Adopt Resolution #22-242 Approving Cancellation of Purchase Agreement for Parcel 50; Case of Java Companies, L.L.C.

Purpose:
The purpose of this case is to consider adoption of Resolution #22-242 Approving Cancellation of Purchase Agreement for Parcel 50 with Java Companies, L.L.C.

Background:
The City entered into a Purchase Agreement with Java Properties, LLC on December 15, 2021 to purchase and develop approximately 7 acres located south of Casey's General Store and O'Reilly Auto Parts.  The City Council approved extending the Inspection Period from June 15, 2022 to December 15, 2022 to give the City and Developer more time to define projects costs and project timing.  The Developer has met with prospective tenants and they are not comfortable moving forward with development until the new interchange at Ramsey Boulevard and Highway 10 is complete, or is under construction. As such, the Developer has asked the City to enter into a cancellation agreement.  A Notice to Proceed has not been given by the Developer so the $15,000 in Earnest Money would be refunded.  The Inspection Period has not ended, so the request for the cancellation of the purchase agreement and the refunding of the Earnest Money is within the terms of the Purchase Agreement. The Developer has interest in re-engaging with the City closer to the time of completion of the improvements on Ramsey Boulevard and Highway 10.  The EDA reviewed this request at its October 13, 2022 meeting and supports the cancellation agreement.

N/A

A Cancellation Agreement executed by the Developer is attached and has been reviewed by the City Attorney as to form.   The EDA reviewed this request and supports the cancellation agreement as presented. Construction of the turn lane for the future Veteran's Drive access to Ramsey Boulevard will be constructed as part of the Ramsey Boulevard/Interchange improvements.  Completion of these improvements will increase the marketability of this parcel for development in the future. This purchase agreement included $5000 in additional Refundable Earnest Money for the 6 month extension to complete further due diligence relating to the construction impacts on this project.  The EDA also discussed whether or not future extensions for future purchase agreements should include Non Refundable Earnest Money. Staff is supportive of considering non-refundable earnest money for extensions of the due diligence period prior to a Notice of Proceed being given by the developer. As mentioned previously in this case, this is not an option for the current cancellation of purchase agreement for consideration by the City Council.

Alternatives include:
1) Adopt Resolution #22-242 Approving Cancellation of Purchase Agreement for Parcel 50 (as presented); subject to City Attorney Review.
2) Adopt Resolution #22-242 Approving Cancellation of Purchase Agreement for Parcel 50 (with changes); subject to City Attorney Review.
3) Something else.
 

N/A

Motion to Adopt Resolution #22-242 Approving Cancellation of Purchase Agreement for Parcel 50 (as presented); subject to City Attorney Review.