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HomeMy WebLinkAboutHEDRA 06-11-09An HRA meeting will precede the EDRA meeting. HASTINGS HOUSING ~ REDEVELOPMENT AUTHORITY June 11, 2009, 6:00 p.m. City Hall CYty Council Chamber Agenda I. Quorum. II. Minutes ofnlay 14, 2008 III. Business A. Public hearing on transfer of East 2/3 of Lot 1, Block 14, Oliver's Grove to the City of Hastings. Resolution authorizing execution of deed. IV. Adjourn HASTINGS HOUSING & REDEVELOPMENT AUTHORITY Minutes of May ld, 2009, 6:00 p.m. City Hall CYt~~ Council Chamber I. Quorum: Conmiissioners Holzem, Mat'todam, Keena and Hallenbeck present, Toppin absent; staff: Grossman. II. Minutes of January S, 2008: Martodam moved and Keena seconded approval; motion carried. III. Business Order public hearing Keena moved, Hallenbeck seconded, a public hearing on the transfer of East 2/3 of Lot 1, Block 14, Olivers Grove, to the City of Hastings for the meeting of June 11, 2009 at 6:00 p.m. Motion carried, 4-0. IV. Adjourn: Hallenbeck moved, Martodam seconded adjournment motion carried. June 1, 2009 TO: Hastings HR-1 FROM: John Cn'ossman RE: Transfer of ownership of Olivers Cn'ove to City of Hastings Action: Public healing and resolution authorizing execution of deed. Backeround: The HRH ordered the preparation of deeds for the transfer of its real estate to Hastings EDR-1 by resolution 1-2009 on Janu:ny 8, 2009. Subsequently on February 12, 2009 the EDRA approved transferring the Oliver's Grove properly to the City rather than to EDRA. This hearing and resolution will effect that direction. The reasons for the transfer to the City instead of EDRA include 1) the property is in a National Register Historic District, so any new conshuction would have to be compatible with the e~sting character; 2) two proposals to construct a ne~a~, t~a~o-story brick commercial building on the lot did not prove to be financially feasible; 3) the adjacent properly on the west has existing east-facing windows; 4) as a park space with trees and seating, it serves as a downtown attraction and atnenity; 5) off street public puking for apartment tenants is scarce in this area; 6) the properlu has been maintained by the City Parks Department for 15 years. Facts: The properly ~a~as acquired in 1985 with the adjacent building to flte ~a~est with the intent to cure a blighting situation. The building was in need of rehabilitation and the vacant properly was an unsurfaced, weedy lot, detracting from the appearance of the dov~ntov~n area. The cost of the entire property was $85,000, of that, approximately $20,000 would have been the value of the vacant lot. In 1989 the building was resold for rehabilitation for $3,240.00. The assessor's market value of flee building at fltat time was $79,000; it is now $253,000 . In 1990 the HRA decided to clean up the vacant lot and make it an attraction for downtown while holding it for redevelopment. The cost of the improvements was $60,000. The current assessor's market value of the Olivers Grove property, including the improvements is $87,200. The property will be transferred, not sold. Transfer to the City for public purposes is authorized under the HR-1 stahrte. The HRA has achieved public purposes for the acquisition: elimination of blight and redevelopment of an e~sting building to sfl engflten flte do~vnto~vn commercial and apartment markets. Options: 1) No change - EDRA continues to hold the property for redevelopment. Redevelopment is not likely in the foreseeable future. The cost of new construction is not supported by the local commercial and apartment rents, even with the lot donated to a development. 2) City takes ownership for public purposes. This has been the `existing condition" since 1991. .~s a park, the Cil}' policies would apply to it and the Parks and Recreation Department will manage it. The cost of maintenance has been carried by the Parks budget for many years, so no increase in city costs is expected. Local volunteers frequently plant and maintain the flower beds. 3) In event of a future redevelopment proposal: If conditions changed so that a feasible development was proposed for the property, and it had broad public support, the property could be transferred by the City Council, following the charter provisions, to the EDRA for redevelopment. Recommendation Staff recommends approval of the resolution transferring the properly to the City of Hastings. HOUSING AND REDEVELOPI\1ENT AUTHORITY IN AND FOR THE CITY OF HASTINGS RESOLUTION 2-2UU9 TRANSFER OF BLOCK 14 PROPERTY TO THE CITY OF HASTINGS June 11, 2009 yy'hereas the Housing and Redevelopment Aufltority purchased Lot 1, Block 14 in 198 for the purpose of curing blighting conditions: a commercial