liability company, lessor, and Crown Castle AS LLC, a Delaware limited liability company, lessee. (Parcel 1) 16. The following appears as a memorial on the Certificate of Title. While the Company will affirmatively insure against loss or damage sustained by the Insured arising as a result of this matter affecting title to the Land, neither Commercial Partners Title, LLC nor Old Republic National Title Insurance Company will undertake to have the memorial removed from the Certificate of Title: a. Collateral Assignment of Management Agreement for the Parking Facilities and Lease of Plaza Property and Option to Purchase Parking Property dated September 28, 2012, filed December 6, 2012, as Document No. 512229.002, executed by Stadium Village Properties, L.L.C., a Minnesota limited liability company, as borrower, to Venture Bank, a Minnesota banking corporation, as lender. Document was given as additional security for that certain Mortgage and Security Agreement and Fixture Financing Statement filed as Document No. 494729.003, which has been deleted from the Certificates of Title by Order in Proceedings Subsequent dated May 12, 2016, filed May 13, 2016, as Document No. 538682.002. (Parcels 1 and 3) 2. Inter-fund Loan Kloiber explained that inter-fund borrowing is a routine method of managing cash-flow for large redevelopment projects. To complete the purchase of 3989 Central Avenue NE, the EDA requires temporary financing from the City of Columbia Heights for approximately one-third of the purchase price, or $1,000,000. Staff estimates the proposed new loan of $1,000,000 will be rapid within 12 months from the acquisition of 3989 Central Avenue. The new loan will accrue no interest if it is repaid within 12 months, and an interest rate of one percent for any time required beyond 12 months. Kloiber clarified that of the approximate $3,000,000 purchase price, $1,000,000 would come from the existing fund balance in EDA fund 408, $1,000,000 would come from City Fund 420, and $1 million would be loaned from City Fund 431. STAFF RECOMMENDATION: Staff recommends that the EDA Board approve the inter-fund loan from the City of Columbia Heights to support the acquisition of 3989 Central Avenue NE. Questions/comments from members: There were no questions. Motion by Szurek , seconded bySchmitt, to waive the reading of Resolution 2019-11, there being ample copies available to the public. All ayes. MOTION PASSED. Motion by Buesgens, seconded by Schmitt, to adopt Resolution 2019-11, Resolution approving and specifying the terms of an inter-fund loan from the City of Columbia Heights. All ayes. MOTION PASSED. EDA Special Meeting Page 20 July 22, 2019 RESOLUTION NO. 2019-11 A Resolution of the Economic Development Authority in and for the City of Columbia Heights, Minnesota, approving an inter-fund loan from City of Columbia Heights to Economic Development Authority Redevelopment Fund 408. Whereas by separate action, the Economic Development Authority seeks to acquire certain real property at 3989 Central Avenue Northeast for subsequent sale within the City of Columbia Heights; and Whereas, the Economic Development Authority requires temporary financing for approximately one- third of this proposed acquisition; and Whereas, the City and EDA have determined both that the proposed acquisition and resale are consistent with their goals and purposes, and the City has sufficient resources to provide such temporary financing; and Whereas, the City and the Economic Development Authority agree to the following internal loan terms for this temporary financing: 1.Principal of $1 million will be advanced by the City on the acquisition date 2.Interest accrues at zero percent per annum during the first year following the acquisition date. 3.Interest accrues at one percent per annum after the first year following the acquisition date. 4.All principal and accrued interest will be repaid by the Economic Development Authority on the resale date. Now, therefore, in accordance with all regulations of the Economic Development Authority in and for the City of Columbia Heights, the Board of the Economic Development Authority in and for the City of Columbia Heights makes the following: ORDER OF ECONOMIC DEVELOPMENT AUTHORITY IN AND FOR THE CITY OF COLUMBIA HEIGHTS IT IS HEREBY RESOLVED, that the Economic Development Authority in and for the City of Columbia Heights approves an inter-fund loan from the City of Columbia Heights to Economic Development Authority Redevelopment Fund 408. Passed this _________ day of ______________________, 2019 Offered by: Buesgens Seconded by: Schmitt Roll Call: All ayes President Attest: Secretary EDA Special Meeting Page 21 July 22, 2019 OTHER BUSINESS Schmitt asked for a timeline of the next steps. Chirpich answered that his next steps are to make a calendar and that he would communicate meeting times with members so that a quorum would be present. Bourgeois added that she has scheduled a discussion regarding relocating City Hall to the 3989 th Central Avenue Development at the August 5 City Council Work Session. Motion by Buesgens, seconded by Schmitt, to adjourn the meeting. The meeting was adjourned at 6:52 pm. Respectfully submitted, Nicole Tingley City Clerk/Recording Secretary