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HomeMy WebLinkAbout9.a. Akron 42 LLC Land Purchase Extension Agreement EXECUTIVE SUMMARY City Council Regular Meeting: October 18, 2022 AGENDA ITEM: Land Purchase Extension for Life Time Recreation Center project AGENDA SECTION: Consent PREPARED BY: Logan Martin, City Administrator AGENDA NO. 9.a. ATTACHMENTS: Letter of Intent; Land Purchase & Sale Agreement APPROVED BY: LJM RECOMMENDED ACTION: Motion to approve a First Amendment to a Purchase Agreement with Akron 42, LLC to acquire approximately 29 acres in the northeast quadrant of Akron Avenue and Hwy 42. BACKGROUND The City continues to make considerable progress with Life Time Inc. on the public-private partnership that has been established to construct a new facility in Rosemount. The City Council authorized the acquisition of 29 acres in the northwest quadrant of Akron Ave. and Hwy 42 in April of 2022. Since that time, the City and Life Time have completed all due diligence investigations into the property. We’ve also been negotiating the long-term lease arrangement between the entities, and that document is approximately 95% complete. The project has received all necessary City planning approvals and is nearing final design. However, the volatility of the construction marketplace has led Life Time to request that the project be placed out for bids in Spring of 2023, rather than the previously planned Fall of 2022. As such, an extension of the land purchase agreement with Akron 42, LLC is needed. The City and the seller have agreed to language to extend the agreement, which requires a $50,000 non-refundable earnest payment. These funds are applicable to the final sale price. This extension establishes the new closing date as on or before May 16, 2023. This will give the City and Life Time adequate time to bid the project and have certainty about final costs prior to closing on the land, which is a normal order of operations in development projects. If an additional extension is needed, an additional $50,000 applicable earnest payment would be required. RECOMMENDATION Staff recommends the City Council approve a First Amendment to a Purchase Agreement with Akron 42, LLC to acquire approximately 29 acres in the northeast quadrant of Akron Avenue and Hwy 42. {00382500 6} RS220\402\817241.v5 FIRST AMENDMENT TO PURCHASE AND SALE AGREEMENT THIS FIRST AMENDMENT (this “Amendment”) is made and entered into this ____ day of ________________, 2022 (“Effective Date”), by and between the City of Rosemount , a Minnesota municipal corporation (the “Buyer” or the “City”) and Akron 42, LLC, a Minnesota limited liability company (the “Seller”) (collectively, the “Parties”). RECITALS A. The Seller is the fee owner of the certain real property located in the City of Rosemount, Dakota County, Minnesota, referred to in the Purchase Agreement (defined below) as the Health Club Property and the Residual Property, and as more specifically described and depicted in the Purchase Agreement. B. The Seller has agreed to sell and the Buyer has agreed to purchase the Property, subject to the terms and conditions of a Purchase and Sale Agreement between the Parties, dated as of April 5, 2022 (the “Purchase Agreement”). C. Pursuant to the Purchase Agreement, the Buyer has reviewed the tit le commitment for the Property and has issued its objections thereto, and the Seller has responded to the Buyer’s objections. D. The Parties desire to enter this Amendment acknowledging the expiration or extension of contingencies and extension of the Closing Date. NOW, THEREFORE, in consideration of the foregoing and the covenants and obligations contained in this Amendment , and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties agree to amend the Purchase Agreement as follows: 1) Definitions. Capitalized terms used but not defined in this Amendment shall have the meanings ascribed to such terms in the Purchase Agreement. 2) Extension of Closing Date. The first sentence of Paragraph 7.1 of the Purchase Agreement is hereby amended to read as follows: The closing of the purchase and sale transaction contemplated by this Agreement (“Closing”) shall occur on May 16, 2023 (the “Closing Date”) at the offices of the Title Company, or such earlier date as may be agreed by the Parties; provided, that Buyer may elect to extend the Closing Date to a Business Day occurring no later than June 30, 2023 by delivery of the following to Seller at least 10 Business Days prior to the scheduled Closing Date: (i) written notice to Seller of the new Closing Date, and (ii) payment by wire transfer (to an account designated by Seller) in the amount of $50,000.00, which payment shall be entirely non-refundable and not considered Earnest Money, but will be credited against the Purchase Price at Closing. {00382500 6} RS220\402\817241.v5 3) Extension Payment. In exchange for extension of the Closing Date to May 16, 2023 as granted under Section 2 above, on the Effective Date Buyer agrees to wire payment to Seller (to an account designated by Seller) in the amount of $50,000.00, which payment shall be entirely non-refundable and not considered Earnest Money, but will be credited against the Purchase Price at Closing. 4) Re-Plat. The first sentence of Paragraph 2.1 of the Purchase Agreement is hereby amended to read as follows: During the Approval Period, Buyer shall prepare for recording at Closing a re-plat of the property described on Exhibit A (the “Re-Plat ”) and separately identifying the Health Club Propert y and the Residual Property, in accordance with Buyer’s typical processes and standards for the same. 5) Expiration or Extension of Contingencies. (a) Expiration. The Parties acknowledge and agree that: (i) Buyer’s right to terminate under Paragraph 3.4 of the Purchase Agreement has expired and Buyer has waived any uncured Title Objections and agreed to accept title subject to such uncured Title Objections; (ii) the Inspection Period has expired and Buyer has waived any right to terminate the Purchase Agreement arising out of the condition of the Health Club Property or the Residual Property, and (iii) Paragraph 4.3 of the Purchase Agreement is hereby deleted from the Purchase Agreement and all references in the Purchase Agreement to the Development Agreement Contingency or Developer Agreement Contingency are hereby deleted. (b) Extension. Paragraph 4.5 of the Purchase Agreement is hereby amended to read as follows: Buyer may terminate this Agreement by written notice to Seller, given on or prior to May 1, 2023 (the “Approval Period”), if Buyer is unable to (a) execute satisfactory Life Time Agreements (the “Life Time Contingency”), or (b) obtain financing that is sufficient for the Buyer to complete construction of the Recreational Facility (the “Financing Contingency”). 6) Miscellaneous. This Amendment constitutes the entire agreement between the Parties with respect to the subject matter herein contained. To the extent any provisions of this Amendment conflict with any other provisions of the Purchase Agreement, the provisions of this Amendment shall be controlling. Except as expressly provided in this Amendment, all other terms of the Purchase Agreement remain unchanged and binding and are not modified by this Amendment, and the Parties hereby ratify, reinstate and confirm each and every provision thereof. This Amendment may be executed in several counterparts, each of which when executed is considered an original, but all of which together shall constitute one instrument. Separate signature pages may be signed by various parties and each complete set of pages hereto, with signature pages signed by each party, shall constitute {00382500 6} RS220\402\817241.v5 one original of this Amendment. This Amendment may be delivered by email and the Parties agree to accept and be bound by email signatures. [Signatures on following page] RS220-402-817241.v7 IN WITNESS WHEREOF, the parties have executed this First Amendment to Purchase and Sale Agreement as of the date first written above. SELLER: Akron 42, LLC By: U.S. Home, LLC, its Manager By: Jonathan Aune, Vice President of Land Operations BUYER: City of Rosemount, Minnesota By: Bill Droste Its: Mayor By: ______________________________________ Erin Fasbender Its: City Clerk This Instrument Drafted by: Kennedy & Graven, Chartered 150 South 5th Street, Suite 700 Minneapolis, MN 55402 (612) 337-9300