building in need of rehabilitation for new uses, and an unsurfaced vacant lot; And whereas the HRA sold the building on the Vdest 1/3 of the property for rehabilitation in 1989 and improved the vacant lot as public open space and parking, called Oliyer's Grove, in 1990; And whereas new construction proposals for the vacant lot have not proven to be feasible because the cost of two-story brick buildings has not been supported by the commercial and residential rents achievable in the downtown :u ea; And whereas Oliver's Grove has proven to be a popular downtown amenity and activity space for public events and the parking is used by apartment tenants in flee area; Now therefore be it resolved that the Housing and Redevelopment Authority approves transfer of owmeiship of the following property to the Citu of Hastings to continue the existing uses and authorizes execution of the deed: The East Z/3 of Lot 1, Block 14, Town of Hastings Upon being put to a vote: Yeas: Nays: Absent The Chair person declared the resolution adopted. Attest: Pamela Holzem, Chairperson John Grossman, Executive Director HASTINGS ECONOMIC DEVELOPMENT & REDEVELOPl\1ENT AUTHORITY Agenda for June 11, 2009, 6:1111 pm. CSt}' Hall CYtp Council Chamber I. Quorum. IL Minutes of May 14, 2009 III. Bills IV. Business A. Authorize relocation cost stud}-: Wilson Development B. Approve sin ing Block 29 preliminary agreement: Stotko Speedling C. Planning workshop -set date and agenda V .Reports and Information A. Industrial Park Update 1. Dental Arts 2. Spiral Blvd B. Vermillion Area update 1. P&L 2. Other areas C. 315 E Third Street D. Levee Park Plan -report to Council attached E. Bridge process update F. Bus transit studies G. Transfer of real estate and assignment of agreements to EDR~. V I. Adjourn Hastings EDRA Hastings Economic Development and Redevelopment Authority 6:00 p.m. Hastings City Hall Minutes of May 14, 2009 I. Called to order 6:00 HEDRA Commissioners, Pam Holzem, Kurt Keena, Dennis Martodam, Bob Hollenbeck, Danna Elling Schultz (arrived 6:30pm), and Ron Toppin (arrived 6:30pm) present Commissioner Anthony Alongi, absent Staff present: Hastings EDRA Director John Grossman, John Hinzman, David Osberg, and Community Relations Specialist Shannon Rausch, II. Approval of Minutes Minutes from the April 9, 2009 meeting were presented, Hollenbeck moved to approve the minutes with no changes. Keena seconded the motion; Motion passed 4-0 III. Bllls Commissioner Keena moved to pay the bills. Commissioner Martodam seconded the motion. Motion passed 4-0 IV. Business A. Proposal for Evaluation of Hudson Relocation: City Administrator, David Osberg provided background regarding the possible relocation of Hudson Manufacturing. Hudson is going to be disrupted during the bridge construction, as well as having their warehouse acquired. For sometime now the City and Hastings EDC/HRA have been looking to work with Hudson on relocating them to the Industrial Park. In the Middle of April, the City of Hastings met with Intek regarding their vacant property next to the Cal Ruedy Public Works Facility on Progress Drive which is for sale. The City is interested in exploring the possibility of moving Hudson Manufacturing to this facility. Hastings EDRA is asked to approve a contract with Sebesta Blomberg to evaluate the Hudson and Intek facilities to see if it would be a good fit and economically right for everyone involved. Commissioner Martodam asked what the turn around time would be for the study to be completed. City administrator Osberg answered 45 days, which coincides with Mn/DOT making their offer to Hudson (which is expected around July 1sl ) Commissioner Keena questioned if funds were available in the budget to do this study. Director Grossman indicated that there were. The Commission questioned what would happen to the current Hudson Facility in Downtown if Hudson were to move out to the Intek building, would the City take it over/acquire it? City Administrator Osberg said that more than likely it would be part of the deal that if the City/Hastings EDRA helped move Hudson, the City would then take Hastings EDRA: 05/14/09 ownership of the downtown facility. Hudson is not eager to move, but does recognize that this may be an opportunity to making a move without acquiring debt to do so. The Intek facility is 100,000 sq. ft. (with the possibility of a 30,000 sq. ft. warehouse addition being added if necessary.) The current Hudson facility is around 160,000 sq. ft. but not well utilized, because of its layout. Intek has put the property up for sale. Commissioner Keena moved approval of a contract with Sebesta Blomberg to evaluate the Hudson and Intek Facilities, Martodam seconded the motion. Motion