2007-02-20 LOC Request
JOHNSON, LARSON, PETERSON & MATT, P.A.
A'1TORNf;YS AT LAW
!.lUll COMMERCJAL DRtvE
BtTFFALO, MII'INESOTA 55313
TF....t:rOO!fE; (763) 6H2-45S0 - !'AX: (763) 681.4465 - 'rOl..I, fREE: (8611) (~04550
WEB: "ww.jlpmI9,..,cnm
JAN c. LAQ,SON1'
JOHN T. PETERSONt
ClNDl S. MATT*
MICHAEL C. HALVORSON
OF COUNSEL
THOMAS W. RTCHARDS.
THOMAS W. SPENCE
t Re(ll Property LtlW Speclllllsl
Certified by MifUlesota $lDte BIU Association
.. Qualified Neutral
WAVERLV OFFTC'F.
By A(I(lointmCDl Ooly
WALTER S. JOHNSON
1912.2002
FACSIMILE MESSAGE
DATE: 2/20/07
THIS MESSAGE IS FOR THE ATTENTION OF: Bridget Miller/City Clerk
FAX NUMBER OF RECIPIt."NT: 763-497-3210
THIS MESSAGE IS FROM: Cindi S. Matt. ESQ.
TillS MESSAGE INCLUDES THIS COVER SHEET AND j'ADDITIONAL PAGES.
IF YOU RECENE LESS THAN THIS, PLEASE CONTACT US AT: (763) 682-4550
MESSAGE:
RE: Prairie Run - Letters of Credit
CONFIDENTIALITY NOTICE: The document(s) accompanying this fax contain confidential
information which is legally privileged, Tbe information is intended only for the use of the intended
recipient named above. If you are not the intended recipient, you are hereby notified that any
disclosure, copying, distribution, or the taking of any action in reliance on the contents of this telecopicd
information except its direct delivery to the intended recipient named above is strictly prohibited. Tf
you have received this fax in error, please notify us immediately by telephone to arrange for the return
or the original documcnts to us.
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JOHNSON, LARSON, PETERSON & MATT, P.A.
A'ITORNEYSATLAW
908 COMME1KlAL DWVE
BU'-FAT.O, MINNESOTA 5..'iJI3
n:I.CI'KONV,: (763) 6824550 - "AX: (763) 6824465 - TOl,L mEE:~ (866) 682.45$0
WI!:B: www.ilpmlaw.c:nm
JAN c. LARSONt
JOHN T. PETERSONt
CINDl S. MATT'"
MICHAEL G, HALVORSON
OF COl1NSl!:l.
THOMAS W. RTCltARDS*
THOMAS W. SPENCE
t Real Propeny /AttI Specltllist
CertiJied h)) Minnesota SI4t4J Bar A.sSlJdation
· Qualified Neutral
W AVERT.V OFFICE
By Appolnrment Only
WALTER S. JOHNSON
1912-2002
February 20,2007
Bridget Miller
Albertville City Clerk
5975 Main AvenueN.E.
P,O. Box 9
Albertville, MN 55301
VL4 FACSIMILE AND U.S. MAIL
763-497-3210
Re: Prairie Rtm - Letters of Credit
Dear Ms, Miller:
1 represent Gold Key Development. Inc. I am writing this letter in response to your
February 16, 2007 letter to Ms. Julie Revak, regarding the City's denial of Gold Key
Development. Inc.'s request for a reduction in the Letters of Credit on the Prairie Run project. I
am copying Attorney Jason Kuboushek 011 this letter because of my ethical obligation regarding
comnlwlication with parties that are represented by counsel. Based upon the fact that you sent a
Jetter directly to Gold Key, it appears the City is not represented by cOWlSel as to this issue. If
you are represented by counsel as to tl1is issue. please have your attorney contact me regarding
the same, Otherwise, I trust that the City will handle this issue itself in an expedient manner.
As you are aware, by letter dated January 19, 2007, Julie Revak requested that the City
reduce certain Letters of Credit of Gold Key Development, Inc.' s relating to Prairie Run, on tbe
basis that the projects were 90% complete, and the terms of the various Letters of Credit have
been fhlfilled. It is my Wlderstanding that City Attorney Michael Couri reconunended that the
City Council reduce the Letters of Credit for Prairie Run Addition at the Fcbruary 5, 2007 City
Council meeting. However, at tbe February 5, 2007 meeting, the City Council apparently
unanimously denied the City Attorney's recommendation to reduce the Letters of Credit of
Prairie Run, apparently because of the current litigation involving the City and Gold Key
Development, !nc,
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February 20,2007
Page 2
For your convenience I am attaching hereto a copy of the following doclUllents:
1. Julie Revak's January 19, 2007 request that the Letters of Credit be reduced;
2, Irrevocable Letter of Credit 2601 001 dated August 6, 2004;
3. Irrevocable Letter of Credit No. 2601 002 dated August 6, 2004;
4. Irrevocable Letter of Credit No. 2061 003 dated August 6,2004;
5. Pertinent portions of the Development Agreement regarding the Letters of Credit;
6. Portion of the February 5, 2007 City Council Minutes indicating City Attorney
Court's recommendation to reduce the Letter of Credit and the City's denial of the
City Attorney's recommendation; and
7, The Febroary 16, 2007 letter from the City of Albertville denying the request to
reduce Letters of Credit based on the "current defaults of the Developer as have been
communicated to the Developer in a previous Notice of Default."
