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2004-09-16 Past Costs/InvoicesFelhaber Larson Fenlon ~ Vogt A Professional Association -Attorneys at Law MINNEAPOLIS 220 South Sixth Street i Suite 2200 Minneapolis, MN 55402-4504 612 339 6321 1 Fax 612 338 0535 David M. Cremons 612.373.8504 Fax: 612.373.8473 E-mail: dcremons@felhaber.com ST. PAUL 444 Cedar Street i Suite 2100 St. Paul, MN 55101-2136 651 222 6321 ! Fax 651 222 8905 September 16, 2004 Via FACSIMILE (763.497.3210) aND U.S. Mail Mr. Larry R. Kruse City Administrator City of Albertville 5975 Main Avenue NE Albertville, MN 55301 Re: Millwood Development / Ogren Properties Sites Dear Mr. Kruse: This firm represents Millwood Development, LLC, the owner of Outlot A, Mooney Addition, which is located adjacent to Highway 37 in Albertville. The directly adjacent property, which is also part of the "Mooney Addition," is owned by Ogren Properties and operated as a Mobil gas station. On May 6, 2004, Millwood entered into a Purchase Agreement for the sale of its Albertville property. Subsequent to execution of the Purchase Agreement, we learned that the City of Albertville was insisting upon the payment of certain invoices from a number of years ago as a condition to issuance of a building permit for Millwood's purchaser. Millwood has requested and obtained from Ogren Properties the documentation provided by the City that apparently forms the basis for the payment demand. Unfortunately, as of September 2, 2004, the purchaser under the existing Purchase Agreement notified our client that it no longer wished to proceed with its purchase of the property. Millwood is currently working with another party on a potential purchase of the Albertville site and that party has requested that the closing occur as soon as September 29. At the same time, that party or its contractor has apparently been informed by the City that the City will block the conveyance of the Millwood property or the issuance of a building permit unless and until Millwood pays the sum of $8,839.44 related to 1999-2001 planning and legal costs (and interest). I have attached for your reference certain of the materials our office received from Ogren Properties with regard to this demand for payment. It should come as no surprise to the City that both Millwood and Ogren were taken aback when this issue emerged several months ago with regard to costs incurred as much as five years ago. To the best of our knowledge, no invoice had previously been presented and there was MPLS-Word 67247.2 www.felhaber.com Mr. Larry Kruse September 16, 2004 Page 2 certainly never any indication that a payment of additional charges was a condition to sale or development of the Millwood property. In fact, I have enclosed a letter of December 1, 2000, from the City Attorney, Michael Couri, which explicitly describes the final steps required with regard to the Mooney Addition. That letter makes no reference to outstanding costs, and does not even imply that any amount is owing to the City, its engineer or its attorney. It is worth noting that all of the Northwest Associated Consultants billings and all but $27.50 of the City Attorney fees had already been invoiced prior to December 1, 2000, and could easily (and appropriately) have been charged to MDC Albertville, LLC, the developer of the Mooney parcel at that time. The failure of the City to take action in December 2000 has now left Ogren Properties and Millwood to address costs that were not contracted for by either of those parties and which provided minimal, if any, benefit to them. I seriously question the legal validity of the position the City is apparently taking if it believes that it can block a conveyance of the Millwood parcel or deny the issuance of a building permit based upon five year old invoices that were not communicated to Millwood or Ogren until the last few months. If Millwood was deemed to owe the City, the City could and should have demanded payment BEFORE the City permitted the acquisition by Millwood, not almost four years later. While it is the preference of Millwood (and Ogren) to see whether this situation can be resolved in a reasonable and timely manner, the handling of this entire situation by the City is very disturbing. If this situation were to cause the Millwood sale to be lost, the stakes would also rise to a much higher level. The City demand for payment apparently consists of three components. One component ($359.20) refers to "interest," but no specifics are provided with regard to that item. In the absence of any documentation, we are in no position to respond to that item. The second category of expenses relates to Northwest Associated Consultants ("NAC"). With regard to that firm's invoices, it is useful to focus on the time frames involved. MDC Albertville, LLC (the Mooney entity) and Millwood Development closed on the acquisition of the Albertville properties on December 4, 2000. Development of the Mooney site occurred in 2001. In reviewing the NAC invoices, I noted that for the period from July 1999 through November 1999, all invoices refer to "Al Nations-Gas Station." There are many references to Mr. Nations and his proposed development. There are no references to "Mooney Addition," "Mooney Development," or to Mr. Mooney until January 2001. In terms of timing, this corresponds closely with the Couri billings, which first refer to substantive work on "Mooney Development" in November 1999. In fact, the only time billed by Mr. Couri to "Mooney Development" prior to November 1999 was $27.50 for a brief telephone conference on July 29, 1999. It certainly appears that the City spent considerable time and effort ($2,842.40 by my calculation) working with a prior developer before December 1999. However, I have difficulty conceiving of any basis for the City's demand that Ogren or Millwood pay with regard to the planning work through November 1999. Based upon our calculations, $1,783.49 of the City's costs related to NAC were incurred after November 1999 (when Mr. Couri began to bill his work to Mooney) and Millwood would be prepared to pay those costs if we can get this issue resolved at this time. MPLS-Word 67247.2 Mr. Larry Kruse September 16, 2004 Page 3 The third element relates to the City Attorney billings. It would certainly have been appropriate for the City to have required that the payment be made by MDC Albertville in 2000, since the Mooney Development entity received substantially all of the benefit from the work by Mr. Couri's firm. However, it is our understanding that the entity no longer has any assets or ability to pay. In an effort to get this matter resolved, Millwood would be prepared to pay the $3,850.00 owing to Mr. Couri's law firm to bring his firm current on the billings regarding this site. Please accept this letter as a proposal on behalf of Millwood to pay $5,633.49 in full and complete discharge of these costs. (Frankly, I consider this offer to be at the extreme high end of what might be justifiable under these circumstances). If we can reach agreement on these terms, I can have a payment delivered to the City within a couple of business days. I will also deliver a short Confirmation form that will evidence the acceptance by the City of the payment in full discharge of the outstanding costs with regard to both the Millwood and Ogren parcels. Please let me know whether the payments should be directed to the City or separately to Northwest Associated Consultants and the Couri law firm. In consideration of the resolution of this matter, we also request that the City acknowledge that no obligations remain unfulfilled pursuant to the Conditional Use /Developer's Agreement dated December 4, 2000, with regard to the development of the gas station site and that the Development Agreement be released of record. Presumably, the City will negotiate a new Development Agreement with the purchaser of the Millwood site concerning that purchaser's anticipated development of that site. I have enclosed a copy of Conditional Use / Developer's Agreement for your reference. I believe that you will acknowledge that the document has not ongoing utility with regard to the gas station site. It is very important that we get these matters resolved at this time to avoid disruption of the pending sale and development of the Millwood property. If you have any questions concerning this proposal, please contact the undersigned as soon as possible. Thank you for your prompt consideration. Ve ruly ours, David M. Cremons DMCajm Attachments cc: Mr. Mike Couri, City Attorney -via facsimile and U.S. mail - 763.497.2599 Mr. Daniel E. Freier, Millwood Development - via e-mail - dfreier@pchi.net Mr. Paul. Muilenberg, Ogren Properties -via facsimile - 651.439.1051 MPLS-Word 67247.2