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07-11-11 WSMACARTHUR LAW OFFICE LLC Andrew J. MacArthur Attorney At Law 3601 Thurston Avenue N, Suite 103 Anoka, MN 55303 763.226.3497 July 7, 2011 City Council Members City of Otsego c/o Tami Loff, City Clerk 8899 Nashua Avenue NE Otsego, MN 55330 RE: Proposed Extension Agreement- Appello Group, LLC- Great River Centre Dear Council Members: Please find enclosed the previously approved extension Agreement regarding the Great River Centre development. This Agreement was previously approved by the City Council and was sent to the Developer and 21" Century Bank for their review. The revised Agreement extends the time frame for completing the remainder of the street and other public improvements until July of 2012, assuming that the Developer is able to extend the current Letter of Credit. In the event that the Developer is not able to extend the Letter the City must be notified and we will draw on the Letter of Credit. If the City decides to or must draw on the Letter of Credit, the City can determine whether or not the funds will be used for completion of public improvements or to pay down City debt service. If the money, or a portion of the money drawn, is not used to complete the public improvements, the City can, at its option, assess those lots owned by the Developer for the improvements and they agree to as the assessment and waive any right of appeal. The Agreement has been drafted in light of the most recent information provided by the Developer relative to the present market conditions and their ability to make payments. MACARTHUR LAW OFFICE LLC Andrew J. MacArthur Attorney At Law 3601 Thurston Avenue N, Suite 103 Anoka, MN 55303 763.226.3497 Letter to Otsego City Council July 7, 2011 Page 2 The Agreement has been sent to the Developer and 21St Century Bank and they have both indicated that they will sign it as drafted. It is my understanding that the City Council wants to further discuss this Agreement and their options at the July 11 City Council meeting workshop. I will be available to answer any questions you might have regarding the draft Agreement at the next regularly scheduled City Council meeting on July 11. Very truly yours, Andrew J. MacArthur MACARTHUR LAW OFFICE LLC Encl. cc: Dan Licht, City Planner Ron Wagner, City Engineer CITY OF OTSEGO COUNTY OF WRIGHT STATE OF MINNESOTA AGREEMENT BETWEEN THE CITY OF OTSEGO AND APPELLO GROUP, LLC REGARDING COMPLETION OF PUBLIC IMPROVEMENTS AND PAYMENT OF CITY ASSESMENTS WITHIN GREAT RIVER CENTRE AGREEMENT entered this day of , 2011 between Appello Group, LLC (APPELLO), a Minnesota Limited Liability Company and the City of Otsego (CITY) a municipal corporation under the laws of the State of Minnesota. WHEREAS, APPELLO and CITY previously entered into agreements regarding completion of certain public improvements; and WHEREAS, pursuant to those Agreements certain funds were escrowed for that purpose with 21" Century Bank; and WHEREAS, APPELLO completed a certain portion of the work in 2010, utilizing the escrowed funds; and WHEREAS, APPELLO was to complete the remainder of the public improvements by July 15, 2011 or to request City extension of the Agreement by April 15, 2011; and WHEREAS, APPELLO did request extension of the Agreement in writing by the required date of April 15, 2011 indicating in that letter that they would not be able to complete the remainder of the required public improvements by July 15, 2011 due to the current market conditions; and WHEREAS, the Otsego City Council by resolutions adopted at a regularly scheduled City Council meeting on April 25, 2011 authorized City staff to draw on the Letter of Credit unless a satisfactory additional extension Agreement can be reached by July 15, 2011 ; and NOW, THEREFORE, IT IS AGREED between the Parties as follows: 1. APPELLO agrees with the conclusion of the City Engineer that the roadways (specifically Quaday Avenue from 87th Street to 85th Street and 85th Street from CSAH 42 to Quaday Avenue) within GREAT RIVER CENTRE that have not received a final lift of bituminous have deteriorated to such an extent that those roadways will have to be re -milled and an adequate base will have to be laid prior to application of a wear course of bituminous. APPELLO agrees that this substantially increases the estimated cost of the work to be completed. Further, APPELLO specifically agrees not to raise the issue of the adequacy of the initial laying of the base course or oversight with the CITY and agrees to waive any and all possible claims or causes of action against the City and its employees, agents and contractors based upon such allegations. 2. APPELLO agrees to hold in escrow any available funds from any closing scheduled within GREAT RIVER CENTRE (or any of its additions) for lots owned by APPELLO, said funds to be utilized by the CITY, at its sole discretion, to complete the remainder of the public improvements required within GREAT RIVER CENTRE or to be applied against CITY debt service related to unpaid assessments allocated to APPELLO for the CITY CSAH 42 Project. 