Adopt Resolution #20-245 Approving Purchase Agreement for Outlot B, Alpha Development 2nd Addition; Case of US Home Corporation (Portions may be closed to the public)

Note - this case is posted with the potential to discuss in closed session, if desired. Staff does not believe a closed session discussion is needed. If the Council desires to discuss in closed session, it will need to be pulled from the Consent Agenda and placed on Council Business. 

Purpose:
Consider Adoption of Resolution #20-245 Approving Purchase Agreement for Outlot B, Alpha Development 2nd Addition - US Home Corporation

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 and the requirement to close on Outlot A, Alpha Development, prior to or simultaneous with closing.  

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 (OL A, Alpha Development) 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 recent special assessments of  $13,565 relating to Puma Street and the Buyer has agree to pay them at closing. No real estate commission is due on this transaction because the sale of this property was based upon a city-generated lead for a city-listed city-owned parcel.

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. Approval of Purchase Agreement of Outlot B, Alpha Development 2nd Addition as presented; subject to City Attorney Review (Staff/EDA recommendation)
2. Approval of Purchase Agreement with changes; subject ot City Attorney Review
3. Something else.

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

The EDA reviewed this item at the October 8, 2020 meeting and recommends approval of the attached Purchase Agreement for Outlot B, Alpha Development 2nd Addition as presented, subject to City Attorney review.

Motion to Adopt Resolution #20-245 Approving Purchase Agreement for Outlot B, Alpha Development 2nd Addition - US Home Corporation; subject to City Attorney approval.