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2015-03-16 CC Agenda Packetlberty� ij� Mayor and Council Request for Action March 12, 2015 SUBJECT: LEGAL — SALE OF TAx FORFEITED LOTS 35 AND 37, BLOCK 2, PRAIRIE RUN RECOMMENDATION: It is respectfully requested that the Mayor and Council consider the following: MOTION TO: Accept the high bids of Christian Builders and enter into purchase agreements for the sale of Lot 35, Block 2, Prairie Run to Christian Builders for $41,200 and the sale of Lot 37, Block 2, Prairie Run to Christian Builders for $38,200. BACKGROUND: In August, 2014 the City received deeds from the State of Minnesota to 17 residential properties in Prairie Run. Two of these properties are regular -sized cul-de-sac lots, while the other 15 are small detached townhome lots. In February, the City Council authorized the advertisement for bids for the two cul-de-sac lots, Lots 35 and 37, Block 2. City staff advertised in the North Crow River News and the Wright County Journal Press, called the people who had previously called the City expressing interest in the lots, and put the word out to area builders that the City was taking bids on the lots. A minimum bid price of $35,000 was put on each lot. Bids were opened at 5 p.m. on March loth. The City received two bids on each lot, as follows: Bidder Lot Bid Amount Christian Builders 35 $411200 Ziegler Custom Homes 35 $361000 Christian Builders 37 $381200 Ziegler Custom Homes 37 $351100 The proceeds of the sale would be applied to the unpaid special assessments that remain outstanding from the Prairie Run project. KEY ISSUES: • The City acquired these properties for $5,000 each from the State after the properties went tax forfeit. • All proceeds of the sale will reduce the deficit in the Prairie Run project fund. • Both bids exceeded the minimum bid of $35,000 previously set by the City Council. • Staff recommends accepting the bids of Christian Builders and authorizing the City to execute the attached purchase agreements. M:1Public DatalCity CouncillCouncil Packet information12015103161512015-03-16 Prairie Run Lot Bids.doc Meeting Date: March 16, 2015 ends Page 19 Mayor and Council Request for Action — March 15, 2015 Sale of Tax Forfeited Lots 35 and 37, Block 2, Prairie Run Page 2 of 2 POLICYTRACTICES CONSIDERATIONS: Selling the lots will return these properties to the tax roils and should result in the construction of two more single family homes in Albertville. FINANCIAL CONSIDERATIONS: The City will apply the $79,400 in proceeds to the cost of the lots ($10,000 total) with the remainder going to offset some of the money originally put into this Prairie Run project by the City and not paid back when the developer defaulted on the special assessment payments. LEGAL CONSIDERATIONS: The City may either accept the high bid (for either or both lots) or reject all bids. It cannot accept the low bid unless Christian Builders were deemed a non - responsible bidder. Staff knows of no facts that would cause Christian Builders to be deemed a non -responsible bidder. Responsible Person/Department: Tina Lannes, Finance Director Mike Couri, City Attorney Submitted Through: Adam Nafstad, City Administrator-PWD Attachments: Vacant Land Purchase Agreement, Lot 35, Block 2, Prairie Run. Vacant Land Purchase Agreement, Lot 37, Block 2, Prairie Run. M:1Public DatalCity CouncillCouncil Packet information12015103161512015-03-16 Prairie Run Lot Bids.doc Meeting Date: March 16, 2015 ends Page 20 VACANT LAND PURCHASE AGREEMENT LOT 35, BLOCK 2, PRAIRIE RUIN THIS PURCHASE AGREEMENT (the "Agreement") is made as of the day of March, 2015, by and between the City of Albertville, a Minnesota municipal corporation ("Seller"), and Christian Builders, Inc., a Minnesota Corporation ("Buyer"). RECITALS: WHEREAS, Seller is the owner of Lot 35, Block 2 plat of Prairie Run ("Lot" or "Property") located in the City of Albertville, Minnesota; WHEREAS, the Property is encumbered by that certain Planned Unit Development Agreement dated July 6, 2004, between Seller and Gold Key Development, Inc., that was recorded in the office of the County Recorder in and for Wright County, Minnesota on December 22, 2004 as Document No. A940358 (the "PUD Agreement"); and WHEREAS, the parties desire to memorialize this agreement concerning the sale by Seller to Buyer, and the purchase by Buyer from Seller, of the Lot. NOW, THEREFORE, in consideration of the foregoing and for other valuable consideration, the parties agree as follows: 1. SALE OF LOT. Seller hereby agrees to sell and convey to Buyer, and Buyer hereby agrees to purchase and accept from Seller, fee title to the Property at a Closing which shall occur no later than 45 days from the date of this Agreement; 2. EARNEST MONEY/PURCHASE PRICE FOR LOT. Buyer agrees to pay to Seller the sum of $38,200 (the "Purchase Price") for the Lot, payable as follows: a. Upon Buyer's execution and delivery of this Agreement, Buyer shall pay to Seller $ 1,910 (the "Earnest Money"); and b. At the Closing, Buyer shall pay to Seller $36,290, representing the remainder of the Purchase Price. 