ITEM 3.9 Berning Dairy FarmOtCI�egog
MINNESOTA
DEPARTMENT INFORMATION
Request for
City Council Action
ORIGINATING DEPARTMENT
REQUESTOR:
MEETING DATE:
Administration
City Attorney
May 13, 2019
PRESENTER(s)
REVIEWED BY:
ITEM #:
Consent
City Administrator/Finance Director Flaherty
3.9
STRATEGIC VISION
MEETS:
THE CITY OF OTSEGO:
Berning Family Dairy, Inc.
Is a strong organization that is committed to leading the community through innovative
communication.
X
Has proactively expanded infrastructure to responsibly provide core services.
No
Is committed to delivery of quality emergency service responsive to community needs and
expectations in a cost-effective manner.
The parcel in question (PID 118800251101) was acquired by the City as a tax forfeit parcel in 1993 for park
Is a social community with diverse housing, service options, and employment opportunities.
as a future Park site in the City Comprehensive and Park Plans. The City leased the property for years to
Is a distinctive, connected community known for its beauty and natural surroundings.
AGENDA ITEM DETAILS
RECOMMENDATION:
City staff recommends that the City Council approve a purchase agreement between the City of Otsego and
Berning Family Dairy, Inc.
ARE YOU SEEKING APPROVAL OF A CONTRACT?
IS A PUBLIC HEARING REQUIRED?
Yes
No
BACKGROUND/JUSTIFICATION:
The parcel in question (PID 118800251101) was acquired by the City as a tax forfeit parcel in 1993 for park
purposes. The parcel was never used for park purposes and as the City grew this location was not included
as a future Park site in the City Comprehensive and Park Plans. The City leased the property for years to
Berning Family Dairy, Inc. for agricultural crop purposes.
When the 85th Street and Maciver Avenue Project was initiated in 2017, City staff spoke with Tom Berning
(representing Berning Family Dairy, Inc.) regarding conveyance of the parcel as an incentive to settle for
needed acquisition of easements over and across the Berning farm property to the north of this site and
adjacent to the new school. A condition of settlement for the appraised value of the property was that the
City would undertake acquisition of this property without current restrictions, and would then convey it to
Berning Family Dairy for the County's approved value.
The City of Otsego passed a resolution (2018-03) in early 2018 requesting that the parcel be valued by
Wright County and approved by the County Board as a parcel that should be conveyed to the City at fair
market value and that the current restrictions (park use) on the property be removed by the State of
Minnesota. The County valued the parcel at $30,000.00. After the valuation process was completed, the
City requested that the resolution not be adopted by the County Board until the Stipulation of Settlement
was finally signed by Berning Family Dairy, Inc.
The signed Stipulation and other documents were finally received by the City's representative earlier this
year. The City then requested The Wright County Board to consider the City's resolution approving the
conveyance. At the County Board meeting on April 30, 2019, the resolution was approved. In order to have
the County send the resolution to the State requesting a State deed without restriction to the property, the
City must pay the approved valuation of the property ($30,000.00) plus additional statutory and
administrative costs ($1,200.00) which amounts to a total of $31,200.00.
The attached Purchase Agreement has been executed by Tom Berning on behalf of Berning Family Dairy,
Inc., but needs approval and execution by the City. Once the City receives a clean deed from the State of
Minnesota it will convey the parcel to Mr. Berning for the approved value of $30,000.00 pursuant to the
Purchase Agreement.
I SUPPORTING DOCUMENTS ATTACHED: _ _ I
Purchase Agreement
Wright County Valuation and Administrative Costs
PORRIRI F MOTION
PLEASE WORD MOTION AS YOU WOULD LIKE IT TO APPEAR IN THE MINUTES:
Motion to Approve Purchase Agreement Between the City of Otsego and Berning Family Dairy, Inc. and
approve $31,200.00 payment to Wright County for the subject parcel.
BUDGET INFORMATION
FUNDING:
BUDGETED:
Fund 403 — MSA Construction
No. The costs paid by the City will be mostly
reimbursed with the Berning Family Dairy, Inc.
purchase proceeds.
