The URL can be used to link to this page

IP #719JENSEN & SONDRALL, P.A. Attorneys At Law 8525 EDINBROOK CROSSING, STE. 201 BROOKLYN PARK, MINNESOTA 55443 -1968 TELEPHONE (763) 424 -8811 • TELEFAX (763) 493 -5193 e -mail law @j ensen- sondrallxom DOU( DEBNER CORDON L. JENSEN' Gi.EN 1. NORTON STEVEN A.SONDR.ALL WILLIAM C. STRAIT STACY A. WOODS OF COUNSEL LORENS Q. BRYNESTAD October 1, 2002 VIA FACSIMILE TO (763) 531 -5136 AND BY REGULAR U.S. MAIL Kirk McDonald Community Development Director City of New Hope 4401 Xylon Avenue North New Hope, MN 55428 Re: Acquisition of 7801 Bass Lake Road Our File No.: 99.11275 'Real P -:)ert Law Spemlis' • ertiCed By the Minnesota State Bar Association - Qualified ADR Neutral 'Admitted in Iowa Dear Kirk: This letter will confirm our meeting with the property owner, Jerry Showalter, on the acquisition of the property at 7801 Bass Lake Road. As you know, we had an appraisal done on this property indicating a $330,000.00 market value based on the income approach to value. However, the appraisal also indicated a value for the property of $345,000.00 based on a comparable sales approach. The income approach was based on a 10% capitalization rate. This simply means market value is based on a determination of (net operating income) x (10). A manipulation of the numbers comprising net operating income can produce a higher or lower amount depending on the calculations used by the appraiser for the various factors which comprise net operating income. The property owner contends this property is worth more than $400,000.00 based on a net income approach, however, in a previous meeting, indicated he would accept $395,000.00 as a price for this property. In our September 26` meeting, we discussed with the property owner the concerns indicated by the City Council and their direction to staff to again meet with the property owner about a renegotiated purchase price. After some friendly discussion concerning the nuances of appraising property, especially based on the income approach to value, the parties agreed to recommend a $370,000.00 purchase price for consideration by the City Council at its October 14t' meeting. Basically, we agreed with the property owner that the leasing commission used by our appraiser to reduce net operating income was not reasonable. As a result, the valuation for the property would be increased to $345,000.00 using the income approach to value and a10% cap rate. This makes sense to me since the comparable sales approach in our appraisal also indicated a $345,000.00 market value. We then decided to split the difference between $345,000.00 and $395,000.00, and determined $370,000.00 was a reasonable price for this property. October 1, 2002 Page 2 It is my opinion the property owner is being reasonable and I would strongly recommend we acquire this property for the negotiated price of $370,000.00. Also, we should obtain authority from the City Council at the next meeting to hire a relocation expert to assist with the relocation of the tenant at the property, and we also agreed with the property owner this property could be acquired by a "friendly" condemnation. In other words, we will not start a condemnation action, but at the October 28' meeting, we will pass a resolution authorizing condemnation if negotiation by direct purchase could not be completed. This will give the property owner the time benefit of the Internal Revenue Code to reinvest the purchase price received for this property. If you have any questions or comments regarding this letter or our meeting with the property owner on September 26t please don't hesitate to contact me. Very truly yours, Steven A. Sondrall JENSEN & SONDRALL, P.A.. sas@,iensen-sondrall.com After Hours Extension #147 cc: Dan Donahue Valerie Leone Ken Doresky CNH99.11275 -001 -Kirk UrAm JENSEN & SONDRALL, P.A. Attorneys At Law 8525 EDINBROOK CROSSING, STE. 201 BROOKLYN PARK, MINNESOTA 55443 -1968 TELEPHONE (763) 424 -8811 • TELEFAY (763) 493 -5193 e -mail law @j ensen- sondrallxom DOU( DEBNER CORDON L. JENSEN' G!-EN 1 NORTON STEVEN A. SONDR.ALL WILLIAM C. STRAIT STACY A. WOODS OF COUNSEL LORENS Q. BRYNESTAD October 1, 2002 VIA FACSIMILE TO (763) 531 -5136 AND BY REGULAR U.S. MAIL Kirk McDonald Community Development Director city of New Hope 4401 Xylon Avenue North New Hope, MN 55428 Re: Acquisition of 7801 Bass Lake Road Our File No.: 99.11275 'Real P -:)ert Law Spemlis' ..ertirraBy me Minnesota State Bar Association - Qualified ADR Neutral 'Admitted in Iowa Dear Kirk: This letter will confirm our meeting with the property owner, Jerry Showalter, on the acquisition of the property at 7801 Bass Lake Road. As you know, we had an appraisal done on this property indicating a $330,000.00 market value based on the income approach to value. However, the appraisal also indicated a value for the property of $345,000.00 based on a comparable sales approach. The income approach was based on a 10% capitalization rate. This simply means market value is based on a determination of (net operating income) x (10). A manipulation of the numbers comprising net operating income can produce a higher or lower amount depending on the calculations used by the appraiser for the various factors which comprise net operating income. The property owner contends this property is worth more than $400,000.00 based on a net income approach, however, in a previous meeting, indicated he would accept $395,000.00 as a price for this property. In our September 26` meeting, we discussed with the property owner the concerns indicated by the City Council and their direction to staff to again meet with the property owner about a renegotiated purchase price. After some friendly discussion concerning the nuances of appraising property, especially based on the income approach to value, the parties agreed to recommend a $370,000.00 purchase price for consideration by the City Council at its October 14t' meeting. Basically, we agreed with the property owner that the leasing commission used by our appraiser to reduce net operating income was not reasonable. As a result, the valuation for the property would be increased to $345,000.00 using the income approach to value and a10% cap rate. This makes sense to me since the comparable sales approach in our appraisal also indicated a $345,000.00 market value. We then decided to split the difference between $345,000.00 and $395,000.00, and determined $370,000.00 was a reasonable price for this property. Request , For Action Page 2 10 -28 -02 a resolution threatening condemnation. Attached, please find the purchase agreement and resolution prepared by the City Attorney. On August 26, 2002, the Council considered the potential acquisition of this property for the owner's requested price of $395,000. The Council rejected the owner's offer and directed staff to continue the negotiation. On September 26, staff met with the owner and his wife a second time to negotiate this potential purchase. At that meeting, staff agreed with the owner that the leasing commission used by Shenehon Appraisals that resulted in a reduced net operating income was unreasonable. The owner leases the space on his own and does not retain a leasing agent. As a result, the valuation for the property would be increased to $345,000 based on the 10% cap rate. Staff felt that this number made sense since the comparable sales approach to value in the appraisal valued the property at $345,000. Staff then suggested that the difference be split between $345,000 and $395,000 (the original asking price). The property owner was agreeable to that and requested $370,000. Relocation expenses would be required as a component of this acquisition project. Evergreen Land Services, the City's relocation consultant, has provided the City with a preliminary relocation estimate of $20,000 per tenant. The owner has indicated that nine tenants are currently located in the building, therefore assuming all the tenants accept the $20,000 in lieu of payment as opposed to actual expenses, relocation expenses are estimated to be $180,000. On July 22, 2002, the Council authorized staff to negotiate the potential purchase of this multi- tenant office building based on its appraised value of $330,000 as determined by the Shenehon Company. On August 15, staff met with the property owner who was willing to sell the property to the City for $395,000. As mentioned previously, on August 26, the Council rejected the offer and directed staff to continue negotiation proceedings. On September 26, staff met with the owner a second time and negotiated a reasonable purchase price of $370,000. Based on a meeting with the property owner on April 15, 2002, the City Manager authorized staff to obtain an appraisal of 7801 Bass Lake Road for potential acquisition purposes. The property is located in the East Winnetka Livable Communities area and in Planning District 6. This property is included in the east Winnetka area redevelopment concept plans developed by the Livable Communities Task Force. In 1998, the Council passed a resolution approving the City of New Hope Comprehensive Plan Update. In 1999, the Metropolitan Council approved the Comprehensive Plan Update. In the Plan, the City was broken down into several planning districts. Planning District 6 is the district where the Winnetka, Bass Lake Road and Sumter properties that the City has been pursuing over the past few years are located. Planning District 6 is bordered by Winnetka Avenue North to the west, C.P. Rail system to the south and the City of Crystal to the east and north. The Comprehensive Plan targeted several areas in the City for redevelopment. Recommendations for Planning District 6 include the acquisition and redevelopment of sites located along the south side of Bass Lake Road, in the Bass Lake Road extension area and along the east side of Winnetka Avenue North between 5340 Winnetka Avenue and Bass Lake Road. In October 1999, the New Hope Economic Development Authority directed staff to contact residents along the east side of Winnetka Avenue North, between 5430 and 5550 to inquire if there was any interest in voluntary sales of these properties to the City. Since that time, the City has purchased seven of the seventeen lots along the east side of Winnetka and additional properties along Sumter Avenue North and in the Bass Lake Road extension area (attached, please see a map of city -owned