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Item 3.8 Les Schwab Revised Site Improvement Performance Agreement Request for City Council Action DEPARTMENT INFORMATION ORIGINATING DEPARTMENT REQUESTOR: MEETING DATE: Planning City Planner Licht 12 May 2025 PRESENTER(s) REVIEWED BY: ITEM #: Consent City Administrator/Finance Director Flaherty City Engineer Wagner City Attorney Kendall 3.8 – Les Schwab SIPA STRATEGIC VISION MEETS: 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 recommends the City Council approve a revised Site Improvement Performance Agreement. ARE YOU SEEKING APPROVAL OF A CONTRACT? IS A PUBLIC HEARING REQUIRED? Yes No BACKGROUND/JUSTIFICATION: Les Schwab Tire Center on 8 April 2024 received City Council approval of a Conditional Use Permit development of a minor auto repair use on Lot 1, Block 27, Parrish Meadows, which is at the southwest corner of Parrish Avenue (CSAH 42) and 87th Street. The developer delayed construction of the project until 2025. In accordance with Section 11-4-5.A of the Zoning Ordinance, the developer requested, and the Zoning Administrator approved a 90-day extension of the Conditional Use Permit approval. The City Council actions on 8 April 2024 included approval of a Site Improvement Performance Agreement. With the delay in project construction being initiated, the City Attorney has drafted an update of the Site Improvement Performance Agreement for the proposed development for completion of required improvements to 31 December 2025. SUPPORTING DOCUMENTS ATTACHED: • Resolution 2025-19 • Site Improvement Performance Agreement (Revised) POSSIBLE MOTION PLEASE WORD MOTION AS YOU WOULD LIKE IT TO APPEAR IN THE MINUTES: Motion to adopt Resolution 2025-19 approving a revised Site Improvement Performance Agreement. BUDGET INFORMATION FUNDING: BUDGETED: Fund 701 – Development Escrows N/A 1 CITY OF OTSEGO COUNTY OF WRIGHT STATE OF MINNESOTA RESOLUTION NO: 2025-19 APPROVING A REVISED SITE IMPROVEMENT PERFORMANCE AGREEMENT LES SCHWAB TIRE CENTER WHEREAS, SFP-E LLC (Developer) is proposing development of Lot 1, Block 27, Parrish Meadows; and WHEREAS, zoning applications for the development were approved on 8 April 2024 by the City Council; and WHEREAS, Section 11-9-4 of the Zoning Ordinance requires the developer to enter into a Site Improvement Performance Agreement 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, those obligations were outlined and memorialized a Site Improvement Performance Agreement approved by the City Council with adoption of Resolution 2024-34; and WHEREAS, the Developer delayed construction of the project until 2025 necessitating the Site Improvement Performance Agreement be revised; WHEREAS, the revised obligations are outlined and memorialized in the attached Site Improvement Performance Agreement. NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF OTSEGO, MINNESOTA: 1. The Site Improvement Performance Agreement attached hereto between the City of Otsego and SFP-E LLC 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 Site Improvement Performance Agreement on behalf of the City of Otsego. (The remainder of this page intentionally left blank) 2 ADOPTED by the Otsego City Council this 12th day of May, 2025. MOTION BY: SECONDED BY: IN FAVOR: OPPOSED: CITY OF OTSEGO __________________________________ Jessica L. Stockamp, Mayor ATTEST: __________________________________ Audra Etzel, City Clerk 1 230545v4 Les Schwab Tire Center (reserved for recording information) SITE IMPROVEMENT PERFORMANCE AGREEMENT (LOT 1, BLOCK 27, PARRISH MEADOWS) LES SCHWAB TIRE CENTER THIS SITE IMPROVEMENT PERFORMANCE AGREEMENT (“Agreement”) dated ____________________, 2025, by and between the CITY OF OTSEGO, a Minnesota municipal corporation (“City”) and SFP-E, LLC, an Oregon limited liability company (the “Developer”). 1. BACKGROUND. A. The Developer has submitted to the City a site plan and conditional use permit application for property in the City of Otsego, Minnesota, legally described as Lot 1, Block 27, Parrish Meadows, Wright County, Minnesota according to the recorded plat thereof (hereinafter referred to as the “Subject Property”). B. The development of the above-described property includes the construction of a minor auto repair and service facility located between Parrish Avenue (CSAH 42) to the east, Parkview Avenue to the West, and 87th Street to the South. 2 230545v4 Les Schwab Tire Center 2. CONDITIONS OF APPROVAL. This Agreement is a condition of City site plan approval and will be recorded against the Subject Property. 3. 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 4 below. 