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3. Development AgreementTOWN OF NEW SCANDIA WASHINGTON COUNTY, MINNESOTA DEVELOPMENT AGREEMENT WYLDEWOOD ACRES THIS AGREEMENT made and entered into this day oPJ , day of July, 2004, by and between the TOWN OF NEW SCANDIA, 14727 209th Street North, Scandia, MN 55073, a Minnesota subdivision organized under the laws of the State of Minnesota (hereinafter referred to as "Town"), and Scandia Development, LLC, 6750 North Stillwater Boulevard, Stillwater, MN 55082 (hereinafter referred to as "Developer"). WITNESS: WHEREAS, the Developer has submitted a Preliminary Plat (the 'Preliminary Plat") for a major subdivision and development of approximately 67 acres into 27 housing units consisting of 23 single-family residential units and four townhome units to be known as "WYLDEWOOD ACRES" (the "Project"); and, WHEREAS, the Town intends to grant Developer final plat approval for the Project; and WHEREAS, it is the policy of the Town to enter into development contracts as described in Minnesota Statutes Sec. 462.358, Subd. 2(a); and, WHEREAS, the parties hereto desire to set forth the respective rights and obligations of the parties to this Agreement with respect to the development. AGREEMENT: NOW, THEREFORE, in consideration of the premises and of the mutual promises and conditions contained herein, it is agreed by the parties hereto as follows: 1. a) Letter of Credit for Costs and Fees. Developer shall, contemporaneously with the execution of this Agreement, furnish to the Town Letter of Credit in the sum of $537,471.25 to be held and released by the Town, as provided in Section 5 (d) as security for the payment of the costs of construction of the Public Improvements and related expenses and the costs of compliance with the approved Landscape Plan. b) Deposit and Payment for Costs Incurred by To Contemporaneously with the execution of this agreement, the Developer shall deposit with the Town the sum of $5,000.00 cash escrow to cover the costs of the Town Engineer and Town Attorney for preparation of this Agreement, review of subdivision and contract documents and final construction plans, together with such inspection and administrative costs as may be incurred. All reasonable administrative, legal and engineering costs incurred by the Town in connection with the subdivision shall be documented in a form suitable for inspection by Developer and charged against said escrow account. Developer shall within ten (10) days after notice by the Town Clerk replenish the escrow provided in this section in such amount as said Clerk deems 01 reasonable based on verifiable obligations remaining to be completed pursuant to this Agreement. Any funds remaining in the escrow account after completion and acceptance of the project shall be reimbursed to Developer. The Town shall not be liable to pay interest on the funds held. All costs reasonably incurred by the Town in connection with the development of the Project shall be billed to the Developer and paid by it upon receipt of an invoice therefor. The Town may draw against the Letter of Credit for any amount remaining unpaid 30 days after receipt of the invoice. The Letter of Credit shall be maintained until completion of Developer's obligations with respect to the Project and removal of all temporary soil stabilization and erosion control devices (such as silt fencing). After the completion of all obligations of the Developer, the Letter of Credit shall be released as provided in Section 5 (d). 2. Improvements. Developer shall construct the following described improvements for WYLDEWOOD ACRES (collectively, the "Improvements") in accordance with the plans prepared by the Developer's Engineer and approved by the Town Engineer: (i) Final Grading, Drainage and Erosion Control Plan; (ii) Final Street and Utility Plans, and (iii) Final Landscape Plan prepared by RLK Kurisisto Ltd. a) Monuments. Within one year of recording of the Plat all lot and block corners and angle points which are identified on the Plat must be monumented with iron surveyor's pipes by Developer to assure proper setbacks within the lots. b) Public Improvements. Developer shall construct, pursuant to the approved Street Plan, an urban section bituminous public street including grading, road bed preparation, subgrade work, bituminous surfacing, concrete curb and gutter and concrete 9 sidewalk; storm sewer installation (including stone water controls, drainage systems, berms, swales and/or other storm water drainage devices as required by such plans and street lights ("Public Improvements"). c) Private Improvements. Developer shall be responsible for the installation, pursuant to plans approved by the Town, of wells, watermains, sanitary sewer facilities, electricity, telephone and natural gas installations for the Project (the "Private Improvements"). The private utilities shall be installed underground in a common trench to the extent feasible (except for such appurtenant equipment related thereto as is normally installed above ground, such as transformers, meters and the like) and in the platted utility easements provided in the Plat. d) Soil Stabilization and Erosion Control. Soil stabilization shall be employed throughout the Project to insure the integrity of the soils. Developer shall install erosion control devices as required by the Erosion and Sediment Control Plan approved by the Town Engineer prior