3. SACIWAC CHARGES. Buyer shall be responsible for paying City sewer and water access charges applicable to the Lot purchased by Buyer hereunder prior to the issuance of a building permit for such Lot. 1 Seller and Buyer Initial: Seller Buyer 084029-003/3791411-edit 1 Date Date Agenda Page 21 4 . SELLER'S WARRANTIES. Seller warrants as follows: a. To the best of the Seller's knowledge there are no hazardous wastes, abandoned wells, or underground storage tanks on the Lot. b. Seiler warrants that the Lot DOES NOT receive preferential tax treatment (i.e., Green Acres, etc.), and may be listed as non -homestead or tax exempt property for the current tax year. 5. BUYER COVENANTS . Buyer agrees as follows: a. All homes constructed by Buyer shall comply with all zoning regulations, including all applicable planned unit development approvals. b. Buyer shall provide the Seller with a lot survey and building plans as required by City Ordinance before a building permit can be issued for the proposed residence on such Lot. 6. DEED/MARKETABLE TITLE: At closing, Seller shall deliver a general Warranty Deed conveying marketable title to such Lot, subject to the "Permitted Exceptions" (as hereafter defined in this Paragraph 6.a.-h. of this Agreement) including, without limitation: a. Building and zoning laws, ordinances, state and federal regulations; b. Restrictions relating to use or improvement of the property without effective forfeiture provisions; c. Reservation of any mineral rights by the State of Minnesota; d. Utility and drainage easements of record; e. The terms of the PUD Agreement. f. The City of Albertville Planned Unit Development Agreement recorded as document number 940358 in the Wright County Recorder's Office, except that paragraphs 1.D., 2, 3, 5, 6, 7, 8, 9, 10, 13.C., 13.F. 13.G, 14.C., 15.A., 15.B., 16, 171 18, and 20, shall not apply to the Buyer. Seller and Buyer Initial: Seller Buyer 084029-003/3791411-edit 1 VA Date Date Agenda Page 22 g. Any item designated in the title commitment described in paragraph 7 below to which Buyer does not make an objection, also as defined in paragraph 7 below; h. Any other exception to title which Buyer determines, in writing and in its sole discretion, to be acceptable. 7. TITLE & EXAMINATION: Seiler shall, within a reasonable time after acceptance of this agreement, provide a title commitment ("Commitment") issued by a national title insurance company (the "Title Company"), certified to date to include proper searches covering bankruptcies, state and federal judgments and liens, and levied and pending special assessments. Buyer shall be allowed 10 business days after receipt of such Commitment for examination of title and making any objections which shall be made in writing or deemed waived (each, an "objection" and collectively, the "objections"). If any objection is so made, Seller shall have 20 business days from receipt of Buyer's written title objections to notify Buyer of Seller's intention to make title marketable and subject only to the Permitted Exceptions within 60 days from Seller's receipt of such written objection. If notice is given, payments hereunder required shall be postponed pending correction of title, but upon correction of title and within 10 days after written notice to Buyer the parties shall perform this Agreement according to its terms. If no such notice of objections is given or if notice is given but title is not corrected within the time provided for, Buyer may, at its sole discretion, do one or more of the following: a. For objections with respect to liens of a liquidated amount that were created or assumed by, or asserted against, Seller or Seller's predecessors in title, and that Seller fails to pay or discharge on or before any Closing, proceed to such Closing and withhold from the Purchase Price an amount which, in the reasonable judgment of the Title Company, is sufficient to assure cure of the objections. Any amount so withheld shall be placed in escrow with the Title Company. Seller shall pay the cost and expense to create and administer the escrow. If Seller does not cure such objections within sixty (60) days after such escrow is established, Buyer may then cure such objections within a reasonable time and charge the costs against the escrowed amount. The parties agree to execute and deliver such documents as may be reasonably required by the Title Company to cure such objections. Upon cure of such objections, any unused escrow funds shall be refunded to Seller; b . waive the objections, accept title subject to the objections, and proceed to such Closing, in which event such objections shall be considered Permitted Exceptions, and in which case the parties shall remain