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HomeMy WebLinkAboutDolly James, LLC-1/30/2012Please return this copy to: City Clerk & Finance Department 715 Mulberry Street Waterloo, IA 50703 Preparer Information: Christopher S. Wendland, PO Box 596, Waterloo, Iowa 50704 (319) 234.5701 Name Address City Phone SPACE ABOVE THIS LINE FOR RECORDER DEVELOPMENT AGREEMENT This Development Agreement (the "Agreement") is entered into as of Aaiiwco9) 0 , 2012 by and between Dolly James, LLC (the "Company") and the City of Werloo, Iowa (the "City"). Brent Dahlstrom and James Sulentic are principals of Company 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 buildings and related improvements on property located in the Downtown Urban Renewal and Redevelopment Plan area, generally located on the south side of Sycamore Street, between the railroad tracks and East 8th Street, and legally described on Exhibit "A" attached hereto (the "Property"). 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, or cause it to be conveyed, 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 DEVELOPMENT AGREEMENT Page 2 shall have no duty to convey title to Company until 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. 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 by Company. Company shall construct on the Property six (6) multi -story condominium buildings of not less than 14,400 square feet (4,800 square feet per floor), as depicted on Exhibit "B", and related improvements to the buildings and grounds (collectively, the "Improvements"). 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. It is contemplated that the Improvements will have a total project cost of approximately $6,000,000, divisible into three phases of approximately $2,000,000 each, generally described as follows: Phase I: Buildings 1 and 2 Lots 1, 4, 5, 8, and 9 in Block 1, & E. 7th Street Phase II: Buildings 3 and 4 Lots 2, 3, 6, 7 and 10, in Block 22 Phase III: Buildings 5 and 6 Lots 1, 4, 5, 8 and 9, in Block 22 The Property, the Improvements, and all site preparation and development -related work to make the Property usable for Company's purposes as contemplated by this Agreement are collectively referred to as the "Project". The parties acknowledge that Company may choose to submit the Property to a condominium regime upon completion of a given phase of the Improvements, and that such condominium units may thereafter be sold. 3. Timeliness of Construction; Possibility of Reverter. The parties agree that Company's commitment 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. Measured from the date the Property is deeded to Company, Company must obtain a building permit and begin construction on Phase I within nine (9) months, Phase II within twenty-one (21) months, and Phase III within thirty-three (33) months. Construction of each phase shall be completed within twelve (12) months of its commencement, and all phases shall be completed within forty-five (45) months of the date of conveyance. If Company has not, in good faith, begun the construction of any phase 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 at the end of any phase commencement period but the development of DEVELOPMENT AGREEMENT Page 3 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 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, 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 any phase or of the entire 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. Platting and Release. Company may, in consultation with City, plat the Property if reasonably necessary for purposes of the Project. As nearly as reasonably possible, the area platted for each phase shall correspond with the description of the phase area stated in Section 2 above, or shall be comprised of a roughly equivalent area as measured in square feet. In connection with any sale by Company of that part of the Property corresponding with a completed phase of Improvements, City agrees to release such part of the Property from the conditions and restrictions set forth in this Agreement. A release of any such part of the Property shall not affect the continued effectiveness and enforceability of this Agreement as to any part of the Property that is not specifically released. 5. Reverter of Title; Indemnity. Title shall not revert to City as to any phase of Improvements that has been substantially completed. 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 4, and for such limited purpose Company does hereby constitute and appoint City as its attorney-in-fact. Company further agrees that it shall 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, Company's 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 DEVELOPMENT AGREEMENT Page 4 and prevails in such suit, then Company shall be liable for all legal expenses, including but not limited to reasonable attorneys' fees. Company's duties of indemnity pursuant to this Section 5 shall survive the expiration, termination or cancellation of this Agreement for any reason. 6. 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. 