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9.b Forest Lake Holdco solar development agreement Staff Report Date of Meeting: June 21, 2016 To: City Council From: Neil Soltis, Administrator Re: Solar Development agreement with Forest Lake Holdco, LLC Background: Forest Lake Holdco, LLC (the developer) submitted an application for a Conditional Use Permit (CUP) to the City for a community solar garden to be located on a 59 -acre parcel of land located at the northwest corner of Trunk Highway 97 and County Road 15. The Developer seeks to install a solar array located on 25 acres of the Property, consisting of five One- Megawatt (MW) solar gardens. The Planning Commission conducted a public hearing on the Forest Lake Holdco, LLC’s CUP application on October 6, 2015, and recommended approval to the City Council of the City. City Council Resolution No. 10-20-15-03, adopted on October 20, 2015 approved the issuance of the conditional use permit for the project. As a part of the City’s approval of the Project through the CUP, the City imposed 18 conditions upon the Project, including the execution of a development agreement. Issue: Should the City approve the development agreement with Forest Lake Holdco, LLC Proposal Details: The development agreement, which was prepared by Andy Pratt and has been reviewed by Forest Lake Holdco, incorporates the provisions of the resolution approving the condition use permit along with restating key provision s from the submittals to the Planning Commission. The agreement also establishes a screening escrow and provides for security to ensure that the project is decommissioned. Fiscal Impact: Property tax valuation of underlying land will change. All other costs borne by the City are to be reimbursed under the agreement. Options: 1. Approve the development agreement as drafted 2. Revise the development agreement 3. Take no action on the development agreement Recommendation: Option 1 - Approve the development agreement as drafted CITY OF SCANDIA, MINNESOTA DEVELOPER’S AGREEMENT THIS DEVELOPER’S AGREEMENT (the “Agreement”) is made and entered into this ____ day of _____________, 2016, by and among the City of Scandia, Minnesota, a municipal corporation and political subdivision under the laws of the State of Minnesota (the “City”), Forest Lake Holdco LLC, a Delaware limited liability company (the “Owner” or “Developer”). WHEREAS, the Developer submitted an application for a Conditional Use Permit (CUP) to the City for a community solar garden to be located on a 59-acre parcel of land located at the northwest corner of Trunk Highway 97 and County Road 15, legally described on Exhibit A attached hereto (the “Property”). The Developer seeks to install a solar array located on 25 acres of the Property, consisting of five One-Megawatt (MW) solar gardens, of which each garden will include 20 rows of solar panel arrays approximately 175 feet long, separate by lanes 12 to 18 feet wide (the “Project”). WHEREAS, the Property is located within the Agricultural Core District, and the proposed use of the Property as a solar array is allowed with a CUP. WHEREAS, the City’s Planning Commission conducted a public hearing on the CUP application on October 6, 2015, and recommended approval to the City Council of the City, which approval was granted pursuant to Resolution No. 10-20-15-03, adopted on October 20, 2015 (the “Resolution”). WHEREAS, as a part of the City’s approval of the Project through the CUP, the City imposed 18 conditions upon the Project, including the execution of this Agreement. The Developer has deposited sufficient escrow funds with the City to complete this Agreement and oversee the Project. The entering into this Agreement has already been approved by the City Council. NOW, THEREFORE, in consideration of the premises and of the mutual promises and conditions hereinafter contained, it is agreed as follows: 1. Interconnection Agreement. The Developer or the Owner, as the case may be, must enter into an Interconnection Agreement with Xcel Energy, allowing for the transmission of solar energy from the Project to be distributed by the Xcel power grid. An executed Interconnection Agreement must be filed with the City before the Project may receive any building, grading, or land alteration permits from the City. 2. Fencing & Screening; Landscape Plan. The Developer understands and acknowledges there is an existing fence located on the Property that may be located within the right- of-way maintained by the Minnesota Department of Transportation (MnDOT). The Developer shall remove the existing fence if it is encroaching within the aforementioned MnDOT right-of-way. The Developer shall establish and maintain a fence around the Project, which may be a new fence located off of MnDOT right-of-way, and which fence shall serve as a buffer from Trunk Highway 97 and County Road 15 to the Property. Any fence and Project equipment shall be setback from Trunk Highway 97 and County Road 15, in the judgment of the applicable road authority. Any fence taller than six feet in height shall require an Administrative Permit from the City before it may be placed. The fence shall not exceed 12 feet in height, and shall match the material and style previously submitted in plans and specifications received by the