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Item 3.11 Costco Development Contract Request for City Council Action DEPARTMENT INFORMATION ORIGINATING DEPARTMENT REQUESTOR: MEETING DATE: Planning City Planner Licht 25 November 2024 PRESENTER(s) REVIEWED BY: ITEM #: Consent City Administrator/Finance Director Flaherty City Engineer Wagner City Attorney Kendall 3.11 – Costco Addition STRATEGIC VISION MEETS: THE CITY OF OTSEGO: X 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. 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 recommends the City Council adopt a resolution approving a development contract. ARE YOU SEEKING APPROVAL OF A CONTRACT? IS A PUBLIC HEARING REQUIRED? Yes No BACKGROUND/JUSTIFICATION: Costco Wholesale Corporation received approval of a Zoning Map amendment and preliminary plat to subdivide 25.41 acres located at the northwest corner of 60th Street (CR 137) and MacIver Avenue into three lots on 26 February 2024. The developer subsequently submitted application for final plat approval for the Costco Addition in accordance with Section 10-5-3 of the Subdivision Ordinance, which the City Council approved on 8 July 2024. Lot 1, Block 1, Costco Addition is proposed for development of a Costco retail store and accessory motor fuel facility. Applications for site and building plan review as well as conditional use permits for minor auto repair, motor fuel facilities, exterior building finish, exterior lighting, and wall signage were also approved by the City Council on 8 July 2024. Section 10-10-4.A of the Subdivision Ordinance requires execution of a Development Contract as a condition of final plat approval by to provide for completion of public improvements, establishment of required securities, and payment of applicable fees related to the subdivision of the subject site. Section 11-9-7 of the Zoning Ordinance further requires that the developer enter into a Site Improvement Performance Agreement with the City to provide for construction of the project improvements as approved. The City Attorney has drafted a Development Contract addressing both the subdivision and site improvements for consideration by the City Council. City staff and Costco continue to work together in coordination with Wright County regarding the planned CR 137 improvement project, which also includes improvements to the I-94/CSAH 37 interchange. The Wright County project is anticipated to occur in two phases over 2025 and 2026. Costco is expected to begin site development and building construction of their project concurrently in 2025 with store opening occurring in 2026. SUPPORTING DOCUMENTS ATTACHED: • Resolution 2024-85 • Development Contract POSSIBLE MOTION PLEASE WORD MOTION AS YOU WOULD LIKE IT TO APPEAR IN THE MINUTES: Motion to adopt Resolution 2024-85 approving a Development Contract for the Costco Addition. BUDGET INFORMATION FUNDING: BUDGETED: Fund 701 – Development Escrows N/A 1 CITY OF OTSEGO COUNTY OF WRIGHT STATE OF MINNESOTA RESOLUTION NO: 2024-85 APPROVING A DEVELOPMENT CONTRACT FOR COSTCO ADDITION WHEREAS, Costco Wholesale Corporation (the “owner”) is proposing subdivision of the Costco Addition; and WHEREAS, a final plat for the development was approved by the City Council on 8 July 2024; and WHEREAS, Section 10-10-4.A of the Subdivision Ordinance requires the developer to enter into a development contract to provide the City construction and warranty securities for the public and private improvements and to provide the City various remedies in the event that the developer breaches the terms and conditions of said agreement; and WHEREAS, site and building plans and a Conditional Use Permit for minor auto repair, motor fuel facilities, exterior building finish, exterior lighting, and wall signage were approved for Lot 1, Block 1 by the City Council on 8 July 2024; and WHEREAS, Section 11-9-7 of the Zoning Ordinance further requires that the developer enter into a Site Improvement Performance Agreement with the City to guarantee conformance and compliance with the conditions of the site and building plan and the ordinances of the City; and WHEREAS, those obligations are outlined and memorialized in the attached Development Contract. NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF OTSEGO, MINNESOTA THAT: 1. The Development Contract attached hereto between the City of Otsego and Costco Wholesale Corporation is hereby approved in form subject to modification of fees, charges, and securities as approved by City staff. 2. The Mayor and City Clerk are hereby authorized to execute the Development Contract on behalf of the City of Otsego. (remainder of page intentionally blank signatures to follow) 2 ADOPTED by the City Council of the City of Otsego this 25th day of November, 2024. MOTION BY: SECONDED BY: IN FAVOR: OPPOSED: CITY OF OTSEGO __________________________________ Jessica L. Stockamp, Mayor ATTEST: __________________________________ Audra Etzel, City Clerk 1 Costco Addition 231288v6 (reserved for recording information) DEVELOPMENT CONTRACT (Developer Installed Improvements) COSTCO ADDITION CONTRACT dated ____________________, 2024, by and between the CITY OF OTSEGO, a Minnesota municipal corporation (“City”), and COSTCO WHOLESALE CORPORATION, a Washington corporation (the “Developer”). 1. REQUEST FOR PLAT APPROVAL. The Developer has asked the City to approve a plat for COSTCO ADDITION (referred to in this Contract as the "plat"). The land is situated in the County of Wright, State of Minnesota, and is legally described on Exhibit “A” attached hereto and made a part hereof. 2. CONDITIONS OF PLAT APPROVAL. The City hereby approves the plat on condition that the Developer enter into this Contract, furnish the security required by it, and record the plat with the County Recorder or Registrar of Titles within 100 days after the City Council approves the final plat. 3. RIGHT TO PROCEED. Within the plat or land to be platted, the Developer may not grade or otherwise disturb the earth or remove trees, unless a grading permit has been approved by the City Engineer following approval of a preliminary plat by the City Council, construct sewer lines, water lines, 2 Costco Addition 231288v6 streets, utilities, public or private improvements, or any buildings until all the following conditions have been satisfied: 1) this contract has been fully executed by both parties and filed with the City Clerk, 2) the necessary security has been received by the City, 3) the necessary insurance for the Developer and its construction contractors has been received by the City, and 4) the plat has been filed with the Wright County Recorder or Registrar of Titles’ office. 