obligated to perform pursuant to the terms of this Agreement, with no reduction of Purchase Price; or Seller and Buyer Initial: Seller Buyer 084029-003/3791411-edit 1 3 Date Date Agenda Page 23 C. Terminate this Agreement by sending written notice to Seiler. Upon delivery of such notice of the termination of the entire Agreement, the Earnest Money shall be refunded to Buyer, and this Agreement shall be deemed terminated. d. If Seiler provides a Commitment pursuant to this paragraph, (1) the title examination period shall commence upon Buyer's receipt of the Commitment and (2) Seller shall pay only the cost of the Commitment and not the premium cost of any insurance Buyer may choose to obtain. It is acknowledged that Buyer will be obtaining and reviewing updated title reports for each Lot at Buyer's expense as Buyer deems necessary or desirable.. whether or not Buyer provides Seller with notice of objections following its receipt of the initial Commitment as set forth above in this Section, Buyer may, at its option, at or prior to Closing upon any Lot, notify Seller in writing of any Objections to title first raised by the Title Company between (a) the effective date of the Commitment, and (b) the Closing Date for such Lot, provided such objection did not arise as a result of Buyer's actions, and provided such objection is not a Permitted Exception. with respect to any objections to title set forth in such notice, if Seller does not elect to cure such additional objections, Buyer shall have the options set forth above in this Section 7. 8. REAL ESTATE TAXES.. a. For each Lot purchased by Buyer hereunder, real estate taxes payable in the year of sale shall be prorated between Buyer and Seller to the Closing Date for such Lot. Delinquent real estate taxes shall be paid in full by Seller prior to such Closing Date. Buyer shall accept title to the Lot subject to the lien of real estate taxes payable in the year after Closing. Seller warrants taxes due and payable in the year of Closing for each Lot will be NON -HOMESTEAD classification. Seller makes no representation concerning the amount of subsequent real estate taxes. b. Special Assessments, if any, shall be extinguished by Seller prior to closing. C. Seller shall pay on the Closing Date for each Lot purchased by Buyer hereunder any deferred real estate taxes (i.e.. Green Acres, etc.) which are required as a result of the Closing of the sale of any Lot hereunder. 9. ACCEPTANCE: Buyer understands and agrees that this Agreement is subject to acceptance by Seller in writing. 10. INSPECTION: Buyer has the right to inspect each Lot prior to Closing upon its purchase thereof. Seller and Buyer Initial: Seller Buyer 084029-003/3791411-edit 1 n Date Date Agenda Page 24 11. DEFAULT: If Buyer defaults in any of the agreements herein, Seiler may, as its sole remedy available at law or in equity, choose to terminate this Agreement pursuant to Minn. Stat. § 559.21 and, upon such termination, payments made hereunder may be retained by Seller, including earnest money. In the event of Sellers' default hereunder, Buyer may pursue a claim for specific performance; provided, as to specific performance, such action must be commenced within one-year after such right of action arises. 12. TIME OF ESSENCE: Time is of the essence in this Agreement. 13. ENTIRE AGREEMENT: This Agreement, any attached exhibits and any addenda or amendments signed by the parties, shall constitute the entire Agreement between Seller and Buyer, and supersedes any other written or oral agreements between Seller and Buyer. This Agreement can be modified only in writing signed by Seller and Buyer. 14. POSSESSION: Seller shall deliver possession of each Lot purchased by Buyer hereunder to Buyer not later than the date of closing of the purchase and sale of such Lot. CITY OF ALBERTVILLE CHRISTIAN BUILDERS, INC., Jillian Hendrickson, Mayor Date Kimberly A. Olson, City Clerk DATE OF FINAL ACCEPTANCE By: Name: Its: Dated: , 2015 THIS IS A LEGALLY BINDING CONTRACT BETWEEN BUYERS AND SELLERS. IF YOU DESIRE LEGAL OR TAX ADVICE, CONSULT AN APPROPRIATE PROFESSIONAL. 5 Seller and Buyer Initial: Seller Date Buyer Date_ 084029-003/3791411-edit 1 Agenda Page 25 VACANT LAND PURCHASE AGREEMENT LOT 37, BLOCK 2, PRAIRIE RUIN THIS PURCHASE AGREEMENT (the "Agreement") is made as of the day of March, 2015, by and between the City of Albertville, a Minnesota municipal corporation ("Seller"), and Christian Builders, Inc., a Minnesota Corporation ("Buyer"). RECITALS: WHEREAS, Seller is the owner of Lot 37, Block 2 plat of Prairie Run ("Lot" or "Property") located in the City of Albertville, Minnesota; WHEREAS, the Property is encumbered by that certain Planned Unit Development Agreement dated July 6, 2004, between Seller and Gold Key Development, Inc., that was recorded in the office of the County Recorder in and for Wright County, Minnesota on December 22, 2004 as Document