Thomas J. Campbell*
Roger N, Knutson
Elliott B, Knetsch
Joel J, Jamnik
Andrea McDowell Poehler
Soren M. Mattick
Henry A, Schaeffer, III
Alina Schwartz
Shana N. Conklin
Array B, Schutt
James J, Mong6, III
Jerome M. Porter
David S, Kendall
Kurt S, Fischer
*Of Counsel
Grand Oak Office Center 1
860 13hie Gentian Road
Suite 290
Ewan, Minnesota 55121
Nhin: 651-452-5000
Fax:6SI-234-6237
www, ek-Iaw, Conn
EM –- —-
PROFESSIONAL ASSOC I AT ION
April 26, 2018
Mr, Adam Flaherty, CPA
City Administrator & Finance Director
13400 90t1i Street NE
Otsego, MN 55330
Re: City of Otsego v. Berning Family Dairy, et. al.
Court File No. 86 -CV -18-1079
Dear Mr, Flaherty:
Please find enclosed the Purchase Agreement by and between Berning Family
Dairy, Inc,, a Minnesota corporation ("Purchaser") and City of Otsego, a
Minnesota municipal corporation ("Seller") executed by Tom Berning on behalf
of Berning Family Dairy, Inc, on March 4, 2019.
If you have any questions please call David S, Kendall directly at (651) 234-6207,
Thank you,
/smt
Enclosures
201972YI
Very truly yours,
CAMPBELL KNUTSON
Professional Association
oo
Stuart M, Teigen, L gal Assistant
PURCHASE AGREEMENT
THIS PURCHASE AGREEMENT is effective as of the ql` \ day of (^hrcV- ,
2019, by and between BERNING FAMILY DAIRY, INC., a Minnesota corporation, 11848 800i
Street NE, Albertville, Minnesota 55301 ("Purchaser"), and CITY OF OTSEGO, a Minnesota
municipal corporation, 13400 9001 Street NE, Otsego, Minnesota, 55330 ("Seller").
RECITALS:
A Seller is the owner of property identified as Parcel ID No. 118800251101 located in the
City of Otsego, County of Wright, State of Minnesota, legally described in Exhibit A
attached hereto and made a part hereof (the "Property").
B. Seller desires to convey the Property thereon to Purchaser and Purchaser is desirous of
purchasing the Property. ,
C. Seller received title to this property in 1993 from the State of Minnesota as tax forfeited
property pursuant to Minnesota Statutes § 282.01.
D. Seller may only convey the title received from the State of Minnesota according to the
terms of Minnesota Statutes § 282.01.
AGREEMENT:
In consideration of the mutual covenants and agreements herein contained and other
valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties
agree as follows:
1. OFFER/ACCEPTANCE. Subject to compliance with the terms, covenants and conditions
of this Purchase Agreement, Seller shall convey the Property to the Purchaser.
2. PRICE AND TERMS. The price for the Property included under this Purchase
Agreement is Thirty Thousand and 0/100 Dollars ($30,000.00) which amount shall be paid in
cash at closing.
Seller and Purchaser acknowledge that the Property being conveyed herein is subject to a
restriction that it be utilized by Seller exclusively for park and recreation lands and that this
Agreement is contingent upon Seller obtaining release of this restriction and obtaining marketable
title to the Property.
3. DEED/MARKETABLE TITLE. Upon performance by Purchaser, Seller shall execute
and deliver a Quit Claim Deed, conveying good and marketable title of record, subject to the
following Permitted Encumbrances:
A. Reservations of minerals or mineral rights by the State of Minnesota, if any;
B. Building and zoning laws, ordinances, state and federal regulations;
C. The lien of real property taxes and the lien of special assessments and interest due
thereon, if any, payable in the year of closing which by the terms of this Purchase
Agreement are to be paid or assumed by the Purchaser; and
4. REAL ESTATE TAXES AND SPECIAL ASSESSMENTS.
A. Prior Years' Delinquent Real Estate Taxes and Delinquent Special Assessments.
Delinquent real estate taxes payable in years prior to the year of Closing and
delinquent installments of special assessments certified for collection with real
estate taxes payable in years prior to the year of Closing, together with penalty,
interest and costs, shall be paid by Seller not later than the Date of Closing.
