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ITEM 5.1 Purchase Agreement Water Tower410 F Otsego MINNESOTA DEPARTMENT INFORMATION Request for City Council Action ORIGINATING DEPARTMENT REQUESTOR: MEETING DATE: Legal City Attorney Kendall August 10, 2020 PRESENTER(s) REVIEWED BY: " ITEM #: Legal City Administrator/Finance Director Flaherty 5.1 STRATEGIC VISION MEETS: ''I THE CITY OF OTSEGO: Is a strong organization that is committed to leading the community through innovative communication. X 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. 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 recommends the City Council approve a Purchase Agreement for the site of a future City water tower. ARE YOU SEEKING APPROVAL OF A CONTRACT? 1S A PUBLIC HEARING REQUIRED? Yes No BACKGROUND/JUSTIFICATION: The City of Otsego's Water Master Plan requires initiation of construction of a new water tower in 2020 in order to meet the City's water system demands and to provide additional water storage for fire protection. In early 2020 the City Council directed staff to identify the preferred location and to acquire property for construction of the water tower. City staff identified the preferred location and considered options for acquisition of the property. The City had the option to utilize eminent domain to acquire the property, but determined that negotiated purchase was the preferred option. City staff contacted the owner of the property and negotiated a proposed Purchase Agreement for acquisition of the property necessary for construction of the water tower. City staff consulted with an appraiser and determined that the proposed purchase price is a fair and reasonable price for the property in question. The proposed Purchase Agreement allows the City to conduct soil testing and other due diligence to confirm that the site is suitable for construction of the water tower, and to cancel the sale if the site is determined to be unsuitable. SUPPORTING DOCUMENTS ATTACHED: 0 Purchase Agreement POSSIBLE MOTION PLEASE WORD MOTION AS YOU WOULD LIKE ITTO APPEAR IN THE MINUTES: Motion to approve a Purchase Agreement between the City of Otsego and the Clarence L. Schumacher Limited Partnership. BUDGET INFORMATION FUNDING BUDGETED: Fund 601— Water Utility Yes VACANT LAND PURCHASE AGREEMENT 1. PARTIES. This Purchase Agreement is made on day of , 2020, by and between the CITY OF OTSEGO, a Minnesota municipal corporation, 13400 90th Street NE, Otsego, MN 55330 ("Buyer"), and THE CLARENCE L. SCHUMACHER LIMITED PARTNERSHIP AKA. THE CLARENCE L. SCHUMACHER FAMILY LIMITED PARTNERSHIP, A MINNESOTA LIMITED PARTNERSHIP, 1274 Skillman Avenue West, Roseville, MN 55113 ("Seller"). 2. OFFER/ACCEPTANCE. Buyer offers to purchase and Seller agrees to sell real property located in the City of Otsego, County of Wright, State of Minnesota, legally described in Exhibit A attached hereto (referred to herein as the "Property"). 3. PRICE AND TERMS. The price for the real property included in this sale is Forty -Eight Thousand and No/100 Dollars ($48,000.00) ("Purchase Price"), which shall be payable by Buyer to Seller in cash or certified funds in full on the Date of Closing. Buyer agrees to pay to Seller an additional $1,200.00 in cash to compensate for estimated crop losses on the Property. 4. DEED/MARKETABLE TITLE. Upon performance by Buyer, Seller shall execute and deliver a Warranty Deed conveying marketable title of record, subject to: A. That lease covering the Property, between Seller, as Lessor, and John Kolles, as Lessee, which shall terminate no later than December 31, 2020; B Reservations of minerals or mineral rights by the State of Minnesota, if any; C. Building and zoning laws, ordinances, state and federal regulations; and D. Any other matters consented to by Buyer in writing or not timely objected to by Buyer. 5. 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 based on land area payable in the year of Closing shall be prorated between Seller and Buyer on a calendar year basis to the Closing Date, on a square foot basis. Real estate taxes based on building value payable in the year of Closing shall be paid by Seller. Seller shall pay on or before the Date of Closing all levied and pending special assessments associated with the Property as of the date of this Agreement. Seller 210175v2 shall pay penalty, interest, and costs on any delinquent installment of taxes and special assessments payable in the year of Closing. C. Certified Special Assessments. All installments of special assessments certified for payment with the real estate taxes payable on the Property in the year of Closing shall be paid by Seller at Closing. D. All Other Levied Special Assessments. Seller shall pay on the Date of Closing all other special assessments levied against the Property as of the date of this Purchase Agreement. 