ITEM 3.5 Special Assessment Agreementdo
F
Otsego
MINNESOTA
DEPARTMENT INFORMATION
Request for
City Council Action
ORIGINATING DEPARTMENT
REQUESTOR:
MEETING DATE:
Administration
City Administrator/Finance Director Flaherty
August 10, 2020
PRESENTER(s)
REVIEWED BY:
ITEM #:
Consent
City Attorney Kendall
3.5
STRATEGIC VISION
MEETS:
I THE CITY OF OTSEGO:
Is a strong organization that is committed to leading the community through innovative
communication.
Has proactively expanded infrastructure to responsibly provide core services.
Is committed to delivery of quality emergency service responsive to community needs and
expectations in a cost-effective manner.
X
Is a social community with diverse housing, service options, and employment opportunities.
Is a distinctive, connected community known for its beauty and natural surroundings.
AGENDA ITEM DETAILS
RECOMMENDATION:
City staff is recommending that the City Council approve a Public Improvement and Special Assessment
Agreement.
ARE YOU SEEKING APPROVAL OF A CONTRACT?
IS A PUBLIC HEARING REQUIRED?
Yes
No
BACKGROUND/J USTI FICATION:
The City recently approved a Site Improvement Performance Agreement (SIPA) for the Village, which is a
development of a 190-unit multiple family building. Paragraph 17 of this SIPA requires that the property
owners pay sewer and water utility connection charges in accordance with the City Code.
The property owners, per the attached letter, are requesting that the City assess the sewer and water
utility connection charges due for the Village development against the subject property. The property
owners are requesting a ten-year amortization; however, based on previous similar assessments approved
by the City Council, City staff is recommending a seven-year amortization. The utility connection charges
total $960,500.00. The assessments will begin to be payable in 2021, with a 7-year amortization schedule
and interest of 2.20%.
City Attorney Kendall has drafted the attached Public Improvement and Special Assessment Agreement,
which outlines 1) terms and conditions of the assessment; 2) waivers to any and all hearings, irregularities
in procedure, and any and all rights to object said assessments, including but not limited to any right of
appeal under Minnesota Statute §429.081, any other statute or case law; 3) release/discharge the City; and
4) agreement to record against the property.
SUPPORTING DOCUMENTS ATTACHED:
• Request Letter from Property Owners
• Public Improvement and Special Assessment Agreement
• Resolution 2020-52
POSSIBLE MOTION
PLEASE WORD MOTION AS YOU WOULD LIKE IT TO APPEAR IN THE MINUTES:
Motion to approve the Public Improvement and Special Assessment Agreement between the City of Otsego
and R. Schultz Exchange, LLC and E. Schultz Exchange, LLC and to adopt Resolution 2020-52 approving and
adopting the assessment of sanitary sewer and water connection charges to Lot 1, Block 4 of Great River
Centre of Otsego 2nd Addition.
BUDGET INFORMATION
FUNDING BUDGETED:
N/A
0
THE VILLAGE
LUXUry Living
Eric & Rick Schultz
The Village
1602 215`h Street
St. Augusta, MN 55320
July'20, 2020
City of Otsego,
Attn: Madam Mayor & Council Members
Attn: Adam Flaherty
13400 90'h Street N E
Otsego, MN 55330
It is with all respect, that we ask for your cooperation with a misunderstanding on the city water and sewer connection
fees. On Friday, July '0rd,we paid the city water and sewer availability and park dedication fees totaling approximately
$820,000,00, With the misunderstanding being our fault, we believed all the city fees were satisfied. On Tuesday, July
14, 2020 we received word that we still owed $960,000.00 for water and sewer connection fees,
With the fees being overlooked and our bank loans already finalized, we respectfully ask for assessment of the
water/sewer connection charges for phase one of The Village project, This will prevent us from depleting our emergency
fund this early in the project. We also respectfully ask the council to consider approving a 2.2% interest rate for -a ten
year amortization versus the seven year amortization, A longer amortization will keep our payments lower, and help us
reach our goal of starting phase two within a reasonable amount of time, pending lease up.
