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ITEM 4.1_updated Dev Agreement Gateway North 5th AdditionDEVELOPMENT AGREEMENT GATEWAY NORTH FIFTH ADDITION LOT 2, BLOCK I BUILDING 2 THIS AGREEMENT, entered into this day of February, 2016, by and between the CITY OF OTSEGO, a Minnesota municipal corporation ("CITY") and DUKE REALTY LIMITED PARTNERSHIP, a Limited Partnership under the laws of the State of Indiana ("DEVELOPER") RECITALS WHEREAS, DEVELOPER and CITY entered into that certain Development Agreement Gateway North Fourth Addition dated September 25, 2014 (the `Building 3 Agreement") for the development of approximately 26.14 acres of land which included Lot 2, Block 1 ("Lot 2") and Lot 3, Block 1 ("Lot 3") as shown on the final plat for Gateway North Fourth Addition. WHEREAS, although certain terms and conditions of the Building 3 Agreement apply to Lot 3, the City and Developer agreed that when a building is to be constructed on Lot 3 the parties will enter into a separate development agreement to address specific issues related to that bulding. WHEREAS, DEVELOPER is the fee owner of certain parcels of land described as follows: LOT 1, BLOCK 1 GATEWAY NORTH FOURTH ADDITION, LOT 2, BLOCK 1, GATEWAY NORTH FOURTH ADDITION, and LOT 3, BLOCK 1, GATEWAY NORTH FOURTH ADDITION according to the Final Plat on file and of record at the Office of the County Recorder, Wright County, Minnesota. Lot 3, Block 1, Gateway North Fourth Addition, is proposed to be final platted ("Fifth Addition Plat") as LOT 2, BLOCK 1, GATEWAY NORTH FIFTH ADDITION (the "Subject Property"); and WHEREAS, DEVELOPER has submitted site and building plans for development of an industrial warehouse building on the Subject Property; and WHEREAS, the Subject Property is part of a Planned Unit Development ("PUD") for 109.71 acres of property rezoned on June 12, 2006 as I-2 District with a Planned Unit Development; and WHEREAS, on September 20, 2006, the CITY and DEVELOPER entered into that certain Development Agreement Gateway North ("Master Development Agreement"); and WHEREAS, the Master Development Agreement requires that the DEVELOPER enter into additional Development Agreements with the CITY as a condition of approval of individual developments; and WHEREAS, in accordance with the Master Development Agreement, DEVELOPER and CITY hereby agree that Building 2 shall be developed on the Subject Property and within the Fifth Addition Plat in accordance with the terms and conditions contained herein. NOW THEREFORE, in consideration of the promises and mutual promises hereinafter contained, it is agreed between the parties as follows: 1. Development Plans. The Subject Property shall be developed in accordance with the plans, the cover sheet of which is attached to this Agreement as Exhibit A, dated , 2016 and signed by the City Engineer on file and of record at the CITY, and fully incorporated herein by reference and the conditions stated below (hereinafter the "Building 2 Development Plans"). If the Building 2 Development Plans vary from the written terms of this Agreement, the Building 2 Development Plans shall control. Further, in the event of any conflict or 2 variance between the Building 2 Development Plans and the Development Plans (as defined in the Master Development Agreement), the Building 2 Development Plans shall control. 2. Municipal Improvements. The Building 2 Development Plans include certain Municipal Improvements as set forth on the attached Exhibit B. 3. Private Improvements. The DEVELOPER or any future owner of the Subject Property ("Future Owner") agrees that it shall cause to be constructed and installed certain private improvements ("Private Improvements") on the Subject Property. All Private Improvements are to be installed at DEVELOPER'S or Future Owner's sole cost and expense pursuant to this Agreement and the Private Improvementsto the Subject Property shall include those improvements shown on the Building 2 Development Plans. DEVELOPER or Future Owner shall construct such Private hmprovements in accordance with all applicable building codes, ordinances and CITY standards and the Building 2 Development Plans furnished to the CITY and approved by the City Engineer. The DEVELOPER shall obtain all necessary permits before construction of a building. CITY shall provide adequate field inspection personnel to assure acceptable quality control, which will allow certification of the construction work. Within thirty (30) days after the completion of the building and before any security is released (as more fully set forth in the Master Development Agreement), the DEVELOPER or Future Owner shall supply the CITY with a complete set of reproducible "as built" plans and two (2) complete sets of blue line "as built" plans prepared in accordance with CITY standards. 