HomeMy WebLinkAbout2014-07-16 PACKET 04.Q. REQUEST OF CITY COUNCIL ACTION COUNCIL AGENDA
MEETING ITEM # �
DATE 7/16/14 • a
.
PREPARED BY: Community Development Jennifer Levitt
ORIGINATING DEPARTMENT STAFF AUTHOR
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COUNCIL ACTION REQUEST
1. Consider approving the Development Agreement First Amendment for Everwood 4th
Addition.
2. Consider approving the Third Party Escrow Agreement for Everwood 4th Addition.
STAFF RECOMMENDATION
1. Approve the Development Agreement First Amendment for Everwood 4th Addition.
2. Approve the Third Party Escrow Agreement for Everwood 4th Addition.
BUDGET IMPLICATION: $N/A $N/A N/A
BUDGETED AMOUNT ACTUAL AMOUNT FUNDING SOURCE
ADVISORY COMMISSION ACTION
DATE REVIEWED APPROVED DENIED
❑ PLANNING ❑ ❑ ❑
❑ PUBLIC SAFETY ❑ ❑ ❑
❑ PUBLIC WORKS ❑ ❑ ❑
❑ PARKS AND RECREATION ❑ ❑ ❑
❑ HUMAN SERVICES/RIGHTS ❑ ❑ ❑
❑ ECONOMIC DEV. AUTHORITY ❑ ❑ ❑
❑ ❑ ❑ ❑
SUPPORTING DOCUMENTS
� MEMO/LETTER: Memo from John M. Burbank dated 7/11/14
❑ RESOLUTION:
❑ ORDINANCE:
❑ ENGINEERING RECOMMENDATION:
❑ LEGAL RECOMMENDATION:
� OTHER: Development Agreement First Amendment, Third Party Escrow Agreement
ADMINISTRATOR'S COMMENTS
� ,�,,'
City inistrator Dat
****�*****************************************�*
COUNCIL ACTION TAKEN: ❑ APPROVED ❑ DENIED ❑ OTHER
Cottage
J Grove
� Pride ana PrOSPerity Meet
TO: Honorable Mayor and City Council
Ryan Schroeder, City Administrator
FROM: John M. Burbank, Senior Planner
DATE: July 11, 2014
RE: Development Agreement First Amendment and Third Party Escrow Agreement
Approval for Everwood 4th Addition
Introduction
With the 2014 development project for Everwood 4th Addition approaching, the Developer has
requested that a Third Party Escrow Agreement process be approved to address the surety for
the project. The City Engineer and Finance Department have given a favorable recommenda-
tion on this request. The use of a third party agreement requires that the development agree-
ment for the subdivision be modified. Based on the Developer's request, the Council is
requested to take the two following actions.
1) Approve the Development Agreement First Amendment for Everwood 4th Addition.
2) Approve the Third Party Escrow Agreement for Everwood 4th Addition.
Summary
• With recent residential subdivisions, the City has been allowing for Third Party Escrow
Agreements in lieu of Letters of Credit.
• The City is participating in the Third Party Escrow Agreement for the payment of work that
is being completed by the Developer on behalf of the City in conjunction with the project.
• The third party acting as the Escrow Agent in the escrow agreement is Custom Home-
builders Title, who has met the approval of the City's Finance Director.
Recommendation
It is recommended that the City Council take the following actions:
1) Approve the Development Agreement First Amendment for Everwood Fourth Addition.
2) Approve the Third Party Escrow Agreement for the Everwood Fourth Addition.
DEVELOPMENT AGREEMENT
FIRST AMENDMENT
EVERWOOD 4TH ADDITION
THIS FIRST AMENDMENT TO THE DEVELOPMENT AGREEMENT ("Agreement") is
entered into on the 16th day of July, 2014, by and between MJR Developers, LLC, a Minnesota Limited
Liability coiporation, and Aspen Grove LLC, a Minnesota limited liability corporation, jointly refeired
to as the "Developer," and the City of Cottage Grove, a inunicipal corporation, situated in the County of
Washington, State of Minnesota, hereinafter refei7ed to as the "City."
RECITALS
A. The City approved the Everwood preliminary plat (Resolution No. 2006-196) on September 20,
2006, the Everwood 4th Addition final plat on November 20, 2013 (Resolution 2013-125), and the
Everwood 4'�' Addition Development agreement on November 20, 2013 (Resolution No. 2013-127).