properties in Planning District 6). In March 2002, the Council directed staff to contact twenty (20) residents in Planning District 6 to again inquire if there was any interest in voluntary sales of these properties to the City. The City has received additional interest from a number of property owners about potential sales. This property owner's request was received after the March 2002 interest letter was distributed. In 2000, the City received a Metropolitan Council Livable Communities Grant to study redevelopment Request for Action Page 3 10 -28 -02 opportunities in the roughly quarter -mile area encircling the intersection of Winnetka Avenue North and Bass Lake Road. Currently, a task force of stakeholders is studying redevelopment opportunities within the designated area. Up to this point, the task force has developed a number of redevelopment concept plans for the entire study area, including redevelopment concepts for the Winnetka, Bass Lake Road and Sumter area. On May 24, 2002, the Council hired the engineering firm Short Elliott Hendrickson, Inc. to determine whether qualification tests for tax increment eligibility (site coverage, building conditions) can be met in the east Winnetka area. This study is being undertaken to facilitate redevelopment efforts in the area. SEH has determined the subject building to be substandard in the DRAFT report. At a future meeting, staff will request that the Council consider a resolution determining the building to be substandard and included in a Tax Increment Financing District. The resolution would allow the City to clear the site and still include the property in a future Tax Increment Financing District. The Hennepin County and Shenehon Appraisals Inc. Estimated Market Values are as follows: • Hennepin County o Taxes payable 2002, estimated market value: $230,000 ($74,000 Land & $156,000 Building) • Shenehon Appraisal Co., 6 -4 -02 o $330,000 (not separated by building and land) The property is located at 7801 Bass Lake Road. The property is zoned CB and is used as a multi- tenant office building. The property measures a total of 14,810 sq. ft. or .34 acres. Gross building area of the facility is an estimated 6,000 sq. ft., with a net rentable area of approximately 4,313 sq. ft. The building was constructed in 1969. The appraisal states that the improvements are average quality construction and maintenance is average. If this resolution is approved, staff will forward the purchase agreement to the property owner for the appropriate signatures. The City Attorney has scheduled the closing on December 16, 2002. Upcoming activities include: • Meeting with Evergreen Land Services to begin relocation activities and discuss options for retaining the building in its current occupied status. • Notifying tenants of ownership change and relocation procedures. • Per the Council and City Manager's direction: Researching options to retain the office building as occupied, until the land is needed for redevelopment — contact professional office building management firms. • Presenting options to the Council at a future meeting, prior to closing on the property. Staff recommends approval of this resolution. FUNDING The subject property is located in an area where TIF funds can be expended. TIF funds would be used for property acquisition and associated holding costs. ATTACHMENTS • Resolution • City Attorney Correspondence, 10 -22 -01 • Location Map • Topographic Map • Purchase Agreement • Planning District 6 — City Ownership Map RESOLUTION NO. 02- 151 RESOLUTION AUTHORIZING ACQUISITION OF PROPERTY AT 7801 BASS LAKE ROAD BY DIRECT NEGOTIATION OR EMINENT DOMAIN (IMPROVEMENT PROJECT NO. 719) BE IT RESOLVED by the City Council of the City of New Hope as follows: WHEREAS, the property located at 7801 Bass Lake Road is located within the East Winnetka TIF District recently established by the City of New Hope; and WHEREAS, the acquisition of the property at 7801 Bass Lake Road (hereafter Property) is necessary for the successful completion and implementation of the East Winnetka TIF District; and WHEREAS, the City has caused to be prepared an appraisal of the Property which appraisal indicated the property has a current market value between $330,000.00 and $345,000.00; and WHEREAS, the City has contacted the fee owners of the Property to determine their interest in selling the Property to the City; and WHEREAS, the fee owners indicated an unwillingness to sell the Property at the City's appraisal market value; and WHEREAS, the City has the statutory authority to acquire the Property through condemnation by an Eminent Domain proceeding per Minn. Stat Chap. 117; and WHEREAS, the public purpose for such a taking would be the successful completion of the East Winnetka TIF District; and WHEREAS, the City Council hereby determines it is necessary to acquire the Property through direct purchase with the fee owners per the terms of the "Commercial Building Purchase Agreement" attached hereto as Exhibit A or by condemnation through an Eminent Domain proceeding. NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of New Hope as follows: 1. That the "Commercial Building Purchase Agreement" attached hereto as Exhibit A is hereby approved with a Purchase Price of $370,000.00. 2. That the Mayor and City Manager are hereby authorized and directed to sign the "Commercial Building Purchase Agreement" and to take all necessary steps to acquire the Property by direct purchase per the terms of the "Commercial Building Purchase Agreement ". 3. That the City Manager, in the alternative, is hereby authorized and directed to acquire the Property by condemnation through an Eminent Domain proceeding and to take all steps to start a condemnation action if necessary in the event a direct purchase of the Property is unsuccessful. Dated the 28th day of October, 2002. W. Peter Enck, Mayor Attest: Valerie one, City Clerk P: \Auomey \Cnh Resolutions \CNH99.11275 - 001 -Reno Auth Acq of 7801 Bass Lk Rd.doc N COMMERCIAL BUILDING PURCHASE AGREEMENT THIS AGREEMENT made effective the day of October, 2002 by and between Jerome A. Showalter and Miriam R. Showalter, husband and wife (hereinafter referred to as "Seller ") and City of New Hope, a Minnesota municipal corporation (hereinafter referred to as "Purchaser "). In consideration of the mutual covenants contained herein, Seller and Purchaser agree as follows: 1. Purchase and Sale Subject to and in reliance upon the within representations, warranties and agreements of Seller on the one part, and Purchaser on the other part, and subject to the agreements, covenants and conditions of this Commercial Building Purchase Agreement (the "Agreement "), Seller agrees to sell and Purchaser agrees to purchase: (a) That certain real estate and improvements commonly known as 7801 Bass Lake Road, New Hope, Minnesota, legally described on Exhibit A, including that certain building containing approximately rentable square feet, together with its component mechanical, structural, heating, plumbing, electrical, air conditioning and roofing element, and all other improvements located on the real estate (the "Real Property "). (b) All and singular the rights and appurtenances pertaining to the Real Property, including any right, title and interest of Seller in and to adjacent streets, alleys, rights -of -ways and easements. (c) All plans, code enforcement reports, environmental reports, engineering reports and any other studies and reports involving the Real Property in Seller's possession or reasonably available at no cost to Seller. (d) The personal property, machinery and equipment located upon said Real Property (if any) described on Exhibit B (the "Personal Property "). (e) All right, title and interest of Seller in the lease agreements, contracts and warranties to be assigned in accordance with this Agreement. (f) Unless otherwise stated or otherwise evident to the contrary, the assets listed in subparagraphs (a) through (e) above, are hereinafter collectively referred to as the "Property". 1 EXHIBIT h 2. Purchase Price The total purchase price to be paid by the Purchaser for the Property shall be Three Hundred Seventy Thousand and 00 /100 Dollars ($370,000.00), which shall be paid as follows: (a) $0.00 earnest money, the receipt of which is acknowledged. (b) $370,000.00 cash at Closing. 3. Closing Consummation of this transaction (the "Closing ") shall be on or before December 16, 2002 (the "Closing Date "), at the offices of the City of New Hope, 4401 Xylon Avenue North, New Hope, Minnesota 55428. 4. Possession Date Subject only to the rights of parties in possession pursuant to Lease Agreements accepted by and assigned to Purchaser on the Closing Date, the Purchaser shall be entitled to possession of the Property as of the Closing Date. 5. Seller's Obligations at Closing At the Closing, Seller shall: (a) Execute and deliver to Purchaser a Warranty Deed subject to the Permitted Encumbrances. (b) Deliver to the Purchaser copies of all certificates of occupancy, licenses, permits, authorizations, and approvals issued by governmental authorities having jurisdiction over the Property. (c) Execute and deliver a Bill of Sale with general warranties for all Personal Property (if any) included in the transfer. (d) Deliver the originals of all lease agreements for the Property and execute and deliver to the Purchaser an assignment of said leases in a form mutually acceptable to Purchaser and Seller. (e) Deliver to Purchaser letters executed by the Seller ready for delivery to each respective tenant directing that rental payments be sent to the Purchaser or at Purchaser's direction. (f) Deliver to Purchaser tenant estoppel letters in a form reasonably acceptable to Purchaser. (g) Pay to Purchaser the amount of all security deposits, including all interest accrued thereon as of the Closing Date held or received by Seller with respect to the tenants. I (h) Deliver an assignment in a form acceptable to Purchaser of all service, maintenance and management contracts that Purchaser elects not to terminate, and of any assignable warranties, guaranties, permits and licenses applicable to the Property. (i) Deliver a non - foreign affidavit, properly executed in recordable form containing such information as required by IRC Section 1445(B)(2) and its regulations. (j) Provide an appropriate federal income tax reporting form, if any is required. (k) Pay the state deed tax due for conveyance of the Property. (1) Pay the cost of recording all documents necessary to place record title to the Property in the condition warranted and required of Seller by this Agreement. (m) Execute and deliver to Purchaser a seller's affidavit indicating no judgments or liens against Seller. (n) Execute all other documents reasonably necessary to perform this Agreement and to transfer the Property to Purchaser free and clear of any and all encumbrances other than permitted encumbrances. 