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HomeMy WebLinkAbout2020-3054DECONSTRUCTION ESCROW AND DISBURSING AGREEMENT (Pre-Closing Work) This DECONSTRUCTION ESCROW AND DISBURSING AGREEMENT ("Agreement") is effective as of ______ , 2020 (the "Effective Date") by and among BPOZ Columbia Heights, LLC, a Delaware limited liability company ("BPOZ"), and the City of Columbia Heights, a Minnesota municipal corporation ("City") and First American Title Insurance Company ("Escrow Agent"). RECITALS A.BPOZ has acquired title to certain land (the "Redevelopment Property") pursuant to a certain Purchase and Redevelopment Contract by and among BPOZ, the City and the Columbia Heights Economic Development Authority dated September 28, 2020 (the "Contract"), under which BPOZ has agreed to construct a mixed-use building (the "Project") consisting of approximately 266 multifamily rental apartment dwellings, approximately 3,280 square feet of commercial space, and associated structured and surface parking all to be owned and operated initially by BPOZ (the "Housing Component"), and (ii) approximately 21,256 square feet of gray-shell finish space designed for use as a City hall to be owned and operated initially by City (the "City Hall Component"). B.Section 3.4 of the Contract requires the City to complete certain Pre-Closing Work (as defined in the Contract), and the reimbursement by BPOZ to the City of the out of pocket costs of the Pre-Closing Work. C.Section 3 .4 of the Contract further provides for the deposit of an amount representing 125% of the estimated costs of the Pre-Closing Work into an escrow held by Escrow Agent, if Closing ( as defined in the Contract) occurs prior to completion of the Pre-Closing Work and a final determination of such Pre­ Closing Work. D.As of the date of Closing (as defined in the Contract), the Pre-Closing Work has not been completed to a point at which the actual costs of the Pre-Closing Work can be finally determined. E.In order to assure that the Pre-Closing Work is properly completed and paid for in a timely manner, the parties desire to enter into this Deconstruction Escrow and Disbursement Agreement. NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto hereby agree as follows: Deconstruction of Improvements. The City shall complete the Pre-Closing Work, which includes deconstruction, demolition and disposal of certain improvements substantially in accordance with the demolition plans and specifications prepared by the City, Alliant Engineering and Doran Companies and approved by the City and BPOZ (the "Demolition Plans"), rough grading substantially in accordance with the grading plans -1- October 27 Contract # 2020-3054 -2- into the Escrow Account an additional amount equal to the lesser of 125% of the estimated cost increase due to such change order or 125% of the estimated cost of the remaining work necessary to complete the Pre-Closing Work as modified by the change order. Use. The Escrow Deposit shall, except as otherwise stated in this Agreement, be used exclusively for the purpose of paying or reimbursing the City for the out of pocket costs of the completion of the Pre-Closing Work from time to time as construction progresses. Accounting. The Escrow Agent shall account for all funds deposited with it and shall hold the Escrow Deposit in a non-risk, interest bearing account. Interest earned on any portion of the Escrow Deposit shall be added to the Escrow Deposit and be available to pay for the Pre-Closing Work Costs. Conditions for Disbursement. a.First Disbursement of Funds. Prior to the first disbursement hereunder, Escrow Agent shall be furnished: 1.A copy of the demolition and construction budget or use of proceeds schedule executed by the City setting forth the amounts budgeted for all items which in the aggregate constitute the Pre-Closing Work Costs. 11.A disbursement request, in the form attached to this Agreement as Exhibit B ("Disbursement Request"), executed by the City in connection with the requested disbursement. 111.Sufficient funds to cover the requested disbursements, all unpaid charges owed under this Agreement, and all remaining Pre-Closing Work Costs. b.Conditions of Subsequent Disbursements. Prior to each disbursement hereunder, the Escrow Agent shall be furnished: 1.An up-to-date demolition and construction budget prepared by the City. ii.A Disbursement Request executed by the City in connection with the requested disbursement. iii.Sufficient funds to cover the requested disbursements and to pay for extras or change orders for which waivers have not been deposited and for which funds have not previously been deposited. 1v. Sufficient funds to cover the disbursement, and all unpaid charges owed under this Agreement. -3- v.A sworn construction statement and unconditional lien waivers, satisfactory to Escrow Agent, with respect to amounts disbursed for Pre­ Closing Work Costs pursuant to the immediately preceding Disbursement Request. v1. Copies of all pending or approved change orders. c.Conditions of Final Disbursement. 1.An up-to-date demolition and construction budget prepared by the City. 11.Copies of all pending or approved change orders. 