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Home My WebLink About2003-03-11PACKET CITY OF COTTAGE GROVE • ECONOMIC Secretary DEVELOPMENT AUTHORITY AGENDA MARCH 11 , 2003 7:30 A.M. 1. Call to Order 2. Roll Call 3. Approval of February 11, 2003 Minutes 4. Business Items A. Project Updates B. Gateway North Development District i. Oakwood Commercial Properties ii. 1501 Partnership property acquisition iii. Ruvelson property acquisition iv. Construction schedule update C. River Oaks/EDA Joint Venture D. EDA Enabling Resolution E. EDA Vacancy F. Calendar 5. Miscellaneous Business Items 6. Adjourn Next Meeting Date: April 8, 2003 • E:\Economic Development\E D AAgendas\2003\March 11 Regular.doc • CITY OF COTTAGE GROVE ECONOMIC DEVELOPMENT AUTHORITY MINUTES February 11, 2003 Pursuant to due call and notice thereof, a regular meeting of the Economic Development Authority was held at City Hall, 7516 80th Street South, Cottage Grove, Minnesota on the 11th day of February 2003. CALL TO ORDER The meeting was called to order at 7:30 a.m. by EDA President Wolcott. ROLL CALL • Members Present: Jim Wolcott, EDA President Sandy Shiely, EDA Vice-President Mike Wennen, Authority Member Gerry Weingartner, Authority Member Glen Kleven, Authority Member Members Absent: Dick Pederson, Authority Member Others Present: Ryan Schroeder, City Administrator Michelle Wolfe, Assistant City Administrator Nancy Hanzlik, City Engineer Scott Johnson, Management Analyst APPROVAL OF MINUTES Authority Member Gerry Weingartner moved to approve the January 14, 2003 EDA Minutes. Mike Wennen seconded the motion and the Motion carried unanimously. SCHMID & SONS PUBLIC HEARING AND DEVELOPMENT AGREEMENT EDA President Jim Wolcott opened the public hearing. He asked everyone in attendance for comments or objections to the project. Hearing no comments or objections to the project he closed the hearing. Next, Michelle Wolfe explained to the • EDA that the City of Cottage Grove passed a resolution in 1999 to grant business Economic Development Authority- Minutes February 11, 2003 • Page 2 subsidies to businesses that met certain criteria, which are reviewed on a case by case basis. The subsidy involves the use of Tax Increment Financing for project land costs. Authority Member Glen Kleven asked if the employment goals are stated in the resolution. Ryan Schroeder answered that the language in the agreement is not necessary because of the Green Acres legislation, which requires that wages are a higher percent of minimum wage and that a minimal level of jobs must be created. Mr. Schroeder also commented that job creation is the secondary goal and the primary goal is increased tax base. Michelle Wolfe commented that the Development Agreement does have a section on job creation. Mayor Shiely asked if the business had a number of temporary positions and would they use local people. Michelle Wolfe said that they use a temporary service to fill some positions. Ryan Schroeder explained that we can encourage the hiring of local people, but we cannot demand businesses hire local people. Michelle Wolfe also commented that local businesses have found a ready and able working pool in Cottage Grove. Staff needs to update the information on the local labor pool that was compiled in 1999. Mike Wennen made a motion to approve a public subsidy for the Schmid and Sons project. Gerry Weingartner seconded the motion and the motion carried unanimously. Next, the Authority discussed a resolution to approve a development agreement with Schmid and Sons. Ryan Schroeder commented that development agreement follows standard form. This particular agreement allows for Schmid and Sons to bring in fill for ID the building site and the project will share a new pipe for storm water purposes with a future development next door. He also explained that the life of the TIF district will extend to 2009 and Schmid and Sons must own the building for a minimum of that duration. Mayor Shiely made a motion to approve the development agreement and the sale of Industrial Park property to Schmid and Sons. The motion was seconded by Gerry Weingartner and the motion carried unanimously. PROJECT UPDATES Michelle Wolfe told the Authority that the City has received three leads since the last meeting. One is for a 150,000 sf light manufacturing project, a 30,000 sf MEDP project, and a 10,000 sf project. Staff is currently going through the active list to find out which projects are still possibilities. GATEWAY NORTH Mr. Schroeder informed the Authority that the City owns everything except for the Ruvelson and 1501 Partnership properties for the Kohl's project. The City is proceeding with condemnation proceedings with these two properties. The Ruvelson property has gone through the public purpose hearing and the judge ruled in favor of the City. The 1501 Partnership Property will propose a landscape and grading plan for the property at a meeting next week. They will also discuss the land swap and a monument sign at this time. • Economic Development Authority- Minutes • February 11, 2003 Page 3 Staff wanted the EDA's input and direction on the Oakwood Park Commercial parcel. The parcel is 3.82 acres in size and a 30,000 to 35,000 sf project could be constructed on the parcel. A sketch of a multi-tenant building and a restaurant were included in the packet. Mr. Schroeder is trying to put together a purchase agreement with what the City would allow on that site (aesthetics, users, etc.). Glen Kleven asked if the agreement specified that a sit down restaurant be built on the site. Ryan Schroeder said that it was not a part of the current agreement. The EDA members agreed that they would like to have a sit down restaurant built on that site. Jim Wolcott asked if the aesthetics needed to be tightened up. Mr. Schroeder said that any area of the building that is non-glass needs to be brick construction with 85% of the back facade made of brick. There also needs to be some type of feature (clock, fountain, etc.) on the property. Jim Wolcott asked if there would be a view of the park from any of the locations. Mr. Schroeder said the lower part of the site will have a hill behind it, but the rest will have a view of the park. He also mentioned that he has three parties that are interested in the parcel. Mayor Shiely commented that the City owns the property and she is hesitant to give up control of the property to a developer. The strip malls that have been built in the past have