7. Bonds. Until completion of the Improvements, Company agrees that, to ensure complete performance of the Project, it shall obtain and keep in force one or more bonds in the amount of not less than $2,000,000, for each phase of Improvements that has not been substantially completed. Certificates or copies of said bonds shall be delivered to City before City conveys Property title to Company. Company will not do or omit the doing of any act which would vitiate any bond. 8. Water and Sewer. Company will be responsible for extending water and sewer service to any location on the Property and for payment of any associated connection fees. 9. Minimum Assessment Agreement. Company acknowledges and agrees that it 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. Company further agrees that prior to the date set forth in Section 2 of Exhibit "C" it will not seek or cause a reduction in the taxable valuation for the Property, which shall be fixed for assessment purposes, below the amount of $6,000,000.00 in the aggregate, or $2,000,000.00 for each separate phase of Improvements (in either case, as applicable, the "Minimum Actual Value"), through: (i) willful destruction of the 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 agrees to sign said attached Exhibit "C" at the closing. The parties agree to cooperate with any reasonable request by the other party or by the Black Hawk County Assessor to modify such agreement and this Agreement in order to divide the Minimum DEVELOPMENT AGREEMENT Page 5 Actual Value among condominium units that may be established upon completion of a given phase of Improvements. 10. Tax Rebates. Provided that Company has completed the Improvements as set forth herein and has executed the Minimum Assessment Agreement as set forth in Section 9, City agrees to rebate property tax (with the exceptions noted below) as follows: Year One 100% rebate Year Two 100% rebate Year Three 100% rebate Year Four 100% rebate Year Five 100% rebate Year Six 100% rebate Year Seven 100% rebate Year Eight 100% rebate Year Nine 100% rebate Year Ten 100% rebate for any taxable value over the January 1, 2011 value of $ . Rebates are payable in respect of a given year only to the extent that Company has actually paid general property taxes due and owing for such year. To receive rebates for a given year, Company 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. The taxable value of the 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. Rebates may be paid on a phase -by -phase basis if Company plats the Property in a manner corresponding with each phase of Improvements. 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 (a) all phases of the Improvements if the Property is not platted into separate phase parcels or (b) the Improvements relating to a given phase parcel if the property is platted into separate phase parcels, and in any event not based on a prior year for which the assessment is based solely upon (x) the value of the Property or a phase parcel or upon (y) the value of the Property or a phase parcel and a partial value of the Improvements due to partial completion of the Improvements or a partial tax year. City agrees to cooperate with any reasonable request from Company to amend this Agreement so that the rebate incentives provided by this Agreement are, without diminution, divided among and preserved for the benefit of the condominium units that may be established after completion of a given phase of the Improvements. DEVELOPMENT AGREEMENT Page 6 11. 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. 12. Representations and Warranties of Company. Company hereby represents and warrants as follows: A. Company is not prohibited from consummating the transaction contemplated in this Agreement by any law, regulation, agreement, instrument, restriction, order or judgment. B. Company 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. Company 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 behalf of Company. 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. City agrees to cooperate with any reasonable request from Company to execute a written assignment of this Agreement to any future owner of any separate parcel of the Property that result from the creation of a condominium regime and to execute one or more amendments to this Agreement and the Minimum Assessment Agreement to ensure that such future owners are entitled to receive the full benefits contemplated by this Agreement. 14. Materiality of Company's Promises, Covenants, Representations, and Warranties. Each and every promise, covenant, representation, and warranty set forth in this Agreement on the part of Company 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 acknowledges that without such promises, covenants, representations, and warranties, DEVELOPMENT AGREEMENT Page 7 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, to Dolly James, LLC, 3538 Augusta Circle, Waterloo, IA, 50701, Attention: Brent Dahlstrom, with a copy to Eric W. 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. 