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HomeMy WebLinkAbout2016-105 Council ResolutionCITY OF LINO LAKES RESOLUTION NO. 16-105 APPROVING FIRST AMENDMENT TO PUBLIC IMPROVEMENT SURETY AGREEMENT NORTHPOINTE 4TH ADDITION WHEREAS, the City Council adopted Resolution No. 16-70, on July 11, 2016, approving the Public Improvement Surety Agreement for NorthPointe 4th Addition; and WHEREAS, the Agreement requires financial security of $1,080,904 to be escrowed with the Escrow Agent, that amount being 125% of the estimated cost of improvements ($864,723); and WHEREAS, the Amendment to the Surety Agreement requires the Bank, Escrow Agent and City approve the work completed prior to disbursal of funds; and NOW, THEREFORE BE IT RESOLVED that the City Council of the City of Lino Lakes hereby approves the First Amendment to Public Improvement Surety Agreement attached hereto. Adopted by the Council of the City of Lino Lakes this 12th day of September, 2016. The motion for the adoption of the foregoing resolution was introduced by Council Member Kusterman and was duly seconded by Council Member Manthey and upon vote being taken thereon, the following voted in favor thereof: Kusterman, Manthey, Maher, Rafferty, Reinert The following voted against same: none ATTEST: u is e Bartell, City Clerk CITY COUNCIL AGENDA ITEM 1F STAFF ORIGINATOR: Diane Hankee MEETING DATE: September 12, 2016 TOPIC: Consider Resolution No. 16-105, Approving Amendment to Public Improvement Surety Agreement, NorthPointe 4th Addition VO 1E REQUIRED: 3/5 INTRODUCTION Staff is requesting council approval of the First Amendment to the NorthPointe 4th Addition Surety Agreement. BACKGROUND As part of the Development Agreement, the City Council approved a Surety Agreement for NorthPointe 4th Addition by Resolution No. 16-70 on July 11, 2016. The Surety Agreement in the amount of $1,080,904 provides financial security for 125% of the estimated cost of improvements which is deposited with the Escrow Agent. The Bank has requested an amendment to the Surety Agreement requiring that they also approve the work completed prior to disbursal. RECOMMENDATION Staff recommends adoption of Resolution No. 16-105. ATTACHMENTS 1. Resolution No. 16-105 AMENDMENT TO PUBLIC IMPROVEMENT SURETY AGREEMENT NorthPointe 4th Addition THIS AMENDMENT is entered into on September , 2016, by Registered Abstractors, Inc., a Minnesota corporation ("Escrow Agent"), City of Lino Lakes ("City"), Tony Emmerich Construction, Inc., a Minnesota corporation ("Developer"), Parties to the Public Improvement Surety Agreement ("Surety Agreement") which is attached as Exhibit A ("Agreement") and referenced in the Development Agreement & Planned Unit Development Agreement for NorthPointe 4th Addition dated August 10th, 2016 ("PUD Agreement"), and Northeast Bank, a Minnesota corporation ("Bank"). RECITALS WHEREAS, the PUD Agreement requires the payment of financial security of $1,080,904.00, in cash, to be deposited with Escrow Agent and a Letter of Credit posted with the City in the amount of $83,970.00; and WHEREAS, the Bank has required that the Surety Agreement be further amended to provide that the cash which is being deposited with Escrow Agent is a loan from the Bank to the Developer/Borrower, and said cash shall be deposited in an account held at the Bank in the name of the Escrow Agent under certain terms and conditions acceptable to the Bank, and said Surety Agreement shall further include restrictions on draws or the release of funds from said escrow account by all Parties including the Bank. NOW, THEREFORE, in consideration of the foregoing recitals and other good and valuable consideration, it is agreed between the Parties as follows: 1. Paragraph 1 of the Surety Agreement shall be further modified by adding the following sentence: "1. The deposit of funds in the amount of $1,080,904.00 represents the loan fund which the Developer/Borrower has secured from the Bank (hereinafter "Loan Funds"). The Loan Funds shall be deposited in an Escrow Account at the Bank ("Escrow Account") and held in the name of the Escrow Agent. Escrow Agent acknowledges that the Escrow Account shall be utilized only for draws for improvements undertaken and completed pursuant to the Surety Agreement, Development Agreement, and Loan Agreement between Borrower and Developer. In no event shall Escrow Agent be allowed to comingle any Funds or withdraw any Funds from said Escrow Account for any use other than reimbursement for the costs of improvements defined in the PUD Agreement. The Letter of Credit shall be for a one (1) year period and automatically renewed for successive one (1) year periods." 