Loading...
EDA 2003 05 27CHANHAS$~ ECONOMIC DEVELOPMENT AUTHORITY SPECIAL MEETING MAY 27, 2003 Chairman Furlong called the meeting to order at 8'.25 p.m. MEMBER8 PRESENT: Tom Furlong, Steve Labatt, Bob Ayotte, Brian Lundquist, Craig Peterson and Jim Bohn CONSIDER APPRQyAL QF PURCHASE PROPERTY~ BLOOMBERG COMPANIES. Gerhardt: Chairman, EDA members. Included in your packet is a proposed purchase agreement with Bloomberg Companies. At our last meeting staff was able to continue negotiations with Bloomberg Companies and the purchase price is now at $1,150,000. Up approximstely $82,000 from the last time you met. Justin Miller, Assistant Executive Director has prepared a time table that I'd like to have him go through fight now to update all EDA members and public that are present. Furlong: Thank you Mr. Miller. Miller: Good evening. One of the principles that I think the EDA stated clearly last time when we met. Ayotte: Could you pull the mic closer. Miller: I'm sorry. One of the key factors in approving this site plan, or the ~ plan at the last EDA meeting was that we put some specific time tables into the purchase agreement and I think we've done that. I think we have a pretty aggressive fime~ on this proposal. If you look at the handout that I gave you earlier, time's three columns. One is for the Bloomberg Companies. One is for the City, and those are how we split out the obligations on both sides for this contract. The first one you'll see is an obligation of the City that we need to provide to Bloomberg all surveys and environmental ~ that we have on hand within 15 days of the executed agreement. We have already done that so that's something we don't have to worry about. The next would be for Bloomberg to enter into a conlract for environmental testing. That would need to be done within 20 days of the executed contract, and we would have to provide the City being ALTA rifle commitment within 20 days alld we have already started that proc. ess, so we feel confident we can get that done within 20 days. The next step would be for the Bloomberg Companies. They would need to obtain an ALTA survey of the entire site within 30 days of executing this agreement. Those 3 days that I just told you are the most fluid of this, of this agreement and those are dependent on the actual execution which will be the signing of the agreement. The rest of the dates from hereon out are actual firm calendar days. The first of which would be Bloomberg Companies disglosing any problems they see with the rifle commitment that we provide them, they would need to do that by July 15~. The next four are all by August Iu. I think that's an i ,repellant day in this agreement. They would need to disclose any concerns they have, that they find with the environmental testing on the site. They would also need to provide to us a letter they have come to an agreement with the Chanhassen Cinema in regards to tearing down and repairing the party wall, as well as relocating the Southwest Metro Economic Development Authority - May 27, 2003 park and fide easement onto a prowaly in the development area that is owned by Bloo~. And we would also need to receive proof that they have applied for the PUD, which is planned unit development process by August 1~. The next big date in this agreement is September 30~, and that is the target that we have for city site approval. Along with that will probably be two or three Planning Commission meetings. One is going to be just Idnd of a broad overview of what we are looking for and also give staff and the developer a chance to find out problems or the interest that the Planning Commission has with this. And then we think it will probably take at least 2 Planning Commission meetings to get through the entire PUD and site plan approval process. Those will be the first two meetings in September, and hopefully you will have final City Council, EDA approval by the last meeting in September. We're also asking that the applicant provide some proof that they have lease or occupancy agreements with tenants by ~ ,S~tem~r 30~h, and then if aH goes well we will close on the property no later than November 14 . All through thi~ process also Bloomberg Companies will be providing bi-weekly reports on the status of all these items and we will share those with the EDA members. Gerhardt: Chairman, at this time I think I received a couple of comments from HDA membem. There was a section in the purchase agreement that we had ask~ Tom Scott to give clarification on regarding liability on Section 12.7. Tom- Tom Scott: Would you like me to address that now Todd? Gerhardt: Yes, if you could please. Tom Scott: Yeah, Section 12.7, I guess this reafly is how it relates to ano~ provision in the purchase agreement which is 2.11. And it relates to if the EDA does not go ahead and perform under the agreement for some reason and it would be in breach of the agreement. What remedy would, what remedies would the buyers have and in 2.11 the agreement indicates that the buyer's sole remedy if seller refuses to perform it's obligation shall be to have it's earnest money returned, which would be $10,000. Now, that's what is indicated in the 2.11. Then when you go to the Section that Todd referred to, 12.7. It says if seller defaults for different reasons, buyer may either terminate this agreement by giving seller written notice thereof, in which case the earnest money shall be refunded to buyer or buyer may seek specific perf~ce of this agreement or buyer may proceed to close and basically waive, with or without waiver of any breach by seller. The point in 12.7 is, and I did talk to Mr. Kelly of my office just before the meeting who had negotiated this and had talked with Mr. Rice, the attorney for Bloomberg. We do want to clarify that and I would like some counsel from, I guess some input from the ED& We would clarify it, as I understand it, Mr. Rice might want to address this point too, is that it would in fact be, the remedy would be if we don't, ff we breach the agreement and don't convey, would be the return of the earnest money deposit. So we would clarify 12.7 to be consistent with the earlier paragraph. Furlong: $o you would strike the or buyer may seek specific perf~ce of this agreement? Tom Scott: Right. It would be, and I think, fight. We would strike it to make it consistent with the initial. Furlong: 2.11. Tom Scott: Language in the earlier paragraph that would simply be, which is as I read the