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2007-5-21 Resolution Declining to Release Gold Key Development Letter of Credit i � �V��� � ��AC�� 'vw� a� �� ��� ��7 CITY OF ALBERTVILLE RESOLUTION NO. 2007- RESOLUTION DECLINING TO RELEASE GOLD KEY DEVELOPMENT'S LETTER OF CREDIT V��HEREAS, the City of Albertville ("the City'') and Gold Key Development ("the Developer") entered into a Planned Unit Development Agreement ("Development Agreement") on July 16, 2004: WHEREAS, Paragraph SA of the Development Agreement requires the Developer to provide the City with an irrevocable letter of credit as security the obligations of the Developer under the contract shall be performed; WHEREAS, Paragraph SA also states the letter of credit shall be in the amount of$791,537.00 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); WHEREAS, Paragraph SB states: The City may draw on said letter of credit or surety to complete v��ork not performed by Developer (including but not limited to on- and off-site improvements, Municipal Improvements described above, erosion control, and other such measures), to pay liens on property to be dedicated to the City, to reimburse itself for costs incurred in the drafting, execution, administration or enforcement of this Agreement, to repair or correct deficiencies or other problems which occur to the Municipal Improvements during the warranty period, or to otherwise fulfill the obligations of the under this Agreement. WHEREAS, On August 6, 2004, Alpine Capital, LLC issued an irrevocable letter of credit No. 2601-001 in the amount of$680,337.00; WHEREAS, On August 6, 2004, Alpine Capital, LLC issued an irrevocable letter of credit No. 2601-002 in the amount of$53,000.00; WHEREAS, On August 6, 2004, Alpine Capital, LLC issued an irrevocable letter of credit No. 2601-003 in the amount of$58,200.00; WHEREAS, letters of credits Nos. 2601-001, 2601-002, and 2601-003 all contain the following language: Lach draft drawn under this Letter of Credit must be accompanied by: l. The original of this Letter of Credit; 1 2. A notarized stateinent executed by the Administrative Engineering Technician, stating that the Developer is in default under the terms of the Developers Agreement, and that the City is entitled to draw upon the Letter of Credit. Such statement shall set forth the amount required to cure such default. WHEREAS, letters of credit Nos. 2601-001 and 2601-002 have been amended twice and have been extended until June 30, 2007; WHEREAS, the City has received requests from the Developer and its Attorney to reduce the letters of credit; WHEREAS, the City has requested Alpine Capital, LLC and the Developer to extend letters of credit Nos. 2601-001 and 2601-002 in their full amounts ($680,337.00 and $53,000.00). The request for the extension had a deadline of May 17, 2007. To date, the Developer has not extended letters of credit Nos. 2601-001 and 2601-002; NOW, THEREFORE, BE IT RESOLVED: 1. The City has determined the Developer to be in default of the Development Agreement and has so notified Developer of such default. See Exh. A (Dec. 1, 2006 letter). 2. The City also believes the Prairie Run Subdivision as designed by the Developer violated Minnesota Pollution Control Agency regulations. 3. To date, Developer has failed to remedy such defaults. 4. In order to secure the funds necessary to implement possible corrective measures to bring the Prairie Run Subdivision in compliance with the Development Agreement, City Ordinances, State laws and regulations and to pay for the costs associated with administration and enforcement of the Development Agreement, the City has decided not to reduce letters of credit Nos. 2601-001, 2601-002, and 2601-003. 5. Additionally, if the Developer has not extend the expiration dates of letters of credit Nos. 2601-001 and 2601-002 at least 45 days prior to their expiration date, City Staff is authorized to draw upon the letters of credit pursuant to Paragraph SF of the Development Agreement. 