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HomeMy WebLinkAbout6.a. Sunrise Builders Property AcquisitionCITY OF ROSEMOUNT EXECUTIVE SUMMARY FOR ACTION CITY COUNCIL MEETING DATE: JANUARY 7, 1992 AGENDA ITEM: SUNRISE BUILDERS SUPPLY PROPERTY AGENDA SECTION: OLD BUSINESS PREPARED BY: STEPHAN JILK, CITY ADMINISTRATOR AGENDj�i� # 6A ATTACHMENTS: PURCHASE AND LEASEBACK DOCUMENTS AP O BY' 12-17-91 COUNCIL MEETING MINUTES This item is back on the agenda for reconsideration. On De ember 17th the Council took action to approve the purchase of the Sunrise Property and the leaseback of the property. The council did suggest a consensus on the length of time required for cancelling the lease and suggested a 90 day period was appropriate. The owner of the property and the proposed lessee has advised our city attorney that the 90 -day reciprocal lease cancellation time period is acceptable to him. These time periods were added to the lease agreement. The revision was also made to reflect that the city would pay the taxes owed on the property in 1993 and beyond. Based on the discussion at the council meeting on 12-17-91 (transcript attached), these changes provide for the agreement on purchase and leaseback as council approved. I have simply brought this item to you to provide the completed documents for your information. No action would be necessary. RECOMMENDED ACTION: NONE COUNCIL ACTION: LEASE AGREEMENT THIS AGREEMENT is made as of the day of 1992, by and between THE CITY OF ROSEMOUNT, A MINNESOTA MUNICIPAL CORPORATION, hereinafter referred to as "Lessor", and SUNRISE BUILDERS, INC., A MINNESOTA CORPORATION, hereinafter referred to as "Lessee"; 1. LEASED PREMISES. Lessor in consideration of the rents and covenants hereinafter described, does hereby lease and demise to Lessee the following described real property, improvements, and use of any common areas in the building located in the County of Dakota and State of Minnesota, hereinafter referred to as "the Leased Premises See Exhibit A attached hereto. 2. PURPOSE. Lessee shall use the Leased Premises for the purpose of operating a building supply store or for any other lawful purpose. Lessee shall permit no hazardous substances as defined in Minn. Stat. §1156.01, et seq. upon the property. 3. TERM. The term of this Lease shall be three (3) years, and shall run from January 31, 1992, to January 30, 1995; provided, however, that either Lessee or Lessor may terminate this Lease Agreement by giving not less than ninety (90) days notice. 4. RENT. Lessee shall pay to Lessor as rent for the Leased Premises monthly payments of $750.00 in advance, on or before the first day of every month during the term of this Lease. The first monthly installment shall be due Lessor on January 31, 1992. Payments shall be mailed or delivered to Lessor at 2875 145th Street West, Rosemount, MN. 55068, or at such other place as Lessor 1 orderly condition, and shall cause or permit no damage or waste to said premises. 10. LIABILITY. Lessor shall not be liable for injury or damage to the person or property of Lessee occurring within the Leased Premises. 11. INDEMNITY. Lessee shall indemnify and hold harmless Lessor from and against any claim, liability, expense, or loss arising out of the injury to any person or damage to any property occurring on the Leased Premises or public areas adjacent thereto, including mechanic's liens against the Leased Premises. 12. DESTRUCTION. Should the Leased Premises, without any fault on the part of Lessee or Lessee's agents, be destroyed or so injured by the elements or any cause as to be untenantable and unfit for occupancy, this Lease shall expire and Lessee's obligation to pay rent abate. Upon expiration, all obligations and rights of both Lessor and Lessee hereunder shall cease, with rent apportioned to date of expiration. 13. RIGHT OF ENTRY. Lessor shall have the right to enter the Leased Premises for the purpose of performing Lessor's obligations hereunder, for the purpose of avoiding damage or injury in circumstances of emergency or other necessity, for the purpose of inspection of the Leased Premises upon reasonable belief such inspection is necessary to avoid damage or waste by Lessee, and for the purpose of preparing, exhibiting, and showing the Leased Premises for sale, lease, financing, or appraisal. Following notice by either party hereto that a lease term will be terminated, Lessor shall have the right to post the usual notices "For Rent" or "For Sale", and shall be allowed, at reasonable times, to bring prospective tenants or purchasers within the teased premises for purposes of showing the property. 14. ABANDONMENT. If at any time during the term of this lease, the Leased Premises are abandoned by Lessee, Lessor may, at Lessor's option, enter the 3 Leased Premises and relet the premises as agent for Lessee for any portion of the unexpired term, collect rent, and hold Lessee liable for any difference in rent collected due to Lessee's abandonment, and Lessor shall in no case be liable to Lessee for acts pursuant to exercise of this option. 