B. Real Estate Taxes Payable in the Year of Closing. Real estate taxes payable in the
year of Closing shall be prorated between Seller and Purchaser on a calendar year
basis to the Date of Closing. Purchaser shall assume installments not paid at
Closing. Seller shall pay penalty, interest and costs on any delinquent installment
of taxes and special assessments payable by Seller in the year of Closing.
C. Certified Special Assessments. All installments of special assessments certified
for payment with the real estate taxes payable in the year of Closing shall be paid
by Purchaser at Closing.
D. Pending Special Assessments. Seller shall provide for payment of special
assessments pending as of the date of this Purchase Agreement for improvements
that have been ordered by the City Council or other governmental authorities.
Seller's provision for payment shall be by payment into escrow of 1.5 times the
estimated amount of the assessments. If a special assessment becomes pending
after the date of this Purchase Agreement and before the Date of Closing,
Purchaser may, at Purchaser's option:
(1) Assume payment of the pending special assessment without adjustment to
the purchase price of the real property; or
(2) Require Seller to pay the pending special assessment (or escrow for
payment of same as provided above) and Purchaser shall pay a
commensurate increase in the purchase price of the real property, which
increase shall be the same as the estimated amount of the assessment; or
(3) Rescind this Agreement, in which case all Earnest Money shall be
refunded to Purchaser.
E. All Other )levied Special Assessments. Seller shall pay on the Date of Closing all
other special assessments levied as of the date of this Purchase Agreement.
5. SELLER'S LIEN WARRANTIES. Seller warrants that there has been no labor or
material ftunished to the Property for Seller for which payment has not been made.
G. ACCESS PRIOR TO CLOSING. Upon reasonable notice to Seller, Purchaser and
Purchaser's authorized agents shall have the right during the period from the date of this
Agreement to the Date of Closing to enter in and upon the Property in order to make, at
Purchaser's expense, surveys, measurements, soil tests and other tests that Purchaser shall deem
necessary. Purchaser agrees to restore any resulting damage to the Property and to indemnify, hold
harmless and defend Seller from any and all claims by third persons of any nature whatsoever
arising from Purchaser's right of entry hereunder, including all actions, proceedings, demands,
assessments, costs, expenses and attorneys' fees.
7. POSSESSION. Seller shall deliver possession of the Property not later than the actual
date of closing.
8. TITLE INSURANCE. Seller shall notify Purchaser if the restriction is lifted regarding
exclusive use of the Property for park and recreation purposes and. Seller has obtained marketable
title. Within fifteen (15) days of the date of that notice, Purchaser shall be responsible for
obtaining title evidence and reviewing title to the Property. Purchaser shall be allowed twenty (20)
business days after the receipt of the title commitment for examination of title and making any
objections, which shall be made in writing or deemed waived.
9. TITLE CORRECTIONS AND REMEDIES. Seller shall have 120 days from receipt of
Purchaser's written title objections to make title marketable. Upon receipt of Purchaser's title
objections, Seller shall, within ten (10) business days, notify Purchaser of Seller's intention to make
title marketable within the 120 day period, Liens or encumbrances for liquidated amounts which
can be released by payment or escrow from proceeds of closing shall not delay the closing, Cure
of the defects by Seller shall be reasonable, diligent, and prompt. Pending correction of title, all
payments required herein and the closing shall be postponed.
If any objection is so made, Seller shall have ten (10) business days from receipt of Purchaser's
written title objections to notify Purchaser of Seller's intention to make title marketable within one
hundred twenty (120) days from Seller's receipt of such written objection. If notice is given,
payments hereunder required shall be postponed pending correction of title, but upon correction of
title and within ten (10) days after written notice to Purchaser, the parties shall perform this
Agreement according to its terms. If no such notice is given or if notice is given but title is not
corrected within the time provided for, the Purchaser (at Purchaser's option) shall have the right to
terminate this Agreement.