The City's refusal to reduce the Letters of Credit, based upon the "current default of the
Developer, as have been communicated to the Developer in a previous Notice of Default." is
without legal justification and clearly violates the terms of the three Letters of Credit and the
Development Agreement. The City's refusal to reduce the Letters of Credit are causing damages
to Gold Key Development, inc. in the form of additional fees on the Letters of Credit and
attorneys fees and expenses associated with clearing up this issue, as well as negatively
impacting Gold Key's ability to obtain financing for other projects and expenses.
Each LeneT of Credit provides for a mechanism for a reduction, based upon the tenus of
the Development Agreement and the level of completion of the project. Gold Key has complied
with the terms of the Letters and Development Agreement as they relate to the reduction and it is
entitled to an immediate reduction of the same, as recommended by the City's Attorney, Michael
Couri.
Letter of Credit No. 260 I DOl, at page 2, provides "This Irrevocable Letter of Credit may
be reduced by 50% of the amount of special assessments paid on any lot in Prairie Run pursuant
to the Surety Release provisions set out in Section 6 of the City of Albertville Planned Unit
Development Agreement Prairie RUll. The reduction per lot is listed on Exhibit A. Each
drawing hereunder shall reduce by the amount of such drawing the amount available under this
Letter of Credit."
Letter of Credit No, 2601 002 provides "This Irrevocable Letter of Credit may be reduced
by the cost of the on and off-site improvements completed and paid for by the Developer
pursuant to the Surety Release provisions set out in Section 6 of the City of Albertville Planned
Unit Development Agreement Prairie Run, Each drawing hereWlder shall reduce by the amount
of such drawing the amount available under this Letter of Credit."
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February 20,2007
Page 3
Letter of Credit No, 2601 003 provides "Thislrrevocable Letter of Credit may be reduced
by 150% of the cost of completed landscaping/screening materials pursuant to the Surety Release
provisions set out in Section 6 of the City of Albertville Planned Unit Development Agreement
Prairie Run, except that in no even shall the letter of credit be reduced below $9,700.00 (25% of
the estimated landscaping costs) for two years from the time of the installation of landscaping
materials. Each drawing hereunder shall reduce by the amount of such drawing the amount
available under this Letter of Credit."
These tree items (municipal improvements, site improvements and landscaping plans)
have been substantially completed and reduction in the Letters of Credit is required. Nothing in
the Surety Release provisions of the Development Agreement, or the Letters of Credit
themselves, allow the City to refuse to reduce the Letter of Credit based upon the other defaults
alleged by the City in the CUlTent litigation. The City's refusal to reduce the Letters of Credit is a
breach of contract and is, in my opinion, done in bad faith because Gold Key Development, Inc.
has initiated legal action against the City. To the extent the Gold Key Development, Inc. suffers
damages, both out of pocket and consequential, as a result of the City's inappropriate refusal to
reduce the Letters of Credit, Gold Key does intend to seek reimbursement of thc same (including
attorneys fees and costs), either in the present litigation (by way of an Amended Complaint), or
in a separate lawsuit.
1 respectfully request that the City reconsider its refusal to reduce the Letter of Credit at
the next City Council meeting. In the event the City refuses to reduce the Letter of Credit, Gold
Key Development, Inc. will start appropriate legal action to get the reduction that Gold Key is
entitled to in these Letters of Credit~ and for its damages based upon the City's actions.
Please let me know if you have questions or concerns, Thank you.
cin~s~P~
Cindi S, Matt
CSMljal
enclosures
cc: Dean Johnson (wlenclosures)
Jason Kuboushek, Esq. (wlenclosures)
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FEB-13-2007 TUE 11:44 AM DEAN JOHNSON HOMES
FAX NO. 7634794821
January 19, Z007
City of Albertville
5915 Main Ave
A1bertviUe. MN 55301
Re: Letter of C~lt
Prairie Run, Gold Key
Development. Inc.
To Whom It May Concem:
I am writing 10 request a reduction in our Jetter of Credit at Prairie Run. Gold Key Developmert Inc.
Letter of credit #2601-001 Amount $680.337.00- Municipal Improvements
LOC # 2601-002 Amount $53.000,00 -Site Improvements
LOC # 2601-003 Amount $ 58.200.00- landscaping Plan
Our records Indicate these projects at 90% complete.
