2015-09-21 CC Agenda Packetlberty� ij� Mayor and Council Request for Action
September 17, 2015
SUBJECT: LEGAL — SALE OF TAx FORFEITED LOTS IN PRAIRIE RUN
RECOMMENDATION: It is respectfully requested that the Mayor and Council consider the
following:
MOTION TO: Approve the purchase agreement to sell lots 1-15, Block 1, Prairie Run to
Fieldstone Family Homes for $25,000 per lot.
BACKGROUND: In 2004 the City of Albertville approved the plat of Prairie Run, which
contained 28 "detached townhome" lots abutting CSAH 18, 25 regular single-family lots and one
commercial lot. The City agreed to install utilities and roads in the Prairie Run subdivision and
special assess the costs of the improvements to the properties in the plat. The City obtained a
Letter of Credit in the amount of 50% of the cost of the improvements, but the Letter of Credit
was from Alpine Capital, a private financing company (not a bank). The plat immediately
experienced drainage problems arising from engineering/design errors, which held up
construction on a number of the lots while litigation ensued. About the time the litigation ended,
the housing bust arrived, which essentially halted all lot sales. After the dust settled, there were
2 cul-de-sac lots remaining unbuilt upon that had special assessments outstanding and 15
detached townhome lots in the same position, as well as one commercial lot upon which no
special assessment payments had been made.
Because the taxes and special assessments were not paid on any of these lots, the City made the
payments on the bond that financed the project using money from other City funds. All of these
vacant lots went tax forfeit. The City acquired the 2 cul-de-sac lots (and has since sold them)
and the 15 detached townhome lots from the state for minimal consideration ($100 per lot) in the
hope that the City can sell the lots and recover some or all of its lost special assessments. The
City had previously acquired an additional 10 detached townhome lots from Alpine Capital in
settlement of its default on its Letter of Credit.
To date, the City has sold the 2 cul-de-sac lots for $79,400, and has contracted with Fieldstone
Family Homes to sell the 10 detached townhome lots acquired from Alpine Capital for a total of
$185,000 (an average of $18,500 per lot) and has given Fieldstone a right of first refusal on the
remaining 15 detached townhome lots. Fieldstone has closed on 4 of the 10 Alpine lots so far,
with the remainder of the lots to be purchased by next May.
Because Fieldstone has a right of first refusal on the 15 detached townhome lots and because it is
having very good success marketing homes on the lots it has purchased from the City, City Staff
approached Fieldstone to see if they would be interested in purchasing the remaining 15 detached
Townhome lots. City Staff and Fieldstone have negotiated a purchase price of $25,000 per lot
for each of the 15 lots.
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Meeting Date: September 21, 2015
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Mayor and Council Request for Action — September 21, 2015
Tax Forfeited Lots in Prairie Run Page 2 of 2
Staff is now seeking City Council approval of the sale of the 15 remaining residential lots to
Fieldstone with closings on three lots every six months beginning September 1, 2016 with the
final three lots to be closed by September 1, 2018. The proposed purchase agreement is very
similar to the prior purchase agreement (selling the 10 Alpine lots) except that the proposed
purchase agreement does not require the installation of pine trees in the back yards to screen
CSAH 18 since each lot already has several pine trees that were planted approximately 10 years
ago.
KEY ISSUES:
• Total sale price for all 15 lots is $375,000.
• The proceeds of the sale will reimburse the City for costs already incurred by the City in
installing municipal improvements to the properties (essentially recovering the original
special assessments).
• This sale will keep the City roughly on schedule for breaking even on the Prairie Run
development, assuming that the remaining commercial lot eventually sells for the
amount of the special assessments that are owed on the property (i.e. the City will have
broken even on all of the residential lots).
• The lots will close in stages over athree-year period.
• City Staff believes that the special assessments on the commercial lot will remain
outstanding for many years in the future.
POLICY/PRACTICES CONSIDERATIONS: The City acquired these lots with the intent of
selling them and applying the proceeds to reimburse the City for money it had previously spent
on municipal improvements for these lots. This proposed sale will carry out that intent.
FINANCIAL CONSIDERATIONS: As the last of the residential lots in Prairie Run, the City
will roughly break even on the residential properties, leaving only the one commercial property
still owing special assessments.