passed 4-0 Commissioner Danna Elling Schultz arrived at 6:30 B. Block 29 Draft Preliminary Agreement Discussion was tabled on the Preliminary agreement with Stotko/Speedling until they have had a chance to review and agree to the proposed agreement. Commissioner Ron Toppin arrived at 6:45 C. Hastings EDRA Planning Workshop: Hastings EDRA Director, John Grossman proposed a variety of ideas for getting together and holding a planning workshop which could include; long range planning, the role of the EDRA, Goals/Issues for the Hastings EDRA to work on/towards. Staff will work on proposing a couple of topics and arrange a time when everyone can meet for about 3 hours some afternoon. V. Reports A. Dental Arts: Council Approved Hastings EDRA recommendation at their May 4l" meeting. Dental Art is now working on their site plan. B. 315 3ftl Street: Staff notified the Realtor for the House at 315 East 3ro Street that the Hastings EDRA is less interested in purchasing the property at this time because the Senior Center expansion has been put on hold and the asking price is too high. Staff will continue to monitor the situation to see if it sells, or if the price changes at all. C. Spiral Boulevard Improvements: Engineering has been working to revamp their improvement plans to lower the overall cost of the project and the amount being assessed to the business owners. They will be presenting the revamped improvement plan on May 18l" with a curb and ditch proposal. D. 23ftl Street Intersection Study: May 4l" Council accepted the proposal for services with S.E.H. to study the 23ro Street intersection. The scope will include: • Data collection including traffic counts, turning movements, and crash data. • Traffic forecasts • Traffic analysis • Intersection Control Evaluation Report for potential signalization • Backage road concept plans Expected to conclude in September and is not to exceed $40,000. E. Bridge Update: Mn/DOT has completed the Environmental Assessment for the Highway 61 Bridge. The comment period began on May 4, and will be accepted through June 17. A public hearing is planned for May 20, 2009 at the Hastings City Hall from 3 p.m. to 7:30 p. m. with presentations at 4 p.m., 5 p.m. and 6 p.m. Comment cards will be available at Hastings EDRA: 05/14/09 2 the public hearing for written input and a court reporter will be available to record verbal comments. F. Block 1: Block 1 which has been transferred to Hastings EDRA, has recently received a couple of inquiries, the first from Greenhouse Vi//age Property which does senior co-ops. They have checked whether or not it is still available, as well as another developer who also does senior apartments. No commitments or serious conversations at this time, just inquires. G. Vermillion Area: • Planning Director Hinzman informed the Hastings EDRA that the Salvation Army is considering the former Midtown Foods space in the Midtown Shopping Center for a Salvation Army Thrift Store. Even though this project would meet the zoning requirements for operation, staff has concerns about how donation drop-offs would be handled. The rear of the mall (on Eddy Street) has very limited space, and with residences in close proximity, could lead to a lot of issues. The owner has been informed that accumulation in the open of donated items is prohibited under City Code. Donation drop-offs (both during and after business hours) could not occur in open areas; an enclosed drop-off area for goods will be required, similar to what the Good will has. Ed Peterson Properties - 1300 Block -Staff met with Ed Peterson on May 13th to discuss potential development. He is still working through his options, but is now thinking he may be coming to the Hastings EDRA for assistance with the building improvements for new tenants. VI. AdJournment: Toppin moved to adjourn at 7:20 p. m., Keena seconded; Motion passed 6-0 Next meeting is scheduled for June 11, 2009 at 6:OOpm in the Council Chambers. Shannon M. Rausch, HEDRA Secretary Hastings EDRA: 05/14/09 3 Agenda Notes for 6-11-09 BiLLs Bradley Deike Block 29 agreement $64 Ehlers Assoc. Hudson $2,155 Wilson Dev. 315 3rd, 215 Ramsey $243 BUSINESS A. ACQUISITION & RELOCATION COST STUDY -WILSON DEVELOPl\IENT Staff requested a proposal from Wilson Development Inc. far an acquisition and uniform relocation act cost study for the relocation of Hudson Manufacturing Co (HMC). These costs will be needed to make an accurate proposal to HMC. MN DOT is expected to propose a settlement to HMC in July and the EDR.A should make a proposal then or soon after in order that HMC can consider the entire package in making a decision. MN DOT's proposal will include acquisition ofright-of--way for the bridge