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HomeMy WebLinkAbout9.a. Approval of Preliminary Development Agreement by and between the City of Rosemount and Rosemount Port Authority and Doran Companies RESEN4OLll EXECUTIVE SUMMARY CITY COUNCIL City Council Meeting: December 4, 2012 AGENDA ITEM: Approval of Preliminary Development Agreement by and Between the City of AGENDA SECTION: Rosemount and the Rosemount Port New Business Authority and Doran Companies PREPARED BY: Kim Lindquist, Community Development AGENDA NO. c Director ATTACHMENTS: Preliminary Development Agreement APPROVED BY: DDJ RECOMMENDED ACTION: Motion to Approve Preliminary Development Agreement by and Between the City of Rosemount and the Rosemount Port Authority and Doran Companies. ISSUE In October, the Council reviewed certain undertakings that the City and senior housing developer, Doran would undertake to begin the process of putting together a preliminary development agreement for the construction of market rate senior housing north and west of the Steeple Center. The preliminary agreement primarily states that the two parties agree to negotiate for a final development contract over the next 90 days and during that time will not negotiate or contact any other developers. In the past, the preliminary agreement would list the items both parties will work on so that additional information is available for the final contract. In this case there is a little more substance to portions of the agreement. However, in either event, according to the City Attorney, this agreement is non binding and that either party may choose to not move forward with a final development contract. On the other hand it represents to the best of our knowledge, an agreement about what actions both parties (the City being the City and Port Authority, and Doran) agree to carry out, to create a private senior housing project with senior center on the property. One of the discussion points was Doran had requested that the City commit to providing the land for $1. The City Attorney crafted the agreement so the land would be sold for $1 so long as the developer performs to the Council's and Port Authority's satisfaction. That means that the building must be of a certain value, must meet city ordinance and Downtown design standards, the developer cannot make an unreasonable profit, joint construction of the senior center with the private senior housing project will result in a 20 -30% savings, public access will be provided to the private cafe and dining areas in the senior housing, construction of 60 underground parking spaces and 30 surface spaces, and several other items listed in section 6. Over the next several weeks staff would anticipate that the developer will begin design of the project which will lead to the basis for the final development contract. As part of the design process, and per the agreement, there will be at least three community open houses or neighborhood meetings to solicit public input. Further the developer will be providing a written status report regarding the senior housing project and attend a month meeting with the Council and Port Authority, upon request. At a minimum staff expects numerous meetings over the time period of this agreement, which is 90 days. RECOMMENDATION At this time, Staff is recommending approval of the Preliminary Development Agreement. The agreement has been drafted and reviewed by the City Attorney and the Doran Attorney. Staff has been informed that Doran supports the agreement and will not request further changes. 2 PRELIMINARY DEVELOPMENT AGREEMENT BY AND BETWEEN THE CITY OF ROSEMOUNT AND THE ROSEMOUNT PORT AUTHORITY AND DORAN COMPANIES This instrument drafted by: KENNEDY GRAVEN, CHARTERED 470 U.S. Bank Plaza 200 South Sixth Street Minneapolis, Minnesota 55402 612.337.9300 412542 CLL RS220 -337 THIS PRELIMINARY DEVELOPMENT AGREEMENT (the "Agreement is made and entered into as of the day of 2012, by and between the City of Rosemount, Minnesota, a municipal corporation under the laws of Minnesota (the "City the Rosemount Port Authority, a public body politic and corporate under the laws of Minnesota, (the "Authority both with their principal office at 2875 145 Street West, Rosemount, Minnesota 55068 and Doran Development, LLC, a Minnesota limited liability company, (the "Developer with its principal office at 7803 Glenroy Road, Suite 200, Bloomington, Minnesota 55439. WITNESSETH: WHEREAS, the City owns and operates the Steeple Center, a community facility at 14375 South Robert Trail; and WHEREAS, the City and the Authority own property north of the Steeple Center comprised of approximately 1.6 acres as depicted on Exhibit A attached hereto (the "Development Property and WHEREAS, the Developer wishes to develop the Development Property with an 80 to 90 -unit senior housing facility (the "Senior Housing Project and WHEREAS, the City will be developing a public Senior Center adjacent to the Steeple Center and the Senior Housing Project; and WHEREAS, the parties believe that the proposed development of the Development Property adjacent to the Steeple Center will be advantageous to both facilities and the public through shared services, programming, development expenses, parking, plazas, stormwater management facilities, and other amenities; and WHEREAS, the parties