2018-08-15 CC HRA Agenda PacketMISSION STATEMENT: "The City of Mound, through teamwork and cooperation, provides, at a
reasonable cost, quality services that respond to the needs of all citizens, fostering a safe, attractive
and flourishing community."
CONCURRENT SPECIAL MEETING AGENDA
MOUND HOUSING AND REDEVELOPMENT AUTHORITY
AND MOUND CITY COUNCIL
WEDNESDAY, AUGUST 15, 2018 AT 6:00 P.M.
MOUND CITY COUNCIL CHAMBERS
CENTENNIAL BUILDING
5341 MAYWOOD ROAD, MOUND, MN
Call to Order
2. Approval of the agenda, with any amendments
3. Council Action: Approve minutes:
- March 13, 2018 concurrent meeting 1 - 3
- July 24, 2018 concurrent meeting 4 - 7
4. HRA Action: Approve minutes:
- March 13, 2018 concurrent meeting 1 - 3
- July 24, 2018 concurrent meeting 4 - 7
5. Catherine Pausche, Director of Finance & Admin Services, 8-42
requesting discussion on a purchase and development agreement
with Mound Harbor, LLC to build a townhome development in
the Mound Harbor District and requesting the following actions:
a. HRA Action: Action on a resolution providing approval for conveyance 43
of land in Mound Harbor District to City of Mound
b. Council Action: Action on a resolution approving purchase and 44
development agreement with Mound Harbor, LLC
6. Adjourn
This is a preliminary agenda and subject to change. The City Council and HRA will set a final agenda at the meeting.
More current meeting agendas may be viewed at City Hall or at the City of Mound web site: www.cityofmound.com.
MINUTES OF THE CONCURRENT MEETING OF THE MOUND CITY COUNCIL AND
MOUND HOUSING AND REDEVELOPMENT AUTHORITY
March 13, 2018
The Mound City Council and Mound Housing and Redevelopment Authority in and for the City of
Mound, Minnesota, met in concurrent special session on Tuesday, March 13, 2018, immediately
following the regular City Council meeting that started at 7:00 p.m. in the council chambers of the
Centennial Building.
Members present: Mayor/Chair Mark Wegscheid, Council Members/Commissioners Kelli Gillispie,
Jennifer Peterson, Jeff Bergquist, Ray Salazar (7:45 pm)
Members absent: None
Others present: City Manager and Director of Public Works Eric Hoversten, Finance
Director/Clerk/Treasurer Catherine Pausche, Community Development Director Sarah Smith, and
Administrative Assistant Rebecca Kress, Tom Backritges, Tim Whitten, Mike Kevitt.
1. Open meeting
MOTION made by Chair Mark Wegscheid, seconded by Peterson, to reconvene the February 27,
2018 concurrent special session with the City Council and the Mound Housing and Redevelopment
Authority at 7:30 p.m. All voted in favor. Motion carried.
2. Approve agenda
MOTION by Wegscheid, seconded by Peterson, to approve the agenda. All voted in favor. Motion
carried.
3. Council Action: Approve minutes from February 27, 2018 concurrent meeting.
MOTION by Peterson, seconded by Gillispie, to approve minutes from February 27, 2018
concurrent meeting. All voted in favor. Motion carried.
4. HRA Action: Approve minutes from February 27, 2018 concurrent meeting.
MOTION by Peterson, seconded by Bergquist, to approve minutes from February 27, 2018
concurrent meeting. All voted in favor. Motion carried.
5. Request for Qualifications and Interest in a Townhome Development in the Mound Harbor
District in Mound, MN: Discussion and action to select the preferred developer
Catherine Pausche, Finance Director, summarized review of what was discussed at the previous
February 27, 2018 meeting in which staff were directed to provide recommendations in response to the
presentations and material submitted by the developers in response to the City request for
qualifications and interest in the Mound Harbor District Townhome Development. The Council heard
from 2 developers: Tom Bakritges, Director of Land Development, Homestead Partners and Mike
Kevitt, Vice President of Land Development, SVK Development. Pausche reviewed the objectives from
the previous meeting which are (1) obtain a competitive price for the land and maximize the market
value of the completed development, (2) balance the intensity of use with preservation of public
enjoyment of the area; and (3) complete the development in a timely manner with the developer
independently financing all improvements.
Pausche continued the review of the concept plans presented from each developer. Homestead
Partners proposed a 21 unit development, which Pausche pointed out fits within the footprint of the
Staff concept plan and the idea there would be more circulation for the public to the downtown area and
allowing for a restaurant parcel which will be set aside for future use. SVK Development, although
similar, presented a detached style of townhome with a bit less public space being proposed. Pausche
added that the SVK Development proposal suggested a build of 16-17 units and offered $960K for the
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Concurrent City Council/HRA Meeting Minutes — March 13, 2018
parcel of land and Homestead offered $660K with 21 units. Pausche said more units will provide higher
tax revenue to the City over time and noted that both concepts were desireable, formidable offers of
high quality. Pausche stated that both participants stated they were able and willing participants in
moving forward in the land use process. Pausche reiterated that both proposals have many similarities
which the City is looking for such as owner occupied properties with both presented proposals which
are complimentary to the Villas on Lost Lake. Pausche also mentioned that Homestead provided for
additional off-street parking and SVK for stormwater management, as well as both demonstrated high
end finishes which will support higher market value.
Pausche referenced the Staff memo observation that although there are many benefits to the stand
alone units in SVK's proposal, including windows which takes advantage of views, the City does not
want the development to have a single-family residential neighborhood feel. Pausche said
Homestead's design compliments the Villas by using slab -on -grade flush with the trails and public
spaces and achieves the medium density targets for the area, therefore Staff recommends proceeding
to negotiate a purchase and development agreement with Homestead Partners with SVK as the
alternate.
Mayor Wegscheid said he was glad all City parties took the time to pause and condsider all the
information presented by the developers. Wegscheid stated he appreciated Staffs reflection on both
proposals. Wegscheid also stated that both participants are highly qualified parties and thanked both
parties for their time and effort in this process.
Peterson added that she felt both proposals were great but that the Homestead Partners option feels
more like downtown and more aligned with what the public has been requesting.
6. Council Action: Action on a resolution authorizing staff to negotiate the terms of a purchase
agreement for consideration by the HRA Board and City Council with Homestead Partners
MOTION by Peterson, seconded by Bergquist, to authorize staff to negotiate the terms of a
purchase agreement for consideration by the HRA Board and City Council with Homestead
Partners. All voted in favor. Motion carried.
RESOLUTION NO.18-29 : RESOLUTION AUTHORIZING STAFF TO NEGOTIATE THE TERMS
OF A PURCHASE AGREEMENT FOR CONSIDERATION BY THE HRA BOARD AND CITY
COUNCIL WITH HOMESTEAD PARTNERS
7. HRA Action: Action on a resolution authorizing staff to negotiate the terms of a purchase
agreement for consideration by the HRA Board and City Council with Homestead Partners
Gillispie asked if there is a timeline as to when we would see a purchase agreement come back
from the developer. Pausche stated that the City would be back with a progress report by the last
meeting in April. Pausche added that the timeline is hopeful but there are variables to consider that
could affect the proposed timeline. Pausche said that the intention is to keep the process moving
forward. Smith added that Staff would like to meet with Homestead Partners and get the timeline
nailed down and agreed that the timeline should keep moving forward for both the City and the
developers benefit.
MOTION by Bergquist, seconded by Peterson, to authorize staff to negotiate the terms of a
purchase agreement for consideration by the HRA Board and City Council with Homestead
Partners. All voted in favor. Motion carried.
RESOLUTION NO. 18-03H: RESOLUTION AUTHORIZING STAFF TO NEGOTIATE THE TERMS
OF A PURCHASE AGREEMENT FOR CONSIDERATION BY THE HRA BOARD AND CITY
COUNCIL WITH HOMESTEAD PARTNERS
WA
Concurrent City Council/HRA Meeting Minutes — March 13, 2018
8. Council Action: Action on a resolution approving amended and restated Master
Subordination Agreement and Estoppel Certificate related to the Indian Knoll Manor Proiect
Pausche stated that Aeon is modifying the Master Subordination Agreement for the mortgages on
Balsam Hill to move the primary to MHFA (the end loans) in place of Wells Fargo who was the
construction lender. Pausche noted that the City/HRA's place in line doesn't change and this is just
a housekeeping issue.
MOTION by Gillispie, seconded by Salazar, to approve amended and restated Master
Subordination Agreement and Estoppel Certificate related to the Indian Knoll Manor Project. All
voted in favor. Motion carried.
RESOLUTION NO. 18-30: RESOLUTION APPROVING AMENDED AND RESTATED MASTER
SUBORDINATION AGREEMENT AND ESTOPPEL CERTIFICATE RELATED TO THE INDIAN
KNOLL MANOR PROJECT
9. HRA Action: Action on a resolution approving amended and restated Master Subordination
Agreement and Estoppel Certificate related to the Indian Knoll Manor Project
MOTION by Gillispie, seconded by Salazar, to approve amended and restated Master
Subordination Agreement and Estoppel Certificate related to the Indian Knoll Manor Project. All
voted in favor. Motion carried.
RESOLUTION NO: 18-04H: RESOLUTION APROVING AMENDED AND RESTATED MASTER
SUBORDINATION AGREEMENT AND ESTOPPEL CERTIFICATE RELATED TO THE INDIAN
KNOLL MANOR PROJECT
10. Adjourn
MOTION by Bergquist, seconded by Gillispie, to adjourn at 7:53 p.m. All voted in favor.
Motion carried.
Attest: Catherine Pausche, Clerk
-3-
Chair Mark Wegscheid
MINUTES OF THE CONCURRENT MEETING OF THE MOUND CITY COUNCIL AND
MOUND HOUSING AND REDEVELOPMENT AUTHORITY
July 24, 2018
The Mound City Council and Mound Housing and Redevelopment Authority in and for the City of
Mound, Minnesota, met in concurrent special session on Tuesday, July 24, 2018, at 6:00 p.m. in the
council chambers of the Centennial Building.
Members present: Mayor/Chair Mark Wegscheid, Council Members/Commissioners Kelli Gillispie(6:03
pm arrival), Jennifer Peterson, Jeff Bergquist, Ray Salazar
Members absent: None
Others present: City Manager and Director of Public Works Eric Hoversten, Finance
Director/Clerk/Treasurer Catherine Pausche, Community Development Director Sarah Smith,
Administrative Assistant Rebecca Kress, Tom Bakritges, Jeff Thoele, Monica & Darren Kahmeyer, TQ
White II, Tegan & Kevin Castellano, Frank Doherty, Barb Miller, John Smyth, Robert Sandom, Curt &
Laura Wynkoop, Jim Gountanis, Michelle Herrick, Scott Gates, Cassy & Alex Hubler, Danelle Bonilla,
Robert Stevens, Jesus Uitell, Gary Wambold, Arlyn Anderson, Rick Manion, Jack Harrison, Joe Bruns,
S. Zimmerscheid, Dennis Johnson, Debbie Anderson, Christie Casey, Bethany Slicerson, Anna Peters,
Desiree Meisik, Kim Blievernicht, Candi Stabeck, Brooks Chandler, Leigh Maustad, Sheri Buescher,
Stephen & Suzanne Schmidt, Marc Doepner-Hove, Cathryn Fossing, and David Goode.
1. Open meeting
Mayor/Chair Wegscheid called the meeting to order at 6:00 p.m
2. Approve agenda
MOTION by Salazar, seconded by Bergquist, to approve the agenda. All voted in favor. Motion
carried.