Sincerely,
Julie Revak
Dean R. Johnson Homes
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FE8-13-2007 TUE 11:42 AM DEAN JOHNSON HOMES
Of/13/2PO! ~ 10:3. FAI 8710578 ... DEAN JOHNSON
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FAX NO. 7634794821
P. 02
IiII 002/008
ALPINE CAPITAL, LLC
91' TwELve OAKs C8NTE&
15500 WAYZ.\TA BO\UVARD
'WJ\Y2A'TA, MN 55391
PHONe "2M5l-.907'
Il~ 952-249..1141
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nuUwOCABLE Lt;rU!R OF CRBDIT NO. f601 001 DATBD AUGUST 6. 2A104.
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SZ" BtraIivc ~1W'ing l'eahDioian
~City r Alblrtvil1c
-'975 Main Avmue
.P.O. box 9
~De.MN SS301
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by establish our lrtevocable 1.etta' oter. DDIIlbCRd IS iDcticated. abov.. 8I1C'I
'VI tftlftlt'"4i.atcly, in favor oltbe City of Albemrille ("'City"), at the requ.l aacl ti)r the
of OoJci Key Development, Inc. (the nevela~) in the amolDlt of aad not to C1C ceecl Six
cl Eighty lb01&18Dd 1bree H1UIdred 'I'bifty Seven and 001100 (5680.331.00). is luch
" t is decmasact 88 provided be:1cnv, available to you by )'D1II' siJht draft or drafts drawn UPOD
~Iin ~UOJl with tile Developers ab1i.p1iDIIS as detcdbecl io the Planned Ullit DS'/e1opment
~ . iDt for the PIcmcd Unit ~l!lI\t to be aown all '"Prairie Run"'. nis .)unt
50% of the estimated. costs of the Mlmicipa11mprovemen.ts. This &rcvocab"l.: LcUcr
.t is valid IlpOII recording of tho Plac.
draft ~ UDder thi& Idler of Credit 1nU8t bo accompanied b~
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, , ldraft drawn UDder lbis Letter of Crcd.it m\llt:
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The on_ otthis Letter ofCndU;
A DOtariz~ stataDrmt ex=uted by the AdmiDi&tratiw EogiDeerirlg
TeoJmicjau. statiq that the DcwI.opcr is in defau1t under the klm" of the
DGvclopers Agreement. 1114 that tba City is .mtlcd to draw upolJ the
Letter ofCteclit. SUch statemCDt IhaU set forth the amomat reqWted to
CW'e such defiult.
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Be sigged OIl bcba1t orclle Cit)' by the Adm"mtivc E118Raccring
Tcx;luIiGiau or hislhar desiIDGC.
Be in III an&OUDt required to cure the default by the Devdopet-, ""~blch
amount shaD 1JOt excee4 5680,337.00.
Bear on its faoe the dausc, "DRAWN UNDER. LB'!l SR OF CJlJ!Dtt
NO. 2601 00'" datcct Aupst 6. 2004.
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FEB-13-2007 TUE 11:43 An DEAN JOHNSON HOMES
FAX NO, 7634794821
P, 03
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10:~5 FAX 9Tl0S'~ ~~~ DEAN JOHNSON
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Bo prcsmted fot payment duriq repler bwdnass houra at our 1~3l1ectiGD
deparaaa at!J01 Twelve 0a1ca Ceatar Dri've, Suite 919, WaytlQ, MN
55391, DO later dum 2.:00 p.m. em luna 30, 2005.
ihbis i. able Letter of Credit maybe reduced by SO% of the 8ID01IIlt ofspecia1 aue6SlD8lltS
~aif1' n i1l)' lot in Prairio RIm purIU8I1t tQ tile Surety Rolcasc pnwwans lOt ~t in Section 6 oC
:.the 'ty of AlbmMlle Planned UBi' DMllGplllCDt AsRemmt Prairie RuIl. 'Iho reduction. per lot
. ;/is I an Exhibit A.
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drawing hereunder sb811 reduee by the amoU11l of sugh drawiDg d1e amouat avai1~lble under
ofCndit.
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. " asrca that clratt8 drawa UDder md presented in conf'oanity with the teens (I:fll!is
o~ Cndit will be cNly baamcd. upQ11 plWcutatiOD.
18 otbmwiIC "prasly dated, this LettBr of Cn:dit is subject to the Uniform CmtOlDs aDd
e for ~ Credits (latest Rev.), JntenUltional CMmber ofCommeme Jl1.lbUoatlons
(or J&1at DO.) (the l1Difmm Cu$tOmS). As to matters not gavemed by the Uni10rm
: .mis Letter of Credit shall be 80vemed by aDd CO'IISU'Ued in accordmce with '~.laW& of
ofMirmesota, iDcludhtg the UJliform CGmmereial Code as in effect in the Stato or
,~ .
~This of Credit is !JOt traPafa.ble or assipablc aad is not isruod fbr thI= bmofit of an)' third
:: eW"'M1t.
