HomeMy WebLinkAbout4.c. Review of Kerry Johnson Committment Agreement c v
CITY OF ROSEMOUNT
EXECUTIVE SUMMARY FOR ACTION
PORT AUTHORITY COMMISSION MEETING DATE: NOVEMBER 3 , 1993
AGENDA ITEM: REVIEW OF JOHNSON PARTNERSHIP AGENDA SECTION:
COMMITMENT AGREEMENT OLD BUSINESS
PREpARED BY� EOCONOMICLDEVELOPMENT COORDINATOR AGENDA ����� � � �j
ATTAC�FENTS: CORRESPONDENCE FROM MIKE MILES, APPROVED BY:
DRAFT OF COMMITMENT AGREEMENT, CORRESPONDENCE
FROM DR. KERRY JOHNSON DATED 9-10-93
At the port authority' s October 2 meeting, the cammissioners expressed
interest in completing an agreement with Ron and Kerry Johnson to complete
certain site improvements on the Repairs, Inc. site, 14390 Sou�h Robert
Trail. The attached agreement drafted by port authority attorney Mike
Miles accomplishes several things including:
1. Facilitate redevelopment of the parcel by initiation of demolition,
preliminary grading, etc.
2 . Establishment of February 21, 1994, as the "commitment date" for
Johnsons to proceed with their proposed project and October 1, 1994,
as the project completion date.
3 . Definition of suitable evidence of commitment on the part of the
Johnsons, e.g. "unconditional letter of commitrnent from an accredited
conventional lending institution. °
4 . Financial protection for the port authority and its redevelopment
activities on this site.
Mr. Johnson was provided a copy of the agreement by Mr. Miles .
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RECO1rIlrlENDED ACTION: Motio to apprave the commitment agreement between
the Rosemount Port Authorit nd Johnson Partnership {as amended) .
PORT AtTTHORITY ACTION:
` f�rtorneys At Law
1303 South Erontage Road
Hastings, MN 55033
Telephone 612-438-9777
FLUEGEL MOYNIHAN & MILES, I'A. FaX61Z-4�$-9"5
Donaid J. Fluegel
Shawn M. Moynihan
J. Michael Miles
Joan M. Eluegel
October 27, 1993
Dr. Kerry L. Johnson and
Mr. Ronald L. Johnson
14520 South Robert Trail
Rosemaunt, MN 55068
Re: Commitment Agreement Between Rosemount Port Authority and
Johnson Partnership
Dear Kerry and Ron:
Attached for your review and comment is a draft of a
Commitment Agreement between the Rosemount Port Authority and your
development partnership. I would welcome any thoughts and
suggestions you have regarding the substance of this draft.
Please note that the draft is also being reviewed by John
Miller and will need speeific adoption by the Port Authority
itself . If you have the opportunity to review and approve this
instrument within the next several days, we can place it on the
Port Authority' s agenda for its next regular meeting on Wednesday,
November 3, 1993 .
Thank you for your patience, and I hope the document suitably
represents our discussions and agreements .
Sincerely,
FLUEGEL M�YNTHAN & MZLES, P.A.
�-�-��-����^�"'".---
J. Michael Miles
JMM:gmo
enc. �,
cc: Ron Wasmund
John Miller
COMMITMENT AGREEMENT
THIS AGREEMENT, is entered into thi.s day of
, 1993 , by and between the City of Rosemount,
Minnesota, Port Authority (hereinafter "RPA" ) and Kerry L. Johnson
and Ronald L. Johnson (hereinafter collectively referred to as
"Developer" ) .
RECITALS
� The RPA has acquired title to certain real property in
Rosemount, Minnesota, which property i5 described as
follows :
AUDITOR' S SUBDIVISI�N NUMBER l .
Part of Lot 4 commenc�ng 348 feet
North of Center Section 29 , Township
115, Range 119 , East 196 feet North
110 feet, West 196 feet, South 110
feet to beginning . (hereinafter,
the "Property„ )
• The RPA solicited proposals from potential developers of
the Property.
• On January 19 , 1993 , Developer presented a proposed
project to the RPA (which is attached as Exhibit A to
this Agr�ement and hereinafter referred to the
"Project" ) . �-��
• At its xegular meeting on April 6 , 1993 , `adopted a motian
�,
authorizing RPA staff to enter into a Comrnitment
Agreement with Developer, following the negotiation of
suitable terms and conditions .