3. Sarah Smith, Community Development Director, requesting discussion on a purchase and
development agreement with HPH Mound Harbor, LLC to build a townhome development in the
Mound Harbor District and requesting the following actions:
Finance Director/Clerk/Treasurer Catherine Pausche, presented a background on how the City has
gotten to this point in the development of the Mound Harbor District (MHD). Pausche stated that TIF,
or Tax Increment Financing, is a popular development tool local governments use where the
incremental property tax from development is used to fund the public costs of economic revitalization
and growth. Pausche said no developer is going to pay for cleaning up blighted areas and these
improvements are necessary to get the area to a build ready site, noting the public investment needed
does not reflect the value of the land. Pausche went on to say that with TIF, the City is obligated to
develop the land and that after 15 years, it will go back on the tax rolls either way, burdening the tax
base even further if development does not happen.
Pausche said the initial concept plan was for vertical mixed-use development which would be similar to
some of the new developments in Wayzata and to The Mist in Spring Park. Pausche summarized the
$7.2 million in investments through 2015, including: removal of the debris and contaminated soils from
the City dump area, re -dredging Lost Lake to make it navigatable and giving lake access to downtown
Mound, creating the greenway and trail, moving the historical pump house to create public bathrooms
and buying some blighted properties. Pausche added that out of that $7.2 million, the City only had to
issue $4 million in bonds with the rest being paid by grants and developer in-kind. Pausche said Lost
Lake Villas was phase one of a larger development plan, but when the recession hit, the other phases
stalled and this is an attempt to restart it.
Pausche stated that a market study was commissioned in 2013 and performed by a very well known
researcher. The study showed that there is some room for commercial but nothing like what was
Concurrent City Council/HRA Meeting Minutes—July 24, 2018
contemplated in the original Mound vision, especially because Mound Marketplace Development was
not contemplated when the original vision was created and consistent with the number of commercial
vacancies in recent years. In contrast, Pausche said the study showed demand for housing is strong at
all levels, including the luxury townhomes being discussed. The City also had the financial advisors
determine how much development would be necessary to pay for the 2009D Bonds and repay the
interfund loans. The answer was $27.8 million which equates to 180 apartment units and 6300 SF of
retail which is not desirable or 85 -120K of retail which is not realistic. Pausche said the City has been
approached with concepts for 120+ units of high density affordable housing in the Harbor District which
would have essentially eliminated public enjoyment of the area and significantly intensified use.
Pausche said the City has observed the strong market for the Lost Lake Villas and determined that this
type of housing is viable in Mound while also learning from the lessons of the Villas with regard to
parking issues, design, and better separation between residential and retail.
Pausche stated that the City came to the conclusion that horizontal mixed-use would be the best
solution, with commercial located on the busy roads (CR 110/CR 15) and a small area for residential in
the center which will create $12 - $14M in taxable market value for the City. In putting together the
Reqeuste for Qualifications and Interest in a Townhome Development (RFQ), the City wanted to
respond to feedback from the Market Study and shifting economic forces, respect existing business as
not to compete with key stake holders, compliment the Lost Lake Development by reducing intensity of
use and allow for public enjoyment of the area, and create a competitive process to test the market
while leaving all options on the table. Pausche went on to highlight the RFQ process which included
being very specific on wanting high-end townhomes as high density was not the goal for the area. The
RFQ was sent to 83 luxury home builders and affiliates, mainly from the Parade of Homes list of
builders in the $600K - $1 M category. Pausche said that 4 responses were received and 2 were
selected for interviews based on their ability to meet the criteria of 17-20 luxury townhomes on 2.3
acres. Pausche said the City targeted luxury homebuilders and developers versus the mixed-use
commercial/residential developers who focus on high density options which the City did not want to
entertain. Pausche went on to say the City did consult professional commercial appraisers, but the City
was advised that it only makes sense to appraise the property when the type of development is known.
Pausche explained that the RFQ/1 process is a common tool used by Cities and Counties to ensure the
market was tested as MN State Statute is fairly open about the requirements for selling land held for
redevelopment. Pausche said the initial developer of the Villas on Lost Lake, Mound Harbor LLC,
bought the land for $1 and paid for and tuned over ownership of the Lost Lake Slips as well as made
other improvements. Their original plan was to have 3 phases of development, but when the recession
hit, development stopped and the remaining 26 lots went back to the bank and sat on the market for
years during the recession. The second builder/developer paid approx $800K for the remaining 26
ready -to -build lots with full utility, foundation and streets which is an average of $30.7K per lot. The
City has accepted an offer of $660K for 21 lots which is $31.41K per lot and that does not include the
street/utilities/public improvements that will need to be made to make the site ready to build. Pausche
stated the 21 townhomes have an estimated market value of $550 - $700M and that $12M in property
value will produce over $100K in additional tax increment which provides critical relief to the levy.
Pausche went on to say that 21 homes will create a minimum of $15K in additional utility revenues and
that the 10 new overnight slips generates over $1 OK per year from slip fees and increase the value of
the townhomes. Pausche noted the City will continue to own the slips and the new townhome owners
would have right of first refusal with any surplus slips available to Mound residents first and lastly, non -
Mound residents.
Pausche stated that Homestead Partners LLC and their affiliate JMS Custom homes, proposal came
closest to what the City was requesting, including being able to stay within the 2.3 acre footprint offered
by the City which will leave 47K square feet for a future restaurant/brewery and 57K square feet of
green space. Pausche said the proposed luxury townhomes will target active adults and will have 3
bedrooms, 3 baths, 2 car garage with an optional 3rd tandem garage, and the lower level will have a
family room, bedroom, and a bathroom. The main level would include a great room, kitchen, dining,
-5-
Concurrent City Council/HRA Meeting Minutes—July 24, 2018
bedroom with a 3/4 bath and an owner's suite. Pausche concluded stating that if approved, land use
approvals would take place this Fall with construction to begin in March of 2019.
Mayor Wegscheid thanked Pausche for her presentation and stated that he had some questions on the
agreement. Wegscheid said he would like more time to review and the opportunity to have a
discussion with the developer on some of the details in the agreement. Gillispie agreed that she has
questions as well and would like to discuss this further. Salazar, Bergquist, and Peterson all agreed
that more time and discussion is needed before acting.
MOTION by Wegscheid, seconded by Salazar, to table the proposed actions and remand back
to staff for further discussion between Staff, Mound Development Committee and the
developer and bring it back to the August 15, 2018 concurrent Council/HRA meeting in order to
allow more time for public viewing and feedback. All voted in favor. Motion carried.
A. TABLED HRA Action: Action on a resolution providing approval for conveyance of
land in Mound Harbor District to City of Mound
RESOLUTION NO: 18- : RESOLUTION APROVING PROVIDING APPROVAL FOR CONVEYANCE
OF LAND IN MOUND HARBOR DISTRICT TO CITY OF MOUND
B. TABLED Council Action: Action on a resolution approving purchase and
development agreement with Mound Harbor, LLC.
RESOLUTION NO: 18- H: RESOLUTION APROVING PURCHASE AND DEVELOPMENT
AGREEMENT WITH MOUND HARBOR, LLC
4. Catherine Pausche, Director of Finance and Administrative Services discussing Tax
Increment Financing Districts 1-2 and 1-3 and the Dock Fund and requesting the following
actions:
Catherine Pausche, Director of Finance and Administrative Services, presented information on the
requested actions for the HRA and Council, stating that the Mound Marketplace and Village by the Bay
was established in the early 2000's and came online before the recession and because of this, the tax
increment has been quite healthy in this district. Pausche stated there are three debt issues related to
TIF District 1-2 which makes it more complex, including a subordinate note with the developer where
some of the excess TIF will be used for a 10% administrative fee to the City, 50% used to pay down the
bonds and 50% will go to the subordinate note. Pausche noted that any time there is prepayment of a
bond, a formal action is required.
Pausche went on to say one of the bond issues called for the City to levy a portion of the debt service,
but that since tax increment is higher than original projections, there is an opportunity to recapture a
portion of the debt levies for other purposes. Pausche is recommending transferring $650K of the debt
levies from TIF 1-2 to TIF 1-3 for a partial paydown of the 2009D bond issue, which will be refinanced in
the Fall. Pausche also recommended transferring approximately $350K from the dock fund in order to
pay down a total of $1 M on the $2.975M of 2009D bonds outstanding. Pausche said that would bring
the total interfund loan from the Dock fund to $550K, which is less than the orginal cost of the slips and
dredge and equal to the amount of Lost Lake Slip fees received since 2007. Pausche noted that even
if the Harbor District development occurs, any TIF generated will be insufficient to totally repay the debt
levies and dock fund interfund loans.
A. HRA Action: Action on a resolution providing for the prepayment and redemption of
a portion of the Authority's Tax Increment Revenue Refunding Bonds (Metroplains
Project), Series 2006
M
Concurrent City Council/HRA Meeting Minutes—July 24, 2018
MOTION by Salazar, seconded by Gillispie, to approve a resolution providing for the prepayment and
redemption of a portion of the Authority's Tax Increment Revenue Refunding Bonds (Metroplains
Project), Series 2006. All voted in favor. Motion carried.
RESOLUTION NO: 18-05H: RESOLUTION PROVIDING FOR THE PREPAYMENT AND
REDEMPTION OF A PORTION OF THE AUTHORITY'S TAX INCREMENT REVENUE REFUNDING
BONDS (METROPLAINS PROJECT), SERIES 2006
B. Council Action: Action to authorize a $25,000 payment on the Taxable Tax Increment
Subordinate Revenue Note-MetroPlains Redevelopment Project (Series 2002B)
MOTION by Salazar, seconded by Gillispie, to authorize a $25,000 payment on the Taxable Tax
Increment Subordinate Revenue Note-MetroPlains Redevelopment Project (Series 2002B). All voted in
favor. Motion carried.
C. Council Action: Action on a resolution authorizing transfer of funds
MOTION by Bergquist, seconded by Salazar, to approve resolution authorizing transfer of funds. All
voted in favor. Motion carried.
RESOLUTION NO: 18-73: RESOLUTION AUTHORIZING TRANSFER OF FUNDS
D. Council Action: Action on a resolution authorizing transfer of funds and expenditures
outside of budget
MOTION by Salazar, seconded by Gillispie, to approve resolution authorizing transfer of funds
expenditures outside of budget. All voted in favor. Motion carried.
RESOLUTION NO: 18-74: RESOLUTION AUTHORIZING TRANSFER OF FUNDS AND
EXPENDITURES OUTSIDE OF BUDGET
5. Adiourn
MOTION by Salazar, seconded by Bergquist, to adjourn at 6:43 p.m. All voted in favor.
Motion carried.
Attest: Catherine Pausche, Clerk
M
Chair Mark Wegscheid
Date: August 9, 2018
To: HRA Board of Commissioners & City Council Members
From: Eric Hoversten, City Manager/Public Works Director
Sarah Smith, Community Development Director
Catherine Pausche, Director of Finance and Administrative Services
Subject: Purchase and Development Agreement for Harbor District Townhome Development
At the March 13, 2018 concurrent City Council and HRA meeting, Homestead Partners LLC was
selected as the developer of a 21 unit townhome development in the Mound Harbor District. Staff was
directed to work with Homestead Partners LLC and our attorneys to prepare a Purchase and
Development Agreement for the City Council and HRA's consideration.
