HomeMy WebLinkAbout02-12-07 Item 7B, Preliminary Development AGreement for Funding and Guaranty for TCAAP
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Request for Council Action
7B
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Prepared By:
Dept.:
council Mtg. Date:
Final Action Needed By:
Karen Barton
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Community Development
02/12/07 ~
Agenda Item:
Review of preliminary Development Agreement and Amendment toihe~ Funding and
Guaranty Agreement between the City and CRR,LLC
Budgeted Amount: NfA
Actual Amount: NfA
Funding Source: NI A
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and final approval by legal counsel.
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and final approval by legal counsel.
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X Memo/Letter: 02108/07
Resolution No.:
Ordinance No.:
Engineering Recommendation:
Attomey Recommendation:
X Other:
Memo from Steve Bubul 2-7-07; Final Draft Preliminary Development Agreement; first Amendment to
Funding and Guaranty Agreement; Original Funding and Guaranty Agreement
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. .ry and reimbursement of oilY expenditures relating to the purchase and redevelopment of the TCMP property.
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EN HILLS
MEMORANDUM
DATE:
February 8, 2007
Agenda Item 7B
TO: Mayor and City Council
Michelle Wolfe, City Administrator
FROM: Karen Barton, Community Development Director
SUBJECT: Preliminary Development Agreement Review
Attached is the final draft to the Preliminary Development Agreement (PDA) between the City
and CRR, LLC for the purchase and redevelopment of the TCAAP property, as well as a memo
from Mr. Steve Bubul of Kennedy and Graven Chartered summarizing the PDA, and a proposed
Amendment to the Funding and Guaranty agreement between the City and CRR, LLC. Mr.
Bubul will be present to review the documents with Council at the meeting Monday night.
City of Arden Hills
City Council Meeting
February fl, 2007
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counciI02-08-07.doc
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470 US Bank Plaza
200 South Sixth Street
Minneapolis MN 55402
&
(612) 337-9300 telephone
(612) 337-9310 fax
http://www.kennedy-graven.com
CHARTERED
MEMORANDUM
TO:
Mayor Harpstead and City Council members
FROM:
Stephen Bubul
DATE:
February 7, 2007
RE:
Preliminary Development Agreement
Following is a general summary of draft Preliminary Development Agreement ("PDA'.)
between the City and CRR, LLC (the "Developer"). As you review the PDA, please note
that it includes references to the Offer to Purchase between the City and GSA (the
"OTP"), To the extent you have questions about specific terms of the OTP, you may
want to bring those to City staff before the Council meeting.
Section I: Describes the general purpose of the agreement, which is to layout the
parties' respective roles during negotiation of a definitive Master Development
Agreement ("MDA").
Section 2: Describes the general conditions that must be met in order to reach
agreement on the MDA.
Section 3: Describes the Developer's obligations during the term of the PDA. The
key milestones are:
. Submit site plans and development schedules within 90 days after request
from the City as part of the AUAR process.
. Submit project pro forma within 30 days after City and GSA reach agreement
on remediation credit under the OTP
.
. Submit market feasibility report within 30 days after draft AUAR IS
completed,
Section 4: Describes City's obligations during the tenn of the PDA. Generally, the
City agrees to cooperate with Developer, evaluate Developer's submissions, evaluate
public financing tools, and similar tasks,
Section 5: Describes responsibilities of City and Developer regarding various costs.
"City Reimbursable Costs" are all third-party costs for consultants and the cost of City
staff retained specifically for the TCAAP project. Developer is responsible to pay those
costs during the term of the PDA, according to a budget that will be attached. Key points
are:
. If Developer wants to stop the City from incurring these costs, it can provide a
notice with an explanation. If the City disagrees, the matter goes to
mediation, but Developer remains responsible to pay costs during the
mediation process.
. The parties must mutually agree on any changes to the budget. Any
disagreements will be subject to mediation. If that's unsuccessful, either party
may terminate the PDA.
. The Developer must deposit (and maintain a balance of) $50,000 with an
escrow agent as security for its obligation to pay City Reimbursable Costs.
. If the PDA expires or is terminated, and within two years later the City enters
into a development agreement with another developer, the City must
reimburse Developer for certain prior costs incurred by Developer. See
Exhibit E to the PDA for detailed explanation of these "Developer
Reimbursable Costs."
Section 6: The City will not negotiate with any party other than Developer during the
term of the PDA, and CRR may not assign its rights under the PDA to any other party
other than an "Affiliate" without prior City approval. An "Affiliate" is an entity that
controls or is controlled by Ryan alone, or Ryan and Rehbein together.
Section 7: Provides that the parties will promptly begin negotiating the MDA. The
execution of the MDA is conditioned on findings that any public financial assistance is
necessary and feasible, and that the proposed redevelopment is feasible.
Section 8: Clarifies that the normal City land use approval process will apply to the
redevelopment.
Section 9:
Requires City Council approval for any amendments to the PDA.
.
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Section 10: Explains the parties' rights regarding the OTP, summarized as follows:
. The City can rescind the OTP if the grounds exist, and the City has terminated
PDA (i.e" because of a Developer default), or the PDA has expired.
. The Developer can require the City to rescind the OTP if the grounds exist and
Developer follows a two-step notice process, First, Developer must give a 60-day
notice that it may not want to proceed. After expiration of that 60-day period,
Developer may give the City a notice directing the City to give GSA a 30-day
rescission notice. Therefore, the total period between the first Developer notice
and the effective date of rescission is at least 90 days. (There is one exception to
the 60/30 day notice requirement described in Section 10(b)(iii) of the PDA).
However, if Developer initiates rescission under this provision, the Developer
Reimbursable Costs described in Section 5 are reduced.
Section II: The term of the PDA runs from execution through March 31, 2008. Any
extension would require mutual agreement of the parties and approval by the City
Council.
Section 12: Describes default and termination provisions.
Sections 13 to 22:
Miscellaneous provisions.
