2007-02-20 LOC Request Denial
JOHNSON, LARSON, PETERSON & MATT, P.A.
A"lTORNf;YS AT LAw
!J1Nl COMMERCIAL DRtvE
BtJ'FFALO, MINNESOTA 55313
Tl!:litrOOIfE: (763) 'R2.4S50 - FAX: (763) 682-44CiS - '1'01.1, fREE: (866) (082.4550
WEB: l\'WW.jlllmla",.cnm
JAN C. LA'RSON1'
JOHN T. PETERSONt
ClNDl S. MA TT*
MICHAEL C. HALVORSON
0.- COUNSEL
THOMAS W. RICHARDS.
THOMAS W. SPENCE
t Reul Prope,.,)' Law Specklltsl
Certqiefl by Minnesota $/Dte Bu Association
... Qualified Neutral
WA VERL \I OFFICE
By Appointment Only
WALTER S. JOHNSON
1912-2002
FACSIMILE MESSAGE
DATE:
2/20/07
rHIS MESSAGE IS FOR THE ATTENTION OF: Bridget Miller/City Clerk
FAX NUMBER OF RECIPIENT:
763-497-3210
THIS MESSAGE IS FROM:
Cindi S. Matt. ESQ.
THIS MESSAGE INCLUDES THIS COVER SHEET AND j'ADDITIONAL PAGES.
IF YOU RECENE LESS THAN TIllS, PLEASE CONTACT US AT: (763) 682-4550
MESSAGE:
RE: Prairie Run - Letters of Credit
CONFIDENTIALITY NOTICE: The document(s) accompanying this fax contain confidential
information which is legally privileged. Tbe information is intended only for the use of the intended
recipient named above. If you are not the intended recipient, you are hereby notified that any
disclosure, copying, distribution, or tllc taking of any action in reliance OR the contents of this telecopied
information except its direct delivery to the intended recipient named above is strictly prohibited. If
you havc received this fax in error, please notify U5 immediately by telephonc to arrange for thc return
ofthe original documcnts to us.
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JOHNSON, LARSON, PETERSON & MATT, P.A.
A'ITORNEYS AT LAw
908 COMMt'RCIAL DRIVE
BUI'FA'_O, MINNESOTA 55313
nl..C"HONr;: (763) 6824550 - VAX: (763) 6824465 - TOI..L FREE~ (866) 61.42.4550
Wl';B: www,jJamlaw.t:nm
JAN c. LARSONt
JOHN T. PETERSONt
CTND15. MATT'"
MICltAEL G. HALVORSON
OF COUNSEl.
THOMAS W. RTCHARDS*
THOMAS W. SPENCE
l' Real P'qperfy lAW Spddlflist
Certi~d hp Minnesota SIiIt41/ku Aswdation
" Qu.alifld /Veulrdl
WAVERT.VOFFICE
By Appointment Oaly
WALTER S. JOHNSON
1912-2002
February 20,2007
Bridget Miller
Albertville City Clerk
5975 Main Avenue N.E.
P,O. Box 9
AlbertVille, MN 55301
VL4 FACSIMILE AND U.S. MAIL
763-497-3210
Re: Prairie RWl - Letters of Credit
Dear Ms. Miller:
1 represent Gold Key Development, Inc. I am writing this letter in response to your
Febrllal-y 16, 2007 letter to Ms, Julie Revak, regarding the City's denial of Gold Key
Development, Inc,'s request for a reduction in the Letters of Credit on the Prairie Run project. I
am copying Attorney Jason Kuboushek on this letter because of my ethical obJigation regarding
commwlication with parties that are l-epresented by counsel. Based upon the fact that you sent a
Jetter directly to Gold Key, it appears the City is not represented by counsel as to this issue. If
you are represented by counsel as to this issue, please have your attom.ey contact me regarding
the same. Otherwise, I trust that the City will handle this issue itself in an expedient manner.
As you are aware, by letter dated January 19, 2007, Julie Reval( requested that the City
reduce certain Letters of Credit of Gold Key Development, Inc.' s relating to Prairie Run, on the
basis that the projects were 90% complete, and the terms of the various Letters of Credit have
been fulfilled. It is my understanding that City Attorney Michael Couri recommended that the
City Council reduce the Letters of Credit for Prairie Run Addition at the February 5, 2007 City
Council meeting. However, at the February 5, 2007 meeting, the City Council apparently
lln::lnimously denied the City Attorney's recommendation to reduce the Letters of Credit of
Prairie Run, apparently because of the current litigation involving the City and Gold Key
Development, Inc.
