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HomeMy WebLinkAboutDolly James 2, LLC-9/8/2015Preparer Information: Christopher S. Wendland, P.O. Box 596, Waterloo, Iowa 50704 Name Address City FTeasererun £his copy [o: City Clerk & finance Dept. 715 Mulberry St. Waterloo, IA 50703 (319) 234-5701 Phone DEVELOPMENT AGREEMENT This Development Agreement (the "Agreement") is entered into as of Se _ v ° , 2015 by and between Dolly James 2, LLC (the "Company"), Hi Yield, LLC (the "Affiliate") and the City of Waterloo, Iowa (the "City"). Brent Dahlstrom and James Sulentic are principals of Company and/or Affiliate and execute the personal guaranty at the end of this Agreement for the purposes stated therein. RECITALS A. City considers economic development within the City a benefit to the community and is willing for the overall good and welfare of the community to provide financial incentives so as to encourage that goal. B. Company is willing and able to finance and construct a building and related improvements on property located in the Downtown Urban Renewal and Redevelopment Plan area, generally located on the northeasterly side of the corner of Commercial Street and W. 6th Street, and legally described on Exhibit "A" attached hereto (the "Property"). C. Affiliate owns real estate abutting the Property, legally described on Exhibit "B" attached hereto (the "Affiliate Property"), which the parties intend to be included in the project that is the subject of this Agreement. AGREEMENT NOW, THEREFORE, in consideration of the mutual covenants set forth herein, the parties agree as follows: 1. Sale of Property; Title. Subject to the terms hereof, City shall convey the Property to Company for the sum of $1.00 (the "Purchase Price"). Conveyance shall be by quit claim deed, free and clear of all encumbrances arising by or through City except: (a) easements, conditions and restrictions of record which do not, in Company's opinion, interfere with Company's proposed use; (b) current and future real estate real property taxes and assessments subject to the agreements made herein; (c) general utility and right-of-way easements serving the Property; and (d) restrictions imposed by the City zoning ordinances and other applicable law. City shall have no duty to convey title to Company until (i) Company delivers to City reasonable and satisfactory proof of financial ability to undertake and carry on the Project (defined below), which may take the form of a lending commitment letter, and (ii) City has satisfied the contingency for amendment of the urban renewal plan as set forth in Section 12. Company shall, at its own expense, prepare an updated abstract of title, or in lieu thereof Company may, at its own expense, obtain whatever form of title evidence it desires. If title is unmarketable or subject to matters not acceptable to Company, and if City does not remedy or remove such objectionable matters in timely fashion following written notice of such objections from Company, Company may terminate this Agreement. City shall provide any title documents it has in its possession, including any abstracts, to assist in title preparation. 2. Improvements. Company and Affiliate shall construct on the Property and the Affiliate Property an apartment building consisting of four above -ground floors and related parking, landscaping, and other improvements to the buildings and grounds (collectively, the "Improvements"). Each floor will be approximately 12,000 square feet, with 10 units on the upper floors. Said building shall also contain a limited commercial area on the first floor. The Improvements shall be constructed in accordance with all applicable City, state, and federal building codes and shall comply with all applicable City ordinances and other applicable law. Parking shall meet City's minimum requirements based on building use, occupancy, and future intended development on the Property and Affiliate Property and may include underground parking. The site shall be developed as generally depicted on Exhibit "C" attached hereto, and Company shall submit specific building designs and site plans for City review and approval. It is contemplated that, upon completion, the improved property will have a total value of approximately $2,500,000. The Property, the Improvements, and all site preparation and development -related work to make the Property usable as contemplated by this Agreement are collectively referred to as the "Project". 3. Timeliness of Construction; Possibility of Reverter. The parties agree that the commitment of Company and Affiliate to undertake the Project and to construct the Improvements in a timely manner constitutes a material inducement for the City to convey the Property, or to cause the Property to be conveyed, to Company and that without said commitment City would not do so. Company and Affiliate must obtain a building permit and begin construction by June 30, 2016 and substantially complete construction within twelve (12) months thereafter. If Company has not, in good faith, begun the construction of the Improvements on the schedule stated above, then title to the Property shall revert to the City, except as provided in this Agreement; provided, however, that if construction has not begun within the stated period but the development of the Project is still imminent, the City Council may, but shall not be required to, consent to an extension of time for the construction of the