Section 23: Describes the mediation process that applies primarily to disputes
regarding costs. Either party can require initiation of the process, in which case the
parties must participate in at least 8 hours of mediation and complete the process within
30 days,
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11 th Draft
February 7, 2007
PRELIMINARY DEVELOPMENT AGREEMENT
THIS AGREEMENT is made and entered into as of this day of ,2007 by
and between the CITY OF ARDEN HILLS, a Milll1esota municipal corporation (the "City"), and
CRR, LLC, a Delaware limited liability company (the "Developer").
RECITALS
WHEREAS, the City and Developer entered into that certain Interim Agreement dated as
of August 26, 2002, and amended by Amendment No. I thereto dated October 25, 2004 (together,
the "Interim Agreement"), regarding the acquisition and redevelopment of a portion of the Twin
Cities Army Ammunition Plant (the "TCAAP Site") in the City; and
WHEREAS, the Interim Agreement expired in accordance with its terms on May 9, 2005;
and
WHEREAS, the parties have determined to amend and restate the Interim Agreement by
entering into this Agreement; and
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WHEREAS, this Agreement concerns the portion of the TCAAP Site described in Exhibit
A hereto (the "Development Property"), which property is expected to be acquired by the City from
the United States of America acting by and through the General Services Administration (the
"GSA") pursuant to the terms of an Offer to Purchase between the City and GSA dated August I,
2006 as amended by a letter amendments thereto dated August I I, 2006, November 15, 2006, and
January ,2007, and additional amendments entered into from time to time (together, the "OTP");
and
WHEREAS, the Development Property is now occupied by the former Twin Cities Army
Ammunition Plant, which has been abandoned and is being disposed of by GSA on behalf of the
United States of America; and
WHEREAS, the City has engaged in a comprehensive planning process to guide the
redevelopment of the Development Property, which process is intended to remove impediments to
development, maximize the property's potential for revitalization of the City and surrounding
region, increase tax base for the City and all taxing jurisdictions, and increase commercial and
housing opportunities at this critical site in the City; and
WHEREAS, the parties acknowledge that there are significant environmental issues
affecting the Development Property, and that redevelopment of the property will require zoning
changes, significant remediation activities and substantial infrastructure improvements; and
WHEREAS, the parties further expect that the City, upon acquisition of the Development
Property from GSA, will simultaneously convey the Development Property to Developer pursuant
to the terms of a master development agreement ("MDA") to be negotiated as further described
herein; and
WHEREAS, in light of such expected real estate transaction, the City has also entered into
that certain Funding and Guaranty Agreement with Developer, Ryan Companies, Inc. ("Ryan") and
Rehbein Companies, Inc. ("Rehbein") dated as of August 1 0, 2006, as amended by a First
Amendment thereto dated ,2007, and as it may be further amended from time to
time (the "Guaranty"); and
WHEREAS, Ryan and Rehbein are the principals of Developer, and those three entities
entered into the Guaranty in order to evidence their obligation to pay all earnest money and the
Purchase Price (as defined in the Guaranty) required to be paid by the City to GSA under the OTP;
and
WHEREAS, under the tenns of the Guaranty, the City and Developer agreed to negotiate
the terms of an MDA concerning the Development Property and the parties' respective
responsibilities in developing such property and setting forth those matters that need to be
completed prior to closing on the acquisition of the Development Property under the OTP (referred
to hereafter as the "Closing"); and
WHEREAS, the parties have detennined to describe their respective responsibilities prior
to Closing; and
WHEREAS, the City Council has adopted an overall concept plan for the Development
Property, designated as the TCAAP Framework Vision approved by the City Council on
January 13, 2005 and attached hereto as Exhibit B, and as it may be refined and amended from time
to time (the "Framework Vision"); and
WHEREAS, the City's Economic Development Commission and City Council have
adopted a TCAAP Public Financing Policy (the "Public Financing Policy"), setting forth the general
principles that will guide the City's financial participation in the Development; and
WHEREAS, the Developer proposes to redevelop the Development Property as a mixed-
use project consisting of residential uses with compatible and mutually supporting office, retail,
services, hotel, community and civic use, office/warehouse and other uses (referred to generally as
the "Development"); and
WHEREAS, the City Council has acknowledged the Developer's desire to enter into this
Preliminary Development Agreement to allow the Developer to further refine its proposal and to
negotiate with the City concerning the redevelopment described in this Agreement; and
WHEREAS, the City and the Developer acknowledge that the purchase and redevelopment
of the Development Property is mutually beneficial to City and Developer, and therefore the parties
desire to proceed with the Development if the conditions described herein are satisfied.
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NOW, THEREFORE, in consideration of the covenants and obligations of the parties
hereto, the City and the Developer hereby agree as follows:
Section I. Preliminary Nature of Agreement. The City and the Developer agree that
this Agreement is intended to be preliminary in nature, Before the City and the Developer Can make
a decision on whether to proceed with the implementation of the Developer's development proposal
for the Development Property, it will be necessary to assemble and consider information relative to
the design, financial feasibility and other aspects of redevelopment of the that property. The
purpose of this Agreement is to allow the Developer an opportunity to assemble such necessary
information, and to negotiate with the City concerning the execution of an MDA which, if executed,
will set forth the rights and responsibilities of the City and the Developer with respect to the
Development Property.
Section 2. Present Intent of Parties. It is the intention of the parties that this Agreement
documents their present understanding and commibnents, and that the parties will proceed to use
their best efforts to negotiate a mutually satisfactory MDA, which MDA will (i) include conveyance
of the Development Property to the Developer pursuant to all terms of the OTP and MDA, and (ii)
will require fulfillment of the following conditions to the mutual satisfaction of the parties:
(a) the Developer demonstrates the market feasibility of the Development;
(b) the Developer demonstrates the ability to undertake the Development in a manner
consistent with the general land uses described in the Framework Vision;
(c) the Developer demonstrates that projected sources of financing for the Development
will be available to the Developer, and that if Developer requests financial assistance
from the City, such assistance is necessary to make Developer's redevelopment
proposal financially feasible and is consistent with the Public Financing Policy and
taking into account the unique needs of the Development; and
(d) if the City agrees to provide any financial assistance, the Developer and the City are
able to reach agreement on the Developer's provision of security adequate to
reasonably justifY the City's investment.
The MDA (together with any other agreements entered into between the parties hereto or
contemporaneously therewith) when executed will supersede all obligations of the parties
hereunder.