and payment for inconvenience caused by disruption of normal business by bridge conshuction. The EDA proposal would be for acquisition of the balance of their properly acrd the costs of relocating the business to the new building. We need to know the costs in order to assess the feasibility of financing options The HRA used Wilson Development for flte UBC relocation. Their services were entirely satisfactory and reasonably priced. This work could be stopped in the event that the EDRA or HMC decided not to pursue relocation. See enclosed proposal. RECOMMENDED ACTION: Consider accepting the proposal for the work in phases. B. APPROVE PRELIMINARY AGREEMENT - STOTIiO SPEEDLING Following last month's discussion, a change of the original agreement has been proposed to Stotko Speedling. Because the developer is capable and their proposal meets so many of the EDR.A goals, the Board thought that the three year term was acceptable, but desired an opporlunilu to review prop ess during the term. The change allows the board and the developer to review the m:n'ket conditions and developer progress on the agreement after two years, June 2011. The term of the agreement is still June 30, 2012. The developer would agree to give timely notice to the EDRA if they are no longer able to pursue the project. The balance of the agreement is unchanged. They will review and comment on this amendment and the agreement (enclosed) before the meeting. Any changes they propose will be sent out by email for consideration at the meeting. RECOMMENDED ACTION: Approve signing the agreement as amended. Any significant proposals to change the agreement might affect the recommendation. C. PLANNING WORKSHOP -SPECIAL MEETING Assuming 1 to 4 pm on a weekday, as of June 5 the following dates were still open for all commissioners and staff. June 18 had a conflict. • A,Ionday, July 13 • Monday-Thursday, Attgttst 3 tluough 6 The purpose of the workshop is to focus on long range goals or policies. There's a need to look ahead, even as immediate concerns, such as a possible Hudson relocation, the 2010 budget, a new bridge, and potential redevelopments will be center stage throughout the summer and fall. Workshops can be held periodically to revisit the goals. • June: Little additional information on Hudson relocation. Cily and EDRA 2010 budget process will be st:uting. Abridge type decision is expected, but work on details will continue. • July: The Hudson reports should be complete, indicating the range of costs and giving Hudson management the information they need to make a decision. The 2010 budget will be discussed at the 7uly 9 meeting. • August Could be working with Hudson on details. The lew and budget resolutions will be on the agenda at the August meeting. Consider these as entrees on dte workshop menu. Appetizers. Programs and powers. • Brief review of the existing goals and programs established by the HRA. Discuss their outcomes and potential in the future. • Review of EDA powers and examples of their ttse (from other cities). Main courses. What should be done'? • Future business park. Provide more options for startup or growth by manttfacttu'ing and service businesses. Discuss marketing, incentives. • Commuter center. Work with transit agencies, primarily with land for a station or park and ride, to establish commuter service to St. Paul and A,Iinneapolis. Promote commercial and residential redevelopment around a station area. • Commercial development. Watch all commercially zoned areas. Look for vacant or non-conforming land and run down or obsolete buildings, parking and signage. Promote and assist infill, redevelopment and appearance improvements. • Infrastructure. .Are there deficiencies that would deter business inveshnenf? Are there services that would be a competitive advantage'? • Housing. Ar e there issues, or potential problem areas that the EDRA should consider? Dessert. Identify priorities, next steps. ACTION: Call a special meeting on a selected date, and give direction on agenda. REPORTS AND INFORMATION A. INDUSTRIAL PARK UPDATE Red Wing Dental Arts -Gary Iocco is still preparing plans for Site Plan submittal to Planning Commission and City Council. Mr. Iocco has indicated a desire to vary from the Architectural Stand:u ds of the Zoning Code. Any variance would need Planning Commission review and City Council approval, and would need to meet certain h:u dship criteria. It may be a tough sell to accept the variance considering the land is sold for a dollar. Staff will complete the draft Subsidy Agreement for review by the EDRA and Mr. Iocco shortly. 