agreement is reciprocal so that's also the, if the buyer's breach, don't fulfill the obligations, then we're limited to simply returning the earne~ money deposit as damages and we can't seek Economic Development Authority - May 27, 2003 specific performance to require them to perform or seek other damages so. So that would need to be clarified so, and if there's any other clarifications, I guess we'll just have to see where we're at. If the EDA is cornfoCmble with it we could approve the agreement subject to that clarific~on and final approval by the EDA attmmey. But again we can see if there are other issues with the agreement or where we go from here. So that would be my comments on that point. Furlong: Mr. ~t, other issues? Comments. Gerhardt~ The last issue, again raised by an EDA member was having that deadline for the building demolition of the bowl property itself. There are some circumstmx~s that go along with not having that in there. One being that if you tear down the bowling alley property, you have to have some type of agree~t to replace either a temporary wall or permanent wall with the theater. There is a party wall agreement between the two and if the building comes down, there needs to be an exterior wall built in place. Right now it is a four hour wall that is sheet rock, which is not an element that can handle our weathe~ here in Minnesota so some type of permanent stmcmm needs to go in them. At this point Bloomberg Companies have told us that they don't have an agreement with the movie theater people so they can't make a commi~ on when the building should come down. However the~ is some incentives on th~m to tear down that building. One is that it would reduce their ~ taxes by having the building down so there's an incentive to save some money on that side of it. And I guess that's really the only incentive for them to do that. For some reason they do not follow through with the purchase agreement within a one year p~riod of tearing down the bnil~, we have that clause in the~ that we can buy the ~ I~ck from them. Und~ State Statute and it's also included in this purchase agreement if they do not fulfill their obligations of what they promised, we can acquire that property back at what we sold it for. So with that Mr. Bloomb~ and his representatives are here tonight to answer any questions that you have regarding the purchase agreemeat or their proposed development and we had a meeting today to give them some initial commm~ on their presentation to the Planning Commission. And hoping to go to see them June 15~. 17~. Furlong: Okay. Any questions for staff at this time? lust point of clarification~ Is it one year from the date of close or one year from the date of demolition of the building? Gerhardt: Fve got to believe it's closing. Furlong: Okay. That's what I thought. Tha~ you. Other questions. Lundquist: Todd we talked on the phone today about, my concern still is the time. I know that you guys have laid out the calendar here and it looks like it's pretty tight but is ~ any ways to expedite through the ~s at all to get anything faster than a November 14 close or anything that we can do to move that date up at all? Gerhardt: First reaction is when they make their formal submittal and getting direction from the Planning Commission is going to be key. Usually we can turn these things around a little faster if the Planning Commission doesn't see it as a difficult site plan and bring it to council sooner. Other than that, a lot of it goes back to us notifying other government jurisdictions and getting their comments back is what is going to time consuming. We have to allow them 30 days to comment and to get those back so we can make a formal presentation to the Planning Commission. Lundquist: So is that a yes there's a way to expedite it or a no, this is the way it's going to be? Economic Development Authority - May 27, 2003 Gerhardt: I thought I talked my way around it pretty good but, not really. I mean thi~ is going to be a difficult site to redevelop. It's not like Chipofle and Buffalo Wild W'mgs where you take a vacant lot. You're going to take an existing building, with existing parking ~ in the area. Probably have to look at a traffic study. Special signage. So it's not going to be real easy to take through like the industrial buildi~ you saw tonight. That's a fairly simple site plan. This is a little more complicated when you're dealing with retail and you want to make sum you've got the adequate parking or people aren't parking out in the street or that you have uniform signage and architectural standards. So I just don't see how we can move it along any faster but we will try if it's there to do so. Lundquist: Then onto the reconstm~on or the demolition of the building. The condition, in Section 7.8 on the purchase agreement Is that Bloo~ must have an agreement with the Cinema by August 1't as to the anmtgements for demolition of the bowling alley and reconslnwfion of the wall. Can we add, would it be, can we add a condition that we've got to have that date for demolition along with that agreement? Part of that agreement must be a date for demolition. Any objections from staff's point of view? Well we can talk to. Gerhardt: I think that's apl~. Lundquist: Okay. Furlong: Thank you. Other questions for staff at this time? Peterson: The only one I've got Todd is, I was somewhat surprised by the amount of earnest money and I didn't get a chance to call you on that. It seems remarkably low for the value of the deal, less than one percent. What's your perspective7 Gerhardt: I'd say that's pretty typical. In a lot of the deals I've done in the past I haven't seen too much over that. It's usually $5,000 to $ lO,O00. Peterson: Didn't we have more than 10 last time? Gerhardt: No. I don't believe so. I think it was 10. Peterson: It just seems low to me. As you've heard my broken record before but we haven't been able to get this thing done and if making, upping that would motivate you know motivate anybody further, I'd like to consider tbac Furlong: Okay. Other questions for staff at this time? If ~ are none, I see Mr. lohnson you're here this evening. Is there any comments, discussion you'd like to provide? Clayton $ohnson: Mr. Rice has a point of clarification. Furlong: Very good, good evening. Cextainly, please come forward. John Rice: My name is John Rice. Fm an attorney here in Chanhassom I'm here on behalf of Bloomberg Companies. I have just