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
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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.
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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
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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
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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.