10. NOTICES. All notices required herein shall be in writing and delivered personally or
mailed to the address for each party as shown above and if mailed, are effective as of the date of
mailing.
M
11. MINNESOTA LAW, This contract shall be governed by the laws of the State of
Minnesota,
12. WELL DISCLOSURE. [Check one of the following]
Seller certifies that Seller does not know of any wells on the Property.
X Wells on the Property are disclosed by Seller on the attached Well Disclosure form,
13. DISCLOSURE OF INDIVIDUAL ON-SITE SEWAGE TREATMENT SYSTEM,
Seller discloses that there may be individual on-site sewage treatment system on the
Property. Seller is aware of an application for a building permit dated April 16, 1969 to
install an on-site sewage treatment system on the Property, This application does not
include a map showing the location of the system. Seller has no information regarding
whether this system remains on the property. If the system remains on the property,
Seller has no reason to believe it has been in use since Seller acquired conditional title
from the State of Minnesota in 1993 through tax forfeiture statutes,
14. PROTECTED HISTORICAL SITES. [Select either one of the following.]
X Seller represents that Seller does not know if there are historical, native
American, or archeological materials on or in the Property that might be protected
by law,
To Seller's knowledge, the property does not have any American Indian burial
grounds, other human burial grounds, ceremonial earthworks, historical materials,
and/or other archeological sites that are protected by federal or state law.
Purchaser's obligation to close is contingent upon Purchaser determining to
Purchaser's satisfaction that the property does not have any American Indian burial
grounds, other human burial grounds, ceremonial earthworks, historical materials,
and/or other archeological sites that are protected by federal or state law,
15. LEAD PAINT DISCLOSURE. [Check one of the following]
Seller represents that the dwelling was constructed on the real property in 1978 or
later.
Seller represents that the dwelling was constructed on the real property before 1978,
(if such housing is located on the real property, attached and made a part of this
Purchase Agreement is "LEAD PAINT ADDENDUM FOR HOUSING
CONSTRUCTED BEFORE 197811,)
16. METHAMPHETAMINE DISCLOSURE STATEMENT.
[Check one of the following.]
X To the best of Seller's knowledge, methamphetamine production has not occurred
on the Property.
To the best of Seller's knowledge, methamphetamine production has occurred on
the Property and Seller makes the following disclosure:
A county or local health department or sheriff [strike one] has / has not ordered that the
Property or some portion of the Property is prohibited from being occupied or used until it
has been assessed and remediated as provided in the Department of Health's Clandestine
Drug Labs General Clean-up Guidelines.
If such order or orders have been issued complete the following statement:
The above orders issued against the Property [strike one] have / have not been vacated.
If such order has not been issued, state the status of removal and remediation on the
Property: [Use additional sheets, if necessary.]
17. CLOSING. The closing (the "Closing") of the purchase and sale contemplated by this
Agreement shall occur at a location designated by Purchaser, and shall occur on or before
2019 ("Closing Date"). At closing, Seller and Purchaser shall disclose
their Federal Tax Identification Numbers for the purposes of completing state and federal tax
forms.
18. CLOSING DOCC. MENTS.
A. At the Closing, Seller shall execute and/or deliver to Purchaser the following
(collectively the "Closing Documents"):
(1) Quit Claim Deed.. A Quit Claim Deed in recordable form and reasonably
satisfactory to Purchaser.
(2) Storage Tanks. If required, an affidavit with respect to storage tanks
pursuant to Minn. Stat. § 116.48.
(3) 'Well Certificate. If there is a well located on the Property, a well
disclosure certificate in form and substance true to form for recording.
(4) Other Documents. All other documents reasonably determined by either
party or the title insurance company to be necessary to transfer and provide
title insurance for the Property.
