ITEM 3.5 Arbor Creek 3rdRequest�^~/. U��r
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DEPARTMENT INFORMATION
MEETING DATE:
ORIGINATING DEPARTMENT: REQUESTOR*
Planning City Planner Licht 26 August 2013
City Attorney MacArthur
pnsacwren(s)'
Consent
AGENDA ITEM DETAILS
REVIEWED BY:
City Administrator Johnson 3.5 — Arbor Creek 3rd
City staff recommends approvalofanagreement with Centra Homes regarding the securities for phased
construction ofArbor Creek 3rdeastof Madver Avenue.
ARE YOU SEEKING APPROVAL oF AnowrnAor, | 13 A PUBLIC HEARING REQUIRED?
Centra Homes has an entered into an agreement with Emmerich Development to purchase the 151 lots
|nArbor Creek 3mAddition east ofPNac\verAvenue. Emmerich Development, the original developer of
Arbor Creek, received City Council approval of the Arbor Creek 3 rd Addition Final Plat on 10 January 2005
and started constructionofimpmvements. However, construction was halted asthe effects ofthe
recession were beginning to slow demand for additional lots. The public improvements within the
portion ofArbor Creek 3'd Addition west of MacIver Avenue were completed (and all but two lots now
built upon) but the area east of Madver Avenue was left partially graded with some water and sewer
pipes installed inopen trenches.
Thedeve lopment ag ree me nt forArborCree k 3'd req ui res EmmerichOeve lo pme nt to provideaecu rity to
ensure the completion of the public improvements within the final plat, including streets, sewer,, water
and storm sewer, initially estimated as$I,8OO,000for the entire plat. Emmerich Development had
posted aLetter ofCredit tnmeet the security obligations forArborCreek3mAdd(t|onbuttheissuing
bank failed and the City received a letter from the FDlC stating that the Letter of Credit would not be
honored orrenewed. Emmerich Development was unable toobtain a replacement Letter of Credit due
tothe banking crisis and recession, but the City does hold acash escrow of $250,244.49. Should the City
have neededLoacttocomp|ete the pubUcimprovomentseast ofMao\verAve nue,|tvvouIdhave utU1zed
the cash escrow and assessed any cost incurred over that amount to the individual lots.
With Centra Homes acquiring the subdivision east of MacIver Avenue, their intent is to complete the
public improvements and undertake construction of single family homes in phases of 20 to 30 lots, with
the first phase being 26 lots accessed from K4ac|ver/4/enue at 78th Street. City staff has drafted an
addendum to the development agreement whereby Centra Homes acknowledges that the City will not
issue building permits tolots without access topublic improvements that will berecorded with these
lots of record. This agreement requires Centra Homes to maintain $2O/0]O in escrow with the City for
the purposes ofenforcing the agreement should the need arise. The draft agreement further provides
that separate agreements will be entered into for each phase of construction requiring Centra Homes to
provide additional securities for the improvements being installed within each specific phase to provide
for oversight and ensure completion.
Upon approval of the draft agreement by the City Council and execution by Centra Homes, the cash
escrow the City 1sholding fromEmmerich Development would bereleased. This approach will allow
Centra Homes to limit the security required to the amount needed only those areas of Arbor Creek 3 m
east of Madver Avenue being completed while allowing the City protection against a request to issue
building permits for the existing final platted lots remaining without adjacent streets or utilities
completed.
SUPPORTING DOCUMENTS: oATn~oHso oNONE
A. Site Location
B Draft Agreement
POSSIBLE MOTION
Please word motion as you wo7ii I ike it to appe'll in the m1nutes.