6. Purchaser's Obligations at Closing Subject to the terms and conditions hereof, and contemporaneously with the performance by Seller of its obligations, Purchaser shall do the following: (a) Deliver a City check payable to the Seller for the amount due at Closing. (b) Accept delivery of the Property. (c) Accept assignment of the lease agreements and execute documents assuming future obligations of the lessor under said leases. (d) Execute and deliver such additional documents as are necessary and incidental to Closing the transaction consistent with the terms and conditions of this Agreement. 7. Rent and Operating Expense Pro - Ration The following pro - rations shall be made as of the Closing Date: (a) Rents (including, without limitation, payments for operating costs, common area costs and real estate taxes) interest, and all other income and operating expenses relating to the Property shall be made as of the Closing Date, with the Seller responsible for the expenses and entitled to the revenues accrued or applicable to the period prior to the Closing Date. Purchaser is responsible for the expense and 3 entitled to the revenues accrued or applicable after the Closing Date. If on the Closing Date any of the amounts to be apportioned cannot be calculated with complete precision because the amount or amounts of one or more items included in such calculation are not then known, such calculation shall be made on the basis of reasonable estimates of Seller and Purchaser of the amount or amounts of the estimates of the Seller and Purchaser of the amount or amounts of the item or items in question, subject to adjustment (by additional payments by Purchaser to Seller or by refunds from Seller to Purchaser) when the amount or amounts of such item or items become known. Promptly after the amount of any such item becomes known to either party, such party shall notify the other thereof and shall include in such notice, the amount of any required adjustment. If such adjustment requires an additional payment by Purchaser to Seller, Purchaser shall make such payment to Seller simultaneously with its giving of or within twenty (20) days after its receipt of such notice, as the case may be. If such adjustment requires a refund by Seller to Purchaser, Seller shall make such refund simultaneously with its giving of or within twenty (20) days after its receipt of such notice, as the case may be. 8. Seller's Representations, Warranties and Covenants Seller covenants, represents and warrants to the Purchaser as follows: (a) The Property presently complies with all laws, ordinances, rules and regulations of the city, state and federal government and of all their agencies and departments ( "laws "), including but not limited to all zoning and environmental laws. (b) All required certificates of occupancy, underwriters' certificates relating to electrical work and building, safety, fire and health codes and approvals and all other permits necessary to operate the Property, have been issued and will be assigned, where appropriate, to Purchaser at Closing. That Seller is not aware of any code violation nor to Seller's knowledge has any governmental agency, official or employee ticketed, red - tagged, threatened to ticket or red -tag, or otherwise indicated that any aspect of the Property violates any such code. (c) There are no structural defects or deficiencies in the foundations, walls or roofs of the Property; there is no water leakage through the floor, walls or roof of the Property. That all heating and air - conditioning units and systems, all plumbing, all electrical and mechanical systems located in and upon the Property are and will be in proper working order as of the date of Closing. The Purchaser shall be entitled to access to the Property for the purpose of making such examinations as the Purchaser deems necessary in its sole discretion and as of Closing Date, the Purchaser shall accept the Property in its "as is" condition. (d) That the buildings and improvements located on the Real Property are entirely within the boundary lines and applicable set -back lines of the Real Property. 2 (e) That there is no litigation, proceeding (eminent domain or otherwise), claim, investigation, notice of charge or deficiency pending or threatened, nor does Seller know or have reason to know any basis for any such action, which might adversely affect the Property. (f) That there are no service and /or employment contracts or other contracts, unrecorded easements, covenants or restrictions or agreements of any kind or description, either written or verbal, pertaining to the Property as of the date hereof, except as may be canceled or terminated at the Seller's discretion on or before the Closing Date scheduled herein. (g) During the period between the date hereof and the Closing Date, Seller shall continue to operate and maintain the Property in the usual and customary manner. (h) Seller owns the Property, free and clear of all encumbrances and has the full right to sell and convey the same as herein provided. (i) Seller has received no notice of actual or threatened special assessments or reassessments of the Real Property. (j) No toxic or hazardous substances or wastes, pollutants or contaminants (including, without limitation, asbestos, urea formaldehyde, the group of organic compounds known as polychorinated biphenyls, petroleum products including gasoline, fuel oil, crude oil and various constituents of such products, and any hazardous substance as defined in the Comprehensive Environmental Response, Compensation and Liability Act of 1980 ( "CERCLA "), 42 U.S.C. §9601 -9657, as amended) have been generated, treated, stored, released or disposed of, or otherwise placed, deposited in or located on the Property, nor has any activity been undertaken on the Property that would cause or contribute to (i) the Property to become a treatment, storage or disposal facility within the meaning of, or otherwise bring the Property within the ambit of, the Resource Conservation and Recovery Act of 1976 ( "RCRA "), 42 U.S.C. §6901 et seq. or any similar state law or local ordinance, (ii) a release or threatened release of toxic or hazardous wastes or substances, pollutants or contaminants, from the Property within the meaning of, or otherwise bring the Property within the ambit of, CERCLA, or any similar state law or local ordinance, or (iii) the discharge of pollutants or effluents into any water source or system, the dredging or filling of any waters or the discharge into the air of any emissions, that would require a permit under the Federal Water Pollution Control Act, 33 U.S.C. §1251 et seq. or any similar state law or local ordinance. There are no substances or conditions in or on the Property that may support a claim or cause of action under RCRA CERCLA or any other federal, state or local environmental statutes, regulations, ordinances or other environmental regulatory requirements, including without limitation, the Minnesota Environmental Response and Liability Act, Minn. Stat. 115B ( "MERLA ") and the Minnesota Petroleum 5 Tank Release Cleanup Act, Minn. Stat. 115C. No asbestos has been installed or exists within any improvements on the Property. No above ground or underground tanks, are located in or about the Property and have subsequently been removed or filled. To the extent storage tanks are located on the Property they have been duly registered with all appropriate regulatory and governmental bodies and otherwise are in compliance with applicable Federal, state and local statutes, regulations, ordinances and other regulatory requirements. (k) Seller has not entered into any other contracts for the sale of the Property, nor are there any rights of first refusal or options to purchase the Property or any other rights of others that might prevent the consummation of this Agreement. (1) Seller is not a "foreign person ", "foreign partnership ", "foreign trust" or "foreign estate" as those terms are defined in Section 1445 of the Internal Revenue Code. (m) There is no action, litigation, investigation, condemnation or proceeding of any kind pending or threatened against Seller or any portion of the Property. (n) Seller will make available to Buyer on or before November 11, 2002, a true, correct and complete copy of each lease applicable to the Property. Such leases are in full force and effect and neither Seller nor tenant is, to the best of Seller's knowledge, in default under any such lease. There are no other leases or possessory rights regarding the Property, except such leases provided to Purchaser. (o) Seller will make available to Purchaser on or before November 11, 2002, a true, correct and complete copy of each contract applicable to the Property which extends beyond the Closing Date. To the best of Seller's knowledge, such contacts are in full force and effect and neither Seller, nor any other party to such contract, is in default under such contract. All other contracts in effect as of the date of this Agreement regarding the Property are terminable on or before the Closing Date. (p) Seller shall execute no lease agreement during the period of time from the date of this Agreement to the Closing Date, the term of which lease extends beyond the Closing Date without the prior written consent of Purchaser. (q) On or before November 11, 2002, Seller will deliver to Buyer true and correct copies of all leases, contracts and permits in connection with the Property together with operating statements for the last three (3) years. To the extent available to Seller, Seller will also deliver to Buyer true and correct copies of all warranties, plans, specifications, surveys, and environmental reports pertaining to the Property. Seller will indemnify Purchaser, its successors and assigns, against, and will hold Purchaser, its successors and assigns, harmless from any expenses or damages, including reasonable attorneys' fees, that Purchaser incurs because of the breach of any of the above representations and warranties, whether such breach is discovered before or after Closing. Consummation of this Agreement by Purchaser with knowledge of any such breach by Seller will not constitute a waiver or release by Purchaser of any claims due to such breach. 