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Home My WebLink About8B, TCAAP Escrow Agreement ~ _ffiLLS Request for Council Action Prepared By: Ron Moorse Council Meeting Date: August 10, 2009 Motion to approve the escrow agreement between the eity and RRLD, and Old Republic National Title Insurance Company as the escrow agent, and to authorize the eity Administrator to place the amount of the disputed reimbursable expenditures into the escrow account. Budgeted Amount: Actual Amount: Funding Source: NA NA NA Recommendation: 1. Approve the escrow agreement between the City and RRLD, and Old Republic National Title Insurance Company as the escrow agent, and to authorize the City Administrator to place the amount of the disputed reimbursable expenditures into the escrow account. ~'~'''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''U.''''''''''''''''''''''"",,''u.............................u.....................................""""........................""..............................................................................................................................................................................................................................................................................................................................................................................................................................................................................................._...............................................~.....................~..............'"...............................................................__.................................................................................................................. Supportin!! Documents: 1. Memorandum dated August 10,2009 from City Administrator 2. Escrow Agreement zI\ MEMORANDUM DATE: August 10, 2009 TO: Mayor and City Council FROM: Ron Moorse, City Administrator SUBJECT: TCAAP Escrow Agreement Backt!round: When the Offer to Purchase (OTP) with the Army/GSA related to the TCAAP property was rescinded, the GSA refunded the earnest money to the City. This earnest money was to be returned to the City's development partner, RRLD. The City is currently holding a portion of the earnest money as an offset to unpaid reimbursable expenditures. The City Attorney has recommended that the funds related to these unpaid expenses be placed into an escrow account while the City and RRLD resolve objections RRLD has regarding the reimbursable expenses. The Council, at its July 27, 2009 regular meeting, tabled action on the TCAAP Escrow agreement to the August 10, 2009 regular meeting to enable the City Attorney to address a number of questions and concerns regarding how the agreement relates to the Preliminary Development Agreement the City had with RRLD, particularly the dispute resolution process. In discussing these questions and concerns with the City's attorneys, they recommended that the best way to address these concerns was to amend the escrow agreement to specifically indicate that the City and RRLD agree that Section 23 of the PDA, which sets out the dispute resolution process, survives termination of the PDA, and that nothing in this Escrow Agreement modifies the dispute resolution process described in this section of the PDA. The attached escrow agreement reflects that revision. An additional revision to the escrow agreement allows for portions of the funds in the escrow account to be released as they are resolved between the City and RRLD. The City's attorneys will attend the TCAAP work session scheduled for 5:00 p.m. on August 10 to answer further questions. Council Action ReQuested: Motion to approve the escrow agreement between the City and RRLD, and Old Republic National Title Insurance Company as the escrow agent, and to authorize the City Administrator to place the amount of the disputed reimbursable expenditures into the escrow account. \ \Metro-inet\ardenhills\Admin\Council\Agendas & Packet Information\2009\08-1 0-09 Regular\Packet Information\RCA TCAAP Escrow agreement A 8-10-09.doc ESCROW AGREEMENT This Escrow Agreement is made this _ day of August, 2009 by and between RRLD, LLC ("RRLD"), the City of Arden Hills (the "City"), and Old Republic National Title Insurance Company ("Escrow Agent"). RECITALS WHEREAS, the City and the United States of America, acting by and through the General Services Administration (the "GSA"), have entered into that certain Offer to Purchase dated as of August 1, 2006, as amended (the "OTP"); and WHEREAS, the City and RRLD have entered into that certain Preliminary Development Agreement dated as of March 30, 2007, as amended pursuant to that certain First Amendment to Preliminary Development Agreement dated as of April 30, 2007; that certain Second Amendment to Preliminary Development Agreement dated as of March 10, 2008 and that certain Third Amendment to Preliminary Development Agreement dated as of March 30, 2009 (collectively, the "PDA"); and WHEREAS, the City, CRR, LLC (the predecessor of RRLD), Ryan Companies US. Inc. and Rehbein Companies, Inc., have entered into that certain Funding and Guaranty Agreement dated as of August 10, 2006, as amended by that certain First Amendment to Funding and Guaranty Agreement dated as of March 30, 2007 (collectively, the "Guaranty"); and WHEREAS, pursuant to the Guaranty, the RRLD agreed with the City, among other things, to fund the earnest money required to be paid pursuant to the terms of the OTP in the total amount of $2,250,000 (the "Earnest Money"); and WHEREAS, the Earnest Money was returned to the City by the GSA; WHEREAS, the City and RRLD have agreed that $62,719.37 (the "Undisputed Costs") of the Earnest Money may be retained by the City as payment by RRLD of a certain portion of the City Reimbursable Costs pursuant to Section 5 of the PDA, and $437,060.67 (the "Claimed Costs") of the City Reimbursable Costs are in a dispute ("Dispute") ; and WHEREAS, the City has refunded the Earnest Money less the Undisputed Costs and the Claimed Costs to RRLD; and WHEREAS, the City and RRLD desire that the portion of the Earnest Money equal to the Claimed Costs be deposited in escrow with Escrow Agent pending resolution of the Dispute. NOW, THEREFORE, in consideration of the foregoing and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties agree as follows: 1. Escrow. The City shall deposit with Escrow Agent the portion of the Earnest Money equal to the Claimed Costs. Escrow Agent shall deposit such funds in an interest bearing account which account shall permit withdrawal without penalty upon one day's notice. The Claimed Costs shall remain in escrow until (i) Escrow Agent has received written instructions directing the release of such funds (or any portion thereof) signed by both RRLD and the City, which instructions may be given either for the entire amount of Claimed Costs, or from time to time for specified portions thereof; or (ii) RRLD or the City sends to Escrow Agent a court or arbitrator's order directing the release of such funds with a copy to the other party, and the other party does not within thirty (30) days thereof send written notice to Escrow Agent of its intention to appeal the same. In the event a party sends written notice of appeal to Escrow Agent and does not so appeal the order within the statutorily permitted time, upon notice from the other party of such non-appeal, the Escrow Agent may release the funds as directed by such order. 2. Escrow Agent Duties. The sole duties of Escrow Agent shall be those described herein, and Escrow Agent shall be under no obligation to determine whether the other parties hereto are complying with any requirements of law or the terms and conditions of any other agreements among said parties. Escrow Agent may conclusively rely upon and shall be protected in acting upon any notice, consent, order or other document believed by it to be genuine and to have been signed or presented by the proper party or parties. Escrow Agent may consult the advice of counsel with respect to any issue concerning the interpretation of its duties hereunder; RRLD and the City hereby acknowledge such fact and indemnify and hold harmless Escrow Agent from any action taken by it in good faith in reliance thereon. Escrow Agent shall have no duty or liability to verify any such notice, consent, order or other document, and its sole responsibility shall be to act as expressly set forth in this Agreement. Escrow Agent shall be under no obligation to institute or defend any action, suit or proceeding in connection with this Agreement. 3. Escrow Agent Fees. RRLD and the City shall each pay one-half of any charges of Escrow Agent for its services rendered as Escrow Agent, which charges are $150.00. 4. Dispute Resolution Process. City and RRLD agree that Section 23 of the PDA survives termination of the PDA, and that nothing in this Escrow Agreement modifies the dispute resolution process described in such section of the PDA. IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first set forth above. RRLD, LLC By: Ryan Companies US, Inc. Its: Manager By: Its: above. IN WITNESS WHEREOF1 the parties have executed this Agreement as of the date first set forth The City of Arden Hills By: Its: Administrator IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first set forth above. Old Republic National Title Insurance Company By: Its: