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HomeMy WebLinkAboutL and H Farms-12/12/2011EXCHANGE AGREEMENT THIS EXCHANGE AGREEMENT is entered into this day ofe-W14-01- 2011, by and between the City of Waterloo, a municipal corporation ("City"), and L and H Farms, Ltd., an Iowa general partnership ("LHF"). WHEREAS, City has offered to purchase approximately 50 acres more or less of Black Hawk County agricultural land described on the attached Exhibit "A" (hereinafter "Farm Land") for the sum of $750,000.00 on or before Thursday, December 15, 2011, if LHF will agree to accept a conveyance of the Farm Land in exchange for 24.5 acres of development land located at the intersection of U.S. Highway 20 and Ansborough Avenue; and WHEREAS, LHF is the owner of 24.5 acres of real property located at the southeast corner of the intersection of U.S. Highway 20 and Ansborough Avenue described on the attached Exhibit "B" and depicted on the aerial photograph as parcels comprised of 7.61 acres more or less and 16.89 acres more or less on attached Exhibit "C" (hereinafter "Development Land"); and WHEREAS, LHF is willing to convey the Development Land to City in exchange for the Farm Land so as to qualify the transaction for the non -recognition of gain under Internal Revenue Code Sec. 1031 (such exchange being hereafter referred to as the "Exchange"). NOW, THEREFORE, in consideration of the mutual covenants herein contained and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties agree as follows: Section 1. Construction and Interpretation. This Agreement shall be carried out, governed by, and construed in accordance with the laws of Iowa and, to the extent necessary or appropriate, to obtain like -kind exchange treatment under Internal Revenue Code Sec. 1031. The parties agree to execute any additional documents required to allow this transaction to so qualify. LHF agrees to bear any expenses associated with document preparation necessary to qualify the Exchange for like -kind exchange treatment. Section 2. Contingencies. 2.1 City's obligations herein are subject to and conditioned upon the following: A. The City Council for the City of Waterloo, Iowa, adopting a resolution authorizing City to take assignment of the contract to purchase the Farm Land pursuant to the agreed-upon terms and conditions of the assignment set forth in Section 3 below, and further authorizing City to purchase the Farm Land for the sum of $750,000.00 pursuant to the terms and conditions of said contract; B. The City Council for the City of Waterloo adopting a resolution authorizing City to convey the Farm Land to LHF in exchange for the Development Land by directing the sellers of the Farm Land to convey it directly to LHF in accordance with the terms of that certain Option Exchange Agreement between City and LHF dated March 8, 2010; C. City completing its purchase of the Farm Land prior to closing on this exchange with LHF. 2.2 LHF's obligations herein shall be subject to and conditioned upon City completing its purchase of the Farm Land. Section 3. Terms of Assignment. City will be taking assignment of an existing contract to purchase the Farm Land. A copy of said contract is attached to this Agreement as Exhibit "D." LHF acknowledges that Paragraph 23(D) in the Addendum to the Offer to Buy Real Estate and Acceptance could be construed as requiring the purchaser under the contract to also acquire adjacent farm land pursuant to the terms of a second Offer to Buy Real Estate and Acceptance between the current owner of the Farm Land and Hollis Farms, Inc. City's obligations herein are subject to the assignment in which Hollis Farms, Inc. assigns all of its right, title and interest in the Offer to Buy Real Estate and Acceptance to purchase the Farm Land, including a provision in which the current owner of the Farm Land agrees to look solely to Hollis Farms, Inc. for performance of the second real estate contract to purchase the adjacent farm land and agrees to hold the City of Waterloo harmless from any and all obligations under the second real estate contract to purchase the adjacent farm land. Section 4. Conveyance of Property. 4.1 City agrees to require the current owners of the Farm Land to convey said real property directly to LHF by warranty deed as consideration for LHF's conveyance of the Development Land to City by warranty deed; 4.2 City agrees to accept the conveyance of the Development Land in accordance with the terms and conditions of this Exchange Agreement. 4.3 In recognition of LHF's role in identifying and pre -approving the Farm Land for acquisition by City for purposes of this Agreement, LHF agrees to accept the conveyance of the Farm Land "as is," subject to all conditions, easements, restrictions and other characteristics, and hereby acknowledges that City has not made and will not make any representation or warranty with respect to the Farm Land, whether as to merchantability of said land, its fitness for any particular purpose, or otherwise. 4.4 The parties agree that both the Farm Land and the Development Land shall be deemed to have a value of $750,000.00 for purposes of this transaction. 