Thank you for your consideration with this matter. We are extremely excited to grow our family business with the city of
Otsego,
Respectfully,
Eric & Rick Schultz
Owners of The Village
320.250.0190
Phone: 320.250.0190 1 Email: Eric, Schultz@thevillageofotsego,com I Website: www,thevillageofotsego,com
PUBLIC IMPROVEMENT
AND
SPECIAL ASSESSMENT AGREEMENT
AGREEMENT made this _ day of , 2020, by and between the
CITY OF OTSEGO, a Minnesota municipal corporation ("City") and R. SCHULTZ
EXCHANGE, LLC, a Minnesota limited liability company, and E. SCHULTZ EXCHANGE,
LLC, a Minnesota limited liability company ("Property Owners").
RECITALS
A. Property Owners are the owners of real property located in the City of Otsego,
Wright County, Minnesota, as legally described on Exhibit A attached hereto and incorporated
herein (the "Subject Property").
B. The Property Owners entered into a Site Improvement Performance Agreement
with the City for improvement of the Subject Property dated and recorded with
Wright County as Document #
C. Whereas Paragraph 17 the Site Improvement Performance Agreement requires the
Property Owners to pay Sewer and Water Connection Charges in accordance with the City Code
at the time a building permit is issued for the Subject Property.
D. The Property Owners have requested that the City assess the Sewer and Water
connection Charges due for the proposed development ("Fees") against the Subject Property.
NOW, THEREFORE, IN CONSIDERATION OF THEIR MUTUAL
COVENANTS THE PARTIES AGREE AS FOLLOWS:
1. SPECIAL ASSESSMENT. The City will assess the Fees in the amount of nine
hundred sixty thousand five hundred dollars ($960,500.00) against the Subject Property. The
special assessment shall be deemed adopted on the date this Agreement has been signed by all
parties. The assessment shall be spread without deferment over a seven (7) year period in equal
annual installments, together with interest of two and two tenths percent (2.2%) per year on the
unpaid balance. The first installment shall be payable with taxes paid in 2021.
2. WAIVER. Property Owners, their successors and assigns, waive any and all
procedural and substantive objections to the Public Improvements and special assessment, including
but not limited to hearing requirements and any claim that the assessment exceeds the benefit to the
Subject Property. Property Owners waive any appeal rights otherwise available pursuant to Minn.
Stat. § 429.081.
3. RELEASE. Property Owners, their successors and assigns, hereby unconditionally
release and forever discharge the City, its elected officials, employees, agents and insurers from any
and all claims and causes of action of whatever kind or nature that is in any way connected with or
related to the Public Improvements and the City's sewer and water systems, including mapping
errors.
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210907v4
4. BINDING EFFECT; RECORDING. This Agreement shall be binding upon
Property Owners and their successors and assigns. This Agreement shall run with the land and
may be recorded against the title to the Subject Property.
CITY OF OTSEGO
Jessica L. Stockamp, Mayor
Tami M. Loff, City Clerk
STATE OF MINNESOTA )
ss.
COUNTY OF WRIGHT )
The foregoing instrument was acknowledged before me this day of
, 2020, by Jessica L. Stockamp and Tami M. Loff, the Mayor and City
Clerk of the City of Otsego, a Minnesota municipal corporation, on behalf of the corporation and
pursuant to the authority granted by its City Council.
NOTARY PUBLIC
210907v4
OWNER:
R. SCHULTZ EXCHANGE, LLC
Its
STATE OF MINNESOTA )
)ss.
COUNTY OF WRIGHT )
The foregoing instrument was acknowledged before me this day of
, 2020, by Rick Schultz, the Chief Manager of R. Schultz Exchange, LLC,
a Minnesota limited liability company, on behalf of said limited liability company.
NOTARY PUBLIC
OWNER:
E. SCHULTZ EXCHANGE, LLC
Its
STATE OF MINNESOTA )
)ss.