to construction startup or as shown on the plans, and such devices shall be removed or maintained at the discretion of the Town Engineer until the Town's final acceptance of the public and private improvements. e) Traffic Signs. Developer shall install traffic signs per the Street Plan at its own cost and expense and in accordance with the Minnesota Manual on Uniform Traffic Control Devices. f) Completion of Improvements. Subject to Unavoidable Delays (as hereafter defined), all Improvements shall be fully completed in accordance with the Grading Plan and the Utility and Street Plans on or before October 1, 2004, except that 4 the bituminous wear course for the public streets shall be installed after August 1 and before September 30, 2005. g) As -Built Plans. Developer shall furnish, at no cost to the Town, at least two sets of as -built plans on mylar indicating the location of all utilities in place, said as - built plans to be in a form approved by the Town Engineer who shall certify to the Town that said plans correctly represent the location of the utilities as contracted. 3. Unavoidable Delays. The deadlines set forth in Section 2 and the dates for Developer's performance of its other obligations hereunder may be extended if Developer provides the Town written notice of delays incurred by Developer due to causes beyond Developer's reasonable control, including but not limited to delays in material and equipment deliveries, labor or equipment shortages, weather conditions that interfere with completion of the Improvements hereunder (collectively, "Unavoidable Delays"). In the event of an Unavoidable Delay, the deadlines and dates for performance of Developer's obligations hereunder shall be extended for the period of the delay, provided, however, if such delays cause Developer to be unable to complete the Improvements due to cold weather or frost conditions, such deadlines and dates shall be extended until a date in the following year by which Developer, subject to road limitations and further Unavoidable Delays, can complete the Improvements. 4. Plan Preparation. Submissions and Approvals. a) Preliminary Plan Approvals. The Grading Plan has been approved and accepted by the Town Engineer. 5 b) Final Plans for Public Improvements. The Developer shall provide the Utility and Street Plan to the Town Engineer for final approval, consistent with the terms hereof. c) Landscape Plan. Developer shall submit the Landscape Plan to the Town Board for final approval. 5. Construction Warranty: Inspection and Approval, Financial Guaranty: and Maintenance Bonds. a) Warranty. Developer agrees to construct the Improvements at its own expense in accordance with the terms of this Agreement and the approved plans. Developer represents and warrants that the Improvements shall be guaranteed to be properly functioning as designed for one year following the installation of the wear course of bituminous surface. Acceptance of the Improvements shall occur after the warranty period has expired and the Town by formal motion accepts the Improvements and assumes all liability for maintenance of the Improvements. It is understood that the Town will perform snow plowing and any other normal Town street maintenance after completion of construction and during the Warranty Period. Developer shall repair or replace any material or labor that is reasonably rejected by the Town Engineer as defective or not in compliance with the approved plans therefor, to the reasonable satisfaction and approval of the Town Engineer at the sole cost and expense of Developer, provided the Town Engineer has given written notice of such 6 defect or noncompliance, supported by technical evidence, to Developer prior to expiration of the Warranty Period. b) Inspection and Staking. Developer authorizes the Town Engineer to perform inspection relative to the Utility and Street Plans and grants it a License to enter the Project to perform all necessary work and /or inspections until final acceptance by the Town of all Improvements and expiration of the applicable Warranty Periods. Developer shall perform staking of the lots to the satisfaction of the Town Engineer. c) Acceptance of Improvements. Upon notice by Developer that any of the Improvements have been completed, the Town Engineer will inspect in a timely manner the Improvements to insure that the Improvements were constructed in accordance with the approved Plans and the terms of this Agreement. d) Financial Guaranty. To finance construction of the Public Improvements and secure Developer's obligations set forth in Section 2, Developer shall provide to the Town an Irrevocable Letter of Credit in the sum of $537,471.25. Developer shall be entitled to a reduction in the Letter of Credit on a dollar for dollar basis as Improvements are inspected and approved by the Town Engineer, except that the Letter of Credit shall not be reduced below an amount equal to 125% of the cost of the work to be completed as determined by the Town Engineer nor below the amount of $15,000.00 (being the minimum contingency for the Project) until the Improvements have been accepted by the Town and the Warranty Period has expired. To obtain a reduction in the Letter of Credit the Developer will give notice to the Town of completion of a portion of Improvements. The Town Engineer will inspect the 7 completed Improvements within ten (10) days of the Developer's notice, and, provided