Development Manager Compensation Agreement (Landform)

Per the Agreement dated 3/31/2011 between the City of Ramsey HRA and Landform Professional Services, LLC, Landform is due an incentive-based compensation whereas the Incentive Compensation will be paid on all transactions (within The COR) regardless of origin or referral source, within 15 months of the termination of the Agreement. The Incentive Compensation shall be, as stated within the Agreement, two percent (2%) of the total capital cost of the end use of the parcel or property sold for development.

This Agreement has expired; however, the following projects were secured and signed (under purchase agreement) prior to the expiration of said Agreement.

The attached compensation worksheets have been negotiated, per the Agreement, and are ready for discussion/approval. The two projects highlighted in the attached worksheets are CommonBond and Casey's General Store. The payments, and timing of those payments, are also highlighted. These schedules were drafted by Staff. Staff communicated with Landform, per the Agreement, and are presenting the attached payment figures and schedules to be approved/discussed.

Casey's General Store specific comments: The attached numbers are presented as final, Landform agrees to the worksheet as presented. These numbers were prepared by Staff and Casey's.

CommonBond specific comments: Please note that there are two routes for the HRA to discuss in regards to Landform compensation for the CommonBond project. Route 1 is provided based on Staff negotiation with Landform to finalize building value figures. Without truly knowing the construction costs of the building, it is presented that it potentially be approved as a range. The final building value, and subsequently the "Total Payment" to Landform, would be calculated at the time final site plans are submitted for approval-- we'll know the actual construction costs at that point. This range of building value is based on Article 4B2b of the Agreement. Please note route 1 does not warrant payment now, but rather at closing per the Agreement being that the earnest money provided by CommonBond is not hard until closing (when contingencies are all met). This option does not finalize negotiation with Landform at this time but does finalize a range (a minimum and maximum payment) for security to both parties.

CommonBond Route 2: Route 2 provides a negotiated option affording finalization of number negotiation with Landform. The negotiated building value number is the average of the range provided in Route 1. This route affords the HRA with finalized numbers (no more negotiation or checking back in to finalize payment); however, this route is offset by the need to provide Landform with the 20% (typically due at PA execution) now. This could be a loss for the City if the CommonBond project did not move forward (tax credits not awarded thus meaning the project fails; determination on the project moving forward comes late fall/early winter).


Note:
Staff has been asked at past meetings why public subsidies (CommonBond project may be provided $250,000 from the Anoka County HRA Fund should the project move forward) aren't removed from these compensation schedules-- the current Agreement does not allow for removal of public subsidies from the schedule. The current Agreement does indicate, per an Amendment, that if public financing is provided by the City or HRA to a project, payment to Landform is delayed to match financing terms. An earlier version of that Agreement between Landform and the HRA signed in 2010 provided removal for subsidies when calculating compensation. That language was removed in the most current Agreement, signed in 2011.

Alternative 1: Accept and approve the attached compensation schedule for Casey's General Store and Route 1 for CommonBond. A release agreement will be requested to be signed by Landform stating no further payment will be sought, etc. (this was done for North Commons and was provided by Briggs and Morgan).

Alternative 2: Accept and approve the attached compensation schedule for Casey's General Store and Route 2 for CommonBond. A release agreement will be requested to be signed by Landform stating no further payment will be sought, etc. (this was done for North Commons and was provided by Briggs and Morgan).

Alternative 3: Continue negotiations on both projects.

Note: Staff is recommending alternative 1. Staff is not recommending further negotiation which may lead to litigation, additional costs, etc.

Land Sale Proceeds

Staff is recommending a motion in favor of Alternative #1. Staff feels this alternative provides sufficient security by finalizing a range which will determine the final payment to Landform for the CommonBond project. Alternative #2 (Route 2 for CommonBond) provides payment to Landform now, which is okay; however, if the project does not come to fruition payment will have been made to Landform that cannot be recaptured ($29,852.81). If CommonBond moves forward and the HRA chose alternative #2, a potential savings of roughly $14,000 would be had if the range met the cap. If CommonBond moves forward and the HRA chose alternative #1, a potential loss of the same amount would be realized. If CommonBond doesn't move forward and alternative #2 is chosen, the HRA is at a loss of $29,000+. If CommonBond doesn't move forward and alternative #1, no loss is realized.

Motion to approve the attached compensation schedules that highlight payment amounts and timelines for the CommonBond (choose route 1 or 2) and Casey's General Store projects to Landform. This motion includes the need for, and authorization to sign, an agreement release to be signed by Landform and the HRA.