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HomeMy WebLinkAbout#04 - WAC AmendmentSTAFF REPORT DATE: October 11, 2022 DISCUSSION AGENDA ITEM: First Amendment to WAC Prepayment Agreement TO: Mayor and City Council SUBMITTED BY: Kristina Handt, City Administrator BACKGROUND: In 2014 the City entered into a WAC Prepayment Agreement with EN Properties LLC. A copy is included in your packet. The annual $50,000 payments were made in years 2015-2021. In July 2022, Terry Emerson, representing EN Properties LLC, sent a letter to the city requesting “that the city suspend or cancel current and future prepaid WAC payments” A copy is included in your packet. ISSUE BEFORE COUNCIL: Should the Council amend the Prepayment WAC Agreement with EN Properties? PROPOSAL DETAILS/ANALYSIS: At the request of the Mayor, the City Attorney updated the proposed amendment with the following language: In the event that there remain unused WAC units attributable to the Property, Owner may make a written request to the City for a refund of the unused WAC units. The City shall refund the amount paid by Owner for the unused WAC units to Owner within 30 days of Owner making the request to the City. Unused WAC units will be refunded to Owner by City at the rate of $3,000.00/unit, not to exceed 116 WAC or $348,000.00. A copy of the proposed First Amendment is included in your packet. FISCAL IMPACT: Depending upon direction, city may refund $2,000-$350,000 to the developer. OPTIONS: Provide direction to staff on how to proceed. If the Council wishes to approve the first amendment, staff would suggest a requirement that it is signed by the property owner prior to being placed on a council agenda for final adoption. ATTACHMENT: • Prepayment WAC Agreement • July 12, 2022 Letter from EN Properties, LLC • Proposed First Amendment DOCSOPEN-LA515-1-812530.v4-8/9/22 FIRST AMENDMENT TO WAC PREPAYMENT AGREEMENT THIS FIRST AMENDMENT TO WAC PREPAYMENT AGREEMENT is made and entered into as of ________, 2022 by and between the City of Lake Elmo, Minnesota, a municipal corporation and political subdivision under the laws of the State of Minnesota (“City”) and EN Properties LLC., a Minnesota limited liability company (“Owner”): RECITALS A. The City and Owner entered into an Agreement dated June 3, 2014, where Owner would provide advance payment and security for a specified number of water availability charges (“WAC”) to the City (the “Agreement”). B. The Agreement called for Owner to pay for 166 WAC in the total amount of $500,000.00 over the course of ten years at a rate of $50,000 per year. C. As of the date herein, Owner has paid a total of $350,000.00 toward WAC which entitles owner to credit for 116 WAC with $2,000.00 remaining. D. Owner wishes to terminate payments under the Agreement, retain credit for 116 WAC, and receive payment from the City for the $2,000.00. NOW THEREFORE, in consideration of the mutual promises and covenants contained in this First Amendment, the City and Owner agree as follows: 1. Paragraph 1 of the Agreement is deleted and replaced with the following: SUMMARY OF SECURITY REQUIREMENTS. Owner shall pay for 116 WAC units in the total amount of $348,000.00 in connection with the placement of a municipal water services to The Terminus. To secure in advance, payment of these WAC units totaling $348,000.00, Owner shall post and maintain, until full payment has been received by the City, an irrevocable letter of credit in a form satisfactory to the City in an amount not less than $500,000.00 to secure payment. The letter of credit may be drawn upon by the City if, within one (1) year of the date of this agreement, the Owner has not paid to the City a minimum of $50,000.00 and paid $50,000.00 per year thereafter until $348,000.00 has been paid to the City. The payment shall be due July 1st of each year. Actual payments (because of development) for WAC fees will be deducted from the fees otherwise owed annually if WAC fees are more than the minimum amount owed of $50,000.00 per year, a credit will be issued for the following year or years. 2. The City agrees to release 100% of the Security upon execution of this First Amendment. 3. The City will credit 116 WAC to Owner to be credited to any WAC owed for the Property upon development of the Property. The City will pay to Owner $2,000 in overpayment DOCSOPEN-LA515-1-812530.v4-8/9/22 for 116 WAC. In the event that there remain unused WAC units attributable to the Property, Owner may make a written request to the City for a refund of the unused WAC units. The City shall refund the amount paid by Owner for the unused WAC units to Owner within 30 days of Owner making the request to the City. Unused WAC units will be refunded to Owner by City at the rate of $3,000.00/unit, not to exceed 116 WAC or $348,000.00. 4. The remaining terms of the Agreement remain in effect. EN PROPERTIES, LLC a Minnesota limited liability company By __________________________ Its __________________________ CITY OF LAKE ELMO, MINNESOTA By ________________________________ Charles Cadenhead, Mayor By_________________________________ Julie Johnson, City Clerk By __________________________ Its ___________________________