ITEM 3.5Great River Centre AgreementRequest for
0 10 Council Action
MINNCSOTA g
DEPARTMENT INFORMATION
E END TION: Council approve Agreement between th City, Appello Group, LLC and 21s'Century Bank
regarding completion of roadway, payment of delinquent takes and assessments and deferment of
action on tax forfeit parcels.
ARE YOU SEEKING APPROVAL OF A CONTRACT? IS A PUBLIC HEARIFiG REQUIRED?
Yes I No,
BACKGROUND/JUSTIFICATION: The City initially received correspondence from s' C ntury Bank regarding a
proposal to pay off the current delinquent taxes on the Appello. owned properties within Great River
Centre and convey two f the lots to the City with the understanding that all delinquent and future
special assessments on the Appello Darned properties within the plat would be transferred to the parcels
conveyed to the City. Additionally, the current $300,.000 Letter of Credit would be used for purposes of
completing the street reconstruction work within the Plat rather than being used to reduce special
assessments. City staff met with Wright County staff in order to gather information on the tai forfeit
status of the properties involved, and review the process and timelines for forfeiture. City staff also met
with representatives of 215' C ntury Rank so that they could explain the proposal in greater detail and
provide their rationale for the proposal.
Most of the parcels in question are currently eligible for tax forfeiture this year, as they have net paid
property taxes for three years. The County Attorney and County Auditor indicated that they would
follow the direction of the City as to whether the City wanted to act on these parcels in 2013 or 2014.
In order for the properties to go tax forfeit the County must serve the property owners with a Notice f
Expiration f Redemption Period. After 60 days following the notice the County Auditr would sign a
Certificate of Tax Forfeiture which would convey title to the properties to the State of Minnesota. At
that time the properties would be removed from thetas roils and all special assessments on the
property would also be cancelled, subject to reassessment by the City at such time that the property
was purchased conveyed back to private ownership. The County,. acting on behalf of the State, would
then determine an appraised minimum value for the properties and would place thea on safe at
auction. The property must be sold for at least the County appraised value.
At the direction of the City Council, City staff again met with representatives of $t Century Bank t
convey that the initial proposal would not be accepted by the City, but that the City would consider
requesting that Wright Counter defer action on tax forfeiting certain of the properties if a number of the
properties were brought up to date with delinquent taxes and assessments being paid in full and
reconstruction ofthe street utilizing Letter of Credit funds. 1't Century then responded t that meeting
with a second proposal that outlined teras and conditions similar to what was conveyed to them at the
above mentioned staff meeting.
Based upon the Ban's second written proposal, City staff drafted a written Agreement that was earlier
submitted to the Council for review. The written Agreement was then sent to 215' Century Bank for their
review. The attached Agreement is a result of the negotiations between City staff and 2151 Century Bank
relative to the original draft Agreement. City staff has reviewed the proposed changes and has accepted
them as they primarily relate to the form of the Agreement and not the substance.
The changes from the draft originally provided to the Council are primarily changes in procedure
requested by 2Vt Century Bank. The current Letter of Credit would be returned to the Bank upon all
parties signing the Agreement and the Bank placing in escrow $300,000.00 for the road improvements.
ents.
The money wound be utilized to make the required roadway improvements. If the improvements were
more than $300,000.00 the additional amount world be paid for by the Bank or Appello. If the
improvements were less than $300,000.00 any remainder would be used to pay for City engineering,
legal and administration inistration to a cap of $12,,000.00. Any remaining portion of the City fees would b
assessed against the Appello parcels at such time that the City proceeds to construct the sidewalks,
landscaping and lighting which would also be assessed against the Appello owned parcels.
Appello and the Bank have waived any rights to appeal the sidewalk assessment for themselves and any
s ucces sors in title. The Agreenn e nt gill be recorded against the property in order to provide notice to
potential purchasers. The City may want to consider proceeding with a project to construct the
sidewalks, landscaping and lighting as soon as possible.
Upon payment of the approximately $775,000.08 in delinquent taxes and assessments, the City has
agreed to request that Wright County delay any action on forfeiture until 2014 on the two properties
identified in the Agreement. The Agreement allows the City to immediately receive the assessment
money duce on some parcels and have the road work completed this Summer.
SUPPORTING TING DOCUM NT : xci ATTACHED o NONE
Reprised Agreement between the City and 1"t Century Bank and Appello Group, LLC
{ appear i the minutes. pp
ETfI�: Please word �tio� � you would Ike �� � � ���] � rove the Agreement between the
City of Otsego, 1't Century Bank and Appello Group, LLC relative to Great River Centre as presented.