2. Spiral Boulevard\Industrial Park Improvements -The City Council ordered the Industrial Park Improvements at the May lSs' Meeting. The improvements include curb and gutter, and ditches for stormna~ater. The Engineering Department expects to open project bids in early July, and begin coushuctiou on late Jttly\early Attgttst. Project completion is scheduled by October 31st B. VERMILLION AREA UPDATE P&L\Ed Peterson -City Staff is scheduled to meet with Ed Peterson on June l ls'. More information will he provided at the meeting. 2. Other Vermillion Street Areas -No new information regarding the Midtown Foods\Salvation Anny lease. Staft~is continuing to work with SEH regarding the 23`d Street Traffic Studti-. C. 315 EAST 3~ STREET At the last meeting EDRA indicated they were less motivated and the asking price was too high. Pete Nelson, the realtor, indicated there was no change from the owners, and asked if the EDRA was going to make an otter. D. LEVEE PARK PLAN The attached Levee P:n'k Plan and Levee P:n'k Committee report was presented to the City Council on June 1st. The City Council directed the P:n k and Recreation Committee to continue to solicit input and refine the plan. The plans envision placing a visitor's center on EDRA property on Block 1 or Block 3. The plans can be found on the Cily's website as sho~nm below: http ; 1 X6.{3') ~i3 7 }/ti4'eblmk?/doc~ wta.a,px?dbid {)~ic1 1541?4~opcngdf -true. E. BRIDGE PROCESS UPDATE City Staff is preparing Environmental Assessment comments for Cily Council review and approval at the June 1 ~s' Meeting. MN Dot has tentatively scheduled an announcement of the selected bridge type(s) for July 14s'. F. BUS TRANSIT STUDIES Red Rock Corridor Commission's bus rapid transit feasibility study will be completed and reported to the Board in July or August. Comparisons of different scenarios indicates that the consultant (URS) will likely recommend an extension of Met Transit's existing Cottage Grove routes to Hastings. This approach would require the Cily to opt into the transit taxing area- That in itself may not fund the subsidy needed to operate the service. Red Rock, URS and Met Transit are continuing to work through the details and expect to meet with the Cily staff. Building bus transit facilities is more likely now that the bounding bill was passed and signed. It contains funds for Red Rock park and ride lots, including Hastings. A station :u ea planning process, funding by Red Rock v~711 be beginning soon. It sounds like we will be involved in detailed plans for bus loading and parking on Block 16, adjacent to the depot. G. TRANSFER OF HRA REAL ESTATE AND AGREEMENTS TO EDRA. Dan Fluegel, the City Attorney, has managed the transfer of Block 1 and all the other p:n'cels of downtown real estate to EDRA Oliver's Grove will be transferred to the City after the hearing on June 11, 2009. A,Ir- Fluegel is in the process of assigning to EDRA seven active loan agreements, the lease of UBC properties to the City, and the Abdo purchase agreement for Lot 1, Block 3. The attorney and staff reached the conclusion that hansferring five active business subsidy agreements for Industial Patk Property would not be a good idea because their security is based on the City power to assess costs to real estate. EDRA does not have that po~a~er. Until an alternate security method can be identified, it is best to leave the unsold industrial real estate in the City's ownership. Thus the EDRA will remain in the position of recommending land sales to the Cily Council. June 4, 2009 Mr. John Grossman Hastings HRA 1014`h Street East Hastings, MN ss033-1944 Dear Mr. Grossman: I am writing to submit a proposal to provide acquisition and relocation consultant services for the possible acquisition and relocation of the Hudson Manufacturing's Hastings plant. We are proposing a phased approach that will permit the City/HRA to determine the level of interest and economic feasibility for all parties, and then move to the actual implementation phase of acquiring the property and relocating the industry. Project Understanding The existing Hudson Manufacturing site is being impacted by the MnDOT Bridge project. MnDOT will acquire the warehouse portion of the property in a partial acquisition and will impact access to the property during construction. MnDOT will present an offer to acquire a portion of the site some time after July 1, 2009. MnDOT is seeking possession by the summer of 2010. The Gity/HRA has an interest in the property for riverfront redevelopment project as well as retaining a major local industry. There is a possible existing industrial building for sale in Hastings that may be an acceptable replacement relocation site for the Hudson Manufacturing business. There is some sense of urgency as the possible replacement site may have additional interested