not attracted the restaurants that the City wants. Glen Kleven mentioned that the spaces in the new strip malls have filled up quickly and there is not enough space for other projects that are wanted in the community. • Mr. Kleven thinks the City needs to find the right commercial project. Mr. Weingartner said the City should not be in a hurry to develop the parcel due to the poor economy. Mike Wennen mentioned offering a subsidy for certain projects. Ryan Schroeder said the City would need to use general fund money to subsidize a project at this site because it is outside of a TIF district. The City needs to weigh what we want with what size project the lot can sustain. Mayor Shiely commented that the City has a limited amount of locations for a big restaurant or a small box retail user. The City needs to bring in larger restaurants to look at the site. Jim Wolcott asked if the City could set up an RFP process for the site to control what is built on the property. Mr. Schroeder said the City can do this to some extent, but businesses will not put much money into the design. Ryan Schroeder proposed that the City could have a design competition or charette for the parcel with a laundry list of what City leaders want or do not want on the parcel. EDA members will e- mail their ideas for the parcel to Michelle Wolfe to be discussed at future meetings. EDA members do not think the City should be in a hurry to develop the parcel. They think the City should wait for the right project. After the list has been compiled the City will hire an architect to help create a vision for the parcel. GROVE PLAZA FACADE Staff presented the new proposal for the Grove Plaza façade. The snow load will affect how high the façade will be constructed. Glen Kleven thought the proposal looked out of scale with the rest of the structures. Mr. Kleven proposed that they make the small user • space look like one space. Gerry Weingartner agreed with Mr. Kleven because there is • Economic Development Authority- Minutes February 11, 2003 • Page 4 no flow to the roof lines. Mayor Shiely also thought a straight roof line would make the façade look better. The EDA thought the small tenant spaces should look like one or two spaces. Also, some examples of signs were passed around at the meeting and the EDA liked the examples. KOHL'S PROJECT Ryan Schroeder updated the Authority on the Kohl's project. As of date, the project is moving forward within budget. The project is on schedule for March demolition of existing structures. The land needs to be ready and delivered to Kohl's by June 15th Jim Wolcott asked if a plan had been drafted for the US Bank temporary road. Mr. Schroeder said the City will use a portion of the US Bank, Victory Church, and Pet Clinic properties for the road. Burnett Realty will always have access off 80th St. until Hardwood Court is completed. Ryan Schroeder next asked for the EDA to authorize him to deposit money on the Ruvelson and 1501 Partnership Property for quick take proceedings. The City will use the appraised value of $75,500 for the Ruvelson property and will trade property in the value of $27,127 with 1501 Partnership Property. The City Appraiser is updating the appraisal. We will use his updates when they become available. A motion was made by • Gerry Weingartner to authorize Ryan Schroeder to deposit money in the amount of $75,500 for the Ruvelson Property. Mayor Shiely seconded the motion and the motion passed unanimously. A motion was made by Gerry Weingartner to authorize Ryan Schroeder to trade property with 1501 Partnership Properties in the amount of $27,127 subject to a review of the appraisal for both. Mike Wennen seconded the motion and the motion carried unanimously. 2003 BUSINESS BREAKFAST Jim Wolcott commented that it was a nice event with a good speaker, but was poorly attended due possibly to weather and the date. Michelle Wolfe informed the EDA that the City received 78 RSVP's for the event and only 45 people attended. Mr. Wolcott would like the staff to come up with a new plan for next year's breakfast. RIVER OAKS/EDA JOINT VENTURE Employees of businesses in the Industrial Park will be able to take advantage of discounts at River Oaks Golf Course. This will help the golf course target market towards businesses. This could possibly be expanded to all businesses in Cottage Grove. Gerry Weingartner thought it was a good idea, but thought we should consider recognizing older businesses. Mr. Schroeder wanted to start small for the first year and if the promotion is successful, then expand to other businesses. Mr. Weingartner thought the promotion was starting backwards with the newest businesses. Glen Kleven thought the 50% discount for meetings was steep. It gives the perception that they are over- • charging for the rest of the year. Mike Wennen commented that he would like to golf at Economic Development Authority- Minutes • February 11, 2003 Page 5 River Oaks, but tee-times are not always available for businesses because preference is given to patron card holders. Ryan Schroeder said the golf course is looking into the times when tee-times are open. Mayor Shiely felt the golf course should try it for a year and make sure that everyone who is qualified for a patron card has one. Mr. Wolcott thought that a business level patron card would be a good idea. Glen Kleven made a motion to accept the new joint marketing event between River Oaks and the Industrial Park businesses. Mike Wennen seconded the motion and the motion carried unanimously. UPDATE GATEWAY FINANCES Ryan Schroeder updated the EDA on the finances for the Gateway area. The memo included all the non-roadway expenses to date. A portion of the proceeds from the project are not EDA revenue and will not go to projected expenses. Future tax revenues from the project were not included because they will go to the general fund. There is approximately$2 million in general fund revenue projections not shown. Jim Wolcott and Mayor Shiely thought the revenues should be listed. EDA VACANCY • Jim Wolcott encouraged members to come up with names for the vacancy. There are no business or residency requirements for the Authority, but members want someone who is connected to the community. ADJOURN The EDA adjourned at 9:15 a.m. Respectfully submitted, if Scott Johnson Management Analyst City of Cottage Grove • Memo To: Economic Development Authority Members From: Michelle Wolfe,Assistant City Administrator Date: 3/7/2003 