HomeMy WebLinkAboutIV.A - Block 1 Development - Mint and Spades
HEDRA Memorandum
To: HEDRA Commissioners
From: John Hinzman, Community Development Director
Rusty Fifield, Economic Development Coordinator
Date: July 2, 2020
Subject: Options for Block 1
Requested Action
Establish a course of action for Block 1. Options include:
1. Direct staff to negotiate a purchase and development agreement with Mint
Development and work with Spades SBC to find an alternative site. Mint
submitted a Letter of Interest for development of the site prior to the June HEDRA meeting
and will present further information at the meeting.
2. Approve the Preliminary Development Agreement with Spades SBC and direct
staff to work with Mint Development to find an alternative site. Consideration of
the Purchase and Development follows Spades presentation to the Board at the June
HEDRA meeting and direction by HEDRA to develop a Preliminary Development
Agreement for future consideration.
3. Reject both proposals and direct staff to work on other alternatives for site
development.
Block 1 Property
The subject property referred to as Block 1 comprises two parcels totaling 1.49 acres and
generally located between the Mississippi River and Artspace Hastings Lofts. The Site has been
owned by HEDRA and the former Hastings HRA for over 30 years and was formerly contained
industrial uses. Site development is challenged by Mississippi River setbacks and the presence
of overhead electrical powerlines that bifurcate the site. A Purchase and Development
Agreement between HEDRA and Panache\Rungoli expired earlier this year.
Development Proposals
Mint Development
Mint Development Company LLC has submitted a Letter of Intent (LOI) to HEDRA for the
purchase of Parcels 19-63950-00-010 and 19-63950-00-021 (Block 1). The LOI can be found in
Attachment A. Mint desires to enter into a Purchase and Sale Agreement (PSA) with HEDRA
Block 1 Development
July 2, 2020
Page 2
related to Block 1 incorporating the terms of the LOI. The PSA creates a framework for
determining the feasibility of development and the purchase price go Block 1.
Mint proposes to build a primarily multi-family residential project. The project may include a
small commercial space. The specific number of dwelling and amount of commercial space will
be determined by market demand, site constraints and financial feasibility. The description of
“proposed use” appears in the cover letter to the LOI and not in the LOI itself.
The LOI proposes that the purchase price of the Property be set based on the number of
housing units to be built. The proposed price scale is as follows:
Less than 15 units .......................... $105,000
15 to 19 units ................................... $112,500
20 to 24 units ................................. $150,000
25 to 29 units ................................. $187,500
30 to 34 units ................................. $225,000
35 units or more ............................ $262,500
HEDRA set the base sale price for Panache and Spades at $470,700 or $7.23 per square foot. It
is likely that the actual sale price would need to be reduced by the parcel area that is not
developable. It would be prudent to have the property appraised after remediation and
determination of developable area. An appraisal would set a fair base price and basis for
determining any business subsidy.
Within 90 days of the execution of the PSA, Mint will complete a survey and title review. If these
actions show that the property is not developable, HEDRA will pay 0ne-half of the cost of the
survey and title work.
The LOI establishes a 201-day Due Diligence Review Period that begins with the execution of the
PSA. (If the PSA was executed August 1, the Review Period would end February 27, 2021.) Mint
would have two options to extend the Due Diligence Review Period by 60 days for each option.
Exercising both options gives Mint control over the property until June 2021.
The following tasks must be completed or waiver during this period.
• Undertake environmental and obtain a “no action letter” from the MPCA (HEDRA).
• Obtain satisfactory soils report after clean-up is complete (Mint).
• Approve easement or easement vacations needed for proposed development/use (City).
• Receive satisfactory market demand analysis results (Mint).
• Obtain satisfactory governmental approvals for development plan and all related
entitlements for the development (Mint/HEDRA/City)
• Determine no pending condemnation or litigation affecting the property (Mint).
The following should be incorporated into any future LOI with Mint Development:
1. The description of the proposed development should be in the LOI and not just in the
cover letter.