4. Grading, Landscaping and Drainage. The DEVELOPER or Future Owner shall be responsible for grading, landscaping and storm water management on the Subject Property as more fully set forth in this Agreement and the Landscaping Plan. A. Landscaping. DEVELOPER or Future Owner shall maintain the sod and landscape of boulevard areas adjacent to the Subject Property as shown in the Building 2 Development Plans through at least one growing season and to the reasonable satisfaction of CITY. The long term maintenance of sod and landscaping of boulevard areas shall be the responsibility of DEVELOPER or any Future Owner after purchase of the Subject Property. Further, 91 DEVELOPER or Future Owner shall be responsible for mowing, elimination of weeds and removal of any garbage or debris on the Subject Property. B. Erosion Control. The erosion control plan for the Subject Property within the Building 2 Development Plans has been reviewed and approved by CITY and shall be implemented by DEVELOPER prior to grading of the Subject Property. All areas disturbed by the excavation and backfilling operations shall be reseeded forthwith after completion of work in that area. If DEVELOPER does not comply with the erosion control plan and schedule or any erosion control requirements, CITY may, with reasonable notice, take action as it deems appropriate in accordance with all applicable laws, ordinances or regulations or according to this Agreement. C. Grading Plan. Grading of the Subject Property shall be in accordance with the approved Grading Plan as provided in the Building 2 Development Plans. 5. Pre -Construction Activity. DEVELOPER shall schedule a pre - construction meeting with CITY to review the proposed schedule for grading and construction of the Subject Property and related improvements as set forth on the Building 2 Development Plans, and to coordinate the schedule with the City Engineer. 6. Ownership of Improvements. Upon completion of the work and construction required by this Agreement, improvements lying within public easements on the Subject Property shall become CITY property without further notice or action, except that those streets, which will be maintained as private drives shall remain under DEVELOPER's ownership subject to any and all necessary easements, including necessary ingress and egress access to future lots. All storm ponds, detention ponds and outlets on Outlots (specifically, Outlots A, B, C, D, and E, as shown on the Final Plat for Gateway North Fourth Addition; the "Pond Parcels") shall remain DEVELOPER property subject to any easements and the functionality of such ponds and outlets shall be maintained by the CITY. CITY hereby acknowledges and agrees that the ownership of the Pond Parcels may be conveyed to the Gateway North Business Owners' Association, Inc. ("Owners Association") and such Owners Association shall maintain the landscaping and be responsible for the maintenance, repair, replacement and utility costs for the Pond Parcels which constitute a part of the common area, including, but not limited to, any costs associated with the removal of n sedimentation, fallen objects, debris and trash; mowing; outlet cleaning; fountain maintenance; pumping and lighting of these areas to the extent the CITY does not maintain the same as part of its stormwater management program. 7. Clean Up. DEVELOPER shall promptly clean any and all dirt and debris from streets resulting from construction work by DEVELOPER, its agents or assigns during the work and construction required by this Agreement. 8. AUAR. DEVELOPER has completed and AUAR (Alternative Urban Areawide Review) affecting the Subject Property that the CITY approved on June 26, 2006. DEVELOPER shall comply with all terms and conditions of CITY approval of the AUAR and implement any and all actions or mitigation required by CITY approval. 9. Administrative Fee. A one-time fee for CITY administration of the development of the Subject Property is one (1%) percent of estimated construction costs or $1,519.00. 10. Park and Trail Dedication. Park and Trail dedication requirements for GATEWAY NORTH FIFTH ADDITION were satisfied with the Final Plat of GATEWAY NORTH as set forth in the Master Development Agreement. 11. Storm Water Fees. No Storm Water Fees are applicable to GATEWAY NORTH FIFTH ADDITION as set forth in the Master Development Agreement. 