15. DEFAULT. If any default is made in the payment of rent, or if Lessee defaults in the performance of any other covenant or provision of this Agreement, Lessor may, at its option, terminate the Lease, retake possession of the Leased Premises and remove Lessee. Lessor shall recover from Lessee all reasonable attorneys' fees and court costs incurred in legal proceedings required to secure Lessor 's rights hereunder in the case of default by Lessee. If an event of default occurs, whether or not Lessor elects to terminate this Lease, Lessor may enter upon and repossess the premises by force, summary proceedings, ejectment, unlawful detainer or otherwise, and may remove Lessee and all other persons or property therefrom. No termination of this Lease and no repossession of the Leased Premises shall relieve Lessee of its liabilities and obligations under this Lease, all of which shall survive any such termination or repossession. In the event of any such termination or repossession, whether or not the Leased Premises shall have been re -let, Lessee shall pay to Lessor the rent and other sums and charges due to be paid by Lessee up to the time of such termination or repossession and thereafter Lessee, until the end of what would have been the term in the absence of such termination or repossession, shall pay to Lessor as and for liquidated damages and agreed current damages for Lessee's default, the equivalent of the amount of rent and such other sums and charges which would have been payable under this Lease Agreement by Lessee, if this Lease Agreement were still in effect, less the net proceeds, if any, of any re -letting by Lessor, after deducting all of Lessor's expenses in connection with such re -letting 4 including without limitation all repossession costs, operating expenses and attorneys' fees. 16. GOVERNING LAW. This Agreement shall be governed by and construed according to the laws of the State of Minnesota. 17. SEVERABLE PROVISIONS. Each provision, section, sentence, clause, phrase, and word of this Lease Agreement is intended to be severable. If any provision, section, sentence, clause, phrase or word hereof is illegal, invalid or unenforceable for any reason whatsoever, such illegibility, invalidity or unenforceability shall not affect the validity, legality or enforceability of the remainder of t])is Lease Agreement. 18. ENTIRE AGREEMENT. This Lease Agreement contains the entire agreement and understanding between Lessor and Lessee with respect to the Leased Premises, and can be modified only by subsequent written agreement between the parties hereto. The covenants, terms and conditions of this Lease Agreement shall bind and inure to the benefit of the heirs, representatives, successors and permitted' assigns of the parties hereto. IN WITNESS WHEREOF, Lessor and Lessee have executed this Lease Agreement, as of the day and year first above written. Lessor: Lessee: THE CITY OF ROSEMOUNT, a Minnesota Municipal corporation By Its And Its 5 SUNRISE BUILDERS, INC., a Minnesota corporation Its STATE OF MINNESOTA ) COUNTY OF ) The foregoing instrument was acknowledged before me this day of 1992 by and the and of the City o Rosemount, a Minnesota Municipal corporation, on behalf of the municipal corporation. Notary Public STATE OF MINNESOTA) COUNTY OF ) The foregoing instrument was acknowledged before me this day of 1992 by the of Sunrise Builders, Inc., a Minnesota corporation, on behalf of the corporation. Notary Public THIS INSTRUMENT DRAFTED BY: Eric A. Short Hertogs, Fluegel, Sieben, Polk, Jones & LaVerdiere, P.A. 999 Westview Drive Hastings, MN 55033 Telephone: (612) 437-3148 CONTRACT FOR DEED Form No. 54-19 - No delinquent taxes and transfer entered; Certificate of Real Estate Value ( )filed ( )not required , 19— By County County Auditor Deputy (reserved for mortgage registry tax payment data) W recording data) MORTGAGE REGISTRY TAX DUE HEREON Date: January 31 —,1992 THIS CONTRACT FOR DEED is made on the above date by Michael McDonough and Eileen M. McDonough husband and wife (marital status) Seller (whether one or more), and The City of Rosemount , Purchaser (whether one or more). Seller and Purchaser agree to the following terms: 1. PROPERTY DESCRIPTION. Seller hereby sells, and Purchaser hereby buys, real property in Dakota County, Minnesota, described as follows: See Exhibit "A" attached hereto together with all hereditaments and appurtenances belonging thereto (the Property). 2. TITLE. Seller warrants that title to the Property is, on the date of this contract, subject only to the following exceptions: (a) Covenants, conditions, restrictions, declarations and easements of record, if any; (b) Reservations of minerals or mineral rights by the State of Minnesota, if any; (c) Building, zonine and subdivision laws and regulations; (d) Tho lia„ nf rPn) estate taxes and installments of special assessments which are payable by Purchaser pursuant to paragraph 6 of this contract; and (e) The following liens or encumbrances: Mortgage in favor of First State Bank of Rosemount dated January 31, 1992, recorded , 1992, as Document No. (the "Mortgage"). 