HomeMy WebLinkAboutX-C-02 Authorize Signature - The Confluence Purchase and Development Agreement and Minimum Assessment Agreement
City Council Memorandum
To: Mayor Fasbender and City Councilmembers
From: John Hinzman, Community Development Director
Date: October 17, 2022
Item: The Confluence - Authorize Signature of Amended Purchase and Development
Agreement and Minimum Assessment Agreement
Action Requested:
Authorize signature of the following items related to The Confluence:
1) 5th Amendment to Purchase and Development Agreement
2) Minimum Assessment Agreement
The actions extend the substantial completion date from October 31, 2022 to May 31, 2023 and
obligates Confluence to execute a Minimum Assessment Agreement for payment of taxes by
Confluence based upon a valuation of $5,733,294. The Minimum Assessment Agreement would
be effective January 1, 2023 regardless of the status of completion of Minimum Improvements.
Approval would be subject to minor modifications as approved by the City attorney. Approval
requires a simple majority of City Council.
Background:
In 2016 the City, HEDRA, and Confluence Development executed a Purchase and Development
Agreement (PDA) for Great River Landing (now The Confluence) a historic rehabilitation of the
former Hudson Manufacturing Building located at 200 2nd Street W. The PDA set parameters
and obligations for the transfer of the building to Confluence for development of a hotel,
apartments, banquet facility, and commercial space.
All parties have subsequently executed amendments to the original PDA to reflect changes and
delays with the project. The property was transferred to Confluence in March, 2018. In August
2019 a third amendment to the agreement was executed to address environmental remediation,
remaining grant payments, and completion dates. The fourth amendment was executed in August
2021 to update commencement of the project and completion of items and obligated the
developer to enter into a Minimum Assessment Agreement if substantial completion was not
achieved by October 31, 2022.
Status of Construction:
Confluence has completed most of the exterior improvements. Within the building windows,
HVAC, electrical and plumbing work is well underway. Framing of the apartments and
commercial spaces is taking shape.
HEDRA Action:
HEDRA will consider similar action at its October 13th meeting.
X-C-02 (a,b)
Attachments:
• 5th Amendment to Purchase and Development Agreement
• Minimum Assessment Agreement
X-C-02 (a,b)
1
FIFTH AMENDMENT TO PURCHASE AND DEVELOPMENT AGREEMENT
THIS FIFTH AMENDMENT TO PURCHASE AND DEVELOPMENT
AGREEMENT (“Fifth Amendment”) is made this day of , 2022
(“Effective Date”), by and between the Hastings Economic Development and Redevelopment
Authority, a public body corporate and politic (“Authority”), 101 Fourth Street East, Hastings,
Minnesota 55033; the City of Hastings, a home rule charter city under the laws of the State of
Minnesota (“City”), 101 Fourth Street East, Hastings, Minnesota 55033; Confluence Development
LLC, a Minnesota limited liability company (“Redeveloper”), 101 East 10th Street, Suite 300,
Hastings, Minnesota 55033; and Confluence Park LLC, a Minnesota limited liability company
(“Park LLC”), 101 East 10th Street, Suite 300, Hastings, Minnesota 55033 (Redeveloper and Park
LLC are collectively known as “Redeveloper”).