12. Sewer Availability Charges. The Sewer Availability Charges for GATEWAY NORTH FIFTH ADDITION were satisfied with the Final Plat of GATEWAY NORTH FOURTH ADDITION. 13. Sewer Connection Fees. Sanitary sewer connection fees are paid at the time of issuance of a building permit. At the time of connection, the DEVELOPER shall pay two (2) RECs at the current fee rates in effect at the time of building permit approval for the Subject Property. 14. Water Availability Charges. The Water Availability Charges for GATEWAY NORTH FIFTH ADDITION were satisfied with the Final Plat of GATEWAY NORTH FOURTH ADDITION. 15. Water Connection Fees. Water connection fees are paid at the time of issuance of a building permit. At the time of connection, the DEVELOPER shall pay two (2) RECs at the current fee rates in effect at the time of building permit approval for the Subject Property. 16. Street and Traffic Control Sign Fees. The fee amount for the Subject Property was calculated as follows: 0 signs at $250.00 per sign or $00.00. 17. CITY Engineering, Engineering Administration, Construction Observation, and Legal Fee Escrow and City Fees. DEVELOPER shall pay escrow for the CITY'S engineering, engineering administration and construction observation services of Municipal Improvements as set forth on Exhibit B, following execution of this agreement, in the estimated amount set forth below. 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 service estimated to be three percent (3%) of the estimated construction cost of the improvements to be inspected, assuming normal construction and project scheduling. DEVELOPER shall pay for construction observation of the Municipal Improvements performed by the City Engineer. Construction observation shall include part or full time observation, as determined by the City Engineer, of the Municipal Improvements and will be billed at hourly rates actually required for said inspection 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, CITY will notify DEVELOPER of anticipated cost overruns for engineering administration and observation services. The Escrow and Fee account for Building 2 shall include estimated escrow for City Engineering, Engineering Administration and Construction Observation limited to the Municipal Improvements expenses and Legal expenses, and fees for City Administrative, Street and Traffic Control Signs, Water and Sewer Availability Charges as follows: ESCROW AND FEES City Construction Administration and Inspection Escrow $12,155.00 (estimated 8% of $151,932, actual billings to be paid) no Legal Fees (1 % of $151,932 actual billings to be paid) $1,519.00 City Administration Fees (1% of $151,932) $1,519.00 Street & traffic control sign Fees (0 at $250.00 per sign) $00.00 Sewer Availability Charge Fees $00.00 Water Availability Charge Fees $00.00 TOTAL $15,193.00 These Escrow and Fee amounts shall be submitted to CITY prior to CITY executing this Agreement. Any Escrow amounts not utilized for legal and engineering charges incurred by the City under this Agreement shall be returned to DEVELOPER when all improvements have been completed, all financial obligations to CITY satisfied, and all required "as -built " plans have been received by CITY. Engineering, planning and legal fees incurred prior to the execution of this Agreement shall be deducted from escrow already submitted with the Plat application or charged against the escrow herein established. All other amounts listed as one-time fees are non-refundable and available immediately for CITY use when posted. 18. Security. To ensure compliance with the terms of this Agreement, and construction of all Municipal Improvements, DEVELOPER shall furnish CITY with a cash escrow or Irrevocable Standby Letter of Credit in the amount of $371,115.29, said amount calculated as follows: Site Grading, Erosion & Sediment Control Watermain- Lateral Storm Sewer- Lateral Engineering & Surveying Construction Services Landscaping SUBTOTAL $90,750.00 $127,080.00 $24,852.00 $9,875.58 $44,334.65 $296,892.23 7 TOTAL SECURITY ($296,892.23 x 125%) $371,115.29 The issuer and form of the security (other than cash escrow) shall be subject to CITY approval, which approval shall not be unreasonably withheld. The security shall be issued by a banking institution in good standing as determined by CITY and approved by the City Administrator. CITY shall have the ability to draw on the Security by overnight courier delivery to the bank or branch bank issuing the Letter of Credit. The security shall be for a term ending