At the July 24. 2018 concurrent City Council and NRA meeting, the proposed Purchase and
Development Agreement was presented for consideration and the issue was tabled and remanded back
to staff to coordinate further discussion between staff, the Mound Development Committee and the
developer and in order to allow more time for public viewing and feedback prior to bringing it back to
the August 15th meeting.
The City acknowledges there has been recent public debate on the proposed townhome concept and the
public will be given an opportunity to address the City Council/HRA at Wednesday's meeting.
Delaying the decision was beneficial to allow some of the residents new to the discussion time to
review past meetings, including streaming them on LMCC-TV.org, reviewing the meeting minutes,
2014 market study and presentations still on the City's website, and viewing the more recent newsletter
article on redevelopment, August 4th Laker article and presentation from the July 24th concurrent
meeting.
Staff wishes to address some of the recurring themes in these public discussions:
Theme 1) The Lost Lake Slips are being sold to the developer
City Response: The City will continue to own all of the 61 slips in Lost Lake Harbor, 14 of which are
transient and 47 of which are overnight. The 47 overnight slips generated over $77,000 in revenue in
2018 and will continue to do so. These revenues have been used to support the debt service on the
bonds issued to pay for these improvements, but a special levy on the tax base is also required to
support the bonds. Just like the Villas on Lost Lake, the Harbor District townhome owners are given
right of first refusal on one of the slips in order to increase the value of the development. Any unused
slips are then offered to Mound residents first, and then non -Mound residents.
Harbor District Townhome Development
Page 2
The narrowness of the channel and bridge/entry constrains how much transient usage can be supported
These slips have been underutilized for many years and converting another 10 of them to overnight
(for a total of 47 overnight) helps to generate revenues that will support the previous development and
long-term sustainability of the district.
Theme 2) The City should focus on bringing businesses to the downtown, including a
restaurant to anchor the district, not residential.. Why can't we be more like Wayzata c& Excelsior?
City Response: Many factors come into play here, which was the subject of the quarterly newsletter
article titled What Mound Looked Like in the Year 2000. Prior to the recession, when development
was booming and the internet had not yet transformed retail, the Harbor District was being marketed
by Welsh Properties to no avail. A major restaurant chain went as far as to do a market study and then
withdrew interest when it was determined Mound could not support a lunch crowd and did not have a
dense enough population surrounding it. Those conclusions were reaffirmed in the market study
commissioned by the City in 2013/14. Wayzata and Excelsior benefit by being the gateways to Lake
Minnetonka for large cities like Plymouth, Minnetonka and Chanhassen. The City also recognized the
amount of vacant office and retail spaces in Mound and the surrounding communities, including: 3
vacant pad sites in Mound Marketplace, continuously advertised space available in Commerce Blvd
frontage between OLL and Dakota Trail (Threshold, etc), private suite, business, and industrial space
continuously advertised in the Balboa Building (old Tonka Toys), the pending vacancy in Stonegate
Plaza after Early Childhood moves to its new location by Hilltop (9,000 square feet), and lastly the
significant long-term vacancies at Commerce Place. Adding additional capacity would only put
pressure on these existing businesses/properties besides the fact that no developer has expressed any
serious interest in developing more commercial/office/retail, whereas there is interest in adding
"rooftops" which help to support our existing businesses. Mound is fortunate to have many thriving
businesses with a great customer base who supports buying local, but there are limits. The City has
reserved the east end of the Harbor District for a potential restaurant site surrounded by public, open
green space that will serve as the corridor from Lake Minnetonka to the trails and downtown.
Theme 3) The proposed purchase price for the 2.3 acres with lake access is too low
City Response: Since our relationship with the previous developer, Mound Harbor Renaissance,
LLC ended, the only proposals we received were for high density senior living or affordable housing,
with 3 stories, 70 - 120 units+, with some commercial, but it seemed only to satisfy the vision for the
district and as a means of getting the high density housing approved. Knowing that high density
housing is not what the community invested in this area for and recognizing that the area has become a
real community asset that needs to be preserved, the City decided to target homebuilders/developers
for a smaller project vs. mixed use commercial/residential developers who tend to focus on high
density residential that would have taken up the entire space.
The Request for Qualifications and Interest (RFQ/I) is a common tool used by cities and counties to
ensure the market was tested as MN State Statute is fairly open about requirements for selling land
held for redevelopment. The RFQ/1 was sent to 83 luxury home builders & affiliates, mainly from the
Parade of Homes list of luxury home builders in the $600K - $1M category - 4 responses were
received and 2 were selected for interviews.
Harbor District Townhome Development
Page 3
It should be noted that the initial developer of the Villas on Lost Lake bought the land for $1 but made
many of the public improvements to the greenway and built the Lost Lake Slips. When 26 of the lots
went back to the bank, they sat on the market for years during the recession. The next builder paid
approximately $800K (an average of $30.7K per lot) for 26 ready to build lots with full foundations,
utilities and streets. The offer price of $660K for 21 lots averages $31 AK per lot and none of the
street/utilities/public improvements have been made. Homestead Partners will incur significant costs
to convert the 2.3 acres to build -ready status.
The $7M in investments in this district were to clean up significant blight from the old city dump,
make Lost Lake navigable once again, and remove old buildings that were well past their useful life.
This is what redevelopment tax increment financing districts (TIF) are designed for: to fund the public
costs of preparing land for economic revitalization and growth. These investments are not a reflection
of the value of the land.
Theme 4) "Market Rate" is another word for affordable and these will not be luxury
City Response: This is a completely private development with no public assistance. Developers,
including non-profit developers such as Aeon and Common Bond, can only build affordable housing
with public grants, loans and tax incentives. Homestead Partners/JMS Custom Homes niche is luxury,
custom homes, clearly demonstrated by the developments featured on their website:
https://wwwjmscustoi-nhomes.com and by the townhome project that was proposed in response to the
City's RFQ/I. It should also be noted, the City maintains control over the project through our land use
approval process throughout the development.
Conversely, other feedback received is that these townhomes will be too expensive for a typical
family. The 2014 market study showed strong demand for market rate townhomes and condominiums
(there currently isn't a legal description for "luxury" per the City attorney, so you don't tend to see it
used in contracts). While Mound has diverse housing stock at all ranges of the housing spectrum,
maximizing the market value of these particular townhomes will provide the tax relief necessary that
did not materialize from the original vision for the district and that is an expectation of a TIF
redevelopment district.
Theme 5) The area should be kept as a public gathering space for the public enjoyment
City Response: The City came to a similar conclusion which is why only 2.3 acres were carved out
for the townhome development and not the entire thing! The idea was to nestle the townhomes in the
center away from the commercial corridors while leaving plenty of public green spaces abutting the
Dakota Trail and providing a gateway from the harbor pavilion on Lake Minnetonka to our businesses
in downtown Mound. The City has over 30 parks and maintains significant amounts of streetscape and
trails, particularly in downtown Mound. Allowing the private townhome development will provide
funding for making essential improvements in the Harbor District. Imagine the abandoned and non-
essential asphalt and the current weeds and rubble being replaced with actual lawn -grade turf and
plantings similar to the quality and appearance of the Veterans Memorial Plaza (next to the parking
deck) - so much better for lounging, playing and community events.
Harbor District Townhome Development
Page 4
It should also be noted that a meeting did take place with the Development Committee consisting of
Mayor Mark Wegscheid and Council Member Kelli Gillispie, the developer and their attorney, and
Staff. The primary outcome was that the timeline was shortened to basically three years for actual
construction of the 21 homes after site prep. When analyzing the requirements of the land use
approval process, the intent is to begin construction of the first 6 units in the Spring in order to be
included in the Fall 2019 Parade of Homes. In addition, a better understanding of the developer
investment and holding costs was received that demonstrates the inherent incentives built into the
development process that compels the developer to complete the development in the most timely
fashion the market will allow. Allowing the townhome buyer to choose their finishes results in higher
values as well. The Developer will share their market analysis that shows strong demand for this type
of housing and why they think the $550,000 - $700,000 per unit value is realistic at the August l 5th
meeting. Residents are also encouraged to visit their website at https://www.jmscustomhomes.com/.
Staff recommends approval of the Purchase and Development Agreement.
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Draft
August 8, 2018
PURCHASE AND DEVELOPMENT AGREEMENT
This Purchase and Development Agreement is made as of , 2018 (the
"Agreement"), between the CITY OF MOUND, MINNESOTA, a statutory city and political subdivision
of the State of Minnesota, having its office located at 2415 Wilshire Boulevard, Mound, Minnesota 55364
(the "Seller"), and MOUND HARBOR, LLC, a Minnesota limited liability company, having its principal
office at 6035 Culligan Way, Minnetonka, MN 55345, or its assigns (the "Buyer"). The "Effective Date"
of this Agreement shall be the later date on which both the Seller and the Buyer have executed this
Agreement, as shown by the dates next to their signature blocks.
1. Sale of Real Property. The Buyer offers to purchase and the Seller agrees to sell real property in
Hennepin County, Minnesota, legally described in EXHIBIT A attached hereto (the "Property").
Purchase Price. The price for the Property is $660,000 (the "Purchase Price"). The Purchase
Price shall be paid as follows:
2.1 Earnest Money. Twenty Thousand and no/100 Dollars ($20,000) as earnest money
("Earnest Money") which Earnest Money shall be delivered and held by Custom Home
Builders Title ("Escrow Agent") in an interest bearing escrow account, pursuant to the
Escrow Agreement attached hereto as EXHIBIT B, provided, however, that the fee for
any such account shall be paid by the Buyer. The Earnest Money shall be deposited
within three (3) business days after the Effective Date. Unless otherwise disbursed
pursuant to the Escrow Agreement, the Earnest Money and all interest accrued thereon
shall be paid to the Seller at Closing and credited towards the Purchase Price.
2.2 Closing Payment. Subject to adjustments provided for herein, Six Hundred and Forty
Thousand and no/100 Dollars ($640,000) in cash or by wire transfer of U.S. Federal
Funds to be received by the Seller on or before 1:00 p.m. local time on the Closing Date.
3. Payment of Purchase Price. The Buyer shall pay the Purchase Price as follows:
(a) nonrefundable earnest money of $20,000 by check (the "Earnest Money"), receipt of which is
hereby acknowledged by the Seller; and (b) the balance of the Purchase Price must be paid by
certified check or wire transfer on the Closing Date. The "Closing Date" shall be no later than
thirty (30) days following the date of the final plat approval.
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4A. Buyer's Contingencies.
4.1 Performance of the Seller's Obligations. The Seller shall have performed all of the
obligations required to be performed by the Seller under this Agreement, as and when
required by this Agreement.
4.2 Title. Title shall have been found acceptable by the Buyer or made acceptable in
accordance with the requirements and terms of Section 10 below.
4.3 Phase I. No later than 210 days after the Effective Date, the Buyer shall have determined
that it is satisfied with a Phase I Environmental Report (prepared in accordance with the
current ASTM standard for Phase I environmental site assessments) to be prepared with
regard to the Real Property by an environmental consultant reasonably acceptable to the
Buyer (the "Phase I"). The Buyer shall cause the Phase I to be prepared no later than 35
days after the Effective Date, at the Buyer's cost and expense. The Buyer shall deliver a
copy to the Seller within three business days after any termination of this Agreement.
4.4 Feasibility Period. Following the Effective Date of this Agreement, the Buyer may enter
the Property to conduct, at its expense, engineering studies on the Property, including but
not limited to wetland, soil, and environmental assessments. No later than two hundred
ten (210) days after the Effective Date, the Buyer shall have determined, in its absolute
sole discretion, that it is satisfied with the results of and matters disclosed by any soil
tests, engineering inspections, hazardous waste, environmental reviews of the Property,
and that the Property is suitable for the Buyer's intended use.