Improvements, and if an extension is granted but construction of the Improvements has not begun within such extended period, then the title to the Property 2 shall revert to the City after the end of said extended period. If Company determines at any time that the Project is not economically feasible, then after giving thirty (30) days' advance written notice to City, Company may convey the Property to City by special warranty deed, and thereupon neither party shall have any further obligation under this Agreement except as expressly provided. If development has commenced within the required period or any extended period and is stopped and/or delayed as a result of an act of God, war, civil disturbance, court order, labor dispute, fire, or other cause beyond the reasonable control of Company, the requirement that construction of the Project shall be tolled for a period of time equal to the period of such stoppage or delay, and thereafter if construction is not completed within the allowed period of extension then title to the Property shall revert to the City. 4. Reverter of Title; Indemnity. In the event of any reverter of title, Company agrees that it shall, at its own expense, promptly execute all documents, including but not limited to a special warranty deed, or take such other actions as the City may reasonably request to effectuate said reverter and to deliver to City title to the Property that is free and clear of any lien, claim, or encumbrance arising by or through Company. Company shall pay in full, so as to discharge or satisfy, all liens, claims, charges, and encumbrances on or against the Property. If Company fails to deliver such documents, including but not limited to a special warranty deed, to City within thirty (30) days of written demand by City, then City shall be authorized to execute, on Company's behalf and as its attorney-in-fact, the special warranty deed required by this Section, and for such limited purpose Company does hereby constitute and appoint City as its attorney-in-fact. Company and Affiliate further agree that they shall, jointly and severally, indemnify City and hold it harmless with respect to any demand, claim, cause of action, damage, or injury made, suffered, or incurred as a result of or in connection with the Project, their failure to carry on or complete same, or any lien, claim, charge, or encumbrance on or against the Property of any type or nature whatsoever that attaches to the Property by virtue of Company's ownership of same. If City files suit to enforce the terms of this Agreement and prevails in such suit, then Company and Affiliate shall be liable for all legal expenses, including but not limited to reasonable attorneys' fees, incurred by City. The duties of indemnity pursuant to this Section shall survive the expiration, termination or cancellation of this Agreement for any reason. 5. No Encumbrances; Limited Exception. Until completion of the Improvements, Company agrees that it shall not create, incur, or suffer to exist any lien, encumbrance, mortgage, security interest, or charge on the Property, other than such mortgage or mortgages as may be reasonably necessary to finance Company's completion of the Improvements and of which Company notifies City in advance of Company's execution of any such mortgage. Company may not mortgage the Property or any part thereof for any purpose except in connection with financing of the Improvements. 6. Regulatory Approvals. Company and Affiliate acknowledge and agree that the Project will require Company and/or Affiliate to obtain various approvals from 3 the City of Waterloo and/or other applicable governmental authorities, including but not limited to zoning, site plan, subdivision, building permit and other approvals required or necessary for the proposed Improvements to the Property. To optimize coordination of Project plans and development with such approvals, Company and Affiliate agree to participate regularly and in good faith in the project management/design-build management (PMT/DBMT) process applicable to the Property and Affiliate Property for design issues, landscape design, parking, construction documents, and other matters. 7. Utilities. Company and Affiliate will be responsible for extending water, sewer, telephone, telecommunications, electric, gas and other utility services to any location on the Property and for payment of any associated connection fees. 8. Minimum Assessment Agreement. Company and Affiliate acknowledge and agree that each will pay when due all taxes and assessments, general or special, and all other charges whatsoever levied upon or assessed or placed against the Property or Affiliate Property. Company and Affiliate further agree that prior to the date set forth in Section 2 of Exhibit "D" that neither of them will seek or cause a reduction in the taxable valuation for the Property and the Affiliate Property, which shall be fixed for assessment purposes, below the aggregate amount of $2,500,000 (the "Minimum Actual Value"), through: (i) willful destruction of the Property, the Affiliate Property, the Improvements, or any part of either; (ii) a request to the assessor of Black Hawk County; or (iii) any proceedings, whether administrative, legal, or equitable, with any administrative body or court within the City, Black Hawk County, the State of Iowa, or the federal government. Company and Affiliate agree to sign said attached Exhibit "D" at the closing. 