No. A940358 (the "PUD Agreement"); and WHEREAS, the parties desire to memorialize this agreement concerning the sale by Seller to Buyer, and the purchase by Buyer from Seller, of the Lot. NOW, THEREFORE, in consideration of the foregoing and for other valuable consideration, the parties agree as follows: 1. SALE OF LOT. Seller hereby agrees to sell and convey to Buyer, and Buyer hereby agrees to purchase and accept from Seller, fee title to the Property at a Closing which shall occur no later than 45 days from the date of this Agreement; 2. EARNEST MONEY/PURCHASE PRICE FOR LOT. Buyer agrees to pay to Seller the sum of $41,200 (the "Purchase Price") for the Lot, payable as follows: a. Upon Buyer's execution and delivery of this Agreement, Buyer shall pay to Seller $2,060 (the "Earnest Money"); and b. At the Closing, Buyer shall pay to Seller $39,140, representing the remainder of the Purchase Price. 3. SACIWAC CHARGES. Buyer shall be responsible for paying City sewer and water access charges applicable to the Lot purchased by Buyer hereunder prior to the issuance of a building permit for such Lot. 1 Seller and Buyer Initial: Seller Buyer 084029-003/3791411-edit 1 Date Date Agenda Page 26 4 . SELLER'S WARRANTIES. Seller warrants as follows: a. To the best of the Seller's knowledge there are no hazardous wastes, abandoned wells, or underground storage tanks on the Lot. b. Seiler warrants that the Lot DOES NOT receive preferential tax treatment (i.e., Green Acres, etc.), and may be listed as non -homestead or tax exempt property for the current tax year. 5. BUYER COVENANTS . Buyer agrees as follows: a. All homes constructed by Buyer shall comply with all zoning regulations, including all applicable planned unit development approvals. b. Buyer shall provide the Seller with a lot survey and building plans as required by City Ordinance before a building permit can be issued for the proposed residence on such Lot. 6. DEED/MARKETABLE TITLE: At closing, Seller shall deliver a general Warranty Deed conveying marketable title to such Lot, subject to the "Permitted Exceptions" (as hereafter defined in this Paragraph 6.a.-h. of this Agreement) including, without limitation: a. Building and zoning laws, ordinances, state and federal regulations; b. Restrictions relating to use or improvement of the property without effective forfeiture provisions; c. Reservation of any mineral rights by the State of Minnesota; d. Utility and drainage easements of record; e. The terms of the PUD Agreement. f. The City of Albertville Planned Unit Development Agreement recorded as document number 940358 in the Wright County Recorder's Office, except that paragraphs 1.D., 2, 3, 5, 6, 7, 8, 9, 10, 13.C., 13.F. 13.G, 14.C., 15.A., 15.B., 16, 171 18, and 20, shall not apply to the Buyer. Seller and Buyer Initial: Seller Buyer 084029-003/3791411-edit 1 VA Date Date Agenda Page 27 g. Any item designated in the title commitment described in paragraph 7 below to which Buyer does not make an objection, also as defined in paragraph 7 below; h. Any other exception to title which Buyer determines, in writing and in its sole discretion, to be acceptable. 7. TITLE & EXAMINATION: Seiler shall, within a reasonable time after acceptance of this agreement, provide a title commitment ("Commitment") issued by a national title insurance company (the "Title Company"), certified to date to include proper searches covering bankruptcies, state and federal judgments and liens, and levied and pending special assessments. Buyer shall be allowed 10 business days after receipt of such Commitment for examination of title and making any objections which shall be made in writing or deemed waived (each, an "objection" and collectively, the "objections"). If any objection is so made, Seller shall have 20 business days from receipt of Buyer's written title objections to notify Buyer of Seller's intention to make title marketable and subject only to the Permitted Exceptions within 60 days from Seller's receipt of such written objection. If notice is given, payments hereunder required shall be postponed pending correction of title, but upon correction of title and within 10 days after written notice to Buyer the parties shall perform this Agreement according to its terms. If no such notice of objections is given or if notice is given but title is not corrected within the time provided for, Buyer may, at its sole discretion, do one or more of the following: a. For objections with respect to liens of a liquidated amount that were created or assumed by, or asserted against, Seller or Seller's predecessors in title, and that Seller fails to pay or discharge on or before any Closing, proceed to such Closing and withhold from the Purchase Price an amount which, in the reasonable judgment of the Title Company, is sufficient to assure cure of the objections. Any amount so withheld shall be placed in escrow with the Title