4. PLANS. The Subject Property shall be developed in accordance with the following plans which are on file with the City. The plans shall not be attached to this Agreement. If the plans vary from the written terms of this Agreement, the written terms shall control. The plans are: Plan A – Site Plan Plan B – Grading and Drainage and Erosion Control Plan Plan C – Plans and Specifications for Public Improvements Plan D – Utility Plan Plan E – Landscape Plan Plan F – New Building Floor Plan Plan G – New Building Elevations Plan Plan H – Lighting Photometric Plan No work can occur outside of the areas indicated on the plans without modifying this Agreement or obtaining a separate grading permit. 5. IMPROVEMENTS. The Developer shall install and pay for the following: A. Sanitary Sewer System B. Water System C. Storm Sewer System D. Concrete Curb and Gutter 3 230545v4 Les Schwab Tire Center E. Site Grading, Stormwater Treatment/Infiltration Basins, and Erosion Control F. Underground Utilities G. Setting of Iron Monuments H. Surveying and Staking I. Sidewalks J. Retaining Walls K. 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 discretion and at the Developer’s 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 instructions received from the City ’s inspectors. The Developer’s engineer shall provide for on-site project management. The Developer’s engineer is responsible for design changes and contract administration between the Developer and the Developer’s contractor. The Developer or its engineer 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 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. 4 230545v4 Les Schwab Tire Center 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. 6. 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 7. 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. 8. TIME OF PERFORMANCE. The Developer shall install all required public improvements by December 31, 2025. 9. STREETS. The Developer agrees to maintain the streets within the Plat until the base course 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 draw from the Developer’s letter of credit. 5 230545v4 Les Schwab Tire Center Should the City determine that snowplowing is necessary prior to final wear course 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, the Developer shall guarantee to the City for a period of one (1) year the street has 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 one (1) year warranty period set forth above commences upon the date on which the City accepts the streets by resolution. Streets indicates any work within the public right of way that touches or impacts City streets. Developer agrees to provide proper temporary traffic control signage and maintain traffic on Parrish Avenue and 87th Street NE during construction of entrances and sidewalks associated with the Development. Developer shall complete all necessary street patching and curbing replacement prior to September 30, 2025. If Developer fails to complete all necessary street patching and curbing replacement prior to September 30, 2025, the City shall have the ability to draw on the security provided by the Developer to complete this work. 10. 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 appropriate by the City in conjunction with plat development. 11. 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 per 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 6 230545v4 Les Schwab Tire Center 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 costs. No development, utility or street construction will be allowed and no certificate of occupancy will be issued unless the plat is in full compliance with the approved erosion control plan. 12. 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. Within thirty (30) days after completion of the grading and before the City approves the certificate of occupancy , 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 building pads, and all other items listed in City Code. The Developer shall post a security for site grading, erosion and sediment control, and wetland protection in the amount of $6,780.00 which is due upon execution of this Site Improvement Performance Agreement calculated as follows: 2.26ac. x $3,000/ac. = $6,780.00 13. CLEAN UP. The Developer shall clean dirt and debris from streets that has resulted from construction work by the Developer, home builders, subcontractors, their agents or assigns. Prior to any 7 230545v4 Les Schwab Tire Center construction in the plat, the Developer shall identify in writing a responsible party and schedule for erosion control, street cleaning, and street sweeping. 14. 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. 15. LATERAL AND TRUNK WATERMAIN. 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. The Developer shall post a security for lateral and trunk watermain in the amount of $21,844.00 which is due upon execution of this Site Improvement Performance Agreement. 