Section 3. Developer Undertakings, (a) The Developer shall submit to the City the
following items at the following times:
(1) Within 90 days after receipt of each written request by the City from to time, the
Developer shall submit, in forms reasonably required by the City in order to
undertake the Alternative Urban Areawide Review ("AUAR") process:
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(i) preliminary (and periodically updated) site plans for the Development
Property, and
(ii) preliminary (and periodically updated) development schedules for the
Development, including preliminary phasing and staging plan
(2) Within 30 days after the City and GSA (with Developer's consent) have entered into
a written agreement regarding the amount of remediation credit and the credit
mechanism under the OTP, Developer shall submit a preliminary project proforma
with estimated costs of the Development and possible sources and uses of all funds
to finance such costs; and
(3) Within 30 days after the draft of the AUAR is submitted for review and connnent in
accordance with Minnesota Rules, Chapter 4410, Developer shall submit a
preliminary report on the market feasibility ofland uses designated in the AUAK
(b) Developer shall cooperate and participate with the City in negotiations with GSA
regarding any necessary amendments and clarifications to the OTP; obtaining access to the
Development Property; obtaining from GSA and U.S. Army all environmental reports and
information regarding the Development Property; identifying the nature, extent and cost of
remediation; determining the mechanism for applying remediation costs as a credit against the
purchase price and the amount of such credit; determining the terms and conditions of the
Memorandum of Agreement (as defined in Section 28 of the OTP); obtaining changes to the FOST
and FOSET (as defined in Section 5 of the OTP); obtaining acceptable terms for the Covenant
Deferral Request process for early transfer under Section 24 of the OTP and the timing thereof; all
other matters under the OTP; the terms and conditions relating to the conveyance and remediation
of the Wildlife Area and the Athletic Field Area; and the matters set forth in this Section 3 and in
Section 5(a) through 5(t) and Section 7 below, As used in this Agreement, the "Wildlife Area" and
the "Athletic Field Area" shall mean the portions of the Development Property designated on
Exhibit C.
(c) Developer shall provide, upon the reasonable request of the City staff from time to
time, reports as to the Developer's progress in assembling the information necessary to comply with
the terms of this Agreement.
(d)
Guaranty.
Developer agrees to fund the earnest money as provided in Section 3,OB of the
(e) Developer agrees to assume the obligations of the City as provided in Section 3.0C
ofthe Guaranty.
The costs of all undertakings by the Developer under this Section 3 shall be born solely by
the Developer unless and to the extent any such costs are Developer Reimbursable Costs as defined
in Section 5 (t). All of the information and materials described in this Section 3 shall be the
property of the Developer.
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Section 4.
following:
City Undertakings. During the term of this Agreement, the City shall do the
(a) Make available City staff and consultants for consultation with respect to the
matters set forth in Sections 3, 4, 5 and 7.
(b) Cooperate and participate with the Developer in: negotiations with GSA regarding
any necessary amendments to the OTP; obtaining access to the Development
Property; obtaining from GSA and U.S. Army all environmental reports and
information regarding the Development Property; identifying the nature, extent and
cost of remediation; determining the mechanism for applying remediation costs as a
credit against the purchase price and the amount of such credit; determining the
tenns and conditions of the Memorandum of Agreement; obtaining changes to the
FOST and FOSET; obtaining acceptable terms for the Covenant Deferral Request
process for early transfer and the timing thereof; all other matters under the OTP; the
terms and conditions relating to the conveyance and remediation of the Wildlife
Area; and the Athletic Field Area and the matters set forth in this Section 4, Section
5 and Section 7,
(c)
Grant to the Developer, at its cost, all rights of access to the Development
Property to conduct all investigations and tests relating to the environmental,
geotechnical and other physical conditions of the Development Property, all to the
extent such rights are available to the City under the OTP, subject to these
conditions:
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(i) Developer shall maintain on file with the City a list of entities that
will enter the Development Property and the name of Developer's
contact person regarding access by any entity.
(ii) Developer and City shall jointly negotiate with GSA regarding all
procedures and rules regarding access to the Development
Property,
(iii) Developer shall indemnify and hold harmless the City for any
claims arising from Developer's entry on the Development
Property, and shall at all times maintain with the City a certificate
of insurance evidencing that Developer has insurance regarding
such risks. City shall tender to Developer any claims subject to
indemnification under this clause immediately after its knowledge
of any such claims, and shall permit Developer to defend and/or
resolve any such claims.
(iv) Developer shall keep the Development Property free of all liens
and shall repair any damage that is caused to the Development
Property caused in any way by Developer's entry on such property.
Developer shall have the right to contest any liens, provided that
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Developer provides the City and GSA with collateral (such as a
bond or title insurance insuring over such lien) reasonably
acceptable to the City and GSA.
(d) Evaluate the financial and market feasibility of the undertakings of the Developer
as specified in Section 3 of this Agreement.
(e) Consider options for public financial assistance as part of the Development, if the
Developer is able to demonstrate a need for public financial assistance as
determined by the City in its sole discretion,
(f) Evaluate the availability of public financing tools related to the Development, and
commence any actions necessary to implement any such tools approved by the
City Council.
(g) Coordinate with Developer in developing an infrastructure plan consistent with
the Development plan.
(h) Consider and evaluate any requests by Developer to seek special legislation that
may be necessary to carry out the Development.
(i) Make available to the Developer at the City's offices all environmental reports,
studies and information in the possession of the City from time to time.
(j) Forward to Developer all communications it receives from or sends to GSA or the
Minnesota Pollution Control Agency CMPCA"),
(k) Tender its earnest money and Purchase Price (as defined in the Guaranty) as
provided in Sections 3,OB and 3.0C of the Guaranty.
(I) Perform all of its other obligations under this Agreement.
(m) Perform all of its obligations as the Purchaser under the OTP, subject to (i) the
performance by Developer of its obligations as provided in Sections 3.0B and
3.0C of the Guaranty and Oi) Section 10 of this Agreement.
The cost of all undertakings by the City under this Section shall be payable by the Developer to the
extent any such costs are City Reimbursable Costs as defined in Section 5 and subject to
reimbursement as provided therein.