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a1111m be called 'lIPOU to resolve is&uea of fiGt or Jaw betw.. the City aDd the nlveloper,
er, .c cxistaDe of a dispute as to isnes of Jaw or fact belwe. The CitY II14lht:
sball haw DO effect em tit, City's ability to draw OIl this Jzrevocablc Letter 'D fCredit.
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FEB-13-2007 TUE 11:43 AM DEAN JOHNSON HOMES FAX NO. 7834794821
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'02/13/2007 10:~5 FAX 9110518 ~ DEAN JOHNSON
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, rnlo' 11owin8 amounts ate the per lot specialassl5aments to be aaseued iA Prairie "\IlL The
, : J~ Irrevocable Lc&tcr ofCralU may bo reduced as each lot's asscssmcots are paic~ pursuant
. ~o' Sutdy Rdoue pro'lisimll set out in SeetioA 6 of the City of Albertville PIamaecl. Unit
: ~J>Cy :' t AgreaneDt Prairie ItuD. .
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: ;1 I . Single Pamily lots 529,400.00 z SO'A. :;: S 14.100
: ' t)ctu;bod TowobollUl1ots $22,350.00 X SOIA = SllJ175
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FEB-13-2007 TUE 11:43 AM DEAN JOHNSON HOMES
'Or::~/~.T ~ 1.:35 PAX .Tl0ST8 ... DIAN JOINsaN
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FAX NO. 7634794821
P. 05
rcII 005/008
.ALPINE CAPITAL, LLC
. 919TwmnOAaQmn
15'00 \VAWATA BoulEvAIUJ
WAY7A1'A, MN 5S5.91
PHONE: 9S2-249-9019
FAX! 952-249-1141
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.1 ; , ~LI! LBT1'IlR OF CIUlDIT NO.1-'Ql 002 DATBD AUGUST Ii, :!004.
-IA. . ;: 'YC EqinceriDg Tedmiciau
C~ty ~Brtville
. ,1597 ~. Avcmac
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lAlb ., MN 55301
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cruby establish our lnevocabJe Letter of Cndit. numbered u mOlted above. au!.
'w immediately, in fitvar oftbe City of AlberMl1e C'Cityj. at the request aDd. J.bt 1M
,t ~ Gold. Key D~lopmCl1t. Inc. (tho Dovolopar) in tho amouat of aDd IIDt to e,:cHd F&1ty
Thousand ad. 00/100 (SS3~OOO.OO), lIS sucI1 amaUllt is decreased as provided D.~low,
~ to you by your ligbt draft or drafts dra_ upoII us in coDllediOD with the Dc:"clopcr's
reIaIitaS to the oamp1e1ion of OIL IIIld uti-site impIov~ ill desm'bed in the
. .Ullit Development Agreamcmt for the Planer! Uuit DovcJopment to be Imowrl U
. e RuJ1P. This Jmwcablol..otte: of Credit is valid. upon recording of the Plat.
. draft drawn W1dot this Letter of Credit must b. accampaaicd by:
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Tho oriJiDa1 ofthi5 Letter ofCrcdi1;
A DOtarized statemllllt oxecuted by 1be .A.&.\iIti4trative P.qiDeaiDS
Tecbaician. statin, that the Deve1opa' is in default wuler the te:~1Ii1 ottbe
Dcvc10pcn ~ and thai the City is CIltitlcd to draw vpma the
Letter of Cmtit. Sudl atatemeat shaJl set forth the amount roqltired to
Gure sacb default.
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:~ draft awn under this Lette:r ot Credit mUIt:
; :.1 ' I. Be sipd an bo1Ia1f.r!be ellY by tho AdIIUIrislralIve ilIlaiIIecrlag
'I Teo1micWl or bisIber dlasipee.
2, Be in ID amo\lJ1t requind to cure the default by the Developer. which
amount shan not exccecl 1$3,000.00,
Bear an its faee lbe clause, t1)RA WN UNDER LBI- J:&<. OF clUmrr
NO. 2601 002f1 dltecl Augast 6,2004.
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FEB-13-2007 rUE 11:43 AM DEAN JOHNSON HOMES
FAX NO, 7634794821
p, 06
IiII 001/008
:~o: 35 FAJ. Sl7l0nl .._ DEAN JOHNSON
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4. Be prescaeed for paymeat d.urina regular bu.sinJ!SS hours at our I::ttllcction
, i! d.cpanmam at 901 Twelve Cab c.-Drive. Suite 919, Wayznu.. MN
. SS3'13 no 1atCI' than 2:00 p.m. OD J'uu 30, 2005.
: ,l~ : blc t.ca:cr or cnoau l1l.I)' be .-lIy lira - ofd18 cmlllCl oll'Ilre lm:1"";"""'"
1 ~ aDd paid for by the DcveJopcr pursu:mt tG the Surety Jle1eue provisiOl'JS set u\lt ill
. r,Sec ~ :oftbo City of A11rcImille PlanDed tTDit Development Agreement Pnirie Rul3.