B. The City requires that certain public improvements, which are herein refei�ed to as "Public
Improvements" and include, but are not limited to stoi�n drainage systems, sanitary sewer, water,
grading, street lighting, trails, sidewall�, curb and gutters, and streets, be installed to serve the
Subject Property and other properties affected by the development of the Subject Property, all at the
expense of the Developer, all as set foi�th in the Approved Feasibility Report and Conshuction plans
dated November 20, 2013 (Resolution 2013-126).
C. Subsequent to the adoption of the Development agreement the following occurred:
1. The Developer asked the City to consider a change to Section 2.c. (i) in the contract;
replacing the requirement of an ii7evocable letter of credit or cash payment surety for the developer
constructed improvements with a third party agreement. The City is agreeable to the change.
2. A mathematical enor was discovered in Section 2.c. (iii) of the adopted Development
Agreement which requires correction before the cash payment surety may be issued to the City on
the behalf of the Developer.
3. The Developer offered to constiuct/install streetlights desired by the City along
Hardwood Avenue fiom East Point Douglas Road to 73` Street in conjunction with the Everwood
4 project.
NOW, THEREFORE, IT IS HEREBY AND HEREIN MUTUALLY AGREED, in consideration
of each party's promises and considerations herein set foi�th, as follows:
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1. Section 2.c.i of the ori�inal Development agreement (Resolution 2013-127) is amended
and/or revised as follows
The Developer will provide to the City a Third Party Agreement totaling the amounts shown below
to guarantee the constiuction of the public improvements as put forth in the adopted Feasibility
Study (Resolution 2013-126):
TIIII2D PARTY AGREEMENT — PUBLIC IMPROVEMENTS
Street paving $100,519
Sanitary sewer system 83,856
Water system 3,250
Water & Sanitary house seivices 18,638
Storm sewer 208,767
St. lighting (base, conduit, wiring, etc.) 15,931
Bituminous Trail 178,360
Mulch Trail 57,281
Concrete Sidewalks 36,561
General 20,219
Final Street (a) 41,865
SUBTOTAL $765,247
Less: City funded
Ponding (30,714)
Bituminous Trail (150,606)
Concrete Sidewall� (36,561)
TOTAL $547,365
*The cash requirement table below reflects a credit of $23,646 for the Mulch Trail
(a) The cost to construct the final street is estimated to be $41,865. The City will allow a
reduction of the $100,519 cost for street paving and $41,865 for final streets in the Third
Party Agreement — Public Improvements if a minimum of $41,865 is posted in a letter of
credit until all the final street improvements have been constructed and accepted by the
City.
(b) The Third Party Escrow Agreement outlining the conditions of the disbursement of funds
to the developer's contractor is included with this Amendment to the Developers
Agreement. The Third Party Escrow Agreement will be executed by all parties and
included with this amendment for recording purposes.
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2. Section 2.c.iii of the original Development a�reement (Resolution 2013-127) is revised as
follows:
A cash payment for the required development in the amount of $141,915, as shown in the table
below.
DEVELOPMENT FEES AND CHARGES
Sanitaiy Sewer Area Charge $14,860
Water Area Charge 17,025
Stol�rn Water Area Charge 36,035
Streetlight poles 2,250
Streetlight luminaries 2,250
Street seal coating 1,535
Trail seal coating 1,953
Boundazy marlcers 1,035
Streetlight utility charge 588
Engineering fee (12% of $547,365) 65,684
Grading Escrow 22,346
Credit: Mulch Trail (23,646)
SUBTOTAL $141,915
If the actual engineering costs incurred exceed the fee paid, the Developer and the City shall
review the costs required to complete the project and the Developer shall deposit additional sums
with the City.
3. Off Site Imnrovements. At the request of the City, the developer has agreed to install streetlights
along Hardwood Avenue from East Point Douglas Road to 73r Street. These streetlights are in
addition to the off-site improvements which are outlined in section 23 of the original Developer
Agreement and construction plans have been provided by the City to the Developer. The City
estimates the cost of these improvements to be $228,212.
The City will deposit $446,093 to the Third Pai�ty Escrow funds to reimburse the Developer for
the cost of purchase and installation of the Hardwood streetlights ($228,212), Hardwood Ponding
construction ($30,714), concrete sidewallc construction ($36,561) and a portion of Hardwood
Bituminous Trail construction ($150,606). If the actual expenditures for these improvements
exceed the City's deposit, the City will deposit additional funds into the Escrow agreement. If the
expenditures are less than the deposited amount, any balance shall be returned to the City at the
end of the project.
IN WITNESS OF THE ABOVE, the pat�ties have caused this Agreement to be executed on the date
and year written above.