16. 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. 17. LANDSCAPING. Landscaping shall be installed in accordance with the approved landscape plan. The Developer shall post a $10,722.00 landscaping security upon execution of this Site Improvement Performance Agreement to ensure that the landscaping is installed in accordance with the approved plan. The Developer shall install an in-ground irrigation system for all yards and planting areas within Lot 1, Block 1, in compliance with Section 5-2-3.C.2 of the City Code. 18. SPECIAL PROVISIONS. The following special provisions shall apply to this Agreement: A. Implementation of the conditions listed in the Findings of Fact and Decision approved by the City Council on April 8, 2024. B. All grading, drainage and erosion control plans shall be subject to review and approval by the City Engineer. 8 230545v4 Les Schwab Tire Center C. All utility plans shall be subject to review and approval of the City Engineer. D. The Developer shall pay Utility Availability Charges for the lot concurrent with approval of the PUD Development Stage Plan and execution of the Site Improvement Performance Agreement. E. The Developer shall pay applicable Utility Connection Charges for the proposed use at the time a building permit is issued. F. The subject site 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. G. The Developer shall install a five-foot wide concrete sidewalk with curb and gutter to access 87th Street. H. Operations: (1.) Hours of operation shall be between 7:00 AM to 10:00 PM. (2.) All repair activities shall be conducted within the principal building and overhead doors to the service bays shall be closed at all times, except when moving vehicles in and out. (3.) Storage of all flammable materials, including liquids and rags shall conform with the applicable provisions of the Minnesota State Fire Code. (4.) All vehicles shall be stored completely inside the principal building or parked in stalls designated for vehicle drop off to the north and west of the building between the hours of 10:00 PM and 7:00 AM; there shall be no other outdoor parking upon the subject site between these hours. I. Construction specifications for the off-street parking are subject to review and approval of the City Engineer. J. The Developer shall submit an exterior lighting plan including photometric measurements of light intensity and indicating the type, location, and height of all exterior light fixtures compliant 9 230545v4 Les Schwab Tire Center with Section 10-16-10 of the Zoning Ordinance prior to approval of a building permit, subject to review and approval of the Zoning Administrator. K. Architectural details of the waste container enclosure shall comply with the requirements of Section 11-18-4.c of the Zoning Ordinance, subject to review and approval of the Zoning Administrator. L. All signs shall comply with Section 11-37-5. C of the Zoning Ordinance and require issuance of a sign permit approved by the Zoning Administrator prior to installation. 19. 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 street, sanitary sewer, water 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. 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 10 230545v4 Les Schwab Tire Center Administrative Fee (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. 20. 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 or via presentation by facsimile or courier if with a national banking institution. The security shall contain an automatic renewal provision and shall not 11 230545v4 Les Schwab Tire Center 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. 21. SUMMARY OF SECURITY REQUIREMENTS. The amount of the security described above is calculated as follows: CONSTRUCTION COSTS: A. Watermain – Lateral and Trunk $21,844.00 B. Streets 5,000.00 C. Sidewalk and Trail 12,650.00 CONSTRUCTION SUB-TOTAL $39,494.00 OTHER COSTS: 12 230545v4 Les Schwab Tire Center A. Site Grading, Erosion & Sediment Control $6,780.00 B. Engineering & Surveying Construction Services (6.5%) 2,567.11 C. Landscaping 10,722.00 OTHER COSTS SUB-TOTAL $20,069.11 TOTAL – SUBTOTAL $59,563.11 TOTAL IRREVOCABLE LETTER OF CREDIT $74,453.89 FOR SECURITY (125% OF SUBTOTAL) ESCROW A. City Legal Expenses ($1,500 Minimum)) $1,500.00 B. City Construction Administration & Utility & Street Inspection 10,000.00 ($10,000.00 Minimum) C. GIS Data Entry Fee 250.00 ESCROW TOTAL $11,750.00 This breakdown is not a restriction on the use of the security. 22. 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 executing this Contract: A. City Administrative ($1,500.00 Minimum) $1,500.00 TOTAL CASH REQUIREMENTS $1,500.00 23. 