Purchase of Services Agreement between the Housing and Redevelopment Authority in and for the City of Ramsey (the "HRA") and Landform Professional Services, LLC

The current Development Management (DM) contract for The COR at Ramsey was terminated on  March 31, 2013.  The current contract has been in effect for two years and preceded the original contract of April 2010, and preliminary work that was done by Landform starting in 2009.

The contract provided for a variety of development management services relative to the COR in exchange for compensation in the form of "Administrative Compensation," "Incentive Compensation," and Additional Compensation."  

Recently the City received two documents (attached) asserting that Landform should not be compensated for services that Landform has provided to the HRA because its services performed under the contract constitute serving as a real estate broker or agent.  An exhibit is attached that illustrates what the City would have paid to a broker (7% of land sale price) as compared to Landform (2% of development capital cost, as adjusted) for five representative projects.  The Landform compensation recognizes the broader level of service provided by Landform per the contract.

The City HRA Attorney, Mr. Bray,  has reviewed all relative documents and prepared a memo that is attached.  Subsequent to that memo, the HRA authorized a legal review memo from an independent firm that substantially confirmed the courses of action outlined by Mr. Bray.  This memo is not in the attachments, and is currently classified confidential, pending consultation with the authoring attorney.

This meeting is to discuss Mr. Bray's memo and alternatives available to the HRA in regard to the Landform contract.

It is recommended that the HRA review and discuss the HRA Attorney's proposed alternative actions.  While the information discussed is of potentially sensitive legal nature, state statute does not allow a closed session of the Council unless there is current or pending litigation.  The HRA Attorney has advised that these options and opinions be discussed in public at this time.   

Currently, the City has several other contracts with Landform that are in various stages of completion for plats, storm water management, and planning efforts.  In regard to development related efforts, the Development Manager's contract provides that incentive fees are to be paid for any HRA Contracts with third parties, for a period of fifteen month following termination.

HRA Attorney, Tom Bray, will be in attendance at the meeting to discuss the following options as he has outlined:
 
1.       Pay in full per the contract;
2.       Determine if Landform would be willing to meet and attempt to negotiate a mutually acceptable resolution or would be willing to jointly engage a mediator or arbitrator to assist in resolving the issue.
3.       Notify Landform that the HRA intends to withhold some portion of the amounts owing and if Landform objects, commence a declaratory judgment action seeking an adjudication of the parties rights.
4.       Pay what the HRA deems it owns, withhold the balance..

The above courses of action have various strengths and weaknesses that will be reviewed by the attorney, to determine which course of action might be acceptable to the HRA.  Staff supports recommendation number two above, as offering the best alternative to achieve a smooth and productive transition, and a clean resolution to mutual obligations under the contract.

No funding necessary at this time.

Review options with the HRA Attorney and select a course of action.  Staff supports recommendation number two above.