HomeMy WebLinkAboutL and H Farms-3/8/201011111111111111 113
Doc ID 004130220011 Type: GEN
Kind: AGREEMENT
Recorded: 05/05/2010 at 02:13:24 PM
Fee Amt: $59.00 Page 1 of 11
Black Hawk County Iowa
JUDITH A MCCARTHY RECORDER
Fi1e2014-00020574
OPTION EXCHANGE AGREEMENT
Recorder's Cover Sheet
Preparer Information: (name, address and phone number)
Mark S. Rolinger, 415 Clay Street, Cedar Falls, IA 50613, Phone: (319) 277-6830
Taxpayer Information: (name and complete address)
L and H Farms, Ltd.
2052 Hammond Avenue
Waterloo, IA 50702
Return Document To: (name and complete address)
Mark S. Rolinger
415 Clay Street
Cedar Falls, IA 50613
Grantors:
The City of Waterloo
715 Mulberry Street
Waterloo, IA 50703
Grantees:
L and H Farms, Ltd.
2052 Hammond Avenue
Waterloo, IA 50702
Legal Description: See Page 2
Document or instrument number of previously recorded documents:
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OPTION EXCHANGE AGREEMENT
THIS OPTION EXCHANGE AGREEMENT is entered into this TPA- day of March,
2010, by and between the City of Waterloo, a municipal corporation ("City"), and L and 11
Farms, Ltd., an Iowa general partnership ("LHF").
WHEREAS, City and LHF are entering into an Exchange Agreement contemporaneously
with this Option Exchange Agreement in which City will convey approximately 112 acres of
Black Hawk County agricultural land to LBF in exchange for LHF's conveyance of
approximately 20.4 acres of development land to City, and
WHEREAS, the Exchange Agreement is subject to and conditioned upon City and LHF
entering into this Option Exchange Agreement, and neither party would enter into the Exchange
Agreement without the other party also entering into this Option Exchange Agreement; and
WHEREAS, City and LHF have reached agreement on the terms under which they will
exchange the options contemplated in the Exchange Agreement and desire to incorporate the
terms into this Option Exchange Agreement.
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. City's Option to Purchase.
As consideration for the option granted to LHF in Section 2 below, LHF hereby grants City an
option to purchase the development land legally described on Exhibit "A" and shaded in blue and
depicted on the aerial photograph attached hereto as Exhibit "B", subject to the following
conditions:
A. City must convey like -kind agricultural land to LHF as consideration for LHF's
conveyance of the development land to City;
B. The like -kind agricultural land must be acceptable to LHF in its sole and absolute
discretion;
C. The number of tillable acres of agricultural land that LHF must receive in
exchange for its conveyance of development land to City shall be determined pursuant to the
following formula:
87.9 _ CSR of replacement agricultural land x 3.21 = the "Exchange Ratio"
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In the above formula, the number 87.9 is the average com suitability rating (CSR) for the
development land subject to City's option to purchase. Said figure shall be divided by the
average CSR of the replacement agricultural land and then multiplied by 3.21. The figure 3.21 is
the Exchange Ratio agreed upon between City and LHF for replacement agricultural land
acceptable to LHF having an average CSR identical to the development land subject to City's
option to purchase (87.9). City must convey 3.21 tillable acres of acceptable replacement
agricultural land with an average CSR of 87.9 for every tillable acre of development land
conveyed by LHF to City pursuant to this Agreement. The above formula is intended to adjust
the Exchange Ratio for variations in the average CSR for the replacement agricultural land. For
example, if the average CSR for the replacement agricultural land is 84.5, then the Exchange
Ratio for the transaction between City and LHF is adjusted to 3.34. In other words, City must
convey 3.34 tillable acres of replacement agricultural land to LHF in exchange for every tillable
acre of development land conveyed by LHF to City pursuant to City's exercise of its option.
D. City's option to purchase the development land from LHF shall remain in effect
for a period of eight (8) years from and after the date this Option Exchange Agreement is
approved by the City Council for City.
E. City shall not be required to purchase all of the development land subject to its
option in a single purchase. City may exercise its purchase option on multiple occasions through
the purchase of portions of the development land provided that each exercise must occur before
City's option lapses.