4. CHANGES IN OFFICIAL CONTROLS. For five (5) years from the date of this Contract, no amendments to the City’s Comprehensive Plan or official controls shall apply to or affect the use, development density, lot size, lot layout or dedications of the approved plat unless required by state or federal law or agreed to in writing by the City and the Developer. Thereafter, notwithstanding anything in this Contract to the contrary, to the full extent permitted by state law and including but not limited to legal non-conformities, the City may require compliance with any amendments to the City’s Comprehensive Plan, official controls, platting, or dedication requirements enacted after the date of this Contract. 5. DEVELOPMENT PLANS. The plat shall be developed in accordance with the following plans. The plans shall not be attached to this Contract. The plans may be prepared, subject to the City Engineer’s approval, after entering the Contract, but before commencement of any work in the plat. The City Engineer may approve minor amendments to Plans without City Council approval. If the plans vary from the written terms of this Contract, the written terms shall control. The plans are: Plan A - Plat Plan B - Final Grading, Drainage, and Erosion Control Plan Plan C - Plans and Specifications for Public Improvements, if any Plan D - Lighting Plan Plan E - Landscape Plan 3 Costco Addition 231288v6 6. IMPROVEMENTS. The Developer shall install and pay for the following as shown on the approved plans, if any: A. Sanitary Sewer System B. Water System C. Storm Sewer System D. Roundabout E. Concrete Curb and Gutter F. Site Grading, Stormwater Treatment/Infiltration Basins, and Erosion Control G. Underground Utilities H. Setting of Iron Monuments I. Surveying and Staking J. Sidewalks and Trails K. Retaining Walls L. Landscaping The improvements shall be installed in accordance with the City subdivision ordinance; City standard specifications for utility and street construction; and any other ordinances including Chapter 6 of the City Code concerning erosion and sediment control. The Developer shall submit plans and specifications which have been prepared by a competent Minnesota registered professional engineer to the City for approval by the City Engineer. The Developer shall instruct its engineer to provide adequate field inspection personnel to assure an acceptable level of quality control to the extent that the Developer’s engineer will be able to certify that the construction work meets the approved City standards as a condition of City acceptance. In addition, the City may, at the City’s reasonable discretion and at the Developer’s reasonable expense, have one or more City inspectors and a soil engineer inspect the work on a full or part-time basis. The Developer, its contractors and subcontractors, shall follow all lawful instructions received from the City’s inspectors. The Developer shall provide for on-site project management. The Developer’s engineer is responsible for design changes and contract administration between the Developer 4 Costco Addition 231288v6 and the Developer’s contractor. The Developer or its engineer or contractor shall schedule a pre- construction meeting at a mutually agreeable time at the City with all parties concerned, including the City staff, to review the program for the construction work. Within thirty (30) days after the completion of the improvements and before the final security is released, the Developer shall supply the City with a complete set of reproducible “as-constructed” plans and an electronic file of the “as-constructed” plans in an AutoCAD .DWG file or a .DXF file, all prepared in accordance with City standards. In accordance with Minnesota Statutes 505.021, the final placement of iron monuments for all lot corners must be completed before the applicable security is released. The Developer ’s surveyor shall also submit a written notice to the City certifying that the monuments have been installed following site grading, utility and street construction. 7. CONTRACTORS/SUBCONTRACTORS. City Council members, City employees, and City Planning Commission members, and corporations, partnerships, and other entities in which such individuals have greater than a twenty five percent (25%) ownership interest or in which they are an officer or director may not act as contractors or subcontractors for the public improvements identified in Paragraph 6 above. 8. PERMITS. The Developer shall obtain or require its contractors and subcontractors to obtain all necessary permits, which may include: A. Wright County for County Road Access and Work in County Rights-of-Way B. MnDot for State Highway Access C. MnDot for Work in Right-of-Way D. Minnesota Department of Health for Watermains E. MPCA NPDES Permit for Construction Activity F. MPCA for Sanitary Sewer and Hazardous Material Removal and Disposal G. DNR for Dewatering H. City of Otsego for Building Permits, Retaining Walls, Irrigation I. MDH for water permits J. MPCA for sewer extension 5 Costco Addition 231288v6 9. DEWATERING. Due to the variable nature of groundwater levels and stormwater flows, it will be the Developer’s and the Developer’s contractors and subcontractors responsibility to satisfy themselves with regard to the elevation of groundwater in the area and the level of effort needed to perform dewatering and storm flow routing operations. All dewatering shall be in accordance with all applicable county, state, and federal rules and regulations. DNR regulations regarding appropriations permits shall also be strictly followed. 10. TIME OF PERFORMANCE. The Developer shall install any required public improvements, as shown on the approved plans, by November 1, 2027, or twelve (12) months after Wright County completes the planned CR 137 public improvement project, including accesses to I-94 at CSAH 37. 11. LICENSE. The Developer hereby grants the City, its agents, employees, officers and contractors a license to enter the plat to perform all work and inspections deemed reasonably appropriate by the City in conjunction with plat development. 