Approve Second Amendment to the Real Estate Contract Between the Ramsey HRA and McDonald's USA, LLC.

The Council granted a 90-day extension of the McDonald's purchase agreement to extend the July closing date.  The original request was for a six month extension; however, a shorter term extension was negotiated (90 days) and Ramsey HRA and McDonald's USA, LLC entered into the First Amendment to the Real Estate Contract with the extended closing date of October 9. 

Due to the fact that some open items remain prior to proceeding to close on the property, staff is requesting a 30 extension to November 11, 2013.

The original Real Estate Contract between the HRA and McDonald's USA, LLC as well as the First Amended Contract are attached for Council information. 

 

There are several outstanding issues to be wrapped up prior to closing:

1. Application for an Examiner's Directive from the Anoka County Examiner of titles.  The HRA has not heard back from the Anoka County examiner of titles in regard to an Examiner's Directive that will determine the type of title insurance will need to be secured by closing.
2. Sign package.  Staff is working with McDonald’s in getting final design and quotes for the sign package that will need to be ordered by the HRA.  The cost will be about $65,000 for both multi-tenant signs.  The HRA can authorize contingent upon closing.
3. Final soils agreement.  Staff is proposing an escrow to cover soils inspection during construction and a final report to guarantee that the proper soils fill and compaction has been completed per the contract.
4. Final easements are being drafted for recording at closing.

 
The HRA has the option to not extend the contract which would require McDonald's to either cancel the contract, or waive all contingencies and close by October 23.  Given that McDonald's may not be able to waive all contingencies by October 9 (and would therefore cancel the agreement) and the logistics of closing by October 23 is difficult, staff recommends a 30-day extension.  A longer extension is not recommended as it would extend the process unnecessarily.
 
The revised document (with an additional 30-day extension) is now proposed to read:

 SECOND  AMENDMENT TO REAL ESTATE CONTRACT
 
This SECOND AMENDMENT TO REAL ESTATE CONTRACT ("Amendment") is dated _____ between THE HOUSING AND REDEVELOPMENT AUTHORITY IN AND FOR THE CITY OF RAMSEY, MINNESOTA, a public body corporate and politic under the laws of the State of Minnesota ("Seller") and McDONALD'S USA, LLC, a Delaware limited liability company ("Purchaser").  The following statements are a material part of this Amendment: 
 
     A.         Seller and Purchaser entered into a Real Estate Contract dated December 19, 2012 ("Contract") for the property described in Exhibit A attached to the Contract and incorporated into this Agreement by this reference.
 
     B.         Purchaser has expended considerable time, money and effort to satisfy the conditions precedent in the Contract.
 
     C.         The expiration of the Contingency Period is about to occur, and the parties desire to extend such date.
 
            THEREFORE, in consideration of the mutual covenants contained in the Contract and other good and valuable consideration, the receipt of which is hereby acknowledged between the parties, Seller and Purchaser agree as follows:
 
1.         The expiration of the Contingency Period set forth in Article 6A of the Contract is extended to expire on November 11, 2013.  

2.         Except as modified by this Amendment, the Contract is ratified and confirmed by the parties.
 
3.         This Amendment may be signed in one or more counterparts, all of which taken  together shall constitute one and the same document.
 

It is recommended that the HRA approve the Second Amendment to the Real Estate Contract Between the Ramsey HRA and McDonald's USA, LLC with an extension of the contingency period to November 11, 2013.

Extending the contingency period will allow the City to proceed to closing with all contingencies removed.  Not approving the extension could potentially allow McDonald's to walk away or self-perform on the project improvements, neither option is desirable given the desire of the HRA to close on the property in a timely manner.
 

Not applicable.

Approve Second Amendment to the Real Estate Contract Between the Ramsey HRA and McDonald's USA, LLC with an extension of the contingency period to November 11, 2013.