F. Each successive purchase by City shall be for land contiguous to land previously
acquired by City from LHF.
G. If City purchases all of the development land subject to its option, it is likely that
the final exchange between City and LHF will result in LHF receiving more or less tillable acres
of agricultural land than it is entitled to pursuant to the Exchange Ratio applicable to the
exchange based upon the formula set forth in subparagraph C above, since finding a parcel of
agricultural land acceptable to LHF with precisely the number of tillable acres that LHF is
entitled to under the terms of this Agreement is unlikely. In that event, LHF will pay cash to City
for any excess tillable acres received by LHF in the exchange, or City will be required to pay
cash to LHF for any shortfall in tillable acres. The amount of cash consideration due from one
party to the other will be determined by multiplying the purchase price per tillable acre for the
replacement agricultural land times the excess number of tillable acres received by LHF or the
shortfall in tillable acres.
H. Each transaction must be structured in a manner that qualifies the exchange for
like -kind exchange treatment under Internal Revenue Code (IRC) §1031, and only City's final
acquisition of the development land shall involve any cash consideration.
2
Section 2. LHF's Option to Compel a Purchase of Its Land.
As consideration for the option granted to City in Section 1 above, City grants LHF an option to
put any of the development land that remains unpurchased by City at the time City's option to
purchase the development land lapses in 8 years. For a period of 8 years after the lapse of City's
optionto purchase the development land, LHF shall have the right to require City to purchase any
unpurchased development land which was previously subject to City's purchase option pursuant
to Section 1 above. LHF's identification of suitable replacement agricultural land shall be a
prerequisite to LHF's exercise of its put option. If LHF is able to identify suitable replacement
agricultural land within the 8 -year period following the lapse of City's option, LHF shall have the
right to require City to purchase said replacement agricultural land for the purpose of exchanging
the replacement agricultural land with LHF for all or part of the remaining development land.
LHF shall not be required to put all of its remaining development land in a single exercise of the
put option provided for herein. LHF may exercise its put option on multiple occasions by
requiring City to acquire portions of the development land in exchange for acceptable
replacement agricultural land. The Exchange Ratio will be determined using the same formula
set forth in Section 1 above for City's exercise of its purchase option. The final exchange
between LHF and City pursuant to LHF's exercise of the put option granted herein may result in
LHF receiving more or less tillable acres than it is entitled to pursuant to the applicable Exchange
Ratio since finding a parcel acceptable to LHF with precisely the number of tillable acres that
LHF is entitled to in exchange for the last parcel of development land is unlikely. In that event,
LHF will pay cash to City for any excess tillable acres received by LHF, or City will be required
to pay cash to LHF for any shortfall in tillable acres. The amount of cash consideration will be
determined by multiplying the price per tillable acre of the replacement agricultural land times
the excess (or shortfall) in tillable acres.
Section 3. Exchanges.
Each transaction contemplated herein shall be structured to qualify for like -kind exchange
treatment under IRC §1031. The parties agree to execute any additional documents required to
allow the transactions to so qualify. LHF agrees to bear any expenses associated with document
preparation necessary to qualify the contemplated transactions for like -kind exchange treatment.
Section 4. Conveyances.
City agrees to require the owners of any replacement agricultural land acceptable to LHF to
convey the replacement agricultural land directly to LHF by warranty deed as consideration for
LHF's conveyance of the development land to City by warranty deed. In recognition of LHF's
role in identifying and pre -approving the replacement agricultural land for purposes of this
Agreement, LHF agrees to accept the conveyance of the replacement agricultural 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 replacement agricultural land, whether as to merchantability of said land, its fitness
for any particular purpose, or otherwise. Title shall be merchantable title in accordance with the
Iowa Title Standards. All liens or clouds on title shall be removed prior to completing the
exchanges. If title cannot be made merchantable within a reasonable period of time, the exercise
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of the options provided for herein shall be rendered null and void; however, the options shall
remain in effect provided they have not lapsed through the passage of time.
Section 5. Surveys.