6. SELLER'S BOUNDARY LINE, ACCESS, RESTRICTIONS, AND LIEN WARRANTIES. Seller warrants that buildings on adjoining real property, if any, are entirely outside of the boundary lines of the Property. Seller warrants that there has been no labor or material furnished to the Property for which payment has not been made. Seller warrants that there are no present violations of any restrictions relating to the use or improvement of the Property. These warranties shall survive the delivery of the Deed. 7. ACCESS PRIOR TO CLOSING. Upon reasonable notice to Seller, Buyer, and Buyer'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 Buyer's expense, surveys, measurements, soil tests, and other tests that Buyer shall deem necessary. Buyer 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 Buyer's right of entry hereunder, including all actions, proceedings, demands, assessments, costs, expenses, and attorneys' fees. 8. POSSESSION. Seller shall deliver possession of the Property not later than the actual Date of Closing. 9. TITLE INSURANCE BY SELLER. Within thirty (30) days of the date of this Agreement, Buyer shall be responsible for obtaining title evidence and reviewing title to the Property. Buyer shall be allowed thirty (30) business days after the receipt of the title commitment for examination of title and malting any objections, which shall be made in writing or deemed waived. 10. TITLE CORRECTIONS AND REMEDIES. Seller shall have 120 days from receipt of Buyer's written title objections to matte title marketable, Upon receipt of Buyer's title objections, Seller shall, within ten (10) business days, notify Buyer of Seller's intention to matte 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. Upon correction of title and within ten (10) days after written notice to Buyer, 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 Buyer (at Buyer's option) shall have the right to, (a) terminate this Agreement; or (b) cause 210175v2 2 the exception(s) to be removed and credit Buyer's cost to remove the exception(s) against the Purchase Price. 11. WELL DISCLOSURE. [Check one of the following.] X Seller certifies that Seller does not know of any wells on the Property. Wells on the Property are disclosed by Seller on the attached Well Disclosure form. 12. DISCLOSURE OF INDIVIDUAL ON -SITE SEWAGE TREATMENT SYSTEM. [Check one of the following; ] X Seller certifies that Seller does not k riow of any individual on -site sewage treatment systems on the Property. Individual on -site sewage treatment systems on the Property are disclosed by Seller on the attached Disclosure form. 13. SELLER'S COVENANTS, REPRESENTATIONS, AND WARRANTIES. A. Seller as part of the consideration therefore, represents, warrants, and covenants with Buyer and its successors and assigns that: (1) Seller warrants and represents to Buyer that, to Seller's knowledge, without investigation, no entity or person has, at any time: a) "released" or actively or passively consented to the "release" or "threatened release" of any Hazardous Substance (as defined below) from any "facility" or "vessel" located on or used in connection with the Property or adjacent tracts in violation of applicable laws; or b) taken any action in "response" to a "release" in connection with the Property or adjacent tracts; or c) otherwise engaged in any activity or omitted to take any action which could subject Seller or Buyer to claims for intentional or negligent torts, strict or absolute liability, either pursuant to statute or common law, in connection with Hazardous Substances (as defined below) located in or on the Property or adjacent tracts, including the generating, transporting, treating, storage, or manufacture of any Hazardous Substance (as defined below) in violation of applicable law. The terms set within quotation marks above shall have the meaning given to them in the Comprehensive Environmental Response and Liability Act, 42 U.S.C. Sec. 9601 et se ., as amended ("CERCLA") and any state environmental laws. (2) Seller has the present full authority and power to execute this Agreement and, on or prior to the Date of Closing, Seller shall have the full authority and power to close the sale of the Property. (3) As of the Closing Date there will be no outstanding or unpaid claims, actions or causes of action related to any transaction or obligation entered 210175v2 into or incurred by Seller with respect to the Property prior to the date hereof, (4) Seller is not a foreign person as defined in §1445(f)(3) of the Internal Revenue Code or regulations issued thereunder. (5) To Seller's actual knowledge, there is no action, litigation, investigation, condemnation, or other proceedings of any kind pending or threatened against Seller with respect to the Property. B. PROTECTED HISTORICAL SITES. [Select either (1) or (2) below;] Sellers represents that Sellers do not know if there are historical, native American, or