Re: Project Updates Attached is the list of active projects. Staff will provide a verbal update regarding all current active leads at the meeting. Since the February meeting we received one new inquiry for a warehouse facility in the Industrial Park. The property sale closing for the SSP Properties/Schmid and Sons Packaging project • took place last week. While it is anticipate that work will begin soon, the groundbreaking ceremony will be scheduled in April. Attachment S E:\Economic Development\E D A\Documents\2003\March Proj Update.doc City of Cottage Grove • Memo To: Economic Development Authority From: Ryan R. Schroeder Date: 03/07/03 Re: Gateway North Redevelopment District Update We are approaching the construction season and as such are preparing for the completion of the final list of items necessary for site work to begin again. Among these several items enclosed as a separate memo is a discussion about the Oakwood Commercial site. Also, as an attachment is a Council memo regarding property acquisition from the 1501 Partnership. Council approved a purchase agreement for this property at their meeting of March 5, 2003. It is intended that Council will delegate its rights and responsibilities under the agreement to the EDA. As such, we are requesting that the EDA also ratify this agreement (per the Council memorandum. We have been promised we will receive a faxed signature from US Bank on the land swap with that entity today, March 7. As you know, we have overcome the hurdle of the public purpose hearing for the Ruvelson property as well (although the commissioners hearing is yet to occur). Upon EDA approval, therefore, of the 1501 agreement and signatures from the parties the EDA has effective title to all of the property necessary to accomplish this redevelopment (subject to actual closing with US Bank and 1501). As we approach the commissioners hearing we continue to negotiate on price with Ruvelson and contemplate a purchase agreement at your meeting. The City Engineer is proceeding toward demolition of the three commercial structures. Included in costs has been hazard investigation, the actual hazard abatement (asbestos) and demolition. The resulting costs are expected to be between $45,000 and $50,000 with the actual demolition conducted by Arcon in the amount of$38,700. Our budget estimate for this work has been $120,000. • •Page 1 Public Works and Engineering are also working with the general contractor on the • construction schedule for the site work/roadway for 2003. We will bring any information on that schedule that becomes available to your meeting. The developers on the Fratalone parcel are continuing to proceed with their planning activities. Our next design/development meeting with that group follows the EDA meeting on the 11 th. At the February meeting, the EDA directed that staff amend the design for the small tenant spaces in the Grove Plaza Shopping Center with the assumption that there would be a big box tenant as part of that design. The owner, EBL&S has approved this design subject to review by their architectural and construction team to ascertain that the design does not have significant construction impediments. We would request that you also officially ratify this design change. EDA Action: 1. Actions regarding the Oakwood Commercial lot (attached memorandum) 2. Ratify the purchase agreement with the 1501 Partnership 3. Approve the purchase agreement for the Ruvelson property (if available) 4. Receive demolition costs and bids and construction schedule for the Gateway • 5. Ratify Grove Plaza redesign • • Page 2 • REQUEST OF CITY COUNCIL ACTION COUNCIL AGENDA MEETING ITEM # DATE 3/5/03 , AA PREPARED BY: Administration Ryan Schroeder ORIGINATING DEPARTMENT STAFF AUTHOR COUNCIL ACTION REQUEST: Consider authorizing the purchase agreement with 1501 Partnership to acquire property needed for the Gateway North Redevelopment Project. STAFF RECOMMENDATION: Authorize the purchase agreement. SUPPORTING DOCUMENTS: ® MEMO/LETTER: Memo from Ryan Schroeder dated 3/3/03. ❑ RESOLUTION: ❑ ORDINANCE: O ENGINEERING RECOMMENDATION: W ❑ LEGAL RECOMMENDATION: ❑ OTHER: ADMINISTRATORS COMMENTS: ‘12.F ity Admi- strator Dat L' COUNCIL ACTION TAKEN: D APPROVED ❑ DENIED 11 OTHER G:\City Council\Council Action Forms12003\1501 Partnership Agreement-5 Mar 03.doc • City bfoitage rove) • Memo To: Mayor and City Council From: Ryan R. Schroeder Date: 03/03/03 Re: 1501 Partnership Purchase Agreement As Council is aware, there have been a number of properties assembled in order to complete the Gateway North redevelopment project. Of all of those parcels, we have been headed toward an eminent domain action on the final two. Those are the 1501 Property (Bumet Realty building) and the Ruvelson property (the 10,000 square foot +/- property adjacent to the office condominium parcel. We have achieved agreement at this time on the 1501 property acquisition,thus avoiding a court date. • This particular purchase is relatively small but complicated in its' myriad pieces. These pieces are: 1. Acquisition of title along the west side of the property for an expansion of the roadway to be renamed Hardwood Avenue. That parcel is approximately 20,668 square feet in size. 2. Toward that acquisition we are trading a 17,394 square feet remnant to 1501 on the north side of their property; land that will be south of the new Hardwood Court roadway. 3. A small portion of our acquisition will end up being west of the new Hardwood Avenue. That land-figures into the land swap with US Bank. 4. There is significant grading on this portion of the Hardwood/Gateway project. The 1501 pad is at an elevation of about 850'. The highpoint of the future Hardwood Court is currently at about 880', which will be graded down to between 824' at Hardwood Avenue to 852' at the eastern end of the site on Hardwood Court. Therefore, we need a construction grading easement on the entire west and north sides of the 1501 property. 5. Due to access turning movement and slope concerns regarding the existing drive • entrance to the site that entrance is being eliminated. We are relocating that •Page 1 • entrance onto Hardwood Court about 300 feet east of Hardwood Avenue (about 550 feet north and east of the current drive location). 6. Almost all of the existing yard landscaping will need to be relocated and/or replaced as a responsibility of ours under the Hardwood construction contract. 7. The existing pylon sign will also need to be replaced. 