1h. Approval of Settlement Agreement Apple Valley red E Mix' CAMPBELL, KNUTSON, SCOTT & FUCHS, P.A.
Attorneys at Law
Thomas J. Campbell (612) 452.5000 Andrea McDowell Poehler
Roger N. Knutson FaX 612 4525550 Matthew K. Brokl
Thomas M. Scott Marguerite M. McCarron
Gary G. Fuchs George T. Stephenson
J ames R. Walston
Elliott B. Knetsch June 7, 1995 r d
T
Mr. Don Ashworth ''r
1 4v
Chanhassen City Hall
' 690 Coulter Drive, Box 147 I
Chanhassen, MN 55317 AJ r a0`i
RE. City of Chanhassen vs. Apple Valley Red -E -Mix
Q : l 6
Dear Mr. Ashworth: i4- 11�C,¢ ;,,., 7,2 •- >V , 4� , QV ,l 17
As you will recall, in 1992 the City commenced condemnation of the former Apple Valley
' Red -E -Mix parcel that is located on the east end of the City's downtown area. We went through
many hearings and disputes with AVR in the proceeding, including a mini -trial on AVR's claim
that the City was liable to pay AVR for the value of its lost business in addition to the value of
' the real estate. We were successful in the Carver County District Court in obtaining a ruling
that AVR loss of going concern value was not compensable in the condemnation proceeding.
We also went through a process of testing the soils on the AVR site, finding some
contamination from underground tanks and verifying removal of the tanks and decontamination
of the soil. The testing was at City expense. The?removal and verification of clean up by the
Pollution Control Agency was at AVR's expense.
In October, 1993, AVR agreed to vacate the property in return for the City's payment
of the amount of the City's appraisal for damages. By law, the City is required to pay the
amount of its own appraisal to obtain possession of the property. In November, 1993, the City
' paid AVR $420,000, the amount of the City's appraisal for damages. The City's appraisal of
$420,000 was for the real estate and improvements thereon, minus an estimated $40,000 for
removal of the buildings that were deemed to be of no value.
This case has been relatively dormant for several months now. AVR has made a claim
' that they are entitled to compensation for a significant amount of additional adjacent property
that AVR claims it now owns because it has been using that property for over 20 years as part
of its operation. The Court ordered AVR to have a survey done to determine the exact legal
' description of that additional property and AVR has not done so. That is the basic reason for
the extensive nonaction in this file.
Suite 317 • Eagandale Office Center • 1380 Corporate Center Curve • Eagan, MN 55121
Mr. Don Ashworth
June 7, 1995
Page 2
AVR's appraisal for damages is $690,000. That amount does not include the claim of
loss of going concern value which AVR claims to be in the area of $2 million. While the
Carver County District Court has ruled that AVR is not entitled to any compensation for loss
of going concern value, that District Court decision is still subject to appeal once the rest of the
condemnation proceeding is concluded.
Through negotiations with AVR's attorney, I have reached a settlement proposal to
recommend to the City Council. The entire matter can be settled for a total payment to AVR
of $530,000. Since $420,000 has already been paid, settlement would require payment of an
additional $110,000. That total amount would include all damages, all claims for loss of going
concern value, all interest that would be due, all costs and disbursements that could be claimed
by AVR and all other claims AVR may have for damages of any kind.
I recommend that the City Council review and then approve the settlement at $530,000.
Payment of that amount would be equal to approximately $6.80 per square foot, based on AVR's
site alone, or approximately $4.95 per square foot based on AVR's claim to ownership of
additional property. Given the cost of proceeding with the condemnation, the potential risk
involved in the loss of going concern value claim, the interest that would be due to AVR at the
end of that long process, and all the other costs that would be involved, I believe the settlement
at $530,000 is reasonable and is in the best interest of the City. I recommend that the Council
approve that settlement.
I request that you place the matter on the City Council's agenda for its review. If you,
or any Council member, has any questions or requires further explanation, please feel free to
contact me.
Very truly yours,
CAMPBELL, I�NUTSON, SCOTT
& FUCHS, 1A.
R."
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