Consider Purchase Agreement for Outlot B, Alpha Development 2nd Addition; Case of US Home Corporation
(Portions may be closed to the public)

The City of Ramsey and U.S. Home Corporation (Lennar) have been negotiating the terms of a purchase agreement over the past two months. U.S. Home Corporation is in the process of reviewing attached purchase agreement and the general terms and conditions outlined on the attached Term Sheet. The proposed purchase price of $100,000 is within the City's approved deal range for this parcel; however, it still will require site plan and plat approval through the normal planning and zoning process. 

The proposed purchase agreement includes a development concept previously reviewed by the Planning Commission The Planning Commission is generally comfortable with the current concept plan, subject to full Plat Review. The time periods, and extensions outlined in the term sheet and PA are generally consistent with consistent with recent PA templates aside from the omission of the requirement of a Right of Re-Entry Agreement.  

Notification is not required.

Observations:  The site is 2.91 acres in size with a purchase price of $100,000 ($0.79/SF). This price is within the approved "deal range".  U.S. Home Corporation (Lennar) is a housing developer and is in the process of acquiring the land adjacent to the east from Paxmar to combine with City owned land.  A copy of the preliminary plat/site plan is included in the Purchase Agreement.  The City land has special assessments relating to Puma Street and the Buyer has agree to pay them at closing. This was a city generated lead for a City listed city parcel. As noted above, U.S. Home Corporation is still in the process of reviewing the Purchase Agreement at the time of the drafting of this case.  If additional suggested changes or comments are received it will be communicated at the EDA meeting  

Omission of Right-of Re-Entry Agreement:  Recent land sales by the City have required a form of a Right of Re-Entry Agreement as a protection from land speculation, especially in the COR and other higher valued land.  In 2020, the City sold a remnant parcel (13a) to Riverstone (Capstone Homes) in order to accommodate for their plat and the re-alignment of Puma Street. This land transaction did not have a Right of Re-Entry Agreement requirement as the only value of the parcel was to attach to adjacent development.  Due to the similar nature of these land transactions and the likelihood that these parcels could not be sold individually for development that is not part of a larger plat Staff is recommending that the the City not require a Right of Re-Entry Agreement for U.S. Homes Corporation.

The following items are worth highlighting:
 

Earnest Money	$10,000, Nonrefundable after a Notice to Proceed has been given by the Buyer.
Inspection Period	Ends on April 7, 2020  (city requires plat / site plan approval before sale).
Closing	Within 30 days of Notice to Proceed.
Extensions	Developer will deposit $5,000 in escrow for each 60 day extension (2 extensions allowed) Once extensions are made the money becomes non-refundable.
Performance	Plat / Site Approval. A Right of Re-Entry Agreement is not being recommended as part of this transaction.

Alternatives:

1. Recommendation to City Council to approve Purchase Agreement Outlot B, Alpha Development 2nd Addition as presented; subject to City Attorney Review (Staff recommendation)
2. Recommendation to City Council to approve Purchase Agreement with changes; subject ot City Attorney Review
3. Something else.

This case is being handled as part of normal Staff duties.

Staff recommends approval of the attached Purchase Agreement for Outlot B, Alpha Development 2nd Addition, subject to City Attorney review.

Motion to recommend that the City Council approve the attached Purchase Agreement for Outlot B, Alpha Development 2nd Addition, subject to City Attorney approval.