a couple of connnents. I don't kn~w if Justin's memorandum regarding the Southwest Metro Park and Ride documented, in fact provides at 7.9 that we'll provide a letter of intent. That would be a letter of intent with Southwest Metro that we would do it because quite frankly they're wonderful folk but whether or not we can get an agreement for relocation of everything and all the accomm~tions and the additional ease~ts by August 1 is, Economic Development Authority - May 27, 2003 I don't think it's possible. But I mean ttm's without knowing what their schedule for meetings and their process of approval that they would have to go through. But presum~ly by August 1 we can get a letter of intent that will say we intend to do this and we will work towards getting this and that will give everybody in the initial agreement and then moving towards the final. But it's a little bit different in the purchase agreement. And the other one is. Miller: One thing to add though, that would still be a signed release of that permanent easement would be required before closing. John Rice: Oh yes. Yes. That basically says Southwest lVletro and the City and Bloomberg will work to achieve by the date of closing a recordable set of docume~s, more than one, that releases the existing Southwest Metro easement and moves it over to Bloomberg's property and then it would also have to provide separate agreements for rebuilding the slwlter, etc, etc. Moving it, whatever they were going to do. Furlong: And just for clarification. Mr. Rice, is there, what you're describing, is that what we're reading here in 7.9? It seems to be the same thing. Okay. Okay, thank you. John Rice: And then just again, the clarification on the lease and occupancy agreements by September 30~. Furlong: And which section is this sir? John Rice: That is 7.7 on page 10. We'll have agreements that, we'll try to have the agreeax~tts so that the contingency can be fulfilled for notification by September 30~. A status report on them, but I don't think we won't n_~2essarily be able to file with you copies of leases because we might not have them. We might not have the tenants. It might proceed anyway. And the tenant may not want the lease publicly disclosed, but as long as we tmdea'stand that it's a report that's going to be given to you and it will be a good faith report. That's what, is that accurately state the understanding? We may have to tell you there are no tenants, but we're going to do it anyway. But we hope that's not the case. Then I've got to disagree a little bit with my colleague Mr. Scott. The discussions that we had regarding the specific peffmce issue was, it was in two places. The only thing that we have ins~ or that I think that we're entitled to have the right of specific performance is in the event that everything else has fallen into place, all the contingencies for the buyer have been satisfied. The buyer's ready to go ahead and the city has no enforceable reason to terminate the agreement, you've got to show up for the closing and sign the deed. And that is a contract that is enforceable by the court because if you take money you pay, then the court in effect says those are the documents and they're good as signed. You can either sign them or the Mayor might be held in contempt They'll need Mr. Scott there for sure, but that's an enforceable contract And if we don't have that remedy on November 14, then we've spent all of this money and what do we do? See, it's not a contingency to say that well you didn't show up so we get to cancel. We don't want that contingency and we've got it set up with the documents and the contingencies and the da~ ahead of time that if something hasn't occurred, there's the right to terminate. And then the money goes back or the city terminate~ and the money goes back But the discussion with Mr. Schmekpepper and myself and Mr. Kelly this afternoon was that we would modify the 12.7 language to leave that right of specific performance in there only if everything else has happened and the city has no valid fight to terminate, and all of the contingencies for the buyer have occurred and the buyer's ready to perform, then we've got the right of specific performance. That just makes you come to the table. And then language in 2.11 would be qualified that would remain the same except as provided in 12.7. No right of specific performance except as provided in 12.7. And that was the way that we left it and that Economic Development Authority - May 27, 2003 presttmably you could approve the document subject to mutual approval of that language by whoever wants to do it. Mr. Scott, Mr. Kelly and presumably the manager. But some post meeting tonight process of redmfling that lang~ge. And then the other one was the issue of the reverter which came up with the discussion about the demolitiom But if we have the right of reverter that is going to mean that if you're going to exercise it, you're going to repay the purchase price, then we can live with thac Miller: I think that's what's outlined in the state law, if I understand right. Gerhardt: We have it currently in the pure~ agreement. John Rice: Well it's not exactly crystal clear in the statute that you're going to write us a check back. So that's the only thing that we would want to clarify and then there's no Nroblem. Other than that, this baby's fine. Furlong: Other questions? Clayton $ohnson: Let me just add a couple commen~, if I can. Furlong: Sure. Clayton Johnson: One is I think he was just trying to clarify the point on Southwest Metro. Susfin's sununary may have been unclear when he said the formal agreemeat will be in hand by August first. The agreement says that the letter of intent will be in place because we're concerned about, we don't know what the meeting schedule is. I think the other, let me speak to the consideration on the purchase agreement. I mean believe me we are going to have spent a lot of money before Septe~ 30~, somewhere approaching $100,000 between all the architecture, which we have to have to go through planning and so on so it's not as though we don't have a significant investment, we do. We've spent a lot of money already but we're going to spend a lot more between now, so I think that's part of the consideration on the purchase, and the earnest money issue. Any other questions? Ayotte: I was wondering if there would be a target for the 12.7 re-write so that we're not waiting, I understand that everyone's