Block 1 Development
July 2, 2020
Page 3
2. The LOI should have a fixed base price with criteria for reducing the price.
3. Financial assistance for housing is not a business subsidy. Adding a commercial element
may create a business subsidy.
4. Mint should be required to provide the same information as Panache – financing
commitment, sources and uses of funds, and 10-year proforma. This information is only
needed if Mint seeks a reduced purchase price.
5. HEDRA approval of a transfer of the agreement to another party should be required.
6. HEDRA approval of an extension of the Due Diligence Review Period should be required.
Spades
At the June meeting, the Board directed staff to negotiate the terms of a preliminary
development agreement (PDA) with Spades SBC, including the option to purchase Block 1, for
consideration by the Board at the July HEDRA meeting. The proposed PDA appears in
Attachment B.
The PDA creates a framework for Spades to evaluate the feasibility of constructing an office
building on Block 1 that would serve as the headquarters for the company’s global operations.
The key terms of the PDA are explained below.
• The PDA gives Spades the option to purchase Block 1 that terminates on June 30, 2021.
HEDRA and Spades can mutually agree to extend the term of the agreement. Spades may
also terminate at an earlier date if it determines the project is not feasible,
• The PDA sets the base price of the property at $470,000 (same as with Panache). HEDRA
may consider a reduction in the Base Price to account for one or more of the following
conditions: (1) HEDRA determines that certain parts are unusable due to regulatory
encumbrances or environmental condition; or (2) The Developer determines that a specified
lower price is needed to make the project financially feasible; or (3) HEDRA determines that
it is necessary and appropriate to reduce the Base Price as an incentive for the Developer to
undertake the Project.
• The PDA contains obligations of Spades that must be completed prior to exercising the
option to purchase the property.
a. Retain qualified architectural and engineering consultants to provide technical
assistance in evaluating the ability of the Property to meet company needs.
b. Identify ways to improve the site by mitigating the impact of rail noise, power lines or
other issues that may be identified.
c. Prepare detailed cost estimate for the Project.
d. Provide HEDRA with a table containing the sources and uses of funds for the Project.
e. Work with HEDRA to create options to mitigate barriers to the Project.
f. Provide HEDRA with timeline illustrating the construction process and the phasing of
additional jobs at the Project.
g. Submit a site plan for review and approval by the City.
• The PDA contains obligations for HEDRA.
a. Prepare ALTA Survey of the Property and provide results of the Survey to the Developer.
b. Provide the Developer with information on all known regulations that affect use of the
Property including parking, building height and flood plain.
Block 1 Development
July 2, 2020
Page 4
c. Perform cleanup of contamination on the Property pursuant to the terms of the Grant
Agreement with the Metropolitan Council.
d. Provide Developer with a written statement describing the post-cleanup condition of the
Property and a description of all considerations for site development, such as the need
for a vapor intrusion mitigation system.
e. Assist Developer in identifying options for providing adequate parking for the Project.
f. Assist the Developer in identifying options for interim office space if needed prior to
availability of the Project.
g. Work with Developer to create options to mitigate barriers to the Project.
h. Identify sources and uses of non-local financial assistance.
i. Investigate issues related to green cities including what it means to become a green city,
what actions would the City take over the next ten years, what is the estimated cost of
these actions, what benefits would be realized.
Analysis
The Board faces a choice between two very different uses for Block 1, but both beneficial to the
community. The following provides Staff observations about this decision.
1. Given our recent experience with Panache, it is understandable to be wary of dealing with
another start-up entity with a big idea. While elements of both Panache and Spades plans
can be seen as “”blue sky”, there are stark differences.
a. Panache had experience in making cider, an intriguing vision for a cidery, no
hospitality experience, no business plan and little capital.
b. Spades has a talented and experienced management team, a clear business plan,
established tools and relationship needed to succeed, and a compelling and enduring
need for the services it will provide. Concerns about the viability of Spades cannot be
fully dispelled until the Company is up and running.