COUNTY OF WRIGHT )
The foregoing instrument was acknowledged before me this day of
, 2020, by Eric Schultz, the Chief Manager of E. Schultz Exchange, LLC,
a Minnesota limited liability company, on behalf of said limited liability company.
NOTARY PUBLIC
THIS INSTRUMENT WAS DRAFTED BY:
Campbell Knutson,
Professional Association
Grand Oak Office Center I
860 Blue Gentian Road, Suite 290
Eagan, Minnesota 55121
DSK/smt
210907v4
EXHIBIT A
Lot 1, Block 4, Great River Centre of Otsego 2nd Addition, Wright County, Minnesota, according
to the recorded plat thereof.
[PID 118-252-0040101
(Abstract Property)
210907v4
CITY OF OTSEGO
COUNTY OF WRIGHT
STATE OF MINNESOTA
RESOLUTION NO: 2020-52
APPROVING AND ADOPTING
SPECIAL ASSESSMENTS
WHEREAS, R. SCHULTZ EXCHANGE, LLC, a Minnesota limited liability company, and E. SCHULTZ EXCHANGE,
LLC, a Minnesota limited liability company ("Owners") have requested that the Otsego City Council specially
assess certain public improvement costs that affect Owners' property legally described in Exhibit A attached
hereto ("Subject Property");
WHEREAS, the City has received the following signed Public Improvement and Special Assessment
Agreement (Exhibit B) waiving all applicable assessment procedural requirements and requesting to be
assessed for the public improvement costs in the amount itemized therein for the Subject Property;
NOW THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF OTSEGO, MINNESOTA:
1. The signed Public Improvement and Special Assessment Agreement is hereby accepted and approved.
2. The public improvement costs amounting to $960,500.00 are hereby adopted and shall constitute a
special assessment against the Subject Property and hereby made part of this Resolution by reference
and that the tract of land therein included is hereby found to be benefited by the proposed
improvement in the amount of the assessment levied against it.
3. Such assessment shall be payable in equal annual installments without deferment extending over a
period of seven (7) years, the first of the installments to be payable with taxes paid in 2021 and shall
bear the interest rate of 2.20% per annum from the date of adoption of this assessment Resolution. To
the first installment shall be added interest on the entire assessment from the date of this Resolution
until December 31, 2021.
4. The Owners, at any time prior to certification of the assessment to the County Auditor, may pay the
whole of the assessment on such property, with interest accrued to the date of payment, to the City,
except that no interest shall be charged if the entire assessment is paid within thirty (30) days from the
adoption of this Resolution; and such owner may at any time thereafter, pay the City the entire amount
of the assessment remaining unpaid, with interest accrued to December 31 of the year in which such
payment is made. Such payment must be made before November 15 or interest will be charged
through December 31 of the next succeeding year. The Owners may also at any time prior to
November 15, of any year, pay the remaining unpaid principal balance with interest accrued to
December 31 of the year in which such prepayment is made.
5. The City Clerk shall forthwith transmit a certified duplicate of this assessment to the County Auditor to
be extended on the property tax lists of the County.
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210911v2
ADOPTED by the Otsego City Council this 10th day of August, 2020.
MOTION BY:
SECONDED BY:
IN FAVOR:
OPPOSED:
CITY OF OTSEGO
Jessica L. Stockamp, Mayor
ATTEST:
Tami M. Loff, City Clerk
2
210911v2
EXHIBIT A
TO
RESOLUTION
Lot 1, Block 4, Great River Centre of Otsego 2nd Addition, Wright County, Minnesota, according to the
recorded plat thereof.
[PID 118-252-0040101
(Abstract Property)
210911v2
EXHIBIT B
TO
RESOLUTION
PUBLIC IMPROVEMENT
AND
SPECIAL ASSESSMENT AGREEMENT
AGREEMENT made this _ day of 2020, by and between the CITY OF
OTSEGO, a Minnesota municipal corporation ("City") and R. SCHULTZ EXCHANGE, LLC, a Minnesota
limited liability company, and E. SCHULTZ EXCHANGE, LLC, a Minnesota limited liability company
("Property Owners").