RECITALS
WHEREAS, the Authority, the City and Redeveloper entered into that certain Purchase
and Development Agreement dated January 18, 2016 (the “Original Agreement”) as amended by
the First Amendment to Purchase and Development Agreement dated January 2, 2018 (the “First
Amendment”), further amended by the Second Amendment to Purchase and Development
Agreement dated July 23, 2018, further amended by the Third Amendment to Purchase and
Development Agreement dated August 19, 2019, which added Park LLC as a party thereto (the
“Third Amendment”) and Fourth Amendment dated August 6, 2021 (collectively, the Original
Agreement, First Amendment, Second Amendment, Third Amendment, Fourth Amendment and
Fifth Amendment shall be called the “Agreement”), in which the Authority agreed to sell certain
real property to the Redeveloper (“Redevelopment Property”) for the purpose of rehabilitating the
building located on a portion of the Redevelopment Property (the “Building”) and performing
certain other improvements to the Redevelopment Property as required in the Agreement; and
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WHEREAS, the Authority conveyed the Redevelopment Property to the Redeveloper on
or about March 5, 2018; and
WHEREAS, on or about March of 2020, the COVID-19 pandemic shut down all activities
related to fulfilling the obligations under the Agreement and caused major stoppages and
disruptions in the production, supply chains and workers such that it made compliance with
completion dates in the Agreement impossible, resulting in a new completion date of October 31,
2022; and
WHEREAS, since that time supply chain issues related to the pandemic involving, among
other things, windows, doors, electrical switchgear, multiple HVAC system components, as well
as labor shortages, have further contributed to the inability to meet the new completion date; and
WHEREAS, the Fourth Amendment required that in the event the Redeveloper is not able
to complete construction by October 31, 2022, a Minimum Assessment Agreement would be
executed.
NOW THEREFORE, the Parties hereby agree as follows:
Section 1. Section 4.3 (a)(v) of the Agreement is hereby deleted in its entirety and replaced
as follows:
v. Redeveloper shall substantially complete construction of the Preliminary
Improvements, the Main Project, the Development Work and the Minimum
Improvements by May 31, 2023. “Substantially complete construction” shall mean
that the Redeveloper has completed all of the Developer’s construction obligations
pursuant to this Agreement so that a Certificate of Occupancy can be issued for
final occupancy of the entire Building.
Section 2. Section 9.2 (c) of the Agreement is hereby deleted in its entirety and replaced
as follows:
(c) Simultaneous with the execution of this Fifth Amendment, the Redeveloper shall
execute a Minimum Assessment Agreement for the estimated market value of
$5,733,294, which shall be the minimum assessed value for the Redevelopment
Property effective January 1, 2023, regardless of the status of the completion of the
Minimum Improvements.
Section 3. All other terms of the Agreement shall remain unchanged.
[remainder of page intentionally blank]
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IN AGREEMENT, the parties hereto have hereunto set their hands as of the Effective
Date.
HEDRA:
HASTINGS ECONOMIC DEVELOPMENT AND REDEVELOPMENT AUTHORITY
By ________________________________
Bruce Goblirsch
Its President
By ________________________________
Eric Maass
Its Secretary
STATE OF MINNESOTA )
) ss.
COUNTY OF DAKOTA )
The foregoing instrument was acknowledged before me this ____ day of ____________,
2022 by Bruce Goblirsch and Eric Maass, the President and Secretary respectively, of the Hastings
Economic Development and Redevelopment Authority, a public body corporate and politic
organized and existing under the Constitution and laws of Minnesota, on behalf of HEDRA.
Notary Public
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4
CITY:
CITY OF HASTINGS
By:
Mary Fasbender
Its Mayor
By:
Kelly Murtaugh
Its City Clerk
STATE OF MINNESOTA )
) ss.
COUNTY OF DAKOTA )
On this ___ day of _______________, 2022, before me a Notary Public within and for said
County, personally appeared Mary Fasbender and Kelly Murtaugh, to me personally known, who
being each by me duly sworn, each did say that they are respectively the Mayor and City Clerk of
the City of Hastings, the municipality named in the foregoing instrument, and that the seal affixed
to said instrument was signed and sealed on behalf of said municipality by authority of its City
Council and said Mayor and City Clerk acknowledged said instrument to be the free act and deed
of said municipality.
Notary Public
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CONFLUENCE DEVELOPMENT LLC
By:
Patrick O. Regan
Its President and Chief Manager
STATE OF MINNESOTA )
) ss.
COUNTY OF DAKOTA )
The foregoing instrument was acknowledged before me this ____ day of ____________,
2022 by Patrick O. Regan, the President and Chief Manager of Confluence Development LLC, a
Minnesota limited liability company, on behalf of said limited liability company.