LEGAL CONSIDERATIONS: State law allows the City sell these properties to any party it
desires. The City need not advertise for bids on the properties.
Responsible Person/Department: Mike Couri/City Attorney; Tina Lannes/Finance Director
Submitted Through: Adam Nafstad, City Administrator-PWD
ATTACHMENTS: Proposed Purchase Agreement
M:1Public DatalCity Council\Council Packet Information12015109211512015-09-21 RCA to Prairie Run Lots.doc
Meeting Date: September 21, 2015
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VACANT LAND PURCHASE AGREEMENT
THIS PURCHASE AGREEMENT (the "Agreement") is made as of the day of
September, 2015, by and between the City of Albertville, a Minnesota municipal corporation
("Seller"), and Fieldstone Family Homes, Inc., a Minnesota corporation ("Buyer"').
RECITALS:
WHEREAS, Seller is the owner of the following residential lots (individually, a "Lot"
and collectively, the "Property" or sometimes, the "Lots") located in the City of Albertville,
Minnesota, that are legally described as Lots 1-15, Block 1, Prairie Run, Wright County,
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 Lots.
NOW, THEREFORE, in consideration of the foregoing and for other valuable
consideration, the parties agree as follows:
1. SALE OF LOTS. This Agreement contemplates closings upon the purchase and
sale of the Lots (each, a "Closing" and, collectively, the "Closings") at different times in
accordance with the following:
a. Seller hereby agrees to sell and convey to Buyer, and Buyer hereby agrees
to purchase and accept from Seller, fee title to the Lots according to the
following schedule:
1. Buyer shall purchase three Lots by September 1, 2016.
2. Within every six months thereafter, the Buyer shall purchase an
additional three Lots until all Lots have been purchased.
3. Buyer shall determine in what order the Lots shall be purchased.
4. Buyer may purchase more than three Lots at a time, and may purchase
Lots ahead of the schedule required herein. In the event the Buyer
purchases Lots ahead of schedule, Buyer may "skip" the purchase of
Seller and Buyer Initial: Seller Date
Buyer Date_
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one or more Lots in a required six month purchase period, provided
that by the end of such six month period, the total number of Lots
purchased by Buyer under this Agreement is consistent with the Lot
purchase timeline set forth herein.
b. To confirm its selection of the identity and sequencing of each Lot that it
purchases hereunder, Buyer shall, from time to time, deliver a written
notice to that effect to Seller for each Lot that Buyer purchases hereunder
(a "Notice of Exercise"). The Notice of Exercise shall designate the Lot or
Lots that Buyer desires to purchase and shall also designate the date that
Buyer desires for the Closing upon its purchase of such Lot or Lots, which
date (the "Closing Date") shall occur no later than ten (10) business days
after Buyer's delivery of the Notice of Exercise.
2. EARNEST MONEY/PURCHASE PRICE FOR LOTS. Buyer agrees to pay to
Seller the sum of Twenty -Five Thousand Dollars ($25,000.00) per Lot, with a total purchase
price of $375,000 for all fifteen Lots (the "Purchase Price"), payable as follows:
a. Upon Buyer's execution and delivery of this Agreement, Buyer shall pay
to Seller, in immediately available funds, the sum of Twenty -Five Thousand and 00/100
Dollars ($25,000.00) (the "Earnest Money"); and
b . At the Closing of Buyer's purchase of each Lot, Buyer shall, subject to
prorations and adjustments as provided herein, pay $25,000 per lot in cash or wire
transfer of immediately available funds, for the applicable Lot or Lots being purchased.
C. The Earnest Money shall be held by the City and credited against the
Purchase Price of the last Lot purchased by Buyer.
d. On or before the date of the expiration of thirty months after the date of
this Agreement, Buyer shall have purchased all fifteen Lots that are the subject of this
Agreement for a total of $375,000.
3. SACIWAC CHARGES. Buyer shall be responsible for paying City sewer and
water access charges applicable to each Lot purchased by Buyer hereunder prior to the issuance
of a building permit for such Lot.
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 Lots.
Seller and Buyer Initial: Seller
Buyer
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b. Seiler warrants that the Lots Do 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.