motivated but if we're going to be looidng at thin and a pot~axfial approval of this with a contingency for a re-write of 12.7. Clayton Johnson: Well I think they re-wrote it thin aflm'n~. I mean I think it's a rns_n_~ of signing it in the next couple of days. If we clarified this specific perf~ issue, I hope we did. I don't know. Peterson: Before you go away. We had 3 or 4 items that we left last meeting with that you were supposed to meet, and I don't have them in front of me but. Did we meet all of those? Some of those were from you Brian. Lundquist: The 14 days. Yeah, it was a rough agreement. Peterson: And was there, as I said earliex Justin, financing. Was that one of them7 Proof of financing. Have we met that? Or was that one of the conditions as I recall? Miller: I can't reme~ specifically but I think that might be ~ddressed in one of the various deadlines is that, I doubt that Bloo~ Companies and Kraus-Anderson would be able to Economic Development Authority - May 27, 2003 secure leases without them seeing that they have si~ificant financing to build out this development so. Peterson: Nobody seems to remember and that's fine but. Labatt: Well I think the motion is in the minutes here. I moved and Ayotte seconded the EDA direct staff to negotiate and enter into a pmchase agreement with Bloomberg Properties to purchase the bowling alley site and bring back within 14 days a letter of intent with the final purchase price and aggressive time table. 4-2 vote. Nothing about financing. I don't recall anything. Furlong: The only thing that was in the EDA packet on the side by side comparison was the information that for investors that they will provide financial information upon request. So that was in the packet as opposed to the direct motion but...be requested ff that's the desire. Gerhardt~ Chairman, if I could ask that question of Claytom Have you, can you g~t a letter of intent from who's going to provide the construction financing? Are you looking at ~on financing? Clayton Johnson: WeU I think we would, believe me before we get to Sepl~tber 30~ we're going to have some sort of commitment for consmacting financing. The nature of the project though, some of it's going to be built on spec so it will be consm~on finan~g. Probably not a permanent take out. A lot of the offfr~ will have to be built on spec, we know that and we fully anticipate that. Gerhardt: Can you share a commitment letter with us when you get it? Clayton Johnson: Sure, if that's. Gerhardt: Prior to. Clayton Johnson: Well at September 30~, sure. The other issue, let me speak to the bowling alley party wall, just a you know. This came up late today. Talked with the, one of the concerns there is that we can't put the Cinema out of business in Dece~nber. We have an incentive to tear it down because it can't be assessed on January ! if the building's down and it will save us taxes for a year. But the big issue is, we have to have an agreement with the c. onstngfion plan has got to accommodate Cinema because Cinema cannot be out of business on any of their auditoriums in the month of December. Now we hope to have that agreement worked out with them but that just came up today. Peterson: So your intent is to demolish in November? Clayton Johnson: Right. Prior to January 1. Peterson: That'd be great. Clayton Johnson: Yeah, and the environmental is a concern. We're going to get the keys as soon as we have a deal and then we'U have our environmental people in there right away. There is some concern. The Cinema people have, you know as staff knows, have expressed all this concern about moisture and we hope we don't find a mold problem, but we'll know that too within, and that's really part of the purpose of the 2 week reports. We'll share with you what we Economic Development Authority - May 27, 2003 know when we know it and we'lL we don't know what we're going to find when we get in there. We'll keep you posted. Peterson: Did we do an EA when we purchased it? Gerhardt: There has been an Environmental Assessment that was done as a part of, when Bob Copeland had a purchase agreement and we shared that with Bloomberg Companies and they're reviewing it. Clayton Johnson: But we have to do the whole site. We have to do the vacam land and also your land has never been studied. Our land hasn't been studied recently, and then the bowling alley so the new environmental will have to encompass the whole site. But we'll do that, I think we've made arrangements to do thai right away, in the next few days. Gerhardt: What hasn't been done is soil borings outside of the existing foundations and they also want to do an analysis on water table. So they'll be putting some little test pumps out determining...put underground parking in to see what the i ,mpact of that may have on it. Clayton Johnson: The survey's virtually done. The survey that you had done by Otto has been extremely helpful and has saved us a lot of time. If we hadn't had that, but I think the way it is, the survey will probably be done in the next week to 10 days. Furlong: Excuse me Mr. Johnson, with regard to the demolition Mr. Lundquist ask~ about including an anticipated schedule or expecl~ date even with your comment, within that agreement with the cinema, do you see that as workable? Clayton Johnson: Well we would work towards that. I don't really know, I'm not a lawyer so I don't know how we'd work it into the agreement and what i ,re!tact it would have. But I just wanted to let you know, we have every incentive to do it. And we would probably at the time of August pt, when we have this agreement as to how we're going to build that, I would thinlc we'd have the timing ironed out too. But rma lime reluctant to put it in the agreement because I don't know exactly what the remedies would be. Gerhardt: Well I would think the Cinema would want to know what time~ that you may do demolition as a pan of their agreement with you. Because they're not going to want you knocking out walls in December when they're probably their busiest time. Clayton Johnson: Well we may have to, but we're going to have to provide some other barrier while that in. Lundquist: Yeah I' wasn't asking for a, what I would like to see is for you to have a date as part of that arrangement. You know it doesn't have to be, I mean you're going to have to work out with the Cinema when you plan on demolishing their wall. Clayton Johnson: And the method, right. Lundquist: And the method and