BUDGET INFORMATION
.. = �n�2n "wru2su""'r
FUNDING: I BUDGETED: o YES
ACTION TAKEN
❑ APPROVED AS REQUESTED DENIED n TA LF -D n OTHER (List charges)
COMMENTS:
CITY of OTS GO
COUNTY of WRIGHT
STATE, of MINNESOTA
AGRE EMENT BETWEEN THE CITY of OTS Go APPELLO GROUP,
LLC AND 21sT CENTURY ANN RELATIVE To PROPERTY LOCATED
IN GREAT RIVER CENTRE, OTSEGO, MINNESOTA
THIS AGREEMENT entered into this � day of March, 2013 between the City
of Otsego (CITY), a Minnesota Municipal Corporation, Appello Group, LLC
(APPELLO), a Minnesota Limited Liability Company and 21" Century Bank,
(BANS), a Minnesota Corporation.
This Agreement affects certain real property located in Wright County, Minnesota
described as follows: See Exhibit A.
WHEREAS, APPELLO owns certain properties located within the Great River
Centre des crib e as follows: Oudot 1, Great River Centre (PID 118-23 9-0 0 0 0 90),
Lot 1, B lock2, Great Diver Centre Second Addition (PID I 1 -252-002010 , Lot 1,
Block 3 Grcat River Centre Second Addition(PID 11 -252-003010), Lot 1, B ioek
Great River Centre Second Addition (PIIS 118=252-00 010), Lot 2, Block 3
Great River Centre Second Addition -(PID 118-25 2- 0 0 3 020), and o utlot A, Grcat
Diver Centre Third Addition (PID 118-2 6 6 - 0 0 0 0 10); and
WHEREAS, BANK holds r oil a es on all of the above described properties;
and
WHEREAS, CITY has certified assessments ent against the above described
properties; and
WHERFAS,, APPELLO has not timely paid taxes and assessments on the above
described properties over the last three years and certain of the properties are
eligible for tax forfeiture in 2013 tlot 1, Great River Centre; Lot 1, Jock 2,
Great River Centre Second Addition; Lot 1, Block 3, Great River Centre SQcond
Addition; Lot 1, Block 4, Great River Centre Second Addition; and Lot 2, Block 3,
Great Diver Centre Second Addition); and
wH R-EAS,certain road construction (reconstruction of portions of 5t" Street,
QuadayAvenue and "' Street as set forth on attached Exhibit A. well as
required installation of sidewalks, street lights and landscaping has not been
completed within the Plat as required by the Developers Agreement between the
CITY and APPELLO dated May 16, Zoo ; and
WHEREAS, under the original Developers Agreement and addendums thereto
APPELLO was to have in place a Letter of Credit to cover the cost of unfinished
improvements as well as to cover CITY assessments against the properties; and
WHEREAS, the CITY currently holds a $300,000.00 Letter of Credit issued by
BANK in favor of the CITY.
NOW, THEREFORE IT IS AGREED BE TWEEN THE PARTIES as follows:
1. BANK will advance sufficient loan funds to APPELLO to enable
APPELLO to pay all delinquent taxes and assessments including penalties
and interest) payable prior to the 2013 tax year in the approximate amount
of 775,000.00 to be adjusted to actual amount due on date of payment)
attached to the following described properties, Lot 1, Block 2 Great River
Centre Second Addition, Lot 1, Block 3 Great River Centre Second
Addition, and Lot 1, Block 4 Great River; Centre Second Addition by
March 29, 2013. BANK and/or APPELLO agree to make these payments
immediately upon execution of this Agreement by all parties and provide
CITY with proof that the payments have been rude in full,
2. APPELLO agrees to complete all necessary work on t" Street, Quaday
Avenue and 87th Street (including reclaiming of all base course only streets
which have not received the required fired weary eo arse lift and replacement with
two lifts of bituminous, all of which are referred to as the "Road Repair
Work"), but not including installation of sidewalks unless that can b
accomplished also with funds in the total amount of $300,000.00, all to the
satisfaction of the City Engineer by June 21, 2013. At the time of execution
of this Agreement BANK will deposit the sum of $300,000.00 with
which funds will be used as follows, and in the following
priority:
A. First, to pay a contactor from whom BANK and A-PPELLO will
obtain a firin bid to complete the Road Repair Work . In the event
that the contractor price for the Road Repair work exceeds
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$300,000.00, BANK and APPELLO will pay the contractor for such
excess costs. This sum shall be paid upon the CityEngineer's
approval of the completion of the Road Repair Work. Neither
BANK nor APPLLLO shall be responsible sible for maintenance or road
warranty work, and CITY acknowledges that It may not be possible
to obtain a contractor's warranty. The specifications for the Road
Repair Work are noted on hereto attached Exhibit B.
B. If sufficient funds remain, an amount not to exceed $12,000.00 to
pay for City's costs of engineering, legal and administrative
expenses in connection herewith. If sufficient fands do not remain to
pay the $12,000.00 in City expenses, or any portion thereof, BANK
and APP LLO agree that the unpaid amount may be added as a
assessable Project cost to the improvement project set fol h in No.
of this Agreement.
C. The balance, if any, to be paid over to CITY upon satisfactory
completion of the Road Repair air Wori, to be used by CITY t
contribute to sidewalk construction along the repaired road at some
future date.
