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CR 91-19 Revision - Auto Mall Agreement \ January 10, 1991 ~ Council Report: 91-19 , ~ REVISION - AUTO MALL AGREEMENT ~ Proposed Action. Staff recommends adoption of the following motion: Move to approve Amendment to Developers Aqreement and Street Riqht-of-Wav Use Aqreement between the city of Hopkins and Auto Mall Partnership dated March 17. 1987. and authorizing the city Manaqer and Mayor to execute amended aqreement sublect to the conditions as recommended by staff Approval of this action will allow the agreement to be prepared and executed and thus allow the applicant to proceed with financing of this project. Overview. In December 1986, the City Council reviewed the following action in conjunction with the proposed construction of an auto mall located at the northeast corner of County Road 3 and 11th Avenue. o Conditional Use Permit o Rezoning o Vacation of Second Street South All of the above items were approved except for the vacation request. The vacation of Second Street South was requested by the auto mall in order to use the property for parking. A conditional use permit specifically required the applicant, as one of the conditions, to . secure ownership or use of Second Street South. Even though the Council denied the request for vacation they did take action authorizing the city to enter into an agreement with the developer to allow the use of Second Street South for parking. This agreement was subject to termination by the City upon 180 days written notice should the City determine that such right-of-way was needed for public purposes. The auto mall owner is presently attempting to secure long-term financing for this project. The proposed lender lS concerned that if the City terminates the auto malls right to use a portion of Second Street South that, it will have a negative impact on this development and that it will no longer be able to operate as parking will not be available. The amendment to the agreement which is being requested by the applicant will allow them to secure their necessary financing. Primary Issues to Consider. o What are the consequences of not undertaking this action? o What is the impact of this action? o Why was the original vacation request denied? o Has the City Attorney reviewed this item? o What future action will be undertaken regarding this matter? o What are the specifics of the amendment being requested? o How was the yearly payment determined? Supporting Information. , 0 Developers Agreement and Street Right-of-Way Use Agreement dated March 17, 1987. _~ Letter from Kaplan, Strangis & Kaplan /_ 0 Site Map ___-L~ ~ / ~~ J~mes . Kerigan, Planning & Economic Development Director , MALL AGREEMENT CR: 91-19 Page 2 . Analysis. Based on the proposed recommendation, the city council has the following issues to consider: 0 What are the consequences of not undertaking this action? Hopkins Auto Mall Partnership is presently in the process of attempting to secure long-term financing for their project. They have been working with a lender and would like to close on this financing by the end of January. It appears that if the lender cannot be provided with a sufficient comfort level as relates to the use of Second Street South, they are not willing to provide the necessary financing. If the City Council did not wish to undertake the proposed action at this time, this would probably result in the mall owners not securing their financing from the proposed lenders either in January or any time ln the near future. It would probably require them to talk to other lenders in an attempt to locate one that was not uncomfortable with the present language. They would eventually have to secure long- term financing as their present financing is short-term construction financing that was placed on the project at the time that it was constructed. . What is the impact of this action? 0 The impact of this action on the city would be to restrict the City's inability to secure the use of Second street South at any time in the reasonable future should it be determined that it is needed for public purpose. From the staff's standpoint it is questionable whether the subject property will ever be required to be used by the City. In a traffic study done by Benshoof & Associates concerning improvements to County Road 3 and 11th Avenue it was proposed that any property necessary for the widening of county Road 3 would be taken from the south side of county Road 3. For widening of 11th Avenue South, the City has already secured the necessary easement from the Auto Mall property to facilitate this development. 