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Home My WebLink About7C, Notice of rescission under the OTP to GSA and acceptance of RRLD's termination of the PDA ~ ~HILLS Request for Council Action Prepared By: Ron Moorse City Administrator Council Meeting Date: May 11, 2009 1. Motion regarding authorizing the delivery of a notice of rescission under the OTP to GSA. 2. Motion regarding the acceptance of RRLD's termination of the PDA. Budgeted Amount: nla Actual Amount: nla Funding Source: nla Recommendation: 1. Motion regarding authorizing the delivery of a notice of rescission under the OTP to GSA. 2. Motion regarding the acceptance ofRRLD's termination of the PDA. Supportin!! Documents: 1. May 11, 2009, Memo to the City Council 2. Letter Dated May 1, 2009, from Ryan Companies (on behalf of RRLD) regarding the "Notice of Termination of Preliminary Development Agreement" ~ MEMORANDUM DATE: May 11, 2009 TO: Mayor and City Council FROM: Ron Moorse, City Administrato1; SUBJECT: TCAAP Offer to Purchase and Preliminary Development Agreement Back2round The City currently has in place an Offer to Purchase (OTP) with US General Service Administration (GSA) for a portion of the Twin Cities Army Ammunition Plant (TCAAP) property and a Preliminary Development Agreement (PDA) with RRLD. RRLD has notified the City, via the attached letter, of their intention to terminate their agreement to acquire and redevelop a portion of TCAAP. The developer filed its notice to terminate because it determined that the project has become economically infeasible. The letter also requests the City forward to GSA a notice of rescission of the OTP. The Council has reviewed the implications of the letter in relation to the OTP and the PDA. The two options available to the Council regarding the OTP are as follows: 1. Provide a notice of rescission of the OTP, which would result in termination of the existing OTP between the City and GSA. 2. Request GSA to extend the OTP, and make an effort to obtain a new developer under the current OTP. A conference call with Army/GSA was scheduled for Friday afternoon, May 8. The results of that call will be provided to the Council prior to the Council meeting. Action Reauest 1. Motion regarding authorizing the delivery of a notice of rescission under the OTP to GSA. 2. Motion regarding the acceptance ofRRLD's termination of the PDA. I \A hdocsl\ ah \AHdata IPlann ing I Community DevelopmentITCAAP\OTP\051109 - agenda Memo_TCAAP otp and pda 5-5-09.doc 5/8/2009 Page 2 Attachment Letter Dated May 1, 2009, from Ryan Companies (on behalf of RRLD) regarding the "Notice of Termination of Preliminary Development Agreemenr \Y/\Y/W. RYAN C01tI PAN I ES.COIvI Received MA~ - 4: 2099 fA Irden Hi". · City 0 ~ RYAN COMPANIES US, INC. 50 South Tenth Street, Suite 300 Minneapolis, MN 55403-2012 IYANe / 612-492-4000 tel 612-492-3000 fax BUILDING LASTING RELATIONSHIPS May 1, 2009 Mr. Ron Moorse City Administrator City of Arden Hills 1245 West Highway 96 Arden Hills, MN 55112 RE: NOTICE OF TERMINATION OF PRELIMINARY.DEVELOPMENT AGREEMENT Dear Mr. Moorse: The City of Arden Hills , ~ Minnesota municipal. coq>oration (the "City"), and RRLD, ILC, a Delaware limited liability company, previously entered into a Preliminary Development Agreement dated March 30, 2007 as amended by First Amendment to Preliminary Develo.pment A~eement dated April 30. 