B. At the Closing, Purchaser shall pay the Purchase Price and execute and deliver to
Seller the following:
5
(1) All documents reasonably determined by either party or the title insurance
company to be necessary to provide title insurance for the Property;
19. CLOSING COSTS. The costs relating to the closing of this transaction shall be paid as
follows:
A. Purchaser shall pay:
(1) Recording fee for the Quit Claim Deed;
(2) The closing fees charged by the Title Company;
(2) All costs of the premium for owner's title insurance;
(3) State deed tax
(4) All costs associated with obtaining a Title Commitment
20. PURCHASER'S CONTINGENCIES. Purchaser's obligations under this Agreement are
contingent upon Purchaser's satisfaction with each of the following ("Purchaser's Contingencies"):
A. The representations and warranties of Seller set forth in this Agreement must be
true as of the date of this Agreement and on the Closing Date.
B. Purchaser determining on or before the Closing Date, that it is satisfied, in its sole
discretion, with the results of matters disclosed by any Phase I Environmental Audit
or by any additional environmental/engineering investigation or testing of the
Property performed by Purchaser or Purchaser's agent, By executing this
Agreement, Seller hereby authorizes Purchaser to enter upon the Property at
reasonable times to conduct the investigations and/or tests described herein.
Purchaser shall be solely responsible for all environmental tests and shall hold
Seller harmless from any such costs and shall indemnify Seller for breach of this
provision including reasonable attorneys' fees.
C. Purchaser determining that it is satisfied with the title to the Property.
If the Purchaser's Contingencies have not been satisfied on or before the Closing Date, then
Purchaser may, at Purchaser's option, extend the Closing Date in order to satisfy the
Purchaser's Contingencies or terminate this Agreement by giving notice to Seller on or
before the Closing Date. The contingencies set forth in this section are for the sole and
exclusive benefit of Purchaser, and Purchaser shall have the right to waive the
contingencies by giving notice to Seller.
1
21. SELLE R,S'S CONTINGENCIES. Sellers's obligations under this Agreement are contingent
upon Sellers's satisfaction with each of the following ("Sellers's Contingencies"):
A. This Agreement is contingent upon Seller receiving marketable title to the Property
from the State of Minnesota pursuant to Minnesota Statutes § 282,01, Seller will
make reasonable efforts to obtain marketable title to the Property pursuant to
Minnesota Statutes Chapter 282 and any other applicable legal authority, including
but not limited to seeking release of the restriction upon the Property stating that the
Property is to be used by Seller exclusively for park and recreation lands.
If the Seller's Contingencies have not been satisfied on or before the Closing Date, then
Seller may, at Seller's option, extend the Closing Date in order to satisfy the Seller's
Contingencies or terminate this Agreement by giving notice to Purchaser on or before the
Closing Date.
22, TIME IS OF THE ESSENCE. Time is of the essence for all provisions of this Purchase
Agreement.
BUYER:
BERNING FAMILY DAIRY, INC.•
By:\fin ct Dated: Maj'ct, Ll , 2019
Thomas Bering
Its:
SELLER:
CITY OF OTSEGO
By: Dated: 12019
Jessica Stockamp, Mayor
And:
Adam Flaherty, City Administrator
Auditor/Treasurer
Department
10 2nd St. NW Rm 230
Buffalo, MN 55313
Ph: (763) 682-7578
Fax: (763) 682-7873
www.co.wright.mn.us
City of Otsego
13400 901h St NE
Otsego, MN 55330
Re: 118-800-251101
We are submitting to the State of MN your application for a State Deed. The following
fees per Minn. Stat. 282.01, subd. la, par. (b) will need to be paid before this state deed
can be submitted:
Purchase Price: $30000.00
State Deed Tax: $99.00
Agricultural Fee: $5.00
State Deed Fee: $25.00
3% Surcharge: $900.00
Wetland Certificate: $25.00
Admin Fee: $100.00
Total due payable to the Wright County Audltor/Treasurer: $31154.00
Recording Fee: $46.00
Total due payable to the Wright County Recorder: $46.00
Please send both checks to:
Wright County Auditor
102 "d ST NW Room 230 Attn Shawne/Jodi
Buffalo, MN 55313
We will submit this application after the full payments are received.
If you have any questions, please feel free to contact us at (763) 682-7587 or 763 684-
4540.
An Equal Opportunity Employer