3. DELIVERY OF DEED AND EVIDENCE OF TITLE. Upon Purchaser's prompt and full performance of this contract, Seller shall: (a) Execute, acknowledge and deliver to Purchaser a Warranty Deed, in recordable form, conveying marketable title to the Property to Purchaser, subject only to the following exceptions: (i) Those exceptions referred to in paragraph 2(a), (b), (c) and (d) of this contract; (ii) Liens, encumbrances, adverse claims or other matters which Purchaser has created, suffered or permitted to accrue after the date of this contract; and iiii) The following liens or encumbrances: Plone ; and (b) Deliver to Purchaser the abstract of title to the Property or, if the title is registered, the owner's duplicate certificate of title. 4. PURhCHE1SE PRIE purchaser shall�aty to Seller, at suc p ace as eller may desio a e as and for the purchase price for the Property, payable as follows: $50,000.00 in cash, the receipt of which is hereby acknowledged. $266,000.00 payable as follows: ,,,,,, the sum of $66,000.00, plus interest at the rate of 8% per annum, in monthly installments of $2,068.20, which payments shall be due and payable on the first day of each month commencing the first day of March, 1992, and continuing through and including the first day of February, 1995. $200,000.00 plus interest at the rate of 9.5% per annum, in monthly installments of $4,200.37 per month, which payments shall be due and payable on the first day of each month commencing on the first day of March, 1992, and continuing through and including the first day of February, 1997. Interest shall commence on the day of this Contract. Payments shall be first applied to accrued and unpaid interest and the balance to principal. Seller agrees that Purchaser may, at its option, pay such sums as may be owed to First State Bank of Rosemount by Seller pursuant to the Mortgage directly to First State Bank of Rosemount and deduct that amount from the amount to be paid by Purchaser to Seller. 5. PREPAYMENT. Unless otherwise provided in this contract, Purchaser shall have the right to fully or partially prepay this contract at any time without penalty. Any partial prepayment shall be applied first to payment of amounts then due under this contract, including unpaid accrued interest, and the balance shall be applied to the principal installments to be paid in the inverse order of their maturity. Partial prepayment shall not postpone the due date of the installments to be paid pursuant to this contract or change the amount of such installments. 6. REAL ESTATE TAXES AND ASSESSMENTS. Purchaser shall pay, before penalty accrues, all real estate taxes and installments of special assessments assessed against the Property which are due and payable in the year 1�3_ and in all subsequent years. Real estate taxes and installments of special assessments which are due and payable in the year in which this contract is dated shall be paid as follows: pro -rated as of the date of closing. Seller warrants that the real estate taxes and installments of special assessments which were due and payable in the years preceding the year in which this contract is dated are paid in full. 7. PROPERTY INSURANCE. (a) INSURED RISKS AND AMOUNT. Purchaser shall keep all buildings, improvements and fixtures now or later located on or a part of the Property insured against loss by fire, extended coverage perils, vandalism, malicious misrhief and, if applicable, steam boiler explosion for at least the amount of full in_!tirable vaIue If any of the buildings, improvements or fixtures are located in a federally designated flood prone area, and if flood insurance is available for that area, Purchaser shall procure and maintain flood insurance in amounts reasonably satisfactory to Seller. (b) OTHER TERMS. The insurance policy shall contain a loss payable cl ause in favor of Seller which provides that Seller's right to recover under the insurance shall not be impaired by any acts or omissions of Purchaser or Seller, and that Seller shall otherwise be afforded all rights and privileges customarily provided a mortgagee under the so-called standard mortgage clause. (c) NOTICE OF DAMAGE. In the event of damage to the Property by fire or other casualty, Purchaser shall promptly give notice of such damage to Seller and the insurance company. 8. DAMAGE TO THE PROPERTY. (a) APPLICATION OF INSURANCE PROCEEDS. If the Property is damaged by fire or other casualty, the insurance proceeds paid on account of such damage shall be applied to payment of the amounts payable by Purchaser under this contract, even if such amounts are not then due to be paid, unless Purchaser makes a permitted electiondescribed in the next paragraph. Such amounts shall be first applied to unpaid accrued interest and next to the installments to be paid as provided in this contract in the inverse order of their maturity. Such payment shall not postpone the due date of the installments to be paid pursuant to this contract or change the amount of such installments. The balance of insurance proceeds, if any, shall be the property of Purchaser. h. Pt'l,('l i AS E R'S F, LF, ( "I'l TO REBUILD. If Purchaser is not in default ult u nder this , .,n! i, i, I :,r tiring mil such default. and if the mortgagees in anY prior mortgaizes anti s,-Ilcrl in all% pri '' r "ll t t%,( is : - - r (I e-, ido n,)i require -,t h vm% ise. Purchaser !mac elect to h it y , t h, Ii. p"!- 1, 1!'