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February 20, 2007
Page 2
For your convenience I am attaching hereto a copy of the following docwnents:
1. Julie Revak's January 19,2007 request that the Letters of Credit be reduced;
2. Irrevocable Letter of Credit 2601 001 dated August 6, 2004;
3. Irrevocable Letter of Credit No. 2601 002 dated August 6, 2004;
4. Irrevocable Letter of Credit No. 2061 003 dated August 6, 2004;
5. Pertinent portions of the Development Agreement regarding the Letters of Credit;
6. Portion of the February 5, 2007 City Council Minutes indicating City Attorney
Couri's recommendation to reduce the Letter of Credit and the City's denial of the
City Attorney's recommendation; and
7. The February 16, 2007 letter from the City of Albertville denying the request to
reduce Letters of Credit based on the "current defaults of the Developer as have been
communicated to the Developer in a previous Notice of Default."
The City's refusal to reduce the Letters of Credit, based upon the "current default of the
Developer, as have been communicated to the Developer in a previous Notice of Default." is
without legal justification and clearly violates the terms of the three Letters of Credit and the
Development Agreement. The City's refusal to reduce the Letters of Credit are causing damages
to Gold Key Development, mc. in the fonn of additional fees on the Letters of Credit and
attorneys fees and expenses associated with clearing up this issue, as well as negatively
impacting Gold Key's ability to obtain financing for other projects and expenses.
Each Letter of Credit provides for a mechanism for a reduction, based upon the terms of
the Development Agreement and the level of completion of the project. Gold Key has complied
with the terms of the Letters and Development Agreement as they relate to the reduction and it is
entitled to all immediate reduction of the same, as recommended by the City's Attorney, Michael
Cour\.
Letter of Credit No. 260 I 001, at page 2, provides "This Irrevocable Letter of Credit may
be reduced by 50% of the amount of special assessments paid on any lot in Prairie Run pursuant
to the Surety Release provisions set out in Section 6 of the City of Albertville Plaruled Unit
Development Agreement Prairie Run. The reduction per lot is listed on Exhibit A. Each
drawing hereunder shalll.educe by the amount of such drawing the amount available under this
Letter of Credit."
Letter of Credit No. 2601 002 provides "This Irrevocable Letter of Credit may be reduced
by the cost of the on and off-site improvements completed and paid for by the Developer
pursuant to the Surety Release provisions set out in Section 6 of the City of Albertville Planned
Unit Development Agreement Prairie Run. Each drawing hereunder shall reduce by the amount
of such drawing the amount available under this Letter of Credit."
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February 20, 2007
Page 3
Letter of Credit No. 2601 003 provides "This Irrevocable Letter of Credit may be reduced
by 150% of the cost of completed landscaping/screening materials pursuant to the Surety Release
provisions set out in Section 6 of the City of Albertville Planned Unit Development Agreement
Prairie Run, except that in no even shall the letter of credit be reduced below $9,700.00 (25% of
the estimated landscaping costs) for two years from the time of the installation of landscaping
materials. Each drawing hereunder shall reduce by the amount of such drawing the amount
available under this Letter of Credit."
These tree items (municipal improvements, site improvements and landscaping plans)
have "been substantially completed and reduction in the Letters of Credit is required. Nothing in
the Surety Release provisions of the Development Agreement, or the Letters of Credit
themselves, allow the City to refuse to reduce the Letter of Credit based upon the other defaults
alleged by the City in the current litigation. The City's refusal to reduce the Letters of Credit is a
breach of contract and is, in my opinion, done in bad faith because Gold Key Development, Inc.
has initiated legal action against the City. To the extent the Gold Key Development, Inc. suffers
damages, both out of pocket and consequential, as a result of the City's inappropriate refusal to
reduce the Letters of Credit, Gold Key does intend to seek reimbursement of the same (including
attorneys fees and costs), either in the present litigation (by way of an Amended Complaint), or
in a separate lawsuit.
1 respectfully request that the City reconsider its refusal to reduce the Letter of Credit at
the next City Council meeting. In the event the City refuses to reduce the Letter of Credit, Gold
Key Development, Inc. will start appropriate legal action to get the reduction that Gold Key is
entitled to in these Letters of Credit~ and for its damages based upon the City's actions.
Please let me know if you have questions or concerns. Thank you.
;=~SI'J-b3t<J-
Cindi S. Matt
CSMljal
enclosures
cc: Dean Johnson (wlenclosures)
Jason Kuboushek, Esq. (wlenclosures)
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