08-22-2001 Council Agenda - Laserfiche WebLink

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♦ The minimum market value of this project will be set at $948,800 versus $695,663 from the RAB project. (Please note that the draft agreement shows a minimum value of $1,075,000 which is in error.) ♦ This project when combined with the first phase of the RAB development appears to cash flow for the duration of our debt service. While there are not many changes to be made to put the agreement in final form, there are three issues of major importance yet to be resolved. They are as follows: ♦ The first deals with the reimbursement the developers will be responsible for associated with the value of improvements RAB, LLC made to our phase two property. If we are able to negotiate a settlement with RAB, LLC relative to our termination of RAB's interests in the phase two property, it is likely we could reimburse RAB for the value of improvements he made to the property that have benefit to a subsequent developer. These costs could include grading, water service, sanitary sewer service, storm drainage, and base for parking areas. You will note in the developer's redraft of the Development Agreement they proposed to limit their exposure to $27,000 (page 13). I believe the number should be approximately twice that amount. The City Engineer is presently undertaking calculations to provide a more reasonable estimate. Based on their calculations I will be recommending we increase that value accordingly. It is also important to understand that in the event a court would award RAB a higher value than the amount set forth in this agreement, the City would be responsible for that amount. ♦ The second issue involves a notice of Lis Pendens filed on our property by Arnell Business Forms against RAB, LLC. The developer wants us to defend, indemnify, and hold them harmless against any and all claims by Arnell related to this matter. Attorneys for Arnell informed us they have settled this matter with Mr. Biagini and a release should be forthcoming prior to August 31" (this is subject to Mr. Biagini making the settlement payment to Arnell). If Mr. Biagini does not make the payment, this could involve additional legal work to secure the discharge. ♦ The last concern is the expansion of developer's remedies against the City for default associated with paragraph 7 and 13 of this Agreement (see default provisions in paragraph 18 on page 9). While I can appreciate the developer's concerns of ensuring they are ultimately granted title of this property, I believe we should provide limitations on their remedies due to the uncertainties involved in this transaction. While I believe we will be able to gain clear title to this property without major exposure, that cannot be fully guaranteed given the unpredictability of judicial decisions. The developer had previously indicated his understanding of the risks associated with this property when it became available and I would expect them to share those risks. We will try to have better definition of this issue by Wednesday's meeting. Page 43