NOW, THEREFORE, the RPA and Developer agree as follows : -
l . DEVELOPER' S DUTIES .
A. EARNEST MONEY . Upon execution of this Agreement,
' Developer shall provide Four Thousand Dollars
( $4 , 000 ) to the RPA as earnest money for the
purchase of the Property.
B. PRELIMINARY DEVELOPMENT. Developer shall, at its
expense, proceed with completion of a grade plan,
survey, replatting and other necessary preliminary
development activities in order to prepare the
Property for undertaking of the Project .
C . FINANCING. By not later than the end of the
business day on February 21 , 1994 , Developer shall
obtain and present to the RPA, evidence that it has
obtained necessary financing to fully undertake the
Project . At a minimum, satisfactory evidence of
financing shall include an unconditional Letter of
Commitment from an accredited conventional lending
institution and submission of either an irrevocable
Letter of Credit or a bond to the RPA, in an amount
of Twenty-Five Thousand Dollars ( $25 , 000 ) providing
the RPA may liquidate the security if Developer
fails to immediately proceed with the Project .
D. DEVELOPMENT AGREEMENT. At such time, but in any
event not later than February 21 , 1994 , as
Developer provides satisfactory evidence that it
has necessary financing for the Project, Developer
shall proceed with negotiatian of a Development
2
Agreement with the City of Rosemount, Minnesota , in
a form agreeable to the City of Rosemount and the
RPA. Among other things , the Development Agreement
shall specify that the Project shall be undertaken
in accord with the Proposal and such other terms
and conditions as the City may require and that the
Project shall be completed by not later than
October l , 1994 .
E. DEMOLITION COSTS . Developer shall, upon receipt of
title to the Property from the RPA, pay an amount
to the RPA equal �o the total cost of demolition of
structures on the Property undertaken pursuant to
Paragraph 2A, below.
2 . RPA' S DUTTES . Subject to obtaining any and all necessary
approvals from the Rosemount City Council, the RPA shall
undertake the following duties and responsibilities :
A. DEMOLITION. The RPA, upon the receipt of
competitive bids , shall proceed with the demolition
of all structures on the Property.
B. ENVIRONMENTAL WORK. The RPA shall undertake any
necessary environmental cleanups , reclamations ,
etc . , in order to put the Property in a condition
legally suitable for the undertaking of Developer' s
Project .
C . SOIL TESTS . The RPA shall commission the taking of
soil tests to determine if the Property is suitable
3
for the Project without extraordinary building
methods or costs .
D. CONVEYANCE. Within 30 calendar days of Devel.oper' s
presentation of satisfactory evidence of financing
to the RPA and upon receipt of reimbursement for
all demolition costs incurred by the RPA, the RPA
shall quitclaim its interest in the Property to
Developer for the sum of One Dollar ( $1 . 00 ) .
E . Tax Increment Financinq. Following campletion of
the Project and as tax revenues generated by the
Project are received by the City of Rosemount, the
RPA shall remit to Developer, all tax increment
funds received as a result of the Projeet for a
period of five years .
3 . FORFEITURE AND TERMINATION. In the event that Developer
fails to provide satisfactory evidence of financing as
required in Paragraph 1 (C) by the ciose of the business
day an February 21 , 1994 , the following events shall
occur-
A. FORFEITURE OF EARNEST MONEY. Develoger shall
forfeit to the RPA, the earnest money submitted to
the RPA under the provisions of Paragraph 1{A) .
B. PLANNING MATERIALS . Developer shall provide to the
RPA, a copy of any and all planning materials
generated by Developer under the provisions of �
Paragraph 1 (B) .
4
C. TERMINATION. This Agreement sha11 terminate and,
except as atherwise provided in this Paragraph,
neither the RPA nor the Developer shall bear any
responsibilities or obligations to the other.
4 . TERM. This Agreement shall be effective on the date
first above written and, unless terminated pursuant to
Paragraph 3 , shall `continue in effect until all the terms
herein have been fulfilled.
5 . ADMTNISTR.ATIVE PROVISIONS .
A. ENTIRE AGREEMENT/AMENDMENTS . This Agreement
constitutes the full and complete understanding of
the RPA and the Developer regarding the subject
matter thereof . Any amendments to this Agreement
must be in writing and must be executed by the
parties to this Agreement or their successors in
interest.
B. SURVIVAL OF COVENANTS . The promises made in this
Agreement shall remain in effect until a�l such
promises have been fulfilled .