Notary Public
CONFLUENCE PARK LLC
By:
Patrick O. Regan
Its President
STATE OF MINNESOTA )
) ss.
COUNTY OF DAKOTA )
The foregoing instrument was acknowledged before me this ____ day of ____________,
2022, by Patrick O. Regan, the President of Confluence Park LLC, a Minnesota limited liability
company, on behalf of said limited liability company.
Notary Public
This document drafted by:
Korine Land (#0262432)
LeVander, Gillen, & Miller, P.A.
1305 Corporate Center Drive, Suite 300
Eagan, MN 55121
(651) 451-1831
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1
MINIMUM ASSESSMENT AGREEMENT
THIS MINIMUM ASSESSMENT AGREEMENT (the “Minimum Assessment
Agreement”), dated as of this _____ day of ________________, 2022, is between the Hastings
Economic Development and Redevelopment Authority, a public body corporate and politic (the
“HEDRA”), the City of Hastings (“City”) and Confluence Development LLC, a Minnesota limited
liability company and Confluence Park LLC, a Minnesota limited liability company (collectively,
the “Developer”).
WITNESSETH
WHEREAS, on or before the date hereof the HEDRA, the City and Developer have entered
into a Purchase and Development Agreement dated January 18, 2016 (the “Original Agreement”)
as amended by the First Amendment to Purchase and Development Agreement dated January 2,
2018 (the “First Amendment”), further amended by the Second Amendment to Purchase and
Development Agreement dated July 23, 2018, further amended by the Third Amendment to
Purchase and Development Agreement dated August 19, 2019, which added Park LLC as a party
thereto (the “Third Amendment”) and Fourth Amendment dated August 21, 2022, (collectively
“Development Agreement”) regarding certain real property located in the City of Hastings,
Minnesota (the “City”) the description of which is attached hereto as Exhibit A (the “Development
Property”); and
WHEREAS, it is contemplated that pursuant to the Development Agreement, the
Developer will undertake the rehabilitation and conversion of an existing historic building located
on the Development Property into a hotel, market-rate apartments, a restaurant and retail or
commercial uses, as well as underground and surface parking, greenspace and related amenities in
the City (the “Project”), in accordance with plans and specifications approved by the HEDRA; and
WHEREAS, the HEDRA, the City and Developer desire to establish a minimum market
value for the Development Property and the improvements constructed or to be constructed
thereon, pursuant to Minnesota Statutes, Section 469.177; and
WHEREAS, the Developer has acquired the Development Property; and
WHEREAS, the HEDRA, the City and the County Assessor of Dakota County have
reviewed plans and specifications for the Project; and
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NOW, THEREFORE, the parties to this Minimum Assessment Agreement, in
consideration of the promises, covenants and agreements made by each to the other, do hereby
agree as follows:
1. As of January 2, 2023, the minimum market value, which shall be assessed for the
Development Property for taxes payable 2024 and in each year thereafter, shall not be less than
$5,733,294.
2. The minimum market values herein established shall be of no further force and
effect after assessment on or before December 31, 2042, for taxes payable in 2043 provided,
however, this Minimum Assessment Agreement shall terminate on such date as the TIF District
(as defined in the TIF Assistance Agreement) is decertified (the “Termination Date”). If the
Termination Date is earlier than December 31, 2042 for taxes payable in 2043, HEDRA shall duly
execute and record a release of this Agreement upon the written request and sole expense of the
then holder of fee title to the Development Property.
3. This Minimum Assessment Agreement shall be recorded by HEDRA with the
County Recorder of Dakota County, Minnesota. The Developer shall pay all costs of recording.
4. Neither the preambles nor provisions of this Minimum Assessment Agreement are
intended to, or shall they be construed as, modifying the terms of the Development Agreement
between the HEDRA, the City and the Developer.
5. This Minimum Assessment Agreement shall inure to the benefit of and be binding
upon the successors and assigns of the parties, shall be governed by and interpreted pursuant to
Minnesota law, and may be executed in counterparts, each of which shall constitute an original
hereof and all of which shall constitute one and the same instrument.