Company. Seller shall pay the cost and expense to create and administer the escrow. If Seller does not cure such objections within sixty (60) days after such escrow is established, Buyer may then cure such objections within a reasonable time and charge the costs against the escrowed amount. The parties agree to execute and deliver such documents as may be reasonably required by the Title Company to cure such objections. Upon cure of such objections, any unused escrow funds shall be refunded to Seller; b . waive the objections, accept title subject to the objections, and proceed to such Closing, in which event such objections shall be considered Permitted Exceptions, and in which case the parties shall remain obligated to perform pursuant to the terms of this Agreement, with no reduction of Purchase Price; or Seller and Buyer Initial: Seller Buyer 084029-003/3791411-edit 1 3 Date Date Agenda Page 28 C. Terminate this Agreement by sending written notice to Seiler. Upon delivery of such notice of the termination of the entire Agreement, the Earnest Money shall be refunded to Buyer, and this Agreement shall be deemed terminated. d. If Seiler provides a Commitment pursuant to this paragraph, (1) the title examination period shall commence upon Buyer's receipt of the Commitment and (2) Seller shall pay only the cost of the Commitment and not the premium cost of any insurance Buyer may choose to obtain. It is acknowledged that Buyer will be obtaining and reviewing updated title reports for each Lot at Buyer's expense as Buyer deems necessary or desirable.. whether or not Buyer provides Seller with notice of objections following its receipt of the initial Commitment as set forth above in this Section, Buyer may, at its option, at or prior to Closing upon any Lot, notify Seller in writing of any Objections to title first raised by the Title Company between (a) the effective date of the Commitment, and (b) the Closing Date for such Lot, provided such objection did not arise as a result of Buyer's actions, and provided such objection is not a Permitted Exception. with respect to any objections to title set forth in such notice, if Seller does not elect to cure such additional objections, Buyer shall have the options set forth above in this Section 7. 8. REAL ESTATE TAXES.. a. For each Lot purchased by Buyer hereunder, real estate taxes payable in the year of sale shall be prorated between Buyer and Seller to the Closing Date for such Lot. Delinquent real estate taxes shall be paid in full by Seller prior to such Closing Date. Buyer shall accept title to the Lot subject to the lien of real estate taxes payable in the year after Closing. Seller warrants taxes due and payable in the year of Closing for each Lot will be NON -HOMESTEAD classification. Seller makes no representation concerning the amount of subsequent real estate taxes. b. Special Assessments, if any, shall be extinguished by Seller prior to closing. C. Seller shall pay on the Closing Date for each Lot purchased by Buyer hereunder any deferred real estate taxes (i.e.. Green Acres, etc.) which are required as a result of the Closing of the sale of any Lot hereunder. 9. ACCEPTANCE: Buyer understands and agrees that this Agreement is subject to acceptance by Seller in writing. 10. INSPECTION: Buyer has the right to inspect each Lot prior to Closing upon its purchase thereof. Seller and Buyer Initial: Seller Buyer 084029-003/3791411-edit 1 n Date Date Agenda Page 29 11. DEFAULT: If Buyer defaults in any of the agreements herein, Seiler may, as its sole remedy available at law or in equity, choose to terminate this Agreement pursuant to Minn. Stat. § 559.21 and, upon such termination, payments made hereunder may be retained by Seller, including earnest money. In the event of Sellers' default hereunder, Buyer may pursue a claim for specific performance; provided, as to specific performance, such action must be commenced within one-year after such right of action arises. 12. TIME OF ESSENCE: Time is of the essence in this Agreement. 13. ENTIRE AGREEMENT: This Agreement, any attached exhibits and any addenda or amendments signed by the parties, shall constitute the entire Agreement between Seller and Buyer, and supersedes any other written or oral agreements between Seller and Buyer. This Agreement can be modified only in writing signed by Seller and Buyer. 14. POSSESSION: Seller shall deliver possession of each Lot purchased by Buyer hereunder to Buyer not later than the date of closing of the purchase and sale of such Lot. CITY OF ALBERTVILLE CHRISTIAN BUILDERS, INC., Jillian Hendrickson, Mayor Date Kimberly A. Olson, City Clerk DATE OF FINAL ACCEPTANCE By: Name: Its: Dated: , 2015 THIS IS A LEGALLY BINDING CONTRACT BETWEEN BUYERS AND SELLERS. IF YOU DESIRE LEGAL OR TAX ADVICE, CONSULT AN APPROPRIATE PROFESSIONAL. 5 Seller and Buyer Initial: Seller Date Buyer Date_ 084029-003/3791411-edit 1 Agenda Page 30