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dr~ heretmder ahall reduce by the &m0Ullt otsuch drawing the BDlOunt available UDder
ter of Credit
Vy asrco cb.at liIntllll drawu. UDder IIDd prcscDtCd in contosmitywith tha tcnns 4,fthis
of credit will be duly bonarcd upon JlRlCDtatiOD.
~15X as otha.wise expteSSly italed, this Let:mr of Credit is subject to the UDifimD Customs and
.
~ ce &r I>cxnm\en1aly Credits (181c8t Rev.), IJItemational Chamber ofCQ!Alllcrce )~ubJieatiODS
~N~. . (Ot' latest mL) (the 1Jt'itMm CWIOmI). As to matters not pvtll'DlCl by the tTD~rQtID
'!Cust. ~ this Letter of Credit sha1l be govcmcd by and co.astNed ill ~ with 1hc laws of
~S otJt.Cumeaota., iIducliD; tbc UDitilllll C~ Coc1e as in effect ill the State 1:1{
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~ np.. of Cradi1 ia Dot lI8DIfenble or assipab1c aDd is DOt is81ac:Q fOr Ihc bcDcti't tlf lIDY third
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. ~Wlt , DOt bill called upon to resolve issues offact or law betwem the City and tile J:lcvclopcr,
:ib ~ ~ the exilleDce of a diJpule as to iaua9 of_ or faet he'&Weellthe City aDd the
. : l . ,'?Pier dWJ have aD efFec:t on the City's ability to draw ClID this Irrevoellble Letta:r I)f ~
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FAX NO. 7634794821
P. 07
FEB-13-2007 TUE 11:44 AM DEAN JOHNSON HOMES
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10:38 FAl 9Tl0578 ... DEAN JOHNSON
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ALPINE CAPITAL, LLC
'IS' 1'nLvt OAKs CiNTfJl
1 SSOO WAYZA1i\ BOUUVAlU)
WAWATA. MN '5l91
PHONEl !)S2-14'~~~
FAX: 952-249-1141
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1RUV0000LE LB'n'B1l OF CREDIT NO. 2601JlO3 DATED AUGUST 6, :tD04.
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~Wo y establiah our Imvocable Lotter ofCrcdit, numbered as imtioat;d above, aa:d,
~c: .~C .-M1arety, ill faVor, oftbe City of Albertvi11& ("City"), at the 1'8qu08t and illr the .
~ acco t of 0014 Key Development, Inc. (the Dcvelopao) in tbc 1mQ.uR of and 1IOt to eM:caed Fifty
,~. ~usand Two HUDdrcd III1d 001100 (SS8.200.00), 18 &uch am01Jllt is ~ 1$ pro,,;c1e4
~bl1o , aVailable 10 you by your Bight draft or drafh draWn upOD us in connection witb lb,
t , . ~'. obli.gatiou ralatins to completiOD ofl~smeuiDg tD3teri.a1s as (~~'bed in
';t~ IDiIcd Unit Devc10prrlent Aareemat for the PIamlcd Uait Develapmcnt ca be lalflWD lIS
r 'c Rlm". This amountrepresellt51S0% ofthc estimated QOsts of the landscapi11!~'scieCDing
~ . ali' related to said Plat. This JmYooab1e Letter of Credit is valid upon uaordiJij: oithc
~ PTat. .
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. t~ ~ drawn under this Letter at Credit must be aooompani~ by;
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The Grip of this Letter of Credit~
A notiIIimJ $tatClDflllt execurad by the Administrative S.nl!Ci::18
Tedmieian. statiog that the Developer is in defa\l1t lIIJder the resins 'of the
Dcvc10pen Agreemea1t, ad that the City is catitled to draw lIpClU the
Letter of Crudit. SUch ~cnt sbaU set fanh the amDWlt required to
cure such deflutlt
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: E draft drawn UDdIr this Lor ofCndil must:
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Be sipod on1Jehalf of the City by the AdmiDi&1rativc Eugi.aocrlJ~
Tedmidm or hislbcr dcsipee. .
Be ill III imcrmt JeCluireG to cure the default by 1hc D~dopcr, 'A'mcb
maouut IhaU not exceed. $58.200.00.
Bear em its face the clause, "DRAWN UNDER. LEtlBR. OF CnBDlT
NO. ~OlOO3t2 dated Aquat 6. 2004.
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FEB-13-2007 TUE 11:44 AM DEAN JOHNSON HOMES
.) ,: i"~: 113/1~OT 10: 38 FAX 1'710878 ...... DEAN JOHNSON
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FAX NO. 7634794821
P. 08
~008/008
Be pleseated fOr paymtbt durins lCplar business bolrS at our .:olleotion
daplll'lllleat It 901 Twelve Oales eouta' Drive, Suite 919. WQ)'2;&ta;MN
SS391. DO later tbaD 2:00 p.lD. aD Deeealber 31. 2006.
acab1e Letter of Cndit may be reduc:ed by ISO% oftha GOSC of completccl
. scnening mataials punumt to the Surety keleaae provisions set out in Suction 6 of
. of AIbe&1vll1c PlaImed UDit Dcwalopment Agreameet Prairie Run, IX". thz: in DO
~ the lcttcrofc;rcditbcm1u=l below 59,700.00 (25% of the estimated landscaping
tor 4wo yea from the time oftbe insWlation of the laDdsoapiq materia1r-
. berWDdcr 8ha1l rccJuce by the amov.nt of sud1 drawing 1he amount avliJ4.hlc 1U1dcr
afCredit.
