1j Approve Parking and Cross Easements, Colonial Center
CITY OF
CHANHASSEN
;90 City Center Drive, PO Box 141
Chanhassen, Minnesota 55311
Phone 612.937. 1900
General Fax 612.937.5139
Engineering Fax 612.937.9152
Public Safety Fax 612.934.2524
Web lUlUw.ci.chanhassen.mn.us
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MEMORANDUM
TO:
Mayor and City Council
FROM:
Don Ashworth, City Manager
DA TE:
April 3, 1998
SUBJ:
Approve Parking & Cross Easements, Colonial Center
REQUEST
Colonial Center is in the process of being acquired by Theis & Talle. Their
attorney does not feel that there is sufficient evidence as to Colonial Center's legal
right to use the parking lot in front of their property as a parking lot. They are
requesting that the city, as owner of the parking lot, provide to them a cross
easement and parking easement on this property.
BACKGROUND
Most of the parking lots in downtown were completed as public improvement
projects with the costs of the improvement assessed back to each of the benefiting
businesses. Most of the assessments were reassigned back to the BRA after a new
business (Medical Arts/Brooks/Country Suites) or existing businesses (Riviera/
Colonial Center) agreed to redevelop their property and that new or old
developments could avail themselves to the three years of increment to payoff
those assessments. The benefit to the city in doing all of the parking lots as public
improvements was to ensure that they all looked similar in design/landscaping/
lighting/etc. In the case of Colonial Center, the owners were quite concerned with.
the bar activity that was being generated from Pauly'slPony Express. They
demanded a clause that would allow them to reclaim the parking lot at their sole
discretion. As long as the improvements were guaranteed to happen and that they
would not receive the special assessment reductions unless the property was
redeveloped, the BRA really did not object to this clause.
RECOMMENDATION
The attached letter from Vernelle Clayton comes to the conclusion that the city
may be in a difficult situation as we have two competing obligations, i.e. the
necessity to reconvey the property to Colonial Center while simultaneously
assuring Medical Arts the right to have a cross easement/parking privileges on
that lot. I disagree. We could legally take ownership of the property, which we
rhe City of Chanhassen. A growing community with clean lakes, quality schools, a charming downtown, thriving businesses, and beautiful parks. A great place to live, work, and play.
Mayor and City Council
April 3, 1998
Page 2
did. [Note: We could not build or assess the parking lots if we did not own
them.] During the time frame of our ownership, we agreed to cross easements for
Medical Arts. Ifwe were forced to reconvey to Colonial Center, Colonial Center
would then be accepting the property knowing that it is encumbered with the cross
easements. Vernelle's recommends that an easier way to handle this would be to
simply provide a cross easement/parking privileges to Colonial Center. Both the
city attorney and I agree. Approval of a cross easement and parking privileges to
Colonial Center is recommended.
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LOTUS
REALTY SERVICES
March 20, 1998
TO:
Don Ashworth
FROM:
Vernelle Clayton
RE:
Colonial Square Parking Issue
This memo is a follow up to our phone conversation regarding adequate assurance of parking and
access for the Colonial Square Building. The purchaser is requesting that the Colonial Square
property be added to an existing easement as a benefited parcel in order for the purchaser to
obtain title insurance for the property.. This request is being made as an alternative to the City's
earlier proposal that the City provide a letter from the City's attorney assuring Colonial Square
that the lot can only be used as a parking lot. It is also being made as an alternative to the existing
owners' requesting that the parking lot be deeded back to them pursuant to the terms of their
agreement with the City.
Enclosed is a sketch of the area north of 78th Street between the Riviera and Great Plains Blvd.
The hatched marked area represents the area covered by the access and parking easement now in
place. The benefited parcels are the two Ridgeview Buildings, except that the Riviera has a right
to park on 12 stalls at the west edge.
As you can see, the two Ridgeview Buildings have an existing perpetual right to drive and park on
all of the area in front of Colonial Square. This right was guaranteed by document entitled
Declaration of Easements, Covenants and Restrictions dated October 3, 1989 between the City
and the HRA at the same time as the City and the HRA entered into Development and
Redevelopment agreements with the ownership entity of Ridge view I. The document is recorded
with the County Recorder and Registrar of Titles.
In contrast to the above approach, when the Colonial Square folks entered into their agreement
with the City on June 2, 1988, to facilitate the improvement of their parking lot, they simply
deeded the parking lot to the City. The City in return agreed to improve and maintain it. Colonial
Square agreed to reimburse the City for maintenance and the City agreed to Deed the property
(parking lot) back to the Colonial Square owners at no cost if Colonial Square were to be
unhappy with the City's maintenance of the lot. The document is silent on Colonial Square's right
to park, drive and/or walk across the parking lot.
551 WEST 78TH STREET. P.O. BOX 235. CHANHASSEN, MINNESOTA 55317. (612) 934-4538. FAX (612) 934-5472
Although the existing owners have expressed a willingness to request that the parcel be deeded
back to them and although an inspection of the parking lot would seem to indicate that their
representation of inadequate maintenance could be supported, we are quite sure that the Colonial
Square folks would not anticipate receiving back a parcel which has now been encumbered by a
perpetual parking and access easement and we are not encouraging that solution. Furthermore, to
convey the property back to Colonial Square could violate the City's obligation to the two
Ridgeview buildings.
It is our position that the City's offer to provide a letter confirming that the lot can only be used
for parking is not sufficient because the City cannot guarantee that the parking is available to
Colonial Square inasmuch as the City has already specifically provided that the parking is available
in perpetuity to Ridgeview I and II. It also appears that the Title Insurance Company will not,
based solely upon that letter, insure the purchaser or its lender that they have access to 78th Street
or parking rights. Without title insurance the purchaser can't buy and the lender won't lend.
If the existing Declaration is properly amended by the City and the HRA, it appears that the title
insurance would be available.
As a practical matter, the title company cannot, therefore, provide assurance to either the
purchaser or its lender that there is parking and access for Colonial Square. For example, there is
nothing to prevent the Ridgeview I and II folks from parking all of their cars in that area, leaving
no room for occupants of Colonial Square. While that act would not be very polite, it is perfectly
legal under the document.
The existing document seems to assume the future need for adding parcels in that there is a
specific provision for the addition of adjacent parcels as "benefited parcels." It would seem that
the addition of Colonial Square is the best solution for the City and Colonial Square. As Mr.
Silverman has pointed out, the addition of Colonial Square lot as a benefited parcel does not add
any limitation on the City's use of the area that does not already exist since the exact same benefit
of the same area has already been given to Ridgeview I and II.
We therefore concur with Roger that this should not be a controversial issue for the Council, nor,
for the reasons stated in the above paragraph, would its approval effect in any way what might or
might not be the outcome of the current exploration offuture uses within the "Old
TownlHistorical District."
We encourage you to present the request for amendment of the Declaration to the Council with a
positive staff recommendation. The amendment will not increase the City's responsibilities or
encumber the property more than it is already encumbered. The failure to adopt the amendment
may leave the present Colonial Square owners with an unmarketable asset and could force them
to seek to exercise their rights reserved against the City. This would create a major problem
since the City has an obligation to provide access and parking rights to the Ridgeview properties
over the same property. It would appear that the City is faced with conflicting obligations but is
being offered a graceful opportunity to satisfy all parties with no additional adverse consequences
to the City. Please give this your best consideration.
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