December 31, 2016, and shall contain an automatic renewal provision. CITY may draw down the security for any violation of the terms of this Agreement, or upon receiving notice of the pending expiration of the security. It shall be the responsibility of DEVELOPER to infonn CITY at least thirty (30) days prior to expiration of the security of the impending expiration and the status of the Project relative to the security and this Agreement. If, for whatever reason, the security lapses prior to complete compliance with this Agreement (other than during any warranty period), DEVELOPER shall immediately provide CITY with either an extension of the security or an irrevocable letter of credit of the same amount upon notification of the expiration. If the required improvements are not completed at least thirty (30) days prior to the expiration of the security, CITY may also draw down the security. CITY may draw down the security for any violation of the terms of this Agreement (after any reasonable notice to DEVELOPER and cure periods). If the security is drawn down, the proceeds shall be used to cure any default. CITY will, upon making determination of final costs to cure any default, refund to the DEVELOPER any monies which CITY has in its possession which are in excess of the security needed. Upon receipt of proof satisfactory to CITY that work has been completed and financial obligations to CITY have been satisfied, the security will be reduced from time to time down to the amount of warranty security as set forth in paragraph 19 of this Agreement. The security shall not be reduced below ten percent (10%) of the posted security until all improvements have been completed, all financial obligations to CITY satisfied (which includes posting of warranty security), and required "as built" plans have been received by CITY. The intent of this Agreement that CITY shall have access to sufficient security, either security or warranty security, to complete the Project and insure warranty on all public improvements. The security amount shall be submitted to CITY prior to execution of the Agreement. 19. Warranty. DEVELOPER warrants all work required to be performed by it against poor material and faulty worlmanship for a period of one (1) year after its completion and acceptance by CITY. The amount of posted security for warranty of public improvements to be posted by DEVELOPER shall be in the amount of $27,327.30. The amount has been determined by the City Engineer and is based upon the costs of the raw materials and labor which would be necessary to correct the most common deficiencies in the public improvements. 20. Intentionally Deleted. 21. Responsibility for Costs. A. Except costs for construction of improvements such as site grading, drainage, erosion and sediment control and wetland protection, if any, within the Fifth Addition Plat and which are further identified on Exhibit C attached hereto (the "Developer's Internal Improvements") and except as otherwise set forth herein and in the Master Development Agreement, DEVELOPER shall pay all costs incurred by it or CITY in conjunction with the development of the Subject Property including, but not limited to legal, planning, engineering, and inspection expenses in connection with the development of said Lot. B. DEVELOPER shall hold CITY and its officers, employees and agents harmless from claims made by itself and third parties for damages sustained or costs incurred resulting from DEVELOPER's acts or failures to act in connection with development of the Subject Property by DEVELOPER. DEVELOPER shall indemnify CITY and its officers, employees and agents for all costs, damages or expenses which CITY may pay or incur in consequence of such claims, including attorney's fees. C. DEVELOPER shall reimburse CITY for costs incurred in the enforcement of this Agreement, including engineering fees, planning fees, attorney's fees, and costs and disbursements. CITY shall reimburse DEVELOPER for costs incurred in the enforcement of E this Agreement, including engineering fees, attorney's fees, and costs and disbursements. D. DEVELOPER shall pay in full all bills submitted to it by CITY for obligations incurred under this Agreement and agreed to be paid by DEVELOPER under this Agreement within thirty (30) days after receipt. If the bills are not paid on time, and DEVELOPER does not reasonably dispute the payment of amount of such bill CITY may either reimburse itself from existing Escrow or Security or may halt all Building 3 development work, and construction until all bills are paid in full. Bills not paid within thirty (30) days shall accrue interest at the rate of twelve percent (12%) per year. 22. Payment and Release of Special Assessment. The CITY hereby agrees that, provided the DEVELOPER remits payment to the CITY in the amount of Forty -Eight Thousand Seventy -Four and 53/100 Dollars ($48,074.53) on or before February 23, 2016, which assessment has been prorated for the Subject Property, the CITY forever releases and discharges any liability of the DEVELOPER and the Future Owner from any further payment of any Special Assessment described in Section 5 of the Master Development Agreement. 