2. The balance between risk and reward is an important factor.
a. The Mint proposal is close to being a sure bet. We are confident that Mint will deliver
a quality project, that fits this location and addresses the community need for new
housing. The new residents help to grow the Downtown community. Beyond this, we
have not identified any secondary benefits from the Mint proposal.
b. Spades is not a sure bet. A variety of factors could prevent construction of the
proposed office building, including the site will not accommodate the desired
structure, inadequate initial fund raising, and internal pressure to build in a different
location. The merits of the Spades proposal come from the potential benefits
locating the company’s headquarters on Block 1.
i. People working in this building (estimated at up to 200) create a potential
new market for Downtown businesses and potential demand for housing.
ii. Spades creates a significant customer for the lodging and meeting facilities at
The Confluence.
iii. Spades’ building will bring people to Hastings from all over the world.
Block 1 Development
July 2, 2020
Page 5
iv. Spades presence in Hastings creates the potential for spin-off development
both directly from Spades and from other businesses that want to be near
Spades.
There is little risk or cost to the Spades PDA other than staff time and further delay in
developing Block 1.
c. Staff has not spoken to either firm about the willingness to consider other sites. The
Board should by cautious about the willingness of Spades or Mint to switch to a
different site in Hastings.
i. Block 1 is a unique site for Spades. The property is controlled by HEDRA, in
our Downtown, on the Mississippi River, in a National Park, and walking
distance from restaurants and lodging. No other location has all of these
characteristics.
ii. To the best of our knowledge, Hastings is not in competition with any other
city for the Spades headquarters building. We do not want to inadvertently
cause Spades to look at alternatives. This will decrease our chances and
increase our costs.
iii. While Block 1 is clearly a desirable location for housing, we believe that there
are other suitable locations in Hastings.
Attachments
• Letter of Interest - Mint Development
• Preliminary Development Agreement - Spades SBC
PID 19.63950.00.010 & PID19.63950.00.021
Letter of Intent – Hastings, MN
June 9, 2020 Page 1 of 3
June 9, 2020
Hastings Economic Development & Redevelopment Authority
Attn: Mr. John Hinzman
101 4th Street East
Hastings, MN 55033
RE: Cover Letter for Purchase of Real Property
PID: 19-63950-00-010 & PID: 19-63950-00-021
Dear Mr. Hinzman,
Please find attached Letter of Intent with respect to the purchase of HEDRA’s real property
located at the southeast quadrant of Tyler Street and First Street.
PROPOSED USE: We are proposing a boutique mixed-use development
primarily consisting of residential rental units. The
conceptual development plan also contemplates a small
dedication for commercial space as market demand dictates.
Based on a preliminary analysis of the site, it is estimated
that the site would allow for approximately 20-24 units and
42 surface parking stalls.
We believe the proposed use is consistent and closely aligned
with an existing zoning designation of Downtown Core as
well as being guided as a Mixed-Use property in the 2040
Comprehensive Plan.
SITE CHALLENGES: There are a number of potential challenges that any buyer
will face when redeveloping this site including: 1)
environmental clean up; 2) flood plain boundaries; 3)
existing public / private easements; and, 4) bedrock.
Environmental Clean Up
Because of the anticipated clean up related to the
Metropolitan Council grant received, reviewing any available
information the City has related to current environmental
conditions as well as work to be completed will be extremely
helpful.
PID 19.63950.00.010 & PID19.63950.00.021
Letter of Intent – Hastings, MN
June 9, 2020 Page 2 of 3
Flood Plain & Existing Easements
Based on County GIS maps and historic plats, the site appears
to be significantly encumbered by both the 100-year flood
plain and existing public and private utility and drainage
easements. Specifically, there is a 50-foot easement for the
overhead transmission lines (and others) that bifurcates the
buildable area of the two parcels. Additionally, the overhead
transmission lines may be problematic for two reasons: 1)
project financeability and insurability could be impacted due
to proximity and 2) relocation is cost prohibitive at, per Xcel
Energy, $750,000 per tower. As an unfortunate result, the
parking field will need to be located between the building
and river. Ideally, we would have placed it on the south side
of the property to provide unrestricted view but this does
not appear to be an option. Because of these variables, the
most important initial task we will complete is an
ALTA/topographic survey to fully understand all physical
site constraints.