0 Why was the original vacation request denied? The Zoning and Planning Commission approved the vacation request of Second Street South by the applicant at the time that it was submitted. The City Council subsequently denied this request. It appears that this denial was based upon the following: . . MALL AGREEMENT CR: 91-19 Page 3 . o That there are potentially deed restrictions on this property which would make it difficult to vacate the property and provide it to the developer. As part of the Zoning and Planning commission approval of the vacation it was requested that this item be referred to the City Attorney to undertake the necessary paper work to attempt to facilitate the vacation. o There appeared to be interest on the part of certain city council members to have the City retain ownership of the property should it be determined necessary for some future public purpose. Because of the above reasons, the Auto Mall owner stated that if Council did not wish to approve the vacation they would be willing to accept a lease of this property with the termination clause as detailed in the approved agreement. o Has the City Attorney reviewed this item? staff has discussed this matter with the City Attorney. He does not have a problem with either vacating the property, providing a long . term, lease or revising the agreement to reflect the language as being requested by the applicant. o What future action will be undertaken regarding this matter? The action that is presently be requested will allow the applicant to secure their permanent financing. However, if this action is approved they still wish to look at the possibility of either securing a long- term lease of this property or a vacation. They will be reviewing both of these alternatives and probably be returning back to the city Council to consider one of these actions at some future date. Staff is recommending that the city Council approve the action contingent upon the following: - Applicant prepares a revised agreement in a form and with language acceptable to the City of Hopkins. - The applicant agrees to submit an application for a vacation of Second Street South located on the subject property within 120 days following execution of the revised agreement. Should it be determined that a vacation is not possible, the applicant shall undertake action, if determined feasible, to facilitate an execution of an easement for the Second Street South property located on the subject site. It shall be . understood that the agreement shall remain in force should a vacation or easement be unable to be approved and executed. - That the applicant shall pay on an annual basis a payment of $3,700 in consideration for the use of Second Street South. Such payment shall be made for a 30 year time period. ; MALL AGREEMENT CR: 91-19 Page 4 . o What are the specifics of the amendment being requested? Under the present agreement the city allows the auto mall owner to use Second Street South for parking, landscaping and signage. This right can be terminated by the City with 180 days written notice. Under the language proposed by the legal counsel for the auto mall owner, termination of the use of Second Street South would be undertaken only at such time as the auto mall site is no longer used for commercial purposes. o How was the yearly payment determined? The payment is based upon the fact that the original Second Street right-of-way was 60 feet in width. Twenty feet of the northerly right-of-way has been vacated previously and is part of the auto mall property. If a future vacation took place for the remaining right-of- way, the auto mall would receive 10 feet and the City of Hopkins 30 feet. The 30 feet secured by the city under such action would have a value of approximately $111,150, if it was assumed it was worth $6.50jsq. ft. Based upon an amortization over 30 years at 0 interest, the payment would be $3,700 per year. Staff and applicant felt that this would be an appropriate figure to calculate an annual payment for ~ use of this property. Alternatives. The city Council has the following alternatives regarding this matter: 1. Approve the action as requested by city staff. This action will allow the applicant to secure his necessary financing. 