23. Miscellaneous. A. Third parties shall have no recourse against CITY under this Agreement. B. If any portion, section, subsection, sentence, clause, paragraph or phrase of this Agreement is for any reason held invalid, such decision shall not affect the validity of the remaining portion of this Agreement. C. The action or inaction of CITY or DEVELOPER shall not constitute a waiver or amendment to the provisions of this Agreement. To be binding, amendments or waivers shall be in writing, signed by the parties and approved by written resolution of the City Council. CITY's or DEVELOPER's failure to promptly take legal action to enforce this Agreement shall not be a waiver or release. D. This Agreement shall run with the land, shall be recorded against the title to the Subject Property, and shall be binding on all parties having any right, title or interests in the Subject Property or any part thereof, their heirs, successors and assigns. 10 E. Each right, power or remedy herein conferred upon CITY or DEVELOPER is cumulative and in addition to every other right, power or remedy, express or implied, now or hereafter arising, available to CITY or DEVELOPER, 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 CITY or DEVELOPER and shall not be a waiver of the right to exercise at anytime thereafter any other right, power or remedy. F. DEVELOPER shall pay for all local costs related to drainage improvements required to complete the construction of the Subject Property according to the Development Plans. Local costs are costs related required internal drainage improvements such as retention ponds. G. Should development of the Subject Property proceed at a pace slower than anticipated, and for that reason, specific terms of this Agreement become onerous or unduly burdensome to DEVELOPER, upon DEVELOPER's application, CITY will enter into negotiations regarding those specific terms and shall not unreasonably withhold consent to appropriate changes in the terms of this Agreement. H. DEVELOPER shall demonstrate and maintain compliance with the 1991 Wetland Conservation Act, only to the extent said Act applies to the Subject Property. I. DEVELOPER shall be responsible for all on site drainage for the Subject Property, as well as for any affects their actions may have on adjoining properties. 24. Violation of Agreement. If while the escrow or security provided in this Agreement is outstanding, a violation of any of the covenants or agreements herein contained occurs and such violation is not cured within thirty (30) days after written notice thereof from CITY to DEVELOPER, CITY may draw upon the DEVELOPER's escrow or security to cure any violation of the Agreement and to reimburse CITY for any costs incurred in curing the violation. 25. Maintain Public Property Damaged or Cluttered During Construction. DEVELOPER agrees to assume full financial 11 responsibility for any damage which may occur to public property including, but not limited to, street, street sub -base, base, bituminous surface, curb, utility system including, but not limited to, watermain, sanitary sewer or storm sewer when said damage occurs as a result of construction activity which takes place during development of the Subject Property by DEVELOPER or its contractors, except for damage caused by CITY, its employees, agents or contractors. DEVELOPER further agrees to pay all costs required to repair the streets and/or utility systems damaged or cluttered with debris when occurring as a direct or indirect result of the Developer's construction that takes place on the Subject Property. In the event that DEVELOPER is required to maintain or repair such damage and fails to maintain or repair the damaged public property referred to aforesaid within thirty (30) days after written notice from CITY or such longer period as may reasonably necessary or in the event of an emergency as shorter time period as determined by CITY, CITY may, upon notifying