4.5 No cash consideration will be exchanged between the parties. Section 5. Form of Conveyance 5.1 City shall cause the current owner of the Farm Land to convey said real property directly to LHF by Warranty Deed. LHF shall convey the Development Land to City by Warranty Deed. Title shall be merchantable title in accordance with the Iowa Title Standards. 5.2 All liens or clouds on title shall be removed prior the Exchange. 5.3 If title cannot be made merchantable within a reasonable period of time, this Exchange Agreement shall become null and void. Section 6. Closing. The closing on the Exchange contemplated herein shall occur contemporaneously with the closing on City's purchase of the Farm Land. It is expected that the closing will occur on or before December 15, 2011. Section 7. Property Taxes. 7.1 LHF acknowledges that City will receive a credit against the $750,000.00 purchase price for the Farm Land in an amount equal to the annual real estate taxes on the Farm Land prorated through the closing date, and that as a result of such credit, the seller of the Farm Land will expect City and its successors to pay the installments of property taxes due on and after March 31, 2012. LHF agrees to assume responsibility for making the general property tax payments for the Farm Land due March 31, 2012, and all subsequent installments. 7.2 LHF will pay the property taxes on the Development Land that are due March 31, 2012. LHF will also pay one hundred percent (100%) of the installment of general real estate taxes due on September 30, 2012. City shall be responsible for real estate taxes attributable to the Development Land due March 31, 2013, and all subsequent installments of general real estate taxes attributable to the Development Land, if any. Section 8. Survey. If the parties determine that a survey of the Development Land, or any part thereof, is required, then City shall reimburse LHF for the cost of procuring a plat of survey for the Development Land. The plat of survey must be completed and filed of record in the office of the Black Hawk County Recorder prior to the completion of the Exchange contemplated herein. Section 9. Abstracting. 9.1 The current owner of the Farm Land will provide City with an updated abstract of title for the Farm Land prior to City having to complete its purchase of the Farm Land. Upon receipt of the abstract of title, City shall deliver it to legal counsel for LHF. Legal counsel for LHF shall examine the abstract of title and confirm that the current owner of the Farm Land possesses marketable title to the real estate as required by this Exchange Agreement. 9.2 LHF will provide City with an updated abstract of title for the parcel of real estate that includes the Development Land. City acknowledges that the abstract of title will include other real estate. City shall bear the expense of paying the abstract company to prepare a separate abstract of title for the Development Land. City may defer the preparation of this abstract until such time as it is prepared to sell all or a portion of the Development Land. Section 10. Other Closing Costs. Each of the parties agrees to pay any closing costs not specifically addressed herein in the manner customarily paid by buyers and sellers as part of real estate transactions in the State of Iowa. Section 11. Option to Rent. City agrees that as long as City remains the titleholder to all or a portion of the Development Land, Lanehaven Farms, Inc., shall be entitled to rent any and all undeveloped portions of the Development Land on a year-to-year basis on the condition that Lanehaven Farms, Inc., enter into a written lease agreement with City requiring, among other things, that Lanehaven Farms, Inc., provide the same indemnification customarily required of tenants in a cash basis farm lease and that Lanehaven Farms, Inc., procure customary liability insurance identifying City as an additional insured. Annual rent for the first eight (8) years shall be $190.00 per acre. Thereafter, annual rent shall be mutually agreed upon by the parties or in the absence of such agreement, it shall be set at the then prevailing fair rental value as determined by a mutually agreeable farm management company such as Hertz Farm Management. Rent shall be payable in December of each calendar year. Section 12. Notices. All notices, requests, demands, directions and other communications required or permitted to be given pursuant to this Agreement shall be valid if in writing and if delivered personally, or sent by certified or registered mail, return receipt requested, postage prepaid and addressed as follows: To City: To LHF: Section 13. Amendments. The City of Waterloo, a municipal corporation Attention: Ernest G. Clark, Mayor Attention: Suzy Schares, City Clerk 315 Mulberry Street Waterloo, Iowa 50703 L and H Farms, Ltd., an Iowa general partnership Lanehaven Farms, Inc., Partner Attention: Curtis Hollis, President 7052 Hammond Avenue Waterloo, Iowa 50702 This Agreement may not be modified except in a written instrument signed by the parties. Section 14. Enforceability. This Agreement shall bind