4.5 Utilities. The Buyer shall have determined that the Property's access, utility services
(including sanitary sewer, storm sewer, water, natural gas, electricity, cable and telephone
services) are sufficient for the Buyer's intended use of the Property.
4.6 No Adverse Action. There shall not exist on the Closing Date any lawsuit, governmental
investigation or other proceeding challenging the transaction contemplated in this
Purchase Agreement, or which might adversely affect the right of the Buyer to own,
develop, or use the Property after the Closing Date for the Buyer's intended use.
4.7 Governmental Approval. The Buyer shall have obtained, reviewed, or completed the
following items to the Buyer's sole satisfaction within 210 days from the Effective Date
of this Agreement: (A) condition of title and an ALTA survey; (B) land use applications;
(C) preliminary plat application; (D) final plat application; (E) land use approvals; (F)
preliminary plat approval; (G) Development Agreement with the Seller as described in
Paragraph 20; (H) Approvals as required by the County, the watershed district, or any
other regulating body; and (I) final plat approval (collectively, the "Governmental
Approvals"). The Seller shall without charge to the Buyer cooperate in the Buyer's
attempts to obtain all such Governmental Approvals.
4.8 Access/Easements/Vacation of Roadways. The Seller shall have completed the vacation
of certain roadways and easements on and surrounding the Property and created roadway
access rights to the Property for the Buyer's intended use.
4.9 Boat Slip Priority. The Seller will have amended its City Code of Ordinances to provide
for the Townhome Association having exclusive access to 20 boat slips each year (as
further described in Section 19.7 below and set forth in EXHIBIT F).
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4B. Termination by Buyer. If any of the foregoing contingencies set forth in Section 4A hereof
have not been satisfied, in the Buyer's sole discretion, on or before the stated date then this
Agreement may be terminated, at the Buyer's option, by written notice from the Buyer to the
Seller; provided, however, the Buyer may only terminate this Agreement as a consequence of its
dissatisfaction with the physical condition of the Property if the Buyer has performed reasonable
and customary investigation or due diligence with respect to the physical attributes of the
Property that the Buyer finds unsatisfactory. Such notice of termination shall be given no later
than three (3) business days after the stated date for the relevant contingency item, provided,
however, that said notice shall be given prior to the Closing Date. If the Buyer fails to give notice
of termination as provided above, the contingencies are automatically deemed waived. The
Buyer may also waive any contingency by written notice to the Seller but such written notice is
not required for a waiver to be effective. Upon a termination by the Buyer (a) the Buyer and the
Seller shall execute a recordable written termination of this Agreement, which shall include the
Buyer's quit claim of any interest in and to the Property, (b) the Earnest Money and any interest
accrued thereon shall be released to the Buyer, and (c) upon fulfillment of (a) and (b) above
neither party will have any further rights or obligations regarding this Agreement or the Property
except for the rights and obligations of indemnification set forth in Sections 6, 17, 22, and 23
hereof.
5. [Intentionally Omitted.]
6. Buyer's Access, Investigation, and Security. The Seller shall allow the Buyer, and the Buyer's
agents, access to the Property without charge and at all reasonable times for the purpose of the
Buyer's investigation and testing the same. The Buyer shall pay all costs and expenses of such
investigation and testing and shall indemnify and hold the Seller and the Property harmless from
all costs and liabilities relating to the Buyer's activities. The Buyer shall further promptly repair
and restore any damage to the Property caused by or occurring during the Buyer's testing and
return the Property to substantially the same condition as existed prior to such entry.
7. The Seller's Closing Documents. On the Closing Date, the Seller shall execute and/or deliver to
the Buyer the following (collectively, "the Seller's Closing Documents"):
7.1 Deed. A Warranty Deed, substantially in the form attached hereto as EXHIBIT C, in
recordable form reasonably satisfactory to the Buyer, conveying the Property to the
Buyer, free and clear of all encumbrances, except the Permitted Encumbrances.
7.2 Title Policy. The Policy described in Section 10 hereof, or a suitably marked up Title
Commitment for the Policy initialed by Title Company (hereinafter defined), in the form
required by this Agreement.
7.3 Affidavits. Such Affidavits of the Seller as may be reasonably required by Title
Company to issue the Policy.
7.4 IRS Reporting Form. The appropriate Federal Income Tax reporting form, if any, as
required.
7.5 Development Agreement. The Development Agreement described in Section 20.
7.6 Declaration Regarding Boat Slips. The Declaration Regarding Boat Slips described in
Section 19.10.
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7.7. FIRPTA Affidavit. A non -foreign affidavit, in commercially acceptable form (if not
applicable to this the Seller, then the Seller agrees to comply with all withholding
requirements of the hlternal Revenue Service related thereto);
7.8 A Bring -Down Certificate. A bring -down certificate confirming the truth and accuracy
of those representations made by the Seller in Paragraph 17 of this Agreement; and
7.9 Other Documents. All other documents reasonably determined by the Buyer to be
necessary to transfer the Property to the Buyer free and clear of all encumbrances, except
the Permitted Encumbrances.
8. Buyer's Closing Documents. On the Closing Date, the Buyer will execute and/or deliver to the
Seller the following (collectively, "Buyer's Closing Documents"):
8.1 Purchase Price. The Purchase Price, by wire transfer of U.S. Federal Funds or by
certified check to be received in Title Company's trust account or delivered to the Seller
on or before 1:00 p.m. local time on the Closing Date.
8.2 Title Documents. Such Affidavits of Purchaser, Certificates of Value or other documents
as may be reasonably required by Title Company in order to record the Seller's Closing
Documents and issue the Policy.
8.3 Development Agreement. The Development Agreement described in Section 20.
8.4 Other Documents. All other documents reasonably determined by the Seller to be
necessary to consummate the transaction contemplated hereby in a manner consistent
with the terms and conditions hereof.
9. Prorations. The Seller and the Buyer agree to the following prorations and allocation of costs
regarding this Agreement:
9.1 Title Insurance and Closing Fee. The Seller will pay all costs of the Title Commitment
described in Section 10 of this Agreement and the fees charged by Title Company for any
escrow required regarding the Buyer's Objections. The Buyer will pay the premium or
cost of the Owner's Title Policy and all additional premiums required for the issuance of
any }Mortgagee's Title Insurance Policy required by the Buyer. The Seller and the Buyer
will each pay one-half of any reasonable and customary closing fee or charges imposed
by any closing agent designated by Title Company.
9.2 Deed Tax. The Seller shall pay all state deed tax regarding the Warranty Deed to be
delivered by the Seller under this Agreement.
9.3 Real Estate Taxes and Special Assessments. On the Closing Date, the Purchase Price
shall be adjusted as follows:
9.3.1 Current Year's Taxes. All property taxes and green acres taxes which have
become a lien on the Property (the "Taxes") and which are due and payable prior
to the year in which the Closing Date occurs shall be paid by the Seller at or prior
to the Closing Date. All Taxes which are due and payable in the year in which
the Closing Date occurs shall be prorated to the Closing Date and the Seller's
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portion shall be paid by the Seller on the Closing Date. This proration shall
result in the Seller's payment of Taxes from January 1 to the date immediately
prior to the Closing Date and the Buyer's payment of Taxes from the Closing
Date to December 31.
9.3.2 Assessments. All charges for improvements or services already made to or
which benefit the Property, and all levied and pending assessments (general or
special) created or confirmed prior to the Closing Date (the "Assessments") shall
be paid in full by the Seller on the Closing Date. All assessments (general or
special) which levied as of the Closing Date or which become levied after the
Closing Date shall be assumed and paid by the Buyer.
9.4 Recording Costs. The Seller will pay the cost of recording all documents necessary to
place record title in the condition warranted by the Seller and requested by the Buyer in
this Agreement. The Buyer will pay the cost of recording all other documents, including
the cost of recording the final plat.
9.5 Other Costs. All other operating costs of the Property will be allocated between the
Seller and the Buyer as of the Closing Date, so that the Seller pays that part of such other
operating costs payable before the Closing Date, and the Buyer pays that part of such
operating costs payable from and after the Closing Date.
9.6 Attorney's Fees. Each of the parties will pay its own attorney's fees, except that a party
defaulting under this Agreement or any closing document will pay the reasonable
attorneys' fees and costs incurred by the non -defaulting party to enforce its rights
regarding such default.
10. Title Examination. Title examination will be conducted as follows:
10.1 Seller's Title Evidence. The Seller shall, no later than 30 days after the Effective Date
furnish to the Buyer, at the Seller's cost and expense, the following: a commitment (the
"Title Commitment") for the most current ALTA Form B Owner's Policy of Title
Insurance insuring title to the Property in the amount of the Purchase Price, issued by
Custom Home Builders Title (the "Title Company"). The Title Commitment will commit
Title Company to insure title to the Property subject only to the Permitted Encumbrances.
The Buyer is responsible for purchasing an Owner's Policy of Title Insurance.
10.2 Survey. No later than 60 days after its receipt of the Title Commitment, the Seller shall
obtain at its own expense an ALTA/ASCM as built survey (the "Survey") prepared by a
Registered Land Surveyor properly licensed to practice in the State of Minnesota in form
acceptable to the Buyer (the "Survey"). The Seller shall provide a copy of the Survey to
the Buyer within three days of receipt.
10.3 Buyer's Obiections. Within 10 business days after receiving the later of the Title
Commitment and the Survey, the Buyer shall make written objections (the "Objections")
to the form and/or contents of the Title Commitment and the Survey if the Buyer has
obtained one within the time set forth in Section 10.2 hereof. The Buyer's failure to
make Objections within such time period will constitute a waiver of Objections. Any
matter shown on the Title Commitment and/or Survey and not objected to by the Buyer
shall be a "Permitted Encumbrance" pursuant to this Agreement. The Seller will have 60
days after receipt of the Objections to cure the Objections, during which period the
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Closing will be postponed if necessary. The Seller shall use its best efforts to correct any
Objections. To the extent that the Objections are not cured within such 60 -day period,
the Buyer will have the option to terminate this Agreement and receive a refund of the
Earnest Money, or waive the Objections and proceed to Closing.
11. Closing. The closing of the purchase and sale contemplated by this Agreement (the "Closing")
shall occur on the Closing Date. The Closing shall take place at the offices of the Title Company,
or at such other place as may be agreed to. The Seller agrees to deliver possession of the Property
to the Buyer on the Closing Date.
12. Property. The Seller, in advance of or as part of the land use and preliminary plat application
process will vacate roads and easements on and surrounding the Property as required for the
Buyer to undertake the Minimum Improvements.
13. Well Disclosure. The Seller's knowledge of wells is as follows:
❑ The Seller certifies that the Seller does not know of any wells on the described real
property.
❑ A well disclosure certificate accompanies this document.
❑ I am familiar with the property described in this instrument and I certify that the status and
number of wells on the Property have not changed since the last previously filed well
disclosure certificate.
14. Individual Sewage Treatment System Disclosure. The Seller certifies that there is [no]
individual sewage treatment system on or serving the Property.
15. Right of Entry. The Seller hereby grants to the Buyer, its agents, employees, officers, and
contractors, a license to enter the Property to perform all work and inspections deemed
appropriate by the Buyer in conjunction with this Agreement.