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5, City Reimbursable Costs. (a) Defined. Developer will reimburse the City fOf all
"City Reimbursable Costs" in accordance with this Section. The tenn City Reimbursable Costs
means the following costs, but only to the extent that such costs are included in the Budget (as
defined below):
(I) Out-of pocket-costs incurred by the City from and after May 9, 2005 for (i) the
City's financial advisor in connection with the Development, (ii) the City's legal counsel in
connection with negotiation and drafting of this Agreement, the MDA and any related
agreements or documents; (iii) the City's planning consultant in connection with
redevelopment of the Development Properly; and (iv) any other third-party costs in
connection with acquisition of the Development Property from GSA and conveyance to the
Developer, or in connection with the City's financial participation, if any, in the
Development (including without limitation appraisers, surveyors and environmental
consultants); and
(2) The cost of City staff retained in whole or in part specifically to carry out City
responsibilities with respect to the Development (including usual and customary costs and
disbursements incurred by such staff), provided that (i) the cost of such staff (for purposes of
determining City Reimbursable Costs) must be based upon hourly rates that the City and the
Developer have agreed upon in writing as part of the Budget; and (ii) if such staff has
multiple duties, only the portion of staff time related to the Development shall be treated as a
City Reimbursable Cost
Notwithstanding anything to the contrary, the Developer may request that the City cease incuning
all or any portion of the City Reimbursable Costs as designated by the Developer, by delivering
written notice to the City including a detailed explanation for the objection to the designated costs.
The City shall, within 10 business days after receipt of Developer's notice, give Developer written
notice that it either (I) accepts Developer's objection, in which case the Developer will not be
responsible for the designated City Reimbursable Costs effective as of two (2) business days after
the date of the City's notice of acceptance, or (2) denies Developer's objection, in which case the
Developer remains responsible for the designated City Reimbursable Costs, except as hereinafter
provided and subject to Developer's rights under Section 23 hereof. Developer remains obligated to
pay any disputed City Reimbursable Costs pending any proceeding under Section 23.
(b) Prior Costs, Upon execution of this Agreement, the Developer has deposited with
the City $ (receipt of which the City acknowledges) representing reimbursement of all
City Reimbursable Costs incurred from May 9, 2005 through the date of this Agreement, and not
previously reimbursed by Developer, all of which are set forth on the attached Exhibit C.
(c) Budget and Consultant Process. The current budget of City Reimbursable Costs,
including the type and scope of work and the current list of consultants is attached as Exhibit D,
which may be amended from time to time by mutual agreement (the "Budget"). The City may,
without amending the Budget, replace or retain any additional consultants or staff consistent with
the type and scope of work described in the Budget, subject to the total amount of City
Reimbursable Costs specified in Exhibit D. If the City proposes to (i) engage any different
consultants or staff than those shown in the attached Budget, or (ii) allocate savings in a line-item in
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the Budget to pay additional expenses over the amount for another line-item, the City will (before
engaging the consultant or incurring the additional line-item expense) provide Developer with at
least 10 business days notice, including (in the case of clause (i) above) a written description of the
consultant or staff, the scope of work and the estimated cost; and (in the case of clause (ii) above) an
explanation of the reasons for the line-item change; and in either case offering Developer an
opportunity to comment within the I D-day period. The City agrees that all contracts with
consultants will be terminable immediately upon notice without penalty and will provide for
payment for services rendered only prior to such termination.
]f the City or Deve]oper proposes to revise the Budget (including changes in type or scope
of work or the total amount of City Reimbursable Costs), then the City or the Developer, as the case
may be, shall submit a revised budget to the other party and an explanation of the changes to the
Budget, and allow thirty (30) days for the other party to approve the changes to the Budget. ]f the
other party approves the proposed changes to the Budget, the changes shall be incorporated into the
Budget, the revised Budget shall be signed by the City and the Developer, and the revised budget
shall become the Budget. If the City's or the Developer's proposed changes to the Budget are not
approved by the other party within such thirty (30) days, then either the City or Developer may
terminate this Agreement under Section ]2(a) hereof, subject to the terms of Section 23 hereof.
(d) Payment Process. The City will provide the Developer with a copy of al] invoices
received by the City immediately upon receipt of such invoices for City Reimbursable Costs,
including copies of invoices provided by third parties and in the case of eligible staff costs a city-
prepared invoice showing time, hourly rates (consistent with the Budget), any costs and
disbursements, any description reasonably needed to explain how the staff costs relate to the
Development and such other reasonable information regarding the City Reimbursable Costs as
Developer requests. Developer shall pay City Reimbursab]e Costs to the City within thirty (30)
days after receipt of each invoice; provided, however, Developer shall not be required to pay the
City Reimbursable Costs to the City more often than monthly. ]f the Developer fails to pay the City
Reimbursable Costs to the City as provided herein, then Developer shall reimburse the City for its
out-of-pocket costs incurred in collecting the City Reimbursable Costs, including reasonable
attorneys fees.
(e) Security- As security for Developer's obligations under this Section, Developer
shall, within thirty (30) days after the date of this Agreement, deposit $50,000 in escrow with an
escrow agent of Developer's choice, pursuant to an escrow agreement among Developer, City and
the escrow agent in a form reasonably acceptable to the City. The escrow agreement shall provide
for the right of the City, after three (3) days written notice to Developer, to draw on the amount in
escrow to pay City Reimbursable Costs which have not been paid by Developer pursuant to this
Agreement. Additionally, the escrow agreement shall provide that each time the balance in the
escrow drops below $50,000, Developer shall replenish the escrow to $50,000 within ten (10) days
after written notice from the City or the escrow agent. City Reimbursable Costs are also payable
from any offset of returned earnest money and Developer Reimbursable Costs, as descnbed in
Section] I (c)(iii) hereof.
(f) Termination. (I) Upon expiration or earlier termination of this Agreement in
accordance with its terms, the City will release the escrow to the Deve]oper less any draw needed
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to pay the City any City Reimbursable Costs incurred through two (2) business days following
the City's receipt of the notice of termination. For the purposes of this paragraph, City
Reimbursable Costs are considered to be incurred if they relate to services performed and are
payable under a contract entered into on or before two (2) business days following the City's
receipt of the notice of termination.
(2) If this Agreement is terminated before its expiration or the term expires with or
without an MDA, and the City within two years after the effective date of termination or
expiration enters into a definitive development agreement with another developer who is not an
Affiliate as defined in Section 6 hereof (the "Successor Developer") regarding all or a portion of
the Development Property (the "New Development Property"), then the City will reimburse
Developer for the Developer Reimbursable Costs described on the attached Exhibit E (the
"Developer Reimbursable Costs"), except as otherwise provided in clause (3) of this Section
5(t), If the New Development Property consists of property less than the entire Development
Property, the amount payable under this clause is the product of (a) the Developer Reimbursable
Costs, multiplied by (b) a fraction, the numerator of which is the area in square feet of the New
Development Property, and the denominator of which is the area in square feet of the
Development Property minus the combined area in square feet of the Wildlife Area and the
Athletic Field Area.
(3) If this Agreement is terminated before its expiration because of rescission of the
OTP initiated by Developer under Section I O(b) hereof, the Developer Reimbursable Costs will
exclude any costs for Item I (Framework Yision) and Item 8 (Development of the TIF District)
on Exhibit E.
(4) Notwithstanding the expiration or earlier termination of this Agreement, the terms
and conditions of paragraph (t)(J -3) shall survive the expiration or termination of this
Agreement.
Section 6. Exclusive Development Rights. During the term of this Agreement, the City
designates Developer as the sole master developer of the Development Property, and agrees that it
will not negotiate or contract with any other party concerning the sale or development of the
Development Property. The Developer shall not without the prior written consent of the City (a)
assign or transfer its rights under this Agreement, in full or in part, other than to an Affiliate, or (b)
undertake a merger, acquisition, reorganization or similar transaction unless the resulting entity is an
Affiliate. For the purposes of this Section, the term "Affiliate" means any corporation, partnership,
limited liability company or other business entity or person controlling, controlled by or under
common control with Ryan or Ryan and Rehbein. For the purpose hereof the words "controlling",
"controlled by" and "under common control with" shall mean, with respect to any corporation,
partnership, limited liability company or other business entity, the ownership, directly or indirectly,
of fifty percent or more of the (i) the voting interests in such entity, or (ii) the power to direct or
cause the direction of management policies of such entity, whether by way of ownership of voting
securities or by contract or otherwise.
Section 7. Negotiation of MDA. Upon execution of this Agreement, the City and the
Developer shall proceed with the negotiation of an MDA regarding the Development consistent
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with the terms set forth in this Agreement and use their best efforts to execute an MDA. The
execution ofthe MDA shall be subject to the following:
(a) All tenus of the MDA are acceptable to the City and the Developer.
(b) The City's financial consultant provides to the City a report indicating that:
(i) Any public financial assistance is necessary and appropriate, and is
financially feasible for the City in light of its other redevelopment and
economic development goals; and
(ii) Based on a review of the market study and pro forma provided by the
Developer, the proposed redevelopment and its financial feasibility are
supportable by projected market conditions.
Section 8. Effect of Approvals. No approval given by the City hereunder or in
connection herewith shall be deemed to constitute an approval of the Development for any purpose
other than as stated herein and the process outlined in this Agreement shall not be deemed to
supersede any concept review, conditional use permit, vacation, subdivision, rezoning or other
zoning or planning approval process of the City relative to the development of real estate or
condition of receiving any grant funds,
Section 9, Modifications. This Agreement may be modified and the term thereof may
be extended only through written amendments hereto signed by the parties to this Agreement and
approved by the City Council.
Section 10. Rights Regarding OTP. (a) The City may only rescind or terminate the OTP
pursuant to the terms thereof, including, but not limited to Section 5 thereof under the following
terms and conditions:
(i) The City determines that the grounds exist for rescission or tenuination
under the terms of the OTP; and
(ii) This Agreement expires or the City has terminated this Agreement pursuant
to Section 12(a)(i) hereof prior to the execution of an MDA.
If the foregoing conditions are satisfied, the City may deliver to GSA a notice of rescission
or termination ofthe OTP effective upon receipt thereof by GSA.
(b) The Developer may require that the City rescind or terminate the OTP pursuant to
the terms thereof, including, but not limited to Section 5, under the following terms and conditions:
(i) The Developer determines that the grounds exist for rescission or
termination under the terms of the OTP; and
10
(ii) The Developer provides written notice to the City explaining why Deve]oper
may not want to proceed with the Development and the grounds that exist for the City's
rescission or tennination of the OTP (the "lnitia] Developer Notice"); and
(iii) No sooner than sixty (60) days after the date of delivery of the Initial
Developer Notice and at least thirty (30) days before the designated date of rescission or
termination, the Developer may, in its sole discretion, provide written notice to the City
directing City to rescind or terminate the OTP (the "Deve]oper Rescission Notice"). Within
such 30-day period, the City shall forward to GSA and others as required by the OTP, the
City's notice of rescission or termination of the OTP for the reasons stated in the Deve]oper
Rescission Notice, and such rescission or termination shall be effective as of the date
designated in the Developer Rescission Notice.
(iii) Notwithstanding Section 1O(b)(ii) and (iii) to the contrary, if the Covenant
Deferra] Request has been signed by the Governor of the State of Minnesota and the EPA
Administrator, then Developer shall provide written notice to the City at least two (2)
business days before the designated effective date of rescission or termination, which notice
explains the grounds for rescission or termination of the OTP (the "CDR Rescission
Notice"), Within two (2) business days after receipt of Deve]oper's notice, the City shall
forward to GSA and others as required by the OTP the City's notice of rescission or
termination of the OTP for the reasons stated in Developer's notice, and such rescission or
termination shall be effective as of the date designated in the CDR Rescission Notice.