12. EROSION CONTROL. Prior to initiating site grading, the erosion control plan, Plan B, shall be implemented by the Developer and inspected and approved by the City. The City may impose additional erosion control requirements if they would be beneficial. All areas disturbed by the grading operations shall be stabilized pursuant to the MPCA Stormwater Permit for Construction Activity. Seed shall be in accordance with the City’s current seeding specification which may include temporary seed to provide ground cover as rapidly as possible. All seeded areas shall be fertilized, mulched, and disc anchored as necessary for seed retention. The parties recognize that time is of the essence in controlling erosion. If the Developer does not comply with the MPCA Stormwater Permit for Construction Activity or with the erosion control plan and schedule or supplementary instructions received from the City, the City may take such action as it deems appropriate to control erosion. The City will endeavor to notify the Developer in advance of any proposed action, but failure of the City to do so will not affect the Developer ’s and City’s rights or obligations hereunder. If the Developer does not reimburse the City for any cost the City incurred for such work within ten (10) days, the City may draw down the letter of credit to pay any 6 Costco Addition 231288v6 costs. No development, utility or street construction will be allowed and no building permits will be issued unless the plat is in full compliance with the approved erosion control plan. 13. STREETS. The Developer agrees to maintain the streets within the Plat until the bituminous surfacing has been accepted by the City. Should the City be required to grade the street prior to paving, the cost of such grading shall be paid by the Developer and drawn from the Developer’s letter of credit. Should the City determine that snowplowing is necessary prior to bituminous surface installation, the City will plow the street(s) prior to acceptance of the streets. The Developer shall hold harmless and indemnify the City from any and all liability related to snow plowing and shall pay all costs associated with snow plowing. Any plowing undertaken by the City shall not constitute City acceptance or evidence of acceptance of the street(s) in question. Upon final completion of streets and acceptance by the City as a City street rather than a private drive, the Developer shall guarantee to the City for a period of two (2) years the streets have been constructed to City standards. The warranty period shall not commence until such time as street construction is completed and the streets are accepted as City streets by the City. The two (2) year warranty period set forth above commences upon the date on which the City accepts the streets by resolution. 14. GRADING. The plat shall be graded in accordance with the approved grading development and erosion control plan, Plan “B”. The plan shall conform to City of Otsego specifications. The Developer shall provide the City with an “as-constructed” grading plan certified by a registered land surveyor or engineer that all storm water treatment/infiltration basins and swales, have been constructed on public easements or land owned by the City. The “as-constructed” plan shall include field verified elevations of the following: a) cross sections of storm water treatment/infiltration basins; b) location and elevations along all swales, wetlands, wetland mitigation areas if any, locations and dimensions of borrow areas/stockpiles, and installed “conservation area” posts; and c) lot corner elevations and house pads, and all other items listed in City Code. The City will withhold issuance of building permits until all erosion control measures are in place as determined by the City Engineer. 7 Costco Addition 231288v6 15. CLEAN UP. The Developer shall clean dirt and debris from streets that has resulted from construction work by the Developer, subcontractors, their agents or assigns. Prior to any construction in the plat, the Developer shall identify in writing a responsible party and schedule for erosion control, street cleaning, and street sweeping. 16. OWNERSHIP OF IMPROVEMENTS. Upon completion of the work and construction required by this Contract and final acceptance by the City, the improvements lying within public easements shall become City property without further notice or action. 17. LATERAL STORM SEWER. The Developer shall post a security for lateral storm sewer in the amount of $20,000.00 which is due upon final plat approval. The security amount shall be one hundred twenty five percent (125%) of the City Engineer’s estimated cost of all public improvements and/or private improvements required by the Subdivision Ordinance or Zoning Ordinance. The Developer shall pay a cash fee in the amount of $108,356.10 as required by the City Code and City Fee Schedule then in effect for the Trunk Storm Water Management Impact Fee for the Otsego Creek Watershed due upon final Plat Approval, calculated as follows: 22.74 Net Acres x 4,765.00 = $108,356.10 18. LATERAL AND TRUNK SANITARY SEWER. The Developer shall pay to the City the required water availability charges and sanitary sewer availability charges. The water and sewer availability charges shall be collected according to Section 8-1-6-B of City Code including 3.5 RECs per gross acre for commercial, industrial, or institutional uses. The Developer shall post a security in the amount of $101,500.00 for Lateral and Trunk Sanitary Sewer which is due upon final plat approval. The security amount shall be one hundred twenty five percent (125%) of the City Engineer’s estimated cost of all public improvements and/or private improvements required by the Subdivision Ordinance or Zoning Ordinance. The Developer shall pay a cash fee in the amount of $120,869.91 for the Sewer Availability Charge (“SAC”) for Developer installed trunk sewer improvements at the time of Plat Approval which is calculated as follows: 8 Costco Addition 231288v6 22.74 Net Acres x 3.5 RECs/ Acre x $3,049.00 = $242,669.91 - $121,800.00 Developer Credit = $120,869.91 19. LATERAL AND TRUNK WATERMAIN. The Developer shall post a security in the amount of $611,554.00 for the installation of lateral and trunk watermain and connection. The Developer shall receive a credit from the City in the amount of $60,483.72. for the Water Availability Charge (“WAC”) for trunk water improvements at the time of Plat Approval which is calculated as follows: 22.74 Net Acres x 3.5 RECs/Acre x $3,192.00 = $254,051.28 - $314,535.00 Developer Credit = ($60,483.72) 20. SEWER CONNECTION CHARGE AND WATER CONNECTION CHARGE. The Developer shall pay to the City required water and sewer connection charges. The water and sewer connection charges shall be collected per Section 8-1-6-C of City Code for all uses and must be paid prior to the issuance of a building permit based on the fee schedule in effect at the time of application for the building permit. 