9. Seller's Warranty of Title Subject to performance by the Purchaser, the Seller agrees to execute and deliver the Warranty Deed conveying marketable title to said Property subject only to the following exceptions ( "Permitted Encumbrances "): (a) Reservation of any minerals or mineral rights to the State of Minnesota. (b) Utility and drainage easements which do not interfere with present improvements. (c) The lien of real estate taxes and special assessments not the obligation of the Seller pursuant to the terms of this agreement. (d) Exceptions to title which are not objected to by Purchaser as provided in Paragraph 10 below. (e) Lease agreements accepted by Purchaser and assigned to Purchaser at Closing. 10. Obligations of Seller and Purchaser as to Title Matters It is understood and agreed that the title herein required to be furnished to the Property and to appurtenant easements, if any, by the Seller shall be marketable of record and that marketability shall be determined as of the Closing Date. Seller agrees to record all documents necessary to show of record a marketable title in Seller, and to cause all Abstracts of Title examined to be continued to show such filing, all at Seller's cost and expense. (a) Delivery of Title Commitment Within twenty (20) days after the Effective Date, Buyer shall cause a Title Company to issue and deliver to Buyer a Title Commitment for the Property, together with complete copies of all instruments identified as conditions or exceptions on Schedule B of the Title Commitment. Seller shall be responsible for the cost of the Title Commitment. Seller agrees that not more than ten (10) days nor less than five (5) days before the Closing, Buyer shall have the right at Buyer's expense to cause the Title Company to issue a Title Update. (b) Buyer's Review of Title Commitment After Buyer's receipt of the final Title Commitment, together with all supporting documents, Buyer shall have twenty (20) days in which to notify Seller of any objections to the condition of the Title Commitment that Buyer determines, in its sole and absolute discretion, have an adverse effect on the Property. If Buyer fails to notify Seller in writing of objections to the Title Commitment within the twenty (20) -day review period, Buyer shall be deemed to have no objections to the Title Commitment. 7 (c) Seller's Cure of Title and Survey Objections If Buyer objects to the condition of title, Seller shall have thirty (30) days after Buyer provides Seller with notice of Buyer's objections, or such other time period agreed to by Buyer and Seller in writing, to use reasonable efforts to cure Buyer's objections. Prior to the expiration of said applicable cure period, Seller shall notify Buyer in writing stating either that Seller has cured Buyer's objections to Buyer's satisfaction or that Seller is unable to cure said objections. If Seller does not cure Buyer's objections to Buyer's satisfaction within the above - referenced applicable cure period, then within fifteen (15) days after Buyer's receipt of Seller's notice, then at any time prior to Closing, Buyer shall notify Seller in writing of Buyer's election to: (i) terminate this Contract, whereupon the Deposit shall be returned to Buyer; (ii) waive said objections; or (iii) extend the time period to cure Buyer's objections for a period of sixty (60) days from the date of Buyer's election to extend, in order to provide Seller and /or Buyer with the opportunity to cure Buyer's objections provided, however, if Buyer's objections are not cured to Buyer's satisfaction prior to the expiration of said sixty (60) -day period, then Buyer shall notify Seller in writing of Buyer's election either to: (i) terminate this Contract, whereupon the Deposit shall be returned to Buyer; (ii) waive said objection; or (iii) Buyer may cure said objection, and in such event at Closing, Buyer shall be entitled to a credit against the Purchase Price in an amount equal to Buyer's cost to cure said objection. If Buyer objects to the condition of title as provided herein and if Closing is scheduled to occur prior to the expiration of the applicable time periods set forth in this subsection, then the date of Closing shall be postponed until the earlier of the expiration of said sixty (60) -day additional cure period or ten (10) days after the cure to Buyer's satisfaction of Buyer's objection. (d) Title Insurance Policy At Closing, Buyer shall cause the Title Company to issue in Buyer's name the Title Policy for the Property. The Title Policy shall be in an amount equal to the Purchase Price and subject only to the Permitted Exceptions, and the Standard Exceptions shall be deleted from the Title Policy. At Closing, Buyer shall pay for the cost of the title insurance premium for the Title Policy and any endorsements thereto that are necessary in order for the condition of title to the Property to comply with the provisions herein. 11. Special Assessments Seller agrees to pay on the Closing Date all special assessments levied, pending or approved including installments of special assessments certified and payable with the real estate taxes due and payable in the year 2002. 12. Real Estate Taxes Seller shall pay all real estate taxes and installments of special assessments due and payable in the year 2001 and prior years. Purchaser shall pay all real estate taxes and installments of special assessments (not paid by Seller pursuant to paragraph 11 above) due and payable therewith in the year 2003 and subsequent years. Real estate taxes due and payable in the year 2002 shall be prorated between Seller and Purchaser as of the Closing Date based upon a calendar year commenced January 1, 2002. 13. Real Estate Brokerage Commission The parties represent to each other that neither has engaged a real estate broker or agent in connection with the. sale and purchase contemplated by the terms of this Agreement. Each party agrees to indemnify and hold harmless the other party for any claim relating to the services of a real estate broker. 14. Conditions to Closing All obligations of Purchaser under this Agreement are subject to the fulfillment, prior to or on the Closing Date, or within applicable time periods, of each of the following conditions: (a) The representations and warranties of the Seller contained in this Agreement shall be true as of the Closing Date as though such representations and warranties were made at such time. (b) Marketability of title to said Real Property has been established pursuant to the provisions of this Agreement. (c) Purchaser shall have until November 21, 2002, or the date which is ten (10) days after the date when Purchaser shall have received the last of the items which Seller is required to deliver to Purchaser pursuant to the provisions of this Agreement, whichever is later, to review, inspect, investigate and /or test, at Purchaser's sole cost and expense, the following matters: (i) All leases, contracts and permits applicable to the Property together with operating statements for the last three (3) years. (ii) The condition of any buildings, structures and improvements located on the Property including all the structural components of such buildings, structures and improvements and all mechanical, electrical, heating, air conditioning, drainage, sewer, water and plumbing systems located therein. (iii) To determine whether Hazardous Substances, inoperable wells or aboveground or underground storage tanks are located in, on or under the Property or improvements thereon. In the event Purchaser determines in his sole discretion that it is in his best interest to obtain a Phase I environmental report for the Property, the Phase I environmental report shall be ordered at the cost and expense of the Purchaser. However, in the event Closing occurs pursuant to this Agreement, Purchaser shall be credited one -half of the cost of said report against the Purchase Price. In the event Closing does not occur as a result of Purchaser's timely exercise of its right to terminate pursuant to any conditions set forth in this paragraph 14 or in the event this Agreement is terminated as a result of default by Seller, Seller shall reimburse Purchaser 100 % of the cost of the Phase I environmental report. This obligation for reimbursement shall survive termination of the Agreement. Seller shall allow Purchaser and Purchaser's agents, access to the Property at all reasonable times for the purpose of Purchaser's investigation and testing. Purchaser shall pay all costs and expenses of such investigation and testing and shall hold Seller and the Property harmless from all costs and liabilities relating to Purchaser's activities. Purchaser shall further repair and restore any damage to the Property caused by Purchaser's inspection and testing and return the Property and /or any improvements or personal property to substantially the same condition as existed prior to such entry. (d) If, as a result of the investigation and testing conducted pursuant to subparagraph (e) above, Purchaser determines: (i) that the leases, contracts, permits and /or operating statements are not acceptable; (ii) that the buildings, structures, improvements, mechanical, electrical or other internal systems are not in proper working order; or (iii) that Hazardous Substances, inoperable wells or aboveground or underground storage tanks are in, on or under the Property or improvements located thereon as evidenced by a written report prepared by an environmental expert, then, in any of such events, Purchaser shall have the right to give notice to Seller that it wishes to terminate this Agreement and upon such notice being given this Agreement shall be null and void and all earnest money shall be promptly refunded. Along with the notice, Purchaser shall also provide Seller with a copy of any written report prepared in connection with any inspection and testing done by Purchaser including, without limitation, any environmental report prepared by an environmental expert. Such notice must be