HomeMy WebLinkAbout07D First Amendment to Development Agreement and Subordination Agreement - 80th & Hemingway, LLC (Former City Hall Site)
TO: Honorable Mayor and City Council
Jennifer Levitt, City Administrator
FROM: Christine Costello, Economic Development Director
DATE: May 27, 2020
RE: First Amendment to Contract for Private Development and Subordination
Agreement between the Cottage Grove Economic Development Authority and
80th & Hemingway LLC.
Background
On March 10, 2020 the Economic Development Authority (EDA) approved (vote 4 to 0) and the
City Council ratified on March 18, 2020 the Contract for Private Development (Development
Agreement) and sale of 7516 80th Street to 80th & Hemingway LLC, (Developer), for development
of a four-story 120-unit market rate apartment building.
The market-rate apartment building will include a mix of units, which will include 31 studio units,
47 one-bedroom units, 38 two-bedroom units, and four three-bedroom units. The units will include
a deck or patio and in-unit washer and dryer. The development will also include other amenities
being sought in today’s market rate apartment search a resident community room, outdoor
community deck, resident storage, mail and package room, dog run, dog wash, and bike storage.
Many of these amenities are currently unavailable in existing apartment buildings in the
community.
Illustrative Site Design
Honorable Mayor, City Council, and Jennifer Levitt
First Amendment DA and Subordination Agreement_80th Hemingway
May 27, 2020
Page 2 of 2
Discussion
The approval of the project by the EDA and City Council happened in the very early stages of the
COVID-19 pandemic and as the pandemic has continued the Developer saw approximately a 3-
4 week delay for the architecture and design on the apartment building. In the Development
Agreement approved in March 2020, the closing on the former city hall property was to take place
on June 4th but the Developer has requested an extension to July 31, 2020 due to the impacts
that COVID-19 pandemic has taken initially on development as everyone adjusted to virtual work
and changes in the economy. The Developer is committed to the development and has continued
to move forward with the project. On May 21st, the Developer submitted to the Building Division
the foundation and footing permit, which is under review. The Developer has also submitted with
the initial Development Agreement earnest money ($20,000) for the project.
Additionally as part of the original Development Agreement the EDA and City agreed that their
interests in the development site would be secondary to the lien of the mortgage held by the
lender, in this case Bridgewater Bank who is providing the Developer the financing for
development. The execution of a subordination agreement is common practice for development
when the EDA and City are not providing financing of the project. The Subordination Agreement
is also recorded at Washington County as part of the development process. The EDA will consider
the first amendment to the Development Agreement and approval of the Subordination Agreement
at a Special EDA meeting on June 2, 2020.
Recommendation
• Authorize the First Amendment to the Contract for Private Development between the
Cottage Grove Economic Development Authority and 80th & Hemingway LLC.
• Authorize Subordination Agreement between the Cottage Grove Economic Development
Authority, City of Cottage Grove, and Bridgewater Bank.
Attachments
1. Resolution
2. First Amendment for Contract for Private Development
3. Contract for Private Development
4. Subordination Agreement