21. CONSTRUCTION ACCESS. Construction traffic access and egress for grading, public utility construction, and public street construction is restricted to access the subdivision as approved by the City Engineer. 22. PARK DEDICATION. The Parks System Master Plan does not identify land within the area of the subject site for acquisition by the City for park purposes. As such, park dedication requirements are to be satisfied by the Developer by a cash fee in lieu of land as provided for by Section 11-8-15.I of the Subdivision Ordinance in the amount of $229,060.02 The park dedication fee is to be calculated and paid at the time of final plat approval in accordance with the City Fee Schedule. The fee is calculated as follows. 22.74 Net Acres x $10,073/Acre = $229,060.02 9 Costco Addition 231288v6 23. TRAFFIC CONTROL SIGNS. The Developer shall pay a cash fee to the City in the amount of $10,000.00 for installation of traffic control signs. The fee is calculated as follows: forty (40) traffic signs at $250.00 per street sign. 24. STREET LIGHT OPERATION COSTS. The Developer shall be responsible for the cost of street light installation consistent with a street lighting plan approved by the City. The charge is calculated as follows: ten (10) street lights at $500.00 per street light. The Developer shall pay a cash fee to the City in the amount of $5,000.00. 25. LANDSCAPING. Landscaping shall be installed in accordance with the approved landscape plan. The Developer shall post a $200,000.00 landscaping security at the time of final Plat approval to ensure that the landscaping is installed in accordance with the approved plan. All existing plantings within the plat to be preserved shall be in good health and condition or be replaced by the Developer with a similar species of planting, as determined by the Zoning Administrator. The Developer shall plant evergreen trees a minimum of eight feet in height as required by Section 11-19-3.A.1 of the Zoning Ordinance. The Developer shall install an in-ground irrigation system in all yards and planting areas within Lot 1, Block 1 and abutting boulevards as required by Section 5-2-3.C.2 of the City Code. 26. SPECIAL PROVISIONS. The following special provisions shall apply to plat development: A. Implementation of the conditions listed in the Findings of Fact approved by the City Council on July 8, 2024. B. The subject property shall be developed in accordance with the site and building plans submitted to the City subject to the stipulations, limitations, and conditions as approved by the City Council in accordance with Section 11-9-4 of the Zoning Ordinance. C. Right-of-way dedication and access to 60th Street (CR 137) shall be subject to review of the City Engineer and approval of Wright County. D. Right-of-way dedication and street and pedestrian improvements for MacIver Avenue shall be subject to review and approval of the City Engineer. 10 Costco Addition 231288v6 E. The Developer shall design and construct intersection improvements at MacIver Avenue and Marlowe Avenue at the Developer’s cost; right-of-way dedication and street and pedestrian improvements for MacIver Avenue shall be subject to review and approval of the City Engineer. F. The Developer establish an ingress/egress and cross parking easement approved by the Zoning Administrator over Lots 1-3, Block 1 to be recorded concurrent with recording of the final plat. G. All stormwater management, grading, wetland impacts, and erosion control plans and issues shall be subject to review and approval of the City Engineer. H. All utility plans shall be subject to review and approval of the City Engineer. I. The Developer shall pay Utility Availability Charges at the time of final plat approval in accordance with the City Code and City Fee Schedule then in effect less any credits for trunk improvements as determined by the City Engineer. J. The Developer shall pay Utility Connection Charges at the time a building permit is issued for construction within each lot of the preliminary plat in accordance with the City Code and City Fee Schedule then in effect. K. All drainage and utility easements shall be subject to review and approval of the City Engineer. L. The Developer shall install the fuel canopy utilizing a custom masonry unit consistent with the material used on the principal building for the lower two-thirds (2/3) of the canopy supports. M. Minor Auto Repair: a. The hours of operation for minor auto repair uses shall be limited to 7:00AM to 10:00PM each day. b. All repair activities shall be conducted within the principal building with overhead doors to the service area(s) closed at all times, except when moving vehicles in and out. c. Storage of all flammable materials, including liquids and rags shall conform with the applicable provisions of the Minnesota State Fire Code. 11 Costco Addition 231288v6 d. Storage of damaged vehicles, vehicles being repaired, and vehicle parts and accessory equipment shall be stored completely inside the principal building. N. Motor Fuel Facility: a. The hours of operation shall be allowed twenty-four (24) hours each day. b. Fuel pumps shall be elevated on islands six inches above the drive aisle surface. c. Outdoor sales areas within the area of the motor fuel facility shall be limited to those areas identified on the approved the site plan or shall otherwise be prohibited. d. Use of a public address system shall not be audible at property lines and playing of music or advertisements via such system is prohibited. e. Exterior trash receptacles shall be provided for patron use. O. Any exterior storage of waste containers, other than trash receptacles intended for patron use, and closed containers connected to interior compactors, shall require an enclosure in compliance with the requirements of Section 11-18-4.C of the Zoning Ordinance. P. The Developer shall install lighting related to the motor fuel facility in compliance with Section 11-77-6.H.11 of the Zoning Ordinance. Q. A sign permit issued by the Zoning Administrator is required prior to Developer installation of any signs within the plat. R. All signs shall comply with Chapter 37 of the Zoning Ordinance, subject to review and approval of the Zoning Administrator. S. The site and building plan approval and the stipulations, limitations, and conditions therein shall be applied to the property in question. All written and graphic materials officially submitted to the City shall be treated as a formal agreement between the Developer and the City. Once approved, no changes, modifications or alterations shall be made to any plan detail, standard, or specifications without prior submission of a plan modification request to the Zoning Administrator for review and approval. 