City. The Developer shall additionally provide screening of approximately 50% of the view of the Project from Trunk Highway 97 and County Road 15. The purpose of the screening is to prevent reflective glare toward any inhabited buildings on adjacent properties and adjacent street rights of way. Screening shall consist of a mix of coniferous and deciduous tree and shrub species that are consistent with the City’s rural character. These plantings and screenings shall be described in a Landscape Plan, to be deposited with the City. The City Administrator, with assistance from the Developer, shall determine whether the 50% screening requirement is met under the Landscape Plan. If the screening requirement is not met, the Developer shall amend the Landscape Plan to meet the screening requirement before the Project may receive any building, grading or land alteration permits from the City. 3. Fencing & Screening Escrow. To ensure the screening under the Landscape Plan is sufficiently established, and as a condition to executing this Agreement, the Developer shall deposit an escrow security, in the amount of $4,000, with the City. The escrow security may be in the form of a cash escrow, letter of credit or a performance bond. Any letter of credit or performance bond must be reviewed and approved by the City Attorney. The escrow will be maintained with the City until the date that is one year after the landscape screening is completely installed, in the sole discretion of the City, which date will be communicated with the Developer. During this one-year period, the City may draw on the escrow security to ensure the landscape screening is installed and maintained in living condition. At the aforementioned one-year date, if, to the satisfaction of the City, the landscape screening is being maintained in living condition, the City will refund the remaining escrow amount or release the letter of credit, as the case may be, to the Developer. If the City determines the escrow security must be replenished during the aforementioned one-year period, the City will communicate accordingly to the Developer in writing. Any escrow amount remaining will then be promptly refunded to the Developer. 4. Project Decommissioning Costs. As of the date of this Agreement, it is estimated the cost of decommissioning the Project is $125,000 (the “Decommission Cost”). This cost is based on a decommissioning industry standard model of $25,000 per MW. To adequately protect the City in case the Project is decommissioned or abandoned, before any building, grading or land alteration permits are issued by the City, the Developer shall deposit financial security with the City, which may be in the form of a cash escrow, letter of credit, or performance bond, in the amount of One Hundred Twenty-Five Percent (125%) of the Decommission Cost. Any letter of credit or performance bond must be reviewed and approved by the City Attorney. The City shall have the right to apply against the financial security all expenses incurred with decommissioning and rehabilitating the Property in case the Developer is in default or otherwise abandons the Project. 5. Access to Property. Access to the Property shall be from County Road 15. The Developer shall obtain an access permit from Washington County for the proposed driveway access to the Project from County Road 15, and provide a copy of the access permit to the City. The Developer shall be responsible for all costs associated with any permitting requirements of MnDOT or Washington County. The Developer shall install a lock-box or similar point of access at the entrance to the Project, to allow for emergency access at such point. 6. Wetlands. The Project must comply with all requirements of the Washington Conservation District. Included in these requirements is the obligation that the Project may not impose within jurisdictional wetlands on the Property. The WCD has identified two jurisdictional wetlands on the Property, and the Project must be located at least 75 feet away from such wetlands. The Developer must evidence to the City and all other regulatory bodies with jurisdiction that the Project is located at least 75 feet away from jurisdictional wetlands, before the Project may receive any building, grading or land alteration permits from the City. 7. Engineering. The Developer must comply with the following engineering requirements: (a) Before any work commences on the Property, the Developer must obtain grading and land alteration permits from the City. The Developer must submit a Grading Plan to the City before a grading permit will be released. The Grading Plan shall include perimeter erosion control on the northern boundary of the Project. (b) The access road to the Project from County Road 15 must be at least 20 feet in width to allow for emergency access. The interior of the Property shall always be maintained to provide sufficient width for emergency access for local law enforcement, fire, and ambulatory vehicles. (c) All work on the Project shall be coordinated with the owner of the gas easement on the Property. (d) All requirements of the Comfort Lake-Forest Lake Watershed District shall be complied with, and all permits received from the Watershed District shall also be deposited with the City. 8. Signage. The Developer shall place a clearly-visible warning sign concerning voltage at the base of all pad-mounted transformers and substations within the Project. 