1501 has agreed to allow for the City proposed monument sign to serve that purpose. Additionally, we will be responsible for a smaller directional sign at the Hardwood Avenue and Court intersection and a new entry sign at their new drive location. 8. That new drive location is where the refuse dumpster is presently located. Thus, we will need to demolish that structure and replace it. The replacement structure will be 1.5 feet lower than the current structure and will not be roofed. In exchange for that consideration, it is growing in square foot from 80 square feet to 256 square feet. 9. To assure 1501 that their site will continue to function we agreed to contribute toward an architectural review of the site. Our contribution toward that work is $8,000. 10. In addition to the above changes in the site, 1501 has asked that the City improve their parking facility by 40 stalls. This will require removal of existing curbing and . trees on the east side of the site with new installation of curbing and bituminous. ) In consideration for that improvement, 1501 is not requiring compensation for the land acquisition or any damage that results from moving of their access or the temporary construction easement. 11. In total, including new landscaping, new signage (including our monument sign), removal of existing structures and parking and replacement thereof our estimate for these improvements is $94,000. Our appraisal for the purchase including an assumption that we would mitigate for damages to the property is in the amount of $67,600. Within the $94,000 number is the monument sign. Therefore, we believe this purchase agreement is a fair trade between the parties. 12.The purchase agreement is between 1501 and the City due to the transactions related to roadway. The EDA will, however, become the responsible party to complete the terms of the project(site work etc.). Options: The Council needs to acquire this property in order to complete Hardwood Avenue. Therefore, options do not exist in that regard (absent not completing the project. This proposal includes conducting site improvements instead of a cash transaction. An alternative would be to not conduct those improvements and to attempt to negotiate, or enter eminent domain to complete the acquisition. We believe the site improvements is the better choice as A) it guarantees enhancement I Page 2 of the aesthetics of the site, and B) the seller is more interested in mitigation • measures than a cash payment leading to the conclusion that this proposal is as cost effective as the alternative. Council Action: By motion authorize the purchase agreement with 1501 Partnership. • • • •Page 3 • #: ----__________ ---__________________________ TO ` 4 NARpWoOD it, Coukr _ t a NEW BITtPIMOUS DRIVE WAT W/CONCRETE CURes1A b'-2'HKaH_ TO MATCH Ex15TMG ` \\ NEW MONP1£NT SIGN �� -� \ -DESIGN TO BE SRIILGR TO J —_ \ NEKr�ORS SIC�IAGE 4C \ I ♦ T, �" ______ !L . ._ , ._-.1° f I f GRADING I�a� „ 111 \ EXISTMG /�+' �t�, \ ExPAN510N11¢Ea thmEXISTaY,STDOP, WALLS I�r Ex15TR,C, RETAINING UAL , 9 \• \ Q ♦ �f EXISTING--4- RETA"G-, I TO BE REMOVED 5 °' \ \ I� \ `\ ;RETAINING iiiiij ' WALL - ill � � \ ~` \ \ EXISTING BUILDING I 21Y-01Jo'-o' y`/ \ Ext5TMG--- •' - \ ��) 2m' ' � �\ RETaMIr�WALL '�� . TO BE REMoyw'\ I Ex*T `• 4L�.- vim' .:r i \ \ \ i"-----„.... \ I \ EklSTAJG • b A • \ \ \ 7 \ \. 1 � iIGNT • \ T Lx STinG l ExinTREsr o �A� DRIvEwAT '' e �_ C / 'DBE r�!10i! \ PEW BITu'. :. - A 7 /1k i WI C.C•C1 cTE " / .®T �1 E X5104 ..2..."4/ G EXIST HZ ' -7---4, _4S).. • �/ \'J • / •� Int LKoNT TO BE \ -_._ 1 e'-e- R�10VED 'i'% / i ' — NEW .■ i RET4MMG'IUALL ��►, ExiS1RY,.� 1 EXISTMG rat SIGN TO BE .. x$T 1�-TRENCH DRAM REMOVED /, •L ✓� 43:4 • ..,,r i- "1 - \ _`� �� £ ISG LIG T I / • I ` LKatHT ' `.. ` ExtsTR,G RETAINING WALLS TO REMAM I a _ _ __ — — — —t — • 15'-0'NKaN �. "- __� —--—----- -- -- —.. ` NEW MONUMENT SIGN -DESIGN TO BE SRIILAR TO PEIGNBORS SIGNAGE . . -._. . ....— _ . Ne 4AA Agenda Item 11/ Requested Change in motion: This agenda item concerns a proposed purchase agreement with the 1501 Partnership for a land exchange and construction services related to the Gateway Redevelopment District and construction of Hardwood Avenue and Hardwood Court. There have been requests for amendment of the purchase agreement from the 1501 Partnership. At this point none of those requests constitute a substantial change in the purchase agreement. However, given that these are last minute changes we would request that the motion be amended to be: Authorization of the purchase agreement with the 1501 Partnership upon the review and concurrence of the City Attorney. • i Q0 Ci. ' 2iII1 Il QI CL 1I cL • ,, il 1 % ill1 ® - -, -\,, 0 - -411ai IIIIIIIIpi _ ill 11 N II 111 4 II -' N m I IIIIIIQI�I ..ice _ 1 I� IIIIII11111ll :— ® w ■■ I t ■■ Ni4 QS M j I l 11111 . 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Schroeder CC: Mayor and City Council Date: 03/05/03 Re: Oakwood Commercial Site Development City staff is continuing to refine the development potential of the 167,531 square foot Oakwood Commercial site. As noted at your last meeting this parcel is controlled by the City Council. We are, however, hoping to continue to work with the EDA on site planning in preparation for future review by the Council. At the February EDA meeting the Board authorized site design services for the parcel. Enclosed is a proposal from KKE Architects in the amount of, perhaps, $4,000. We would appreciate your feedback on the scope of services, which simply is site design with or without colored renderings as a second phase. Also enclosed is a draft purchase agreement for the site. It is configured assuming site design of the entire parcel but with development in two phases. While the entire document contains important provisions of special note regarding aesthetics and development style are: 3C regarding the Anchor Tenant, 3D regarding Development Concept approval, 4C(3) regarding use exclusions, 9C regarding a master plan of the parcel and Exhibit C which is the Architectural Guidelines. From the last discussion there may be certain of these sections the Board and Council would like expanded or more specifically defined. We have also enclosed an initial in-house sketch of our development concept. We have also included an initial site draft from a third party. This particular layout assumes a slightly smaller parcel size than actually exists (by about 14,180 square feet, which