C. Seiler shall not reassess the properties pursuant to Minn. Stat. 429.071,
Subd. 4 for the special assessments that were originally levied under the terms of the
PUD Agreement.
5. BUYER COVENANTS . Buyer agrees as follows:
a. Buyer shall construct on each Lot purchased by Buyer hereunder a home
containing at least 900 finished square feet and garages no smaller than 22 feet by 22 feet.
At least twenty percent (20%) of exterior front facades shall include brick or stone.
b . All homes constructed by Buyer shall comply with all zoning regulations,
including all applicable planned unit development approvals.
d. In connection with each residence that Buyer desires to construct upon a
Lot purchased by Buyer hereunder, 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. RIGHT OF FIRST REFUSAL: Buyer has previously been granted a right of first
refusal in Lots 1-15, Block 1. Said Right of First Refusal shall terminate upon the execution of
this Purchase Agreement.
7. DEED/MARKETABLE TITLE: As Buyer pays for each Lot, Seller shall deliver
a general Warranty Deed conveying marketable title to such Lot, subject to the "Permitted
Exceptions" (as hereafter defined in Paragraph 7.a.-i. 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;
Seller and Buyer Initial: Seller
Buyer
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e. Modification of that document known as City of Albertville Planned Unit
Development Prairie Run, recorded as document number 940358 at the Wright County
Recorder's office ("Development Agreement") to be consistent with the City's ordinance
requirements applicable to the Prairie Run plat and the requirements of this 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.B., 1.D., 1.E., 1.I., 2, 31 51 61 71 81 91 101 13.C., 13.F. 13.G, 13.I.1 14.C.,
15.A., 15.B., 161 171 18, and 20, shall not apply to the Buyer.
g. Any item designated in the title commitment described in paragraph 8
below to which Buyer does not make an objection, also as defined in paragraph 8 below;
h. Any other exception to title which Buyer determines, in writing and in its
sole discretion, to be acceptable.
8. TITLE & EXAMINATION: Seller 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
Seller and Buyer Initial: Seller
Buyer
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to cure such Objections. Upon cure of such Objections, any unused escrow funds shall be
refunded to Seiler;
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
C. Terminate this Agreement by sending written notice to Seller or, if the
uncured Objections affect fewer than all of the Lots, terminate the Agreement with
respect to only those Lots that are affected by the uncured Objections. 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. Upon delivery of a
notice of termination of this Agreement with respect to only those Lots that are affected
by the uncured Objections, this Agreement shall remain in effect with respect to all Lots
that are not affected by the uncured Objections, Seller shall retain the Earnest Money and
credit the same in accordance with the provisions hereof, and this Agreement shall be
deemed terminated with respect to only those Lots that are affected by the uncured
obj ections .
If Seller 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 8.
9. 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 each 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
Seller and Buyer Initial: Seller
Buyer
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Lot will be NON -HOMESTEAD classification. Seiler makes no representation
concerning the amount of subsequent real estate taxes.
b. Special Assessments shall be paid as follows: For each Lot purchased by
Buyer hereunder, Seiler shall pay all levied and outstanding special assessments at or
before the Closing of such Lot.
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.
10. ACCEPTANCE: Buyer understands and agrees that this Agreement is subject to
acceptance by Seller in writing.
ll. INSPECTION: Buyer has the right to inspect each Lot prior to Closing upon its
purchase thereof.
12. DEFAULT: If Buyer defaults in any of the agreements herein, Seller 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.
13. TIME OF ESSENCE: Time is of the essence in this Agreement.
14. 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.
15. 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.
[Signature Page Follows]
Seller and Buyer Initial: Seller
Buyer
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CITY OF ALBERTVILLE
Jillian Hendrickson, Mayor Date
Kimberly A. Olson, City Clerk
DATE OF FINAL ACCEPTANCE
FIELDSTONE FAMILY HOMES, INC.,
a Minnesota corporation
By:
Name:
Its:
Dated:
Buyer's Signature Date
Buyer's Printed Name
, 2015
THIS IS A LEGALLY BINDING CONTRACT BETWEEN BUYERS AND SELLERS. IF
YOU DESIRE LEGAL OR TAX ADVICE, CONSULT AN APPROPRIATE
PROFESSIONAL.
7
Seller and Buyer Initial: Seller Date
Buyer Date_
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