SIGNATURES APPEAR ON NEXT PAGE
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MJR DEVELOPERS, LLC CITY OF COTTAGE GROVE:
By: By:
Milce J. Rygh, Chief Manager Myron Bailey, Mayor
B
Caron M. Stranslcy, City Clerlc
ASPEN GROVE LLC
B
Matthew J. Francis, Chief Manager
ACKNOWLEDGEMENT FOR CITY
STATE OF MINNESOTA )
)ss.
COUNTY OF WASHINGTON )
The foregoing instiument was acknowledged before me this day of , 2014,
by Myron Bailey, Mayor, and Caron M. Stransky, City Clerlc, of the City of Cottage Grove, a Minnesota
municipal corporation, on behalf of the corporation.
Notaiy Public
(Notary Seal)
ACKNOWLEDGEMENT FOR DEVELOPER
STATE OF MINNESOTA )
)ss.
COUNTY OF )
On this day of , 2014, before me, a notary public within and for said County,
personally appeared Mike J. Rygh, Chief Manager of MJR Developers, LLC, a Minnesota limited liability
company, on behalf of said corporation.
(Notary Seal)
Notaiy Public
On this day of , 2014, before me, a notaiy public within and for said County,
personally appeared Mike J. Rygh, Chief Manager of MJR Developers, LLC, a Minnesota limited liability
company, on behalf of said coiporation.
(Notaiy Seal)
Notary Public
-4-
THIS DOCLIMENT DRAFTBD BY:
Coimnunity Development Deparhnent
City of Cottage Grove
12800 Ravine Parkway South
Cottage Grove, MN 55016
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THIRD PARTY ESCROW AGREEMENT
EVERWOOD 4TH — SITE IMPROVEMENTS
THIS AGREEMENT is entered into on July 16, 2014, by Custom Homebuilders Title (hereafter `Bscrow
Agent"), City of Cottage Grove, a municipal corporation (hereafter "City"), MJR Developers, LLC, a
Minnesota Limited Liability Coiporation company and Aspen Grove, LLC, a Minnesota Limited Liability
Corporation (jointly known as "Developer").
RECITALS
WHEREAS, on November 20, 2013 the City approved a final plat named Everwood 4th (hereafter
"Subdivision"); and
WHEREAS, City and Developer have entered into a development agreement on November 20,
2013, with the first amendment to said developer agreement dated July 16, 2014, (hereafter "Development
Agreement") pursuant to which Developer has agreed to deposit certain funds as identified below in
escrow in lieu of a letter of credit; and
WHEREAS, Developer agrees to privately construct public improvements serving the property
legally described in attached Exhibit A and as defined in the Amended Development Agreement; and
WHEREAS, Developer agrees to privately construct/install streetlights along Hardwood Avenue
from East Point Douglas Road to 73r Street and as defined in the Amended Development Agreement;
and
WHEREAS, City and Developer desire that the Escrow Agent disburse the advances and Escrow
Agent is willing to do so on the terms and conditions hereinafter set forth yet not providing any title or
mechanic lien clearance services; and
WHEREAS, capitalized terms used and not otherwise defined herein, shall have the meanings set
forth in the Developer's Agreement.
NOW THEREFORE, in consideration of the foregoing recitals and other good and valuable
consideration, it is agreed between the pai�ties as follows:
1. Developer will deposit escrowed funds in the amount of $547,365 with the Escrow Agent.
2. City will deposit escrowed funds in the amount of $446,093 with the Escrow Agent.
3. The Escrow Agent is authorized and directed to disburse the funds deposited hereunder to
Developer (or City in case of Developer Default) to pay the costs of construction of the Site and
Public improvements identified in the Developers Agreement to be constructed on the described
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real propei as such property is identified in Exhibit A. The nurnber of permissible draws and the
fees to be charged therefore is as set forth herein.
4. Prior to each disbursement of funds by the Escrow Agent to the Developer, the City and Escrow
Agent must be furnished with the following items:
a. Sworn Construction Statement, setting forth all contractors and material suppliers with
whoin the Developer has contracted the amounts of each contract, the amounts paid to date,
the amounts being requested, and the balances due.
b. The written draw request by the Developer for the requested disbursement.
c. Written Approval by the City of the disbursement request; which approval shall (i) not be
unreasonably withheld or delayed and (ii) be provided within ten (10) business days
following the date submitted by the Escrow Agent in accordance with Paragraph 5 below
with confirmation from the Escrow Agent that Developer has provided all of the items
required to be submitted under this Paragraph 3. Failure by the City to respond to such
request within the ten (10) business day approval period shall automatically be deemed to
be City's approval to same. Escrow Agent may communicate with City electronically
relative to these requests.
