HomeMy WebLinkAbout2012-05-22 CC Meeting Packet Enclosure 7
Oak Park Heights
Request for Council Action Ene 1 10
Meeting Date May 22, 2012
Agenda Item Nolcle Senior Living Projects Development Agreement
Time Req. 5
Agenda Placement Old Business
Originating Department /Requester Administration 1ennifer Pinski — - - _- -. _ —
Requester's Signattlre
Action Requested Review, discuss, and possible action
Background /Justification (Please indicate any previous action has been taken or if other public
bodies have been advised).
See attached:
1. Letter to City Council from City Attorney Mark Vierling
2. Correspondence from Tim Nolde to Interim City Administrator DeRosier
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ECKBERG
LAMMERS
\ I I O R N I t'.•\ I 1 ■\' Stillwater Office:
Writer's Direct Dial: 1809 Northwestern Avenue
(651) 351 -2118 Stillwater, Minnesota 55082
Writer's E -mail: (651) 439 -2878
mvierling @eckberglammers.com Fax (651) 439 -2923
May 16, 2012 Hudson Office:
430 Second Street
Hudson, Wisconsin 54016
(715) 386 -3733
Fax (715) 386 -6456
David Beaudet Michael J. Runk
Mayor 5525 O'Brien Avenue North www.eckberglammers.com
6400 Lookout Trail North Oak Park Heights, MN 55082
Oak Park Heights, MN 55082
Les Abrahamson Mark R. Swenson
Council Member Council Member
13990 56th Street North 14846 Upper 55th Street North
Oak Park Heights, MN 55082 Oak Park Heights, MN 55082
Mary McComber
Council Member
5728 Penfield Avenue North
Oak Park Heights, MN 55082
Re: Nolde Senior Living
Our File No.: 01501 -21971
Dear Mayor and Council:
City staff has prepared the Developer's Agreement in this matter, however, there is a critical portion of
the Agreement that Mr. Nolde has an issue with and that he wants to revisit with the Council.
You will recall that the north east portion of the development is fundamentally built out place and
developed with the high rise in the northeast corner, and a few other units of housing along the north
border. The southeast quadrant is going to be development with the multiple family unit that was
formerly known as the Carriage House Cooperative (now Phase II) with the southwest section( Phase I)
being put into multiple units of single - family housing.
Mr. Nolde is proceeding with the development on the southeast corner (the former Carriage House
Cooperative) before proceeding with the other remnants of the development in the southwest quadrant.
City staff and the Council had concerns relative to making sure that the Developer would in fact
complete the southwest quadrant development, as that is, under the current market circumstances having
less desirable housing than the southeast quadrant development, which is now being prepared for
building.
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Famil / l Law • Criminal Law • Personal Injury / Wrongful Death
Y Law Divorce • Business and Commercial Pa 30 of 46
Estate Planning / Probate • Real Estate • Land Use Law • Mediation • Municipal Law • Civil Litigatio
City staff suggested and drafted a provision within the Developer's Agreement requiring the financial
escrow to be deposited by Mr. Nolde to assure that the southwest quadrant would be built- developed
along the approved plans, and required him to deposit a suggested $250,000 to secure his performance
for that development. This is as a result of the negotiations with the city establishing a total housing
requirement in terms of units of housing.
Mr. Nolde takes exception to that requirement.
The Council did by Resolution an escrow to be placed within its conditions that approve this
development for Phase II, but did not specify an amount of the monetary security, leaving that for Staff
recommendation.
Staff still recommends, and strongly feels the need to have a substantive financial security or escrow in
place to assure the performance and construction of the rest of the development, being the southwest
quadrant after the southeast quadrant development has been completed. Apparently the issue is the
amount that is to be required.
This matter will appear on your calendar on the 22 "d, and as an Agenda item. City staff is looking for
Council instruction on the matter, and Mr. Nolde does wish to make his objections made known relative
to the requirement and the financial security that is being requested.
Naturally, if any of you have any questions on this matter at any time, please feel free to contact me
directly. I attach a portion of the Developer's Agreement dealing with that issue for your reference as
well as the Resolution approving the overall development pl. .- • • assed this spring.
You
Mark J. Vierling
MJV /ndf
cc: Eric A. Johnson, City Administrator
Page 31 of 46
Developer's Agreement Staff proposed provision:
Phase II Development. Developer's Development is approved for Phase II of this development. Phase I
will be constructed within 5 years of the commencement of construction of this Phase II development.
As and for a financial security to the City of Oak Park Heights to assure the commencement and
completion of Phase I of the development, Developer shall supply a cash escrow to the City in the
amount of $250,000.00 which shall forfeit to the City in the event that Phase I development as
approved by the City is not commenced in construction on or before June 1, 2017 and pursued
reasonably to completion within 24 months thereafter. This remedy is in addition to and not in lieu of
others allowed under the terms of this agreement or as may be permitted by law.
Past Council Resolution Provided:
27. The Development Agreement shall include a penalty clause if the applicant does not
construct all or part of Phase I.
Page 32 of 46
Brian DeRosier
From: Tim Nolde <timnolde @comcast.net>
Sent: Thursday, May 17, 2012 8:05 AM
To: Brian DeRosier
Cc: JNolde @winthrop.com
Subject: Development Agreement
Dear Brian, it is my understanding that you are the acting City Administrator until Eric recovers. I wish you the
best. As you are aware, we received approval for the next phase of our Senior Living project across the
street. Our Developer's Agreement should be scheduled for Council action this Tuesday, May 22nd.
There are a few items that need addressing of which the council should be aware.
The most important item is on page 12, Item J. This is a requirement that we post $250,000 to guarantee the
city we will complete our future phase. We think this provision is punitive and burdens us with unreasonable
costs and risks. This idea originated in the Development Agreement for the building that is already built. We
were required to provide a $100,000 Letter of Credit to assure the city we would complete the particular
Phase we are trying to build now. In that case, however, the parcel was part of a Tax Increment Financing
District, and the tax increment included the value of the improvements to be constructed on that site and the
city had a "vested" interest in seeing the project completed because of the TIF obligations. Because of this,
we had no qualms about providing such cash assurance.
The current request is totally different. That Phase is not in any Tax Increment District, and all of our
infrastructure is completed and paid for. We cannot predict the future, but feel we have enough funds
already at risk that would only necessitate us completing the project.
All we need is another 9/11 or such type of disaster and all of our plans could be dashed. These are items
totally out of our control, therefore 1 respectfully request the Council waive the entire provision numbered "J"
on page 12.
Another minor item is the amount of funds you want deposited for "potential administrative expenses ". You
are asking for $20,000 and we propose $10,000. All of our other agreements at the city used $10,000 and
there has never been a necessity to draw from that amount. In fact, we have numerous cash deposits already
at the city. I respectfully request the council take action on that item (Section 5, page 8) also.
I will not be able to attend the meeting , however, my brother will be there to answer any questions. Thank
you for your time.
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