when added could allow for an additional 47 parking spaces, more green space...which staff would require or theoretically about 2800 square feet of more building space if neither green space, nor parking were expanded). This layout as presented includes 34,150 square feet of building and 195 parking stalls. We believe this layout is too tight and we have stated that access would be off Hardwood Court •Page 1 and the new road to Oakwood Park, not off Hardwood Avenue. Therefore, this is not • a site plan we would recommend for approval. However, it does provide an opportunity to show the development capacity of the site at perhaps up to 35,000 square feet (in February we had suggested the site could accommodate a restaurant like Applebee's (5,000 square feet) and perhaps 20,000 to 25,000 square feet additional retail space. The enclosed layout suggests perhaps 5,000 to 10,000 square feet more retail, but as noted above we believe the site is a little tight and the • style of restaurant and their parking demand would certainly impact that...for instance we have been told that a Champs Restaurant can demand up to 300 parking spaces). EDA Action: 1. Reaffirm or amend the February authorization for an architectural services contract with KKE for the Oakwood Commercial site 2. Provide direction regarding the Oakwood Commercial purchase agreement template. 3. Provide observations regarding site design (to be forwarded to KKE for their site design project). S • •Page 2 t KKE Architects, Inc. 300 first avenue north minneapolis, mn 55401 612/339-4200 • 612/342-9267 fax www.kke.com minneapolis newport beach February 27, 2003 TM Mr. Ryan Schroeder K K4City of Cottage Grove architects 7516 - 80th Street South Cottage Grove, MN 55015-3195 Subject: Cottage Grove Master Plan KKE 0308.9356.01 Dear Ryan: • It is a pleasure to present this proposal for architectural services for your site in Cottage Grove. I am basing this estimate on one initial meeting with you and your staff followed by a conceptual site plan. The plan would be color rendered for marketing purposes. Based on this scope, we estimate our fees to be Two Thousand Dollars ($2,000.00) plus reimbursable expenses. If a perspective sketch is necessary, we can provide that for an additional $2,000.00. Possible photos from our portfolio could suffice to communicate the quality level of the architecture. We propose to bill this on an hourly basis plus reimbursable expenses. Services beyond this scope would be billed as additional services. Thank you for this opportunity. We look forward to being a part of your team. Sincerely, ACCEPTED BY: KKE ARCHITECTS, INC. DATED: Kathy Anderson, AIA Principal dlj Enclosures: Appendix A- Prevailing Hourly Rates Appendix B - Prevailing Reimbursable Rates Appendix C - General Conditions Copy to: Project File expanding the vision- KKE Architects, Inc. 300 first avenue north minneapolis, mn 55401 612/339-4200 612/342-9267 fax • www.kke.com minneapolis newport beach .M APPENDIX A K K PREVAILING HOURLY RATES architects Position Rate Per Hour Architects and Technical Staff $40.00 - 100.00 Designer 60.00 - 85.00 Project Architect 90.00 Project Manager/Senior Project Architect 100.00 Specification Writer 85.00- 110.00 Associate 90.00- 100.00 Senior Associate 110.00— 150.00 Principal 125.00 - 175.00 Senior Planner $150.00 Interior Designer 55.00 - 125.00 Inspections Division 110.00 Effective September 4, 2002 Subject to Periodic Adjustment • expanding the visions' KKE Architects, Inc. 300 first avenue north minneapolis, mn 55401 612/339-4200 612/342-9267 fax • www.kke.com • minneapolis newport beach dallas K K1.TM APPENDIX B PREVAILING REIMBURSABLE EXPENSES architects Description Cost Blueprints* $.35 - 1.55 Drafting Mylars* 1.50- 8.00 Foam Core Boards* 4.00- 14.00 Photocopy .20 Color Copies (81/2 x 11) $2.00/Copy Plus Set Up Color Copies (11 x 17) $3.00/Copy Plus Set Up Fax .50/page Photocopy Stickyback 1.50 Technical Typist 40.00/hour Photo Ready Publishing $85/81/2" x 11" Face Specification Diskettes 10.00 Mileage .36/mile Parking As billed to KKE Other Transportation As billed to KKE Meals/Lodging As billed to KKE Long-Distance Telephone As billed to KKE Postage/Delivery Charges As billed to KKE Model, Sample, Rendering As billed to KKE Materials/Supplies As billed to KKE Codes/Ordinances As billed to KKE Legal As billed to KKE ConsultantsCost pluso 25/o CAD Equipment Usage 20.00/hour Color Plotter $10/SF Electrostatic Plotter E Size Usage 15.00/sheet Sales Tax, If Applicable As billed to KKE Project reimbursable costs will be charged at cost plus 10%. *Depending on size Effective August 12, 2002 Subject to Periodic Adjustment • expanding the vision- APPENDIX C GENERAL CONDITIONS KKE ARCHITECTS,INC. Section 1: Services and Compensation • 1.1 KKE Architects,Inc.,a Minnesota business corporation(hereinafter called KKE),will perform services as defined in the Agreement,and CLIENT will pay for those services as agreed. KKE will provide additional services as requested or which are necessary,and CLIENT will pay for those services at the rates shown in Appendi and B. CLIENT will pay the balance stated on the invoice unless CLIENT notifies KKE in writing of the particular item that is alleged to be incorrect within fifteen(1 days from the invoice date. CLIENT will pay any tax on professional services now in force or imposed in the future. Section 2: Responsibilities 2.1 KKE will not be responsible for the failure of others to perform in accordance with the specifications or contract documents,and KKE's services shall in no way relieve others of their responsibilities. 2.2 For work not on KKE premises,KKE will not be responsible for superintending,supervising,or directing work of Contractors or others;or for job or site safety,those being the sole responsibility of others. 2.3 CLIENT will make available to KKE all known information regarding existing and proposed conditions of the site and undertaking. Section 3: Reports/Drawings 3.1 Drawings,reports,notes,calculations,and other documents,as instruments of service,shall remain KKE's property. If CLIENT does not pay for KKE's services as agreed,CLIENT agrees that all reports and other work will be returned to KKE upon demand,and that reports/drawings and other work will not be used by CLIENT for any purpose whatsoever. Section 4: Payment,Interest,and Breach 4.1 CLIENT agrees to pay invoices on receipt,and to pay interest on unpaid balances beginning thirty(30)days after invoice date,at the lower of 1.5 percent per month or the maximum rate allowed by law. CLIENT acknowledges that KKE's billing rates and charges are subject to periodic adjustment,and CLIENT agrees to pay for services at the rates and charges in effect at the time invoices are mailed. 