d. Full or partial, up-to-date lien waivers plus affidavits supporting lien waivers and releases
of lien if necessary in a form satisfactory to Escrow Agent and City.
e. A list showing each Contractor/Vendor to be paid from the cui�ent Draw Request, the
amount of payment, and the category of cost as shown on the Sworn Construction
Statement for which such payment are to be made.
f. Such other suppoi evidence as may be reasonably requested by the City or Escrow
Agent to substantiate all payments which are to be made out of the relevant Draw Request
and/or to substantiate all payments, then made with respect to the Public Improvements.
g. Escrow Agent's charges for all of the escrow services to be provided for pursuant to this
Agreement are $25.00 per draw.
h. No draw requests shall be inade by Developer while another is pending or in the event the
City has declared default under the Developer's Agreement.
5. At the time of submission of the final Draw Request, which shall not be submitted before the
completion of the Public Improvements and Site Improvements, including all landscape
requirements, Developer shall submit to City and Escrow Agent, in addition to the requirements
listed in Paragraph 5 above, the following:
a. A written lien waiver from all contractors for worlc done and materials furnished for the
Public Improvements.
b. Such other supporting evidence as may be reasonably requested by the City or Escrow
Agent to substantiate all payments, which are to be made out of the final Draw Request
and/or to substantiate all payments, then made with respect to the Project.
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c. Satisfactory evidence that all work requiring inspection by Governmental Authorities
having jurisdiction including the City has been duly inspected and approved by such
authorities and that all requisite certificates of occupancy, if applicable, and other approvals
have been issued.
d. Final Sworn Construction Statement.
e. The Developer's general contractor shall submit a one (1) year warranty bond in a foim
satisfactory to the City Attorney, fiom the date of Public Improvements acceptance and all
required IG134 documents.
6. Not later than five (5) business days following receipt of the documents delivered to it pursuant to
the above paragraphs, the Escrow Agent will notify in writing the City as to whether or not the
delivered documents are satisfactory to it. If documents are missing, the Escrow Agent will advise
City and Developer. If the documents are supplied to the satisfaction of the City and Escrow Agent,
Escrow Agent will within three (3) days of receipt of draw request, transmit to the Developer the
amount applied for in the relevant draw request.
7. Developer will pay to parties identified in the relevant draw request the amounts shown therein.
Payment will only be made upon receipt of signed lien waivers for the amount requested.
8. The Escrow Agent will lceep and maintain books and records in sufficient detail to reflect the
disbursements made by it hereunder. City and Developer may, during normal business hours,
examine the books and records of Escrow Agent pertaining to the disbursements made by it
hereunder.
9. No liability is assumed by Escrow Agent or City to the Developer or contractors as regards
protection against mechanic's lien or title claims.
10. Functions and duties assumed by the Escrow Agent include only those described in this Agreement
and the Escrow Agent is not obligated to act except in accordance with the teims and conditions
of this Agreement. Escrow Agent does not insure that the building or construction will be
completed or that the building when completed will be in accordance with the plans and
specifications, or that sufficient funds will be available for completion. The funds placed in escrow
shall be maintained in a non-interest bearing account.
11. Escrow Agent acknowledges receipt of escrowed funds upon execution of this document.
12. This Agreement shall be binding upon the parties hereto and their respective successors and
assigns.
Page 3
13. This agreement can be amended or modified only by a written Amendment, written and signed by
all of the pat�ties hereto.
14. Escrow Agent shall place all received funds in a FDIC insured account.
15. If directed by the City in its reasonable business judgment, the Developer shall submit additional
security to address change orders or unanticipated Project costs which costs will be reasonable
agreed upon by the City and Developer.
16. If directed by its reasonable business judgment, the City shall submit additional security to address
change orders or unanticipated streetlight costs which costs will be reasonable agreed upon by the
City and Developer.
17. The parties hereto agree that each party's legal cost incurred to draft and /or negotiate this
Agreement on behalf of such party shall be the sole responsibility of the party incui7ing the same.
18. Time is of the essence as to each provision of this Agreement.
19. All notices required or permitted under this Agreement shall be (i) delivered to the addresses set
forth below, and (ii) mailed, delivered, or transmitted by one party to the others and such notice
shall be deemed given and effective upon receipt if personally delivered; upon receipt if sent by
telecopy or electronic mail; upon receipt or upon the date of first attempted delivery, if sent by
certified or registered mail with postage prepaid, return receipt requested, or if sent by Federal
Express or other nationally recognized carrier service; or upon receipt if sent in any other way.