and inure to the benefit of the parties hereto and their respective successors, executors, personal representatives and assigns. No party to this Agreement may assign their/its rights or interests hereunder without the prior written consent of each of the other parties. Section 15. Counterparts. This Agreement may be executed simultaneously in two or more counterparts, each of which shall be deemed an original, but all of which taken together shall constitute one and the same document. Section 16. Limitation of Rights. With the exception of the rights herein expressly conferred, nothing expressed in this Agreement is intended or shall be construed to give to any person or entity, other than the parties hereto, any legal or equitable right, remedy or claim under or in respect to this Agreement or any covenants, agreements, conditions and provisions herein contained, this Agreement and all of the covenants, agreements, conditions and provisions hereof being intended to be and being for the sole and exclusive benefit of the parties hereto. Section 17. Severability. If any provision of this Agreement shall be held or deemed to be or shall, in fact, be inoperative or unenforceable as applied in any particular case in any jurisdiction or jurisdictions or in all jurisdictions, or in all cases because it conflicts with any other provision or provisions hereof or any constitution or statute or rule of public policy, or for any other reason, such circumstances shall not have the effect of rendering the provision in question inoperative or unenforceable in any other case or circumstance, or of rendering any other provision or provisions herein contained invalid, inoperative, or unenforceable to any extent whatever. Section 18. Intent. It is the intent of the parties that this Exchange Agreement shall permit each party to complete a like -kind exchange pursuant to Internal Revenue Code Sec. 1031 and it is intended to comply with the requirements of the regulations thereunder, including, but not limited to, Reg. 1.1030(k)-1. To the extent that any provisions herein conflict with the requirements of the safe harbor provisions contained therein, the requirements and the conditions of the statute and the regulations shall control. [SIGNATURE PAGE FOLLOWS.] IN WITNESS WHEREOF, City and LHF have each caused this Exchange Agreement to be executed, sealed and delivered as of the day and year first above written. THE CITY OF WATERLOO, A MUNICIPAL CORPORATION By: .77/kg Ernest G. Clark, Mayor By: ��—�� ��+rk_ Suzy Sc City City Clerk L AND H FARMS, LTD. By: LANEHAVEN FARMS, INC., Partner By: Curtis G. Hollis, President STATE OF IOWA ) ) ss. COUNTY OF BLACK HAWK ) This instrument was acknowledged before me on the /=— day of 2011, by Ernest G. Clark as Mayor and Suzy Schares as City Clerk of the City of Waterloo, Iowa, an Iowa municipal corporation. STATE OF IOWA ) ) ss. COUNTY OF BLACK HAWK ) This instrument was acknowledged before me on the day of , 2011, by Curtis G. Hollis as President of Lanehaven Farms, Inc., an Iowa corporation, General Partner of L and H Farms, Ltd., an Iowa general partnership. Notary Public in and for Black Hawk County, Iowa EXHIBIT "A" Farm Land The East 1722 feet of the North Half of the Northwest Quarter of Section 26, Township 88 North, Range 13 West of the 5th P.M., Black Hawk County, Iowa, except the North 55 feet thereof (50 acres more or less). Subject to easements, restrictions, covenants, ordinances and limited access provisions of record and not of record. EXHIBIT "B" Development Land The Southwest Quarter of the Northwest Quarter (SW1/4 NW1/4) of Section No. 9, Township No. 88 North, Range No. 13 West of the Fifth Principal Meridian, City of Waterloo, Black Hawk County, Iowa, EXCEPT Parcel "B" conveyed to the City of Waterloo by deed dated March 16, 2010 and filed May 5, 2010 as Doc. No. 2010-20575; and EXCEPT Tract "A" in a right-of-way plat dated January 19, 1979, and filed May 30, 1980, as 539 Lot Deed 982-991; and EXCEPT Tract "B" (Easement) in the same right-of-way plat filed as 539 Lot Deed 982-991, and EXCEPT Fee Tract "B" in the Acquisition Plat filed July 11, 2005 as Document No. 2006873; AND The North 43 feet of the North Half of the Southwest Quarter (N1/2 SWI/4) in Section No. 9, Township No. 88 North, Range No. 13 West of the Fifth Principal Meridian, Black Hawk County, Iowa; AND That part of the West Half of the Northeast Quarter of Section No. 9, Township No. 88 North, Range No. 13 West of the Fifth Principal Meridian, in the City of Waterloo, Black Hawk County, Iowa, described as beginning at the Center of said Section; thence North 0 degrees 03 minutes West 1033.5 feet along the West line of said Northeast Quarter; thence South 89 degrees, 191/2 minutes East 920.5 feet; thence South 26 degrees 56 minutes West 508.5 feet; thence South 0 degrees 541/2 minutes West 561.8 feet to a point on the South line of said Northeast Quarter; thence South 89 degrees 211/2 minutes West 680.4 feet along said South line to the point of beginning (Tax Parcel No. 8813-09-251-004). Subject to easements, restrictions, covenants, ordinances and limited access provisions. of record and not of record. ASSIGNMENT OF OFFER TO BUY REAL ESTATE AND ACCEPTANCE THIS ASSIGNMENT is made and entered into this 7`'t:' `'` day of December, 2011, by and between Hollis Farms, Inc., an Iowa corporation, and the City of Waterloo, a municipal corporation ("City"). 