3. APPELLO agrees to fully complete removal of existing base course and installation of new base course and wear course on 85th Street and Quaday Avenue as set forth in the City Engineer's e-mail to City staff and APPELLO dated May 28, 2010 to the satisfaction and approval of the City Engineer by July 16, 2012 utilizing funds escrowed from any closing occurring between the date of execution of this Agreement and July 16, 2012. Additionally, all other required public improvements (landscaping, street lights, trails/sidewalks) shall also be completed by July 16, 2012 unless otherwise agreed to by CITY. APPELLO shall notify CITY of any and all closings for properties within GREAT RIVER CENTRE and shall prior to the closing disclose any amounts available from that closing to be placed in escrow for the purpose of constructing the additional public improvements or covering CITY debt service for the CSAH 42 Project, as determined at the sole discretion of the CITY. Any funds available for those purposes, as reasonably determined by CITY, and approved by APPELLO's lender, shall be placed in escrow for either purpose. The obligation to escrow for public improvements and/or debt service payments shall remain in force and effect until such time as all CITY required public improvements within the Plat have been constructed to the reasonable satisfaction of the City Engineer and sufficient surety is available to cover all applicable warranties and all delinquent assessments have been paid. 4. APPELLO agrees to keep in force and effect at all times from this date forward the required Letter of Credit in at least the amount of $300,000.00 for purposes of assuring CITY that all public improvements are completed and that assessments and taxes on GREAT RIVER CENTRE are timely paid as required by the Developer's Agreement and addendums thereto. This provision is to insure that the CITY always has available to it security to cover the costs of public improvements that must be finished by CITY and to assure that taxes and assessments on the Plat are timely paid. In the event that the CITY must draw 2 upon any posted Letter of Credit for the purpose of completing public improvements as set forth in this Agreement or to make needed payments on City debt service, APPELLO must immediately cause there to be a replacement Letter of Credit in the same amount, and in force and effect for a period of not less than one year from the date of posting the Letter of Credit. Any new Letter of Credit must contain an automatic renewal provision and be issued by an FDIC approved and insured banking or lending institution with an office at which the Letter of Credit can be delivered to draw upon within fifty (50) miles of CITY. 5. APPELLO must notify the CITY at least two weeks prior to the expiration of the current Letter of Credit whether or not the BANK will renew the Letter of Credit. In the event that the Letter of Credit is not reissued, replaced or extended the CITY will draw down the Letter of Credit and use the proceeds at its sole discretion to either construct all or a portion of the remaining public improvements or to pay off existing or future CITY debt service. APPELLO agrees to cooperate with the CITY's draw on the Letter of Credit. In the event that the CITY draws on the Letter of Credit it does not reduce, change or modify any obligation that APPELLO has to the CITY under this Agreement, the original Developer's Agreement or any addendum or other Agreement between APPELLO and the CITY related to GREAT RIVER CENTRE, including the obligation to have in force and effect a Letter of Credit. 6. In the event that the CITY determines that the Letter of Credit must be drawn down to insure the CITY's ability to make current of future debt service obligations prior to completion of the public improvements, CITY may determine that the public improvements must go forward as a CITY Project, in which case all costs associated with the CITY project may be assessed against lots and outlots within the Plat owned by APELLO; specifically Outlots I and K, GREAT RIVER CENTRE FIRST ADDITION; Outlots A,B and C and Lot 1, Block 2; Lots 1 and 2, Block 3 and Lot 1, Block 4 GREAT RIVER CENTRE SECOND ADDITION; and Oulot A, GREAT RIVER CENTRE THIRD ADDITION. If the CITY proceeds with a CITY project and assessment APPELLO specifically waives any and all hearings, irregularities in the proceedings and any right of appeal of whatever nature including the right of appeal in Minnesota Statute 429.081. APPELLO specifically agrees that the remaining public improvements increase the fair market value of the above described properties in at least the amount of the cost of said improvements. 