Any party hereto may from time to time, by written notice to the other parties, designate a different
address which shall be substituted for the one specified below.
20. In the event the City declares default under the Developers Agreement, this Escrow agreement
shall tel�ninate and all funds held in escrow shall be remitted to the City of Cottage Grove for
application to obligations specified under the Developers Agreement.
Escrow Agent: Custom Homebuilders Title
Attn: Vicki Delwoo
10850 Old County Road 15
Plymouth, MN 55441
Page 4
City: City of Cottage Grove
Attn: Finance Director
12800 Ravine Parkway
Cottage Grove, MN 55016
Developer: MJR, LLC — Minnesota
Attn: Mike Rygh
6939 Pine Arbor Drive, Suite 101
Cottage Grove, MN 55016
21. This Agreement may be executed in any number of counterparts, each of which shall be original
but all of which shall constitute one and the same instrument. The delivery of an executed
counterpart of this Agreement by facsimile or PDF or siinilar attachment to an email in
accordance with Paragraph 20 above shall constitute effective delivery of such counteipai-t for all
puiposed with the same force and effect as the delivery of an original executed countelpart.
(SIGNATURES ON NEXT PAGE)
Page 5
ESCROW AGENT
CUSTOM HOMEBUILDERS TITLE
BY:
Vicici Delwoo
Its:
STATE OF )
) ss
COLTNTY OF )
On this of , 2014, before me, a Notary Public, in and for said County and
State, appeared Vicici Delwoo, to me personally known, who being by me first duly sworn, did say that
he/she is the for Custom Homebuilders Title Inc., and acicnowledged said instrument to
be the free act and deed of Custom Homebuilders Title Inc., who then executed the foregoing document
by authority of Custom Homebuilders Title Inc., and acknowledging said instrument to be the fiee act and
deed of said company.
NOTARY PUBLIC
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CITY OF COTTAGE GROVE
BY:
Myron Bailey, Mayor
(SEAL)
AND
BY:
Caron M. Stransky, City Clerk
STATE OF MINNESOTA )
) ss
COUNTY OF WASHINGTON )
On this of , 2014, before ine, a Notary Public, in and for said County and
State, appeared Myron Bailey and Caron M. Stranslcy, to me personally known, who being by me first
duly sworn, did say that they are respectively the Mayor and City Clerlc for the City of Cottage Grove,
who executed the foregoing document by authority of the City Council of the City of Cottage Grove, and
said Mayor and City Clerk acicnowledge said instrument to be the free act and deed of said City of Cottage
Grove.
NOTARY PUBLIC
Page 7
MJR, LLC, A MINNESOTA LIMITED LIABILITY
COMPANY
BY:
Mike Rygh
Its: Chief Manager
STATE OF )
) ss
COUNTY OF )
On this of , 2014, before me, a Notary Public, in and for said County and
State, appeared Milce Rygh, to me personally known, who being by me first duly sworn, did say that he is
the Chief Manager of MJR, LLC, a Minnesota limited liability company, and acknowledged said
instrument to be the free act and deed of MJR, LLC who then executed the foregoing document by
authority of MJR, LLC and acknowledging said instrument to be the free act and deed of said partnership.
NOTARY PUBLIC
Page 8
ASPEN GROVE, LLC, A MINNESOTA LIMITED
LIABILITY COMPANY
BY:
Matthew J Francis
Its: Chief Manager
STATE OF )
) ss
COUNTY OF )
On this of , 2014, before me, a Notary Public, in and for said County and
State, appeared Matthew J Francis, to me personally lcnown, who being by me first duly sworn, did say
that he is the Chief Manager of ASPEN GROVE, LLC, a Minnesota limited liability company, and
acknowledged said instrument to be the free act and deed of ASPEN GROVE, LLC who then executed
the foregoing document by authority of ASPEN GROVE, LLC and acknowledging said instrument to be
the free act and deed of said pai�tnership.
NOTARY PUBLIC
THIS DOCUMENT DRAFTED BY:
Community Development Deparhnent
City of Cottage Grove
12800 Ravine Parlcway South
Cottage Grove, MN 55016
Page 9
EXHIBIT `�A"
LEGAL DESCRIPTION OF THE SUBJECT PROPERTY
Lot A subdivision Cd 2656 EVERWOOD 3 ADDITION on file and of record in the office of the
Registrar of Titles, Washington County, Minnesota (containing 5.31 acres, more or less)
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