parties. The Gity has retained the services of an industrial engineer to assist in quantifying the financial impact of a possible Hudson Manufacturing plant relocation. The City is now seeking assistance to quantify the cost to comply with the Uniform Relocation Act should the City become involved in the acquisition of the existing factory. Page lof 3 Phase Approach 1. Pre Acquisition Feasibility a. Provide relocation cost estimate to move the plant to a replacement facility in Hastings. b. Explain Uniform Relocation Act responsibilities to the City representatives and Hudson Manufacturing representatives. c. Discuss "minimum compensation" acquisition method to value the acquisition price of the remaining portion of the Hudson site. I understand that this is a voluntary sale with no threat of eminent domain action by the City/H RA. The 2006 Eminent Domain law did establish an additional method to determine the level of compensation called minimum compensation. It is based upon the replacement cost of a facility rather than the fair market value of the existing site. The reality is that this approach may very well be helpful in trying to arrive at a negotiated settlement with Hudson Manufacturing. 2. Implementation a. Acquisition 1. Negotiate the purchase of the existing Hudson Manufacturing plant with Hudson Manufacturing representatives. 2. Draft the purchase agreement for City/HRA review and approval. b. Relocation 1. Assist Hudson Manufacturing submit a relocation claim incompliance with URA. It is understood that most of the equipment is old and may not actually be moved. Substitute equipment relocation claims would be provided. c. If the minimum compensation approach to valuation is utilized, we would prepare a Minimum Compensation Value Damage Report detailing the analysis. Proposal Price We are proposing a time and material approach as the project is somewhat undefined in the sense of the interest and cooperation we will have with Hudson Manufacturing, or what it may take to build their interest. We would only charge for the time and assistance provided at the Gity's direction. 2009 Charee Rates Principal $95.00 Associate $85.00 Office Manager $65.00 Copies 15 each Mileage IRS Allowed Rate Postage, Courier, etc. At Cost Page 2of 3 For budget purposes you could use the following schedule to anticipate the cost of our services. Pre Acquisition $2,600 Relocation cost estimates with meetings to discuss estimate with City and Hudson Mfg. and discuss strategy or approach Implementation Acquisition $3,000 Relocation $3,500 Minimum Compensation $1,500 Thank you for the opportunity to submit this proposal. If you have any questions, please call me. Sincerely, Daniel H. Wilson Chief Manager Page 3of 3 Block 29: D1Z~FT modification to Prelim Agreement Section 10- Termination- The agreement shall be effective until June 30, 2012, subject to progress review in June 2011 or Developer notification, described as follows. a) Prior to the June 2011, Authority meeting, the p:uties will consider the existing economic and market conditions and the developer's progress on the development concept. If the Autlority finds that current conditions make the execution of a development contract wifltin twelve montlts unlikely, or finds that there has been a lack of substantial progress on Developer Undertakings, the Authority may terminate the agreement. b) The Developer will notify the Authority in wYiting it; at any time, they conclude that the proposed development concept is not feasible and they are terminating the an Bement and/or are requesting an opportunity to submit a ne~v concept. PRELIMINARY DEVELOPI\1ENT AGREEMENT THIS AGREEMENT is made and entered into this day of 2009, by and between the Hastings Economic Development and Redevelopment Authority (the "Authority") with its principal office at 101 East Fourfli Sheet, Hastings, Minnesota »033, and Stotko Speedling Construction, Inc., a Minnesota corporation (the "Developer") with its principal office at 1303 Eddy Street, Hastings, Minnesota 55033. «'ITNESSETH: WHEREAS, the Authority is the owner of certain real property (the "Redevelopment Property") located in the City of Hastings (the °City"); and WHEREAS, the Developer has presented to the Authority- a concept for the development of the Redevelopment Properly through the construction of a two story office building, parking lot, utilities and landscape improvements (the "Development'), which proposal contemplates the Authority's conveyance of the Redevelopment Property to the Developer for a nominal purchase price; and WHEREAS, the Authority's Board of Commissioners have reviewed the Developer's development concept and desires to enter into this Preliminary