what you're going to build it back out of and all kinds of good stuff like that. So obviously as a part of that they're going to want to know when you're going to knock it down so. Economic Development Authority - May 27, 2003 Clayton Johnson: Right. If we had to put it in there I guess we'd have to my spring because we can't, sitting here tonight we can't say they're going to let us do it in Decemt~. We're going to try, but I can't say that they will. Furlong: Okay. Other questions at this point? For either stuff or the applicant. Okay. If not we'll bring it back to the EDA then for discussion. Is there any discussion? Lundquist: Any particular order you want to go in? Furlong: No. If you've got some points go ahead. Lundquist: I guess in the interest of urgency, I'd have to go along with Mr. Peterson' s ~ts about the earnest money. I concur that a little more incentive wouldn't hurt. I would like on Section 4.1, again in the urgency clause, to remove the extension of 30 day possibility on the November 14~h day. Ayotte: Say that again. Lundquist: On Section 4.1, we would allow to have 30 day extension provided the buyer is diligently pursuing the satisfaction of required actions. I'd like to remove that 30 day-clause. You know November 14~ is 5 ½ months away so although the calendar seems aggressive, I've got to believe we can do it faster and short of you know taking a lot more earn~ money, I would think that by removing that 30 day extension, that we have that on them and I'm still not getting a warm fuz~.y that we're going to get this thing going as fast as we'd like to, and again just with the things around perspective tenants. Not getting those thing~ done by Septeanb~ 3(P. Not knowing when we can get the demolition done. Not knowing when the pamj wall's going to get done and not wanting to pin down dates. I mean I'm just not getting a real warm fnz~j, that this is something, I realize that both Kraus-Anderson and Bloo~ are going to invest a s~ amount of resoumes and time into this thing but I don't want to be here a year from now wondering why there's not a hole in the ground yet. I see 5 ½ months of time and some conditions that don't look like they're stretched to me and less than one percent earnest money and I think that's not enough pressure. So whether or not we want to add conditions or what, that's my thoughts and opinions but it's a fairly, see what everyone else wants to do. Furlong: Okay. Other comments. Peterson: Yeah, I would probably parallel Councilman Lundquist's perspective. I think moving it to $20,000 earnest money is just another help. If it only makes me feel better, I think it's appropriate. That, because I do believe that it will incent, it makes it a lilfle bit tougher to walk away from it if he doesn't follow through so. Moving the target dates, I probably don't feel that as strongly as Mr. Lundquist just because I think you know Iluless we call some specqal meetings, which I'm certainly open to do to expedite the process, knowing that we've got an issue with ~mber, I'd like to get that building down in November too so if we can, if we need to call a special council meeting, EDA meeting and/or Planning Commission meeting, Fm certainly willing to invest time into that. As I think that the Planning Commission would too if they. I think everybody that drives by there wants to get that building down so let's think outside the box and do some special meetings. If we're holding up the scenario, then let's stop that and let's make this a priority. Furlong: Okay. Economic Development Authority - May 27, 2003 Ayotte: I have a question of staff if I may. Furlong: Sure. Ayotte: With regard to the time table, and there's a direct correlation between the business of the Planning Commission and the ability to meet the schedule. Conect or no? Gerhardt: I don't think the Planning Commission's schedule is time consul. My points were, the project being complicated and you may need a second or a third meeting to handle some issues to get questions back. It's, a second issue is notifying other government agencies. We need 30 days to send notice to the DNR, to the Watershed District. To the County and a few other ones. Ayotte: I guess that's my question. If there are other agencies that have an i ,mpact on the schedule that's outside of our ability to control, is that the case? Gerhardt: Yes. Ayotte: So if that's the case then how can we tighten that schedule ff we don't have control of the agents that would i .mpact the schedule? Do we put language into an agreement that says ff the SWMP is the sticking point then it provides some sort of extension of the schedule. How do we deal with that? Peterson: We get to the point where we submit it to them earlier th~ we would have otherwise. Gerhardt: I'm going to go the expert on this. Let Kate... Aanenson: This is a very complex, just so you umtemand, even doing Chipotle, internally in staff we worked with them several months befme you even see it so this is a very aggressive schedule. All the parties involved are used to working on this type of process. We've met with them and what we've said to do is we're going to go to the Planning Commission on the 17~h and give a similar presentation as they gave here to get an early read because they want to do something a little bit different so what we're trying to do is frame up the issues that we have so the Planning Commi.qsion again has time to digest and give them good direction. So the complexity comes in is that there's a lot of diffemm layers. The Planning Commir~sion hasn't done a lot of redevelopment This is all new. There's a lot of different layers there that they have to understand The parking arrangemenL Who's involved. Who's not involved. Developing, structuring the PUD. Sust doing the PtJD itself, which is the whole framework for that, we're going to rne~ the design by, is going to take a meeting. Just because there's a lot to review. So after we all agree that, after the first meeting on the 17~', which we met today to gear up for, then they'll refine that. Come back with the design standards. A complete application. Several drawings, landscaping, everything for that first meeting, but I doubt we'll get through the site plan and the PUD that first meeting. Mm than likely we'll just get thro~ the PUD. Get concurrence on that and the second part of that meeting we will go through the site plan. Can it get done in one? Possibly, but I just think that's