2. Restrictions on Withdrawal of Funds from Escrow Account. Regardless of any provision to the contrary within the Public Improvement Surety Agreement, no Funds shall be released from the Escrow Account to the Escrow Agent for disbursement unless the same is approved by both the City and the Bank. 3. Paragraph 3 of the Surety Agreement shall be revised to provide that all items identified under said paragraph 3 shall be furnished to the City and to the Bank and must be approved by both the City and the Bank prior to any further distribution of any Escrow Funds by Escrow Agent. Paragraph 3 shall be further revised by adding the following: "If requested by Bank or Escrow Agent, Borrower shall also furnish to Bank and Escrow Agent a copy of each contract with each of the Contractors. Borrower shall keep the Escrow Agent and Bank advised at all times of the names of all Contractors, and of the type of work, material or services and of the dollar amount covered by each of their respective contracts with Borrower. It is understood that only Contractors whose names, contract descriptions and, after a request therefor, contracts have been furnished to Bank and Escrow Agent shall be entitled to receive disbursements under this Agreement. Borrower may obtain advances for disbursement to contractors only to the extent of the amount currently due to each Contractor for work satisfactorily completed or materials actually incorporated into the Project by such Contractor, less any retainage permitted to be withheld pursuant to such Contractor's contract, and Borrower agrees that all sums requested hereunder for disbursement to each Contractor shall not exceed that amount. Escrow Agent shall not be required to make the final advance for the payment of the full amount of each Contractor's contract until the Bank and City are satisfied that all of the work covered by such contract has been completed in accordance with the approved Plans, and all requirements set forth in the Loan Agreement and Development Agreement have been fully complied with, including, with respect to the General Contractor, the requirements to evidence Completion of the Improvements. The Escrow Agent shall perform a search of the appropriate records and, within five (5) Business Days after receiving the foregoing items, shall give Bank notice by telephone if any intervening liens are disclosed (other than those expressly listed in the Title Policy or subsequent amendments thereto previously given to Bank). If any such intervening liens or other matters, which in Bank's and City's judgment jeopardize its security interest in the Project, are disclosed, the Escrow Agent shall refrain from making further disbursements until Bank and the City notify the Escrow Agent that such intervening liens or other matters have been waived by Bank and City or satisfied. Upon demand of Bank and/or City, Borrower shall immediately cause any such liens or other matters to be satisfied of record or bonded, or shall make other arrangements with respect to the discharge thereof satisfactory to Bank and City." 2 4. Paragraph 6 of the Surety Agreement shall be revised to provide that items listed under paragraph 6 shall also be provided to and approved by the Bank prior to any disbursements of funds. 5. Paragraph 7 of the Surety Agreement shall be revised to provide that all notifications shall be delivered to both the City and the Bank in writing and all notifications regarding document approval shall be provided to both the City and the Bank. If Borrower fails to deliver documents or provide any missing documents, the Escrow Agent shall provide notice to both the City and the Bank. Any documents supplied or requested by Escrow Agent shall be provided to both the City and the Bank to the City's and Bank's full satisfaction. 6. Paragraph 9 of the Surety Agreement shall be revised to provide that the City, Bank and Developer have the right to examine the books and records of the Escrow Agent and the Escrow Agent shall notify both the City and the Bank when the fund balance is less than $25,000.00. 7. Paragraph 11 of the Surety Agreement shall be revised to provide that the Escrow Agent, City and Bank do not ensure that the building or construction will be completed or when completed will be pursuant to the Plans and Specifications. 