the Engineer approves the completed Improvements, the reduction in the Letter of Credit will occur on a dollar -for -dollar basis within thirty (30) days after the Town Engineer's approval subject to the limitations stated above. If the Letter of Credit does not automatically renew, then at least thirty (30) days prior to the expiration of the Letter of Credit, Developer shall provide the Town with a new Letter of Credit for a period of at least one (1) year beyond the expiration date of and for the same amount as the Letter of Credit then in effect or Developer shall be in default hereunder with no opportunity to cure, and the Town may immediately demand from the surety the amount of the Letter of Credit then in effect. The Landscape Letter of Credit shall not be reduced below the sum of $2,500.00 until two full growing seasons have elapsed after the completion of all required plantings. If plantings have died within two full growing seasons, they shall be replaced at the expense of Developer. Any Letter of Credit provided under this section shall permit the Town to draw upon the Letter of Credit immediately following any Developer default hereunder that is not cured within any applicable notice period and opportunity to cure by Developer and for such portion thereof as is certified by the Town Engineer to be reasonably necessary to cure such default. 6. Fees and Charges. In addition to those Town Costs for which the Developer is responsible pursuant to Section 1 hereof, Developer and Town agree that Developer shall pay the following: 8 a) Recording Fees. All fees and charges in connection with recording this Agreement and the Plat with the County. b) Park Dedication. Developer shall satisfy the Towns park dedication requirements (or fees in lieu thereof) by payment of the sum of $18,000.00 upon execution of the Plat and the dedication to the public of the park in the plat. 7. Permits: Approvals: and Certificates of Occupancy. a) Other Governmental Units. Upon execution of this Agreement, Developer shall promptly apply for all permits, approvals and licenses required from any governmental agencies as may be necessary for Developer's construction of the Improvements as herein contemplated, and Developer shall construct the Improvements in accordance with the requirements of all such permits, approvals and licenses and the legal requirements of such other governmental agencies. b) Intentionally Omitted. c) Building Permits. Except for one model home to which temporary access has been approved by the Town Engineer, no building permits shall be issued for construction of a residence within the Project until the following conditions have been satisfied: (i) The Plat and this Development Agreement must be recorded with the County. (ii) With respect to the lot for which a permit is requested, the erosion control devices required by the approved drainage and erosion control plan must be substantially constructed, and the Private Utilities and Public Improvements must be substantially installed including all street improvements except the installation of bituminous surface. 9 (iii) All other building permit requirements of the Town's ordinances applicable to residential structures have been complied with, provided that in the event of any inconsistency between the terms of this Agreement and the terms of such ordinances, the terms of this Agreement shall control the building permit process for the Project. d) Certificates of Occupancy. No certificates of occupancy shall be issued for a residence within the Project until utility/road improvements are substantially completed (as reasonably determined by the Town Engineer) and specifically with respect to road surface improvements the first level of bituminous surface has been installed. 8. Restrictions Applicable to All Lots. Following acceptance of the Improvements by the Town, all residential lots within the Project shall be maintained and occupied in accordance with the following restrictions: a) Drainage Improvements. All wetland and drainage areas within public drainage easements (collectively, the "Drainage Areas"), shall not be filled, altered or disturbed without the prior written consent of the Town. Grazing by' domestic animals shall not be permitted within the Drainage Areas. Notwithstanding the sale of any lot, Developer and its agents and contractors, shall have the right to enter upon the lots for the purpose of repairing the Drainage Areas and related drainage appurtenances. Additionally, the Town, and its agents and contractors, shall have the right to enter upon any lot on which Drainage Areas exist for the purpose of inspecting and maintaining the same. In the event that any Drainage Areas on a lot have been filled, altered or disturbed (any such event is hereafter referred to as a "Disturbance") without the prior written consent of the Town and the same is not corrected within thirty (30) days 10 after notice thereof by the Town to the owner(s) of such lot, the Town, and its agents and contractors, shall have the right to enter upon such lot for the purpose of performing work necessary to correct the Disturbance and repairing any damage caused by the Disturbance, and assess the costs thereof against the lot, provided, however, that in the event of an emergency, the Town shall not be required to provide notice and an opportunity to the lot owner(s) to perform such necessary work, but