2007-8-30 MEMO; Gold Key Letter of Credit Reduction; Couri, MacAurthur & Ruppe • � •
• •
e
To: Albertville City Council; Larry Kruse, City Administrator.
Cc: Adam Nafstad, City Engineer, Jason Kuboushek, Attorney
From: Mike Couri, City Attorney
Date: August 30, 2007
Re: Gold Key Letter of Credit Reduction.
In light of the recent Court ruling in the litigation against Gold Key, and
upon the advice of myself and Iverson Reuvers, the fum representing the City
in the Gold Key litigation, City Staff is recommending a reduction in the
letters of credit submitted by Gold Key pursuant to the terms of the
Developer's Agreement. Gold Key originally submitted three letters of credit
in the following amounts:
1. A $680,000.00 letter of credit representing a 50% security for the
special assessments levied against the properties. Under the
Developer's Agreement, this letter of credit may be reduced in
proportion to the special assessments paid. To date, 72.02% of the
special assessments have been paid. Reducing this letter of credit by
72.02% would leave a letter of credit balance of$190,387.53.
2. A $53,000.00 letter of credit for "on- and off-site improvements",
which was calculated at $1,000 per lot for items such as bittuninous
driveways, sod and trees on each lot. To date, 19 lots have been
completed. Reducing the letter of credit calculation by 19 lots
would leave a letter of credit balance of$34,000.00.
3. A $58,200.00 letter of credit for landscaping, representing 150% of
the estimated cost of the landscaping improvements required. To
date, all of the evergreen trees that were required to be installed have
been, as have the landscaping improvements in the entrance median.
However, only a handful of the shrubs have been installed and four
of the evergreen trees have since died. The Developer needs to
replace the four dead trees and install the remaining shrubs. At this
i
point we do not know the amount by which this letter of credit
should be reduced, as the prices originally submitted for the
landscaping are now three years old. Staff recommends no
reduction in the landscaping letter of credit at this time, but we will
be requesting that the Developer submit a contractor's current quote
for the replacement of the four trees and the installation of the
remaining shrubs. Upon review and recommendation by Staff, a
reduction in the landscaping portion of the letter of credit would then
be brought back to the City Council for consideration.
The City Engineer recommends that the Ciry retain an additional
$20,000.00 in letter of credit amount for the required separation of an existing
east-west drainage ditch from the storm water ponds on this site as a potential
fix to some of the drainage violations on this plat as cited by the MPCA. This
amount should be retained in the $680,337.00 letter of credit.
In addition, the Developer owes the City $7,081.84 in unpaid consultailt
bills. This amount should also be retained in the $680,337.00 letter of credit.
Accordingly, Staff now recommends a reduction in the letters of credit
posted by Gold Key as follows:
l. Reduce the $680,337.00 letter of credit to $217,469.37 ($190,387.53
plus $20,000.00 retainage for the ditch plus $7,081.84 for unpaid City
bills).
2. Reduce the $53,000.00 letter of credit to $34,000.00
3. Keep the $58,200.00 letter of credit at its current amount until the
remaining amount of landscaping installation has been determined.
� Page 2