given by the date hereinbefore specified for Purchaser to complete its inspection and investigation. Provided, however, and notwithstanding Purchaser's right to terminate and have all earnest money refunded, Seller shall have the right upon receipt of the above - described notice from Purchaser to cure the defect noted by Purchaser within sixty (60) days from he receipt of the notice from Purchaser. If Seller gives Purchaser notice of its intent to cure within ten (10) days of notice to terminate from Purchaser, this Agreement shall not be terminated. If the defect noted by Purchaser relates to an environmental problem, the cure shall be to the reasonable satisfaction of Purchaser's environmental expert. If the defect noted is with regard to any other problem, the cure will be to the reasonable satisfaction of Purchaser. Seller shall use reasonable diligence to cure the problem as soon as possible and if necessary, the Closing shall be delayed pending such cure. If the defect is cured, the parties will proceed to Closing under the terms of this Agreement within ten (10) days of the completion of such cure. If after Seller's sixty (60) day cure period, the problem is not cured, Purchaser shall once again have the right to give written notice that this Agreement is terminated and upon Seller receiving such written notice this Agreement shall be deemed to be null and void and all earnest money promptly refunded to Purchaser. At any time prior to the expiration of Purchaser's 10 right to terminate this Agreement, or during Seller's sixty (60) day cure, Purchaser shall have the right to waive any defect in writing and upon such waiver, the parties shall proceed to Closing. If after giving a notice of termination pursuant to this paragraph Purchaser closes on this transaction, Purchaser waives its right to make any claims in the future based on any representations and warranties in this Agreement to the extent that such representations and warranties relate to the claim made by Purchaser. 15. Condition of Property It is understood that upon Closing the Purchaser will accept the Property "as is". No warranty as to the physical condition of the Property contained in this Agreement shall survive Closing. The Seller shall have no further responsibility or liability with respect to the condition of the Property. 16. Notice Any notice given under this agreement shall be deemed given on the date the same is deposited in the United States Mail (registered or certified), postage prepaid, addressed as follows: If to the Seller: Jerry Showalter 15409 Tarleton Crest Maple Grove, MN 55311 If to the Purchaser: Daniel J. Donahue City Manager City of New Hope 4401 Xylon Avenue North New Hope, MN 55428 (763) 531 -5100 (763) 531 -5136 (fax) With a copy to: Steven A. Sondrall New Hope City Attorney Jensen & Sondrall, P.A. 8525 Edinbrook Crossing, #201 Brooklyn Park, MN 55443 (763) 424 -8811 (763 )493 -5193 (fax) 17. Default by Seller In the event that Seller should fail to consummate the transaction contemplated herein for any reason, except Purchaser's default, Purchaser may: (a) Enforce the specific performance of this Agreement provided action to enforce such specific performance shall be commenced within six (6) months after the date the right of action has arisen. 11 (b) Cancel this Agreement and upon cancellation, all earnest money shall be refunded to Purchaser. 18. Default by Purchaser In the event the Purchaser shall fail to consummate the transaction contemplated herein for any reason, except default by Seller, the earnest money shall be retained by the Seller, such sum being agreed upon as liquidated damages for the failure of Purchaser to perform the duties, liabilities and obligations imposed upon it by the terms and provisions of this agreement and because of the difficulty, inconvenience, and uncertainty of ascertaining actual damages, no other damages, rights or remedies shall, in any case, be collectable, enforceable, or available to Seller other than as provided in this paragraph, and Seller agrees to accept and take the earnest money as its total damages and relief hereunder in such event. 19. Miscellaneous (a) This Agreement shall be governed by and construed in accordance with the substantive laws of the State of Minnesota. (b) Descriptive headings are for convenience only and shall not control or affect the meaning or construction of any provision of this Agreement. (c) This Agreement shall be binding upon and shall inure to the benefit of the parties hereto and their successors and assigns. (d) This Agreement may be executed in any number of counterparts or may be, where the same are not required, certified or otherwise delivered without the testimonium clause and signatures; each such counterpart hereof shall be deemed to be an original instrument, but all such counterparts together shall constitute but one Agreement. (e) In case any one or more of the provisions contained in this Agreement shall, for any reason, be held to be invalid, illegal or unenforceable in any respect, such invalidity, illegality or unenforceability shall not affect any other provision hereof, and this Agreement shall be construed as if such invalid, illegal or unenforceable provision had never been contained herein. 12 SELLER: Jerome A. Showalter SSN: - - Miriam R. Showalter SSN: - - P: \Attomey \SAS \Documents \CNH99.11275 - 001- PA(Showalter). doc : LE PURCHASER: CITY OF NEW HOPE W. Peter Enck Its: Mayor Daniel J. Donahue Its: City Manager 13 EXHIBIT A LEGAL DESCRIPTION East 70' of that part of Lot 38, Auditor's Subdivision 226 lying North of the South 1100' thereof. EXHIBIT B PERSONAL PROPERTY JENSEN & SONDRALL, P.A. Attorneys At Law 8525 EDINBROOK CROSSING, STE. 201 BROOKLYN PARK, MINNESOTA 55443 -1968 TELEPHONE (763) 424 -8811 • TELEFAx (763) 493 -5193 e -mail law@jensen-sondrall.com DOUGLAS J.DEBNER GORDON L. JENSEN' GLEN A. NORTON STEVEN A.SONDRALL WILLIAM C. STRAIT' - STACY A. WOODS OF COUNSEL LORENSQ.BRYNESTAD October 22, 2002 Ken Doresky Community Development Specialist City of New Hope 4401 Xylon Avenue North New Hope, MN 55428 Re: Acquisition of 7801 Bass Lake Road /Showalter Building Our File No.: 99.11275 Dear Ken: Please find enclosed for consideration at the next Council meeting the following proposed documents: 1. Resolution Authorizing Acquisition of Property at 7801 Bass Lake Road by Direct negotiation or Eminent Domain; and 2. Commercial Building Purchase Agreement. 'Real Property Law Specialist Certified By The Minnesota State Bar Association 'Qualified ADR Neutral 'Admitted in Iowa As we discussed on the telephone, the enclosed Resolution authorizes the City to acquire the property through direct negotiation pursuant to the enclosed Purchase Agreement for $370.000.00. In the event the property owner is not willing to sign the Purchase Agreement, the Resolution then authorizes the City Manager to acquire the property by condemnation through an Eminent Domain proceeding. Obviously, it will not be necessary to initiate the condemnation action if the owners agree to the Purchase Agreement. However, the Purchase Agreement should not be presented to them for signature until after the Council meeting so that there is no dispute concerning the fact that this transaction was entered into under threat of condemnation. I have scheduled the Closing for December 16, 2002. Prior to that date, we will need to review the leases on the property, and we should obtain operating expense information from the fee owner. The Purchase Agreement requires the fee owner to provide us with this information by November 11` We also need to satisfy ourselves there are no environmental issues or concerns relating to this property by the November 11' date, including a determination that a private well or septic system does not exist on this property as well. We also need to discuss how we are going to deal with tenant relocation. It is my understanding a meeting is scheduled prior to the Council meeting to discuss this issue. I believe both the tenants of the building and the City may not want to require an immediate vacation of the property by the tenants. This may require the City to become a commercial landlord for a short period of time. Issues involving this situation need to be discussed. Octol x 22, 2002 Page 2 Finally, we need to obtain a statement from the property owner concerning damage deposits relating to the leasehold interests of the existing tenants. Obviously, these damage deposits need to be considered as part of the Closing costs. Regarding closing costs, I am informed by the title company that a Title Commitment will be available for the property by November 1s Please contact me if you have any questions or comments regarding the attached Resolution, the Purchase Agreement or any other issues we will need to resolve before we actually close on this building and take possession of the property. Very truly yours, Sit Steven A. Sondrall, City Attorney, City of New Hope JENSEN cot SONDRALL, P.A. sas @jensen- sondrall .com After Hours Extension #147 Enclosures cc: Valerie Leone, City Clerk (w /enc.) P:\ Attomey \SAS\Letters \CNH99.11275.0002 -Ken Undoc luau " 7901 5539 7940 5436 1 5437 54-30 5431 5426 5427 5420 • 5421 U17 5416 5417 5410 5411 5406 5407 7810 V 5400 5401 78M • 5519 5,512 MOM 541 �_�.. 5500 5443 M A U17 5446 5437 Iz 5440 5429 7600 7550 7810 V 75W IT 56TH AVE N 5319 W go 7615 E 5307 7301 A 7825 t S� 7800 5,512 MOM 541 �_�.. 5500 5443 5446 5437 Iz 5440 5429 1 5 427 5417 541 LLI 5409 5400 W1 V 5325 5319 W go ------ 5307 A 7825 t S� 7800 L !211 5212 7801 5206 .5221 City-Owned Properties in Comprehensive Planning District 6: 1. 5340 Winnetka Ave. N. 2. 5406 Winnetka Ave. N. 3. 5410/12 Winnetka Ave. N. 4. 5420 Winnetka Ave. N. 5. 5422 Winnetka Ave. N. 6. 5518 Winnetka Ave. N. 7. 5524 Winnetka Ave. N. 8. 5532 Winnetka Ave. N. 9. 5550 Winnetka Ave. N. 10. 5520 Sumter Ave. N. 11. 5530 Sumter Ave. N. 12. Sumter Ave. N. 13.5559 Sumter Ave. N. 14. Bass Lake Road Ext. 15. 7621 Bass Lake Road Ext. - 55TH AVE N 5a I a 7800 5 5814 617 7600 7610 790 7500— 56TH AVE N #N I I I 5550'. 5559 5545 7615 5 5539 5540 537 5538 7301 5532 5531 5530 5524 5519 5520 7621 7601 7940 S 5518 5509 5510 5512 5501 7708 7608". 5506 . .... .... 55TH AVE N 5500 54-43 5436 Y 5437 5444 5437 554M 5437 5436 VAAA 5437 5438 5433 i 5434 5433 1 5432 5430 5431 Z 5429 'LAJ .5428 5429 5440 5430 5429 5430 5426 f 5427 5434 5427 5426 5427 MX 5425 r 5428 5420 5421 5422 .