Motion to approve an addendum to the Development Agreement for Arbor Creek rd Addition as
BUDGET INFORMATION
ACTION TAKEN
oAPPROVED ASREQUESTED ooew|Eo olABLso oOTHER (List changes)
ooMwswTm
Arbor Creek 3rd Addition
Date Created: 8/16/201
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CITY OF OTO
COUNTY OF WRIGHT
STATE OF MINNESOTA
ADDENDUM TO DEVELOPERS AG'REEMENT- AR OR CREEK THIIW
ADDITION
AGREEMENT entered into this —day of Atipst, 2013 bctlxecii the City of Otsego
(CITY), a municipal corporation Under the laws of the State of Minnesota and Centra
Homes, Inc. (DEVELOPER), a corporation under the laws of the State of Minnesota.
This Agreement affects that property located in the City of Otsego, Wright County,
Minnesota identified as:
AlW OR CREEK TTI RD ADDITION as on fi I e and recorded at the Offil c e or the County
Recorder, Wright Cowity, Minnesota.
WHEREAS, DEVELOPER has purchased platted land identified as a portion of
A"OR CF, -EEK TUTIRD ADDITION within the City of Otsego, Wright Cotinty,
T\4innesota consisting of 15 1 lots (said lots set forth on the attached Exhibit A) zoned for
residential pia -poses; and
WHEREAS, in relation to said Plat DEVELOPER's predecessor and CITY have entered
ijito that certain Developers Agreement recorded against the property on June 30, 2005 as
Doctiment No. A 965619 at the Office of the County Recorder of Wright County,
Mim-lesota, which remains in force and effect and which duties and obligations are
asstinied by DEVELOPER; and
WHEREAS, said Developers Agreement requires that DEVELOPER maintain security
in the form of an Irrevocable Standby Letter of Credit to insure that all public
iniprovenients required by CITY are constructed and warranted to City specifications;
and
WHEREAS, the current requirement is that DEVELOPER leas in place a Letter of Credit
in ffie amount of $1,900,000.00 to cover costs of public improvements needed to
complete the development; and
WHEREAS,, DEVELOPER s predecessor had obtained such a Letter of Credit from
N/lainstreet Bank; and
WHERE AS, Maitistreet an has been taken over and placed into receivers1iij) by the
FDIC; and
WHEItEl AS, the FDIC has indicated that it will no longer honor the obligations to CITY
as set forth in the original Letter of Credit and
'WHEREAS, CITY has notified DEVELOPER" s predecessor that they must obtain and
post a substitute Letter of Credit in order to remain in compliance with the Developers
Agreement; and
WHERE AS,DEVELOPER's predecessor has been unable to obtain a substitute Letter
of Credit in the amount required by the Developers Agreement; and
WHERE, AS, DEVELOPER has purchased the property with knowledge that seCUrity
will leave to be provided for public improvements prior to the City issuing building
permits for any lot within the Plat; and
WHEREAS, DEVELOPER and CITY have entered it -it o this Agreenient in order to
memorialize the process for posting of security for CITY costs and to hisure construction
of public improvements.
NOW THEREFORE IT IS AGREED D between the p antics as fo I I o ws:
1. DEVELOPER acknowledges and agrees that the CITY will issue no btiilding
perniits within AIMOR CREEK TI -IIID ADDITION east of MacIver Avenue
where all needed public improvements have not been completed (See Exhibit B
attached), until such time as all required public improvements have been installed
by the DEVELOPER and approved by the City Engineer. DEVELOPER may
obtain building permits for certain Phases of the PrOJ'CCt Upon execution of a
separate Developers Agreement for the developnient of these lots or phases of
these lots, postfiig of all security and cscrow required by that Agrcenient and
conipleting all public improvements within the Project oil that Phase as set forth in
the Developers Agreement, and Nvhen approved by the City Engineer.
2. DEVELOPER shall notify any person or entity seeking to buy the lots or a lot
within ARBOR CREEK THIRD ADDITION cast of MacIver Avenuc of the fact
2
that no building permits will be issued on the above described platted lots withill
the subdivision until such time as all public. iiiiprovenients, have been installed by
the DEVELOPER and approved by the City Engineer, or until such tilde as a
Phase Developers Agreement has been executed, all sceurity and escrow posted
and the public improvements for that please leave been completed to the
satisfaction of the City Engineer.