2007 and Second Amendment to Preliminary Development' Agreement da."ted - March 10, 2008 (together, the "Agreement") with !espect to acquisition .an~ red~velopment of a po:rtion ,of. the Tw41. Cities Army . . ~ . Ammunition Plant (the "TCAAP Site>>) in the City. The Agteeme~t concerns the Po.rtio.n o.fthe TCAAP Sit~ described in Exhibit A to the Agreement '(the "Development PropertY''), whi~h property was expected to J:>e acquired by the City from the United States of America acting by and through ~e General Services Administration (the ~~'GSA") pursuant to the terms of an Offer to Purchase between the City and the GSA dated August 1,) 20~6 as amended by letter amendments thereto dated August 11, 2006, No~ember 15, 2006, and February 12, 2007, and additio~al amendments entered into from time to time (together, the cCOlP"). By this letter, Ryan Companies US, Inc., as Manager of RRLD, LLC (the "Developer") notifies the City of its decision to terminate the Agreement, in accordance with the terms of Section 10 (b) or the Agreement. This letter shall serve as the "Initial Deve~oper Notice" as provided in Section 10 (b) (ll) of the Agreement. In accordance with Section 10 (b) (i) of the Agreement, the Developer has determined that grounds exist for the rescissi~n or terminaf;ion under the tenns of the OTP. In accordance with Section 10 (b) (ii) of the Agreement, the Developer has determined, based on its environmental findings, that the direct and indirect costs of enviro~ehtal remediation of the Development Property render the project economically infeasible in a~cordance ~th Section 5 (c) of the. OTP. In addition, according to OTP Section 5(e), as amended by the 8th Amendment'.to the OTP, the City has the right to rescind the Olp if the City and the GSA do not reach agreement on the".Purchase Price Credit (with the excepti~n of the credit for the cost of environmental insw:ance) by May 15. 2009. As all parties to. the transactionackno.wledged in ow: Washingto.n D.C.nieeting on April 22, 2009, it is not feasible to reach agree'ment on, the Purchase P#ce C~edit by ~.ay 15, 2009. . The p'rovisions. ~f Section 10 (b) of the Agte~ment allow the City sixtY (60) days after receipt of the lniti'a! Developer Notice to take any of the actions described in clause (v) of Section 10 (b). Such clause (v) provides that the City may in its sole discretion negotiate with: (1) the Developer to avoid the Second Developer AI UCENSE ROC095t46, CA UCfNSE 800760, OR UC€NSE CC8155932 IYAN@ \V/\Y/\V. RYANCO~'I PANIES.CO~'I 8UILDING LASTING RELATIONSHIPS May 1, 2009 Page 2 Notice (as defined in Section 10 (b) (ill) of the Agreement) being sent; (2) the GSA regarding extensions to the OTP; (3) any other party regarding the acquisition and redevelopment of the Development Property; or (4) any combination thereof. By this letter, the Developer requests that, due to current market conditions limiting the City's ability to successfully negotiate any of these provisions; the City waive the 60-day notice provision included in Section 10 (b) (ill) of the Agreement, and acknowledge that this letter may also serve as the Second Developer Notice. If the City acknowledges that this letter serves as the Second Developer N orice, then in accordance with provisions. of Section 10 (b) (ill) of the Agreement, the Developer directs that the City select one of the options included in Sections 10 (b) (ill) (1) and (2) in the City's sole discretion. Such subsections (1) and (2) provide that the City perform the selected action within thirty (30) days after receipt of the Second Developer Notice. Notwithstanding that such action shall be selected in the City's sole discretion, the Developer respectfully requests that, due to current market conditions, the City select option (2), and forward to the GSA and others as .required in the OTP, the City's notice of rescission or tennination of the OTP for the reasons stated herein. The Developer requests that the City immediately cease work which ,may be reimbursable by the Developer to the City under the provisions of the Agreement. We have appreciated the ongoing support of the ,City in pursuit of this redevelopment, and regret that environmental findings make this action necessary. ' Richard M. Collins Vice President c: Stephen). Bubul Kennedy & Graven, Chartered 470 U.S. Bank Place 200 South Sixth Street Minneapolis, :MN 55402 Mr. Charles F. Diessner Fredrikson & Byron, P.A. 200 South Sixth Street, Suite 4000 Minneapolis" :MN 55402