2. Continue for further information. Under this action the applicant will not be able to secure his necessary financing in January. 3. Deny the request. Under this action the applicant will have to attempt to find another lender willing to provide the financing with the agreement as it presently exists. If they are not able to secure such long-term permanent financing it could potentially place the project in jeopardy. 4. Approve the amendment to the agreement with language other than proposed by staff. with this alternative the council could consider the following: o limit the termination clause to something different than is presently proposed by the developer ~ J . . . - .. . ~ - ~ - - , I 5314679 DEVELOPER'S AGREEMENT ANn STREET RIGHT-O~-WAY USE AGRf.EMENT --_._~ --_. -.--. J - THIS AGREEMENT, is m~C!e as of '"he 17th day of March, 1987, by and 8etween the CITY OF HOPKINS, a Minne~ota municipal corporatlon ( the "Cityn) and HO PKI NS AUTO '1ALL PflHTNERSHIP, a Minnesota general par tnersl- ip ("Developer"r~-~ - -, . WITNESSETH: WHERr.;AS: a. Developer is or will be the owne r of a parcel of land I located in the City of Hopkins, Hennepin County, Minnesota, lega 11 y . described on Exhibit 1\ attached hereto (the "s i te") ; and I I I b . Developer desil:."es to construct on the Site a I multi-tenant commel:."cial building ( the "Pl:."oject"J subs tantially in accol:."d~nce with the site plan attached he I:." e to as Exhibit B ( the "Site Plan"), to be occupied by various automobile service and/or supply companies; and c. In ol:."der to constl:."uct the Project as shown on the Site Plan, the Developer must 'Jtilize a portion of Second S tree t South, . as dedicated in the plat of West M 1 n neapo lis. between 9 th Avenue Sou th and 11 th Avenue South, and the City is will i ng to make such portion of Secood Street South available fo r use by Developer until the same 15 needed by the Ci ty Ear publ ic purposes;,and .... c1 . The City has approved construction of the Project conditioned on the dedication by Developer of a portion of the Site i'ldjacent to 11th Avenue South for additiondl s tree t right-aE-way; and e. The City has agreed to pel:."form clHtain . public impl:." oveman tR to 9th Avenue South and 11th Avenue S 01.1 th which are necessary or desirable fol:." the Project. NOW THEREFORE, In coneideration of the mutual convenantll contained hel:."ein, and for other valuable consideration, the parties hereby agree as follows: l. Right to Use Street R~ht-ot-wal. The City hel:."eby g ran ts to Develope!:, 1 te succ.ssors and ass gos, the ellclusive r 19ht to use the right-ot-way tor Second Street South, as dod lea tf!d in the plat of W.st Minnespoll., adjAcent to the Sit e, ~llcept th e Weet 35 teet thereot, for the construction, maintenance and use of ingr.s:3 and egre.., parklnq, landscaping and ~i'Jnage, II 1 1 substantially as shown on the Sit. Plan and the plans llnd sped t i ca t i ona for the Project to blt subm it ted to and o!Ioppl:."oved by the e i ty. Developer shall not have the right to construct curb . -- -~~,.~~~~ -l"'~-"'C"""II""""""""'J."''"''IIL..~--~ F""""WI"""~""'-~'~- -- . - 'cu ts or any other direct access to Highway No. 3 or to ma ted ally modify the improvemen ts to the right-af-way from those shown on the Site Plan and the original plans and specifications for the Project. Such r:i gh t to use shall be subject to termination by th~ City upon one hu~dred eighty (18") days written notice in the even t the City determines tha t such righ t-of -way is needej for public purposes. 