HomeMy WebLinkAbout2019-09-03 Special Council Meeting PacketCITY OF CENTERVILLE
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a. Revised Development Agreement
b. Revised Conditional Use Permit
c. Authorize Lienholder's Priority
d. Grant Extension to Record Plat
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TO: Mayor and City Council
FROM: City Administrator and City Attorney
DATE: August 30, 2019
RE: SPECIAL MEETING OF THE CITY COUNCIL
Bay View Villas
The Developer of Bay Viewill s not able to close on his property yesterday. Several issues arose
that can be rectified by Council action as set forth in this memo.
r r TOO It_f Imp, please
move to adopt ,r
REVISED DOCUMENTS ISSUE: It is necessary for the Developer to revise its Agreements with the City for
the following reasons:
Pursuant to the City's requirements, the 100-day deadline to record their Plat expired on
8/30/2019. Entering into a newly dated Development Agreement will reset that 100-day
deadline.
• A revised Development Agreement and Conditional Use Permit will identify the new property
owner, Bayview Villas, LLC.
• As discussed below, a revised Development Agreement can properly identify liens from Chase
Bank and the I.R.S., and a new construction .
Revised versions of the Development Agreement and Conditional Use Permit are attached to Resolution
19-025, which follows this memo.
ISSUE:LIEN The Developer asks to Record the Bay View Villas Plat before it can obtain clean title
involving two liens: the IRS lien previously discussed with the Council and a lien from Chase Bank.
RECOMMENDATION:
understands d accepts the potential risks associated with this course of action.
RULE OF LAW: The City's Plat is a land use document that must be Recorded in the highest prior so that
it is not subject to any mortgage, lien, easement, or other land use encumbrance.
DISCUSSION: The Internal Revenue Services has a $400,000 lien on the land that will become the Plat for
the Bay View Villas. Chase Bank also has a $196,000 lien that Staff learned about after the last Council
meeting. At closing these liens will be paid off these liens will be paid -off by the Bank but the removal of
the liens from the property's title will take time. The Developer desires to record the Plat before the
liens may be removed. The City faces some risk in the unlikely event there is a problem with the process
of removing these liens.
The worst -case scenario is where, for unforeseen reasons, a lien remains in place. If the lien remains in
place, the I.R.S. or Chase Bank could foreclose and sell the Bay View property. That foreclosure sale
would include the City's streets, stormwater ponds, and private lots. To guard against this potential risk,
Bay View agreed to provide the City with a Title Insurance policy equal to 150% of the amount estimated
as necessary for the City to buy back the streets and the stormwater pond. However, no insurance policy
can allow the City to replace the Conditional Use Permit or some of the easement features currently
controlling the property.
Conversely, if the City requires the Developer to wait weeks or months until the liens are cleared from
title, the approach of pall and Winter will likely cause the Developer to lose a construction season. They
have Buyers and Builders waiting to purchase lots and construct homes. Pushing construction until next
year means they may lose some of these sales.
Staffs assessment is there is little risk of a worst -case scenario event. However, in the occurrence of
that worst -case scenario, insurance proceeds would cover the City's monetary loss and almost all of the
loss of the City's land use controls on the site.
ACTION ITEM: The course of action set forth in this memo is set forth in the attached Resolution 19-
025. If the Council desires to adopt this course of action, please adopt Resolution 19-025.
A RESOLUTION ADOPTING REVISED DEVELOPMENT AGREEMENT
AND
CONDITIONAL USE PERMIT
WHEREAS, RICHARD A. DEFOE AND KARNA 1. DEFOE, ("Developer"), are the �fbe
owners of the Plat for BAY VIEW VILLAS, and will soon transfer ownership to BAYVIEW
VILLAS, LLC (also Imown as the "Developer"). The City desires to facility that property
transfer by revising its land use documents to reflect this property transfer.
WHEREAS, executing a revised Development Agreement and Conditional Use Permit will name
the new property owner, Bayview Villas, LLC..
WHEREAS, pursuant to the City's requirements, the I 00-day deadline to record the Bay View
Villas Plat expired on 8/30/2019. Entering into a newly dated Development Agreement will reset
that 1 00-day deadline.
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Chase Bank and the I.R.S., and the new mortgage from Lake Elmo Bank.
NOW, THEREFORE, BE IT RESOLVED, by the City Council of the City of Centervill
Minnesota, does Ordain, and i
1. AUTHORIZES AND APPROVES EXECUTION of the attached, revised, Development
and Subdivision Agreement, and Conditional Use Permit that reflect a transfer of the real
property of Bay View Villas from ownership by the DeFoe family into a Limited
Liability Company for development of that land.
2. APPROVES a revised Development and Subdivision Agreement effective from the date
of this Resolution, that in part,
a. Allows the Plat for Bay View Villas to be recorded no later than within 100 days
from today,
b. Allows for the temporary presence of two hens to be recorded before the priority
of the Plat Conditional Use Permit and this Agreement;
c. Allows for the permanent presence of the mortgage written from Lake Elmo
Bank recorded in priority before the Plat, Conditional Use Permit and this
Agreement but making conditional on the Bank's execution of a subomation
agreement.
3. All other conditions stated from Resolution 19-012 of the Centerville City Council
remain in effect and apply to the revised documents identified herein.
PASSED AND DULY ADOPTED this 3rd day of September 2019 by the City Council
of the City of Centerville.
Jeff P , Mayor
Attest:
! afk Stat , City Administrator