(c) In the event (i) of rescission or termination of the OTP initiated by either the City or
Developer under paragraphs (a) or (b) of this Section] 0, (ii) of rescission or termination of the OTP
by GSA under the terms of the OTP, including but not limited to Section 5(d) thereof; or (iii) the
City is otherwise entitled to receive or does receive a refund of all or any portion of the earnest
money from the GSA pursuant to the terms of the OTP, then the Developer is entitled to such
refund of all or any portion of the earnest money. In the event the City receives a refund of all or
any portion of the earnest money from the GSA, regardless of the circumstances, the City agrees to
promptly remit such refund after its receipt to Developer without interest. If the City fails to wire
transfer the earnest money which it receives from the GSA to the Deve]oper at an account
designated by the Developer within five (5) business days following the City's receipt of such
earnest money from the GSA, then the City shall reimburse the Developer for all of its out-of-
pocket costs incurred in collecting the earnest money, including reasonable attorneys fees.
(d) Ifany of the events described in Section 10(c) occur, the City shall collect all earnest
money due to the City pursuant to the terms of the OTP, subject to the following (i) the Developer
shall decide what actions shall be taken to collect the earnest money, (ii) the City shall retain the
attorneys and consultants requested by Developer to collect the earnest money, (iii) the Deve]oper
shall participate in all aspects of such actions to collect the earnest money, (iv) no resolution of any
dispute with regard to the earnest money shall be agreed upon without the written consent of the
Deve]oper, (v) upon the City's collection of any earnest money paid under the OTP, such earnest
money shall be promptly paid to the Developer as provided in Section 10(c) and (vi) the City shall
fully cooperate with the Developer in pursuing the collection ofthe earnest money. Developer shall
pay all of the out-of-pocket expenses incurred by the City in taking actions to collect the earnest
money, so long as such actions are pursuant to the written direction of the Developer.
I]
(e) The City may, or upon Developer's written request, it shall request that the GSA
consent to the assignment by the City to the Developer of all of the City's right, title and interest in
and to the earnest money, including the right to collect the earnest money, all pursuant to the terms
and conditions of the OTP. If the GSA consents to such assignment, then from and after the duly
executed consent by the GSA to such assignment to the Developer, the City shall no longer have
any responsibility to collect the earnest money, other than the City is obligated to cooperate with
Developer regarding the Developer's actions to collect the earnest money.
(f) The City will not take actions or fail to take actions that constitute revocation or
default under the OTP, including, but not limited to Section 7, except and to the extent such actions
or omissions are the result of acts or omissions of Developer under Sections 3(d) or 3(e) of this
Agreement. In the event the earnest money may be forfeited at the option of GSA pursuant to
Section 7 of the OTP, the Developer's rights to have the City pursue the collection of the earnest
money are the same as described in Section I O( c) and (d). If the City receives a notice of default
under the OTP (the "OTP Default Notice"), the City shall within one (1) business day thereafter
forward a copy of the OTP Default Notice to the Developer. The City shall provide Developer with
reasonable updates of the action being taken by the City to cure such default. If at any time the
Developer reasonably believes that the City is not proceeding diligently to cure the default within
the time period provided under the OTP, the Developer may take such actions on behalf of the City
as it reasonably deems necessary to cure the City's default pursuant to the OTP Default Notice.
Section II. Term of Agreement. (a) This Agreement shall be effective through
March 31,2008, subject to earlier termination in accordance with Section 12. If for any reason an
MDA has not been entered into by the parties within the term of this Agreement or any other
mutually approved extension thereof, this Agreement shall be null and void and neither party
thereafter shall have any liability or obligations to the other except as otherwise provided in Section
12(c) in this Agreement.
Section 12,
DefaultJRemedies.
(a) This Agreement may be terminated by the City or the Developer, only upon thirty
(30) days' written notice to the other if:
(i) The other party fails to perform any of its obligations hereunder or fails to
agree to proposed changes to the then existing Budget, and fails to cure such
default or agree upon such changes to the Budget within thirty (30) days
after receipt of written notice thereof from the party wanting to terminate this
Agreement which notice explains the nature of the default or the change to
the Budget, and the OTP is terminated in accordance with Section 10
thereof; or
(ii) The OTP is terminated, including the rescission of the offer, in accordance
with Section] 0 hereof.
Upon termination under this Section 12(a), neither party thereafter shall have any liability or
obligations to the other party except as otherwise provided in Section 12(b) and (c) of this
Agreement.
]2
(b) Upon the tennination of this Agreement pursuant to Section 12(a) above:
(i) If either party terminates this Agreement, then (I) the City shall give prompt
notice to its consultants and its staff, and to any other parties performing
work or services the cost of which qualifY as City Reimbursable Costs, to
promptly cease providing any further work or services on or related to the
Development, unless City agrees to be responsible for such costs; and (2)
notwithstanding the provisions of Section 5, City Reimbursable Costs will
not include any such costs or expenses incurred from and after two (2)
business days following the City's receipt of the Developer's written notice
terminating this Agreement or date of the City's written notice to Developer
terminating this Agreement.
(ii)
If the Developer tenninates this Agreement, the Developer's remedies are
limited to terminating this Agreement, enforcing its rights under Section 10
hereof and under the Guaranty, recovering from the City the Developer
Reimbursable Costs, collecting any earnest money as provided in Sections
IO(c), (d), (e) and (f), and collecting all out-of-pocket costs incurred by the
Developer, including reasonable attorneys fees, for collecting the payment to
Developer of the earnest money which has been received by the City;
provided that if Developer terminates the Agreement because of rescission of
the OTP initiated by Developer under Section lO(b) hereof, Developer's
rights to receive Developer Reimbursable Costs are qualified by the
provisions of Section 5(f)(3) hereof.
't
(iii) If the City tenninates this Agreement, then the City's sole remedies shall be
to tenninate this Agreement and to recover any unpaid City Reimbursable
Costs, and all of the out-of-pocket costs incurred by the City in collecting the
City Reimbursable Costs, including reasonable attorneys fees. The City
shall remain obligated to pay the Developer the Developer Reimbursable
Costs pursuant to Section 5, to terminate the OTP pursuant to Section 10, to
recover the earnest money and pay the same to the Developer pursuant to
Sections I O( c), (d), ( e) and (f) and as otherwise provided in this Agreement.
The Developer Reimbursable Costs and earnest money due Developer are
subject to a right of offset for amounts due by the Developer to the City for
unpaid City Reimbursable Costs.