7. This current Agreement does not affect any of the terms and conditions of those previous Developers Agreement and amendments thereto between APPELLO and CITY, unless specifically amended or modified by this Agreement. All other terms and conditions of the previous Developers Agreement and amendments thereto shall remain in full force and effect. APELLO specifically agrees that the original Developer's Agreement and addendums thereto are binding and remain binding on APPELLO, it successors and assigns and that it will not contest the validity of said Agreements. 3 8. Any and all required upkeep and repair (such as potholes and crack sealing) of those portions of the road (85th and Quaday) which will not receive the wear course until next year as well as prompt mowing of all lots within the Plat, are the responsibility of APPELLO. Any such required repairs or mowing, as determined at the reasonable discretion of the CITY, shall be promptly undertaken and completed by APPELLO upon receipt of notice of the same from the CITY. In the event that APPELLO does not promptly make the repairs as required by the City Engineer or undertake mowing as required by the Zoning Administrator, CITY may make such repairs and/or undertake mowing and bill the costs of the repair or mowing as well as any attendant administrative, legal, engineering, planning or other costs incurred by the CITY to APPELLO which shall promptly (within thirty days) make such payment. If APPELLO fails to pay for any costs CITY may draw upon any available escrow or security that it holds to cover these costs plus interest and/or assess the costs against any property within the Plat owned by APPELLO. Failure to immediately pay any such repair costs shall be considered a material breach of this Agreement, and CITY may immediately terminate the Agreement. 9. This Agreement supersedes any and all previous Agreements, oral or written, regarding extension of the specific items listed only. This Agreement does not affect or modify any other obligation of APPELLO under the original Developer's Agreement or addendums thereto, nor is it to be construed as a waiver of any other obligation of APPELLO by the CITY. Dated: APPELLO GROUP LLC By: Its Dated: CITY OF OTSEGO 4 Jessica Stockamp, Mayor Tami Loff, City Clerk CONSENT 21St Century Bank as Lender to Appello Group LLC and as the issuer of a Letter of Credit on behalf of Appello Group, LLC affecting Great River Centre, has reviewed this Agreement and consents to its terms and conditions. Dated: 21sT CENTURY BANK By: Its 5 ITEM 3_3 SPECIAL MEETING CITY COUNCIL WORKSHOP MONDAY, JULY 11, 2011 OTSEGO CITY HALL 7:00 PM* 1. Mayor Stockamp will call the workshop to order. Mayor Stockamp called the meeting to order at 8:10 PM. Roll call: Mayor Jessica Stockamp; Councilmembers: Vern Heidner, Doug Schroeder and Tom Darkenwald. Excused absence: CM Dan Scharber. Staff: Gary Groen, Finance Director; Tami Loff, City Clerk; Daniel Licht, City Planner; Ron Wagner, City Engineer; Andy MacArthur, City Attorney. 2. GRC/Appello agreement. City Planner Licht reviewed the draft agreement. City staff is recommending the City enter into the agreement at this point and review later one. CM Darkenwald asked if Appello understands regarding potential assessment for the street improvements. City Planner Licht said that the letter from the City Attorney emphasized that point. CM Darkenwald asked how many years are they behind. Finance Director Groen said since 2009 on the special assessments and 2010 on the property taxes. City Planner Licht said Appello have been paying their taxes but not paying the special assessments to avoid a tax forfeit. The City Council directed the agreement be put on the July 25, 2011 City Council agenda for approval as a consent item. 3. Any other items. City Planner Licht gave an updated on the McDonald house. The HPC recorded a video of the house for the records. The City Council had discussion on opening the site for an archeological dig to the public. The City Council directed City staff is to coordinate the effort to organize an archeological dig of the site. The City Council discussed the proposal received during open forum at the July 11, 2011 regular City Council meeting for emergency sirens. City staff was directed to provide a comparison of the equipment on this proposal to that which was ordered for further City Council information. 4. Adjourn. The City Council set a Budget Workshop for Monday, August 1, 2011 at 5:30 PM. Mayor Stockamp directed City staff to talk to Rose Cassady about if the Otsego Festival wants the splash pad on or off during the event. Ms. Johnson said the city of Elk River typically have their splash pad open from Memorial Day to Labor Day. The workshop adjourned at 8:46 PM. Written by: Tami Loff, City Clerk *immediately following the adjournment of the City Council meeting at 7:00 PM.