16. No Representations by Seller. IT IS UNDERSTOOD AND AGREED THAT THE SELLER IS
NOT MAKING AND HAS NOT AT ANY TIME MADE ANY WARRANTIES OR
REPRESENTATIONS OF ANY KIND OR CHARACTER, EXPRESSED OR IMPLIED, WITH
RESPECT TO THE CONDITION OF THE PROPERTY, INCLUDING, BUT NOT LIMITED
TO, ANY WARRANTIES OR REPRESENTATIONS AS TO HABITABILITY,
MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, ZONING, TAX
CONSEQUENCES, LATENT OR PATENT PHYSICAL OR ENVIRONMENTAL
CONDITIONS, UTILITIES, ACCESS, OPERATING HISTORY OR PROJECTIONS,
VALUATION, GOVERNMENTAL APPROVALS, THE TRUTH, ACCURACY OR
COMPLETENESS OF ANY PROPERTY DATA OR OTHER INFORMATION PERTAINING
TO THE PROPERTY DELIVERED TO BUYER BY SELLER, OR ANY OTHER MATTER OR
THING REGARDING THE PROPERTY. BUYER ACKNOWLEDGES AND AGREES THAT
UPON THE CLOSING OF THE TRANSACTION CONTEMPLATED BY THIS AGREEMENT,
THE SELLER SHALL SELL AND BUYER SHALL ACCEPT THE PROPERTY "AS IS,
WHERE IS, WITH ALL FAULTS." THE BUYER HAS NOT RELIED AND WILL NOT
RELY ON, AND THE SELLER IS NOT LIABLE FOR OR BOUND BY, ANY EXPRESSED OR
IMPLIED WARRANTIES, GUARANTIES, STATEMENTS, REPRESENTATIONS OR
INFORMATION PERTAINING TO THE PROPERTY OR RELATING THERETO
(INCLUDING SPECIFICALLY, WITHOUT LIMITATION, PROPERTY INFORMATION
PACKAGES DISTRIBUTED WITH RESPECT TO THE PROPERTY) MADE OR FURNISHED
BY THE SELLER, THE MANAGER OF THE PROPERTY, OR ANY REAL ESTATE BROKER
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OR AGENT REPRESENTING OR PURPORTING TO REPRESENT SELLER, TO
WHOMEVER MADE OR GIVEN, DIRECTLY OR INDIRECTLY, ORALLY OR 1N WRITING,
UNLESS SPECIFICALLY SET FORTH IN THIS AGREEMENT.
THE BUYER REPRESENTS TO THE SELLER THAT THE BUYER HAS CONDUCTED, OR
WILL HAVE HAD THE OPPORTUNITY TO CONDUCT PRIOR TO CLOSING, SUCH
INVESTIGATIONS OF THE PROPERTY, INCLUDING BUT NOT LIMITED TO, THE
PHYSICAL, ENVIRONMENTAL AND GEOTECHNICAL CONDITIONS THEREOF, AS THE
BUYER DEEMS NECESSARY TO SATISFY ITSELF OF THE CONDITION OF THE
PROPERTY AND THE EXISTENCE OR NONEXISTENCE OR CURATIVE ACTION TO BE
TAKEN WITH RESPECT TO ANY HAZARDOUS OR TOXIC SUBSTANCES OR
MATERIALS ON, WITHIN, UNDER OR DISCHARGED FROM THE PROPERTY, AND
WILL RELY SOLELY UPON SAME AND NOT UPON ANY INFORMATION PROVIDED BY
OR ON BEHALF OF THE SELLER OR ITS AGENTS, OFFICERS, DIRECTORS,
SHAREHOLDERS OR EMPLOYEES WITH RESPECT THERETO.
UPON CLOSING, THE BUYER SHALL ASSUME THE RISK THAT ADVERSE MATTERS,
INCLUDING BUT NOT LIMITED TO, ADVERSE PHYSICAL, ENVIRONMENTAL AND
GEOTECHNICAL CONDITIONS MAY HAVE BEEN REVEALED BY THE BUYER'S
INVESTIGATIONS, AND BUYER, UPON CLOSING, SHALL BE DEEMED TO HAVE
WAIVED, RELINQUISHED AND RELEASED THE SELLER (AND THE SELLER'S
OFFICERS, COUNCIL MEMBERS, EMPLOYEES AND AGENTS) FROM AND AGAINST
ANY AND ALL CLAIMS, DEMANDS, CAUSES OF ACTION (INCLUDING CAUSES OF
ACTION IN TORT), LOSSES, DAMAGES, LIABILITIES, COSTS AND EXPENSES
(INCLUDING ATTORNEYS' FEES AND COURT COSTS) OF ANY AND EVERY KIND OR
CHARACTER, KNOWN OR UNKNOWN, WHICH BUYER MIGHT HAVE ASSERTED OR
ALLEGED AGAINST THE SELLER (AND THE SELLER' OFFICERS, COUNCIL MEMBERS,
EMPLOYEES AND AGENTS) AT ANY TIME BY REASON OF OR ARISING OUT OF ANY
LATENT OR PATENT PHYSICAL CONDITIONS, VIOLATIONS OF ANY APPLICABLE
LAWS (INCLUDING, WITHOUT LIMITATION, ANY ENVIRONMENTAL LAWS) AND
ANY AND ALL OTHER ACTS, OMISSIONS, EVENTS, CIRCUMSTANCES OR MATTERS
REGARDING THE PROPERTY.
17. Representations
17.1 Representations and Warranties of Buyer. The Buyer represents and warrants to the
Seller that the Buyer is a limited liability company duly organized under the laws of the
State of Minnesota; that the Buyer is duly qualified to transact business in the State of
Minnesota; that the Buyer has the requisite company power and authority to enter into
this Agreement and the Buyer's Closing Documents signed by it; such documents have
been duly authorized by all necessary company action on the part of the Buyer and have
been duly executed and delivered; that the execution, delivery and performance by the
Buyer of such documents do not conflict with or result in violation of state law or any
judgment, order or decree of any court or arbiter to which the Buyer is a party; such
documents are valid and binding obligations of the Buyer, and are enforceable in
accordance with their terms.
The Buyer will indemnify the Seller, its successors and assigns, against, and will hold the
Seller, its successors and assigns, harmless from, any actual expenses or damages,
including reasonable attorneys' fees, that the Seller incurs because of the breach of any of
the above representations and warranties, whether such breach is discovered before or
608762 v]
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after Closing; provided, and notwithstanding the foregoing, each of the representations
and warranties herein contained shall survive the Closing for a period of three years and
any action concerning a breach of any of the foregoing representations or warranties of
the Buyer shall be commenced within three years of the Closing or shall be deemed
waived. Consummation of this Agreement by the Seller with knowledge of any breach of
such warranties and representations by the Buyer will constitute a waiver or release by
the Seller of any claims due to such breach.
17.2 Representations and Warranties of the Seller.
(a) The Seller is duly authorized and empowered to enter into this Agreement and to
perform fully the Seller's obligations hereunder.
(b) The Seller has received no notice of any pending or threatened condemnation
proceeding or other litigation relating to or otherwise affecting the Property, except as
may be shown in the public record.
(c) The Seller has received no notice of any pending or threatened violations or
litigation at the Property, except as may be shown in the public record.
18. Condemnation. If, prior to the Closing Date, eminent domain proceedings are commenced
against all or any part of the Property by any entity other than the Seller, the Seller shall
immediately give notice to the Buyer of such fact and at the Buyer's option (to be exercised
within 30 days after the date of the Seller's notice), this Agreement shall terminate, in which
event neither party will have further obligations under this Agreement, except for the rights and
obligations of indemnification set forth in Sections 6, 17, 22, and 23, and the Earnest Money,
together with any accrued interest, shall be refunded to the Buyer. If the Buyer shall fail to give
such notice then there shall be no reduction in the Purchase Price, and the Seller shall assign to
Buyer at the Closing Date all of the Seller's right, title and interest in and to any award made or to
be made in the condemnation proceedings. Prior to the Closing Date, if the Agreement has not
been terminated pursuant to the first sentence of this Section, the Seller shall not designate
counsel, appear in, or otherwise act with respect to such condemnation proceedings without the
Buyer's prior written consent.
19. Construction of Minimum Improvements. The Buyer agrees that it will construct the
Minimum Improvements (defined below) on the Property as described in this Section. This
covenant shall survive the delivery of the Deed.
19.1 The Buyer shall construct on the Property the "Minimum Improvements," which consist
of 21 market -rate townhomes, with three to four units per building, including two garage
stalls per unit, at least 2 parking spaces in front of each building per unit, and at least 11
additional guest parking spaces as shown on the current concept plan. The specific
Minimum Improvements shall be as shown on the preliminary plat, as approved.
19.2 The Buyer agrees to commence and complete construction of each phase of the Minimum
Improvements as follows:
Phase 1: Infrastructure Improvements — grading, water main, sanitary sewer and storm
sewer and small utilities (as described in the Development Agreement referred to in
Sections 20) will be performed in one phase with the completion by December 31, 2019.
The Buyer may request an Early Start Agreement for consideration by the City Council
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and HRA Board prior to release of the Final Plat and completion of the Development
Agreement for recording to allow issuance of a building permit to begin construction of
the infrastructure improvements.
Phase 2: Commence building construction by June 1, 2019 and complete construction of
6 units (2 buildings) by December 31, 2020.
Phase 3: Commence building construction by June 1, 2020 and complete construction of
7 units (2 buildings) by December 31, 2021.
Phase 4: Commence building construction by June 1, 2021 and complete construction of
8 units (2 buildings) by June 1, 2022.
Landscaping / Irrigation Improvements: To be installed in the spring or summer
following the completion date for each building construction phase referenced above. It
being understood and acknowledged that the landscaping and irrigation improvements are
not conditions to issuance of a Certificate of Completion of Phases 2 through 4.
For each of Phases 2 through 4 described above, the Buyer may request an extension for
the commencement and/or construction dates described above of up to 6 months, which
such extension shall not be unreasonably withheld.
For Phases 2 through 4 of the Minimum Improvements, construction of each respective
phase will be considered satisfied when the building exterior and the respective units
vanilla shell have been completed.
19.3 The Buyer is a Minnesota limited liability company, whose purpose is to install the
required public improvements required for the Minimum Improvements and to develop the
Minimum Improvements. It is in the best interest of the Buyer, and the intent of the Buyer
to work with JMS Custom Homes, LLC, a Minnesota limited liability company ("JMS
Custom Homes") as the builder of the townhomes. The Buyer acknowledges and
understands that the City expects the completed Minimum Improvements to be similar in
size, scope, and quality to the project submitted to the City as part of the Buyer's response
to the City's Request for Qualifications with respect to the Property.
19.4 Promptly after the Buyer's substantial completion each Phase, upon written request from
the Buyer, the Seller will furnish the Buyer with a Certificate of Completion, at no cost to
the Buyer, in the form attached hereto as EXHIBIT D and reduce the Buyer's letter of
credit in the applicable percentages as described in Section 21 below. Such issuance of
Certificates of Completion by the Seller shall be a conclusive determination of
satisfaction and termination of the agreements and covenants in this Agreement with
respect to the obligations of the Buyer and its successors and assigns, to construct the
Minimum Improvements and the dates for completion thereof. The Buyer's completion
of any Phase ahead of the required deadline shall not affect the required timing of
commencement or completion of subsequent Phases.