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. ~e ~y agree tlw dra"fta drawu under and pmented in c;oufomDty with the C8m18 "fdlis
. .!. of Credit wiD be dwy hozaDred upon presllltllZion.
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~Bx as otherwise expressly st~ this Letter of Credit is 6UbjBCt to the umform Ol&toms IIId
: ~~ :for Docmueatazy Credits (latest Rev.), IntenWiona1 Chamber of CCJIIUDC:RC 1,IIbUcatioDl
. ~o. : (~latestno.) (tho Uniform Customs). As m !IIatrers DOt governed by tho Ua:l:torm
; ~Cust , .this Letter- of Credit shaI1 be governed by and CODJtru.cd in acconIancc with tbo laws of
Is I of~iflfteaota, iDclucliq the UDit'oma CoDIIDll'Cial Code as ill effect in the Slate IJf
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:~ of Credi'C is DOl tnmaferable or assigoabl., and is not issued for the benefit I~f any third
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DOt be caUed upon to resolve iames offact Of Jaw between the City B1Id the J)ateJopar,
. ~ existlmce ot a dispute as to isma oflaw or lid: betw_ the City and tbJ,
Ill' shall have IlO effect aa the Ci1y's ebil:i1)' to dmw on this Izrevocable Lettar cat Credit.
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CITY OF ALBERTVILLE
PLANNED UNIT DEVELOPMENT AGREElMENT
PRADUE RUN
TIllS AGREEMENT, entered into this I b" H day of ..!.J ~ . ,2004 by and
. between GOLD KEY DEVELOP:MENT, INC" a Minnesota Cmpor . fi, referred to herein
. as "Developer"; and the 'CITY OF ALBERTVILLE, County of Wright, State of Minnesota,
hereinafter referred to as "City";
WITNESSETH:
WHEREAS, Developer, Robert C. Heuring and Christine A. Heuring are the fee
owners of the real property described in the attached Exhibit A, which is the real property is
proposed to be subdivided and platted for development, and which subdivision, which is the
subject of this Agreement, is intended to bear the name "Prairie Run" and shall hereinafter
be referred to in its entirety as "Said Plat" or "Subject Property"; and
WHEREAS, this Agreement shall apply to the Subject Property which is owned in
fee by Developer which is legally described as follows (after the filing of the Prairie Run
Plat):
Lots 1-15, Block 1
Lots 1-38, Block 2
Outlot A
All said property in Prairie Run plat, City of Albertville, County of Wright, Minnesota.
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such ponds, Said retention ponds and basins shall be installed prior to the
installation of utilities.
4. Intended Use of Subdivision Lots. The City and Developer agree that the
numbered lots in Said Plat are intended only for single-family residential use in the
number and the configuration as are shown on Said Plat. . Developer shall construct
only one single family dwelling per numbered lot, unless Said Property is rezoned by
the City in the future into a Classification which would allow additional units to be
constructed. .
5. Suretv Requirements.
A. The Developer will provide the City with an irrevocable letter of credit (or
other smety as approved by the City Attorney) as security that the obligations
of the Developer under this contract shall be performed. Said letter of credit
or surety shall be in the amount of$791,537,OO representing the sum of 50%
of the estimated cost of the Municipal Improvements ($680,337,00), 100% of
the on and off-site improvements ($53,000.00), and 150%, of the estimated
cost for landscaping/screening materials related to Said Plat ($58,200.00).
Said letter of credit or surety must meet the approval of the City attorney as to
form and issuing bank.
B. The City may draw on said letter of credit or surety to complete work not
performed by Developer (including but not limited to on- and off-site
improvements, Municipal Improvements described above, erosion contro~
and other such measures), to pay liens on property to be dedicated to the City,
to reimburse itself for costs incuned in the drafting, execution, administration
or enforcement of this Agreement, to repair or correct deficiencies or other
problems which occur to the Municipal Improvements dwing the warranty
period, or to otherwise fulfill the obligations of the under this Agreement.
C. In the event that any cash, irrevocable letter of credit, or other surety referred
to herein is ever utilized and found to be deficient in amount to payor
reimburse the City in total as required herein, Developer agrees that upon
being billed by the City, the Developer will pay within thirty (30) days of the
mailing of said billing, the said deficient amount. If there should be an
overage in the amount of utilized security, the City will, upon making said
detennination, refund to the Developer any monies which the City has in its
possession which are in excess of the actual costs of the project as paid by the
City.
