ITEM 7.1 Waterfront East 3rd AdditionOtsTe F o
MINNESOTA Z
DEPARTMENT INFORMATION
Request for
City Council Action
ORGINATING DEPARTMENT:
REQUESTOR:
MEETING DATE:
Legal
Andy MacArthur, City Attorney
June 13, 2016
PRESENTER(s):
REVIEWED BY:
ITEM #:
City Attorney
Lori Johnson, City Administrator
7.1
AGENDA ITEM DETAILS
RECOMMENDATION:
Staff recommends that the attached resolution be adopted waiving the requirement for a replacement
Letter of Credit for Guardian Angels Senior Services and 521 Land Company, LLC regarding Outlot A,
Otsego Waterfront East Third Addition and Lot 1, Block 1, Otsego Waterfront East Third Addition.
ARE YOU SEEKING APPROVAL OF A CONTRACT? I IS A PUBLIC HEARING REQUIRED?
No. No.
BACKGROUND/JUSTIFICATION:
The City entered into a mediated settlement agreement with GCI Capital in 2011 regarding property
within Otsego Waterfront East. The Agreement requires GCI to maintain a Letter of Credit in favor of the
City to insure payment of special assessments against the property due to City infrastructure projects.
The Agreement calls for a reduction of the GCI Letter of Credit upon sale of any individual lot within the
Plat. The Buyer is then to provide a substitute Letter of Credit for that lot's share of assessments. The
purpose of this arrangement was to insure that a Letter of Credit was in place at all times for each
property until such time as a Certificate of Occupancy was issued for a building on the premises.
The outstanding assessment balance as of January 1, 2016 on the properties is as follows; Outlot A (PID
118264000010)= $392,693.06 and Lot 1, Block 1 (PID 1182640001010)= $150,013.35.
Ron Touchette of Rock Solid Companies has, on behalf of Guardian Angels Senior Services and its wholly
owned affiliate 521 Land Company, LLC requested that the City waive the replacement Letter of Credit
for the specific properties mentioned above. Guardian Angels and/or 521 is in the process of purchasing
the described lots and has represented to the City that the replacement Letter of Credit is a significant
impediment to their closing on the property due its non-profit organizational structure. Guardian Angels
will most likely have to bond in order to finance the project.
The waiver would not affect any of the City's normal remedies for unpaid property assessments, there
would just not be a Letter of Credit to be immediately draw on if an assessment payment was missed.
All properties within Otsego Waterfront East are current with payment of taxes and assessments. The
remaining GCI Capital Letter of Credit covering the Plat is currently at $ 669,553,13.
City staff has met with representatives of the Guardian Angels regarding this Project and have discussed
the proposed development. Staff has clearly indicated that the proposed development would require
City approvals. At this point, the entities are just purchasing the property and understand that no
approvals have been given, nor does approval of the waiver bind the City to any approval. They are
proceeding at their own risk.
SUPPORTING DOCUMENTS: x❑ ATTACHED ❑ NONE
Resolution Approving Waiver of Letter of Credit Requirement for Certain Properties Within Otsego
Waterfront East Third Addition.
MOTION: (Please word motion as you would like it to appear in the minutes.)
Motion to approve Resolution No. 2016-58 Approving Waiver of Letter of Credit Requirement for
Certain Properties Within Otsego Waterfront East Third Addition.
BUDGET INFORMATION
FUNDING: ( BUDGETED: ❑ YES
NA
ACTION TAKEN
❑ NO
CITY OF OTSEGO
COUNTY OF WRIGHT
STATE OF MINNESOTA
RESOLUTION NO.2016-58
RESOLUTION APPROVING WAIVER OF LETTER OF CREDIT
REQUIREMENTS FOR CERTAIN PROPERTY IN OTSEGO
WATERFRONT EAST THIRD ADDITION
WHEREAS, the City of Otsego entered into a mediated agreement with GCI
Capital in 2011 requiring a Letter of Credit to insure payment of special
assessments within Otsego Waterfront East; and
WHEREAS, upon sale of lots within Otsego Waterfront East the Agreement
requires the City to release a proportionate share of the GCI Capital Letter of
Credit which is to be replaced by a separate Letter of Credit from the new property
owner to remain in place until a Certificate of Occupancy has been issued for a
structure on the lot; and
WHEREAS, Guardian Angels Senior Services and/or its wholly owned affiliate
521 Land Company, LLC intends to purchase Outlot A, Otsego Waterfront East
Third Addition (PID 118264000010) and Lot 1, Block l,Otsego Waterfront East
Third Addition (PID 118264001010); and
WHEREAS, Guardian Angels Senior Services and 521 Land Company, LLC
have made a written request to the City to waive the requirement of a separate
Letter of Credit to insure payment of assessments from the date of property
transfer to the issuance of a Certificate of Occupancy.
NOW THEREFORE, the City Council of the City of Otsego resolves as follows:
1. Guardian Angels Senior Services and 521 Land Company, LLC are hereby
granted a waiver of the Letter of Credit requirement for both Lot 1, Block
1, Otsego Waterfront East Third Addition and Outlot A, Otsego Waterfront
East Third Addition. The waiver is specifically limited to the entities and
properties listed above.
2. The waiver shall be in force and effect from the date of this Resolution and
shall remain in place so long as all scheduled payments of property taxes
and assessments are paid on time. In the event that said payments are not
timely made, the waiver automatically terminates and a Letter of Credit
must be posted with the City in the applicable amount required as of that
date.
3. The waiver is not assignable without City approval.
ADOPTED this 13th day of June, 2016 by the Otsego City Council.
Council Member motioned to adopt the resolution and the
motion was seconded by Council Member
CITY OF OTSEGO
Jessica Stockamp, Mayor
Tami Loff, City Clerk
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CITY OF OTSEGO
COUNTY OF WRIGHT
STATE OF MINNESOTA
RESOLUTION NO.2016-58
RESOLUTION APPROVING WAIVER OF LETTER OF CREDIT
REQUIREMENTS FOR CERTAIN PROPERTY IN OTSEGO
WATERFRONT EAST THIRD ADDITION
WHEREAS, the City of Otsego entered into a mediated agreement with GCI
Capital in 2011 requiring a Letter of Credit to insure payment of special
assessments within Otsego Waterfront East; and
WHEREAS, upon sale of lots within Otsego Waterfront East the Agreement
requires the City to release a proportionate share of the GCI Capital Letter of
Credit which is to be replaced by a separate Letter of Credit from the new property
owner to remain in place until a Certificate of Occupancy has been issued for a
structure on the lot; and
WHEREAS, Guardian Angels Senior Services and/or its wholly owned affiliate
521 Land Company, LLC intends to purchase Outlot A, Otsego Waterfront East
Third Addition (PID 118264000010) and Lot 1, Block l,Otsego Waterfront East
Third Addition (PID 118264001010); and
WHEREAS, Guardian Angels Senior Services and 521 Land Company, LLC
have made a written request to the City to waive the requirement of a separate
Letter of Credit to insure payment of assessments from the date of property
transfer to the issuance of a Certificate of Occupancy.
NOW THEREFORE, the City Council of the City of Otsego resolves as follows:
1. Guardian Angels Senior Services and 521 Land Company, LLC are hereby
granted a waiver of the Letter of Credit requirement for both Lot 1, Block
1, Otsego Waterfront East Third Addition and Outlot A, Otsego Waterfront
East Third Addition. The waiver is specifically limited to the entities and
properties listed above.
2. The waiver shall be in force and effect from the date of this Resolution and
shall remain in place so long as all scheduled payments of property taxes
and assessments are paid on time. In the event that said payments are not
timely made, the waiver automatically terminates and a Letter of Credit
must be posted with the City in the applicable amount required as of that
date.
3. The waiver is not assignable without City approval.
4. If there is a default in scheduled payment of property taxes and special
assessments for the property, the City shall not be obligated to make
incentive payments pursuant to the agreement with GCI Capital, Inc.
recorded with Wright County as Document 1178736.
ADOPTED this 13th day of June, 2016 by the Otsego City Council.
Council Member Warehime motioned to adopt the resolution and the motion was
seconded by Council Member Schroeder.
IN FAVOR: Stockamp, Warehime, Heidner, Schroeder, Darkenwald
OPPOSED: None
CITY OF OTSEGO
Jessica Stockamp, Mayor
Tami Loff, City Clerk
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