If the Seller shall refuse or fail to provide any certification in accordance with the
provisions of this Section, the Seller shall, within 30 days after written request by the
Buyer, provide the Buyer with a written statement, indicating in adequate detail in what
respects the Buyer has failed to complete the particular phase of the Minimum
Improvements in accordance with the provisions of the Agreement, or is otherwise in
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default, and what measures or acts it will be necessary, in the opinion of the Seller for the
Buyer to take or perform in order to obtain such certification and the Buyer shall be
afforded a fair and reasonable opportunity, as necessary, to cure or address such stated
default.
19.5 The Buyer represents and agrees that until issuance of the Certificate of Completion for
the Minimum Improvements:
19.5.1 The Buyer has not made or created and will not make or create or suffer to be
made or created any total or partial sale, assignment, conveyance, or lease, or any trust or
power, or transfer in any other mode or form of or with respect to this Agreement or the
Property or any part thereof or any interest therein, or any contract or agreement to do
any of the same, to any person or entity, with the exception of any bona -fide unit owner
or an assignment to another entity affiliated with the Buyer by common ownership,
(collectively, a "Transfer"), without the prior written approval of the City Council of the
Seller. The term "Transfer" does not include encumbrances made or granted by way of
security for, and only for, the purpose of obtaining construction, interim or permanent
financing necessary to enable the Buyer to construct the Minimum Improvements or
component thereof.
19.5.2 If the Buyer seeks to effect a Transfer other than to a bona -fide unit owner, prior
to issuance of the final Certificate of Completion for the Minimum Improvements, the
Seller shall be entitled to require as conditions to such Transfer that:
19.5.2.1 Any proposed transferee shall have the qualifications and financial
responsibility, in the reasonable judgment of the Seller, necessary and adequate to fulfill
the obligations undertaken in this Agreement by the Buyer as to the portion of the
Property to be transferred.
19.5.2.2 Any proposed transferee, by instrument in writing satisfactory to the
Seller and, if necessary, in form recordable in the public land records of Hennepin
County, Minnesota, shall, for itself and its successors and assigns, and expressly for the
benefit of the Seller, have expressly assumed all of the obligations of the Buyer under this
Agreement as to the portion of the Property to be transferred and agreed to be subject to
all the conditions and restrictions to which the Buyer is subject as to such portion;
provided, however, that the fact that any transferee of, or any other successor in interest
whatsoever to, the Property, or any part thereof, shall not, for whatever reason, have
assumed such obligations or so agreed, and shall not (unless and only to the extent
otherwise specifically provided in this Agreement or agreed to in writing by the Seller)
deprive the Seller of any rights or remedies or controls with respect to the Property, the
Minimum Improvements or any part thereof or the construction of the Minimum
Improvements; it being the intent of the parties as expressed in this Agreement that (to
the fullest extent permitted at law and in equity and excepting only in the manner and to
the extent specifically provided otherwise in this Agreement) no transfer of, or change
with respect to, ownership in the Property or any part thereof, or any interest therein,
however consummated or occurring, and whether voluntary or involuntary, shall operate,
legally, or practically, to deprive or limit the Seller of or with respect to any rights or
remedies on controls provided in or resulting from this Agreement with respect to the
Property that the Seller would have had, had there been no such transfer or change. In
the absence of specific written agreement by the Seller to the contrary, no such transfer or
approval by the Seller thereof shall be deemed to relieve the Buyer, or any other party
IN
608762 N 1
bound in any way by this Agreement or otherwise with respect to the Property, from any
of its obligations with respect thereto.
19.5.2.3 Any and all instruments and other legal documents involved in effecting
the transfer of any interest in this Agreement or the Property governed by this clause shall
be in a form reasonably satisfactory to the Seller.
19.5.3 If the conditions described in Section 19.5.2 hereof are satisfied then the Transfer
will be approved and the Buyer shall be released from its obligation under this
Agreement, as to the portion of the Property that is transferred, assigned, or otherwise
conveyed. The provisions of this Section 19.5.3 apply to all subsequent transferors.
19.5.4 Except for transfers to bona -fide unit owners, which does not require the Seller
consent, upon issuance of the final Certificate of Completion for the final unit, the Buyer
may Transfer the Property and/or the Buyer's rights and obligations under this
Agreement with respect to such Property without the prior written consent of the Seller,
19.6 Upon the completion of the Minimum Improvements, the Townhome owner's association
(the "Townhome Association") shall provide a copy of [the Declaration Creating
] (the "Townhome Declaration"). The Townhome owner's association must
include in its Declaration a covenant that the first buyer of each townhome unit intends to
live in the unit as an owner -occupant and will not rent the townhome unit for at least five
years following the purchase of such townhome.
19.7 Annually, the Seller, its successor or assign, shall offer the Townhome Association the
ability to enter into a Boat Slip Use Agreement each year for up to 20 boat slips for
exclusive use of the owners of a Townhome unit in the form as attached hereto as
EXHIBIT F. The Boat Slip Use Agreement will include the exclusive use of up to 20
boat slips; provided, however, that the number of boat slips offered each year to the
Townhome Association will not exceed the number of Townhome units completed and
units under construction. The Seller covenants and represents that, subject to the
provisions of this Section 19.7, the Townhome Association shall have exclusive access to
20 boat slips each year. Notwithstanding the foregoing, if owners of the Townhomes
decline the use of all 20 boat slips, the City may enter into rental agreements for the
unused boat slips for that year. Prior to the conveyance of the Property to the Buyer, the
Seller will amend its City Code of Ordinances to provide for the Townhome Association
having exclusive access to 20 boat slips each year. In addition, upon creation of the
Townhome Association, the Seller shall enter into the Declaration Regarding Boat Slips
set forth in EXHIBIT E which shall be recorded against the Property.
20. Development Agreement. Prior to the issuance of any grading or building permits for the Property,
the Buyer shall enter into a Development Agreement with the Seller with respect to the infrastructure
required for the Minimum Improvements and the requirements of the Seller for the Buyer's
construction of such infrastructure, and such Development Agreement shall be recorded against the
Property.
21. Penalties for Failure to Complete Minimum Improvements. The Buyer will submit a letter of
credit in the amount of $35,000 (the "Letter of Credit") at Closing to secure performance of the
Buyer's obligations under Section 19.2. Upon completion of one or more Phases of the Minimum
Improvements, the Letter of Credit shall be reduced as follows: 10% reduction of the original amount
after satisfactory completion of Phase 1 (in addition to any applicable reductions or releases in
608762 e1
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relation to the Development Agreement), 25% reduction of the original amount after satisfactory
completion of Phase 2, 25% reduction of the original amount after satisfactory completion of
Phase 3, and 40% reduction of the original amount after satisfactory completion of Phase 4.
In the event that, subsequent to conveyance of the Property to the Buyer, the Buyer, subject to
Unavoidable Delays (as hereafter defined), fails to carry out its obligations to construct Phases I
through 4 as described in Section 19.2 with respect to the commencement of construction of the
Minimum Improvements (including the nature and the date for the completion thereof), or abandons
or substantially suspends construction work, and any such failure, abandonment, or suspension shall
not be cured, ended, or remedied within thirty (30) days after written demand from the Seller to the
Buyer to do so, then the Seller may grant up to a 6 month extension to commence or complete the
Phase as provided in Section 19.2. If following the applicable extension, the Buyer has not satisfied
the applicable commencement or completion of the applicable Phase, the Seller may draw down on
or make a claim against the Letter of Credit (in the percentage of the remaining amounts for each
Phase set forth in the first paragraph of this Section 21), as appropriate, upon five (5) business days'
notice to the Developer.
For the purposes of this Agreement, the teen "Unavoidable Delays" means delays beyond the
reasonable control of the Buyer as a result thereof which are the direct result of strikes, other labor
troubles, prolonged adverse weather or acts of God, fire or other casualty to the Minimum
Improvements, litigation commenced by third parties which, by injunction or other similar judicial
action, directly results in delays, or acts of any federal, state or local governmental unit (other than
the Seller in exercising its rights under this Agreement) which directly results in delays. Unavoidable
Delays shall not include delays in the Buyer's obtaining of permits or governmental approvals
necessary to enable construction of the Minimum Improvements by the dates such construction is
required under this section of this Agreement.
22. Broker's Commission. The Seller and the Buyer represent and warrant to each other that they
have dealt with no brokers, finders or the like in connection with this transaction. The parties agree
to indemnify each other and to hold each other harmless against all claims, damages, costs or
expenses of or for any other such fees or commissions resulting from their actions or agreements
regarding the execution or perfonnance of this Agreement, and will pay all costs of defending any
action or lawsuit brought to recover any such fees or commissions incurred by the other party,
including reasonable attorneys' fees.
23. Mutual Indemnification. The Seller and the Buyer agree to indemnify each other against, and
hold each other harmless from, all liabilities (including reasonable attorney's fees in defending
against claims) arising out of the ownership, operation or maintenance of the Property for their
respective periods of ownership. Such rights of indemnification will not arise to the extent that
(a) the party seeking indemnification actually receives insurance proceeds or other cash payments
directly attributable to the liability in question, (net of the cost of collection, including reasonable
attorney's fees) or (b) the claim for indemnification arises out of the act or neglect of the party
seeking indemnification. If and to the extent that the indemnified party has insurance coverage,
or the right to make claim against any third party for any amount to be indemnified against as set
forth above, the indemnified party will, upon full performance by the indemnifying party of its
indemnification obligations, assign such rights to the indemnifying party or, if such rights are not
assignable, the indemnified party will diligently pursue such rights by appropriate legal action or
proceeding and assign the recovery and/or right of recovery to the indemnifying party to the
extent of the indemnification payment made by such party.
12
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24. Assignment. The Buyer may not assign its rights under this Agreement, without the prior written
consent of the Seller which consent shall be granted if the assignment is commercially
reasonable.
25. Survival. Except as stated in Section 17 hereof, all of the terms of this Agreement will survive
and be enforceable until a Certificate of Completion is provided as to each phase of the Minimum
Improvements.
26. Notices. Any notice required or permitted to be given by any party upon the other is given in
accordance with this Agreement if it is directed to the Seller by delivering it personally to an
officer of the Seller, or if it is directed to the Buyer, by delivering it personally to an officer of the
Buyer, or if mailed in a sealed wrapper by United States registered or certified mail, return receipt
requested, postage prepaid, or if deposited cost paid with a nationally recognized, reputable
overnight courier, properly addressed as follows:
If to the Seller: City of Mound, Minnesota
2415 Wilshire Boulevard
Mound, MN 55364
Attention: City Manager
If to the Buyer: Mound Harbor, LLC
6035 Culligan Way
Minnetonka, MN 55345
With a copy to: Foley & Mansfield, PLLP
Attention: Ailana McIntosh
250 Marquette Avenue, Suite 1200
Minneapolis, MN 55410
Notices shall be deemed effective on the earlier of the date of receipt or the date of deposit as
aforesaid, provided, however, that if notice is given by deposit that the time for response to any
notice by the other party shall commence to run one business day after any such deposit. Any
party may change its address for the service of notice by giving written notice of such change to
the other party, in any manner above specified, ten days prior to the effective date of such change.
27. Captions. The paragraph headings or captions appearing in this Agreement are for convenience
only, are not a part of this Agreement and are not to be considered in interpreting this Agreement.
28. Entire Agreement; Modification. This written Agreement constitutes the complete agreement
between the parties and supersedes any prior oral or written agreements between the parties
regarding the Property. There are no verbal agreements that change this Agreement and no
waiver of any of its terms will be effective unless in writing executed by the parties.
29. Binding Effect. This Agreement binds and benefits the parties and their successors and assigns.
30. Controlling Law. This Agreement has been made under the laws of the State of Minnesota, and
such laws will control its interpretation.