just a lot to ask. Ayotte: Then to Craig's point then, if because traditionally we have learning curve, we have outside agents, if we were to try to accelerate schedule, is it reasonable to suspect that we could reduce risk to the agreement with an increase in the number of meetings and more focus by staff, Planning Commission, Council, EDA to do that? 10 Economic Development Authority - May 27, 2003 Aanenson: Sure, and I think we agreed on that today. They're willing to do that. Again the best thing we can do is go to the Planning Commission early and get some concurrence on the types of materials and tell them what they're trying to accomplish so everybody's on board. With that they're certainly willing to keep in contact with staff and we'll be working with the Planning Commission so we're again not just dropping somelhing complex in their laps so I think we're on the same page on that. Pete'son: To support Kate's position, I think I wouldn't be surprised if we have one separate meeting just on design standards. Aanenson: Right, that's what I'm saying, right. Furlong: And excuse me, the we being the Planning Commission or the EDA or both? Peterson: Planning Commission. Aanenson: But I don't think giving it back, when they get a complete applicatio~ that is going to include all the civil's, everything so I don't think if we have to have a special meeting, it looks like it's going to take three and we want to stay within the time fork, as a Planning Commission, have we ever done...sure. It's just undea~anding the complexity of the project. Again redevelopment this Planning Commission hasn't done too many of those types of projects. So there's just a lot of underlying issues. So, and it's not going to be a stuffing issue. Furlong: Other discussion. Mr. Bohn, anything? Mr. Labatt? Labatt: Just a quick question to Mr. Johnson. Is $'20,000 a problem? Clayton Johnson: No. I just want everybody to understand that it's not...that's the smallest part of our investment. Our risk...spending money hand over risc Labatt: Yeah, and okay. I'm fine with the schedule and Fd like to actually, did the extension or 30 days I think is fair. You know who knows what can happen with the DN1L as slow as they are and things are getting cut and staff is getting cut. If they need it, then I'm fine with it. I don't want to do too much more chopping here, but I'm okay with increasing the eame~ money to $20,000. 4.1, leave the same. And then 12.7 1 believe, I guess I would just let the lawyers and Mr. Gerhardt and Mr. lW_lller work through that later on this evening or tomorrow and come up with something and then let's sign it. Furlong: Okay. It's just from comments. I think the issue on the eam~ money I would agree with Councilman Peterson, Lundquist and Labatt, that that's affffmpriam and I appreciate that. And since this is the smallest portion, would more be okay then? No, that comes later. That comes later. The timeline I fully aptnecia~ Mr. Lundquist's concern to get this done. I think that was expressed at our last meeting. It seems like a long ~ to me but I'm going to defer to our experts here in terms of getting it done and if they feel it's accelerated then I trust them on that. I don't think it's in anybody's desire to delay this. I think it's in everybody's desire to get it done and clearly our's. For that reason I think with regard to lsn~j~ on 12.7, since that, and I'll defer to the attorneys hem on language but that paragraph speaks of seller's default as opposed to seller completing everything and then just not showing up, so I think with regard to default, I do have a problem including specific performance in the~. If there is, I mean if it's a deal ~ on the pan of the buyer to include specific performance, if we do everything and just don't show up, then I would expect that would be mutual on the buyer default. That either we strike the 11 Economic Development Authority - May 2?, 2003 specific performance language in it's entirety, which I think would be cleaner and appropriate, or we make that mutual simply because this ~ to the seller's default in this paragraph as opposed to, you know if we do everything and are not in default, we just can't happen to find the closing, which is not too, which doesn't seem likely to me so I guess my preference would be to strictly, to simply strike that sentence on buyer may seek specific performance. Keep it clean in terms of the earnest money and to me that's more sin~. le. If that is a problem, then I would suggest that we have mutual specific performance language on the part of the seller too. $o I guess I would ask that question Mr. Rice. lohn Rice: It's simply, and given the intensity with which this body wants to see that ~ sold and developed, I can't imagine you're not going to come to the closing if everything's all set. And you'd probably like to see the money as well as getting that ~ redeveloped. But it's the one protection that a buyer has. The buyer has really, there's no suit for damages here in the event of a breaclx There's only one protection that we're asking for. That is if everything's all set and you haven't terminated the purchase agreement, and we're not in default, then you've got to come to the closing. And the only way to enforce that is specific p~rf~ce. Can't make you clean up, we can't make you tear down the building. All we can make you do is come to the closing. That's all. But that's all. It doesn't have anything else. It doesn't have attorney fees. It doesn't have damages, it just says you've got to come to the closing or else you've got to respond to the court order that says give them a deed because they gave you the money. That's all it is. And that's the only protection the buy's got here. And the buyer, if we're not going to not show up at the closing. If things aren't going right you're going to get a notice that the contingency has not occurred and that we have to terminate. So that's not going to come. That's not going to come. B~ause, especially with the increased earnest money, if there's any problem at all, if they're worried about that smallest part of the investment, then they're going to terminate and not spend any more money or take any more risk. That's the way, that's the way they wor~- That's just the way that the commercial purchase agreements are done. I mean some~ if somebody's got some huge leverage then there's damages but we don't want to seek damages and we don't want you to seek