4.2 CLIENT'S obligation to pay for the work contracted is in no way dependent upon CLIENT'S ability to obtain financing,zoning,approval of governmental or regulatory agencies,final adjudication of a lawsuit in which KKE is not involved,or upon CLIENT'S successful completion of the project. To preserve lien rights in accordance with the mechanic's lien laws in Minnesota,KKE will file liens in the county where the project site is located within one hundred twenty(120)days after the last item of service labor has been furnished. If KKE brings a lawsuit against CLIENT or forecloses a lien on CLIENT'S property to collect its fees,then all its collection expenses, including attorneys'fees,will be paid by CLIENT. Section 5: Standard of Care 5.1 In performing its services,KKE will use that degree of care and skill ordinarily exercised under similar conditions by reputable members of its profession practicing in the same locality. Section 6: Disputes • 6.1 CLIENT agrees to resolve disputes using informal discussion and mediation prior to arbitration or litigation. 6.2 If CLIENT brings a lawsuit against KKE which is dismissed or as to which a verdict is rendered for KKE,in whole or in part,CLIENT will pay KKE its cost of defense, including but not limited to,attorneys'and expert witness fees. Section 7: Limitation of Liability 7.1 CLIENT agrees to hold harmless,indemnify,and defend KKE from and against any and all claims,losses,damages,liability,and cost,including,but not limited to,cost of defense,arising out of this agreement,whether insured or not,excepting only such liability as may arise out of the sole negligence of KKE in the performance of services under this Agreement. 7.2 In the event KKE is held liable for damages,the total cumulative liability of KKE,its affiliates,and its respective directors,officers,employees,agents,and Subcontractors shall not exceed 100 percent of the gross compensation received by KKE as its fee under this agreement,or$50,000,whichever is greater. 7.3 In the event CLIENT does not wish to limit KKE's liability,KKE agrees to waive the limitation provided for in Section 7.2 upon written notice from CLIENT received within five(5)days after the date of this Agreement is executed,and CLIENT agrees to pay additional consideration equivalent to ten(10)percent of the total fees,such consideration to be called"Waiver of Limitation of Liability Charge". This charge will in no way be construed as being a charge for insurance of any type but will be increased consideration for the greater risk involved in performing work for which there is not limitation of liability. 7.4 Betterment.If,due to the Design Professional's error,any required item or component of the project is omitted from the Design Professional's construction documents,the Design Professional shall not be responsible or paying the :ost to add such item or component to the extent that such item or component would have been otherwise necessary to the project or otherwise adds value or betterment to the project. In no event will the Design Professional be responsible for any cost or expense that provides betterment,upgrade or enhancement of the project. 7.5 Contingency Fund. The Owner and the Architect acknowledge that changes may be required because of possible omissions,ambiguities or inconsistencies in the plans and specifications and,therefore,that the costs of the project may exceed the construction contract sum. The Owner agrees to set aside a reserve in the amount of Five Percent(5%)of the actual project construction costs as a contingency reserve to be used,as required,to pay for any such increased project costs. The Owner further agrees to make no claim by way of direct or third-party action against the Architect or his or her sub-consultants with respect to any payments within the limit of the contingency reserve made to the construction contractors because of such changes or because of any claims made by the construction contractors relating to such changes. Section 8: Termination 8.1 This Agreement may be terminated by either party upon at least seven(7)days'written notice in the event of substantial failure by the other party to perform in accordant with the terms hereof through no fault of the terminating party. Such termination shall not be effective if that substantial failure has been remedied before expiration of period specified in the written notice. If this Agreement is terminated,KKE shall be paid for services performed to the termination notice. Section 9: Entire Agreement This Agreement,together with the appendices attached to it,is the entire agreement between KKE and CLIENT,and it supersedes all prior written or oral agreements. This Agreement is governed by the laws of the State of Minnesota. to. PURCHASE AGREEMENT AND AGREEMENT FOR OPTION This Purchase Agreement(the "Agreement") is made this day of , 2003 by and between CITY OF COTTAGE GROVE, a Minnesota municipal corporation (the "Seller") and a corporation (the "Buyer"). 1. SUBJECT PROPERTY AND OPTION PROPERTY. The Seller is the fee owner of certain real estate (the "Property") located in Washington County, Cottage Grove, Minnesota, which is depicted on the attached Exhibit B. The Property consists of approximately 2.2 acres that is a part of land to be platted as Lot 2, Block 3, GATEWAY NORTH FIRST ADDITION, and the legal description of the Property will be determined by survey as provided in paragraph 7 of this Agreement. The Seller also owns additional real estate adjacent to the Property, consisting of approximately 1.646 acres (the"Option Property"), which is the remainder of the land to be platted as Lot 2,Block 3, GATEWAY NORTH FIRST ADDITION. 2. OFFER/ACCEPTANCE. In consideration of the mutual agreements herein contained, Buyer offers and agrees to purchase and Seller agrees to sell and convey the Property and all improvements thereon,together with all appurtenances,pursuant to the terms of this Agreement. In addition, Buyer and Seller agree to execute an Option Agreement for the Option Property as provided in this Agreement. 