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Home My WebLink About4C, Earnest Money Refund to Royal Oaks Realty ~ ~~HILLS City Council Agenda Packet Item: ~ ~HIlLS Request for Council Action Prepared By: DepL: Council Mtg. Date: Final Action Needed By: Jim Willis Administration Febr':lary??, _ 2008 Fe.bruary 25, 2008 Budgeted Amount: Actual Amount: Funding Source: toun<;-jI Acti9hR~_qlfe~t: Motion to approve a refund of the -earnest money deposit made by Royal Oaks Realty in the amount of $40,000 Staff Recommendation; Motion to approve a refund of the earnest money deposit made by Royal Oaks Realty in the amount of $40,000 Planning: PTRC: -suPPoriIngP9~l.IiTI~nts:-..-(~@qt~) X Memo/Letter: Resolution No.: Memo dated 2/25108 Ordinance No.: Engineering Recommendation: Attorney Recommendation: X Other: Agreement, confidential memo and correspondence Agenda Item: ~ ~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. CANCELLATION AGREEMENT AND MUTUAL RELEASE OF CLAIMS THIS CANCELLATION AGREEMENT AND MUTUAL RELEASE OF CLAIMS IS entered into on , 2008 ("effective date"), by Royal Oaks Realty, Inc (Royal Oaks). and the City of Arden Hills (City). RECITALS A. On or about June 23, 2006, the City and Royal Oaks entered into an agreement whereby Royal Oaks agreed to purchase and the City agreed to sell a certain parcel of real property (the Property), legally described as: The west 1072.5 feet of the North 276.82 feet of the Northeast Quarter of the Northwest Quarter of Section 22, Township 30, Range 23, Ramsey County, Minnesota. (The Purchase Agreement) B. The Purchase Agreement creates certain obligations and rights for both parties to the agreement. In order to secure its rights, Royal Oaks. paid to the City earnest money in the amount of$40,000.00. C. Royal Oaks submitted to the City a Master and Final Planned Unit Development and Preliminary Plat proposal of development, which was approved by the City after revisions and subject to conditions. D. That the conditions attached to the development make it impractical for Royal Oaks to proceed with the development and the parties have therefore agreed to cancel the Purchase Agreement and execute this mutual release. NOW THEREFORE, the parties agree as follows: 1. Royal Oaks and the City do hereby cancel the Purchase Agreement. Royal Oaks shall provide a quit claim deed transferring any interest it may have in the Property to the City, in form suitable for filing. 2. The City shall, upon its approval and execution of this Agreement, return the earnest money in the amount of Forty Thousand Dollars ($40,000.00) to Royal Oaks. 3. For good, sufficient, and valuable consideration as set forth in paragraphs 1 and 2 above, each party does hereby release the other, their respective agents, employees and officers from all claims, duties, obligations and rights under the Purchase Agreement. Dated: Royal Oaks Realty, Inc. BY: its: President Subscribed and Sworn to before me, a Notary Public, this _ day of , 2008 by Marcel Eibensteiner, President of Royal Oaks Realty, Inc., a Minnesota Corporation, on behalf of the Corporation. Notary Public Dated: City of Arden Hills BY: its: Mayor Subscribed and Sworn to before me, a Notary Public, this day of by Stan Harpstead, Mayor of the City of Arden Hills, Minnesota, on behalf ofthe City.. ,2008 Notary Public ROYAL.~OAKS . REALTY, INC. January 3, 2008 Received JAN - 7 2008 City of Arden Hills Mr. Stan Harpstead, Mayor City of Arden Hills 1245 West Highway 96 Arden Hills, MN 55112 RE: Purchase of Old City Hall site Dear Mr. Mayor: As I'm certain you know, in June, 2006, my company, Royal Oaks Realty, Inc. entered into an agreement with the City of Arden Hills to purchase the old Arden Hills City Hall property located at 1245 West Highway 96. On October 10,2006, The Arden Hills City Council approved our Final Plat for development of the "Arden Hills Office Park," subject to six conditions. The letter from City Planner James Lenhoff, setting forth those conditions is attached. Exercising our rights under the Purchase Agreement, I sent a letter dated November 20, 2006 to Mayor Aplikowski and to the members of the City Council indicating that Royal Oaks Realty, Inc. was no longer interested in pursuing this development. A copy of the letter is attached. On February 8, 2007, my attorney, Ron Riach, sent a certified letter to City Adininistrator Michelle Wolfe confirming that Royal Oaks had exercised the termination clause in the Purcahse Ageement and requested the return of the earnest money ($40,000.00). As of today's date, I have not received a response and L1.e earnest money has not been returned, I am writing today to again ask that the City of Arden Hills return the earnest money that Royal Oaks Realty, Inc. as part of the purchase price for the property. Thank you. S::::~ ~_ e4; /! : ~(~sfefner, President Royal Oaks Realty, Inc. cc: Ron Riach, Esq. Jerome P. Filla, Esq. 1000 County Road E West, Suite 150. Shoreview, Minnesota 55126. (651) 483-5518. Fax (651) 483-5642 www.royaloaksrealty.com ~ ~ ft- 2..k - oS", ~ ~~HILLS October 12,2006 Marcel Eibensteiner 1000 County Road E West Suite 150 Shoreview, MN 55126 Re: Planning Case #06-029 Final Plat Approval 1440-1450 West Highway 96 Dear Mr. Eibensteiner: Congratulations! At their October 10"', 2006, meeting, the City Council approved your Final Plat for the "Arden Hills Office Park" subject to signing a site development agreement that is approved by the City Attorney and the following six conditions: 1. The applicant shall continue to be subject to all of the conditions for the PUD as approved in Planning Case 06-023. 2. The developer shall file the Final Plat with the Ramsey County Recorder and provide the City with arecorded copy within sixty days of approvaL 3. The applicant shall pay a park dedication fee of $40,000 as required in the purchase agreement 4. _The developer shall enter shall enter into a Development Agreement with the City, which must be executed prior to the release ofthe Final Plat and be subject to review by the City Attorney. 5. Signing ofthe Final Plat shall be subject to approval of the bylaws by the City Attorney. 6. The applicant shall submit the approved permit(s) from the Rice Creek Watershed District prior to filing the Final Plat Please note that there are conditions that you must complete before filing the final plat with Ramsey County. If you have any questions, contact me by email at;ames.lehnhoffralci.arden-hiils.mn.us or by phone at (651) 634-5134. James Lehnhoff City Planner Cc: Karen Barton, Community Development Director Planning Case File 06-029 City of Arden Hills + 1245 'Vest Highway 96 + Arden Hills, MN . 55112-5743 Phone 651.634.5120 . Fax 651.634.5137 . www.ci.arden-hills.l1m.u5 , , November 20, 2006 City of Arden Hills 1245 Highway 96 Arden Hills, MN 55112 Dear Mayor Aplikowski and City Council members David Grant, Brenda Holden, Gregg Larson, and Vincent Pellegrin: We no longer wish to pursue the purchase of the old city hall site, due to the following reasons: I. PUD restrictions 2. Limited signage 3. Subleasing restrictions 4. Multiple tenant restrictions Sincerely, Marcel Eibensteiner, President Royal Oaks Realty, Inc. ME/ceg