(c) Notwithstanding any other provision of this Agreement to the contrary, the terms
and conditions of Section 4(c)(iv), Section 5, and Sections lO(c), (d) and (e) and Section l2(b)
survive the expiration or earlier termination of this Agreement.
Section ]3, Severabilitv. If any portion of this Agreement is held invalid by a court of
competent jurisdiction, such decision shall not affect the validity of any remaining portion of this
Agreement.
]3
Section ]4. Notices. Notice or demand or other communication between or among the
parties shall be sufficiently given if sent by mail, postage prepaid, return receipt requested or
delivered personally:
(a)
As to the City:
With a copy to:
City of Arden Hills
11245 W. Highway 96
Arden Hills, MN 55112
Attn: City Administrator
Stephen J. Bubul
Kennedy & Graven, Chartered
470 U.S. Bank Plaza
200 South Sixth Street
Minneapolis, MN 55402
(b) As to the Deve]oper: CRR, LLC
c/o Ryan Companies US, Inc.
50 South Tenth Street, Suite 300
Minneapolis, MN 55403
Attn: Rick Collins
With a copy to:
Charles F. Diessner
Fredrikson & Byron, P.A.
200 South Sixth Street, Suite 4000
Minneapolis, MN 55402
Section ]5. Countemarts. This Agreement may be executed simultaneously in any
number of counterparts, all of which shall constitute one and the same instrument.
Section ]6, Waivers.]n the event any agreement contained in this Agreement should
be breached by either party and thereafter waived by the other party, such waiver shall be limited
to the particular breach so waived and shall not be deemed to waive any other concurrent,
previous or subsequent breach hereunder.
Section] 7. Titles of Sections. Any titles of the Sections of this Agreement are
inserted for convenience of reference only and shall be disregarded in construing or interpreting
any of its provisions.
Section 18. Relationship of Parties, Nothing in this Agreement creates a joint venture,
partnership or principal-agent relationship between the parties.
Section 19, Effective Laws. This Agreement shall be construed in accordance with the
laws of Minnesota, and any disputes shall be adjudicated in Ramsey County district courts.
Section 20.
all respects.
Effect of Agreement. This Agreement supersedes the Interim Agreement in
]4
Section 21. Conflict. In the event of any conflict between the terms and conditions of
this Agreement and the Guaranty, the terms and conditions of this Agreement shall govem and
control.
Section 22, References to GSA. All references to the GSA in this Agreement shall also
be deemed to be references the United States Government and/or the U.s. Army, as circumstances
reqUIre.
Section 23. Dispute Resolution, Upon written notice from either party to the other prior
to the commencement of any legal action, or within ten {I 0) business days after the commencement
of any legal action relating to any claims, disputes or other matters in question between the parties
to this Agreement arising out of or relating to Sections 5 (excluding 5(f)(2)) and 11 of this
Agreement, shall be referred to nonbinding mediation before, and as a condition precedent to,
proceeding with any legal action regarding such claims, disputes or other matters other than the
commencement of such action. Each party agrees to participate in up to eight (8) hours of
mediation which must be completed and any agreed upon resolution duly executed within thirty
(30) days after written notice requiring nonbinding mediation. The mediator shall be selected by the
parties, or if the parties are unable to agree on a mediator then any party Can request the
administrator of the Ramsey County District Court Civil ADR Program and/or similar person, to
select a person from its list of qualified neutrals. The mediation shall be decided by employees or
agents of each party having authority to settle the dispute. All fees and expenses of the mediator
shall be shared equally between the parties and all other expenses incurred by each party related to
the mediation shall be borne by such party, including without limitation, the costs of any experts or
legal counsel. All applicable time periods for responding to any legal action which has been
commenced, statutes oflimitations and all defenses based on the passage of time are tolled while the
mediation procedures are pending, and for a period of30 days thereafter.
[Signatures on following pages]
15
IN WITNESS WHEREOF, the City has caused this Agreement to be duly executed in its
name and behalf and the Developer has caused this Agreement to be duly executed in its name and
behalf on or as of the date first above written.
CITY OF ARDEN HILLS
By
Its Mayor
By
Its City Administrator
CRR, LLC
By
Its
4135348 5.DOC
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16
EXHIBIT A
DEVELOPMENT PROPERTY
[Insert survey]
.;c,i.-
A-I
EXHIDIT B
FRAMEWORK VISION
[Insert Framework Vision map]
B-1
EXHIBIT C
PRIOR CITY REIMBURSABLE COSTS
C-I
EXHIBIT D
BUDGET OF CITY REIMBURSABLE COSTS
D-1
EXHIBIT E
DEVELOPER REIMBURSABLE COSTS
Developer Reimbursable Costs are the City Reimbursable Costs and the out-of-pocket costs paid by
the Developer for the following activities, subject to the terms and conditions described below:
L Framework Vision
2. Envirorunental studies of the Development Property
3. Geotechnical studies ofthe Development Property
4. Traffic Analysis-Related to infrastructure outside the Development Property only
5. AUAR process and documents related to Development Property
6, Amendments to City Comprehensive Plan related to Development Property
7. Landscape plans and design guidelines for Development Property
8. Development District and TIF District(s) and related plans for all or portion of the
Development Property
The Developer Reimbursable Costs related to any of the foregoing activities qualifY as a Developer
Reimbursable Cost only if the Successor Developer uses such relevant item. The portion of the
Developer Reimbursable Costs due the Developer in each category will be the portion of actual
Developer Reimbursable Costs that are determined by a City-appointed "independent expert" in the
relevant field to have value for the Successor Developer. If Developer disagrees with the City's
expert, Developer may (within 30 days after receipt of the City's expert opinion) request an opinion
from an independent expert selected by Developer. If the expert opinions differ, the two experts
will mutually agree upon a third independent expert who shall determine the process to be followed
and whose conclusion as to the amount of Developer Reimbursable Costs for that item that are due
the Developer will be binding on the parties. For the purposes of this Exhibit E, the term
"independent expert" for the City-appointed or Developer appointed independent expert means a
person or entity who (i) has reasonable professional experience in the area that is the subject of the
opinion; (ii) does not have any material financial interest in the City, the Developer, Rehbein, Ryan
or the transaction to which such person's opinion relates (other than payment to be received for
professional services rendered as a consultant to the Developer or City, including regarding the
Development, or as an "expert" under this Exhibit E and (iii) is not connected with the City, the
Developer, Rehbein or Ryan as an officer, director or employee.