Bedrock
Geotechnical exploration will also be important to better
understand whether there is any opportunity for
underground parking. Based on the adjacent and recently
completed ArtSpace project, it is our assumption that
Bedrock will prohibit the ability to provide underground
parking. As a result, all parking for project will need to be
surface parking which will be another limiting factor for
project density and size.
Example: In conceptual sketch, we estimate the ability to fit at
least 42 parking stalls. If project is entirely housing, we would
be allowed to construct approximately 25 units without a
variance. If 1,200 square feet of the project is allocated to
commercial use, approximately 22 units could be constructed.
MARKET COMPARABLES: When purchasing land for a multi-family project, the market
typically analyzes land costs based on the achievable density
and a per dwelling unit basis as means of calculating value in
lieu of a price calculated on a per square foot basis. This was
the basis to our proposed purchase price structure.
PID 19.63950.00.010 & PID19.63950.00.021
Letter of Intent – Hastings, MN
June 9, 2020 Page 3 of 3
Also, to provide comparable transactions to reinforce the
Purchase Price, Mint Development Co has recently secured a
Purchase & Sale Agreement for land to develop a senior
housing community in Hastings as well as an LOI for a client
planning a workforce housing project. The workforce
housing project will be a transit-oriented development
located along the 494/694 corridor adjacent to a planned
Bus Rapid Transit station and is being purchased from
another reputable development company. Both sites have
been secured at similar prices of approximately $7,500 per
dwelling unit or less depending on final unit counts.
SCHEDULE: In addition to the LOI, a preliminary milestone schedule
targeting a spring 2021 construction commencement has
been included for review and consideration.
PAST PERFORMANCE: Mint Development Co has proposed similar terms of the
previously negotiated Letter of Intent and Purchase & Sale
Agreement that were used to acquire land from the City of
Hastings in 2018 to construct the Aspen Dental. This should
allow both parties to streamline negotiations and reduce
legal expenses.
I greatly appreciate HEDRA’s consideration of the proposed Letter of Intent and look