. , ! - �!, i'. insurance proceeds necessary to repair, replace or restore the damaged Propert 'v iffie repair %% -,rk deposited in escrow with a bank or title insurance company qualified to do business in the State of Minnesota, or such other party as may be mutually agreeable to Seller and Purchaser. The election may only be made by written notice to Seller within sixty days after the damage occurs. Also, the election will only be permitted if the plans and specifications and contracts for the repair work are approved by Seller, which approval Seller shall not unreasonably withhold or delay. If such a permitted election is made by Purchaser, Seller and Purchaser shall jointly deposit, when paid, such insurance proceeds into such escrow. If such insurance proceeds are insufficient for the repair work, Purchaser shall, before the commencement of the repair work, deposit into such escrow sufficient additional money to insure the full payment for the repair work. Even if the insurance proceeds are unavailable or are insuffficient to pay the cost of the repair work, Purchaser shall at all times be responsible to pay the full cost of the repair work. All escrowed funds shall be disbursed by the escrowee in accordance with generally accepted sound construction disbursement procedures. The costs incurred or to be incurred on account of such escrow shall be deposited by Purchaser into such escrow before the commencement of the repair work. Purchaser shall complete the repair work as soon as reasonably possible and in a good and workmanlike manner, and in any event the repair work shall be completed by Purchaser within one year after the damage occurs. If, following the completion of and payment for the repair work, there remain any undisbursed escrow funds, such funds shall be applied to payment of the amounts payable by Purchaser under this contract in accordance with paragraph 8 (a) above. 9. INJURY OR DAMAGE OCCURRING ON THE PROPERTY. (a) LIABILITY. Seller shall be free from liability and claims for damages by reason of injuries occurring on or after the date of this contract to any person or persons or property while on or about the Property. Purchaser shall defend and indemnify Seller from all liability, loss, costs and obligations, including reasonable attorneys' fees, on account of or arising out of any such injuries. However. Purchaser shall have no liability or obligation to Seller for such injuries which are caused by the negligence or intentional wrongful acts or omissions of Seller. (b) LIABILITY INSURANCE. Purchaser shall, at Purchaser's own expense, procure and maintain liability insurance against claims for bodily injury, death and property damage occurring on or about the Property in amounts reasonably satisfactory to Seller and naming Seller as an additional insured. 10. INSURANCE, GENERALLY. The insurance which Purchaser is required to procure and maintain pursuant to paragraphs 7 and 9 of this contract shall beissued byan insurance company or companies licensed to do business in the State of Minnesota and acceptable to Seller. The insurance shall be maintained by Purchaser at all times while any amount remains unpaid under this contract. The insurance policies shall provide for not less than ten days written notice to Seller before cancellation, non -renewal, termination or change in coverage, and Purchaser shall deliver to Seller a duplicate original or certificate of such insurance policy or policies. 11. CONDEMNATION. If all or any part of the Property is taken in condemnation proceedings instituted under power of eminent domain or is conveyed in lieu thereof under threat of condemnation, the money paid pursuant to such condemnation or conveyance in lieu thereof shall be applied to payment of the amounts payable by Purchaser under this contract, even if such amounts are not then due to be paid. Such amounts shall be applied first to unpaid accrued interest and next to the installments to be paid as provided in this contract in the inverse order of their maturity. Such payment shall not postpone the due date of the installments to be paid pursuant to this contract or change the amount of such installments. The balance, if any, shall be the property of Purchaser. 12. WASTE, REPAIR AND LIENS. Purchaser shall not remove or demolish any buildings, im- provements or fixtures now or later located on ora part ofthe Property, nor shall Purchaser commit or allow waste of the Property. Purchaser shall maintain the Property in good condition and repair. Purchaser shall not create or permit to accrue liens or adverse claims against the Property which constitute a lien or claim against Seller's interest in the Property. Purchaser shall pay to Seller all amounts, costs and expenses, including reasonable attorneys' fees, incurred by Seller to remove any such liens or adverse claims. 13. DEED AND MORTGAGE REGISTRY TAXES. Seller shall, upon Purchaser's full performance of this contract, pay the deed tax due upon the recording or filing of the deed to be delivered by Seller to Purchaser. The mortgage registry tax due upon the recording or filing of this contract shall be paid by the party who records or files this contract; however, this provision shall not impair the right of Seller to collect from Purchaser the amount of such tax actually paid by Seller as provided in the applicable law governing default and service of notice of termination of this contract. 