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Home My WebLink About#05 - Southwind LOC DATE: June 6, 2023 CONSENT TO: Mayor and City Council FROM: Kristina Handt, City Administrator AGENDA ITEM: Approve Draw on Southwind LLC’s Letter of Credit BACKGROUND: With each new plat that is approved, entering into a Development Agreement is a requirement of final plat approval. In order to ensure the public improvements are completed as detailed in the approved plans, the city also requires a letter of credit (LOC) from the developer. Our standard form requires the LOC to automatically renew each year unless notice is given 45 days ahead of time to the City that it will not be renewed. ISSUE FOR DISCUSSION: Should Council approve staff drawing on the Letter of Credit for Southwind? PROPOSAL DETAILS/ANALYSIS: On May 8, 2023 we received an email from Kyle Johnson representing First State Bank and Trust who issued the LOC for Larry Alm, developer of Southwind of Lake Elmo LLC that they would not be renewing the LOC when it expires July 17, 2023. In October 2022, the 2 year warranty inspection was completed on the landscaping. As detailed in the attached report from Stantec, two trees were to be replaced. HKGI did a reinspection in May following notice of the nonrenewal of the LOC and found these two trees had not been replaced and still failed to meet standards. The developer and bank were notified of the failed inspection and intent to draw on the LOC on May 18th. The only response has been from the bank asking how much. Staff would propose the city draw on the LOC in the amount of $5,000 to cover the cost of planting two new trees ($1,200), replenishing the negative escrow balance ($2,089.82) and to cover future billings from legal and landscaping related to these inspections and pulling of the LOC. FISCAL IMPACT: NA OPTIONS: 1) Authorize the City Clerk to draw on the Letter of Credit for Southwind of Lake Elmo, LLC in the amount of $5,000 2) Authorize the City Clerk to draw on the Letter of Credit for Southwind of Lake Elmo, LLC in a different amount 3) Do not authorize staff to draw on the Letter of Credit for Southwind of Lake Elmo, LLC RECOMMENDATION: If removed from the consent agenda: “Motion to authorize staff to draw $5,000 on the Letter of Credit for Southwind of Lake Elmo LLC” ATTACHMENTS: • Notice of Non Renewal from First State Bank and Trust • LOC, April 2019 • Landscape Inspection Report 10/4/22 • Landscape Inspection Report 5/17/23 8147 Globe Dr. Suite 205 Woodbury, MN 55125 Kyle Johnson (651) 756-7588 kyle@johnsonbealka.com VIA CERTIFIED MAIL May 8, 2023 City of Lake Elmo 3800 Laverne Avenue North Lake Elmo, Minnesota 55042 Attn: City Administrator Re: Southwind of Lake Elmo/Letter of Credit Notice of Non-Renewal My firm represents First State Bank and Trust (“Bank”). As you are aware, Bank issued, in favor of the City of Lake Elmo (“City”), a certain Irrevocable Letter of Credit, dated July 17, 2017, initially in the maximum amount of $591,521.70 (as the same has been amended and partially released from time to time, collectively, “Letter of Credit”). The Letter of Credit automatically renews for successive one-year terms unless, at least forty-five (45) days prior to July 17 of any year, Bank delivers notice to the City that it intends to cancel the Letter of Credit. Please accept this letter as formal notification to the City that the Bank is electing to cancel the Letter of Credit. The Letter of Credit currently has an outstanding maximum exposure of $70,326.00. The remaining Letter of Credit security relates only to landscaping work. The landscaping has been completed for several years and the final inspection last fall concluded that, with the exception of two (2) trees in dispute, the landscaping is acceptable. The two (2) year warranty period has expired. The two (2) trees in dispute are budding this spring. Should you have any questions or comments, do not hesitate to reach out. Also, please advise if I should direct this communication elsewhere. Sincerely, Johnson Bealka, PLLC By: _______________________________ Kyle Johnson, Attorney CC: Larry Alm, Southwind Builders (via email) Scott Faust, First State Bank and Trust (via email) Memo File: 227701130 To: Molly Just, City of Lake Elmo Planning Director From: Sarah Harding, Landscape Architect Mark Flicker, Landscape Architect Subject: Southwind 1st Addition Landscape Warranty 2-year Reinspection – October 4, 2022 Date: October 12, 2022 Attendees: Mark Flicker, Landscape Architect Landscape Inspection Summary: A walk through of the landscape conditions was completed for the 2-year reinspection of Southwind 1st Addition. Findings: • Trees had been replaced or trimmed per the developer provided plan document, on 9-30-2022 (as shown below) which differs from the recommendations noted in the 9-15-2022 inspection memo. • One (1) tree noted in the 9-15-2022 inspection memo to be replaced (on the south side of 5th Street) was determined to have been installed as part of the Hunter’s Crossing Development. This tree is the responsibility of City of Lake Elmo, not this Development. Acceptance 1-year Inspection 1-year Re-inspection 2-Year Inspection 2-Year Re-inspection Final Inspection Acceptance Southwind 9/1/2020 6/3/2021 9/28/2021 9/15/2022 10/04/2022 REPLACE REPLACE October 12, 2022 Molly Just Planning Director City of Lake Elmo Page 2 of 2 Recommendation: It is recommended that conditions of the 2-year reinspection of the landscape warranty for Southwind 1st Addition include: • Replacement of (2) trees as noted on the 9-30-2022 (attached above). These (2) trees had been trimmed, rather than being replaced as originally noted in previous inspections because their central leader was dead. By trimming rather than replacing these 2 trees, the overall tree health and form is not conducive for long term success, in a public right-of-way street tree setting and is seen as a maintenance hazard. See attached pictures below for noted trimmed tree conditions. • All other trimmed trees and replacement trees were found to be acceptable. Stantec Consulting Services Inc. Sarah Harding, PLA (MN) City of Lake Elmo Municipal Landscape Architect P: 952-334-4838 E: sarah.harding@stantec.com Hoisington Koegler Group Inc. 800 Washington Ave. N., Suite 103 Minneapolis, Minnesota 55401 (612) 338-0800 www.hkgi.com Creating Places that Enrich People’s Lives Hoisington Koegler Group Inc. MEMORANDUM TO: Sophia Jensen FROM: Tim Solomonson, PLA DATE: 5/17/2023 RE: City of Lake Elmo Sketch Plan Review | Sunflower Meadows Southwinds 1st Addition – Warranty Inspection and Close-out Inspector and Inspection Date: Tim Solomonson, Landscape Architect – 5.17.23 Landscape inspection summary A site warranty inspection was conducted to assess the status of warranty work identified in the 2-year reinspection memo (Oct 4, 2022). Findings: • No replacement work had been completed; trees identical to site photos provided in the prior memo. (Blue map items) • Substantial additional landscape and tree issues identified which are out of the warranty period. (Red map items) Recommendation: The replacements identified in the October 4 2022 memo were never carried out, therefore it is recommended that conditions of the final acceptance of landscape warranty satisfy requirements identified in the October 2, 2022 memo. Hoisington Koegler Group, Inc. Tim Solomonson, PLA (MN) City of Lake Elmo Municipal Landscape Architect P: 612.802.0142 E: tim@hkgi.com c 3OF 3-27-17 JLT JLT Name Reg. No.Date Revisions Date Designed Drawn 2015 Pioneer Engineering, P.A. Mendota Heights, MN 55120 2422 Enterprise Drive (651) 681-1914 Fax: 681-9488www.pioneereng.com LANDSCAPE ARCHITECTSLAND SURVEYORSLAND PLANNERSCIVIL ENGINEERS I hereby certify that this plan was prepared by me or under my direct supervision and that I am a duly Licensed Landscape Architect under the laws of the State of Minnesota 44763 Jennifer L. Thompson L3SOUTHWIND OF LAKE ELMO LAKE ELMO, MINNESOTA SOUTHWIND BUILDERS INC. 2372 LEIBEL STREETWHITE BEAR LAKE, MINNESOTA 551105-26-17 LANDSCAPE PLAN DRY SWALE/POND (STATE SEED MIX 33-262 FORMERLY W4) NATIVE DRY PRAIRIE SOUTHEAST (STATE SEED MIX 35-621 FORMERLY U6) 4-5-17 added rain garden seeding5-26-17 CITY COMMENTS