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D. Developer hereby agrees to allow the City to specially assess the Developer's
property for any and all costs incurred by the City in enforcing any of the
terms of this agreement should the Developer's letter of credit or surety prove
insufficient or should the Developer fail to maintain said letter of credit or
surety in the amount required above within 30 days of mailing of written
request by the City. Should the City assess the Developer's property for said
costs, the Developer agree not to contest or appeal such assessment and
waives all statutory" rights of appeal under Minnesota StatutesJ including
Minnesota Statute 429.081, to the extent of the costs- identified in this
Agreement.
E. That portion of said cash, irrevocable letter of credit or other surety with
respect to the performance of Site Improvements shall be released upon
certification of the City Engineer and approval of the City Council that all
such items are satisfactorily completed pursuant to this Agreement.
F. In the event a surety referred to herein is in the form of an irrevocable letter of
credit, which by its terms may become null and void prior to the time at
which all monetary or other obligations of the Developer are paid or satisfied,
it is agreed that the Developer shall provide the City with a new letter of
credit or other sW'ety, acceptable to the City, at least forty~five (45) days prior
to the expiration of the original letter of credit. If a new letter of credit is not
received as required aboveJ the City may without notice to the Developer
declare a default in the terms of this Agreement and thence draw in part or in
total, at the City's discretion, upon the expiring letter of credit to avoid the
loss of surety for the continued obligation. The form of any irrevocable letter
of credit or other surety must be approved by the City Attomey prior to its
issuance.
6. Surety Release.
A. PeriodicallYJ as payments are made by the Developer for the completion of
portions of the Mwrlcipal Improvements, On- and Off~site Improvements,
and/or Landscaping Improvements and when it is reasonably prudent, the
Developer may request of the City that the surety be proportionately reduced
for that portion of the Municipal Improvements which have been fully
completed and payment made therefor. All such decisions shall be at the
discretion of the City Council. The City's cost for processing reduction
request( s) shall be billed to the Developer. Such cost shall be paid to the City
within thirty (30) days of the date of mailing of the billing.
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B, Developer may request of the City a reduction or release of any surety as
follows:
i. When another acceptable letter of credit or surety is furnished to
the City to replace a prior letter of credit or surety.
11. When all or a portion of the MWlicipal Improvements have been
installed "and as the corresponding special assessments are paid,
that portion of the letter of credit or surety -attributable to the
municipal improvements may be reduced by 50% of the dollar
amount of special assessments which have been paid
iii. When all or a portion of the on- and off-site improvements or the
Landscaping Improvements have been installed, the letter of credit
or surety may be reduced by the dollar amount attributable to that
portion of improvements so installed, except the City shall retain
the letter of credit or surety in the amount of 25% of the estimated
landscaping costs for two years from the time of the installation of
said landscaping materials.
C. The costs incurred by the City in processing any reduction request shall be
billed to the Developer and paid to the City within thirty (30) days of billing.
7. Abandonment of Proiect .. Costs and Expenses. In the event Developer
shouJd abandon the proposed development of the Subject Property, the City's
costs and expenses related to attorney's fees, professional review, drafting of
this Agreement, preparation of the feasibility report, plans and specifications,
and any other expenses undertaken in reliance upon Developer's various
representations shall be paid by Developer within thirty (30) days after receipt
of a bill for such costs from the City. In addition, in the event Developer
abandon the project, in whole or in part, ceases substantial field work for
more than nine (9) months, fails to provide sufficient ground-cover to prevent
continuing soil erosion from the Said Plat, or fails to leave the abandoned
property in a condition which can be mowed using conventional lawn
mowing equipment, Developer agrees to pay all costs the City may incur in
talcing whatever action is reasonably necessary to provide ground-cover and
otherwise restore Said Plat to the point where undeveloped grounds are level
and covered with pennanent vegetation sufficient to prevent continuing soil
erosion from Said Plat and to facilitate mowing of Said Plat. In the event that
said costs are not paid, the City may specially assess such costs against the
lots within Said Plat and/or take necessarr legal action to recover such costs,
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including attorneys fees. Developer knowingly and voluntarily waives all
rights to appeal said special assessments under Minnesota Statutes section
429.081.
8. Developer to Pay City's Costs and Expenses. It is understood and agreed
that the Developer will reimburse the City for all teasonable administrative,
legal, planning, engineering and other professional costs incurred in the
creatiolls administration, enforcement or execution of this Agreement and the
approval of Said Plat, as well as all reasonable engineering expenses incurred
by the City in designing, approving, installing, and inspecting said
Improvements descn"bed above. Developer agree to pay all such costs within
30 days of billing by the City. If Developer fails to pay said amounts, then
the City may specially assess such costs against the lots within Said Plat.
Heuring and Developer knowingly and voluntarily waives all rights to appeal
said special assessments under Minnesota Statutes section 429.081.
Developer has the right to request time sheets or work records to verify said
billing prior to payment.