8. Paragraph 14 of the Surety Agreement shall be revised to provide any future amendment to the Surety Agreement shall only be approved by all Parties to this Agreement including, but not limited to, the Bank. 9. Paragraph 16 of the Surety Agreement shall be revised to provide that Escrow Agent shall provide financial statements to both the City and the Bank. 10. Paragraph 21 of the Surety Agreement shall be revised to provide that in the event the City has declared a default under the Development Contract/Planned Unit Development Agreement, this Agreement shall not terminate and all funds held in the Escrow Account shall remain held in said Escrow Account pending agreement between the City and the Bank as to the application of any funds held in Escrow and, in the event the Parties cannot agree to the same to a court of competent jurisdiction in connection with allocation of the funds. 11. Paragraph 23 of the Surety Agreement shall be deleted in its entirety and replaced with the following: "All remaining funds, after completion of all work as provided in this Agreement, shall be returned to Bank and disbursed by the Bank pursuant to the terms and conditions of the Loan Agreement by and between Bank and Borrower dated August , 2016. All remaining funds held pursuant to this Agreement shall be disbursed to the Bank as soon as reasonably possible after review and approval by the City of all terms and conditions of this Agreement." 3 12. Except as revised herein, all other terms and conditions of the Surety Agreement shall remain unchanged. ESCROW AGENT: Registered Abstractors, Inc., a Minnesota corporation By Its: CITY: City of Lino Lakes By: Jeff Reinert, Mayor ATTEST: By: Julianne Bartell, City Clerk DEVELOPER: Tony Emmerich Construction, Inc., a Minnesota corporation By: Baleen K. Roberts Its: President BANK: Northeast Bank, a Minnesota corporation By: Larry G. Crane Its: Market President 4 STATE OF MINNESOTA COUNTY OF ) ) ) ss. The foregoing instrument was acknowledged before me this day of August, 2016, by , the of Registered Abstractors, Inc., a Minnesota corporation, on behalf of the corporation. STATE OF MINNESOTA ) ) SS ) COUNTY OF ANOKA Notary Public This instrument was acknowledged before me on day of , 2016, by Jeff Reinert as Mayor of the City of Lino Lakes on behalf of said City. STATE OF MINNESOTA ) ) SS ) COUNTY OF ANOKA Notary Public This instrument was acknowledged before me on day of , 2016 by Julianne Bartell as City Clerk of the City of Lino Lakes on behalf of said City. Notary Public STATE OF MINNESOTA ) ) ss. COUNTY OF ) The foregoing instrument was acknowledged before me this day of August, 2016, by Baleen K. Roberts, the President of Tony Emmerich Construction, Inc., a Minnesota corporation, on behalf of the corporation. Notary Public 5 STATE OF MINNESOTA ) ) ss. COUNTY OF ) The foregoing instrument was acknowledged before me this day of August, 2016, by Larry G. Crane, the Market President of Northeast Bank, a Minnesota corporation, on behalf of the corporation. 690074-v3 6 Notary Public EXHIBIT A Public Improvement Surety Agreement PUBLIC IMPROVEMENT SURETY AGREEMENT NorthPointe 4th Addition THIS AGREEMENT is entered into on , 2016, by (hereinafter "Escrow Agent"), City of Lino Lakes (hereinafter "City"), and Tony Emmerich Construction, Inc. (hereinafter "Developer"). RECITALS WHEREAS, City and Developer have entered into a Development Contract and Planned Unit Development Agreement dated pursuant to which Developer has agreed to deposit certain funds as identified in Paragraph 2 below in escrow in lieu of a letter of credit; and WHEREAS, Developer agrees to privately construct improvements serving NorthPointe 4th Addition, legally described on Attachment A. The Final Plat is attached hereto as Attachment B; and WHEREAS, City and Developer desire that Escrow Agent disburse the advances and Escrow Agent is willing to do so on the terms and conditions hereinafter set forth yet not providing any title or mechanic lien clearance services; and WHEREAS, capitalized terms used, and not otherwise defined herein, shall have the meanings set forth in the Development Contract & Planned Unit Development Agreement; and NOW THEREFORE, in consideration of the foregoing recitals and other good and valuable consideration, it is agreed between the parties as follows: 1. Developer will deposit escrowed funds in the amount of $1,080,904.00 with Escrow Agent. 2. The Escrow Agent is authorized and directed to disburse the funds deposited hereunder to Developer to pay the costs of construction of the identified improvements (See Attachment C) to be constructed on the described real property as such property is identified in the Development Contract & Planned Unit Development Agreement. The number of permissible draws and the fees to be charged therefore is as is set forth herein. 