LHF shall have the right to procure the surveys necessary to provide a legal description for the
land subject to City's option, said legal description to be incorporated into Exhibit "B", and any
additional surveys of the development land necessary to complete the transactions
contemplated herein. City shall reimburse LHF the cost of procuring the plats of survey. Any
plats of survey necessary to complete the transactions contemplated herein shall be filed in the
office of the Black Hawk County Recorder prior to completion of the exchanges.
Section 6. Abstracting.
City shall provide counsel for LHF with an updated abstract of title for any replacement
agricultural land to be conveyed to LHF in exchange for its development land pursuant to the
terms of this Agreement. Legal counsel for LHF shall examine the abstract of title and confirm
that the current titleholder of the replacement agricultural land possesses marketable title to the
real estate as required by this Agreement. LHF will provide City with abstracts of title for any
and all parcels of development land City acquires from LHF. City will reimburse LHF the cost of
procuring the abstract of title for City. Legal counsel for City shall examine the abstract of
title and confirm that LHF possesses marketable title to the land to be acquired by City.
Section 7. 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 8. Option to Rent.
Lanehaven Farms, Inc., shall be entitled to rent any and all undeveloped portions of the
development land purchased by City 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 ten (10) years shall be $190 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.
4
Section 9. 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:
The City of Waterloo, a municipal corporation
Attention: Mayor
Attention: City Clerk
315 Mulberry Street
Waterloo, Iowa 50703
L and H Farms, Ltd., an Iowa general partnership
Lanehaven Farms, Inc., Partner
Attention: President
7052 Hammond Avenue
Waterloo, Iowa 50702
Section 10. Amendments.
This Agreement may not be modified except in a written instrument signed by the parties.
Section 11. 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 12. 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 13. 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.
5
Section 14. 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.
[Signature page follows.]
6
IN WITNESS WHEREOF, City and LHF have each caused this Agreement to be
executed, sealed and delivered as of the day and year first above written.
THE CITY l�. WATERLOO, A MUNICIPAL CORPORATION
By:
By:
rnest G. Clark, Mayor
Suzy Schar s, City Clerk
LANEHAVEN FARMS, INC., Partner
By:
Curtis G. Hollis, President
THE HURST HOLDING COMPANY, INC., Partner
By: ��
Richard H. Hurst, President
By:
Donald J. Hurst, Sery
6
STATE OF IOWA )
} ss.
COUNTY OF BLACK HAWK )
This instrument was acknowledged before me on the e day of
2010, 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 )
d for Black Haw
County, Tow
This instrument was acknowledged before me on the day of A-
2010, 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.
STATE OF IOWA
Pat°44-1,„
Notary Public in and for Black Hawk County, Iowa
) ss.
COUNTY OF BLACK HAWK )
This instrument was acknowledged before me on the t' day of
2010, by Richard H. Hurst and Donald J. Hurst as President and Secretary respectively
of The Hurst Holding Company, Inc., an Iowa corporation, General Partner of L and H
Farms, Ltd., an Iowa general partnership.
,� 4LMARK ROLINGER
Commission f' trnnb:s 5L'2tas
',.� ' MYCcm•1 iii
otary Public in and for B Hawk County, Iowa
7
EXHIBIT "A"
The Southwest Quarter of the Northwest Quarter (SW 1/4 NW I/) 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 (6- , 2010, and filed Mare-hm 'Y 2010, as Document
No. - ; 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 (Tax Parcel
No. 8813-09-151-003);
AND
The North Half of the Southwest Quarter (NIh SW 1/4) and the North Half of the South
Half of the Southwest Quarter (NIh Sl SW1/a), all in Section No. 9, Township No. 88
North, Range No. 13 West of the Fifth Principal Meridian, EXCEPT the South
1,131.43 feet of the West 385 feet thereof (Tax Parcel Nos. 8813-09-301-001, 8813-
09-326-001 and 8813-09-351-001);
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 minutes East 920.5 feet; thence
South 26 degrees 56 minutes West 508.5 feet; thence South 0 degrees 541 minutes
West 561.8 feet to a point on the South line of said Northeast Quarter; thence South 89
degrees 21/ minutes West 680.4 feet along said South line to the point of beginning
(Tax Parcel No. 8813-09-251-004).
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