__... _.�._.... �._... ....._..__.._.., s4; s 54�i -_ _ _�._- ._ - 5423 ST RAPHAEL DR. 5420 5425 5420 5419 54 a 5417 5361 5-410 5411 5414 5413 5416 f 5412 5410 5414 LLJ. 5.355 5406 W7 5406 5409 r Mi 5406 5409 5408 5409 5410 5 5 349 5400 5401 s 5400 5401 - 5400 5401 5400 5325 530 5329 53M 5337 5336 5340 5M7 5,319 5324 5331 5342 r 5325 1 m LLJ - 5330 1 go 5313 51325 5W8 5321 r 5325 Co 5324 co _J cf 531 8 53W 5317 5307 5312 53ig 5319 7825 5324 5,31,3 ' t 5313 5306.*' 5313 5312 goo 531 8 53 09 5306 5307 1 5218 5307 1 CV 15212 5 5312 35 1 5300 5w, 7801 5,301 5206 5,306 IN -522 1 Y ti J 1 9!" CSI r x. -_ -- I O x x _j.K b P • x x ui Ld ° } x m ° e x / w � a I C 0 C x O C 9a'„ I 9 !, 4. x 903.5 55TH AVENUE o ° 1 O .N ° L �1 O r. x C O O C I V W 0 ° 900 Lu C W W Z x x x ° Z p x so LL O G O I n Ix _. ." x O. W x ° .O • 0 N x C rJ ST. RAPHAEL ° 92 O O N C I p C p O 0 x ° C x x ° C O W oO 4' pW 0 o O o = O 27.3 �: h ° 10 � . �i C x i Y O C C I �7 C ❑� f p e 92i.6 �! O O I 92; ? 1 - 'r- - -_Lk 921.0 920.5 Lu LLJ ❑ `I O � h a p Lu e C 00 I I O < / 920.4 0 � 0 O 919.4 X O 921.3 ... p p ie 62140 A �Iy \w H% October 29, 2002 4401 Xylon Avenue North New Hope, Minnesota 55428 -4898 www.ci.new- hope.mn.us Mr. Jerry Showalter 15409 Tarleton Crest Maple Grove, MN 55311 City Hall: 763 - 531 -5100 Police: 763- 531 -5170 Public Works: 763 - 533 -4823 TDD: 763- 531 -5109 Subject: 7801 Bass Lake Road — October 28 Council Action Dear Mr. Showalter, City Hall Fax: 763 - 531 -5136 Police Fax: 763 - 531 -5174 Public Works Fax: 763- 533 -7650 On October 28, 2002, the New Hope City Council approved a resolution to purchase your property located at 7801 Bass Lake Road by direct purchase or condemnation and directed staff to proceed with a purchase agreement. Enclosed, please find three copies of the purchase agreement prepared by the City Attorney. Please sign all three copies and return them to the City for execution. Upon final signatures, the City will return one original copy to you for your records. The City Attorney has scheduled the closing for December 16. Please let us know if you have a conflict with that date. The City Attorney has completed one change to the agreement located in paragraph 8(p) on page 6 by adding language to indicate that no new leases may be entered into by the property owner after the date of the purchase agreement. If the provision is violated, the owner would be responsible for associated relocation costs. Please contact me at 763- 531 -5137 if you have any questions or comments. Thank you for your cooperation throughout this purchase process. Sincerely, Ken P. Doresky, AICP Community Development Specialist Kirk McDonald Director of Community Development Enc.: 7801 Bass Lake Road Purchase Agreement (Three Copies) Cc: Dan Donahue, City Manager Steve Sondrall, City Attorney Doug Sandstad, Building Official Chuck Tatro, General Inspector Erin Seeman, Community Development Intern Valerie Leone, City Clerk (Improvement Project No. 719) Family Styled City f a For Family Living Nn. 1658 — Office Lease. J O L tZL OFFICE LEASE Miller-Davis Co., Minnea QCfj[� CAC, Entered into in duplicate this ..................................... ............................ f � .....................day of !! 1 ........................... by and between................................................................................. ...................... " /�� 17�r� p si S .. ......... ........ ..............................9 . t... t[.:.................. G...................................................................... ...,:....:...................as Lessor ...................... ............. and a :N f.G 5 as Lessee WITNESSETH: That said lessor, in eonsideratl�' ono he c'ovenaari'ts of the lessee hrein contained, hereby covenants with said lessee as follows: That said lessor do...e.S..hereby lease, demise and let to said lessee th..lS.....certain room ............ designated as ....... ..............._...... ........................ ..................................................................................................... .............. . . .................. in the building kno-w�n, as.......1.... /.7 c .. in the ................... ... t../.....C... ............................of, 6 State of......//1.✓v:/L zc(aT ................ r, jX...... . 19............. e ul,ations on the back hereof, for for the term of.... E� ./✓.......... year .........from the............. e� ....5 / ..............day of subject to th e restrictions herein contained and to the rules and i ( �7 ' (_3 0 /"A_1"j � n & it� D CL 11� (/ —2 .. o f � :. fL /)I,,- i / b at ...........11..W, J. v,v payable in monthly installments of 16c .......,Dollars 1) l .....SS,�3 i� ............................ _.............................. .............. ............................... ........................Dollars each on the first day of each month in advance; said premises to be used by said lessee only as .............................. office in which to carry on the business of ..................................... .............. .................... ..................... ....:.... ..................................... ...; and will furnish such heat, elevator service, and general janitor or cleaning service as shall be reason- ably necessary to the comfortable use and occupancy of said premises during business hours, Sundays and Holidays excepted, upon the condition that the lessor shall not be liable for damages for failure so to do due to causes reasonably beyond his control: PROVIDED, HOWEVER, That in case said premises shall become untenantable. or unfct for occupancy in whole or in part by the total or partial destruction of said building by fire or other casualty and said lessor shall fail or refuse within ................. ............................... days thereafter to agree in writing to restore the same within ninety (90) days this lease may be terminated by either lessor or lessee by notice in writing; and in case said lessor shall agree in writing to restore the same within said time the rent to be paid hereunder pending such restoration shall be, abated in propo tion to the loss and impair ent of the use of said premises to be, deternl -ined as follows: ..: Q ............................ �>,.t.:...... ................�. e. Sse�.......................................................... ............................... . ................................................................ 1. Said lessee, in consideration of the covenants of the lessor herein contained, hereby covenants with said lessor as follows: TERMS AND PAYMENT OF RENT:—That the lessee hereby leases from the lessor the premises above described upon the terms above specified, and will pay rent therefor as above specified: ASSIGNMENT AND SUBLETTING: —That the lessee will not assign this lease and will not sublet any part of said premises without the consent in writing of the lessor; and does hereby agree that if the lessee shall be declared bankrupt, shall have a receiver appointed of his property, shall make an assignment for benefit of creditors, or his rights hereunder shall be taken under execution, it shall be construed as an assignment of this lease within the meaning hereof: USE OF PREMISES: —That the lessee will keep said premises in an orderly, clean and sanitary condition as required by the laws and ordinances applicable thereto; will neither do nor permit to be done therein anything which is in violation of the terms of insurance policies on said building; will neither do nor permit to be done on said premises anything in violation of laws or ordinances applicable thereto; and will neither commit nor suffer waste in said premises: and will pay for all glass broken by his fault or negligence: BILLS FOR SERVICE:— all bill #o* gas -wa#e ��leclricity heat.nna- other sevice- slsd iw .sai� — d premise =4eeu- due:.. and will snake no claim against the lessor for damages caused by water, gas, electricity or other means: ENTRY BY LESSOR: —That the lessor may at all reasonable times enter said premises to inspect the same and to make repairs therein and incident to repairs of said building; and that no changes, alterations or repair shall be made in said premises without the consent of the lessor in writing: LOSS OF PROPERTY: —That the lessee will make no claim against the lessor for any loss of property by theft, burglary, or other means, from said premises: LIEN FOR RENT: —That the lessee grants to the lessor a lien upon all personal property of the lessee in said premises during said term to secure payment of the rent payable hereunder, and does agree that no such property shall be 'removed from said premises without the consent in writing of the lessor while any installments of rent are past due and during any other de- fault in the conditions hereof: ABANDONMENT OR DEFAULT: —That in case the lessee shall vacate or abandon said premises or shall default in any of his covenants herein and said default shall not be removed within ten (zo) days after notice thereof in waiting from the lessor, the lessor is hereby authorized to re -enter said premises, to eject the lessee and take full possession of said premises, to term- inate this lease at his option and to lease and let said premises as to him shall seem best, to remove from said premises all personal property of the lessee nd to store the same to the account and at the expense and risk of the lessee, and to sell said property or any part thereof an out of the proceeds to pay all expenses of so removing, storing and selling the same, and all sums which shall then be in arrears or past due for rent; and that no such act or acts of the lessor shall be construed as can- cellation of this lease or waiver -of the right of the lessor to collect rent hereunder for the remainder of said term, except said exercise of his option to terminate the same; and that in case the lessor shall determine that any action or proceeding at law or otherwise is necessary to enforce the terms and conditions hereof, the lessee agrees that a reasonable attorney's fee and the accessary costs and disbursements thereof y 3+c alloacd and taxed against hint. In consideration of the premises, it is hereby mutually agreed by and between the parties hereto that their respective covenants herein shall be binding upon and inure to the benefit of their respective heirs, legal representatives, successors and assigns; and that the term "lessor" and "lessee" shall be construed to mean men or women, lessors or lessees where there are more than one, and corporations, as the case may be. Sin Witneog M The parties hereto have hereunto set their hands and seals the day and year ve w first boritten, in the presence of: ................................. . ........ ........... ......_.... .:................................... ..... ... `' ...C................ .... ....«- "'........ (SE.4L) ...... ........_ .................... (SE.4L) ... ............................... (SE./IL) No. 1658 —Office Lease. _ r V 7:Z 7 Miller -Davie Co., Minneapolis OFFICE LEASE ?� �fjt$ lta35t, Entered into in duplicate this ....................... .. ...................................... 1....... .................. ........clay of ... .................. ........., by an between _ ... (?.Z°F? ..t_ 5....... .as Lessor and ..... . � �Si......... ,, (.c.t4:T/p:- 5 ............................. ? ... ............, ................ .. ............................ ...........,..........,...... as Lessee s ..................... � .. WIT.N'ESSETH: That said lessor, in consideration of the covenants of the lessee herein contained, hereby covenants with said lessee as follows: I ' That said lessor do.�,�.....hereby lease, demise and let to said lessee th.e...h:....certain room,S.........designated as .....l. FAG'_... ... . 5� .............................. �� .... > ... .... ... ........................................................................... ............... :.........................._.. ..............................- in the building known as...........!� - .... ZSD. tc .� .....: ......................................................... ............ in the........... . of....l..f .. , State of .L `'`•��.fi......... f or the term of..... N -........ year .........from the..... day of.........../ �t �.c- ............. ............... � .- " -- s 18ct,to th restr'ction contained and to th regulatiorts on the back hereof, or �� ......II. 1 4 .�pR.. _ 11J... ...._5. /_ /.......... in monthly installments -Tit I.��: �G.. ✓..�........7• -�� 7 - �?. Dollars payable y i f ............. 1 each on the first day of each month in advance; said premises to be used by said lessee only as .............................. office...5....in which to carry on the business of.......�..2:.5....�.£ �.3�j, .... s:. ��.. �t[. Jl J. } .............................; and will furnish such heat, elevator service, and general janitor or cllantng service as shall be, reason- ably necessary to the comfortable use and occupancy of said premises during business hours, Sundays and Holidays excepted, upon the condition that the Lessor shall not be liable for damages for failure so to do due to causes reasonably beyond his control: PROVIDED, HOWEVER, That in case said premises shall become untenantable or unfelt for occupancy in whole or in part by the total or partial destruction of said building' by fire or other casualty and said lessor shall fail or refuse within ................. ............................... days thereafter to agree in writing to restore the same within ninety (90) days this lease may be terminated by either lessor or lessee by notice in writing; and in case said lessor shall agree in writing to restore the same within said time the rent to be paid hereunder pending such restoration shall be, abated in proportion to the loss and impairment of the use of said premises to be, determined as follows: 1 ....... �.......... : � � 1.�.� ^. ........... ..� ........�. ms z........................................................ ...._....._.................... .............................................................................. ............................... Said lessee, in consideration of the covenants of the lessor herein contained, hereby covenants with said lessor as follows: TERMS AND PAYMENT OF RENT: —That the lessee hereby leases from the lessor the premises above described upon the terms above specified, and will pay rent therefor as above specified: ASSIGNMENT AND SUBLETTING: —That the lessee will not assign this lease and will not sublet any part of said Premises without the consent in writing of the lessor; and does hereby agree that if the lessee shall be declared bankrupt, shall have a receiver appointed of his property, shall make an assignment for benefit of creditors, or his rights hereunder shall be taken under execution, it shall be construed as an assignment of this lease within the meaning hereof: USE OF PREMISES: —That the lessee will keep said premises in an orderly, clean and sanitary condition as required by the laws and ordinances applicable thereto; will neither do nor permit to be done therein anything which is in violation of the terms of insurance policies on said building; will neither do nor'permit to be done on said premises anything in violation of laws or ordinances applicable thereto; and will neither commit nor suffer waste in said premises: and will pay for all glass broken by his fault or negligence: BILLS FOR SERVICE: — r th> lesse� pay -all hilLc_fnx yasamaler... electricity, heat gnd „1LtE:et used in said premises when due: and will make no claim against the lessor for damages caused by water, gas, electricity or other means: ENTRY BY LESSOR: —That the lessor may at all reasonable times enter said premises to inspect the same and to make repairs therein and incident to repairs of said building; and that no changes, alterations or repair shall be made in said premises without the consent of the lessor in writing: LOSS OF PROPERTY: —That the lessee will make no claim against the lessor for any loss of property by theft, burglary, or other means, from said premises: LIEN FOR RENT: —That the lessee grants to the lessor a lien upon all personal property of the lessee in said premises during said term to secure payment of the rent payable hereunder, and does agree that no such property shall be removed from said premises without the consent in writing of the lessor while any installments of rent are past due and during any other de- fault in the conditions hereof: ABANDONMENT OR DEFAULT: —That in case the lessee shall vacate or abandon said premises or shall default in any of his covenants herein and said default shall not be removed within ten (m) days after notice 'thereof in writing from the lessor, the lessor is hereby authorised to re -enter said premises, to eject the lessee and take full possession of said premises, to term- inate this lease at his option and to lease and let said premises as to him shall seem best, to remove from said premises all personal property of the lessee and to store the same to the account and at the expense and risk of the lessee, and to sell said Property or any part thereof and out of the proceeds to pay all expenses of so removing 1 storing and selling the same, and all sums which shall then be in arrears or past due for rent,* and that no such act or acts a7 the lessor shall be construed as can- cellation of this lease or waiver the right of the lessor to collect rent hereunder for the remainder of said term, except said exercise of his option to terminate the same; and that in case the lessor shall determine that any action or proceeding at law or otherwise is necessary to enforce the terms and conditions hereof, the lessee agrees that a reasonable attorney's fee and the nrcesenry costs and disburcrwents ihereuf inay be allowed and ta,cd aslainsi lira. In consideration of the premises, it is hereby mutually agreed by and between the parties hereto that their respective covenants herein shall be binding upon and inure to the benefit of their respective heirs, legal representatives, successors and assigns; and that the term "lessor” and "lessee" shall be construed to mean men or women, Lessors or lessees where there are more than one, and corporations, as the case may be. In Witness Wbereef, The parties hereto have hereunto set their hands and seals the day and year fast above written, in the presence of: _ ........................................................................... ............................... (SE.IL) !......f ......(SE2L) � U No. 1656 -0$ Leas Miller -Davie Co., Min OFFICE LEASE Tbig 10 50, Entered into in duplicate this .......................................... ............................... ...._.......................day of f r✓ ��f�� ......................,.u� by and between........fG�.gG _T6Z .......... r�ti T /... .................. . ... ..................... .... ....................I.......... _...................... ....as Lessor F ,ter r ri4y r i — r— S and.......'?-.-.........,-.. .. ............................. �. ...._ _.............:' �r:.. �.......:.......: �- �........ L- �. f ....t�..4..%�- �..._..........as Lessee � WITNESSETH: That said lessor, in consideration of the covenants of the lessee herein contained, C hereby covenants with said lessee as follows: That said lessor do.af.....hereby lease, demise and let to s id Jesse �S ..ce taro room.f"._.....desif'nated . a ............. ...._....................... ).: ..... .. t ��.�:....... .� ..... �. t as .... °�..� .'� in the building known as............ o f l h int 6_ ........... . ................... ....._........ .................... I.......... L in the........ rl.......... ........................ .......... of... ..., / ?9 State of...L /aC✓'y.... �..TI� .............. for the term of......Q4 p V.. .......year.........from the....... .f/ °�.r °..day of...... .... .........�........ 0....:.Y, sub'ect to the restrictions her contained and to the rules and regulations on' he back hereof, for l.t�l.2.../� 1 ......1 h`1 .... t. -�G� ' ✓ ... o2 ...v..�4 v7y........... - �2... .............. .Dollars at .cL 1 {.._..�(�r .�?..: ,. .....r........ 'J J / / ................... p gable in J%eall j installments of. Ct 0 �� w j .[t( ✓. ...GJ4C'f f3L� fp._.` �r�Dollars 2f(vO.D ��NIN /lo, P bc�fi saad premises to be used by said lessee only as .............................. o ffice ........tn, which to carry on the business of.... ^' and will furnish such heat, elevator service, and general janitor or cleaning service as shall be, reason- r ably necessary to the comfortable use and occupancy of said premises during business hours, Sundays n and Holidays excepted, upon the condition that the lessor shall not be liable for damages for failure so to 2 do due to causes reasonably beyond his control: PROYIDED, HOW'EYER, That in case said premises i shall become untenantable or unfit for occupancy in whole or in part by the total or partial destruction of said building by fire or other casualty and said lessor shall fail or refuse within ...........