may nonetheless assess the cost thereof to the lot. b) Improvements in Road and Easement Areas. Other than mailboxes, ground cover (grass) and driveways, no improvements shall be installed by any owners or occupants of lots in public or private road right-of-ways or in utility or drainage easement areas adjacent thereto that interfere with operation of the Town's maintenance equipment (including snow plows) in such areas. c) Advertising Signs. All signs advertising the development of the Project and general sales of lots or residences within the Project (including lighting of such signs), other than standard single yard signs for sales of individual lots, must comply with the Town's sign ordinances and policies and be approved by the Town in advance of installation. d) Resubdivision. There shall be no subdivision of any of the lots within WYLDEWOOD ACRES without the consent of the Town. The Plat is approved under the lot averaging provisions of the Development Code, which provides for a maximum density of 27 residential units. 11 9. Landscape Requirements. Developer shall landscape the site in accordance with the approved Landscape Plan and the Town Development Code. Developer shall install a berm of four feet to six feet in height along the northerly edge of Lot 5, Block 4, Wyldewood Acres on which shall be planted eight black spruce trees. Additionally, there shall be planted on said lot twenty over story trees such as Maple trees or Hickory trees. There shall be five over story trees planted on each residential lot except for Lots 3, 4 and 5, Block 3, Wyldewood Acres. Two of the required five trees shall be planted on the rear of Lots 8, 9, 10, and 11, Block 4 and on Lot 1, Block 3, Wyldewood Acres. Boulevard trees shall be planted fifty feet apart on Outlot A along the east side of Odell Avenue North. All plantings shall be maintained and, if necessary, replaced as provided in the Town Development Code. 10. Miscellaneous. a) Plat Recording. All applicable conditions of Final Plat approval must be met prior to the recording of the Plat. The Plat must be recorded with the Washington County Recorder within one hundred twenty (120) days of Final Plat approval unless reasonably extended or said approval shall be null and void. All financial requirements of the Town shall be delivered to the Town Clerk upon execution of the Plat. b) Conveyance of Lots. The Plat and this Development Agreement must be recorded with the Washington County Recorder's Office prior to Developer's transfer of fee title or a contract vendee's interest in any lot within the Project. 12 c) Homeowner's Association. Developer shall furnish to the Town attorney for his review and approval the Articles of Incorporation, Bylaws and Declaration of Protective Covenants for the homeowner's association to be established for the plat. d) Outlot A. Developer shall furnish to the Town Attorney for his review and approval the documents of conveyance of Outlot A, Wyldewood Acres to the sanitary sewer operator and the contract between the operator and the homeowner's association for the operation and maintenance of the system. 11. Developer's Representations. a) General. Developer hereby represents, warrants, and covenants to the Town that as of the date of this Agreement, the statements set forth in this section are true and correct. b) No Disability. Developer knows of no legal disability that would prevent them from carrying out this Agreement. c) Ownership. Developer owns marketable fee title to the Project (subject to mortgage and related financing instruments). d) Execution No Violation. The execution, delivery, and performance of the Agreement does not and will not result in any breach of, or constitute a default under, any indenture, mortgage, contract, agreement or instrument to which Developer is a party or by which it or the Project is bound. e) Litigation. There are no pending nor, to the knowledge of Developer, threatened actions or proceedings before any court or administrative agency which will 13 materially adversely affect the financial condition, business, or operation of Developer or the ability of Developer to perform its obligations under this Agreement. f) Compliance. Developer will comply with and, subject to Unavoidable Delays, duly and promptly perform all of its obligations under this Agreement. 12. Bindine Effect. This Agreement shall be deemed to be a restrictive covenant and the terms and conditions hereof shall run with the land described herein and be binding on and inure to the benefit of the heirs, representatives and assigns of the parties hereto, and shall be binding upon all future owners of all or any part of the Plat, and shall be deemed covenants running with the land, provided, however, that at Developer's request, after all of the Improvements have been accepted by the Town and the Warranty Periods therefore have expired, the Town shall issue a Certificate of Compliance, in recordable form, stating that the Improvements have been constructed and completed by Developer in accordance with the terms hereof and have been finally accepted by the Town. 13. Title Evidence. Developer shall furnish the Town with evidence of fee ownership of the property being platted by way of an attorneys title opinion or title insurance policy dated not earlier than 30 days prior to the execution of the Plat. 14. Insurance. Developer or Developer's Contractor shall take out