9. Tax Rebates. Provided that Company and Affiliate have completed the Improvements as set forth herein and have executed the Minimum Assessment Agreement as set forth in Section 8, City agrees to rebate property tax (with the exceptions noted below) as follows: Year One through Year Twenty 42% rebate each year for any taxable value over the January 1, 2015 value of $32,400 for the Property (land value only) and $12,600 for the Affiliate Property. Rebates are payable in respect of a given year only to the extent that Company or Affiliate have actually paid general property taxes due and owing for such year. To receive rebates for a given year, Company or Affiliate must, within twelve (12) months after the tax payment due date, submit a completed rebate request to City on the form provided by or otherwise satisfactory to City, or the rebate shall be forfeited. 4 The taxable value of the Property and the Affiliate Property as a result of the Improvements must be increased by a minimum of 10% and must increase the annual tax by a minimum of $500.00. This rebate program is not applicable to any special assessment levy, debt service levy, or any other levy that is exempted from treatment as tax increment financing under the provisions of applicable law. The first year of in which a rebate may be given ("Year One") shall be the first full year for which the assessment is based upon the completed value of the Improvements, and not based on a prior year for which the assessment is based solely upon (x) the value of the Property or Affiliate Property or upon (y) the value of the Property or Affiliate Property and a partial value of the Improvements due to partial completion of the Improvements or a partial tax year. 10. Representations and Warranties of City. City hereby represents and warrants as follows: A. City is not prohibited from consummating the transaction contemplated in this Agreement by any law, regulation, agreement, instrument, restriction, order or judgment. B. Each person who executes and delivers this Agreement and all documents to be delivered hereunder is and shall be authorized to do so on behalf of City. 11. Representations and Warranties of Company and Affiliate. Company and Affiliate each hereby represents and warrants for itself as follows: A. It is not prohibited from consummating the transaction contemplated in this Agreement by any law, regulation, agreement, instrument, restriction, order or judgment. B. It is duly organized, validly existing, and in good standing under the laws of the state of its organization and is duly qualified and in good standing under the laws of the State of Iowa. C. It has full right, title, and authority to execute and perform this Agreement and to consummate all of the transactions contemplated herein, and each person who executes and delivers this Agreement and all documents to be delivered to City hereunder is and shall be authorized to do so on its own behalf. 12. Obligations Contingent. Each and every obligation of City under this Agreement is expressly made subject to and contingent upon City's completion of all procedures, hearings and approvals deemed necessary by City or its legal counsel for amendment of the urban renewal plan applicable to the Property and/or project area, all of which must be completed within 180 days from the date this Agreement is approved by the City council. If such completion does not occur, then this Agreement shall be cancelled without further obligation by any party hereto. 5 13. No Assignment or Conveyance. Company agrees that it will not sell, convey, assign or otherwise transfer its interest in the Property prior to completion of the Project, whether in whole or in part, to any other person or entity without the prior written consent of City. Reasonable grounds for the City to withhold its consent shall include but are not limited to the inability of the proposed transferee to demonstrate to the City's satisfaction that it has the financial ability to observe all of the terms to be performed by Company under this Agreement. 14. Materiality of Company's and Affiliate's Promises, Covenants, Representations, and Warranties. Each and every promise, covenant, representation, and warranty set forth in this Agreement on the part of Company and Affiliate to be performed is a material term of this Agreement, and each and every such promise, covenant, representation, and warranty constitutes a material inducement for City to enter this Agreement. Company and Affiliate acknowledge that without such promises, covenants, representations, and warranties, City would not have entered this Agreement. Upon breach of any promise or covenant, or in the event of the incorrectness or falsity of any representation or warranty, City may, at its sole option and in addition to any other right or remedy available to it, terminate this Agreement and declare it null and void. 15. Notices. Any notice under this Agreement shall be in writing and shall be delivered in person, by overnight air courier service, by United States registered or certified mail, postage prepaid, or by facsimile (with an additional copy delivered by one of the foregoing means), and addressed: (a) if to City, at 715 Mulberry Street, Waterloo, Iowa 50703, facsimile number 319-291-4571, Attention: Mayor, with copies to the City Attorney and the Community Planning and Development Director. (b) if to Company or Affiliate, at 2202 College Street, Cedar Falls, Iowa, 50613, Attention: Brent Dahlstrom, with a copy to Eric Johnson, Esq., Beecher Law Firm, 620 Lafayette Street, Waterloo, Iowa, 50703. Delivery of notice shall be deemed to occur (i) on the date of delivery when delivered in person, (ii) one (1) business day following deposit for overnight delivery to an overnight air courier service which guarantees next day delivery, (iii) three (3) business days following the date of deposit if mailed by United States registered or certified mail, postage prepaid, or (iv) when transmitted by facsimile so long as the sender obtains written electronic confirmation from the sending facsimile machine that such transmission was successful. A party may change the address for giving notice by any method set forth in this section. 