111.The Disbursement Request executed by the City in connection with the requested disbursement. 1v. Sufficient funds to cover the requested disbursements, and to pay for extras or change orders for which waivers have not been deposited and for which funds have not previously been deposited. v.Sufficient funds to cover unpaid charges owed under this Agreement. v1. Sworn construction statement and unconditional lien waivers, satisfactory to Escrow Agent, with respect to amounts disbursed for Pre-Closing Work Costs pursuant to the immediately preceding Disbursement Request. v11. Conditional final lien waivers from all contractors or subcontractors confirming the amount to be paid pursuant to the Disbursement Request. v111. Copy of a certificate of completion from BPOZ, as set forth in Section 7 below, satisfactory to Escrow Agent, that the Pre-Closing Work has been completed. Supervision. BPOZ acknowledges and agrees that the direction and supervision of the work force constructing or installing the Pre-Closing Work, including subcontractors, rests exclusively with the City, and BPOZ agrees not to issue any instructions to or otherwise interfere with the same. Cooperation. If the City will be completing the Pre-Closing Work ("City's Work"), the City agrees, for the benefit of BPOZ (i) to cooperate with BPOZ, if the Project is not then completed, to minimize any inconvenience to or delays of BPOZ's contractors and agents in timely completing the same, (ii) to hold BPOZ harmless from and fully indemnify BPOZ, subject to any applicable statutory limits, for all damage, injury, claims, loss, cost, and expense that results from City's Work, except as may relate to, or arise from, the gross negligence or intentional conduct of BPOZ, (iii) to ensure that those performing the labor for or providing the materials directly to City are fully insured, and (iv) to keep the Redevelopment Property free and clear of mechanics' and materialmen's liens resulting -4- -5- deposits required as a result of change orders, shall keep the Project free and clear of any and all mechanic's liens relating to the Pre-Closing Work. All disbursements for Pre­ Closing Work Costs may be made either to the City as reimbursement for costs paid or advanced, or to the contractor (who it is expected will thereafter promptly pay subcontractors for the work or amounts listed in the draw request) or may be made directly to the subcontractors, in the discretion of Escrow Agent, solely to pay for materials, labor and services, or to pay costs and expenses for which such disbursement is requested. The City may, by written direction, require that all payments be made directly to subcontractors. Insurance Requirements. The City shall provide or cause to be provided workers' compensation, builder's risk, and public liability insurance and other insurance required under applicable law in connection with any of the Pre-Closing Work. Insufficient Account. If the City determines in its reasonable discretion that the money in the Escrow Account is insufficient to pay for completion of the Pre-Closing Work due to change orders, the City shall so notify BPOZ, in writing, and as soon as possible (but in no event later than twenty (20) days after such notice) BPOZ shall deposit with the Escrow Agent an amount, in cash, equal to one hundred twenty-five percent (125%) of such deficiency. The City shall have no responsibility to pay or cause to be paid, any costs, charges or expenses incurred in connection with the deconstruction and completion of the Pre-Closing Work and change orders thereto in excess of amounts in the Escrow Account from time to time. Default. If the City abandons or fails to proceed diligently with the Pre-Closing Work or otherwise is in default under this Agreement, BPOZ shall have the right (but not the obligation) to take over and cause the completion of the Pre-Closing Work following ten (10)days' advance written notice to the City and the Escrow Agent (the "Default Notice"). Unless the City disputes the Default Notice, as evidenced by written notice delivered by the City to BPOZ and the Escrow Agent within ten (10) days following the receipt ( or deemed receipt as the case may be) of the Default Notice, BPOZ may demand release of so much of the remaining Escrow Deposit to cover BPOZ' s out-of-pocket costs incurred to complete the Pre-Closing Work. In the event the City timely disputes the Default Notice, Escrow Agent may, at its option, either (i) continue to hold the remaining Escrow Deposit until such time as BPOZ and the City resolve their dispute and issue joint written instructions relative to disbursement of the Escrow Deposit, or (ii) deposit the Escrow Deposit with a court of competent jurisdiction, in which event Escrow Agent shall thereupon be relieved from all further obligations hereunder. If BPOZ defaults under this Agreement, after written notice of such default is provided to BPOZ and the BPOZ has not cured such default within ten (10) business days, the City shall, in its sole discretion, have the right (i) to bring an action for either specific performance or (ii) to release all amounts