Development Agreement to allow flee Developer to further refine its development concept and to negotiate with the Authority concerning public participation in and approval of the proposed Development and «'HEREAS, the Authority and Developer intend to proceed with the Development if: (i) a design for the Development can be agreed upon by the Authority and the Developer; (ii) a satisfactory agreement can be reached regarding flee purchase price to be paid by the Developer for the Redevelopment Property; (iii) satisfactory financing for the Development can be secured; and (iv) the economic feasibility and soundness of the Development and other necessary preconditions have been determined to the satisfaction of the parties. NOW, THEREFORE, in consideration of the covenants and obligations of the parties hereto, the .Authority and the Developer hereby agree as follows: Section 1. Preliminary Nature of Agreement. The Aufliority and Developer agree that this Agreement is intended to be preliminary in nature. Before the Authority- and Developer can make a decision on whether to proceed with the implementation of the Developer's development concept, it will be necess:y to assemble and consider information relative to the uses, design, economics and other aspects of the Development. The purpose of this Agreement is to allow the Developer air opportunity to assemble such necessay information, to refine the above referenced development concept, and to negotiate with the Authority concerning the execution of a purchase and development agreement (the "Contract") which, if executed, will set for-flr the rights and responsibilities of the Authority and the Developer with respect to such development. 2 During the terns of this Agreement, the Authority agrees that it will not enter into or negotiate s similar agreement with any party other than the Developer for a project on the Redevelopment Property Section 2. Present Intent of Parties. It is the intention of the parties that this Agreement document their present understanding and commitments and that if the following conditions can be fulfilled to the satisfaction of the Authority and Developer that the parties will proceed in an attempt to formulate a mutually satisfactory Contract: (a) the Developer demonstrates the feasibility of dte Development as refined pursuant to this Agreement; (b) the Developer provides such documentation regarding the economic feasibility of the Development as the .Authority may wish to receive during the term of this Agreement; (c) the completion of all undertakings required by this Agreement in a satisfactory and timely manner; (d) the satisfaction of such other conditions as are determined to be appropriate by either party; and (e) the Development is generally consistent with the proposal submitted to the Authority's Bo:n'd of Commissioners on April 9, 2009, attached as EXHIBIT B The Contract (together with any other agreements entered into between the parties hereto contemporaneously there~a~ith) when executed will supersede all understandings and obligations of the parties hereunder. Section 3. Development Design. The Developer's concept for the Development on the Redevelopment Properly is preliminary in nature and must be refined before implementation. The concept as proposed involves the construction of a two story office building, parking lot, utilities and landscape improvements. Section 4. Developer Undertakings. During the teen of this Agreement the Developer shall do the following: (a) Continue to refine its site and building plans for the Development. (b) Seek to secure tenants or purchasers in the Development. (c) Submit to the Authorilu a proposed schedule for the undertaking of the Development, including widtout limitation, the timing of the closing on financing. (d) Seek to secure a commitment for financing sufficient for construction of the Development. 3 (e) Using title information and a survey provided by the Authority, update evidence of title to the Redevelopment Property and provide to the Authority any objections to title. (f) Submit to the Attthorily a project pro forma detailing all costs of the Development and the sources and uses of all funds to be raised to finance the Development, including justification for the Developer's payment of less than market value for the Redevelopment Property. (g) Undertake preliminary engineering and soil testing of the Redevelopment Property. For this purpose, the Developer and its conh'actors shall have the right to enter upon the Redevelopment Properly at reasonable times and after notice to the Authority. The Developer shall indemnify, defend and hold the Authority h:umless from and against any claims or damage, of