12 Costco Addition 231288v6 T. Prior to City Council approval of the final plat, the Developer shall furnish a boundary survey of the proposed property to be platted with all property corner monumentation shown on the plat. Any encroachments on or adjacent to the property shall be noted on the survey. The Developer's land surveyor certifies that all irons will be set following site grading and utility and street construction. U. The Developer shall pay an escrow for the preparation of record construction drawings and City base map updating. This fee is $250.00 per lot for a total charge of $250.00. V. The Developer is required to submit the final plat in electronic format. The electronic format shall be either AutoCAD.DWG file or a .DXF file. All construction record drawings (e.g., grading and utilities) shall be in electronic format in accordance with standard City specifications. 27. CONSTRUCTION ADMINISTRATION AND FEES FOR CITY SERVICES. The Developer shall pay a fee for consulting engineering administration following approval of the Plat. City engineering administration will include consultation with Developer and its engineer on status or problems regarding the project, monitoring during the warranty period, general administration and processing of requests for reduction in security. Fees for this service shall be the actual amount billed for those services, which are estimated to be three percent (3%) of the estimated construction cost of the Improvements to be inspected, assuming normal construction and project scheduling. The Developer shall pay for construction observation performed by the City Engineer. Construction observation shall include part or full time observation, as determined by the City Engineer, of proposed public street, public sanitary sewer, public water main and storm drainage construction and will be billed on hourly rates actually required for said inspection, which are estimated to be five percent (5%) of the estimated construction cost of the Improvements to be inspected. In the event of prolonged construction or unusual problems, the City will notify the Developer of anticipated cost overruns for engineering administration and observation services. Any amounts for engineering administration not utilized from this escrow fund shall be returned to the Developer when all improvements have been completed, all financial obligations to the City satisfied, and the required "as constructed" plans have been received by the City. 13 Costco Addition 231288v6 The escrow and fee account shall also include estimated fees for Legal expenses actually incurred (with any excess funds, if any, returned to Developer as indicated in this Contract), City Administrative Fee (a flat fee due upon execution of this Agreement), Trunk Water and Sewer Access Fees (a flat fee due upon execution of this Agreement), Park and Trail Dedication Fees (a flat fee due upon execution of this Agreement), and shall be as stated by the Financial Summary. This escrow amount shall be submitted to the City prior to the City executing this Agreement. All administrative and legal fees related to plan review, drafting of this Agreement and any other necessary items shall be paid to the City prior to execution of this Agreement. Any amounts for legal and engineering not utilized from this escrow fund shall be returned to the Developer when all improvements have been completed, all financial obligations to the City satisfied, and the required "as constructed" plans have been received by the City. All other amounts listed as flat fees are non-refundable and available immediately for City use when posted. 28. SECURITY. To ensure compliance with the terms of this Contract, and construction of all public improvements, and satisfaction of all other obligations, the Developer shall furnish the City with a cash escrow or Irrevocable Standby Letter of Credit with automatic renewal provisions in the amount as required under this Contract. The security amount shall be one hundred twenty five percent (125%) of the City Engineer’s estimated cost of all public improvements and/or private improvements required by the Subdivision Ordinance or Zoning Ordinance. The Developer shall provide an additional security equal to six and one-half percent (6.5%) of the estimated cost of the required public and/or private improvements for use by the City for the purpose of assuming responsibility for design, bidding, and construction administration of the required improvement in the event of a default by the Developer as provided for by this contract. The issuer and form of the security (other than cash escrow) shall be subject to City approval in its reasonable discretion. The security shall be issued by a banking institution in good standing as determined by the City and approved by the City Administrator. The City shall have the ability to draw on the security at a bank or branch bank located within fifty (50) miles of the City Hall. The security shall contain an automatic 14 Costco Addition 231288v6 renewal provision and shall not expire until all the Development is complete and fully and finally accepted by the City, and all terms of this Contract are satisfied. The City may draw down the security, on five (5) business days written notice to the Developer, for any violation of the terms of this Contract or without notice if the security is allowed to lapse prior to the end of the required term. If the required public improvements are not completed at least thirty (30) days prior to the expiration of the security, the City may also draw it down without notice. If the security is drawn down, the proceeds shall be used to cure the default. Upon receipt of proof satisfactory to the City that work has been completed and financial obligations to the City have been satisfied, with City approval not to be unreasonably withheld or delayed, the security shall be reduced from time to time in proportion to the work completed, but not below ten percent (10%) which is the amount of the warranty security. For purposes of this Section, the warranty period shall be a twelve (12) month period after the applicable work has been completed, except with respect to streets, for which the warranty period shall be two years as addressed elsewhere in this Contract. This security amount shall be submitted to the City prior to execution of the Contract. All administrative and legal fees related to plan review, drafting of this Contract and any other necessary items shall be paid to the City prior to execution of the Contract. Upon completion of the work contemplated hereunder and expiration of the warranty period, the remaining security shall be promptly released to Developer. 