16. No Joint Venture. Nothing in this Agreement shall, or shall be deemed or construed to, create or constitute any joint venture, partnership, agency, employment, or any other relationship between the City and Company nor to create any liability for one party with respect to the liabilities or obligations of the other party or any other person. 6 17. Amendment, Modification, and Waiver. No amendment, modification, or waiver of any condition, provision, or term of this Agreement shall be valid or of any effect unless made in writing, signed by the party or parties to be bound or by the duly authorized representative of same, and specifying with particularity the extent and nature of the amendment, modification, or waiver. Any waiver by any party of any default by another party shall not affect or impair any rights arising from any subsequent default. 18. Severability. Each provision, section, sentence, clause, phrase, and word of this Agreement is intended to be severable. If any portion of this Agreement shall be deemed invalid or unenforceable, whether in whole or in part, the offending provision or part thereof shall be deemed severed from this Agreement and the remaining provisions of this Agreement shall not be affected thereby and shall continue in full force and effect. If, for any reason, a court finds that any portion of this Agreement is invalid or unenforceable as written, but that by limiting such provision or portion thereof it would become valid and enforceable, then such provision or portion thereof shall be deemed to be written, and shall be construed and enforced, as so limited. 19. Captions. All captions, headings, or titles in the paragraphs or sections of this Agreement are inserted only as a matter of convenience and/or reference, and they shall in no way be construed as limiting, extending, or describing either the scope or intent of this Agreement or of any provisions hereof. 20. Binding Effect. This Agreement shall be binding and shall inure to the benefit of the parties and their respective successors, assigns, and legal representatives. 21. Counterparts. This Agreement may be executed in one or more counterparts, each of which shall be deemed an original and all of which, taken together, shall constitute one and the same instrument. 22. Entire Agreement. This Agreement, together with the exhibits attached hereto, constitutes the entire agreement of the parties and supersedes all prior or contemporaneous negotiations, discussions, understandings, or agreements, whether oral or written, with respect to the subject matter hereof. 23. Time of Essence. Time is of the essence of this Agreement. IN WITNESS WHEREOF, the parties have executed this Development Agreement by their duly authorized representatives as of the date first set forth above. CITY OF WATERLOO, IOWA DOLLY JAMES 2, LLC HI YIELD, LLC 7 By: rnest G. Clark, Mayor Attest �� , f L if Suzy Shares, City Clerk By: Brent Dahlstrom, Manager PERSONAL GUARANTY. The undersigned, being either an officer, shareholder, manager, or member of Company and/or Affiliate, hereby agree for themselves and their heirs, personal representatives, and assigns, to unconditionally guarantee to City, its successors and assigns, the full and prompt performance by Company and Affiliate, their successors and assigns, of all promises and covenants on the part of Company or Affiliate to be performed pursuant to the foregoing Agreement, including but not limited to the duties of indemnity set forth therein, for a period of three 3) years after the date of the Agreement. Liability of guarantors hereunder is joint and •e eral. 411111110111110 Brent Dahlstrom 8 4- mes R. Sulentic EXHIBIT "A" Legal Description of Property Lot No. 70 in Fractional Block No. 14, Original Plat on the West Side of the Cedar River, City of Waterloo, Black Hawk County, Iowa, except that part thereof lying Southeasterly of the center line of the party wall erected between Lot Nos. 69 and 70. EXHIBIT "B" Legal Description of Affiliate Property Lot 69 and that part of Lot 70 lying Southeasterly of the center line of the party wall erected between Lots 69 and 70, all in Fractional Block No. 14, Original Plat on the West Side of the Cedar River, City of Waterloo, Black Hawk County, Iowa. EXHIBIT "C" Aerial Depiction See attached. EXHIBIT "D" MINIMUM ASSESSMENT AGREEMENT This Minimum Assessment Agreement (the "Agreement") is entered into as of this ` day of 5Q0 kiiv -e-v a& ‘'s." , by and among the CITY OF WATERLOO, IOWA ("City"), Dolly James 2, LLC ("Company"), Hi Yield, LLC ("Affiliate") and the COUNTY ASSESSOR of the City of Waterloo, Iowa ("Assessor"). WITNESSETH: WHEREAS, on or before the date hereof the