APP LLO and/or BAN. shall submit to the CITY documents verifying the
final costs paid for the Road Repair Work.
. The $300,000.00 Letter of Credit No. 703 dated December ber 2 , 2011
currently outstanding shall be unconditionally released upon execution
hereof and deposit of the sum of $300,000.00 i cash as noted in No. 2
above.
. BANK and APPELLO agree that the CITY may at its discretion, and at any
time determine to construct the sidewalks, street lights and landscaping
(which means any unfinished sidewalks, s, street lighting and landscaping
within the flat including those improvements adjacent to outlots
established for CITY stogyinwater drainagc purposes and lots previously
sold to other artier as a CITY Project with the _full amount to be assessed
only against the lots owned by APPELLo and mortgaged. to BANK and
identified within the first Whereas clause in this Agreement. BANK and
.API LLo on behalf of themselves a.nd their successors in title hereby
waive any and all irregularities in proceedings, any and all required
hearings and waive any right to appeal such assessment in an amount
established by CITY, including the right of appeal under Minnesota Statute
429.081 and any other appeal rights under the Constitution, statute or
common law. BANK and APP LLO also agree that said improvements
willspecialty benefit the referenced lots to at least the amount assessed
against each lot. BANK and APPELL will disclose this waiver and the
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possibility of assessment to any subsequent purchaser of the properties if
the improvements have not been made and assessed prior to sale of the
property.
5. APPELLO also agrees that the CITY may e uire installation of any
improvements not completed (sidewalks, street lighting or landscaping) at
the time of development of any of the lots set forth In the first Whereas
clause. The decision to require this additional work at time of development
or as a public improvement project is solely at the discretion of CITY.
. Upon payment oft e delinquent taxes and assessments as set forth in No. I
above and receipt of written roof of the p gine t, CITY agrees to contact
Wright County and request that any action on tax forfeiture be delayed until
2014 on the following described parcels, Oudot 1, Great River Centre and
Lot 2, Bloch 3, Great River Centre Second addition be delayed until 2014.
7. This Agreement does not affect any of the teems and conditions of those
previous Developer's Agreement dated May 16, 2006 and amendinents
thereto between APP LLO and CITY, unless specifically amended or
modified by this Agreement. All other; terns and conditions of the original
Developers Agreement and amendments thereto shall remain in full force
and effect. AP LLO and BANK specifically agree that that the original
Developers Agreement and addendums thereto are binding and remain
binding upon AP LLO and BANK, their successors and assigns and that
neither will contest the validity of said Agreement and adde du ns.
. This Agreement supersedes aray and all previous Agreements, oral or
written, regarding the specific items contained herein. This Agreement does
not affect or inodify any other obligation of APP LLO under the original
Developers Agreement t or adders ms thereto, nor is it to be construed as a
waiver of any other obligation of APPELLO by the CITY.
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CITY of OTSEGO
Jessica Stoc a p, Mayor
Tari Loff, City Clerk
APPLo GROUP, LLC
By:
Its
21ST CENTURY BANK
Jon Dolphin, President
STATE OF MINNESOTA)
)SS.
COUNTY OF WRIGHT }
The foregoing instrument was acknowledged before me this day of March,
2013 by Jessica Stockamp, Mayor and Tami Loff, City Clerk with authority and
on behalf of the City of Otsego, a Minnesota municipal corporation.
NOTARY PUBLIC
5
STATE OF MINNESOTA)
)SS.
COUNTY OF )
The foregoing instrument was acknowledged before me this day of March,
2013 by John Dolphin, President with authority and on behalf of 21't Century
Bank, a Minnesota corporation.
NOTARY PUBLIC
STATE OF MINNESOTA)
)SS.
COUNTY OF )
The foregoing instrument was acknowledged before me this day of March,
2013 by . the with authority and o
behalf of Appello Group, LLC, a Minnesota Limited Liability Company.
NOTARY PUBLIC
DRAD BY,.
MacArthur Law Office, LLC
Suite 103
3 601 Thurston Avenue North
Anoka, MT 55303
763-231-5850
C
EXHIBIT
Legal Description.
EXHIBIT . ROAD AI WORK
Ate. of ROAD REPAIR WORK
The Road Repair Work covers the portions of the following roadways in the Plat
of Great River Centre Third Addition that currently have only one fift of
bituminous pavement i stallcd.
A. '11 Street NE froin CSAH 42, easterly to the point where it becomes
Quaday Avenue NE.
B. Quaday Avenue NE from the point where it leaves 85thAvenue NEthence
curving to the north,, thence curving to the vest to thep of t where it saes
o degree tum to the north; but not beyond the point where a double lift
of biturninous has been installed.
2, WORK ELL, ME TS
A. Remove and dispose of existing 2.5 inch layer of bituminous material;
;
B. Regrade Class V base as needed;
C. Install one 2.5 inch lift of LV --3 NW "L" Oil bituminous material:
D. Install one 1.5 inch lift of M - Wear "L" Oil bituminous material;
E. Install Tack Coat.