2. Grant of S tree t Easement. Developer hereby agrees to grant to the City an easement for street purposes over the West 35 fee t of the Site on or before issuance of the grading permit for construction of the Project. Developer agrees tha t the Cit:' shall have no Obligation to issue II grading permit or to allow any improv.....ments or use of the street right-of-way referred to in paragraphf 1 hereof until Developer has deliverd to the City a deed granting such street easement. Upon completion of the improvement to 11th Avenue South contemplated in Paragraph 3 and at th~ request of the City, the Developer wi 11 convey title to the property described in the F.:asefr.ent Deed for use as a public way. 3. Developer Commitments. Developer agrees to complete the improv~menti to the Site (other than construction of the building) shown on the Site Plan within one 0) year from and after the date of issuance of the grading permit for the Project. If Developer has not completed such site improvments within one (1) year after lssuance of the grading permit, Developer agrees to . restor:e the street righ t-o f-way to II condition reasonably acceptable to the City and the r: ight to use the str:eet right-of-way for Second Street shall lapse /lnd be of no further for:ce or effect. The City agreea thll t Deve lope r shall not be obli ga ted to restore such street righ t-o f -way to its current condition, but tha t such street right-ot-way may be restored by Developer: to a conditl<Jn that is at least as good as the condition i t is now in from a safe~y and aesthetic standpoint and /It a gr:ade level consistent wlth County Road 3 and 9th Avenue South. Prior: to the time the City improves the pOttion of the Site along 11th Avenue South, over which a street easement will be gran tctd to the City pursuant to Paragraph 2 hereof' , as a IIt...eet, Developer shall have the right to improve the same a8 shown on the Site Plan. Subsequent improvement of such easement area as a "tre('t .ha 11 be at the cost and expense ot the CitYI provided that the City .hall hav. the r i CJh t to asaess the cost of such work to benetited partie., including the neveloper, in accordance with law. 4. Cit1 Commitments Re~din9...-.!th Avenue South. By or before October 3 , 19B7, and .ubject-to suCfi'"""lipprovaT'ieii may be required trom th., County, the City agre.s to perform, at it, ellpens. and without aSSQS,uMnt to Develop.r, the improvements to 9th ,,"venue South nece..ary to connect the lame to HiCJhway No. 3. D/tv.loper .hall have th. right to in.tall . curb cut to 9th ,,"venue ~outh a. shown on the Site Plan at ltl .ole expen... 5. ~q~l.neous. Thi. Agreem.nt .hall run with the land . ______ .~_._~.........- _" _ -I_.__l~_ --- -_..-..--..--~~.-.~-~~. .....,.........~ - . ., . ,. -Ii ::j ~': i " I ")1 " ~k -~~ .' .' -' I . ~ 3 !. ~..,) III A_ ...." :-, ~'!).; .,;, . " ~ . ~ ~~ "'. '. .. ".". 'i'." ... . - -'" . - .~-. {;, , . , , i'O . ....'.''',.....,~. : · f'" .... ';:.. .'.' .... '-:.;. '." --.'" , '. . it B' ,.~ -~ Exhlb ,-, ,;. - \ _n_ ". ..... .oI:lIJo..--.--.-4-.........--....... I ~.. _ ...~...>_ ~_ _ ...___ . - , - . ~ - '~ ) 5314679 21AUG8710:06 C5314679 DOC $10_ (I::, .- ..... . . r _.... 4-... . . : -I ~::':..'\~.. ~~t:~J:}" .. "i ~ ..... r~~"~'~.~ -''''i..~:!.\ ,- -". r:n:ta:.\r.OIl '. .t~~...C~O \;" , 1981 JlUG 21 A" 10: 0 B A': _ _ui\5314679 ~" , D[PUTr ~:\ ,', 'l-' , -- " \1. bJf. !.O I - -~ .-- . ..-- . ._~- . - " LAW OFF'CES . KAPLAN,STRANG1S AND KAPLAN, Po A. 5500 NORWEST CENTER. 90 SOUTH SEVENTH STREET MINNEAPOLIS, MINNESOTA 55402 SHELDON KApLAN 612/375-1138 SAMUEL LT KAPLAN RALPH STRANGIS TELECOPY 612/375-1143 HARVEY F_ KAPLAN ANDRIS A. BALTfNS OF COUNSEL DAVID KA RA N JOHN H. MATHESON BRUCE J. pARKER CATHERINE A_ 8A~TLETT F!08ERT T. YORK MARGERY to:. OTTO NANCY S. BENDER-KELN ER January 7, 1991 KARLIN 5. SyMONS Mr. James Kerrigan Director of Planning and Economic Development city of Hopkins 1010 First street South Hopkins, Minnesota 55343 Re: Hopkins Auto Mall/Parking on 2nd street South Dear Jim: . Enclosed please find the Application for Amendment of the Developer's Agreement executed by James Lupient as general partner of Hopkins Auto Mall Partnership. As you know, when the Auto Mall was developed in 1987, the City of Hopkins granted my client, Hopkins Auto Mall Partnership, the exclusive right to use a portion of 2nd street South for ingress and egress, parking and related uses under a Developer's Agreement and street Right-of-Way Use Agreement dated March 17, 1987 (the "Developer's Agreement"). The Developer's Agreement further provided that the city could terminate the Auto Mall's right to use the applicable portion of 2nd Street South "upon one hundred eighty (180) days written notice in the event the City determines that such right-of-way is needed for public purposes.1I The Auto Mall currently uses 42 parking spaces on 2nd street South. Hopkins Auto Mall Partnership