archeological materials on or in the Property that might be protected by law. X Sellers represent to the best of Seller's knowledge 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. Buyer's obligation to close is contingent upon Buyer determining to Buyer'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, C. All of Seller's covenants, representations, and warranties in this Agreement shall be true as of the date hereof and of the Closing Date, and shall be a condition precedent to the performance of Buyer's obligations hereunder. If Buyer discovers that any such covenant, representation, or warranty is not true, Buyer may elect prior to Closing, in addition to any of its other rights and remedies, to cancel this Agreement, or Buyer may postpone the Closing Date up to ninety (90) days to allow time for correction. If Buyer elects to proceed with the Closing following such discovery, Buyer shall be deemed to have waived its rights to assert a claim against Sellers arising from the inaccuracy or untruthfulness of any such covenant, representation, or warranty, 14. CLOSING. The closing (the "Closing") shall be at a location designated by Buyer. The Closing shall take place on or before August 31, 2020, or at such other time as agreed upon by the parties. Unless otherwise agreed by the parties in writing, in the event that any of the contingencies provided for in this Agreement are not satisfied prior to the Date of Closing, this Agreement shall be null and void and of no further force and effect. At closing, Seller and Buyer shall disclose their Social Security Numbers or Federal Tax Identification Numbers for the purposes of completing state and federal tax forms. 210175v2 4 15. CLOSING DOCUMENTS, A. At the Closing, Seller shall execute and/or deliver to Buyer the following (collectively the "Closing Documents"): (1) Warranty Deed. A Warranty Deed in recordable form and reasonably satisfactory to Buyer, which shall include the following well representations: "Seller certifies that the Seller does not know of any wells on the described Property." (2) Seller's Affidavit. A standard form affidavit by Seller indicating that on the date of Closing there are no outstanding, unsatisfied judgments, tax liens or bankruptcies against or involving Seller or the Property; that there has been no skill, labor or material furnished to the Property for which payment has not been made or for which mechanic's liens could be filed; and that there are no other unrecorded interests in the Property. (3) Non -Foreign Person Certification. A certification in form and content satisfactory to the parties hereto and their counsel, properly executed by Seller, containing such information as shall be required by the Internal Revenue Code, and the regulations issued thereunder, in order to establish that Sellers are not a "foreign person" as defined in §1445(f)(3) of such Code and such regulations, (4) Storage Tanks. If required, an affidavit with respect to storage tanks pursuant to Minn. Stat. § 116,48. (5) Well Certificate. If there is a well located on the Property, a well disclosure certificate in form and substance true to form for recording. (6) Certification. A certification that the representations and/or warranties made by Seller are materially the same as were in existence on the date of this Purchase Agreement or noting any changes thereto; and (7) 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, Buyer shall execute and deliver to Seller the following: (1) All documents reasonably determined by either party or the title insurance company to be necessary to provide title insurance for the Property; (2) Payment of the Purchase Price. 21o175v2 (3) Payment in the amount of $1,200.00 to Seller to compensate for estimated crop losses on the Property. 16. CLOSING COSTS. The costs relating to the closing of this transaction shall be paid as follows: A. Buyer shall pay: (1) Recording fee for the Warranty Deed; (2) The closing fees charged by the Title Company; (3) Pro -rated taxes; and (4) All costs of obtaining a title insurance commitment. (5) All costs of the premium for owner's title insurance. B. Seller shall pay: (1) State deed tax; (2) Pro -rated taxes; (3) Conservation fee attributable to the Warranty Deed; and 17. BUYER'S CONTINGENCIES. The obligations of the Buyer under this Agreement are expressly contingent upon each of the following (the "Buyer's Contingencies"): A. The Buyer shall have determined on or before the Closing Date that it is satisfied, in its sole discretion, with the results of any environmental, soil investigations, soil borings, and all other tests of the Property conducted by the Buyer, the costs of which shall be the responsibility of the Buyer. B. Buyer shall have determined on or before the Closing Date, that it is satisfied, in its sole discretion, with the title to the Property. C. All of the covenants, representations, and warranties made by the Sellers shall be true and correct as of the Closing Date. D. Buyer shall have determined, in its sole discretion that the Property is suitable for the construction of the Buyer's water tower proposed to be constructed on the Property. If the Buyer's Contingencies have not been satisfied on or before the Closing Date, then the Buyer may, at the Buyer's option, terminate this Agreement by giving notice to the Sellers on or before the Closing Date. The contingencies set forth in this section are for the sole and exclusive benefit of the Buyer, and the Buyer shall have the right to waive the contingencies by giving notice to the Seller. 