29. SUMMARY OF SECURITY REQUIREMENTS. The amount of the security described above is calculated as follows: CONSTRUCTION COSTS: A. Sanitary Sewer – Lateral and Trunk $101,500.00 B. Watermain – Lateral and Trunk 611,554.00 C. Storm Sewer - Lateral 20,000.00 D. Streets 646,352.00 CONSTRUCTION SUB-TOTAL $1,379,406.00 15 Costco Addition 231288v6 OTHER COSTS: A. Site Grading, Erosion Control & Wetland Protection 74,670.00 B. Engineering & Surveying Construction Services (6.5%) 89,661.39 C. Landscaping 200,000.00 OTHER COSTS SUB-TOTAL $364,331.39 TOTAL – SUBTOTAL $1,743,737.39 TOTAL IRREVOCABLE LETTER OF CREDIT $2,179,671.74 FOR SECURITY (125% OF SUBTOTAL) ESCROW A. City Legal Expenses (Est. 1.0% of $1,379,406.00) $13,794.06 B. City Construction Observation (Est. 8.0% of $1,379,406.00) 110,352.48 C. GIS Data Entry Fee 750.00 ESCROW TOTAL $124,896.54 This breakdown is not a restriction on the use of the security. 30. SUMMARY OF CASH REQUIREMENTS. The following is a summary of the cash requirements under this Contract which must be furnished to the City prior to the City Council signing the final plat: A. City Administrative (1.0% of $1,379,406.00) $13,794.06 B. Trunk Storm Water Management Impact Fee 108,356.10 C. Trunk Sewer & Sewer Access Fee (SAC) 120,869.91 D. Trunk Water (WAC) (Developer Credit) (60,483.72) E. Park Dedication Fee 229,060.02 F. Traffic Control Signs 10,0000.00 G. Street Lights 5,000.00 TOTAL CASH REQUIREMENTS $426,596.37 31. WARRANTY. The Developer warrants all improvements required to be constructed by it pursuant to this Contract against poor material and faulty workmanship, other than as set forth hereafter in this Section 31, for a period of one (1) year. The warranty period for streets is two (2) years as specified in this Contract. The warranty period for underground utilities is two (2) years and shall commence following 16 Costco Addition 231288v6 completion and acceptance by City Council. A minimum of 10% of the total security as specified above in the portion of Section 29 of this Contract shall be retained as warranty security calculated as follows. WARRANTY RETAINAGE A. Sanitary Sewer $15,225.00 B. Watermain 91,733.10 C. Storm Sewer 3,000.00 D. Streets 96,952.80 B. Erosion & Sedimentation Control 3,733.50 TOTAL WARRANTY RETAINAGE FROM LETTER OF CREDIT $210,644.40 The Developer is not required to post this amount separately but rather this amount shall be retained for warranty purposes from the total security posted according to Section 27 of this Contract until warranty obligations are satisfied. 32. RESPONSIBILITY FOR COSTS. A. Except as otherwise specified herein, the Developer shall pay all costs incurred by it or the City in conjunction with the development of the plat, including but not limited to Soil and Water Conservation District charges, legal, planning, engineering and construction observation inspection expenses incurred in connection with approval and acceptance of the plat, the preparation of this Contract, review of construction plans and documents, and all costs and expenses incurred by the City in monitoring and inspecting development of the plat. B. The Developer shall hold the City and its officers, employees, and agents harmless from claims made by itself and third parties for damages sustained or costs incurred resulting from plat approval and development. The Developer shall indemnify the City and its officers, employees, and agents for all costs, damages, or expenses which the City may pay or incur in consequence of such claims, including attorneys' fees, but excluding in any such costs, damage, or expenses, caused by the willful misconduct or gross negligence of the City or its officers, employees, or agents. 17 Costco Addition 231288v6 C. The Developer shall reimburse the City for costs incurred in the enforcement of this Contract, including engineering and attorneys' fees. D. The Developer shall pay, or cause to be paid when due, and in any event before any penalty is attached, all special assessments referred to in this Contract. This is a personal obligation of the Developer and shall continue in full force and effect even if the Developer sells one or more lots, the entire plat, or any part of it. E. The Developer shall pay in full all bills submitted to it by the City for obligations incurred under this Contract within thirty (30) days after receipt. If the bills are not paid on time, the City may halt plat development and construction until the bills are paid in full. Bills not paid within thirty (30) days shall accrue interest at the rate of eighteen percent (18%) per year. Additionally, the Developer shall pay in full all bills submitted to it by the City prior to any reductions in the security for the development. F. In addition to the charges and special assessments referred to herein, other charges and special assessments may be imposed such as but not limited to sewer availability charges ("SAC"), City water connection charges, City sewer connection charges, and building permit fees. 33. DEVELOPER’S DEFAULT. In the event of default by the Developer as to any of the work to be performed by it hereunder, the City may, at its option, perform the work and the Developer shall promptly reimburse the City for any expense incurred by the City, provided the Developer, except in an emergency as determined by the City, is first given notice of the work in default, not less than five (5) days in advance. This Contract is a license for the City to act, and it shall not be necessary for the City to seek a Court order for permission to enter the land. When the City does any such work, the City may, in addition to its other remedies, assess the cost in whole or in part. 34. MISCELLANEOUS. A. The Developer represents to the City that the plat complies with all city, county, state, and federal laws and regulations, including but not limited to: subdivision ordinances, zoning 18 Costco Addition 231288v6 ordinances, and environmental regulations. If the City determines that the plat does not comply, the City may, at its option, refuse to allow