believe that cost savings and economy of effort can be achieved by planning and building a proposed 5,000 square foot public senior center on City property adjacent to the Development Property (the "Senior Center in conjunction with the Developer's Senior Housing Project; and WHEREAS, the City and the Authority believe that the execution of this Agreement, and the consummation of the Senior Housing Project described herein is in the vital and best interests of the City of Rosemount and the health, safety, and welfare of its residents. NOW, THEREFORE, in consideration of the covenants and obligations of the parties hereto, the City, the Authority and the Developer hereby agree as follows: Section 1. Preliminary Nature of Agreement. The City, the Authority and the Developer agree that this Agreement is intended to be preliminary in nature. Before the City, the Authority and the Developer can make a decision whether to proceed with the implementation of the Senior Housing Project, it will be necessary to assemble and consider information relative to the design, economics and other aspects of the Senior Housing Project. The purpose of this Agreement is to allow the Developer the opportunity to assemble such necessary 412542 CLL RS220 -337 1 information, to refine the details of the Senior Housing Project, and to negotiate with the City and the Authority concerning the execution of a definitive Contract for Private Development (the "Contract which, if executed, will set forth the rights and responsibilities of the City, the Authority and the Developer with respect to the Senior Housing Project. Section 2. Present Intent of Parties. It is the intention of the parties that this Agreement document their present understandings and commitments and, if the following conditions can be fulfilled to the satisfaction of the City, the Authority and the Developer, that the parties will proceed in an attempt to negotiate and execute a mutually satisfactory Contract prior to the expiration of the Term of this Agreement: (a) Completion of all undertakings required by this Agreement in a satisfactory and timely manner; and (b) Satisfaction of such other conditions as determined to be appropriate by each party. The Contract and any other agreements entered into between the parties contemporaneously therewith will, when executed, supersede all obligations of the parties under this Agreement. Section 3. Developer Undertakings. During the Term of this Agreement, the Developer will undertake the following: (a) Identify public improvements expected or required to be completed as part of the Senior Housing Project; (b) Submit to the City and the Authority a preliminary site plan for the Senior Housing Project showing the size, nature and location of the proposed Senior Housing Project, including parking, landscaping and other exterior improvements and submit to the City and the Authority a design framework of the Senior Housing Project showing the relationship of the Senior Housing Project to the Rosemount zoning ordinance, Development Framework for Downtown Rosemount, and development design guidelines. The Senior Housing Project will include 80 to 90 units of senior housing, underground parking of approximately 60 stalls for use by residents of the Senior Housing Project and its staff to maximize surface parking spaces available on the Development Property for public parking. The Development Property will contain approximately 30 surface parking stalls for public use. The Senior Housing Project will also include a cafe /dining area, and amenities for the housing residents, all with an estimated taxable value of $10,000,000 to $15,000,000; (c) Conduct at least three community open houses or neighborhood meetings to solicit public input regarding the proposed development concepts, not including meetings before the Planning Commission and City Council necessary for planning review and approval; 412542 CLL RS220 -337 2 (d) Submit to the City and the Authority a preliminary Senior Housing Project pro forma detailing all costs of the Senior Housing Project, projected as of the date of the pro forma, and the sources and uses of all funds to be raised to finance the Senior Housing Project, and any other information deemed to be necessary by the City or the Authority to determine whether public assistance, including, but not limited to, land cost discounts and grants, is reasonable, appropriate, and in the interests of the public. The City and the Authority may decline to proceed under this Agreement or to execute a Contract if they determine that the public subsidies and assistance requested will result in the Developer realizing an unreasonable return on its investment or that it is reasonable to conclude that the Senior Housing Project could proceed without the subsidies or assistance requested; (e) Submit to the City a proposal for shared services for programming of activities at the Senior Housing Project, the Senior Center and the Steeple Center; (0 Cooperate with the City, which will work at its own expense with the City's selected architect to develop plans and specifications for the Senior Center. Developer will provide a bid for construction of the first level 5,000 square foot Senior Center and cost estimate to add a second -story 5,000 square foot addition. The bid will be a not -to- exceed amount with fees of Developer and Doran Construction Management for overhead and profit not exceeding 5% of the cost of construction of the Senior Center and without any other Developer fees. The bids of trade contractors will be presented by Developer's affiliated company, Doran Construction Management, LLC, which proposed to act as construction manager for the City. The agreements for construction manager shall provide to the City's satisfaction such assurances, guarantees and protection as the City deems necessary to avoid risks ordinarily associated with construction management and provide to the City the protections and advantages ordinarily associated with awarding a contract to a general contractor; (g) Within 30 days of execution of this Agreement, submit, for approval by the City and the Authority, a timetable for completion of each of the activities identified in this Agreement and for securing financing, designing and constructing the Senior Housing Project after execution of the Contract; and (h) Submit to the City a proposal for fee -based use by the public of wellness and fitness programs at the Senior Housing Project. The Developer will provide to the City and the Authority every two weeks during the Term of the Agreement a written status report regarding the Senior Housing Project and will attend a monthly meeting, upon request, with the City Council and Authority's Board of Commissioners. Section 4. Authority and City Undertakings. During the Term of this Agreement, the City and the Authority will undertake the following: 412542 CLL RS220 -337 3 (a) Identify or confirm public improvements required for the Senior Housing Project and the Senior Center; (b) Identify construction, permit, application, utility and any other fees and the amounts thereof that the Developer may be expected to pay for the Senior Housing Project; (c) Identify the Authority and City approval processes and schedules for approvals that may be required for the Senior Housing Project; (d) Promptly respond to Developer's request for review or feedback on any documents or data that the Developer is required to provide to the City under Section 3 of this Agreement. Section 5. Negotiation of Contract. During the term of this Agreement, the City, the Authority and the Developer shall proceed with the negotiation of a Contract for the Senior Housing Project. The decision to enter into a Contract shall be in the sole discretion of each party. If prior to entering into a Contract and after the expiration of the Term of this Agreement as defined in Section 10, any party determines in its sole discretion that it is not in its best interest, for whatever reason, to proceed with the Senior Housing Project, it shall so notify the other party. Upon such notice, this Agreement shall terminate and neither party shall have any further obligation to the other party. Section 6. Contract Terms. The final terms of the Contract will be subject to approval of all of the parties in their absolute and sole discretion. As of the date of this Agreement, the parties expect that the Contract will include the terms generally outlined herein, including: (a) Developer will construct the Senior Housing Project as described in Section 3b with a design satisfactory to the City and the Authority; (b) Doran Construction Management, LLC will manage the construction of the Senior Center of approximately 5,000 square feet for the City on City property under contract with the City at the City's cost. In the alternative, the City may elect to construct the Senior Center using a general contractor. The Senior Center may be attached to the Senior Housing Project. Construction of the Senior Center in conjunction with construction of the Senior Housing Project will result in a cost savings to the City of 20% to 30 (c) Developer will provide for access by the public to the cafe and dining areas and catering services for the Steeple Center and Senior Center that is acceptable to the City and the Authority; (d) Developer will secure all necessary governmental approvals for the proposed Senior Housing Project, including but not limited to the City's Zoning Code and Downtown Development Guidelines; 412542 CLL RS220 -337 4 (e) Any swimming and fitness feature constructed on the premises will be funded entirely by the Developer, as well as any operational and maintenance costs for such facilities. The pool and fitness area must be outside of the 5,000 square foot Senior Center dedicated to the City for public use; (f) The costs of site work and site improvements, excluding buildings, will be allocated among the parties as specified in the Contract; (g) The City and the Authority will convey approximately 1.6 acres of land to Developer for the Senior Housing Project for One Dollar; (h) The City will demolish the school building, meeting all state requirements for removal and management of asbestos and other hazardous materials. All environmental information and reports on the Development Property that are available to the City and the Authority will be provided to the Developer. The Developer will be entitled to investigate and conduct such additional tests and studies of the environmental condition of the Development Property as it deems appropriate. If the Developer discovers environmental contamination on the