3. Prior to each disbursement of funds by the Escrow Agent to the Developer, the City and Escrow Agent must be furnished with the following items: 1 a. Sworn Construction Statement, setting forth all contractors and material suppliers with whom the Developer has contracted, the amounts of each contract, the amounts paid -to -date, the amounts being requested, and the balances due. b. The draw request by the Developer for the requested disbursement. c. Written Approval by the City of the disbursement request, which approval shall (i) not be unreasonably withheld or delayed, and (ii) be provided within ten (10) business days following the date submitted by the Escrow Agent [in accordance with Paragraph 7 below] with confirmation from the Escrow Agent that Developer has provided all of the items required to be submitted under this Paragraph 3. Failure by the City to respond to such request within such 10 business day approval period shall automatically be deemed to be City's approval to same. Escrow Agent may communicate with City electronically relative to these requests. d. Full or partial, up-to-date lien waivers; plus affidavits supporting lien waivers and releases of lien if necessary, in a form satisfactory to Escrow Agent and City. e. A list showing each Contractor/Vendor to be paid from the current Draw Request, the amount of payment, and the category of cost as shown on the Sworn Construction Statement for which such payment are to be made. f. Such other supporting evidence as may be reasonably requested by the City or Escrow Agent to substantiate all payments that are to be made out of the relevant Draw Request and/or to substantiate all payments, then made with respect to the Project. 4. Escrow Agent's charges for all of the escrow services to be provided for pursuant to this Agreement are $150.00 per draw. 5. No draw requests shall be made by Developer while another is pending or in the event the City has declared default under the Development Contract & Planned Unit Development Agreement. 6. At the time of submission of the final Draw Request, which shall not be submitted before completion of the Project, including all landscape requirements, Developer shall submit to City and Escrow Agent, in addition to the requirements listed in Paragraph 3 above the following: a. A written lien waiver from all Contractors for work done and materials furnished for the Project. b. Such other supporting evidence as may be reasonably requested by the City or Escrow Agent to substantiate all payments, which are to be made out of the final Draw Request and/or to substantiate all payments, then made with respect to the Project. c. Satisfactory evidence that all work requiring inspection by Governmental Authorities having jurisdiction, including the City, has been duly inspected and approved by such authorities and that all requisite certificates of occupancy, if applicable, and other approvals have been issued. d. Final Sworn Construction Statement. e. The Developer's general contractor shall submit a 2 year warranty bond, in a form satisfactory to the City Attorney, from the date of Project acceptance and all required IC -134 documents. 7. Not later than five business days following receipt of the documents delivered to it pursuant to the above paragraphs, the Escrow Agent will notify in writing the City as to whether the delivered documents are satisfactory to it. If documents are missing, the Escrow Agent will advise City and Developer. If the documents are supplied to the satisfaction of the City and Escrow Agent, Escrow Agent will within 3 business days transmit to the Developer the amount applied for in the relevant draw request. 8. Developer will pay parties identified in the relevant draw request, the amounts shown therein. Payment will only be made upon receipt of signed lien waivers for the amount requested. 9. The Escrow Agent will keep and maintain books and records in sufficient detail to reflect the disbursements made by it hereunder. City and Developer may, during normal business hours, examine the books and records of Escrow Agent pertaining to the disbursements made by it hereunder. The Escrow Agent shall notify the City and Developer when fund balance is less than $25,000. 10. No liability is assumed by Escrow Agent or City to the Developer or contractors as regards protection against mechanic's lien or title claims. 