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 23, 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 completion and acceptance by City Council. A minimum of 10% of the total security as specified above in the portion of Section 21 of this Contract shall be retained as warranty security calculated as follows. WARRANTY RETAINAGE A. Watermain $3,276.60 B. Streets 750.00 13 230545v4 Les Schwab Tire Center C. Erosion & Sedimentation Control 339.00 TOTAL WARRANTY RETAINAGE FROM LETTER OF CREDIT $4,365.60 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 22 of this Contract until warranty obligations are satisfied. 24. ACKNOWLEDGEMENT. The Developer acknowledges that approval of installation of the Improvements does not constitute a guarantee by the City of any future subdivision approvals and that the Developer performs the work on the Subject Property at its own risk. 25. RESPONSIBILITY FOR COSTS. A. The Developer shall pay all costs incurred by it or the City in conjunction with the development of the Subject Property, including but not limited to legal, planning, engineering and inspection expenses incurred in connection with approval of the site plan, the preparation of this Agreement, review of any other plans and documents. 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 site 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. Notwithstanding anything contained within this Section 21(B), Developer shall not be obligated to indemnify or defend the City from and against claims based on any negligence or willful misconduct by the City, its employees, agents or contractors, or the failure of the City to act in accordance with City ordinances and other applicable laws. C. The Developer shall reimburse the City for costs incurred in the enforcement of this Agreement, including engineering and attorneys' fees. 14 230545v4 Les Schwab Tire Center D. The Developer shall pay in full all bills submitted to it by the City for obligations incurred under this Agreement within thirty (30) days after receipt. Bills not paid within thirty (30) days shall accrue interest at the rate of eight percent (8%) per year. 26. MISCELLANEOUS. A. The Developer represents to the City that the Development complies with all city, county, state, and federal laws and regulations, including but not limited to: subdivision ordinances, zoning ordinances, and environmental regulations. If the City determines that the Development does not comply, the City may, at its option, refuse to allow construction or development work 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. Grading, curbing, and one lift of asphalt shall be installed on all public and private streets prior to issuance of any building permits. F. 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. 15 230545v4 Les Schwab Tire Center G. 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. H. 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 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 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; and that the Developer will indemnify and hold the City harmless for any breach of the foregoing covenants. I. Insurance. Prior to commencing construction, Developer shall furnish to the City a certificate of insurance showing proof of the required insurance required under this Paragraph. Developer or its general contractor shall take out and maintain or cause to be taken out and maintained until six (6) months after the City has accepted the public improvements, such insurance as shall protect such party 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: 16 230545v4 Les Schwab Tire Center 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 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 or 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. A copy of the endorsement must be submitted with the certificate of insurance. The Developer’s or 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. 17 230545v4 Les Schwab Tire Center 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. J. 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. 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 Developer may be liable. Developer agrees this indemnity obligation shall survive the completion or termination of this Contract. K. 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. L. 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 the land, or any part of it, until the City’s issuance of a Certificate of Completion and Release. M. Retaining walls that require a building permit 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 18 230545v4 Les Schwab Tire Center 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. N. 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 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. 27. 