Consider Revised Development Agreement and Development Permit for NORTHGATE ADDITION located at 7295 Sunwood Drive NW; Case of Northgate Church, Inc.

On October 23, 2012, the City Council granted approval to the Northgate Performing Arts Center. The proposed development consists of a single-structure auditorium/church. The original Applicant for the Plat (subdivision of property) was PSD, LLC. PSD was owner of fee-title at the time of Application, but has since conveyed the Property to Northgate Church, Inc.

The request for a revised Development Agreement is two-fold:

1. Reflect the current Property Owner and Assign the Agreement to Northgate Church, Inc.
2. Approve the required Financial Surety amount

Included in the approval was the required Development Agreement, that among other items, includes required improvements and financial sureties to ensure the timely installation of said required improvements. City Code requires a financial surety in the amount of 125%of the cost of the required improvements for public improvements (Plat/subdivision) and 150% for private improvements (site plan).

The Developer has submitted estimated costs of said required improvements, partially backed by bids and unit prices. The Developer has estimated that their obligation for a financial surety should be in the amount of approximately $117,000. The City's Engineer's Estimate is approximately $166,000. It should be noted, in this instance, that a majority of the required public infrastructure has already been installed (Sunwood Drive and Peridot Street). The remaining obligations are mainly private improvements such as parking lot and landscaping.

No notification required.

The financial surety is a requirement to protect the City from liability from uncompleted improvements. This is especially important when it comes to Developer installed public improvements such as sanitary sewer, water, stormwater, and streets.

The City Council has approved multiple instances in the past of accepting a letter of credit for a partial amount, and requiring as part of the Development Agreement that the Developer agrees that a Certificate of Occupancy will not be issued until the required improvements are complete, unless an adequate surety exists or is posted at that time.

In the event of default of the project after it commences, the likely City response would be as follows:

1. Repair and/or complete any erosion control measures as required by City Code, Lower Rum River Watershed Management Organization, and the Minnesota Pollution Control Agency (the City is responsible for enforcing these regulations and is subject to fines and/or postponement of development projects)
2. Inspect and repair as needed any connections to the municipal water, sanitary sewer, and stormwater systems
3. Remove any blight conditions

The Developer has requested that the required surety amount be at a level of 100% of the required improvements, as opposed to the indicated 125% or 150%.

It is not expected that the City would complete the private improvements, such as site grading, landscaping, driveways, etc. In addition, Staff would not recommend completing the sidewalk improvements, which would be public infrastructure, as those improvements may be impacted by construction activities. Sidewalk alternatives do exist in the area. Similar to the City's current process for single-family homes, completion of these improvements could be a contingency of the certificate of occupancy in addition to the financial surety proposed by the Developer. 

Alternative #1
Approve the transfer of the Agreement to Northgate Church, Inc. and require the Developer to submit the surety, in the amount that was requested by the Developer. The assignment is a necessary step as PSD is no longer owner of the parcel and will not be completing the improvements. It appears that the City would have sufficient financial surety to address the issues as indicated above.

Alternative #2
Approve the transfer of the Agreement to Northgate Church, Inc. and require the Developer to submit the standard surety. The assignment is a necessary step as PSD is no longer owner of the parcel and will not be completing the improvements. It appears that the City would have sufficient financial surety to address the issues as indicated above.

Alternative #3
Deny the transfer of the Agreement to Northgate Church, Inc. and require the Developer to submit the standard surety. The assignment is a necessary step as PSD is no longer owner of the parcel and will not be completing the improvements. This alternative is not recommended by Staff.

Staff recommends approval of the revised Development Agreement and Development Permit for NORTHGATE ADDITION, with the modification to financial surety requirements to reflect 100% of the required improvements.

All costs associated with review of the Application are the responsibility of the Applicant.