damages against us. We want to level it out, make sure that this deal is both sides have the incentive to get it done. That's all. And I don't like to be here talking about suing you for specific performance but it is the only protection that the buyer has. With any seller. And that's why it's important. Furlong: Okay. Do you have any comments on that? Mr. Scott. Tom Scott: Well I guess I'd agree with Mr. Rice that without that then we would have the ability at the end of the game to seek and take your deposit back. And not perform, but as you indicated Mr. Mayor, I don't see any reason why we shouldn't have mutual specific performance language to encourage, and I agree with Mr. Rice. It's probably highly i .mlm~bable that his client would get to that point and then not decide not to go ahead with the deal, so it's highly i .mpmbable. It's also highly improbable that we would not perform at that point and stage so my recmxm~endafion would be in the highly i .mprobable event from both sides, that both sides would agree to a m~m_ m! specific performance provision and I would think that's fairly standard and should be acceptable to everyone. Furlong: Okay. Peterson: I heard them say okay. Furlong: Did they say okay? 12 Economic Development Authority - May 27, 2003 Furlong: Okay, mutual. Under those. John Rice: Again, not because we mess up... Furlong: Not because of default on either side. John Rice: ...between, we don't show up for closing. Tom Scorn Right, I undemand. John Rice: If we haven't tetmimited it in the night, the day before the closi_'ng, we're going to be there. Tom Scott: ff I could just add, ff we're going to approve this subject to the attorney, that we could reference the final language in that provision and ~m just also add generally that it be approved by the, finally approved by the EDA for final format, just in case there's some other. Labatt: EDA. Also the Executive Director. Tom Scott: N_,DA attorney I'm sorry. That it be conditioned upon the EDA attorney, that we need to modify the language in 12.7 and this generally that the EDA approve the final, EDA attorney approve the final format of the agreement. In case the~'s any other little clean-up things we n__,~l_ to do. John Rice: I don't know if you want to do 2.11. Tom Scott: Wherever that's substantive change on the earnest money, yeah. John Rice: The earnest money and you want...letter of intent with Cinema. Tom Scott: I don't know that we have a final motion here. Lundquist: I don't think Clayton was amenable to that. Clayton Johnson: He's the one you would like to be because... Peterson: I think to your point that you're motivated from a tax ~ve to make it happen, that's self motivation. Furlong: Puts some motivation them, exactly. I think the issues that I heard from substantive standpoint is the earnest money changing from 10 to 20 likelihood, and then subj~ to the agreement of the attorneys to adjust language in whamver paragraphs necessary, 12.7, 2.11, 12.6, wherever they want, with regard to mutual specific performance. Not under default but simply if all conditions are agreed to and whatever the attorneys agree to there, I think they understand the sense in terms of mutual specific performance. Okay. And to that end is there any other discussion or comments? Bohn: I have one question. How long is it going to take to tear that bowling alley down? I know when we tore, remodeled it for the bowling alley it was a printing company and they went 13 Economic Development Authority - May 27, 2003 through a lot of concrete for those trusses to sit om It was a long process to tear that building down for a bowling alley. Labatt: Probably a couple weeks. Two weeks to tear down all the way. Furlong: It depends on what date they start in Decemlx~. Labatt: And if they can get through all the movie goers. Furlong: That's fight. That's right. It depends on how far before December 31't. Any other discussions I guess at this point or questions? If not, is them a motion? Labatt: I'll recommend that EDA approve the attached purchase agreement with the amendment showing that the earnest money has now been changed to $20,0(O instead of $10,000. And the verbiage in 12.7 being mutually agreeable between the EDA attmney and the attorney for Bloomberg. Is that okay? Furlong: Yep. I guess providing the, Tom do you? Tom Scott: Yeah, if we could just have a, just a general final review of the fommt from a legal standpoint by the EDA attorney. Just in case there's some other. Labatt: Okay, and final approval of the EDA attorney. Lundquist: And that would include more than 12.7 and 2.11 that has to dealt with in other. Furlong: I think the other. Labatt: The appropriate paragraphs. Furlong: The appropriate paragraphs for mutual specific pe~ormanceo as limited in that regard as explained. Okay. With that is them a second? Bohn: Second. Furlong: Is there any discussion on the motion7 Ayotte: Heavens no. We've got two more to do. Furlong: If there's no further discussion we'll call the question without objectio~ L~batt moved, Bohn s~onded tlmt the EDA approve the bowling alley purchase a~ment with Bloomberg Comlmnles amended to change Section 2.1, the earnest money amount from $10,000 to $20,000; to clumge the appropriate paragraphs with resp~ to mutual speeilte performance not due to default; and with lfnal approval by the EDA attorney. All voted in favor and the motion carried unanimously with a vote of 6 to 0. Furlong: Are we going to see that Mr. Scott, tomorrow7 Do you think if that language is ~ generally draft, are we going to have that ready for signature tomorrow7 John Rice: Kelly is telling us what to do and Schrnekpepper is dmffing it so yeah... 14 Economic Development Authority - May 27, 2003 Tom Scott: I would think by tomorrow or the next day. Furlong: Okay. CONSIDER RFP FOR RI~I~-E-MIX SITE. Miller: Good evening again. At the last EDA meeting if you remember we had a representative from New Horizons Daycare approach the city about building a new location on the former Apple Valley Red-E-Mix and Taco Shoppe. I think that was generally well received but it was also the direction of the F_DA to send out an RFP to see what other ideas might be out theae for the sim So staff has developed an RFP with the guiding principles that we heard from the EDA as well as what staff believes should be there and inc~ into the RFP. We have a list of 10 or so developers ready to send thi~ out to tomorrow, pending approval