construction or development work in the plat until the Developer does comply. Upon the City's demand, the Developer shall cease work until there is compliance. B. Third parties shall have no recourse against the City under this Contract. C. Breach of the terms of this Contract by the Developer shall be grounds for denial of building permits, including lots sold to third parties. D. If any portion, section, subsection, sentence, clause, paragraph, or phrase of this Contract is for any reason held invalid, such decision shall not affect the validity of the remaining portion of this Contract. E. If building permits are issued prior to the acceptance of public improvements, the Developer assumes all liability and costs resulting in delays in completion of public improvements and damage to public improvements caused by the City, Developer, its contractors, subcontractors, material men, employees, agents, or third parties. No sewer and water connections or inspections may be conducted and no one may occupy a building for which a building permit is issued on either a temporary or permanent basis until the streets needed for access have been paved with a bituminous surface and the utilities are accepted by the City Engineer. F. The action or inaction of the City shall not constitute a waiver or amendment to the provisions of this Contract. To be binding, amendments or waivers shall be in writing, signed by the parties and approved by written resolution of the City Council. The City's failure to promptly take legal action to enforce this Contract shall not be a waiver or release. G. This Contract shall run with the land and may be recorded against the title to the property. In the event this Contract is recorded, upon request by Developer, the City covenants to provide a recordable Certificate of Completion within a reasonable period of time following the request, upon the completion of the work and responsibilities required herein, payment of all costs and fees required and compliance with all terms of the Contract. A release of this Contract may be 19 Costco Addition 231288v6 provided in the same manner and subject to the same conditions as a Certificate of Completion provided there are no outstanding or ongoing obligations of Developer under the terms of this Contract. The Developer covenants with the City, its successors and assigns, that the Developer is well seized in fee title of the property being final platted and/or has obtained consents to this Contract, in the form attached hereto, from all parties who have an interest in the property; that there are no unrecorded interests in the property being final platted; and that the Developer will indemnify and hold the City harmless for any breach of the foregoing covenants. H. Insurance. Prior to execution of the final plat, Developer and its general contractor shall furnish to the City a certificate of insurance showing proof of the required insurance required under this Paragraph. Developer and its general contractor shall take out and maintain or cause to be taken out and maintained until six (6) months after the City has finally accepted the public improvements, such insurance as shall protect Developer and its general contractor and the City for work covered by the Contract including workers’ compensation claims and property damage, bodily and personal injury which may arise from operations under this Contract, whether such operations are by Developer and its general contractor or anyone directly or indirectly employed by either of them. The minimum amounts of insurance shall be as follows: Commercial General Liability (or in combination with an umbrella policy) $2,000,000 Each Occurrence $2,000,000 Products/Completed Operations Aggregate $2,000,000 Annual Aggregate The following coverages shall be included: Premises and Operations Bodily Injury and Property Damage Personal and Advertising Injury Blanket Contractual Liability Products and Completed Operations Liability Automobile Liability $2,000,000 Combined Single Limit – Bodily Injury & Property Damage Including Owned, Hired & Non-Owned Automobiles 20 Costco Addition 231288v6 Workers Compensation Workers’ Compensation insurance in accordance with the statutory requirements of the State of Minnesota, including Employer’s Liability with minimum limits are as follows: • $500,000 – Bodily Injury by Disease per employee • $500,000 – Bodily Injury by Disease aggregate • $500,000 – Bodily Injury by Accident The Developer’s and general contractor’s insurance must be “Primary and Non-Contributory”. All insurance policies (or riders) required by this Contract shall be (i) taken out by and maintained with responsible insurance companies organized under the laws of one of the states of the United States and qualified to do business in the State of Minnesota, (ii) shall name the City, its employees and agents as additional insureds (CGL and umbrella only) by endorsement which shall be filed with the City and (iii) shall identify the name of the plat. A copy of the endorsement must be submitted with the certificate of insurance. Developer’s and general contractor’s policies and Certificate of Insurance shall contain a provision that coverage afforded under the policies shall not be cancelled without at least thirty (30) days’ advanced written notice to the City, or ten (10) days’ notice for non-payment of premium. An Umbrella or Excess Liability insurance policy may be used to supplement Developer’s or general contractor’s policy limits on a follow-form basis to satisfy the full policy limits required by this Contract. I. Indemnification. To the fullest extent permitted by law, Developer agrees to defend, indemnify and hold harmless the City, and its employees, officials, and agents from and against all claims, actions, damages, losses and expenses, including reasonable attorney fees, arising out of Developer’s negligence or its performance or failure to perform its obligations under this Contract, but excluding in any such costs, damage, or expenses, caused by the willful misconduct or gross negligence of the City or its officers, employees, or agents. Developer’s indemnification obligation shall apply to Developer’s general contractor, subcontractor(s), or anyone directly or indirectly employed or hired by Developer, or anyone for whose acts 21 Costco Addition 231288v6 Developer may be liable. Developer agrees this indemnity obligation shall survive the completion or termination of this Contract. J. Each right, power or remedy herein conferred upon the City