whatsoever nature, arising out of the entry- onto the Redevelopment Property and shall repair any damage caused to the Redevelopment Properly. (i) Using environmental reports and studies provided by the Authority and such other studies and testing deemed necessary, determine the acceptability of the environmental condition of the Redevelopment Property. All of the information described above shall be prep:u'ed or collected at the sole expense of flee Developer. The Developer agrees that it will provide flee Aufliorily with quarterly status reports on progress made with respect to its activities under this Agreement. Section 5. Authority Undertakings. During the term of this .Agreement, the .Authority ~a~ill undertake the following: (a) Provide to the Developer title information based on which the Developer can update evidence of title to the Redevelopment Properly-. (b) Cause to be prepared drafts of the Contract. (c) Provide to the Developer any surveys acrd environmental reports in the possession of the Authority. (d) Analyze information provided by the Developer to determine if the conveyance of the Redevelopment Property for a purchase price that is less than m:uket value is justified. (e) Use its best efforts to cure any valid title objections made by the Developer. Section 6. Nez?otiation of Contract. During the term of this Agreement, the Authority and the Developer shall proceed with the negotiation of a Conbact relative to the Development. The decision to enter into a Contract shall be in the sole discretion of each of the parties. If prior to execution of the Contract either party determines in its sole discretion that it is not in its best 4 interest, for whatever reason, to proceed with the Development, it shall so notify the other party, whereupon this Agreement shall terminate and neither party shall have any rights or obligations to the odter or to any tltird party under or witlt respect to dtis Agreement. If the Developer determines during the term of this Agreement that undertaking the Development is not financially feasible, it will promptly notify the Attthorily of such determination and the parties will terminate this .Agreement. Section 7. Effect of Annrovals. No approval given by the .Authority hereunder or in connection herewith shall be deemed to constitute art approval of the Development for any purpose oflter titan as stated herein and dte process outlined in tltis Agreement shall not be deemed to supersede any concept review, conditional use permit, vacation, subdivision, or other zoning or planning approval process of the Attthorilu or the City relative to the development of real estate. Section 8. Payment of Costs. The Authority- agrees that it will pay its out of pocket costs incurred for attorneys and consultants relating to the preparation of this agreement and the Contract. The Developer will be responsible for all of its costs hereunder, including, but not limited to, updating evidence of title to the Redevelopment Property and environmental and soils conditions testing. The Contract anti specify the parties° responsibilities with respect to costs incurred after execution of the Contract. Section 9. Modifications. This .Agreement may be modified and the term hereof may be extended only through an-itten amendments hereto sin ed by both of the parties to this Agreement. Section 10. Termination. This Agreement shall be effective until Jttne 30, 2012. If for any reason a Contract has not been entered into by the parties by such date or any mutually approved extension dtereof; tltis Agreement shall be null and void and neidter parTy shall have any liability or obligations to the other. Section 11. Severability. If any portion of this Agreement is held invalid by a court of competent jurisdiction, such decision shall not affect the validity of any remaining portion of this Agreement. Section 12. Notices. Notice, demand, or oflter conuuunication fiom one party to the other shall be deemed effective if sent by certified mail, postage prepaid, return receipt requested or delivered personally to a party at its address in the first paragraph of this Agreement, or at such oflter address as such party may designate in wY'iting to the other party. 5 IN WITNESS WHEREOF, the Authority has caused this Agreement to be duly executed in its name and behalf and the De~reloper has caused this Agreement to be duly executed in its nante and behalf on or as of the date first above ~n~ritten HASTINGS ECONOMIC DEVELOPMENT AND REDEVELOPMENT AUTHORITY By Its By Its STOTIiO SPEEDLING CONSTRUCTION, INC. By Its 6 EXHIBIT A Redevelopment Property Lots 1 and 2 except the west 6 feet thereof, Block 29, Town of Hastings ~YHIBIT B Developer's Proposal