3. CONTINGENCIES. This Agreement is subject to contingencies as identified in subparagraphs A through D below. The provisions of subparagraph A may not be waived. The provisions of subparagraph B are for the mutual benefit of Buyer and Seller and may not be waived except by the parties' mutual written consent. The provisions of the first sentence in subparagraph C are for the sole benefit of the Buyer and may be waived only in writing by Buyer. The provisions of the final sentence in subparagraph C and of subparagraph D are for the sole benefit of the Seller and may be waived only in writing by Seller. If any of the contingencies are not satisfied or waived, this Agreement shall be null and void and Buyer shall be entitled to return of Buyer's earnest money. A. SELLER ACCEPTANCE. This Agreement shall be presented to the Seller's city council within 30 days of the date it is submitted to Seller, fully executed by Buyer. If the Seller's city council does not approve this Agreement within thirty (30) days of the date of this Agreement, this Agreement shall be deemed automatically null and void and of no further force or effect and Seller and Buyer shall immediately execute a written acknowledgement that this Agreement has been terminated in its entirety. B. GOVERNMENT APPROVALS. This Agreement is contingent upon Seller obtaining the subdivision approval contemplated at paragraph 7 of this Agreement and upon Buyer obtaining necessary governmental approvals for the construction of Ma shopping center of at least square feet. CAH-225312v4 1 CT160-91 C. ANCHOR TENANT. The Buyer's obligation to close is contingent upon Buyer obtaining a lease acceptable to Buyer for the purpose of securing an anchor tenant for the shopping center. Buyer agrees to exercise best efforts to obtain an anchor tenant. This Agreement is also contingent on Buyer's ability to obtain a lease for a restaurant tenant offering intoxicating liquor service and sit-down dining and covering at least square feet in gross floor area or square feet in interior seating area. D. SELLER APPROVAL OF DEVELOPMENT CONCEPT. This Agreement is contingent upon the Seller's approval of the final design plan for the Property. The Seller requires that the Property be developed with a high quality commercial development that is acceptable to Seller. Buyer will provide Seller with building renderings identifying the materials to be used in the construction of the shopping center within sixty (60) days following the date that the Purchase Agreement is executed by both parties for the purpose of obtaining Seller's approval of the development, and said approval shall not be unreasonably withheld by Seller. At a minimum, and without limiting the Seller's discretion to approve the final design plan, such a development must meet the following criteria: (i) the exterior treatments on all structures must use materials and colors that are substantially similar to the Walgreen's/Gateway Center/TCF development located at East Point Douglas Road and 80th Street; (ii) at least 80 percent of the non-glass exterior building material on the front and side façades must be brick or material deemed superior by Seller, and on the rear façade up to 15 percent of the rear façade may 4110 be rock face block provided it is located along the base of the building, and the remaining 85 percent of the rear façade must be brick or material deemed superior by Seller; (iii) any development on the Property must be consistent with the Gateway architectural controls policy, a copy of which is attached as Exhibit C (but the enumerated criteria in this paragraph supersede any inconsistent provisions in Exhibit C); (iv) landscaping for the development must exceed the minimum requirements under City ordinances in quantity of plantings by at least 20 percent and at least 50 percent of the plant materials must exceed minimum required plant sizes; (v) the site design must positively impact the development opportunity for the adjacent Option Property and must provide for cross-access and cross-parking easements over the Property and the Option Property; (vi) exterior lighting must be consistent with the Hardwood Corridor street lighting or the lighting along the sidewalk at Home Depot and Grove Plaza; (vii) the development must have ground monument signage substantially similar to the Gateway Center or TCF monument signage at East Point Douglas Road and 80th Street; (viii) the Buyer must agree to pay one third of the cost of any off-premises monument signage that the Seller constructs at Hardwood Avenue and 80th Street, not to exceed the sum of Ten Thousand and no/100ths Dollars ($10,000.00); (ix) wall signs on structures must be located within designated sign bands delineated by the architecture of the structure and cannot exceed 2.5 feet in height; (x) the development must include an architectural embellishment or ornamentation that is either part of the principal structure or a freestanding architectural feature which • highlights the overall site development (e.g., clock tower, water feature, fountain, CAH-225312v4 2 CT 160-91 etc.). 4. PURCHASE PRICE AND TERMS: A. PURCHASE PRICE. The purchase price (the "Purchase Price") for the Property shall be determined based upon the survey to be provided under paragraph 7 of this Agreement. Buyer agrees to pay per square foot for the first square feet of land area in the Property and ) per square foot for each square foot or portion thereof in excess of square feet. B. TERMS. 1. EARNEST MONEY. Within two business days after Seller's acceptance as provided at paragraph 3.A. above, Buyer agrees to pay to Seller contemporaneous the amount of Twenty Thousand Dollars ($20,000.00). Seller may deposit the amount in an interest-bearing account pending Closing. Seller is entitled to all interest that accrues on the $20,000.00, and said interest shall not be credited against the Purchase Price, except that Seller shall be required to return accrued interest to Buyer if this Purchase Agreement is terminated due to any of the following: non-marketability of title to the Property; Seller's default; or inability of Buyer to obtain the necessary governmental approvals required to construct a shopping center of at least square feet. • 2. BALANCE DUE. At Closing, Buyer shall paySeller anyremaining Balance Due under the terms of this Agreement by certified check or other immediately available funds. C. DOCUMENTS TO BE DELIVERED AT CLOSING. At Closing Seller shall deliver to Buyer: 1. Warranty Deed conveying good, marketable and insurable title