31. Remedies. If either party defaults under this Agreement, the non -defaulting Party shall have the
right to terminate this Agreement by giving written notice to the defaulting Party. If the Buyer
fails to cure such default within five business days, or such time period as allowed pursuant to
13
608762 v
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this Agreement of the date of such notice from the Seller, the Seller may cancel this Agreement
pursuant to Minnesota Statutes, Section 559.21. If the Seller fails to cure such default within five
business days of the date of such notice from the Buyer, the Buyer may immediately terminate
this Agreement by delivering to the Seller at the address noted in Section 27 hereof a Notice of
Termination executed by an authorized representative(s) of the Buyer.
The foregoing is the exclusive remedy for either party. All other remedies, including damages for
breach, equitable remedies, specific performance, and all other remedies at law or equity are
waived and relinquished by each of the parties.
(The remainder of this page is intentionally left blank.)
Ell
608762 vl
IN WITNESS WHEREOF, the Seller and the Buyer have executed this Purchase and
Development Agreement as of the date and year first written above.
SELLER:
CITY OF MOUND, MINNESOTA
By
Its Mayor
By
Its City Manager
STATE OF MINNESOTA )
) SS.
COUNTY OF HENNEPIN )
The foregoing instrument was acknowledged before me this day of 2018, by
Mark Wegscheid, the Mayor of the City of Mound, Minnesota, a statutory city and political subdivision of
the State of Minnesota, on behalf of the Seller.
Notary Public
STATE OF MINNESOTA )
) SS.
COUNTY OF HENNEPIN )
The foregoing instrument was acknowledged before me this day of , 2018, by
Eric Hoversten, the City Manager of the City of Mound, Minnesota, a statutory city and political subdivision
of the State of Minnesota, on behalf of the Seller.
Notary Public
This document drafted by:
KENNEDY & GRAVEN, CHARTERED (JAE)
470 U.S. Bank Plaza
200 South Sixth Street
Minneapolis, MN 55402
(612)337-9300
S-1
608762 v]
Execution page of the Buyer to the Purchase and Development Agreement, dated as of the date and year
first written above.
By
Its
STATE OF MINNESOTA )
SS.
COUNTY OF )
C��
The foregoing instrument was acknowledged before me this
, the
on behalf of the Buyer.
Notary Public
S-2
608762 v
I'E
day of , 2018, by
of Mound Harbor, LLC, a
[Insert legal description]
608762 v
EXHIBIT A
LEGAL DESCRIPTION
GIIl
WE
EXHIBIT B
ESCROW AGREEMENT
The undersigned ("Title Company"), acknowledges receipt of
$ (the "Earnest Money") to be held by it pursuant to the Purchase Agreement to
which this Escrow Agreement is attached. Title Company will hold the Earnest Money (hereinafter the
"Earnest Money") in accordance with the terms of the Purchase Agreement and disburse the same strictly
in accordance with such terms. Title Company will invest the Earnest Money in such interest-bearing
accounts, instruments, corporate paper, or money market funds as approved by both the Buyer and the
Seller, Interest will accrue for the benefit of the Buyer, unless the Purchase Agreement is terminated by
reason of the default of the Buyer, in which case the interest will be paid to the Seller. Prior to the waiver
or satisfaction of its contingencies, the Buyer may direct the Title Company to return the Earnest Money
to it if the Buyer is entitled to terminate and elects to terminate the Purchase Agreement.
Title Company is not responsible for any decision concerning performance or effectiveness of the
Purchase Agreement or for resolution of any disputes concerning the Purchase Agreement. Title
Company is responsible only to act in accordance with the joint and mutual direction of both the Seller
and the Buyer, or in lieu thereof, the direction of a court of competent jurisdiction except as to the
Buyer's right to direct the return of the Earnest Money in accordance with the Purchase Agreement. The
Seller and the Buyer will hold Title Company harmless from all claims for damages arising out of this
Escrow Agreement and do hereby agree to indemnify Title Company for all costs and expenses in
connection with this escrow, including court costs and attorneys' fees, except for Title Company's failure
to account for the funds held hereunder, or acting in conflict with the terms hereof.
Tile fees and charges of the Title Company will be paid by the Seller. This Escrow Agreement is
dated this _ day of , 20_
am
B-1
608762 v]
W40-10
EXHIBIT C
Deed Tax Due: $
ECRV
Date:
FOR VALUABLE CONSIDERATION, the City of Mound, Minnesota, a statutory city and political
subdivision of the State of Minnesota, Grantor, hereby conveys and warrants to Mound Harbor, LLC, a
Minnesota limited liability company, Grantee, real property in Hennepin County, Minnesota, described as
follows:
[Insert legal description]
Check here if part or all of the land is Registered (Torrens) 0
together with all hereditaments and appurtenances belonging thereto, subject to the following exceptions:
easements of record.
❑ The Seller certifies that the Seller does
not know of any wells on the described
real property.
❑ A well disclosure certificate accompanies
this document or has been electronically
filed. (If electronically filed, insert
WDC number: }.
❑ 1 am familiar with the property described
in this instrument and I certify that the
status and number of wells on the
described real property have not
changed since the last previously filed
well disclosure certificate.
608762 0
CITY OF MOUND, MINNESOTA
By
Its Mayor
By
Its City Manager
C-1
-30-
STATE OF MINNESOTA )
) SS.
COUNTY OF HENNEPIN )
The foregoing instrument was acknowledged before the this day of 2018, by
Mark Wegscheid, the Mayor of the City of Mound, Minnesota, a statutory city and political subdivision of
the State of Minnesota, on behalf of the City.
Notary Public
STATE OF MINNESOTA )
) SS.
COUNTY OF HENNEPIN }
The foregoing instrument was acknowledged before me this day of , 2018, by
Eric Hoversten, the City Manager of the City of Mound, Minnesota, a statutory city and political subdivision
of the State of Minnesota, on behalf of the City.
This instrument was drafted by
Kennedy & Graven, Chartered
470 U.S. Bank Plaza
200 South Sixth Street
Minneapolis, MN 55402
(612)337-9300
608762 vl
Notary Public
Tax Statements should be sent to:
Mound Harbor, LLC
[ADDRESS]
C-2
-31-
EXHIBIT D
FORM OF CERTIFICATE OF COMPLETION
(To be completed for each Phase of the Minimum Improvements)
The undersigned hereby certifies that Mound Harbor, LLC, a limited liability
company (the "Developer"), has fully satisfied its obligations under Section 19 of the Purchase and
Development Agreement, dated , 2018 (the "Agreement"), between the City of Mound,
Minnesota and the Developer, with respect to construction of Phase of the Minimum Improvements in
accordance with Section 19 of the Agreement relating to the Property described in the attached Exhibit A,
and that the Developer is released and forever discharged from its obligations with respect to construction of
Phase of the Minimum Improvements under Section 19 of the Agreement.
Dated: .20
CITY OF MOUND, MINNESOTA
By
Its
Mayor
By
Its City Manager
STATE OF MINNESOTA )
) SS.
COUNTY OF HENNEPIN )
The foregoing instrument was acknowledged before me this day of , 20_, by
, the Mayor of the City of Mound, Minnesota, a statutory city and political subdivision
of the State of Minnesota, on behalf of the City.
Notary Public
STATE OF MINNESOTA )
) SS.
COUNTY OF HENNEPIN )
The foregoing instrument was acknowledged before me this day of , 20_, by
, the City Manager of the City of Mound, Minnesota, a statutory city and political
subdivision of the State of Minnesota, on behalf of the City.
Notary Public
D- I
608762 0
-32-
This document drafted by:
KENNEDY & GRAVEN, CHARTERED (1AE)
470 U.S. Bank Plaza
200 South Sixth Street
Minneapolis, MN 55402
(612) 337-9300
608762 v]
ME
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EXHIBIT E
DECLARATION REGARDING BOAT SLIPS
DECLARATION — BOAT SLIPS
THIS DECLARATION REGARDING BOAT SLIPS (the "Declaration") entered into this _
day of , 2018, by and between the CITY OF MOUND, MINNESOTA, a statutory city and
political subdivision of the State of Minnesota, having its office located at 2415 Wilshire Boulevard,
Mound, Minnesota 55364 (the "City"), and [TOWNHOME ASSOCIATION], a
, having its principal office at (the "Townhome
Association").
RECITALS:
WHEREAS, the City intends to convey the real property legally described on Exhibit A attached
hereto (the "Development Property") to Mound Harbor, LLC, a Minnesota limited liability company (the
"Developer") under Purchase and Development Agreement, dated 2018, between the
City and the Developer ("Development Agreement"); and
WHEREAS, pursuant to the Development Agreement, the Developer will construct 21 townhome
units (the "Minimum Improvements") on the Development Property; and
WHEREAS, in exchange for the Developer constructing the Minimum Improvements, the City has
agreed to provide the Townhome Association exclusive use of up to 20 boat slips under certain
conditions and the City and the Townhome Association desire to memorialize this agreement
pursuant to this Declaration.
NOW, THEREFORE, for good and valuable consideration, the City hereby agrees, covenants, and
declares the following:
L Boat Slip Agreement. Annually, the City shall offer the Townhome Association the
ability to enter into a Boat Slip Use Agreement each year for up to 20 boat slips for exclusive use of the
owners of a Townhome unit. The Boat Slip Use Agreement will include the exclusive use of up to 20
boat slips; provided, however, that the number of boat slips offered each year to the Townhome
Association will not exceed the number of Townhome units completed and units under construction. The
Seller covenants and represents that, subject to the provisions of this Section 1, the Townhome
Association shall have exclusive access to 20 boat slips each year. Notwithstanding the foregoing, if
owners of the Townhomes decline the use of all 20 boat slips, the City may enter into rental agreements
for the unused boat slips for that year.
2. Failure to Provide Boat Slips. If the City takes action to permanently reduce the number
of boat slips available for the exclusive use of the owners of the Townhome units below 20, the
Townhome Association shall have all rights and remedies available to it at law or in equity, including a
right to injunctive relief and specific performance. If any arbitration, litigation, or other legal proceeding
occurs between the parties relating to this Agreement, the Townhome Association shall be entitled to
E-1
608762 v
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recover (in addition to any other relief awarded or granted) the reasonable costs and expenses, including
attorney's fees, incurred by the Townhome Association.
I Enforceability; Successors and AssiM. The covenants contained herein are intended to
be perpetual, shall run with the land, and shall be binding upon, and inure to the benefit of, the
Townhome Association and its successors, assigns, and future owners, tenants and occupants of
any portion of the Development Property-. Without limiting the foregoing, the restrictions and
prohibitions contained herein on the Development Property (or any portion thereof) shall be
enforceable by the City, and its successors and assigns, by injunctive relief, the remedy at law
being inadequate.
4. Governing Law. This agreement shall be governed by the laws of the State of Minnesota.
5. Amendment. This agreement shall not be amended or modified unless by an instrument
in writing executed by the City and the Townhome Association, at the time of the amendment or
modification, of all of the Development Property.
6. No Merger. This instrument shall not merge or be extinguished by reason of common
ownership, including common ownership of the Development Property and any property adjacent
to the Development Property.
E-2
608762 v]
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IN WITNESS WHEREOF, the City and the Townhome Association have executed this
Declaration as of the date first above written.
CITY OF MOUND, MINNESOTA
By
Its Mayor
B
Its City Manager
STATE OF MINNESOTA )
) SS.