14. NOTICE OF ASSIGNMENT. If either Seller or Purchaser assigns their interest in the Property, a copy of such assignment shall promptly be furnished to the non -assigning party. 15. PROTECTION OF INTERESTS. If Purchaser fails to pay any sum of money required under the terms of this contract or fails to perform any of Purchaser's obligations as set forth in this contract, Seller may, at Seller's option, pay the same or cause the same to be performed, or both, and the amounts so paid by Seller and the cost of such performance shall be payable at once, with interest at the rate stated in paragraph 4 of this contract, as an additional amount due Seller under this contract. If there now exists, or if Seller hereafter creates, suffers or permits to accrue, any mortgage, contract for deed, lien or encumbrance against the Property_ which is not herein expressly assumed by Purchaser, and provided Purchaser is not in default under this contract, Seller shall timely pay all amounts due thereon, and if Seller fails to do so, Purchaser may, at Purchaser's option, pay any such delinquent amounts and deduct the amounts paid from the installment(s) next coming due under this contract. 16. DEFAULT. The time of performance by Purchaser of the terms of this contract is an essential part of this contract. Should Purchaser fail to timely perform any of the terms of this contract, Seller may, AX &NU)9X608h� elect to declare this contract cancelled and terminated by notice to Purchaser in accordance with applicable law. All right, title and interest acquired under this contract by Purchaser shall then cease and terminate, and all improvements made upon the Property and all payments made by Purchaser pursuant to this contract shall belong to Seller as liquidated damages for breach of this contract. Neither the extension of the time for payment of any sum of money to be paid hereunder nor any v waiver by Seller of Seller's rights to declare this contract forfeited by reason of any breach shall in any manner affect Seller's right to cancel this contract because of defaults subsequently occurring, and no extension of time shall be valid unless agreed to in writing. After service of notice of default and failure to cure such default within the period allowed by law, Purchaser shall, upon demand, surrender possession of the Property to Seller, but Purchaser shall be entitled to possession of the Property until the expiration of such period. 17. BIN DING EFFECT. The terms of this contract shall run with the land and bind the parties hereto and their successors in interest. ,;1, .Itli:�,I I!:; �, -1;1::;11-I AI'c 1, l,'1 I, 1:.'. in.it n.uul .h, 1„ntlnt 111 SLICh p.u•.tgraphs 1` ..\Srl':-S�.\11:NTS 1;1' u1CN(:lig :\ti�ul l:\7'ItI\. If the 1'r111)V ty i,.Sub)ect tl,.l r,l„r,llci �i1t..u,,t; I; providing for assessments to be levied against the Property' by' any Owners' association. which assessments may become a lien against the Property if not paid, then: (a) Purchaser shall promptly pay, when due, all assessments imposed by the owners' association or other governing body as required by the provisions of the declaration or other related documents; and (b) So long as the owners' association maintains a master or blanket policy of insurance against fire, extended coverage perils and such other hazards and in such amounts as are required by this contract, then: (i) Purchaser's obligation in this contract to maintain hazard insurance coverage on the Property is satisfied; and (ii) The provisions in paragraph 8 of this contract regarding application of insurance proceeds shall be superceded by the provisions of the declaration or other related documents; and (iii) In the event of a distribution of insurance proceeds in lieu of restoration or repair following an insured casualty loss to the Property, any such proceeds payable to Purchaser are hereby assigned and shall be paid to Seller for application to the sum secured by this contract, with the excess, if any, paid to Purchaser. 20. ADDITIONAL TERMS: SELLER(S) Michael McDonough Eileen M. McDonough State of Minnesota County of DAKOTA is. J` The by _ PURCHASER(S) THE CITY OF ROSEMOUNT me this — day of nnunh NOTARIAL STAMP OR .SKAI. IOR OTHER TITLE. OR RANKI State of Minnesota dJ. County of DAKOTA , 19—. SIGNATURE OF NOTARY PUBLIC OR OTHER OFFICIAL The foregoing instrument was acknowledged before me this NOTARIAL STAMP OR SE.AI, (OR OTHER TITLE OR RANK, THIS INSTRUMENT WAS DRAFTED BY INAME AND ADDRESS! Hertos, Fluegel, Sieben, Polk, Jones & LaVerdiere, P.A. Eric A. Short 999 Westview Drive Hastings, MN. 55033 (612) 437-3148 day of and 19—, ttion, on behalf of the municipal corporation. SIGNATURE OF NOTARY PUBLIC OR OTHER OFFICIAL Tax Statements for thereat property described in this instrument should be sent to: P-AILURE TO RECORD OR FILE THIS CONTRACT FOR DEED MAY GIVE OTHER PARTIES PRIORITY OVER PURCHASER'S INTEREST IN THE PROPERTY. (reserved for mortgage registry tax payment data) MORTGAGE REGISTRY TAX DUE HEREON: THIS INDENTURE, Made this 31st day of January i9 92 between Michael McDonough and Eileen M. McDonough husband and wife ,Mortgagor (whether one or more), , and First State Bank of Rosemount , Mortgagee (whether one or more), WITNESSETH, That Mortgaor, in consideration of the sum of Two Hundred Thousand and 09,1100 ($200,000.00) --------------------------------- DOLLARS, to Mortgagor in hand paid by Mortgagee, tlaaCotdpt whereof is hereby acknowledged, does hereby convey unto Mortgagee, forever, real property in County Minnesota, described as follows: See Exhibit "A" attached hereto. together with all hereditaments and appurtenances belonging thereto (the Property). TO HAVE AND TO HOLD THE SAME, to Mortgagee forever. Mortgagor covenants with Mortgagee as follows: That Mortgagor is lawfully seized of the Property and has good right to convey the same: that the Property is free from all encumbrances, except as follows: None that Mortgagee shall quietly enjoy and possess the same: and that Mortgagor will warrant and defend the title to the same against all lawful claims not hereinbefore specifically excepted. P VI ED, N VERTHE ESS. T r y ortgagee the sum of TwoNun�red �fhousan� and 731�i8 `�Pb:�. �i�i----------------------------------- nnr t euc �ccordin RR to th erm ,q(a promissory note of even date herewith (the Note), the final payment being due and payable on eCemDer yy / with interest at the rate provided in the Note, and shall repay to Mortgagee, at the times and with interest as specified, all sums advanced in protecting the lien of this Mortgage, in payment of taxes on the Property and assessments payable therewith, insurance premiums covering buildings thereon, principal or interest on any prior liens, expenses and attorney's fees herein provided for and sums ad,. anced for any other purpose authorized herein, and shall keep and perform all the covenants and agreements herein contained, then this Mortgage shall be null and void, and shall be released at Mortgagor's expense. AND MORTGAGOR covenants with Mortgagee as follows: 1. to pay the principal sum of money and interest as specified in the Note; 2. to pay all taxes and assessments now due or that may hereafter become liens against the Property before penalty attaches thereto; 3. to keep all buildings, improvements and fixtures now or later located on or a part of the Property insured against loss by fire, extended c4ydlafe ffili ,Xg6 lVi%1icious mischief and, if applicable, steam boiler explosion, for at least the amount of at all times while any amount remains unpaid under this Mortgage. If any of the buildings, improvements or fixtures are located in a federally designated flood prone area, and if flood insurance is available for that area, Mortgagor shall procure and maintain flood insurance in amounts reasonably satisfactory to Mortgagee. Each insurance policy shall contain a loss payable clause in favor of Mortgagee affording all rights and privileges customarily provided under the so-called standard mortgage clause. In the event of damage to the Property by fire or other casualty, Mortgagor shall promptly give notice of such damage to Mortgagee and the insurance company. The insurance shall be issued by an insurance company orcompanies licensed to do business in the State of Minnesota and acceptable to Mortgagee. The insurance policies shall provide for not less than ten days written notice to Mortgagee before cancellation, non -renewal, termination, or change in coverage, and Mortgagor shall deliver to Mortgagee a duplicate original or certificate of such insurance policies; 4. to pay, when due, both principal and interest of all prior liens or encumbrances, if any, and to keep the Property free and clear of all other prior liens or encumbrances; 5. to commit or permit no waste on the Property and to keep it in good repair; 6. to complete forthwith any improvements which may hereafter be under course of construction on the Property; and 7. to pay any other expenses and attorney's fees incurred by Mortgagee by reason of litigation with any third party for the protection of the lien of this Mortgage. In case of failure to pay said taxes and assessments, prior liens or encumbrances, expenses and attorney's fees as above specified, or to insure said buildings, improvements, and fixtures and deliver the policies as aforesaid, Mortgagee may pay such taxes, assessments, prior liens, expenses and attorney's fees and interest thereon, or obtain such insurance, and the sums so paid shall bear interest from the date of such payment at the same rate set forth in the Note, and shall be impressed as an additional lien upon the Property and be immediately due and payable from Mortgagor to Mortgagee and this Mortgage shall from date thereof secure the repayment of such advances with interest. In case of default in any of the foregoing covenants, Mortgagor confers upon the Mortgagee the option of declaring the unpaid balance of the Note and the interest accrued thereon, together with all sums advanced hereunder, immediately due and payable without notice, and hereby authorizes and empowers Mortgagee to foreclose this Mortgage by judicial proceedings or to sell the Property at public auction and convey the same to the purchaser in fee