RECITALS
A. Property Owners are the owners of real property located in the City of Otsego, Wright
County, Minnesota, as legally described on Exhibit A attached hereto and incorporated herein (the
"Subject Property").
B. The Property Owners entered into a Site Improvement Performance Agreement with
the City for improvement of the Subject Property dated and recorded with Wright County
as Document #
C. Whereas Paragraph 17 the Site Improvement Performance Agreement requires the
Property Owners to pay Sewer and Water Connection Charges in accordance with the City Code at the
time a building permit is issued for the Subject Property.
D. The Property Owners have requested that the City assess the Sewer and Water
connection Charges due for the proposed development ("Fees") against the Subject Property.
NOW, THEREFORE, IN CONSIDERATION OF THEIR MUTUAL COVENANTS THE PARTIES AGREE
AS FOLLOWS:
1. SPECIAL ASSESSMENT. The City will assess the Fees in the amount of nine hundred sixty
thousand five hundred dollars ($960,500.00) against the Subject Property. The special assessment shall be
deemed adopted on the date this Agreement has been signed by all parties. The assessment shall be
spread without deferment over a seven (7) year period in equal annual installments, together with interest
of two and two tenths percent (2.2%) per year on the unpaid balance. The first installment shall be payable
with taxes paid in 2021.
2. WAIVER. Property Owners, their successors and assigns, waive any and all procedural and
substantive objections to the Public Improvements and special assessment, including but not limited to
hearing requirements and any claim that the assessment exceeds the benefit to the Subject Property.
Property Owners waive any appeal rights otherwise available pursuant to Minn. Stat. § 429.081.
3. RELEASE. Property Owners, their successors and assigns, hereby unconditionally release
and forever discharge the City, its elected officials, employees, agents and insurers from any and all claims
0
210911v2
and causes of action of whatever kind or nature that is in any way connected with or related to the Public
Improvements and the City's sewer and water systems, including mapping errors.
4. BINDING EFFECT; RECORDING. This Agreement shall be binding upon Property Owners
and their successors and assigns. This Agreement shall run with the land and may be recorded against the
title to the Subject Property.
STATE OF MINNESOTA )
) ss.
COUNTY OF WRIGHT )
CITY OF OTSEGO
BY:
:►M
Jessica L. Stockamp, Mayor
Tami M. Loff, City Clerk
The foregoing instrument was acknowledged before me this day of
, 2020, by Jessica L. Stockamp and Tam! M. Loff, the Mayor and City Clerk of the
City of Otsego, a Minnesota municipal corporation, on behalf of the corporation and pursuant to the
authority granted by its City Council.
NOTARY PUBLIC
5
210911v2
STATE OF MINNESOTA )
)ss.
COUNTY OF WRIGHT )
OWNER:
R. SCHULTZ EXCHANGE, LLC
BY:
Its
The foregoing instrument was acknowledged before me this day of
2020, by Rick Schultz, the Chief Manager of R. Schultz Exchange, LLC, a Minnesota limited liability company,
on behalf of said limited liability company.
STATE OF MINNESOTA )
)ss.
COUNTY OF WRIGHT )
NOTARY PUBLIC
OWNER:
E. SCHULTZ EXCHANGE, LLC
Its
The foregoing instrument was acknowledged before me this day of
2020, by Eric Schultz, the Chief Manager of E. Schultz Exchange, LLC, a Minnesota limited liability company,
on behalf of said limited liability company.
NOTARY PUBLIC
THIS INSTRUMENT WAS DRAFTED BY:
Campbell Knutson,
Professional Association
Grand Oak Office Center 1
860 Blue Gentian Road, Suite 290
Eagan, Minnesota 55121
DSK/smt
6
210911Q
EXHIBIT A
Lot 1, Block 4, Great River Centre of Otsego 2"d Addition, Wright County, Minnesota, according
to the recorded plat thereof.
[PID 118-252-0040101
(Abstract Property)
210911Q