City, Company and Affiliate have entered into a development agreement (the "Development Agreement") regarding certain real property, described in Exhibit "A" and Exhibit "B" thereto, located in the City; and WHEREAS, it is contemplated that pursuant to the Development Agreement, the Company and Affiliate will undertake the development of an area ("Project") within the City and within the Downtown Waterloo Urban Renewal and Redevelopment Plan Area; and WHEREAS, pursuant to Iowa Code § 403.6, as amended, the City and the Company and Affiliate desire to establish a minimum actual value for the land and the building(s) pursuant to this Agreement and applicable only to the Project, which shall be effective upon substantial completion of the Project and from then until this Agreement is terminated pursuant to the terms herein and which is intended to reflect the minimum actual value of the land and buildings as to the Project only; and WHEREAS, the City and the Assessor have reviewed the preliminary plans and specifications for the improvements (the "Improvements") which the parties contemplate will be erected as a part of the Project. NOW, THEREFORE, the parties hereto, in consideration of the promises, covenants, and agreements made by each other, do hereby agree as follows: 1. Upon substantial completion of construction of the Improvements by the Company, the minimum actual taxable value which shall be fixed for assessment purposes for the land and Improvements to be constructed thereon by the Company as a part of the Project shall not be less than $2,500,000 (the "Minimum Actual Value") in the aggregate for both properties until termination of this Agreement. The parties hereto agree that construction of the Improvements will be substantially completed on or before December 31, 2017. 2. The Minimum Actual Value herein established shall be of no further force and effect, and this Minimum Assessment Agreement shall terminate, on December 31, 2047. Nothing herein shall be deemed to waive the rights of Company or Affiliate under Iowa Code § 403.6, as amended, to contest that portion of any actual value assignment made by the Assessor in excess of the Minimum Actual Value established herein. In no event, however, shall the Company or Affiliate seek or cause the reduction of the aggregate actual value assigned below the Minimum Actual Value established herein during the term of this Agreement. 3. This Agreement shall be promptly recorded by the City with the Recorder of Black Hawk County, Iowa. The City shall pay all costs of recording. 4. Neither the preambles nor provisions of this Agreement are intended to, or shall be construed as, modifying the terms of the Development Agreement. 5. This Agreement shall inure to the benefit of and be binding upon the successors and assigns of the parties, including but not limited to future owners of the Project property. IN WITNESS WHEREOF, the parties have executed this Minimum Assessment Agreement by their duly authorized representatives as of the date first set forth above. CITY OF WATERLOO, IOWA By: By DOLLY JAMES 2, LLC HI YIELD, LLC By: rnest G. Clark, Mayor Brent Dahlstrom, Manager Suzy Schres, City Clerk STATE OF IOWA ) ss. COUNTY OF BLACK HAWK ) On this 0 day of ,c -r -es 7&"---, before me, a Notary Public in and for the State of Iowa, personally appeared Emest G. Clark and Suzy Schares, to me personally known, who being duly sworn, did say that they are the Mayor and City Clerk, respectively, of the City of Waterloo, Iowa, a municipal corporation, created and existing under the laws of the State of Iowa, and that the seal affixed to the foregoing instrument is the seal of said municipal corporation, and that said instrument was signed and sealed on behalf of said municipal corporation by authority and resolution of its City 2 Council, and said Mayor and City Clerk acknowledged said instrument to be the free act and deed of said municipal corporation by it and by them voluntarily executed. STATE OF IOWA COUNTY OF BLACK HAWK Notary Public ) ss. Subscribed and sworn to before me on /7i /lair 2r1, by Brent Dahlstrom as Manager of Dolly James 2, LLC and Hi Yield, LLC. Notary Public BARBARA J MOSTEI( COMMISSION NO.720408 MY COMMISSION EXPIRES JANUARY 15, 2017 3 CERTIFICATION OF ASSESSOR The undersigned, having reviewed the plans and specifications for the improvements to be constructed and the market value assigned to the land upon which the improvements are to be constructed for the development, and being of the opinion that the minimum market value contained in the foregoing Minimum Assessment Agreement appears reasonable, hereby certifies as follows: The undersigned Assessor, being legally responsible for the assessment of the property subject to the development, upon completion of improvements to be made on it and in accordance with the Minimum Assessment Agreement, certifies that the actual value assigned to such land, building and equipment upon completion of the development shall not be less than Two Million Five Hundred Thousand Dollars ($2,500,000) in the aggregate until termination of this Minimum Assessment Agreement pursuant to the terms hereof. h A$essor for Black Hawk County, Iowa l(-()- r 1P Date STATE OF IOWA ) ) ss. COUNTY OF BLACK HAWK ) Subscribed and sworn to before me on // — ,/j—Lo/S-- by T.J. Koenigsfeld, Assessor for Black Hawk County, Iowa. o Notary Public DEBORAH L. BOECKMANN MY COMMISSION NO. 195786 k:- MY CO A�ION //DPIRES O W P