11. Functions and duties assumed by the Escrow Agent include only those described in this Agreement, and the Escrow Agent is not obligated to act except in accordance with the terms and conditions of this Agreement. Escrow Agent does not insure that the building or construction will be completed, or that the building when completed will be in accordance with the plans and specifications, or that sufficient funds will be available for completion. The funds placed in escrow shall be maintained in a non-interest bearing account 3 ,,,.- 12. Escrow Agent acknowledges receipt of escrowed funds upon execution of this document. 13. This Agreement shall be binding upon the parties hereto and their respective successors and assigns. 14. This Agreement can be amended or modified only by a written Amendment, written and signed by all of the parties hereto. 15. Escrow Agent shall place all received funds in a FDIC insured account. 16. Prior to the execution of this Agreement, the Escrow Agent shall submit financial statements to the City Attorney for review and approval. 17. If directed by the City in its reasonable business judgment, the Developer shall submit additional security to address change orders or unanticipated Project costs which costs will be reasonably agreed upon by the City and Developer. 18. The parties hereto, agree that each party's legal cost incurred to draft and / or negotiate this Agreement on behalf of such party shall be the sole responsibility of the party incurring same. `-' 19. Time is of the essence as to each provision of this Agreement. 20. All notices required or permitted under this Agreement shall be (i) delivered to the addresses set forth below, and (ii) mailed, delivered or transmitted by one party to the other(s) and such notice shall be deemed given and effective: upon receipt if personally delivered; upon receipt if sent by telecopy or electronic mail; upon receipt or upon the date of first attempted delivery, if sent by certified or registered mail with postage prepaid, return receipt requested, or if sent by Federal Express or other nationally recognized carrier service; or upon receipt if sent in any other way. Any party hereto may from time to time, by written notice to the other parties, designate a different address which shall be substituted for the one specified below. 21. In the event the City declares default under the Development Contract & Planned Unit Development Agreement this Escrow agreement shall terminate and all funds held in escrow shall be remitted to the City for application to obligations specified under the Development Contract & Planned Unit Development Agreement Escrow Agent: `.. City: Developer: City of Lino Lakes Attn: Michael Grochala 600 Town Center Parkway Lino Lakes, Minnesota 55014 Tony Emmerich Construction, Inc. Attn: Baleen K. Roberts, President 4920 173rd Avenue NE Ham Lake, Minnesota 55304 22. This Agreement may be executed in any number of counterparts, each of which shall be an original but all of which shall constitute one and the same instrument. The delivery of an executed counterpart of this Agreement by facsimile or PDF or similar attachment to an email in accordance with Paragraph 21 above shall constitute effective delivery of such counterpart for all purposes with the same force and effect as the delivery of an original, executed counterpart. 23. All remaining funds, following City review and approval, shall be sent to the Developer in a timely manner. 5 ESCROW AGENT Escrow Agent STATE OF MINNESOTA ) ss. COUNTY OF ANOKA On this day of , 2016, before me, a Notary Public within and for said County, personally appeared (Escrow Agent), who executed the foregoing instrument. Notary Public DEVELOPER CITY OF LINO LAKES By By Baleen K. Roberts, President Mayor Its Tony Emmerich Construction, Inc. STATE OF MINNESOTA ) ss. COUNTY OF ANOKA ) ATTEST: By City Clerk On this day of , 2016, before me, a Notary Public within and for said County, personally appeared (Mayor) and (City Clerk), to me known to be respectively the Mayor and Clerk of the City of Lino Lakes, and who executed the foregoing instrument and acknowledge that they executed the same on behalf of said City. Notary Public STATE OF MINNESOTA ) ) ss. COUNTY OF ANOKA ) On this day of , 2016, before me, a Notary Public within and for said County, personally appeared (Developer), who executed the foregoing instrument. Notary Public This instrument was drafted by: City of Lino Lakes 600 Town Center Parkway Lino Lakes, Minnesota 55014 7