simple in accordance with the statute, and out of the moneys arising from such sale to retain all sums secured hereby, with interest and altlegal costs and charges of such foreclosure and the maximum attorney's fee permitted by law, which costs, charges and fees Mortgagor agrees to pay. The terms of this Mortgage shall run with the Property and bind the parties hereto and their successors in interest. IN TESTIMONY WHEREOF, Mortgagor has hereunto set its hand the day and year first above written. STATE OF MINNESOTA rt COUNTY OF DAKOTA The by was ac iawled ed and i �een �I. Hertogs, Fluegel, Sieben, Polk, ,tones & LaVerdiere, P.A. Eric A. Short 999 Westview Drive Hastings, MN. 55033 (612) 437-3148 MORTGAGOR 1c ae onoug Eileen M. McDonough day of 119— SIGNATURE OF PERSON TAKING ACKNOWLEDGMENT NOTARIAL STAMP OR SEAL (ORO HER TITLE OR.RANK) FAILURE TO RECORD OR FILE THIS MORTGAGE MAY AFFECT THE PRIORITY OF THIS IORTGAGE JAN-02-13 52 09:48 FROH HEFTOGS LAW ---------------------- TO 4235203 P.02 Napper: item 5, Old Business, Sunrise Builders Property. Sue vanderHeyden(?); Steve Jilk(?): Oh, excuse me, I'm one ahead. Jilkz Mayor and Councilmembers, this, .item is back on the agenda for consideration by the Council. The staff was given direction on the last council meeting to prepare purchase documents and lease agreement documents for the purchase of the Sunrise Builders Property and the leasing Yuck of that property to Mike McDonough. Excuse me, at a specified rate. You have been given copies of the proposed lease agreement and the copy of the purchase document which is very much of a boiler plate document. I would just like to outline a couple of items that I think are very specific to this transaction and then Eric Short has got some minor changes that we should have caught before the document went out to you, but we didn't and so there will be some proposed minor changes to the documents as you have them. we would refer back to the second to the last page of the purchase agreement, the second to the last page of the entire document that you have. It is not only difficult to read but probably not real important as far as boiler plate language, but item 4, toward the top does. call out the p ice and we do outline there the total purchase price o ,$360,00fl. Secondly, that there would be a $SO,OOO cash down pa ime of closing. That there would be an additional $266,000 due and that $266,000 would be paid off on the term of $2,068.20 month, or 8% per annum over a three-year period. $200,000 would be paid at an interest rate of 9.5% at the rate of $4,200.37 per month. The last paragraph of that section suggests that seller agrees that purchaser may at its option pay such sums as may be owed to Rosemount State Bank by seller directly to Rosemount State Bank and deduct that amount to be paid by purchaser to seller. That is what we would propose to do with the $200,000 portion of the purchase price. I think the only other thing that I would like to note on that page is item 6 and there again, it is very difficult to read, but I refer to the real estate taxes and assessments indicate that we would be paying all of the taxes payable in 1993 and that the taxes payable in 1992 would be prorated as of the day of closing. The first part of the document in the packet that you dial receive does outline the lease agreement and that basically suggests that Mr. McDonough through Sunrise Builders, Inc. would be allowed to lease back the property at a rata of $750/month. That term starts January 31, 1992, and ends January 30, 1995, for a three-yaar period which we talked about. There are some suggested changes in regard to the term and to the fees and I would like to have Eric go over those: one being the fact that we would like to offer a clear definition 1 JAN -01-2-1992 09:40 FROM HERTOGS LAW TO 4235203 P.03 of the terminatioa option open to the City would be responsible for we would: own the property. (Cannot understand the tape). Mr. McDonough. Secondly, that any taxes due on the property as Short: . . .Rather than being locked into three years with Mike, we may want to have a maximum of three years that he be allowed to stay on the property and to get out sooner if an opportunity presented itself and we wanted to rel.oeato at that time. I propose to revise this to accommodate the earlier termination if that came about. With respect to paragraph 6, real estate taxes, typically when the city owns a parcel of property its tax exempt but when its leased back to a private owner and used for nonexempt pt:rposes, it becomes taxable at that time. What we would propose to do is for the City to be obligated to pay the real estate takes. Klassan: This paragraph on the rent, I can understand why Mike would want that up to three years at his discretion but what if the City would like him out of there before three years Short: Unless he is in default, he can stay for the full term of the leases. (Long pause on the tape) Klassan: Would it be in the best interests of the City of have a clause stating that where we would give Mike a certain amount of reasonable time to relocate if, in fact, something approaches the City where the property should be made available for that particular