to the Property to the Buyer free and clear of all liens and encumbrances except the following items (allowable encumbrances): a) Building and zoning laws, ordinances, state and federal statutes or other governmental regulations; b) Easements and restrictions of record which have been approved by Buyer in writing; c) Real estate taxes for which the Buyer is responsible under paragraph 5; d) Reservation of any minerals or mineral rights in the State of • Minnesota; CAH-225312v4 3 CTI60-91 e) Covenant by Buyer (i) that within one year of the date of the deed, • Buyer will construct improvements on the Property consistent with the final design plan approved by the Seller under paragraph 4.D of this Agreement, provided that Buyer is able to obtain approval from all the necessary government authorities and (ii) granting to Seller a reverter that includes the right to re-enter and take possession of and title to the Property if Buyer fails to construct the improvements within the one-year period as required. f) Cross-easement and cross-parking easements in favor of the Option Property which has been approved in writing by Buyer and Seller prior to the date of closing. g) Declaration of covenants and restrictions as provided at 4.C.3. below. 2. Standard form Affidavit of Seller. 3. Declaration of covenants and restrictions that prohibits the use of the Property for a gasoline station or automotive-related use, including but not limited to automobile service or repair or retail sales of auto parts. Seller at its option may prepare and record the declaration of covenants and • restrictions prior to Closing. 4. Option Agreement as provided at paragraph 14 of this Agreement. In lieu of recording the Option Agreement, the parties may elect to record a Memorandum of Option Agreement. 5. Such other documents as may be reasonably required by Buyer's title examiner or title insurance company. 5. REAL ESTATE TAXES AND SPECIAL ASSESSMENTS. A. The real estate taxes due and payable in the year of closing shall be prorated between the parties as of the Closing Date. B. Seller shall pay all special assessments levied against the Property prior to or on the Closing Date. C. Seller shall provide for payment of all special assessments for which an improvement has been ordered but assessments have not yet been levied as of the Closing Date, by escrowing an amount equal to two times the estimated amount of special assessments. D. Buyer shall be responsible to pay taxes and special assessments that are levied or • CAH-225312v4 4 CT160-91 become pending after Closing. 6. TITLE AND REMEDIES. Within thirty (30) days after Buyer's acceptance of the survey required by paragraph 7 of this Agreement, Seller shall deliver to Buyer a commitment for an owner's policy of title insurance, certified to a date that is on or after the date of this Agreement and including proper searches covering bankruptcies, state and federal tax liens, judgments and special assessments. The title commitment must commit to insure that, at closing, Buyer will have good, marketable, and insurable title of record to the Property, free and clear of all liens, encumbrances, leases, claims and charges, all material easements, rights of way, covenants conditions, and restrictions and any other matters affecting title, except as approved by Buyer in writing. The title commitment must commit to insure that the property does not violate any zoning or other use restrictions; and that the property is properly zoned for Buyer's use, which is to develop and construct a shopping center. The title commitment must either waive or commit to insure against the following standard exceptions: facts which would be disclosed by an ALTA/ACM Land Title Survey of the Property,rights and claims of any parties in possession, and mechanic's contractor's and materialman's liens and lien claims. The title commitment shall be certified to the legal description of the Property as established by the survey required at paragraph 7 of this Agreement. Buyer shall be allowed ten (10) days after receipt of the commitment to review the same and provide Seller with Buyer's written objections. Objections not made in writing will be deemed waived. If the title to the Property or any part thereof, is found to be unmarketable, Seller agrees S to cure such defects and render the title marketable, by action to quiet title if necessary, within six (6) months after receipt of Buyer's written objections. Pending correction of title, the payments required by this Agreement shall be postponed, but upon the correction of title and within fifteen (15) days after written notice to Buyer, the parties shall perform this Agreement according to its terms. It is further understood and agreed that if the title to the Property or any part thereof is found to be unmarketable and has not been corrected within the six (6) month period, then this Agreement shall be null and void and all monies paid under this Agreement from Buyer to Seller, including accrued interest on earnest money, shall be refunded and neither Buyer nor Seller shall be liable for damages hereunder. If the title to the Property is found marketable or will be made so within the required time period, and Buyer defaults in any of the covenants or agreements herein provided and continues in default for a period of fifteen (15) days, then and in that case, Seller may at its option, deem this Agreement terminated by giving written notice thereof to Buyer, and on such termination, all the payments made upon this Agreement, including accrued interest on earnest money, shall be retained by Seller as liquidated damages, time being of the essence hereof. This Agreement may be enforced by either party by specific performance; provided that: (i) the Agreement has not been terminated; (ii) any action for specific performance must be commenced within six (6) months after the right of action arises; and (iii) nothing in this Agreement shall obligate the Seller to exercise its power of eminent domain for the purpose of making title marketable, but Seller at its option may do so. 7. SUBDIVISION APPROVAL AND SURVEY. The transaction contemplated by this Agreement requires the subdivision of land. The Seller has already initiated an application for • approval of the proposed plat of GATEWAY NORTH FIRST ADDITION. The Seller will obtain subdivision approval or waiver of subdivision requirements for the further subdivision of CA1-1-225312v4 5 CT160-91