C . DEFAULT/REMEDIES . The failure of a party to
fulfill a1l of the terms and conditians of this
Agreement shall constitute an event of default by
that party and, upon such occurrence, shall entitle
the other party to seek specific performance of the
provisions of this Agreement and recover any costs �
5
incurred in obtaining that remedy, including
reasonable attorney' s fees .
D. GOVERNING LAW. This Agreement shall be governed by
the laws of the State of Minnesota .
IN WITNESS WHEREOF, the RPA and the Developer have executed
this Agreement intending to be bound thereby.
ROSEMOUNT PORT AUTHORITY DEVELOPER
By: By:
Ed Dunn Kerry L. Johnson
Its : Chair
By:
Ronald L. Johnson
By:
Ron Wasmund
Its : Executive Director
Rosemount\PA-Jahnsan.Agreement
6
O���N JOHNSON CHIROPRACTIC
- 14465 SOUTH ROBERT TRAIL
= ` ROSEMOUNT,MN 55068
. . ._ .
_ - _<_ °�..'�.__, =; _� ,� ;.. __ .;. . `--.. �
TELEPMONE:612 423 5250
Kerry L.Jahnson,D.C.
Certified Chiro�ractic Sports Physician
Certified Occupational Health Consuitant
September 10, 1993
Mr. John Miller
Economic Development Specialist
Rosemount Port Authority
2875 145th Street West
Rosemount, MN 55068
Dear Mr. Miller,
Thank you for your time during our discussion yesterday of the Repairs Inc. Redevelopment
Project. I am putting in writing�the approach that my partner(Dad!) and I would like to take to
best facilitate the cornpletion of this project.
Specific steps need to be completed and in a certain order before this project can be financed by
our lender and before all city approvals can be acquired. The culmination of many of the steps
would be a final agreement between the City of Rosetnount and ourselves regarding the transfer
of the property as well as an a�reement re�arding the pay as you go tax increment. As you may
know, the lender would consider these as part of our collateral agreement. Before any agreement
can become official the planning department, planning commission and the city council have to
approve the project. Specific steps that need to be completed before we can seek the approval of
these bodies inelude the followina:
A. Site Plan (already completed)
B. Grading Plan
C. Utility Plan
D. Survey
E. Repiatting
F. Approvals from MDOT (if necessary)
G. Resolution of Parking Concerns
Other considerations include the process by which park property can be acquired and any soil
contamination that may be present.
We feel that the most logicat and efficient approach to take towards completion of the necessary
steps would be for the Rosemount Port Authority to authorize expenditure for completion of a
grade plan, survey, acquisition of park property, replatting, demolition of e�cisting buildings, clean
up of any c�ntaminated soil, and approval from MDOT if property extends into their right of way.
This can all be done for the purpose of making the parcel available for cammercial development.
FAMILY� SPORT♦ WORK�' AUTO �____ �._....,.._____�__.�_-----_------ __ _ _
-2-
The Port Authority and yourself are better acquainted with the process by which all of the above
can be accomplished and are best suited for seeking the approval of MDOT, the city planrting
department and commission as well as the city cauncil.
At the same time we would enter into a purchase agreement with the Rosemount Port Authority
and place $4000 down as earnest money for the purchase of the replatted property. A mutually
agreed upon outside date for closing would be chosen. The agreement would be contingent upon
all approvals and our ability to finance the project. Instead of purchasing the property for one
dollar as was requested in the RFP that you approved, we would purchase the property for the
cost of all of the above mentionedPort Authority expenditures with the exception of any soil
contamination or other pollution.
There are several advantages to pursuing this approach:
l. The chances of making this property available for construction of a building
by late this year are greatly improved.
2. The entire transaction between us and the Port Authority becomes much easier
because property boundaries will be established and any unexpected clearr-up
will have been completed.
3. Coordination between the different departments and committees is better
facilitated by the Port Authority.
4. We don't have to spend additional out of pocket money without any agreement
with the city and on land that we don't even own.
5. Upon the sale of the property the Rosemount Port Authority is reirnbursed for
all of its expenses with exeeption of the cost of any ctean-up of pollution.
6. If the worst case scenerio occurs and we pull out of the project (this would be
extremely unlikely) then the Rosernount Port Authority has our $4000 and a prime
downtown parcet that is ready for development.
We hope that you can see how this approach is the most efficient and surest way of ensuring the
success of a much needed downtown development pr4ject. Your consideration is appreciated.