DEVELOPER undertake making or causing it to be repaired or maintained. When CITY undertakes such repair, DEVELOPER shall reimburse CITY for all its reasonable expenses within thirty (30) of its billing to DEVELOPER. If DEVELOPER fails to pay said bill within thirty (30) days, the security shall be responsible for reimbursing CITY. 26. Non -Assignment Without Consent. The obligations of DEVELOPER under this Agreement may be assigned by DEVELOPER if the assignment is approved by CITY. However, DEVELOPER shall not be released from its obligations under this Agreement until a written request from the DEVELOPER is received by the CITYand the express written consent of the City Council through Council resolution is approved (such approval shall not be unreasonably withheld and is to be provided to the DEVELOPER within 60 days of receipt of DEVELOPER's request). Notwithstanding the foregoing, the CITY hereby approves the assignment of this Development Agreement and DEVELOPER's obligations hereunder to Wagner Spray Tech, Inc., a Minnesota corporation ("Wagner"), provided the DEVELOPER and Wagner execute and record an assignment of this Development Agreement in the public records for the Subject Property and provide a copy of same to the CITY. 27. Subordination. This Agreement must be recorded against the Subject Property and all other liens, interests or mortgages shall be subordinate to the terms and conditions this Agreement and said Agreement shall not be subject to foreclosure by any other lien, interest or mortgage. 12 28. Notices. Required notices to DEVELOPER shall either hand delivered to DEVELOPER, it employees or agents, or mailed to DEVELOPER by registered mail or sent by overnight delivery to the following address: Duke Realty Limited Partnership, c/o Duke Realty Corporation, Attn: Josh Budish, 1600 Utica Avenue South, Suite 250, St. Louis Park, MN 55416 with a copy to Lisa Starcevich, Duke Realty Corporation, 1301 W. 22nd Street, Suite 800, Oak Brook, IL 60523. Notice to CITY shall be in writing and shall be either hand delivered to the City Clerk or Deputy City Clerk or mailed by registered mail or sent by overnight delivery to the following address: City of Otsego, City Hall, 13400 90tn Street NE, Otsego, MN 55330, Attention: City Clerk. Notices to Wagner, if applicable, shall be in writing and shall be either mailed by registered mail or sent by overnight delivery to the following address: Wagner Spray Tech Corporation, Attn: Daniel John, 1770 Fernbrook Lane, Plymouth, MN 55309. 29. Agreement Effect. This Agreement shall be binding and extend to the respective representatives, heirs, successors and assigns of the parties hereto. 30. Amendment. This Agreement shall be amended only by addendum executed by both parties to this Agreement. 13 IN WITNESS WHEREOF, DEVELOPER and CITY have executed this Agreement as of the day and year above first written. CITY OF OTSEGO, A municipal corporation Jessica Stockamp, Mayor Tami Loff, City Clerk - DUKE REALTY LIMITED PARTNERSHIP, an Indiana limited partnership BY: Duke Realty Corporation, its General Partner By: Steven W. Schnur Executive Vice President, Central Region 14 STATE OF MINNESOTA ) ) ss. COUNTY OF WRIGHT ) On this day of , 2016, before me personally appeared Jessica Stockamp and Tami Loff to me known as the persons described in the foregoing instrument and who did say they are, respectively, the Mayor and City Clerk of the municipal corporation named therein and that said instrument was signed on behalf of said municipal corporation by authority of its City Council and said Jessica Stockamp and Tami Loff acknowledged said instrument to be the free act and deed of said municipal corporation. NOTARY PUBLIC STATE OF ) ss. COUNTY OF On this day of , 2016, before me personally appeared Steven W. Schnur to me known as the person described in the foregoing instrument and who did say he is the Executive Vice President of Duke Realty Corporation, the general partner of Duke Realty Limited Partnership and that said instrument was signed on behalf of Duke Realty Limited Partnership with authority and on behalf of the partnership and said Executive Vice President acknowledged said instrument to be the free act and deed of said entity. NOTARY PUBLIC 15 EXHIBIT A DEVELOPMENT PLANS FOR THE SUBJECT PROPERTY Site Development Plans for LOT 2, BLOCK 1, GATEWAY NORTH FIFTH ADDITION prepared by Sambatek, Inc. dated , 2016 and approved by CITY , 2016 cover sheet attached. EXHIBIT B MUNICIPAL IMPROVEMENTS Attached. EXHIBIT C DEVELOPER'S INTERNAL IMPROVEMENTS [insert here]