COUNTY OF HENNEPIN )
The foregoing instrument was acknowledged before me this day of 2018,
by Mark Wegscheid, the Mayor of the City- of Mound, Minnesota, a statutory city and political
subdivision of the State of Minnesota, on behalf of the Seller.
Notary Public
STATE OF MINNESOTA )
) SS.
COUNTY OF HENNEPIN )
The foregoing instrument was acknowledged before me this day of 2018,
by Eric Hoversten, the City Manager of the City of Mound, Minnesota, a statutory city and political
subdivision of the State of Minnesota, on behalf of the Seller.
Notary Public
This document drafted by:
KENNEDY & GRAVEN, CHARTERED (JAE)
470 U.S. Bank Plaza
200 South Sixth Street
Minneapolis, MN 55402
(612)337-9300
E-3
608762 vl
-36-
[TOWNHOME ASSOCIATION]
By
Its
STATE OF MINNESOTA )
SS.
COUNTY OF )
The foregoing instrument was acknowledged before me this day of 2018,
by the of [TOWNHOME
ASSOCIATION], a , on behalf of the Townhome Association.
Notary Public
E-4
608762 v]
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[insert]
608762 vl
EXHIBIT A OF DECLARATION
LEGAL DESCRIPTION OF DEVELOPMENT PROPERTY
Lm
W=11
EXHIBIT F
BOAT SLIP AGREEMENT
SLIP USE AGREEMENT BETWEEN THE CITY
OF MOUND AND THE HARBOR DISTRICT TOWNHOME ASSOCIATION
THIS SLIP USE AGREEMENT (this "Agreement") is made and entered into as of the day
of , 2019, by and among The Harbor District Townhome Association, Common Interest
Community No. , acting by and through its association board ("HOA") and the City of Mound, a
Minnesota municipal corporation ("City"). The HOA and the City may hereinafter be referred to
individually as a "party" or collectively as the "parties."
RECITALS:
A. The City owns the 37 slip multiple slip complex in Lost Lake adjacent to the Villas on Lost
Lake townhomes ("37 Slip Complex") and the 24 slip multiple slip complex ("24 Slip Complex")
adjacent to the Harbor District's Greenway and Pier. The 37 Slip Complex and the 24 Slip Complex may
hereinafter be referred to collectively as the "Slip Complexes."
B. In 2018 the City approved a Purchase and Developer Agreement with MOUND HARBOR,
LLC, the original developer of the Harbor District Townhomes, ("Developer"), which provides for
priority assignment of a slip at one of the Slip Complexes for the residents of the Harbor District
Townhomes; and
D. The parties desire to enter into an Agreement that sets forth the tennis and conditions of the
slip assignments, fee structure, rules governing use of the Slip Complexes and the City's obligation to
maintain the Lost Lake Channel and the Slip Complexes and appurtenances.
NOW THEREFORE, in consideration of the premises and other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:
I . Slip Assignment. In accordance with Chapter 78, Section 78-122 (d) of the Mound City
Code, as amended from time to time, up to twenty [20] slips at the Slip Complexes will be reserved for
owners or renters of the Harbor District Townhomes who will be given first priority for assignment of
these slips. Applications and fees for the slip are due by the last day of February each year. All slips not
used by Harbor District Townhomes owners or renters will be released by the City for licensing in
accordance with the Mound City Code (Chapter 78, Section 78-122) beginning on March 1 st of each year.
2. Fee Structure. The City establishes its fee schedule as part of the annual budget process
and the City reserves the right to modify the fees for the slips at the Slip Complexes from time to time.
The City agrees to provide for maintenance activities of the channel, the slips and surrounding
appurtenances of the Slip Complexes including, but not limited to, debt service on bonds related to the
Lost Lake development or renewal, maintenance of the channel and mulitiple slip structures and
appurtenances, utilities, insurance premiums and deductibles, program administration and funding
reserves for these activities.
3. Dock Use Area. The slips at the Slip Complexes are licensed and regulated by the Lake
Minnetonka Conservation District ("LMCD"), which imposes certain restrictions on the use of the lake,
including the slips, that must be complied with by those using the Slip Complexes. In addition, Chapter
78, Article VI the City of Mound City Code, as amended from time to time, regarding slip licensing has
additional regulations that all multiple slip licensees need to comply with. Each user of a slip is
F -I
608762 v]
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responsible for complying with all applicable federal, state, and local laws, rules, regulations, and
ordinances related to their use. The City may terminate a Townhome resident's use of the Slip
Complexes and refuse to lease a slip to the resident for such period of time as the City determines is
reasonable if the resident violates any of the applicable regulations or the terms and conditions of the
lease.
4. Maintenance Activities. Lost Lake was redredged in 2005 to provide access to Lake
Minnetonka for the planned redevelopment of the City's downtown. The Slip Complexes were
constructed to provide pedestrian access to these amenities. The City is responsible for maintaining the
dredge and any aquatic vegetation removal/management so that reasonable access can be obtained in and
around the Slip Complexes. The dredge depth is regulated by the Department of Natural Resources
("DNR") and the standard limit is out to 48" of water depth measured from the Ordinary High Water
("OHW") level elevation of 929.4 feet. The City will maintain the Slip Complexes and appurtenances, as
public amenities, to a reasonable standard, as determined by the City, providing for the health and safety
of pedestrians and functionally equivalent replacement, if necessary. The City's agreement to maintain
the Slip Complex and appurtences is as the owner of the facilities to make them available to the general
public as a public amenity and does not create a special duty between the City and the users of the Slip
Complexes.
5. Liability. All slip licensees must provide proof of boat owners insurance upon license
renewal. The City maintains a General Liability Policy with the League of Minnesota Cities Insurance
Trust and currency has a Property In the Open policy for the Slip Complexes. The City maintains the
right to self insure the Property in the Open coverage as an alternative to the relatively high premiums of
its current policy. Nothing in this Agreement constitutes, or shall be interpreted as, a waiver by the City
of any limitation on or exemption from liability available to it under common law, Minnesota Statutes,
chapter 466, or other law.
6. Notices. Any notice required hereunder shall be given in writing, signed by the party
giving notice, personally delivered or mailed by certified or registered mail, return receipt requested, to
the parties' respective addresses as set forth below:
To City: Eric Hoversten
City Manager
City of Mound
2415 Wilshire Blvd
Mound, MN 55364
With Copy to: Troy Gilchrist
City Attorney
Kennedy & Graven
200 South Sixth Street
Suite 470
Minneapolis, MN 55402
To HOA: The HarbOr District Townhome Association
C/O
MN 55XXX
F-2
608762 vl
Notice shall be deemed delivered (a) in the case of personal delivery, on the date when personally
delivered; or (b) in the case of certified or registered mail, on the date which is one day after deposited in
the United States mail with sufficient postage to effect such delivery. Each party may change recipient
and the address to which notice must be given by delivery of written notice to the other parties in
accordance with this Paragraph 6.
7. Counterparts. The parties may sign this Agreement in several counterparts, each of
which constitutes an original, but all of which together constitute one instrument.
8. Termination. The parties may agree in writing to tenninate this Agreement at any time.
The City may terminate this Agreement upon providing the HOA 12 months written notice of
termination. The termination will not affect the use of the slips by the Townhome residents in the then
present season, but the City may refuse to grant the priority provided for in this Agreement for the then
upcoming season and thereafter.
8. Miscellaneous. This Agreement shall be binding upon the parties hereto and their
respective successors and assigns. This Agreement can be amended or modified only by a writing
signed by the parties hereto. This Agreement shall be governed by the laws of the State of Minnesota.
F-3
608762 vl
IN WITNESS WHEREOF, the parties hereto have executed this Agreement the day and year first
above written.
CITY OF MOUND HARBOR DISTRICT TOWNHOME
ASSOCIATION (COMMON INTEREST
COMMUNITY NO. )
By: By:
Its Its
By: By:
Its
608762 vi
Its
m
HOUSING AND REDEVELOPMENT AUTHORITY OF AND FOR
THE CITY OF MOUND, MINNESOTA
RESOLUTION NO. 18--H
RESOLUTION PROVIDING APPROVAL FOR CONVEYANCE OF
LAND IN MOUND HARBOR DISTRICT TO CITY OF MOUND
WHEREAS, the City of Mound, Minnesota (the "City) underwent a request for qualifications
process to choose a developer to develop townhomes in the Mound Harbor area, and through that process the
City determined to work with Mound Harbor, LLC (the "Developer") for a proposed townhome
development; and
WHEREAS, the Developer has proposed to construct 21 market -rate townhomes, with three to four
units per building, including two garage stalls per unit, at least two parking spaces in front of each building
per unit, and at least 1 I additional guest parking spaces (the "Minimum Improvements"); and
WHEREAS, there has been presented to the Board of Commissioners of the Housing and
Redevelopment Authority of and for the City of Mound, Minnesota (the "Authority") a Purchase and
Development Agreement (the "Agreement") proposed to be entered into between the City and the Developer,
pursuant to which the City will convey certain property to the Developer and the Developer will agree to
construct the Minimum Improvements; and
WHEREAS, the Authority owns certain property with the Mound Harbor area, some of which will
be needed for the Minimum Improvements;
NOW, THEREFORE, BE IT RESOLVED by the Board of Commissioners of the Housing and
Redevelopment Authority of and for the City of Mound, Minnesota that:
1. The Authority hereby approves the conveyance of all property the Authority owns within the
Mound Harbor area to the City for development purposes for $1.00.
2. Authority staff is hereby directed to cause a quit claim deed to be drafted for the purpose of
conveying such property to the City for the Authority's review and approval.
Adopted by the Board of Commissioners of the Housing and Redevelopment Authority of and for the City of
Mound, Minnesota, this 15th day of August, 2018.
Chair
Clerk
531194N,7 JAEMU195-42
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CITY OF MOUND, MINNESOTA
RESOLUTION NO. 18 -
RESOLUTION APPROVING PURCHASE AND DEVELOPMENT AGREEMENT
WITH MOUND HARBOR, LLC
WHEREAS, the City of Mound, Minnesota (the "City) underwent a request for qualifications
process to choose a developer to develop townhomes in the Mound Harbor area, and through that process
the City determined to work with Mound Harbor, LLC (the "Developer") for a proposed townhome
development; and
WHEREAS, the Developer has proposed to construct 21 market -rate townhomes, with three to
four units per building, including two garage stalls per unit, at least two parking spaces in front of each
building per unit, and at least I 1 additional guest parking spaces (the "Minimum Improvements"); and
WHEREAS, there has been presented before the City Council a Purchase and Development
Agreement (the "Agreement") proposed to be entered into between the City and the Developer, pursuant to
which the City will convey certain property to the Developer and the Developer will agree to construct the
Minimum Improvements.
NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Mound, Minnesota
that:
I . The City finds that the execution of the Agreement by the City and performance of the
City's obligations thereunder are in the best interest of the City and its residents.
2. The Agreement is hereby authorized, approved, and confirmed in all respects and the
Mayor and the City Manager are hereby authorized and directed to execute and deliver the Agreement for
and on behalf of the City in substantially the form now on file with the City but with such modifications as
shall be deemed necessary, desirable or appropriate, their execution thereof to constitute such conclusive
evidence of their approval of any and all modifications therein.
3. The Mayor and the City Manager are authorized and directed to execute and deliver any
additional agreements, certificates or other documents that the City determines are necessary to carry out
the intentions of this resolution and the Agreement.
Approved by the City Council of the City of Mound, Minnesota this 15th day of August, 2018.
Chair
ATTEST:
Clerk
531196v1 JAE MU195-42