4C, Earnest Money Refund to Royal Oaks Realty

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~ ~HILLS MEMORANDUM DATE: February 19, 2008 TO: Mayor and City Council Jim Willis, Interim City Administrator ~ Royal Oaks Realty Earnest Money Refund FROM: SUBJECT: ACTION REQUESTED. I recommend that the City refund the $40,000 earnest money deposit made by Royal Oaks Realty in June 2006 relating to the proposed purchase and development of the former City HalllPublic Works site on Highway 96. BACKGROUND. Royal Oaks Realty entered into a purchase agreement with the City on June 26, 2006 for the former City HallIPub1ic Works site on Highway 96. The City approved a condominium style office project with a number of conditions on October 6, 2006. The developer, prior to the closing date, informed the City that they were not preceding with the purchase because of some of the development conditions imposed by the City. Mr. Marcel Eibensteiner, President of Royal Oaks Realty, corresponded with the Mayor in a letter dated January 3, 2008, requesting refund of the earnest money. The Mayor referred the matter to your then acting City Administrators, Sue Iverson and Greg Hoag. They, in turn, requested the City Attorney to review the request. He has done so, and his letter dated January 30, 2008 is attached for Council members only as it considered confidential - attorney client privileged. I have been in contact with Mr. Eibensteiner regarding his request and believe the interests of all parties would be served by the City refunding the earnest money in exchange for a cancellation of the purchase agreement and a mutual release of claims as provided in the attached document. Mr. Eibensteiner also agrees with this solution. The City Attorney as reviewed and approve the attached document.