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3
HEDRA:
HASTINGS ECONOMIC DEVELOPMENT AND REDEVELOPMENT AUTHORITY
By ________________________________
Bruce Goblirsch
Its President
By ________________________________
Eric Maass
Its Secretary
STATE OF MINNESOTA )
) ss.
COUNTY OF DAKOTA )
The foregoing instrument was acknowledged before me this ____ day of ____________,
2022 by Bruce Goblirsch and Eric Maass, the President and Secretary respectively, of the Hastings
Economic Development and Redevelopment Authority, a public body corporate and politic
organized and existing under the Constitution and laws of Minnesota, on behalf of HEDRA.
Notary Public
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4
CITY:
CITY OF HASTINGS
By:
Mary Fasbender
Its Mayor
By:
Kelly Murtaugh
Its City Clerk
STATE OF MINNESOTA )
) ss.
COUNTY OF DAKOTA )
On this ___ day of _______________, 2022, before me a Notary Public within and for said
County, personally appeared Mary Fasbender and Kelly Murtaugh, to me personally known, who
being each by me duly sworn, each did say that they are respectively the Mayor and City Clerk of
the City of Hastings, the municipality named in the foregoing instrument, and that the seal affixed
to said instrument was signed and sealed on behalf of said municipality by authority of its City
Council and said Mayor and City Clerk acknowledged said instrument to be the free act and deed
of said municipality.
Notary Public
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CONFLUENCE DEVELOPMENT LLC
By:
Patrick O. Regan
Its President and Chief Manager
STATE OF MINNESOTA )
) ss.
COUNTY OF DAKOTA )
The foregoing instrument was acknowledged before me this ____ day of ____________,
2022 by Patrick O. Regan, the President and Chief Manager of Confluence Development LLC, a
Minnesota limited liability company, on behalf of said limited liability company.
Notary Public
CONFLUENCE PARK LLC
By:
Patrick O. Regan
Its President
STATE OF MINNESOTA )
) ss.
COUNTY OF DAKOTA )
The foregoing instrument was acknowledged before me this ____ day of ____________,
2022, by Patrick O. Regan, the President of Confluence Park LLC, a Minnesota limited liability
company, on behalf of said limited liability company.
Notary Public
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CERTIFICATION BY COUNTY ASSESSOR
The undersigned, having reviewed the Minimum Assessment Agreement dated as of
______________, 2022 by and Hastings Economic Development Authority, City and Confluence
Development LLC, and Confluence Park LLC, the plans and specifications for the Project, as
defined in the foregoing Minimum Assessment Agreement, and the market value currently
assigned to land upon which the improvements are to be constructed and being of the opinion that
the minimum market value contained in the Minimum Assessment Agreement appears reasonable,
hereby certifies as follows:
The undersigned Assessor, being legally responsible for the assessment of the below-
described property, hereby certifies that the minimum market value of $5,733,294 commencing as
of January 2, 2023, assigned to such land and improvements is reasonable.
__________________________________________
County Assessor for Dakota County
STATE OF MINNESOTA )
) ss.
COUNTY OF DAKOTA )
This instrument was acknowledged before me on _________________, 2022, by
_____________________, the County Assessor of Dakota County.
_____________________________________
Notary Public
This Instrument Drafted By:
Korine L. Land (#0262432)
LeVander, Gillen & Miller, P.A.
1305 Corporate Center Drive, Suite 300
Eagan, MN 55121
(651) 451-1831
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A-1
EXHIBIT A
LEGAL DESCRIPTION OF DEVELOPMENT PROPERTY
Lots 1, 2, 3 and 4, Block 1, Great Rivers Landing, Dakota County, Minnesota.
PIDs 19-30090-01-010, 19-30090-01-020, 19-30090-01-030, and 19-30090-01-040
Abstract Property
AND
Lots 2, 3 and 4, Block 12, Town of Hastings, Dakota County, Minnesota.
PID 19-32150-12-042
Abstract Property
X-C-02 (a,b)