then remaining the in Escrow Account as liquidated damages, it being agreed that the City's damages resulting from the BPOZ's default are difficult, if not impossible, to determine, and that the liquidated damages calculation above is a fair and reasonable estimate of those damages, which has been agreed to in an effort to cause the amount of said damages to be certain. In the event the City seeks and is awarded liquidated damages, the City shall no longer be required to complete any Pre-Closing -6- -7- report (provided such email is followed by delivery by one of the other means identified in (iii) or (iv) below); (iii) one (1) business day following dispatch by Federal Express or equivalent overnight delivery service or (iv) three (3) business days after mailing certified or registered mail, postage prepaid, return receipt requested, to respective addresses of the parties set out below: ESCROW AGENT: First American Title Insurance Company 121 South 8th Street, Suite 1250 Minneapolis, MN 55402 Attn: Kathy Estenson E-mail: kestenson@firstam.com BPOz:· BPOZ Columbia Heights, LLC IDS Center 80 South 8th Street, Suite 4155 Minneapolis, MN 55402 Attn: Robert C. Lux E-mail: rclux@alatusllc.com CITY: City of Columbia Heights Attn: City Manager 590 40th A venue NE Columbia Heights, MN 55421 E-mail: KBourgeois@columbiaheightsmn.gov Choice of Law. This Agreement shall be construed and enforced in accordance with the laws of the State of Minnesota. Successors and Assigns. No party hereunder may assign its rights and interests under this Agreement, in whole or in part, without the prior written consent of the other party. The terms used to designate any of the parties herein shall be deemed to include the permitted successors and assigns of such parties. Entire Agreement. This Agreement and the Contract represent the final agreement between the parties with respect to the Pre-Closing Work and the Escrow Account and may not be contradicted by evidence of prior, contemporaneous or subsequent oral agreements. There are no unwritten oral agreements between the parties. All prior or contemporaneous agreements, understandings, representations, and statements, oral or written, with respect to the Pre-Closing Work and the Escrow Account are merged into this Agreement and the Contract. Neither this Agreement nor any of its provisions may be waived, modified, amended, discharged, or terminated except in writing signed by the party against which the enforcement of the waiver, modification, amendment, discharge, or termination is sought, and then only to the extent set forth in that writing as agreed to by the parties. -8- -9- Signature Page to Construction Escrow and Disbursing Agreement Signature Page to Deconstruction Escrow and Disbursing Agreement EXHIBIT B DISBURSEMENT REQUEST On ______ , 20 __ , the City of Columbia Heights (the "City") hereby requests the disbursement of funds to the following persons in the amounts set forth below ("Disbursement Request") from the Escrow Account established pursuant to the Escrow and Disbursing Agreement dated ____ , 20_ (the "Agreement") executed by and among BPOZ, the City and First American Title Insurance Company to pay for Pre-Closing Work regarding the Project. All capitalized terms not defined herein shall have the meanings ascribed to them in the Agreement. Name and Address of Payee Amount Requested to be Paid a. $ ___________ _ b. $ ___________ _ C. $ ___________ _ d. ------------ The undersigned hereby represents and warrants to Escrow Agent that the following information and certifications provided in connection with this Disbursement Request are true and correct: 1.Attached hereto are invoices and any other documentation which may be required pursuant to the Agreement with respect to each item for which payment is requested above. 2.Estimated costs of completing the uncompleted Pre-Closing Work as of the date of this Disbursement Request: 3.The undersigned certifies that: (A)the disbursement requested pursuant to this Disbursement Request will be used solely to pay a cost or costs allowable under the Agreement; (B)none of the items for which disbursement is requested pursuant to this Disbursement Request has formed the basis for any disbursement previously made from the Escrow Account; (C)all labor and materials for which disbursements have been requested have been incorporated into the Pre-Closing Work or suitably stored upon the Project in accordance with reasonable and standard building practices, the Agreement and all applicable laws, ordinances, rules and regulations of any governmental authority having jurisdiction over the Project; and (D)the materials, supplies and equipment furnished or installed for the Pre-Closing Work are not subject to any lien or security interest or that the funds to be disbursed pursuant to this Disbursement Request are to be used to satisfy any such lien or security interest. IN WITNESS WHEREOF, the undersigned has executed this Disbursement Request as of the day and date first above written. CITY: 20558850v3 CITY OF COLUMBIA HEIGHTS, a Minnesota municipal corporation By: ___________ _ Its: Mayor And by: Its: City Manager