Sincerely,
� � �
l , �
Ke,� L. ohnson, D.C., Partner
cc: Steve Jilk, City Administrator
CITY OF ROSEMOUNT
PORT AUTHORITY
REGULAR MEETING
AGENDA
Wednesday, November 3, 1993
5:15 p.m.
1. Call to Order
2. AdditionsiCorrections to the Agenda
3. Consent Agenda
A. Approval of October 19, 1993 Regular Meeting Minutes
B. Approval of October 19, 1993 Closed Executive Session Minutes
C. Bills and Invoices
D. Fund Transfer for G.O. TIF 1988A Payment
4. Old Business
A. Update on Muller Theater Project
B. Update on CMC Heartland Partners Request for Port Authority Assistance in
Developing Property
C. Review of Kerry Johnson Commitment Agreement
5. Committee of the Whole Reports
6. Consultant/Staff Reports
A. Review of 1994 Draft Work Pmgram and Budget
7. New Business
8. Chair's Report
9. Fxecutive Director's Report
10. Members' Issues
11. Community/Audience Recognition
12. Adjournment
. i
ROSEMOUNT PORT AUTHORITY PROCEEDINGS
REGULAR MEETING
OCTOBER 19, 1993
Pursuant to due call and notice thereof a regular meeting of the Rosemount Port Authority was duly held on
Tuesday, October 19, 1993, at 5:15 p.m. in the Council Chambers at City Hall, 2875 - 145th Street West.
Chair Dunn called the meeting to order with Commissioners Anderson, Carroll, Edwazds, McMenomy,
Sinnwell, and Wippermann present. Staff present included Economic Development Coordinator Miller,
Public Works Director Wasmund, and port authority attorney Miles.
Additions to the agenda included 7.B. Set Special Meeting with Mullers, and 7.C. Closed Execut�ve
Session to discuss possible litigation and liability claims regarding Muller theater project.
MOTION by Carroll to accept the agenda as amended. SECOND by Wippermann. Ayes: 7. Nays: 0.
MOTION by Edwards to approve the consent agenda. SECOND by Sinnwell. Ayes: 7. Nays: 0.
Economic Development Coordinator Miller reviewed the staff report regarding relocation payment to Mr.
Arlyn Cope of Repairs, Inc. Miller explained that the agreement between the port authority and Repairs,
Inc. states that the port authority will pay Repairs, Inc. $20,000 upon the move from the property. In
addition, the $12,000 being held in rent-escrow will be paid when the business is relocated in Rosemount
and the new location meets all building codes and city ordinances. Miller further explained that Repairs,
Inc. has vacated the building, however, its tenant, Southern Motors, is requesting that it be allowed to lease
the building. Miller advised the board that if they agreed to lease the building to Southern Motors, they
may be liable for possible relocation costs to them.
MOTION by Edwards to reject the request to rent space in the Repairs, Inc. building as submitted by
Southern Motors based on possible liability for relocation costs. SECOND by Wippermann. Ayes:
Carroll, Anderson, Wippermann, Dunn, McMenomy, Edwards, Sinnwell. Nays: 0.
MOTION by Edwards to authorize payment of$20,000 to Repairs, Inc. upon vacation of the property at
14390 South Robert Trail by its tenant Southern Motors. SECOND by Sinnwell. Ayes: Anderson,
Wippermann, Dunn, McMenomy, Edwards, Sinnwell, Carroll. Nays: 0.
Economic Development Coordinator updated the board regarding CMC Heartland's request for port
authority assistance in developing their property. Assistance is being requested in two areas; 1) aid in
acquisition of rail property (trackage and quonset building), and 2) acquiring stormwater drainage on the
business park property. Also at issue are two items port authority attorney Miles raised, those being
environmental clean-up costs and responsibility for those costs, and warranting the title. CMC advised that
they would indemnify the port authority of any liability regarding environmental contamination and that
they would begin an environmental assessment of the property. Considerable discussion between the board
and CMC's attomeys followed regarding CMC's request for a commitment from the port authority in the
form of an agreement. CMC contended that they needed this commitment to aid in their negotiations with
the Soo Line railroad to acquire the land needed to relocate the spur line. Port authority commissioners
concuned that CMC should work with staff to deterrnine specifics of an agreement, delineaxing point by
point what they require from the port authority and bring back to a future meeting for the board's
consideration.