is cumulative and in addition to every other right, power or remedy, express or implied, now or hereafter arising, available to City, at law or in equity, or under any other agreement, and each and every right, power and remedy herein set forth or otherwise so existing may be exercised from time to time as often and in such order as may be deemed expedient by the City and shall not be a waiver of the right to exercise at any time thereafter any other right, power or remedy. K. The Developer may not assign this Contract without the written permission of the City Council. The Developer's obligation hereunder shall continue in full force and effect even if the Developer sells one or more lots, the entire plat, or any part of it, until the City’s issuance of a Certificate of Completion and Release. L. Retaining walls over four feet in height shall be constructed in accordance with plans and specifications prepared by a structural or geotechnical engineer licensed by the State of Minnesota. Following construction, a certification signed by the design engineer shall be filed with the Building Official evidencing that the retaining wall was constructed in accordance with the approved plans and specifications. All retaining walls identified on the development plans and by special conditions referred to in this Contract shall be constructed before any other building permit is issued for a lot on which a retaining wall is required to be built. All retaining walls must comply with the City’s engineering manual and the City’s zoning ordinance. M. Should the Developer convey any lot or lots in the Development to a third party, the City and the owner of that lot or those lots may amend this Development Contract or other city approvals or agreements for development or use of those lots without the approval or consent of the Developer or other lot owners in the Development. Private agreements between the owners of lots within the Development for shared service or access and related matters necessary for the 22 Costco Addition 231288v6 efficient use of the Development shall be the responsibility of the lot owners and shall not bind or restrict City authority to approve applications from any lot owner in the Development. 35. NOTICES. Required notices to the Developer shall be in writing, and shall be either hand delivered to the Developer, its employees or agents, or mailed to the Developer by certified mail at the following address: 999 Lake Drive, Issaquah, WA 98027. Notices to the City shall be in writing and shall be either hand delivered to the City Administrator, or mailed to the City by certified mail in care of the City Administrator at the following address: Otsego City Hall, 13400 90th Street NE, Otsego, Minnesota 55330. [The remainder of this page has been intentionally left blank. Signature pages follow.] 23 Costco Addition 231288v6 CITY OF OTSEGO BY: ___________________________________________ Jessica L. Stockamp, Mayor (SEAL) AND __________________________________________ Audra Etzel, City Clerk STATE OF MINNESOTA ) )ss. COUNTY OF WRIGHT ) The foregoing instrument was acknowledged before me this ________ day of ______________, 2024, by Jessica L. Stockamp and by Audra Etzel, 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 24 Costco Addition 231288v6 DEVELOPER: COSTCO WHOLESALE CORPORATION BY: ___________________________________________ Its STATE OF WASHINGTON ) )ss. COUNTY OF KING ) The foregoing instrument was acknowledged before me this ________ day of ______________, 2024, by __________________________________ the ____________________________________ of COSTCO WHOLESALE CORPORATION, a Washington corporation, on behalf of said entity. ______________________________________________ NOTARY PUBLIC DRAFTED BY: CAMPBELL, KNUTSON Professional Association Grand Oak Office Center I 860 Blue Gentian Road, Suite 290 Eagan, Minnesota 55121 651-452-5000 DSK/smt 25 Costco Addition 231288v6 EXHIBIT “A” TO DEVELOPMENT CONTRACT Outlot J, Zimmer Farms, according to the recorded plat thereof, Wright County, Minnesota And The East 20 acres of the South ¾ of the Southeast Quarter of the Southeast Quarter of Section 36, Township 121, Range 24, Wright County, Minnesota, EXCEPT that part thereof taken for Interstate Highway No. 94. [to be platted as Costco Addition, Wright County, Minnesota.] 26 Costco Addition 231288v6 [BANK LETTERHEAD] IRREVOCABLE LETTER OF CREDIT No. ___________________ Date: _________________ TO: City of Otsego City Hall 13400 90th Street NE Otsego, Minnesota 55330 Dear Sir or Madam: We hereby issue, for the account of (Name of Developer) and in your favor, our Irrevocable Letter of Credit in the amount of $____________, available to you by your draft drawn on sight on the undersigned bank. The draft must: a) Bear the clause, "Drawn under Letter of Credit No. __________, dated ________________, 2_____, of (Name of Bank) "; b) Be signed by the City Administrator or Finance Director of the City of Otsego. c) Be presented for payment at (Address of Bank) , on or before 4:00 p.m. on November 30, 2_____. This Letter of Credit shall automatically renew for successive one-year terms unless, at least forty-five (45) days prior to the next annual renewal date (which shall be November 30 of each year), the Bank delivers written notice to the Otsego Finance Director that it intends to modify the terms of, or cancel, this Letter of Credit. Written notice is effective if sent by certified mail, postage prepaid, and deposited in the U.S. Mail, at least forty - five (45) days prior to the next annual renewal date addressed as follows: Otsego Finance Director, Otsego City Hall, 13400 90th Street NE, Otsego, MN 55330, and is actually received by the Finance Director at least thirty (30) days prior to the renewal date. This Letter of Credit sets forth in full our understanding which shall not in any way be modified, amended, amplified, or limited by reference to any document, instrument, or agreement, whether or not referred to herein. This Letter of Credit is not assignable. This is not a Notation Letter of Credit. More than one draw may be made under this Letter of Credit. This Letter of Credit shall be governed by the most recent revision of the Uniform Customs and Practice for Documentary Credits, International Chamber of Commerce Publication No. 600. We hereby agree that a draft drawn under and in compliance with this Letter of Credit shall be duly honored upon presentation. [NAME OF BANK] BY: ____________________________________ Its ______________________________