9. Supporting Mechanical Equipment. All mechanical equipment supporting the Project, including any structure for batteries or storage cells, shall be completely enclosed by a minimum eight-foot high fence with a self-locking gate, which shall be adequately screened. 10. Lighting. The Developer understands and acknowledges that no new lighting is proposed for the Project. If lighting is proposed at a later date it must meet all City Ordinance requirements. 11. Binding Effect; Assignment; Recording. (a) The terms and provisions of this Agreement shall be binding upon and inure to the benefit of the heirs, representatives, successors and assigns of the parties hereto and shall be binding upon all future owners or developers of all or any part of the Property and shall be deemed covenants running with the land. (b) Upon written notice to the City, the CUP and this Agreement, including all rights and obligations therein and herein, may be assigned, in whole or in part, to any affiliate of the Owner and, in the reasonable judgment of the City, to any party with experience owning and operating energy generation or other utility infrastructure facilities. Assignment to any other party not mentioned in the previous sentence shall require written consent by the City, such consent not to be unreasonably withheld. (c) This Agreement shall be recorded within the land records of Washington County so as to give notice hereof to subsequent purchasers and encumbrances of all or any part of the Property, and all recording fees shall be paid by the Developer. 11. Related Documentation. Below is a list of the planning reports, resolutions, files and final documentation related to the Project. These documents may be relied upon by the parties hereto throughout the term of this Agreement. 1. Conditional Use Permit Application, dated September 18, 2015. 2. TKDA staff memorandum to City Council, dated October 13, 2015. 3. Planning Commission official minutes, dated October 6, 2015. 4. Revised Developer plans and specifications, dated October 19, 2015. 5. Resolution No. 10-20-15-03, Approving a Conditional Use Permit for a Community Solar Garden on Parcel ID 18.032.20.33.0001, adopted by the City Council of the City on October 20, 2015. 6. City Ordinance No. 162, including any amendments or supplements. 12. Administrative and Miscellaneous Expenses. The City acknowledges it has received an administrative escrow payment from the Developer in the amount of $300.00, which is to be used to reimburse the City for any expended staff expenses, as well as planning consultant review and legal counsel review. The Developer must continue to pay all fees and escrows associated with the Project, and may be billed separately by the City for all charges over and above the aforementioned escrow amount. If the City seeks to impose additional administrative expenses on the Developer payable through a replenished escrow amount, the Developer shall be given the opportunity to review and comment on such expenses prior to the application by the City for the payment of same. 13. Indemnification; Insurance. To the fullest extent permitted by law, the Developer shall indemnify and hold harmless the City, its agents and employees from and against any and all claims, damages, losses or expenses, including but not limited to attorney’s fees, arising out of the actions of the Developer in connection with this Agreement. The Developer shall within 90 days after the effective date of this Agreement provide the City with a current general liability certificate of insurance with the City, evidencing bodily injury and property coverage with limits of at least $1 million per occurrence and $1 million in the aggregate. The City shall be named as an additional insured on the policy, on a non-contributory basis. The Developer shall maintain all such insurance coverage as described in this Section for the entire term of this Agreement. 14. Breach. In the event of breach of the Developer of any or all of the terms hereof, including but not limited to the failure to complete installation of the Project as specified, the City will pursue remedies through the CUP first and will not exercise contract remedies at law or equity (such as drawing on financial securities provided by the Developer hereunder) for a breach of this Agreement until after 60 days’ notice to the Developer, giving the Developer an opportunity to cure during such 60-day period (and such longer period if reasonably necessary, and Developer is pursuing a cure in good faith during such longer period). 