tonight It has about a month turnaround timeframe. I would probably recommend, I believe on the draft you have it says that we, staff would like to have these back by June 2(Yh. I would recommend that we probably push that back to June 30~. We are in the process of getting a survey for this ~ right now. That will give the developers a little bit more time to have exact dimensions on thi~ ~. As well as giving them some more time to develop...return the product to us and with the hopes of bringing it back to the EDA for another review on July 14m. So staff would recomme~l approval of this RFP and we'd be happy to take any questions. Furlong: Questions. Peterson: Your list of developers, how do we, when you said 10. Why isn't it 307 Millet. Well you've had some interest in this site already by 3 or 4 so they're definitely on there. Just developers that have sent in different proposals or that we've spoken to in the past that are looking for office space. So it will be out in the public domain so we'll probably get questions about it just like we got some about the bowling alley, so we'll, that's by no means a limit of 10. It will be expanded to whoever requests one. Lundquist: Maybe we can put an article or in the Villager to, as well for public. Non-solicited public input if you want to call it that. Miller:. Sure. Peterson: Second questiom Purchase price. We've had thia, is $9 enough? Is it not? How comfortable are you with this one that we say that $9 is kind of the ~nimnm but should we say $9.507 Should we say $9.757 Miller: I think probably we've seen everything in town recently go from 9 to 11 so if we wanted to maybe put a range in there that the City expects to receive from $9 to $11. That way people don't come in at $9. They all come in at 9. Peterson: I think there's an expectation that when somebody buys something from the city they're going to get a deal. You know and that we're not as market driven as anybody else and I think we should be as market driven and if we all agree with that, So to that end I think to your point, I think a range is, or go with median instead of the range. Ayotte: Well the range will sharpen the pencils rather than. 15 Economic Development Authority - May 27, 2003 Furlong: I'm sorry, your suggested range was? Miller: 9 to 11. Labatt: Do we even want to say in here that the City expects $9 per square foot? Why are we even saying that? I mean that's only $975,000 for 2 ½ acres of land. I mean why would we, see what they'll pay us. Lundquist: Well it might save us time weeding them out too. Some guy might come in with some ridiculously low, we'll offer you $300,000 or somethin~g. Gerhardt: Seen that before. Peterson: If we listed it with a broker Steve we'd list the purchase price. Gerhardt: You've got to give them a starting point. I mean we want to put, you always ~ve to have at least a minimRm in there. And I guess we as~ the rnini~m was 9. That's what we sold Chipotle for and we wouldn't consider anything under the 9. Aanenson: It's got limited access. Furlong: Well but it's got visibility, but limited access. Aanenson: Right, so it's hard for a retail, and that goes back to what Justin. The people that we've talked to, it doesn't have the right access for a retail use so that's affecting some of the people. Lundquist: Well we've said in here that no retail will be accepted so we've. Aanenson: But the people that axe looking at it for retail don't want, they have the trip and it's hard to get into so, because we talk to those people and they wanL Miller: You're also looking, this is again a redevelopment site so it's a little bit hard...just the size of the lot. The configuration. It's narrow. The orientation of the building's going to be a little bit more difficult. Where you place the parking. Furlong: Because of the. Miller: Because of the milwad right-of-way. I-Ylghway 5. The existing pedestrian bridge. Furlong: Okay. It's a little harder to build. Miller: Little bit harder. Furlong: Well and I think that perhaps speaks to a range as opposed to a mininmm. Lundquist: We could make the range wider. That would open it up to getting somebody to come in with more possibly. Furlong: I guess the question is are we looking to sell at any price, or are we looking to. 16 Economic Developmem Authority - May 27, 2003 Gerhardt: ff you want to up the minirrmm; you can do thaC If you think $9 is too low, again it's got real limited access. It's got huge exposure and for some uses, you know you probably wouldn't think is appropriate that you probably won't allow there that's probably willing to pay 12 to 13 but aren't uses that you want to see there. Ayotte: Fd like to see a range, I really would. And just beca~ we stop them with the range, that doesn't limit our ability to be more scrutinizing down the road. Peterson: ff we get multiple people intaresteck that's helps too so I think the range is fine. Whether it's $9.25 or $9.50 or. I think $9 is cheap. So maybe says we should start at $9.50 and if someone wants to, it doesn't mean they're going to offer less. Furlong: $9.50 to what? Peterson: 11. Furlong: Okay. Other comments, questions on the draB. Okay, I think those are the issues. Is there a motion? Labatt: To adjourn? Furlong: I'm asking for a motion. Ltmdquist: I don't think there's a motion except to direct. Furlong: Well I think, do we want to approve the RFP? Gerhardt: It would be nice just so we have direction... Furlong: We like being nice. Alright. Lundquist: Okay. Motion to approve the attached RFP with changes to due day on June 30~ and range from $9.50 to $11.00 a square foot. Ayotte: And change the suspense date to June 30~. Lundquist: Yeah. Furlong: Any discussion on the motion7 Hearing none we'll call the question without objection. Lundquist moved, Labatt seconded that the EI~A approve the RFP for the Red-E-Mix site amended to change the due date to June 30, 2003 with a range of $9.$0 to $11.00 per square foot. All voted in favor and the motion carried unanimouRy with a vote of 6 to 0. APPROVAL OF MINIJ-TF.8: Lundqulst moved, Ayotte seconded to approve the 1Wmutes of EDA meeting dated May 5, 2003 as presented. All voted in favor and the motion carried with a vote of 6 to 0. 17 Economic Development Authority - May 27, 2003 Labatt moved, Ayotte seconded fo adjourn the meeting, Ail voted in favor and the motion carried. The meeting was adjo~ at 9:30 p.m. Submitted by Todd Gerhardt Executive Director Prepared by Nsnn Opheim 18