and maintain until the Warranty Period has expired, public liability and property damage insurance covering personal injury, including death, and claims for property damage which may arise out of the work. Limits for bodily injury and death shall not be less than Three Hundred Thousand and no/100 ($300,000.00) for one person and One Million and no/100 ($1,000,000.00) Dollars for each occurrence; or a combination single limit policy of One Million and no/l00 ($1,000,000.00) 14 Dollars or more. The Town shall be named as an additional insured on the policy, and the Developer shall file with the Town a certificate evidencing coverage upon execution of this Agreement. The certificate shall provide that the Town must be given ten (10) days advance written notice of the cancellation of the insurance. The certificate may not contain any disclaimer for failure to give the required notice. 15. Indemnification. Developer agrees to defend and hold the Town, and its officials, employees and agents, harmless against any and all claims, demands, lawsuits, judgments, damages, penalties, costs and expenses, including reasonable attorney's fees, arising out of the negligent actions or omissions, intentional misconduct or default hereunder by Developer, its employees and agents, in connection with the Project. 16. Care of Premises. Developer shall keep the premises free from accumulation of waste materials, rubbish, and other debris resulting from the work and at the completion of the work, it will remove and shall remove all waste materials, rubbish and debris from and about the premises as well as all tools, construction equipment, machinery and surplus materials and will leave the premises acceptable to the Town. 17. Events of Default: Remedies. a) Events of Default Defined. The following shall be "Events of Default" under this Agreement and the term "Event of Default" shall mean, whenever it is used in this Agreement, any one or more of the following events: (i) Subject to Unavoidable Delays, failure by Developer to commence and complete construction of the Public Improvements pursuant to the terms, conditions and limitations of this Agreement, within thirty (30) days after notice thereof by the Town to Developer, or such longer period of time as may reasonably be required to cure such default provided Developer is proceeding with diligence to do so. 15 (ii) Failure by Developer to substantially observe or perform any material covenant, condition, obligation or agreement on its part to be observed or performed under this Agreement, within thirty (30) days after notice thereof by the Town to Developer, or such longer period of time as may reasonably be required to cure such default provided Developer is proceeding with diligence to do so. b) Remedies on Default. Whenever any Event of Default occurs, the Town, subject to any rights of third parties agreed to by the Town pursuant to this Agreement, or otherwise by written, executed instrument of the Town, may take any one or more of the following actions: (i) The Town may suspend its performance under the Agreement until it receives assurances from Developer, deemed adequate by the Town, that Developer will cure its default and continue its performance under the Agreement. (ii) The Town may initiate such action, including legal or administrative action, whether in law or in equity, as is necessary for the Town to secure performance of any provision of this Agreement or recover any amounts due under this Agreement from Developer or recover any damages sustained by the Town as a result of Developer's default hereunder. (iii) The Town may immediately draw on the Letter of Credit or exercise its rights under this Agreement. (iv) The Town may withhold building permits until the necessary corrective action is completed by Developer. IN WITNESS WHEREOF, the Town and Developer have caused this Agreement to be duly executed on the day and year first above written. TOWN W D By De is eefeldt, Town B and Chairman By Dolores Peterson own Clerk 16 SCANDIA ELOPMENT LLC: By b Steve J. May, President STATE OF MINNESOTA ) ) ss. COUNTY OF WASHINGTON ) On this day , L day of July, 2004, before me, a Notary Public, in and for said County and State, appeared Dennis D. Seefeldt and Dolores Peterson, to me personally known, who being by me first duly sworn, did say that they are respectively the Town Board Chairman and Town Clerk of the Town of New Scandia, who by authority of the Town Board of the Town of New Scandia, did sign said instrument and acknowledge said instrument to be the free act and deed of said Town of New Scandia. Notary Public STATE OF MINNESOTA ) ) ss. COUNTY OF WASHINGTON ) The foregoing was acknowledged before me thisct day of 1, 2004, by Steven J. May, the President of Scandia Development, LLC, a corporation unde the laws of Minnesota, on behalf of the corporation. �'2•>�. MAh ,., K LARSON 9� NOTARY PUBLIC MINNESOTA yyawoMlOejxgtr' 11311200i THIS INSTRUMENT WAS DRAFTED BY: HEBERT, WELCH & HUMPHREYS, P.A. 20 NORTH LAKE STREET, SUITE 301 FOREST LAKE, MN 55025 TELEPHONE: 651-464-3397 17 Notar ublic EXHIBIT A LEGAL DESCRIPTION OF THE PROJECT Lots 1 through 4; Block 1 Lots 1 through 6; Block 2 Lots 1 through 8, Block 3 Lots 1 through 10; Block 4; and Outlots A, B and C, WYLDEWOOD ACRES TOWN FINANCIAL REQUIREMENTS 1. Construction Letter of Credit (1.25 x 429,977) $ 537,471.00 2. Costs escrow $ 5,000.00 Park Fees $ 18,000.00