15. Notices. Whenever in this Agreement it shall be required or permitted that notice or demand be given or served by any party to this Agreement to or on another party, such notice or demand shall be delivered personally or mailed by United States mail to the addresses hereinafter set forth by certified mail, return receipt requested. Such notice or demand shall be deemed timely given when delivered personally of when deposited in the mail in accordance with the above. The addresses of the parties hereto are as follows, until changed by notice given as above: City: City of Scandia, Minnesota 14727 209th Street North Scandia, Minnesota 55073 Attention: City Administrator With copy to: Eckberg Lammers, P.C. Scandia City Attorney 1809 Northwestern Avenue Stillwater, Minnesota 55082 Owner or Developer: Forest Lake Holdco, LLC 3944 Xerxes Avenue South Minneapolis, Minnesota 55410 16. Miscellaneous. (a) Notwithstanding anything in this Agreement to the contrary, to the full extent permitted by state law, the City may require compliance with any amendments to the City’s comprehensive plan, official controls, state and federal laws and regulations, platting or dedication requirements enacted prior to the date of this Agreement. (b) The Developer represents to the City that the Project complies with all City, county, state and federal laws and regulations, including but not limited to zoning ordinances and environmental regulations. Development of any subsequent phases of property adjacent to the Project may not proceed until a separate developer’s agreement and an amended CUP for such phase is approved by the City. (c) If any portion, section, subsection, sentence, clause, paragraph, or phrase of this Agreement is for any reason held invalid, such decision will not affect the validity of the remaining portions of this Agreement. (d) Any action or inaction of the City in relation to enforcement of this Agreement shall not constitute a waiver or amendment to the provisions of this Agreement. To be binding, amendments or waivers shall be in writing, signed by all parties, and approved by resolution of the City Council of the City. The City’s failure to promptly take legal action to enforce this Agreement shall not constitute a waiver or release. (e) Each right, power or remedy herein conferred upon the City is cumulative and in addition to every other right, power or remedy, express or implied, now or hereafter arising, available to the City at law or in equity, or under any other contract, and each and every right, power or remedy herein set forth or otherwise so existing may be exercised from time to time as often and in such order as may be deemed expedient at any time thereafter. 17. License. By this Agreement, the Developer hereby grants to the City, its agents, employees, officers and contractors a license to enter the Property to perform all work and inspections deemed appropriate by the City during the installation of the Project. This license shall expire after the Project is deemed to be substantially constructed, by mutual agreement among all the parties. The Developer shall be responsible for obtaining all proper permits from the Minnesota Pollution Control Agency, if necessary. The City makes no representation or guarantee that the permits will be granted to the Developer. 18. Clean-up. The Developer shall promptly clean up any soil, earth or debris on City- owned property, any property that is to become City-owned, or any public right-of-way resulting from construction work on the Project by the Developer, its agents or assigns. 19. Entire Agreement; Governing Law. This Agreement and the documents described in Section 11 herein represents the entire agreement between the parties concerning the subject matter hereof, and all oral discussions and prior agreements are merged herein and therein. The validity, construction, and enforcement of this Agreement shall be determined according to the laws of the State of Minnesota, applicable to contracts executed and performed entirely within that state. IN WITNESS WHEREOF, the City of Scandia, Minnesota and Forest Lake Holdco LLC have caused this Developer’s Agreement to be duly executed on the date and year first above written. CITY OF SCANDIA, MINNESOTA Randall Simonson Mayor Neil Soltis City Administrator STATE OF MINNESOTA ) ) ss. COUNTY OF WASHINGTON ) On this _____ day of _____________, 2016, before me a Notary Public, within and for said County personally appeared Randall Simonson and Neil Soltis, to me personally known, being each by me duly sworn did say that they are respectively the Mayor and the City Administrator of the City of Scandia, Minnesota, the municipal corporation and political subdivision named in the foregoing instrument; and that said instrument was signed on behalf of said municipal corporation by authority of its City Council and said Mayor and City Administrator acknowledged said instrument to be the free act and deed of said municipal corporation. Notary Public FOREST LAKE HOLDCO LLC By ______________________________________ Its _______________________________________ STATE OF MINNESOTA ) ) ss. COUNTY OF ____________ ) On this _____ day of ______________ 2016, before me a Notary Public, within and for said County personally appeared _________________, to me personally known, being by me duly sworn did say that he/she is the _________________ of Forest Lake Holdco LLC, a Delaware limited liability company, and acknowledged said instrument to be the free act and deed of said limited liability company. Notary Public THIS INSTRUMENT WAS DRAFTED BY: Andrew J. Pratt, Scandia City Attorney Eckberg Lammers, P.C. 1809 Northwestern Avenue Stillwater, Minnesota 55082 (651) 439-2878 EXHIBIT A LEGAL DESCRIPTION OF PROPERTY The South 59 acres of the West One-half of the Southwest Quarter, all in Section 18, Township 32, Washington County, Minnesota.