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 DEVELOPMENT AGREEMENT Page 8 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 By: Ernest G. Clark, Mayor Attest:, Suzy Schares, City Clerk DOLLY JAMES, LLC By: Brent Dahlstrom, Manager r By: PERSONAL GUARANTY. The undersigned, being either an officer, shareholder, manager, or member of Company, 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, its successors DEVELOPMENT AGREEMENT Page 9 and assigns, of all promises and covenants on the part of Company to be performed pursuant to the foregoing Agreement, including but not limited to the duties of indemnity set forth therein. Liability of guarantors hereunder is joint and several. rent Dahlstrom 7,,4y72,62 - aeries Sulentic EXHIBIT "A" Legal Description of Property Those portions of Lots 1, 4, 5, 8 and 9, in Block 1, and Lots 1 through 10, in Block 22, Original Plat on the East Side of the Cedar River, City of Waterloo, Black Hawk County, Iowa, bounded as follows: (a) On the northwest, by right of way of the Union Pacific Railroad, (b) on the northeast, by the southwesterly right of way line of Sycamore Street, (c) on the southeast, by the northwesterly right of way line of E. 8rn Street, and (d) on the southwest, by the toe of the Cedar River flood control levee. Note: Legal description for purposes of conveyance will be determined at a later date. EXHIBIT "B" Homes Styles and Sizes See building plans and sketches attached hereto. EXHIBIT "C" MINIMUM ASSESSMENT AGREEMENT This Minimum Assessment Agreement (the "Agreement") is entered into as of this -S -a- day of ct.vw tLv1\ , 2012, by and among the CITY OF WATERLOO, IOWA ("City"), DOLLY JAMES, LLC ("Company"), and the COUNTY ASSESSOR of the City of Waterloo, Iowa ("Assessor"). WITNESSETH: WHEREAS, on or before the date hereof the City and Company have entered into a development agreement (the "Development Agreement") regarding certain real property, described in Exhibit "A" thereto, located in the City; and WHEREAS, it is contemplated that pursuant to the Development Agreement, the Company 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 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 $6,000,000.00 in the aggregate, or $2,000,000.00 for each separate phase of Improvements (in either case, as applicable, the "Minimum Actual Value") until termination of this Agreement. The parties hereto agree that construction of the Improvements will be substantially completed on or before the following dates: Phase I December 31, 2013 Phase II Phase III December 31, 2014 December 31, 2015 The parties also acknowledge that Company may choose to submit the Property to a condominium regime after completion of a given phase of the Improvements and that future owners of the Property as so divided are intended to be the beneficiaries of this Agreement and a related Development Agreement. 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, 2035, unless the Property is platted into separate tax parcels corresponding with each separate phase of improvements, in which case the Minimum Actual Value herein established with respect to a given phase parcel shall be of no further force and effect, and with respect to such phase parcel this Agreement shall terminate, on December 31 of the year that is twenty (20) years after the effective date of that property's Minimum Actual Value (the "Termination Date"). Nothing herein shall be deemed to waive the Company's rights 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 seek or cause the reduction of the actual value assigned below the Minimum Actual Value established herein during the term of this Agreement. The City shall not unreasonably withhold its consent to permit the Company to contest its taxable valuations in full, commencing with the assessment of January 1, 2036 for the Property as a whole, or, as applicable, January 1 immediately following the Termination Date for a phase parcel. 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. The City agrees to cooperate with any reasonable request by Company to execute a written assignment of this Agreement to future owners of condominium units on the Property and to execute one or more amendments to this Agreement to divide the Minimum Actual Value among such units and to ensure that such future owners receive the benefits contemplated by this Agreement and a related Development Agreement between the parties. CITY OF WATERLOO, IOWA By: By: rnest G. C ark, Mayor Suzy Scha;es, City Clerk STATE OF IOWA ) ss. COUNTY OF BLACK HAWK DOLLY JAMES, LLC By: Brent Dahlstrom, Manager 4 J mes Sulentic, Manager On this day of , 2012, before me, a Notary Public in and for the State of Iowa, personally app red Ernest 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 Council, and said Mayor and City Clerk acknowledged said instrument to be the free act and deed of said municipal corporion b it and by t em voluntarily executed. STATE OF IOWA ) ss. COUNTY OF BLACK HAWK Public Subscribed and sworn to before me on �i uyl , 2012 by Brent Dahlstrom and James Sulentic as Managers of Dolly James, LLC. `lhti.62 L% MO tS BARBARA J. MOSTEK COMMISSION NO. 720408 MY COMMISSION EXPIRES January 15, 2015 Notary Public 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 Tess than Six Million Dollars ($6,000,000) in the aggregate, or Two Million Dollars ($2,000,000) for each separate phase of the development, until termination of this Minimum Assessment Agreement pursuant to the terms hereof. Assessor for Black Hawk County, Iowa Date STATE OF IOWA ) ) ss. COUNTY OF BLACK HAWK ) Subscribed and sworn to before me on , 2012 by , Assessor for Black Hawk County, Iowa. Notary Public