Development Property prior to closing, the parties will negotiate an allocation of responsibilities for cleanup or remediation. If the parties are unable to agree on such an allocation, the Developer will not be required to close on the sale of the Development Property. It is the Developer's understanding through information provided by the City that to the best of the City's knowledge, there is no environmental contamination on the Development Property; (i) The City and the Authority will provide assistance to the Senior Housing Project, which may include allocating up to $390,000 of Livable Community Grant Funds for reimbursement of qualified expenses (less any amounts reimbursed to the City for qualified City expenses). The amount of such public assistance will depend on information received from the Developer and the value to the City of public benefits received through the Contract; (j) The parties will enter into a shared maintenance agreement for expenses such as parking lot maintenance, snow removal, lawn care and possibly common area maintenance for some internal spaces; (k) The parties will enter into an agreement for shared services for programming of activities, including fitness and wellness programs, at the Senior Housing Project, the Senior Center and the Steeple Center that is satisfactory to the City; and Section 7. Effect of Approvals. No approval given by the City or the Authority hereunder or in connection herewith shall be deemed to constitute an approval of the Senior Housing Project for any purpose other than as stated herein and the process outlined in this Agreement shall not be deemed to supersede any concept review, conditional use permit, vacation, subdivision, or other zoning or planning approval process of the Authority or the 412542 CLL RS220 -337 5 City relative to the Senior Housing Project. Section 8. Exclusive Rights. In consideration of the time, effort and expenses to be incurred by Developer in pursuing the undertakings set forth herein, the City and the Authority hereby agrees that for the Term of this Agreement they will not terminate this Agreement or discuss, provide or enter into an agreement for provision of financial assistance to any third party in connection with any proposed development within the Development Property. During such period the Developer shall have the exclusive right to work with the City and the Authority in establishing a definitive Contract. Said exclusive rights shall continue, unless earlier terminated as provided herein, for the period described within Section 10 of this Agreement. Section 9. Modifications. This Agreement may be modified and the Term hereof may be extended only through written amendments hereto signed by all parties to this Agreement. Section 10. Termination. This Agreement shall be effective for a period of ninety (90) days beginning on the effective date of this Agreement (the "Term unless extended by the parties in writing prior to that date. If for any reason a Contract has not been entered into by the parties within the Term of this Agreement or any mutually approved extension thereof, this Agreement shall be null and void and neither party shall have any liability or obligation to the other party. Section 11. Legislative Judgment. The Developer understands that many of the actions which the Authority or the City may be called upon to take require the exercise of reasonable discretion, and in some instances, legislative judgment. Such actions may only be made following established procedures, and neither the Authority nor the City can agree, in advance, to any specific decision in such matters. Section 12. Notices. Notice, demand, or other communication from one party to the other shall be deemed effective if sent by certified mail, postage prepaid, return receipt requested or delivered personally to a party at its address in the first paragraph of this Agreement, or at such other address as such party may designate in writing to the other party. 412542 CLL RS220 -337 6 IN WITNESS WHEREOF, the parties have caused this Agreement to be duly executed in their names and behalves on or as of the date first above written. CITY OF ROSEMOUNT By: William Droste, Mayor And by Amy Domeier, City Clerk STATE OF MINNESOTA ss. COUNTY OF DAKOTA The foregoing instrument was acknowledged before me this day of 2012, by William Droste and Amy Domeier, the Mayor and City Clerk, respectively, of the City of Rosemount, a municipal corporation under the laws of Minnesota, on behalf of the City. Notary Public 412542 CLL RS220 -337 7 ROSEMOUNT PORT AUTHORITY By: Chair And by Dwight Johnson, Executive Director STATE OF MINNESOTA ss. COUNTY OF DAKOTA The foregoing instrument was acknowledged before me this day of 2012, by and Dwight Johnson, the and Executive Director, respectively, of the Rosemount Port Authority, a public body corporate and politic under the laws of Minnesota, on behalf of the Authority. Notary Public 412542 CLL RS220 -337 8 DORAN DEVELOPMENT, LLC By: Its: STATE OF MINNESOTA ss. COUNTY OF The foregoing instrument was acknowledged before me this day of 2012, by the of Doran Development, LLC, a limited liability company under the laws of Minnesota, on behalf of the company. Notary Public 412542 CLL RS220 -337 9 EXHIBIT A [Depiction of Development Property] 412542 CLL RS220 -337 A -1