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 ten (10) days in advance. This Agreement 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 Subject Property. When the City does any such work, the City may, in addition to its other remedies, assess the cost in whole or in part. 28. 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: 20900 Cooley Road, P.O. Box 5350, Bend, Oregon 99708-5380. 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. 19 230545v4 Les Schwab Tire Center [Remainder of page is intentionally left blank. Signature pages follow.] 20 230545v4 Les Schwab Tire Center 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 ______________, 2025, 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 21 230545v4 Les Schwab Tire Center DEVELOPER: SFP-E, LLC an Oregon limited liability company By: Jim Brandon Its: Chief Financial Officer STATE OF ______________ ) )ss. COUNTY OF ____________ ) The foregoing instrument was acknowledged before me this ________ day of ______________, 2025, by Jim Brandon, the Chief Financial Officer of SFP-E, LLC, an Oregon limited liability company, on behalf of said entity. ______________________________________________ NOTARY PUBLIC DRAFTED BY: CAMPBELL, KNUTSON Professional Association 860 Blue Gentian Road, Suite 290 Eagan, Minnesota 55121 22 230545v4 Les Schwab Tire Center Telephone: 651-452-5000 DSK/smt 23 230545v4 Les Schwab Tire Center FEE OWNER CONSENT TO SITE IMPROVEMENT PERFORMANCE AGREEMENT JAVA OTSEGO RETAIL 2.0 LLC, a Minnesota limited liability company, fee owner of all or part of the property, the development of which is governed by the foregoing Site Improvement Performance Agreement, affirms and consents to the provisions thereof and agrees to be bound by the provisions as the same may apply to that portion of the property owned by it. Dated this _____ day of ____________, 2025. FEE OWNER: JAVA OTSEGO RETAIL 2.0 LLC By: _______________________________ [Print Name] Its: [Title] STATE OF MINNESOTA ) )ss. COUNTY OF ____________ ) The foregoing instrument was acknowledged before me this _____ day of _____________, 2025, by __________________________________ the _______________________________________ of JAVA OTSEGO RETAIL 2.0 LLC, a Minnesota limited liability company, on behalf of said entity. ________________________________________ NOTARY PUBLIC DRAFTED BY: CAMPBELL, KNUTSON Professional Association 860 Blue Gentian Road, Suite 290 Eagan, Minnesota 55121 Telephone: 651-452-5000 24 230545v4 Les Schwab Tire Center DSK/smt 25 230545v4 Les Schwab Tire Center MORTGAGE HOLDER CONSENT TO SITE IMPROVEMENT PERFORMANCE AGREEMENT FIRST BANK & TRUST, a South Dakota banking corporation, which holds a Commercial Real Estate Mortgage dated March 8, 2024 between mortgagor JAVA OTSEGO RETAIL 2. 0 LLC, a Minnesota limited liability company and FIRST BANK & TRUST (“Lender”), in the principal amount of $1,224,900.00, recorded March 11, 2024 in the Office of the County Recorder, Wright County, Minnesota as Document No. A1548765 on all or part of the subject property, the development of which is governed by the foregoing Site Improvement Performance Agreement, agrees that the Site Improvement Performance Agreement shall remain in full force and effect even if it forecloses on its mortgage. Dated this _____ day of ____________, 2025. FIRST BANK & TRUST By: _________________________ [print name] Its _____________________ [title] STATE OF ______________ ) )ss. COUNTY OF ____________ ) The foregoing instrument was acknowledged before me this _____ day of ________________, 2025, by ___________________________, the _________________________________________ of First Bank & Trust, a South Dakota banking 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 26 230545v4 Les Schwab Tire Center 651-452-5000 DSK/smt 27 230545v4 Les Schwab Tire Center [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. DEMAND(S) FOR PAYMENT MAY ALSO BE MADE BY FACSIMILE TRANSMISSION TO ________ OR SUCH OTHER FAX NUMBER AS (NAME OF ISSUING BANK) MAY IDENTIFY IN A WRITTEN NOTICE TO YOU. TO THE EXTENT PRESENTATION IS MADE BY FACSIMILE TRANSMISSION YOU MUST PROVIDE TELEPHONE NOTIFICATION THEREOF TO (NAME OF ISSUING BANK) AT TELEPHONE NUMBER: _________ PRIOR TO OR SIMULTANEOUSLY WITH THE SENDING OF SUCH FACSIMILE TRANSMISSION. HOWEVER, THE ABSENCE OF SUCH TELEPHONE CONFIRMATION AS DESCRIBED ABOVE DOES NOT AFFECT OUR OBLIGATION TO HONOR SUCH DRAWING, IF SUCH DRAWING IS OTHERWISE IN COMPLIANCE WITH THE TERMS AND CONDITIONS OF THIS IRREVOCABLE LETTER OF CREDIT. IF DEMAND FOR PAYMENT IS MADE BY FAX, PRESENTATION OF ORIGINAL DOCUMENTS IS NOT REQUIRED. OR DEMAND(S) FOR PAYMENT TO BE MADE VIA EMAIL TO _______________. PRESENTATION OF ORIGINAL DOCUMENTS IS NOT REQUIRED. 28 230545v4 Les Schwab Tire Center 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 ______________________________