E-I
FIRST AMENDMENT TO FUNDING AND GUARANTY AGREEMENT
This First Amendment to the Funding and Guaranty Agreement ("First Amendment") is
entered into as of the day of , 2007, by and between the City of Arden
Hills, a Minnesota municipal corporation (the "City"), CRR, LLC, a Delaware limited liability
company (the "Developer"), Ryan Companies US, Inc., a Minnesota corporation ("Ryan") and
Rehbein Companies, Inc. ("Rehbein").
RECITALS
A. The City and the U.S, Government entered into an Offer to Purchase dated
August 1,2006, as amended on August I 1,2006, November 15,2006 and January 22, 2007 (the
"OTP").
B. The City, Developer, Ryan and Rehbein entered into that certain Funding and
Guaranty Agreement dated August 10, 2006 (the "Guaranty").
C. The City and Developer desire to enter into a Preliminary Development
Agreement (the "PDA") regarding the redevelopment of the property described in the OTP (the
"Property") and a condition of the Developer executing the PDA is that the parties enter into this
First Amendment.
D. The City, Developer, Ryan and Rehbein desire to amend the Guaranty as provided
in this First Amendment.
E,
Guaranty.
Defined terms not otherwise defined herein shall be defined as set forth in the
NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties agree that the Guaranty is amended as follows:
I. Paragraph 3.0C of the Guaranty is deleted in its entirety and substituted therefore
is the following:
In the event that the OTP is executed, submitted and not thereafter
rescinded pursuant to its terms and the GSA conveys the Property to the
City pursuant to the OTP, CRR agrees to fund the purchase price and other
amounts due by the City to the GSA, excluding the earnest money, as
required pursuant to the terms and conditions of the OTP (the "Purchase
Price"). In this regard, the City agrees to (i) tender the Purchase Price to
the U.S. Government upon receipt of a wire-transfer of funds in like
amount to the City of Arden Hills' bank account and (ii) simultaneously
convey the Property to CRR pursuant to the terms of a master
development agreement to be entered into between CRR and the City.
304669v2 SJB AR200-4
I
Rehbein and Ryan, for themselves, their successors and assigns, hereby
unconditionally, jointly and severally guaranty of the obligations ofCRR
to fund the earnest money and the Purchase Price as provided in
paragraphs 3.0B and 3.0C, respectively.
2. Paragraph 3.0H is deleted in its entirety and substituted therefore is the following:
3.
and effect.
Except as set forth herein, the Guaranty shall remain unmodified and in full force
IN WIlNESS WHEREOF, the parties have executed this First Amendment effective as
of the day and year first above written,
CITY OF ARDEN HILLS
By:
Name:
Its:
CRR, LLC
By:
Name:
Its:
RYAN COMPANIES US, INC,
By:
Name:
Its:
REHBEIN COMPANIES, INC.
By:
Name:
Its:
4138368_2.DOC
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304669v2 SJB AR200-4
2
RECITALS
FIRST AMENDMENT TO FUNDING AND GUARANTY AGREEMENT
This First Amendment to the Funding and Guaranty Agreement ("First Amendment") is
entered into as of the day of , 2007, by and between the City of Arden
Hills, a Minnesota municipal corporation (the "City"), CRR, LLC, a Delaware limited liability
company (the "Developer"), Ryan Companies US, Inc., a Minnesota corporation ("Ryan") and
Rehbein Companies, Inc. ("Rehbein").
A. The City and the U.S. Government entered into an Offer to Purchase dated
August 1,2006, as amended on August 11,2006, November 15,2006 and January 22, 2007 (the
"OTP").
B. The City, Developer, Ryan and Rehbein entered into that certain Funding and
Guaranty Agreement dated August 10, 2006 (the "Guaranty"),
C. The City and Developer desire to enter into a Preliminary Development
Agreement (the "PDA") regarding the redevelopment of the property described in the OTP (the
"Property") and a condition of the Developer executing the PDA is that the parties enter into this
First Amendment.
D. The City, Developer, Ryan and Rehbein desire to amend the Guaranty as provided
in this First Amendment.
E,
Guaranty.
Defined terms not otherwise defined herein shall be defined as set forth in the
NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties agree that the Guaranty is amended as follows:
]. Paragraph 3.0C of the Guaranty is deleted in its entirety and substituted therefore
is the following:
In the event that the OTP is executed, submitted and not thereafter
rescinded pursuant to its terms and the GSA conveys the Property to the
City pursuant to the OTP, CRR agrees to fund the purchase price and other
amounts due by the City to the GSA, excluding the earnest money, as
required pursuant to the terms and conditions of the OTP (the "Purchase
Price"), In this regard, the City agrees to (i) tender the Purchase Price to
the U.S. Government upon receipt of a wire-transfer of funds in like
amount to the City of Arden Hills' bank account and (ii) simultaneously
convey the Property to CRR pursuant to the terms of a master
development agreement to be entered into between CRR and the City,
304669v2 3JB AR200-4
I
Rehbein and Ryan, for themselves, their successors and assigns, hereby
unconditionally, jointly and severally guaranty ofthe obligations of CRR
to fund the earnest money and the Purchase Price as provided in
paragraphs 3.0B and 3.0C, respectively.
2. Paragraph 3.0H is deleted in its entirety and substituted therefore is the following:
3.
and effect.
Except as set forth herein, the Guaranty shall remain unmodified and in full force
IN WITNESS WHEREOF, the parties have executed this First Amendment effective as
of the day and year first above written.
CITY OF ARDEN HILLS
By:
Name:
Its:
CRR, LLC
By:
Name:
Its:
RYAN COMPANIES US, INC.
By:
Name:
Its:
REHBEIN COMPANIES, INe.
By:
Name:
Its:
4138368_2.DOC
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304669v2 SJB AR200-4
2