6. Once drawn upon, said funds from letters of credit Nos. 2601-001 and 2601-002 shall be held in interest bearing accounts until the resolution of the Prairie Run lawsuits. Dated: May 21, 2007 Ron Klecker, Mayor Bridget Miller, Clerk 2 December l, 2006 Gold Key Development, Inc. Attention: Dean R. Johnson 4700 County Road 19 Medina. MN 55357 Re: City of Albertville; Prairie Run; Gold Key Development. Dear Mr. Johnson: After further analysis of the data available to the Albertville City Engineer, including photographs of the flooding v��hich occurred in the areas near the Prairie Run developinent in July, 2003, the Albertville City Engineer's office has arrived at revised figures for the 100-year flood elevation and the highest kno��n water elevation for the Prairie Run plat. They are as follows: 100-year flood elevation: 949.9 feet above sea level. Highest known water elevation: 951.47 feet above sea level. Paragraph 13.F. of the City Of Albertville Planned Unit Development Agreement Prairie Run betu�een the City of Albertville and Gold Key Development, Inc., dated July 16, 2004 ("Developer's Agreement") states: Developer represents to the City that Said Plat complies «ith all City, county, state and federal laws and regulations, including but not limited to: subdivision ordinances, zoning ordinances, and environmental regulations. Developer agrees to obtain all required federal, state and local permits. If the City determines that Said Plat does not comply, the City may, at its option, refuse to allow construction or development wark in the plat until Developer so complies. Upon the City's deinand, the Developer shall cease work until there is compliance. Developer has ��iolated the following City's subdivision ordinances in the follo«�ing ��ays (the cites below are to the ordinances as they were in effect at the tiine of final plat approval): • Section A-600.4(g) in that the lowest proposed opening (window or door) as shown on the grading plan dated OS/15/04 or as constructed on the following lots is less than two feet above the highest known water level � (951.47) for these lots: Lots Not Built Upon = 8, 9, 10, 11, 17, 21, 23 and 24, all of Block 2 . Lots Built Upon = 7, 14, 15, 16, 18 and 19, all of Block 2. � Section A-600.13(c)(1)�in that the post development 100-year storm peak discharge runoff rate exceeds the pre-development 100-year storm peak discharge runoff rate. � Section A-700.6 in that the surface and underground drainage systems on the plat do not adequately remove all natural drainage that accumulates on the developed property, nor do they provide a permanent solution for the removal of drainage water. • Section A-700.6 in that the plat discharges at more than one-half of the pre- development rate of runoff. Developer has violated the City's zoning ordinances in the following ways (the cites below are to the ordinances as they were in effect at the time of final plat approval): • Section 1000.9(d) in that the lowest floor as shown on the grading plan dated OS/1�/04 or as constructed is less than two feet above the highest known surface water level (951.47) for adjacent ponds or wetlands for the following lots: Lots Not Built Upon = 8, 9, 10, 11, 12, 13, 17 and 24, all of Block 2. Lot Built Upon = 7, 14, 15, 16, 18 and 19 of Block 2. • Section 1000.9(d) in that the lowest floor as shown on the grading plan dated OS/15/04 or as constructed is less than one foot above the 100-year flood level of 949.9, as determined by the 2006 County Ditch No. 9 Flood Study, for adjacent ponds or wetlands for the following lots: Lots Not Built Upon = 8, 9, 10, 11, 12 and 13, all of Block 2. Lots Built Upon = 7 of Block 2. • Section 5000.4 (a) in that the lowest floor as shown on the grading plan dated 0�/15/04 or as constructed is less than three feet above the 100-year flood elevation of 949.9, as determined by the 2006 County Ditch No. 9 Flood Study, for the following lots: Lots Not Built Upon = 8, 9, 10, 11, 12 and 13, all of Block 2. Accordinaly, the City is hereby declaring Gold Key Developinent, Ine. in default of paragraph 13.F. of the Developer's AQreement based on the ordinance violations noted abo��e. While the Cit}' has not thoroughly studied how these various ordinance violations may be remedied, City Staff is concerned that the only way to bring the ! � � development into compliance ���ith Subdivision Ordinance Sections A- 600.13(c)(1) and A-700.6 cited above may be to raise the entire plat. including �� nds. streets an � o d lot elevations. P , In light of these violations and their impact on the entire residential portion of the Prairie Run plat, the City will no longer be issuing building permits for any residential lots in the Prairie Run plat pursuant to the authority of paragraph 13.F. of the Develo er's A reement until a solution to these violations has been P � identified, approved by the City Council and implemented by the Developer. Please forward any proposed solution to the City Engineer for his review.