1. Assignment. Hollis Farms, Inc. hereby assigns all of its right, title and interest in the Offer to Buy Real Estate and Acceptance attached hereto as Exhibit "A." 2. Acceptance of Assignment. City hereby accepts assignment of the Offer to Buy Real Estate and Acceptance attached hereto as Exhibit "A" subject to City not having any obligation to purchase the adjacent real estate pursuant to the separate Offer to Buy Real Estate and Acceptance referenced in paragraph 23(D) of the Addendum to the Offer to Buy Real Estate and Acceptance. John E. Sturtz and Paula Sturtz, the owners of the subject real estate, must confirm by their approval of this Assignment that they will hold City harmless from having to perform on the second contract and will look solely to the party to the second contract, Hollis Farms, Inc. for performance of said contract. 3. Indemnification. Hollis Farms, Inc. hereby agrees to indemnify the City of Waterloo and hold it harmless from and against any claims by John E. Sturtz and Paula Sturtz, the owners of the subject real estate and adjacent real estate, that by virtue of this Assignment, the City of Waterloo is obligated to purchase the adjacent 21.5 acres which is the subject of a separate Offer to Buy Real Estate and Acceptance between John E. Sturtz and Paula Sturtz and Hollis Farms, Inc. HOLLIS FARMS, INC. By: THE CITY OF WATERLOO, A MUNI :" CORPO' -,T N By: Blake G. Hollis, President Ernest G. Clark, Mayor Suzy Scares, City Clerk The undersigned, John E. Sturtz and Paula Sturtz, married persons, hereby consent to the Assignment set forth above and agree to hold the City of Waterloo harmless from and against any claims by us that the City of Waterloo is obligated to purchase the adjacent 21.5 acres which is the subject of a separate Offer to Buy Real Estate and Acceptance between the undersigned and Hollis Farms, Inc. The undersigned hereby confirm that they will look solely and exclusively to Hollis Farms, Inc. for performance of the contract to purchase the adjacent 21.5 acres. Paula Sturtz MEMORANDUM OF AGREEMENT REGARDING PRORATING OF REAL ESTATE TAXES THIS AGREEMENT is made and entered into this 15th day of December, 2011, by and between JOHN E. STURTZ and PAULA STURTZ, married persons (hereinafter "Sturtz"), the CITY OF WATERLOO (hereinafter "City"), and L and H Farms, Ltd. RECITALS: A. Sturtz entered into an Offer to Buy Real Estate and Acceptance (hereinafter "Contract") with Hollis Farms, Inc. on August 23, 2011, for the sale and purchase of the East 1,722 feet of the North Half of the Northwest Quarter of Section 26, Township 88 North, Range 13 West of the 5th P.M., Black Hawk County, Iowa, except the North 55 feet thereof (50 acres more or less) (hereinafter "Real Estate"). B. Hollis Farms, Inc. assigned its rights in the Contract to City and City accepted assignment of the Contract by Assignment of Offer to Buy Real Estate and Acceptance dated December 15, 2011. C. City will convey the Real Estate to L and H Farms, Ltd. as part of an exchange for like - kind real estate. D. The purpose of this Agreement is to confirm the parties' agreement regarding the manner in which property taxes will be prorated pursuant to the terms of the Contract. The parties acknowledge that the Contract requires that property taxes for the Real Estate be prorated to the closing date for the sale and purchase of the Real Estate, December 15, 2011. Sturtz acknowledges that prorating the real estate taxes will require that Sturtz pay 100% of the installment of real estate taxes attributable to the Real Estate due on or before March 31, 2012, and 11/12 of the installment of real estate taxes attributable to the Real Estate due September 30, 2012. The parties acknowledge that the Real Estate is not likely to be taxed as a separate parcel by the time the real estate tax bill for the installments due September 30, 2012 and March 31, 2013 is issued in August of 2012. The tax bill will be sent to Sturtz. Sturtz agrees to pay the taxes due on March 31, 2012, September 30, 2012, and March 31, 2013. L and H Farms, Ltd. as successor to City will reimburse Sturtz for its share of the real estate taxes. The parties acknowledge that the Real Estate will likely be taxed as a separate parcel at the time the property tax bill for the installments due September 30, 2013 and March 31, 2014 is issued in August of 2013. It is understood and agreed by the parties that the City's successor, L & H Farms, Ltd. or its successor will be responsible for the taxes due March 31, 2013 and all subsequent installments of real estate taxes. IN WITNESS WHEREOF, the parties hereto have executed this Agreement the day and year first above written. JOHN E. STURTZ CITY OF 1 RLOO B PAUL STURTZ Mayor L AND H FARMS, LTD. By: By: LANEHAVEN FARMS, INC., Partner City Clerk By: Curtis G. Hollis, President