`�"................ 3 bALl days thereafter to agree in writing to restore the same within ninety (90) days this lease may be f terminated by either lessor or lessee by notice in writing; and in case said lessor shall agree in writing to restore the same within said time the rent to be paid hereunder pending such restoration shall be .n abated in proportion to 4he loss and impairment of the use of said premises to be deterinined as follows: `.�f ......... ✓..� ........�<1t�121, zt: �rC�..........° r�t1rZ+. ........................................................... ............................... Said lessee, in consideration of the covenants of the lessor herein contained, hereby covenants with said lessor as follows: TERMS AND PAYMENT OF RENT: —That the lessee hereby leases from the lessor the premises above described upon the terms above specified, and will pay rent therefor as above specified: ASSIGNMENT AND SUBLETTING: —That the lessee will not assign this lease and will not sublet any part of said premises without the consent in writing of the lessor; and does hereby agree that if the lessee shall be declared bankrupt, shall have a receiver appointed of his property, shall make an assignment for benefit of creditors, or his rights hereunder shall be taken under execution, it shall be construed as an assignment of this lease within the meaning hereof.- USE OF PREMISES: —That the lessee will keep said premises in an orderly, clean and sanitary condition as required by the laws and ordinances applicable thereto; will neither do nor permit to be done therein anything which is in violation of the terms of insurance policies on said building; will neither do nor permit to be done on said premises anything in violation of laws or ordinances applicable thereto; and will neither commit nor suffer waste in said premises: and will pay for all glass broken by his fault or negligence: BILLS FOR SERVICE. —Tl� lit ezy=i=&_when ^u e: and will make no claim against the lessor for damages caused by water, gas, electricity or other means: ENTRY BY LESSOR: —That the lessor may at all reasonable times enter said premises to inspect the same and to make repairs therein and incident to repairs of said building; and that no changes, alterations or repair shall be made in said premises without the consent of the lessor in writing: LOSS OF PROPERTY: —That the lessee will make no claim against the lessor for any loss of property by theft, burglary, or other means, from said premises: LIEN FOR RENT: —That the lessee grants to the lessor a lien upon all personal property of the lessee in said premises during said term to secure payment of the rent payable hereunder, and does agree that no such property shall be removed from said premises without the consent in writing of the lessor while any installments of rent are past due and during any other de- fault in the conditions hereof: ABANDONMENT OR DEFAULT: —That in case the lessee shall vacate or abandon said premises or shall default in any of his covenants herein and said default shall not be removed within ten (zo) days after notice thereof in writing from the lessor, the lessor is hereby authorized to re -enter said premises, to eject the lessee and take full possession of said premises, to term- ill this lease at his option and to lease and let said premises as to him shall seem best, to remove from said premises all personal property of the lessee and to store the same to the account and at the expense and risk of the lessee, and to sell said property or any part thereof and out of the proceeds to pay all expenses of so removing, storing and selling the same, and all sums which shall then be in arrears or past due for rent; and that no such act or acts of the lessor shall be construed as can- cellation of this lease or waiver -of the right of the lessor to collect rent hereunder for the remainder of said term, except said exercise of his option to terminate the same; and that in case the lessor shall determine that any action or proceeding at law or otherwise is necessary to enforce the terms and conditions hereof, the lessee agrees that a reasonable attorney's fee and the necessory costs and disbursements thereof may he allowed and lased against him. In consideration of the premises, it is hereby mutually agreed by and between the parties hereto that their respective covenants herein shall be binding upon and inure to the benefit of their respective heirs, Legal representatives, successors and assigns; and that the term "lessor" and "lessee" shall be. construed to mean men or women, lessors or lessees where there are more than one, and corporations, as the case may be, 3n Witnegg Wijereof, The parties hereto have hereunto set their hands and seals the day and year fast above written, in the presence of: SE✓IL) SE.4L) SE.-4L) SE.dL) JENSEN & SONDRALL, P.A. Attorneys At Law 8525 EDINBROOK CROSSING, STE. 201 BROOKLYN PARK, MINNESOTA 55443 -1968 TELEPHONE (763) 424 -8811 • TELEFAY (763) 493 -5193 e -mail law @j ensen- sondrallxom DOU( DEBNER CORDON L. JENSEN' G!-EN 1 NORTON STEVEN A. SONDR.ALL WILLIAM C. STRAIT STACY A. WOODS OF COUNSEL LORENS Q. BRYNESTAD October 1, 2002 VIA FACSIMILE TO (763) 531 -5136 AND BY REGULAR U.S. MAIL Kirk McDonald Community Development Director city of New Hope 4401 Xylon Avenue North New Hope, MN 55428 Re: Acquisition of 7801 Bass Lake Road Our File No.: 99.11275 'Real P -:)ert Law Spemlis' ..ertirraBy me Minnesota State Bar Association - Qualified ADR Neutral 'Admitted in Iowa Dear Kirk: This letter will confirm our meeting with the property owner, Jerry Showalter, on the acquisition of the property at 7801 Bass Lake Road. As you know, we had an appraisal done on this property indicating a $330,000.00 market value based on the income approach to value. However, the appraisal also indicated a value for the property of $345,000.00 based on a comparable sales approach. The income approach was based on a 10% capitalization rate. This simply means market value is based on a determination of (net operating income) x (10). A manipulation of the numbers comprising net operating income can produce a higher or lower amount depending on the calculations used by the appraiser for the various factors which comprise net operating income. The property owner contends this property is worth more than $400,000.00 based on a net income approach, however, in a previous meeting, indicated he would accept $395,000.00 as a price for this property. In our September 26` meeting, we discussed with the property owner the concerns indicated by the City Council and their direction to staff to again meet with the property owner about a renegotiated purchase price. After some friendly discussion concerning the nuances of appraising property, especially based on the income approach to value, the parties agreed to recommend a $370,000.00 purchase price for consideration by the City Council at its October 14t' meeting. Basically, we agreed with the property owner that the leasing commission used by our appraiser to reduce net operating income was not reasonable. As a result, the valuation for the property would be increased to $345,000.00 using the income approach to value and a10% cap rate. This makes sense to me since the comparable sales approach in our appraisal also indicated a $345,000.00 market value. We then decided to split the difference between $345,000.00 and $395,000.00, and determined $370,000.00 was a reasonable price for this property. C.V. FILED 1400 REQ.— a'4 AND P R TAXES PAFJ TAXPAYER SERVICES TRANSFER ENTERED DEC 2 3 2002 789'7088 202 DEC 3 Fib 2. 34 78 7088 JS Form No. 3 -M - WARRANTY DEED Indio :dual(:;) to Corporation or Partnership STATE DEED TAX DUE HEREON: $1,258.00 F;Ls u i 623 yid .z5 f J Date: December /� , 2002. FOR VALUABLE CONSIDERATION, Jerome A. Showalter and Miriam R. Showalter, husband and wife, Grantors, hereby convey and warrant to the City of New Hope, a Minnesota municipal corporation, Grantee, real property in Hennepin County, Minnesota, described as follows: That part of Lot 38, Auditor's Subdivision Number 226, Hennepin County, Minnesota, described as follows: Commencing at the Northeast corner of said Lot 38; thence South along the East line of said Lot a distance of 210.8 feet; thence West parallel with the North line of said Lot 38 a distance of 70 feet; thence North parallel to the East line of said lot to the North line thereof; thence East to the point of beginning. EXCEPT that part of Lot 38, Auditor's Subdivision Number 226, Hennepin County, Minnesota described as follows: Beginning at a point on the West line of said Lot 38, distant 1100 feet North from the Southwest corner thereof; thence East parallel with the South line of said Lot 38 to the East line of said lot; thence South along the East line thereof a distance of 100 feet; thence West parallel with the South line of said lot to the West line thereof; thence North along the West line thereof to the point of beginning, Hennepin County, Minnesota, according to the recorded plat thereof, and situate in Hennepin County, Minnesota; Subject to and together with easements, restrictions and covenants of record; together with all hereditaments and appurtenances belonging thereto. THE SELLER CERTIFIES THAT THE SELLER DOES NOT KNOW OF ANY WELLS ON THE +roe ho wa ter DESCRIBED REAL PROPERTY. 0 S i 19- 2- ( 3 3 - D D Z I Miriam R. Showalter STATE OF MINNESOTA } COUNTY OF HENNEPIN SS. The foregoing instrument was acknowledged before me this `� day of December, 2002, by Jerome A. Showalter and Miriam R. Showalter, husband and wife, Grantors. (Notarial Stamp or Seal) m STEVEN A SONDRALL A NUM PUBIIC— MINNESOTA • ( // "'�- -. wy omm Boma ism 9t, zoos Notary Public THIS INSTRUMENT DRAFTED BY Jensen & Sondrall, P.A. 8525 Edinbrook Crossing, Suite 201 Brooklyn Park, MN 55443 (763) 424 -8811 Tax Statements for the real property described in this instrument should be sent to: City of New Hope 4401 Xylon Avenue North New Hope, Minnesota 55428 P:\Attomey\JLB\Documents\CNH99-11275-005-WD.doe