9. Erosion and Siltation Control Before any grading is started on any site, all erosion
." control measures' as shown on the approved erosion control plan shall be strictly
complied with as set forth in the attached Exhibit D. Developer shall also install all
erosion control measures deemed necessary by the City Engineer should the erosion
control plan prove inadequate in any respect.
10. Drainal!e Requirements. Developer shall comply with all requirements set forth
for drainage into any county ditch or other ditch through which water from Subject
Property may drain, and shall make any necessary improvements or go through any
necessary procedures to ensure compliance with any federal, state, county or city
drainage requirements, all at Developer's sole expense.
11. Maintain Public Property Damal!ed or Quttered Durin!!: Construction.
Developer agrees to assume full financial responsibility for any damage which may
occur to public property including but not limited to streets, street sub- base, base,
bituminous surface, curb, utility system including but not limited to watennain,
sanitary sewer or stonn sewer when said damage occurs as a result of the activity
which takes place dming the development of Said Plat Developer further agrees to
pay all costs required to repair the streets, utility systems and other public property
.. damaged or cluttered with debris when occurring as a direct or indirect result of the
construction that takes place in Said Plat.
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Albertville to Reimburse Certain Expenditures from the Proceeds of Bonds to be Issued by
the City as amending adding the estimated reimbursement expenditure amount at a cost of
$1,652,709,00 and on file in the office of the City Clerk. Motion carried unanimously,
APorove Bolton & Menk. In~..EDItiDe~(s recommendatlQ1l tor Release of Sur.e.tv for Towne Li'lkes
J. al and 2P!1 Addition rOJ' :the_~lt amount of the remainin5t~ers of Credi.t
Assistant City Engineer Nafstad indicated that David Hempel ofCPDC has submitted. a request
for Release of Surety for Towne Lakes ISI and 2nd Addition. Staffhas reviewed the documents
and is recommending that the Council approve the request to Release the Surety and the ful1
amount of the remaining Letters of Credit for Towne Lakes 1st and 2nd Addition be returned,
MOTION BY Council member Berning, seconded by COlUlci I member Pay to approve Bolton &
Menk., Inc, Engineer's recommendation for Release of Surety for Towne Lakes lil and 2nd
Addition and that the fUll amount of the remaining Letters of Credit be returned and on file in the
office of the City Clerk, Motion carried un.animously,
L'EGAL
ADorove City Attomm'.:s..te~mmendation to reduce the_.Letter of Credit for erajrie Run Additio.n
LG.old K~x..PeveloDmentl
City Attorney Couri reminded the Council that the City is in litigation with Gold Key
Development on the Prairie Run Addition; There is an estimated $600,000 in Letters of Credits on
the Prairie Run Addition, which Couri is recommending the City reduce.
MOTION BY Council member Vetsch. seconded by Coun.cil member Berning to deny the City
Attorney's recommendation to reduce the Letter of Credit for Prairie Rlm Addition {Gold Key
Development} and on file in the office of the City Clerk. Motion carried unanimously,
Set Mondav. March 5. 2007 aU:"<lO_p,m. or. soon thereafteuoJ: a DubHe hear;"!.! (Qr the Vacation of
MacKeD;tj~.A1!.e..oQe..NE
City Attorney Couri infonned the Council that in 2006 Council set a public hearing for the
vacation of MacKenzie Avenue NE. The notice was published, but staff neglected to mail
notitications to the property owners, Staff is looking for Council to set another public hearing,
which staffwill be certain that notifications are mailed to the appropriate property owners.
MOTION BY Council member Berning, seconded by Council member Fay to set Monday,
March 5, 2007 at 7:00 p.m. or soon thereafter for a public hearing for the Vacation of MacKenzie
Avenue NE and on file in the office of the City Clerk. Motion carried unanimously.
ADMJNISTRATION'
Written Renort
City Administrator .Kruse noted that the City Hall construction continues to progress. The HV AC
system has been installed. The majority of the kitchen equipment has been installed.
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FE8-17-2007 SAT 12:31 PM DEAN JOHNSON HOMES FAX NO. 7634794821 P. 02
: 92r16-~97 15:48 FROM-Albertville/City of .763-497-3210 T-076 P001/991 F-l44
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F~ 16,2007
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DellI a:. JoIm5on ~ 8.
A1m: lu1ie lbIVIIk,
4100 County Road 19
Medfaa, .MN. SS3S7
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1 Dear MI. Kavek:
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Tbia ~ is. infiDpI you that at the Februlry 5, 2007 City Colm.cil ~ the
en, COuioill~usIy moved to cIeoy the dClUut ~ reeI.- the Letters of
Clw:dit bcld by. the. City tor municipal impro\rell1elll5, site Jsnprovemeatt, and
. ladSt'.epUag improwmcms to the: ~ RIm AckJitioL
The motioD wu based_ the cwnmt ~. PI the Dc:wlopcr, 88 have bcco
~ to the Developer ill a previous ao&ice of defaulf.
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