ROSEMOUNT PORT AUTHORITY PROCEEDINGS
REGULAR MEETING
OCTOBER 19, 1993
Economic Development Coordinator Miller commented briefly on the specifics of the condemnation award
made to A1 Monk. In his memorandum to the board, Miller advised that the port authority had three
options including paying the award, appealing the award, or wait to see if Mr. Monk appeals the award.
Miller advised, however, that paying the award would be the prudent action because court costs of an
appeal would more than offset any potential gain.
MOTION by Sinnwell to approve payment to A1 Monk of $56,536.71 as final and complete installment for
land located at 13955 and 13965 South Robert Trail. SECOND by Carroll. Ayes: Wippermann, Dunn,
McMenomy, Edwards, Sinnwell, Carroll, Anderson. Nayse 0.
Dave Simons of SP.H, Inc. reviewed the business park drawings being presented to the board for their
approval. The drawings included the preliminary plat, grading and landscaping plan, and phasing plan.
Miller advised that the board should review and approve tlus work prior to its submittal to the planning
commission and city council. Discussion followed as Simons answered commissioners' questions. The
commissioners were agreeable to allow Chair Dunn to meet with Simons to amend the preliminary plat,
addressing Chair Dunn's concerns.
MOTION by Edwards to approve, as amended, the preliminary plat, grading plan, and phasing plan for
subdivision of the Abbott property, subject to moclif'ications, and to direct submittal of the plan to the ciry
of Rosemount for review. SECOND by Wippermann. Ayes: Dunn, McMenomy, Edwards, Sinnwell,
Carroll, Anderson, Wippermann. Nays: 0.
MOTION by McMenomy to approve, as amended, the draft bid specifications and proposed timeta.ble for
the demolition and grading of the "Repairs, Inc. property" at 14390 South Robert Trail. SECOND by
Carroll.
Commissioners concurred that a completion date and a penalty clause for not completing the project by the
completion date should be included in the specifications. Commissioner Sinnwell also commented that the
penalty should be assessed by calendar days, not work days. Commissioners McMenomy and Carroll
agreed to the suggested amendments to their motion.
Ayes: McMenomy, Edwards, Sinnwell, Carroll, Anderson, Wippermann, Dunn. Nays: 0.
Port authority attorney Miles advised that Dan Tyson, Muller Family Theater attorney, had sent a f�
requesting a special meeting to meet with city technical staff, planning, Miles, and Miller. Miller
recommended that the board not set a special meeting fearing it would become a public negotiation over a
purchase agreement. Commissioners agreed with Miller that the project was on track and proceeding
through the proper channels as quickly as possible.
MOTION by Sinnwell to adjourn to an executive closed session to discuss potential claims and liability
from the Muller Theater project. SECOND by Wippermann. Ayes: '7. Nays: 0. The meeting
adjourned at 7:04 p.m.
Chair Dunn reconvened the meeting at 7:28 p.m.
ROSEMOUNT PORT AUTHORITY PROCEEDINGS
REGULAR MEETING
OCTOBER 19, 1993
Economic Development Coordinator Miller introduced Frederick Schwartz of Cottages, Inc., the developer
interested in building senior housing in Rosemount. Mr. Schwartz advised that they had looked at various
sites throughout Rosemount, with the help of Economic Development Coordinator Miller. Mr. Schwartz
informed the port authority that Cottages, Inc. is very interested in pursuing a project in the city of
Rosemount and invited the commissioners on a field trip to visit their North St. Paul project.
MOTION by Sinnwell to adjourn. SECOND by Edwards. Ayes: 7. Nays: 0.
Meeting adjourned at 7:32 p.m.
Respectfully submitted,
Deborah Widstrom
Record°uig Secretary
ROSEMOUNT PORT AUTHORITY PROCEEDINGS
CLOSED EXECUTIVE SESSION
OCTOBER 19, 1993
Pursuant to due call and notice thereof a closed executive session of the Rosemount Port
Authority was duly held on October 19, 1993 at 7:09 p.m., in the council lounge at City
Hall, 2875 - 145th Street West.
Chair Dunn called the meeting to order with all commissioners present. Staff present
included Economic Development Coordinator Miller, Public Works Director Wasmund, and
port authority attorney Miles.
Chair Dunn advised that the purpose of the meeting was to discuss possible liability and
litigation on the Muller project. After considerable discussion, the commissioners agreed to
discuss the project at the next meeting and directed staff to place it as the first item on the
agenda.
Chair Dunn adjourned the session at 7:28 p.m.
Respectfully submitted,
Deborah Widstrom
Recording Secretary