21o175v2 6 18. OTHER. Notwithstanding transfer of the Property pursuant to the terms herein, Seller shall retain all rights and obligations as Lessor under that lease agreement relating to the Property, between Seller, as Lessor, and John Kolles, as Lessee, including the right to receive all rents due thereunder, through December 31, 2020. In exchange for payment referenced in paragraphs 3 and 15.13.(3), above, Seller agrees to indemnify Buyer for any claim by Tenant related to damage to, or loss of crops on the Property. 19, NOTICES. All notices required herein shall be in writing and delivered personally or mailed to the address as shown at Paragraph 1 above and, if mailed, are effective as of the date of mailing. 20. MINNESOTA LAW. This contract shall be governed by the laws of the State of Minnesota. 21. TIME IS OF THE ESSENCE. Time is of the essence for all provisions of this Purchase Agreement. 22. COUNTERPARTS. This Agreement may be executed in one or more counterparts each of which when so executed and delivered shall be an original, but together shall constitute one and the same instrument. IN WITNESS WHEREOF, Buyer and Seller have caused this Agreement to be duly executed as of the date first written above. BUYER: CITY OF OTSEGO In IRA Jessica L. Stocicamp, Mayor Tami Loff, City Cleric (Additional signattcre page attached) 210175v2 SELLER: THE CLARE'NCE L. SCHUMACHER LIMITED PARTNERSHIP AKA THE CLARENCE L. SCHUMACHER FAMILY LIMITED PARTNERSHIP By: Clarence M, LLC, G ne -a Partner By: dward A, Vetsch, Chief Manager And By: Clar A, LL n ral Pa ner By: Edward A. Vetsch, Chief Manager 210175v2 EXHIBIT A Legal Description of Property That part of the Northeast Quarter of the Northeast Quarter of Section 31, Township 121, Range 23, Wright County, Minnesota, described as follows; Commencing at the point of intersection of the East line of the West 33.00 feet of said Northeast Quarter of the Northeast Quarter, with a line to be hereinafter referred to as "Line A", being a line drawn parallel with and distant 55.00 feet Southerly of the following described centerline; Commencing at the Northwest corner of said Section 31; thence South 89 degrees 32 minutes 32 seconds East, assumed bearing along the North line of the Northwest Quarter of said Section 31, a distance of 2574,55 feet to the point of beginning of the centerline to be described; thence Southeasterly a distance of 579.94 feet along a tangential curve concave to the Southwest, having a radius of 1186.00 feet and a central angle of 28 degrees 01 minutes 00 seconds; thence South 61 degrees 31 minutes 32 seconds East tangent to said last described curve, a distance of 253.37 feet; thence Easterly a distance of 672.16 feet along a tangential curve concave to the Northeast, having a radius of 1345.00 feet and a central angle of 28 degrees 38 minutes 00 seconds; thence North 89 degrees 50 minutes 28 seconds East tangent to said last described curve, a distance of 648.00 feet; thence Northeasterly a distance of 614.71 feet along a tangential curve concave to the Northwest, having a radius of 1345.00 feet and a central angle of 26 degrees 11 minutes 09 seconds; thence North 63 degrees 39 minutes 19 seconds East tangent to said last described curve, a distance of 372.72 feet and said centerline there terminating. Thence Southerly, along said East line of the West 33.00 feet of the Northeast Quarter of the Northeast Quarter, a distance of 110.00 feet to the point of beginning of the land to be described; thence Easterly, parallel with said "Line A", a distance of 60.00 feet; thence Northeasterly, to a point on said "Line A" distant 115.00 feet Easterly of said point of commencement, as measured along said "Line A"; thence Easterly, along said "Line A", a distance of 185.00 feet to the East line of the West 333.00 feet of said Northeast Quarter of the Northeast Quarter; thence Southerly, along said East line of the West 333.00 feet, a distance 250.00 feet; thence Westerly, parallel with said "Line A", a distance of 300.00 feet to a point on said East line of the West 33.00 feet; thence Northerly, along said East line of the West 33.00 feet, a distance of 140 feet to the point of beginning. 210175v2