3. DEVELOPER shall provide and inaintain as security to insure warranty of and
proper installation and testing or those public iniprovenlents already installed
within ARBOR CREEKTHIRD ADDITION east of MacIver Avenue as well as
to provide interiiii security for the undeveloped portions of the developill.elit, to
insure that no construction activity occurs, and to cover any costs incurred by
CITY in monitoring and/or enforcing this Agreenient or the original Developers
Agreenient. The amount of this security or escrow shall be $ 20,000.00 Said
escrow to be retained, subject to any draws by the C14"Y for costs incurred, until
such time as other acceptable security is supplied to insure construction of
required public improvements, or until such time as all public iniprovenlents
within the portion of ARBOR CREEK THIRD ADDITION purchased by the
DEVELOPER have been constructed acid approved by the City Engineer. 'The
posted security or escrow shall utilized by CITY, at is sole discretion to reimburse
itself for any costs related to the Administration, processing or enforcenietit of
this Agreement or the original Developer's Agreenient including, but not linlited
to costs of administration, Planner's fees, Engineering fees and attorney's fees. In
the event that the security or escrow posted is depleted or about to be depleted,
CITY shall notify DEVELOPER acid. DEVELOPER shall ininiediately post
additional security or escrow in an amount deterinined by CITY.
4. At such time that security and/or escrow funds acceptable to the CITY is provided
as set forth above, the CITY will release to DEVELOPER's predecessor escrow
aniounts currently held by the CITY, minus any CITY costs incurred.
5. Prior to the time when DEVELOPER commences construction of public
iniproveiiients within the defined areas of ARBOR CREEK THIRD ADDITION
east of MacIver Avenue requiring additional iniprovements, DEVELOPER shall
coniply with the terms and condition s of the original Developers Agreement and
shall post additional security in the form of both an Irrevocable Standby Letter of
Credit with autoiiiatic renewal provisions as set forth in the Phase Developiiient
Agreement, in an amount deterniiiied by the City Engineer to assure completion
and warranty of the proposed work as Nvell as cash escrow to secure paynient of
ongoing engiiieering and other costs incurred by the City as well as for paynient
of any required City fees applicable at that time, or other sceurity arrangements
that may be approved by CITY at its sole discretion.
6. Except for this niodification, all other terms. and conditions as set forth ill the
original Developers Agreenient between DEVELOPER's predecessor and CITY
shall remain in full force and effect and shall be binding upon DEVELOPER.
3
7. The above is a full recitation of the Agreemeiit between the parties which
supereedcs any previous agreement between the parties (except for the original
Developers Agreement) whether oral orwritten.
8. 'mis Agreement shall run with the land and shall be recorded against the property
and is binding inion DEVELOPER and its heirs, assigns or successors in title.
DEVELOPER
CENTRA HOMES, INC.
By:
Its
CITY OF OTSO
Jessica Stockaml), Mayor
Tami Loff, City Clerk
COUNTY OF WRIGHT )
) SS
STATE OF MINNESOTA)
Subscribed and sworn before me this day of
ALIgttSt, 2013 by the
of CENTRA I-10ME, INC. on belialf of the
corporation and with authority.
4
NOTARY PUBLIC
COUNTY OF WIII-IT )
)SS
STA"I"'13 OF MINNESOTA.}
Subscribed and sworn berore me this day of
August, 2013 by Jessica Stockamp, Mayor and
Tami Doff , City Clerk on behalf of the City of Otsego
and with authority.
NOTARY PUBLIC
DRAFTED BY:
MACARTHUR LAW OFFICE, LLC
3601 Thurston Avenue North
Suite 103
Anoka, MN 55303
763-231-5850
5
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1EXHIBITAI
McCONLI [IS FA AN K ROOS A SSOCIATES, INC.
UNGINLERS AND b"DSURVEYORS
St I E E"T I OF 5 S I I E ETS
CONSTRUCTION ITEMS REMAINING
STORM SEWER
SANITARY SEWER
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