2.2.
CC Work Session
- Meeting Date:
- 02/08/2016
- Submitted For:
- Patrick Brama
- By:
- Patrick Brama, Administrative Services
Information
Title:
Discuss Agreements Between City of Ramsey and McDonalds USA LLC
Purpose/Background:
PURPOSE
Provide the City Council with an update related to existing agreements between City of Ramsey and McDonalds USA LLC, and for the City Council to consider the current proposal that has been negotiated.
BACKGROUND
The City of Ramsey and McDonald's USA LLC executed a purchase agreement for the sale/purchase of City-owned land in late 2012. With three amendments, that agreement closed in 2014. Upon execution of that agreement, two notable documents were recorded:
Provide the City Council with an update related to existing agreements between City of Ramsey and McDonalds USA LLC, and for the City Council to consider the current proposal that has been negotiated.
BACKGROUND
The City of Ramsey and McDonald's USA LLC executed a purchase agreement for the sale/purchase of City-owned land in late 2012. With three amendments, that agreement closed in 2014. Upon execution of that agreement, two notable documents were recorded:
(1) QUIT CLAIM DEED: This document included construction deadline language. Construction commencement must begin by February 10, 2016. Construction completion must occur by February 10, 2017.
(2) RESTRICTIVE COVENANT: This document contains a broad set of criteria that restricts competing land uses near the future McDonald's site for a 20 year term. Properties that are affected include only City-owned land currently being marketed for sale by CBRE (see page 23 of original agreement for reference map). This document becomes null and void if McDonald's is not in operation by February of 2017.
(2) RESTRICTIVE COVENANT: This document contains a broad set of criteria that restricts competing land uses near the future McDonald's site for a 20 year term. Properties that are affected include only City-owned land currently being marketed for sale by CBRE (see page 23 of original agreement for reference map). This document becomes null and void if McDonald's is not in operation by February of 2017.
Notification:
NA
Observations/Alternatives:
It is evident at this point that construction commencement will not occur by February 10, 2016, as required by contract (see attached Attorney's memo for discussion of what this means). However, McDonald's has now agreed that they will not ask for the two year extension for completion of the project, and intends to move forward abiding by the original completion date of February 2017.
Also, rather than eliminate the commencement date and grant a two year extension as requested by McDonald's, staff has negotiated the following:
The proposed settlement proposal sticks with the original intent of the contract in regard to the completion date, establishes a penalty if the next commencement date is missed, and covers the City for it's cost of processing the amendment. Staff supports this resolution.
Attached are relevant supporting documents.
Also, rather than eliminate the commencement date and grant a two year extension as requested by McDonald's, staff has negotiated the following:
- The City would extend the commencement date on the existing contract to September 1, 2016.
- The original completion date of February 2017 will remain the same.
- McDonald's will submit a developer's escrow account in the amount of $5,000 to be used to cover all staff time and legal expenses incurred as a result of the contract amendment (any unused escrow monies will be refunded to McDonalds.
- McDonald's will submit an additional surety of $5,000 cash that would be forfeited, in it's entirety, if the project did not commence on or before September 1, 2016.
The proposed settlement proposal sticks with the original intent of the contract in regard to the completion date, establishes a penalty if the next commencement date is missed, and covers the City for it's cost of processing the amendment. Staff supports this resolution.
Attached are relevant supporting documents.
Funding Source:
NA
Recommendation:
Staff recommends approval of the amendments to the McDonald's contract as outlined above.
Action:
Concensus to move forward with consideration of Council action to consider:
- Extending the commencement date on the existing contract to September 1, 2016.
- Keeping the original completion date of February 2017, and all other contract language the same.
- McDonald's will submit a developer's escrow account in the amount of $5,000 to be used to cover all staff time and legal expenses incurred as a result of the contract amendment (any unused escrow monies will be refunded to McDonalds), and
- McDonald's will submit an additional surety of $5,000 cash that would be forfeited, in it's entirety, if the project did not commence on or before September 1, 2016.
Attachments
- Attorney Memo
- ALTERNATIVES 01062016
- Original PA 2012
- Amendment 1
- Amendment 2
- Amendment 3
- Quit Claim Deed
- Restrictive Covenant
Form Review
| Inbox | Reviewed By | Date |
|---|---|---|
| Kurt Ulrich | Kurt Ulrich | 02/04/2016 04:10 PM |
| Kurt Ulrich | Kurt Ulrich | 02/04/2016 04:54 PM |
- Form Started By:
- Patrick Brama
- Started On:
- 01/29/2016 04:47 PM
- Final Approval Date:
- 02/04/2016