project. Short: A reciprocal type of termination. Klassans Thatla the word T was grappling for. Short: Certainly, it would be in the City's interest to have that. Weld have to negotiate that with Mike. That hasn't been raised with him so far. Wipperman: Originally the document called for him to be responsible for taxes and now we're changing that to the City being responsible. Jilk: we never .indicated in our discussions with Mike that he would be responsible for taxes. it is our understanding prior to Mr. Short's review of the law, that there would be no property taxes due because we would be the owner and we would, of course, be tax exempt. Mr. Short indicated that though that as long as we lease the property back, for a profit type business, that the 2 J='d-t=t;_--99` 09: 49 FROM HEF'TOGS LAt,,l TO 4235203 P.04 propexty would not be tax o cmpt. We didn't in effect change our position but we because of the fact that we are going to have to pay takes and that would be an increased cost maybe that is a better way to explain it. Wipperman: What are the annual taxes for this property. Jilk: I think they are $4800.00 --about $400 a month. Napper: We could use the arcTu mont that the University of Minnesota uses for the tax assessor and take into consideration rents received vs. actual property value. Jilk: To establish property value. Nappers Correct. Si.Tnilar to how Rosemount Woods does it. Jilk: It's an argument we could use with the County Assessor. Napper: Right, Jilk: Whether or not we would be successful. Napper: But there is not point in not trying. Jilk: I agree. Napper: obviously we've got $3000 a month going out and $750 a month coming in. it is not a big money maker. Wipperman: Maybe the taxes should be the responsibility of the Lessee. The rental charges are rather minimal to begin with. For a property of that value. Napper: Mike, do you have any idea without whipping out your crystal ball, how long will you want to stay there, if you had to guess. (Can't hear the response on the tape.) Napper: I guess I would recommend that the council look at something like, if we think it is important that we have the option to take full possession of the property if a higher and better use comes along, maybe that is one of things you bring to the table in the negotiations of the lease, the option to evict for the continuation of the City to pay the property tax. You know, if that is something the council wants to consider. Rlassan: My intention is to vote"no" on this in consistency with ghat I did last meeting and for the same reasons. I think if any negotiations should be had it should be on the price of $316,000. However, Just for the sake of discussion, I do think 3 TPN-'•=tom-1992 09:50 FROM HERTOGS LAW TO 4235203 P.05 some reciprocity language ought to be in here if a project does come forward and we need to start construction on something in the next six months or whatever and have Mike be given reasonable amount of time to relocate. Napper: Council consideration. or let it fly at will. Wilcox: Well I don't see a pressing issue coming up that is going to require him to move-- Rlassan: Then why are we buying it. Wilcox: That we would have to move into there. We need it for the water and the storm water for the armory and the delay is going to cost us money and we have the armory coming up this next year and I think we need to go ahead, it's up to the rest of the council if they want reciprocity. I don't have a problem with it. Klassan; well, I don't argue that the City is going to need some of the property. I don't think we need all of the property. Wilcox: Its cheaper to buy it as a whole unit than to buy it piecemeal. Napper: Steve, what's wrong with the recommended action that's on the bottom. Evidently there is more verbiage that needs to be added. Jilk: 4n the green sheet, Mr. Mayor. Napper: Right. Or is that correct as stated. Jilk: That should be correct as stated based on the purchase agreement even with the changes. We wouldn't normally reference Ithe kind of changes that we have suggested la the lease agreement as part of the recommended Motion unless based upon council consensus that you would change that. More specifically, I think you are talking about the three years and $750/month. If that !a changed, then obviously the recommended action would be changed but j based on the changes we have brought to you tonight, or suggested, regarding the termination clause and the taxes normally we wouldn't reference that specifically in the motion. But if you do have a desire to change the $750 month or reference specifically the inclusion of the taxes and/or changing the termination or term of the agreement, then we would change it. Napper: Council consideration --if not, I'll make a motion to approve the purchase agreements with Mike McDonough and the First State Bank of Rosemount for the purchase of the Sunrise Builders property and the rental of the property to Mike McDonough at a rate of $750 per month for up to three years. 4 G-: FROM HERTOGS LAW TC 423520Z P.06 Wilcox: I'll second it. Napper: Motion and second. Further discussion. Suer please call the roll. Walsh: Nappere. Aye. Oxborough: Aye Klassan: No Wilcox Aye wipperman Aye.