is currently refinancing the Auto Mall. The proposed lender is concerned that, if the city terminates the Auto Mall's right to use a portion of 2nd Street South, there will be a material adverse impact on the Auto Mall and, in addition, the Auto Mall will fail to meet the parking requirements of the city of Hopkins as set forth in the city's zoning ordinance. Therefore, before the refinancing can proceed, . - - -, . Mr. James Kerrigan January 2, 1991 Page 2 Hopkins Auto Mall Partnership needs a modification of its current arrangement with the City of Hopkins. Since my client is anxious to close the refinancing as soon as possible, I would suggest a two-step process for resolving this problem. First, my client requests that the Developer's Agreement be amended to provide that the Auto Mall's right to use 2nd street South would not be terminated unless the Auto Mall site is no longer used for commercial purposes. This amendment would permit the refinancing to proceed and, hopefully, could be accomplished within the next few weeks. Following the amendment to the Developer's Agreement, my client will request that the city of Hopkins, as a more permanent solution to the problem, consider either vacating the portion of 2nd street South now used by the Auto Mall or, if vacation proves cumbersome, grant the Hopkins Auto Mall Partnership an exclusive and permanent easement on that portion of 2nd street South now utilized by the Auto Mall. We are . reviewing the records at the courthouse regarding ownership and restrictions on 2nd Street South to discuss with you the best avenue to pursue. sincerely, DK:cd cc: James Lupient . - - ..1, · . AHENDHEN'r 'rO DEVELOPER' S AGREEMENT AND STREET RXG1lT~OP-W1Y USB AGREEMENT I THIS AMENDMENT made and entered into as of this day of , January, 1991, by and between tb~ CITY OF HOPKINS, a Minnesota municipal corporation (the nefty"), and HOPKINS AUTO MALL PARTNERSHIP, a Minnesota general partnership (the "Developer"). ! WIT H E 88 E T H: I . WHEREAS I the C1ty and the DEW$lope.r entered into a Developer's Agreement and Street Right-at-Way Use Agreement dated as of March 17, 1987 (the "Developer's Agreementlt); WHEREAS, the city and the Developer desire to alter, amend and modify the Developer's Agreement in the manner hereinafter set forth. I NOW I THEREFORE, in consideration of t~e fo~egoing, and. in I consideration of other good and va~uable conslderat1on, the rece~pt and sufficiency of which is hereby acknowledged, the parties hereby agree as follows~ I 1. The last sentence of Par~graph 1 of the Developer's e: Agreement is hereby deleted theretrom and the ~ollowipg is hereby ! inserted therein in lieu thereof: i ! "The right of use. herein granted the Developer may be terminated by the city, upon one hundred ei9hty (180) days written notice, in the event - the Project is used for other than commercial purposes. For and in consideration of the right of use herein granted the Developer, the Developer shall ; pay to the City $3,700 upon -the date of execution hereof and I upon each anniversary of the date of execution hereof through I and including the 30th anniversary." 2. Except as hereinbetqre specifically set forth, the Developer's Agreement shall remain in tull force and effect without ! alteration or modification. I , IN WITNESS WHEREOF; the parties hereto have caus~d this Amendment to be executed as of the day anc.l year first above written. CITY OP HOPXINS By e Its 01/10/91 luplent\HopkJns.amd 1 I I SOO-39~d SI9N~~lS N~ld~~ wo~~ sa:rf 16, or N~r - -- . . By I I Its HOPKINS AUTO nLL PARTNBRSltIP By Its: General Partner STATE OF MINNESOTA ) ) 55. COUNTY OF HENNEPIN ) The foregoing instrument was acknowledged before me this _ day of January, 1991, by , the and I the of the City of Hopkins, a Minnesota municipal corporation, on behalf of the corporation. . Notary Public STATE OF MINNESOTA ) r. ) SSe COUNTY OF HENNEPIN ) The foregoing instrument was acknowledged before me this day of .Tanuary, 1991, by I a partner of Hopkins Auto Mall Partnership, a Minnesota general partnership, on behalf of the partnership. I I Notary Public This instrument was drafted by: Kaplan, strangis and Kaplan, P.A. - 1 5500 Norwest Center i 90 South 7th street. I Minneapolis, MN 55402 . 01110/91 Lupient\Hapkins.amd 2 - ~ t'00":i8tJd SI8NtJ~15 NtJldtJ~ wo~~ t'Z: 11 16, 01 NtJf