forward to continued discussion regarding the potential develop of a boutique mixed-use
project on the subject site.
Sincerely,
MINT DEVELOPMENT COMPANY LLC
Robert Barse
Principal / Owner
(612) 499-6095 | rob@mintdevco.com
Ha
s
t
i
n
g
s
H
E
D
R
A
R
i
v
e
r
f
r
o
n
t
S
i
t
e
Ta
s
k
N
a
m
e
Du
r
a
t
i
o
n
St
a
r
t
Fi
n
i
s
h
Pr
e
d
e
c
e
s
s
o
r
s
Co
m
m
e
n
t
s
1
La
n
d
A
c
q
u
i
s
i
t
i
o
n
45
d
06
/
1
1
/
2
0
08
/
1
3
/
2
0
2
HE
D
R
A
P
r
e
s
e
n
t
a
t
i
o
n
0
06
/
1
1
/
2
0
06
/
1
1
/
2
0
3
HE
D
R
A
P
r
o
p
o
s
a
l
S
e
l
e
c
t
i
o
n
&
L
O
I
E
x
e
c
u
t
i
o
n
0
07
/
0
9
/
2
0
07
/
0
9
/
2
0
4
HE
D
R
A
P
S
A
E
x
e
c
u
t
i
o
n
0
08
/
1
3
/
2
0
08
/
1
3
/
2
0
5
In
i
t
i
a
l
I
n
s
p
e
c
t
i
o
n
P
e
r
i
o
d
(
9
0
c
a
l
e
n
d
a
r
d
a
y
s
)
60
d
08
/
2
0
/
2
0
11
/
1
1
/
2
0
90
c
a
l
e
n
d
a
r
d
a
y
s
a
f
t
e
r
H
E
D
R
A
A
u
g
u
s
t
m
e
e
t
i
n
g
d
a
t
e
=
W
e
d
n
e
s
d
a
y
,
No
v
e
m
b
e
r
1
1
6
De
p
o
s
i
t
I
n
i
t
i
a
l
E
s
c
r
o
w
M
o
n
e
y
0
08
/
2
0
/
2
0
08
/
2
0
/
2
0
4F
S
+
5
d
$2,500.00
7
Ti
t
l
e
W
o
r
k
20
d
09
/
0
3
/
2
0
09
/
3
0
/
2
0
4F
S
+
1
5
d
8
AL
T
A
S
u
r
v
e
y
20
d
09
/
0
3
/
2
0
09
/
3
0
/
2
0
4F
S
+
1
5
d
9
Pr
e
l
i
m
i
n
a
r
y
S
i
t
e
/
F
i
t
P
l
a
n
A
n
a
l
y
s
i
s
30
d
10
/
0
1
/
2
0
11
/
1
1
/
2
0
7,
8
10
En
v
i
r
o
n
m
e
n
t
a
l
C
l
e
a
n
u
p
20
d
09
/
0
3
/
2
0
09
/
3
0
/
2
0
4F
S
+
1
5
d
11
Du
e
D
i
l
i
g
e
n
c
e
P
e
r
i
o
d
(
2
1
0
c
a
l
e
n
d
a
r
d
a
y
s
)
12
5
d
09
/
1
7
/
2
0
03
/
1
0
/
2
1
21
0
c
a
l
e
n
d
a
r
d
a
y
s
a
f
t
e
r
H
E
D
R
A
A
u
g
u
s
t
m
e
e
t
i
n
g
d
a
t
e
=
T
h
u
r
s
d
a
y
,
M
a
r
c
h
11
,
2
0
2
1
12
De
p
o
s
i
t
A
d
d
i
t
i
o
n
a
l
E
a
r
n
e
s
t
M
o
n
e
y
0
11
/
1
8
/
2
0
11
/
1
8
/
2
0
5F
S
+
5
d
$2,500.00
13
Sa
t
i
s
f
a
c
t
o
r
y
e
n
v
i
r
o
n
m
e
n
t
a
l
r
e
p
o
r
t
s
10
d
09
/
1
7
/
2
0
09
/
3
0
/
2
0
10
S
S
+
1
0
d
14
Sa
t
i
s
f
a
c
t
o
r
y
s
o
i
l
s
r
e
p
o
r
t
s
10
d
09
/
1
7
/
2
0
09
/
3
0
/
2
0
10
S
S
+
1
0
d
15
Ut
i
l
i
t
i
e
s
&
E
a
s
e
m
e
n
t
s
40
d
11
/
1
2
/
2
0
01
/
0
6
/
2
1
4,
9
16
Ma
r
k
e
t
S
t
u
d
y
40
d
11
/
1
2
/
2
0
01
/
0
6
/
2
1
4,
9
17
Ar
c
h
i
t
e
c
t
u
r
a
l
/
E
n
g
i
n
e
e
r
i
n
g
75
d
10
/
1
5
/
2
0
01
/
2
7
/
2
1
18
Sc
h
e
m
a
t
i
c
D
e
s
i
g
n
/
3
0
%
30
d
10
/
1
5
/
2
0
11
/
2
5
/
2
0
9S
S
+
1
0
d
,
1
0
S
S
19
De
s
i
g
n
D
e
v
e
l
o
p
m
e
n
t
/
6
0
%
20
d
11
/
2
6
/
2
0
12
/
2
3
/
2
0
13
,
1
4
,
1
8
20
Co
n
s
t
r
u
c
t
i
o
n
D
o
c
u
m
e
n
t
s
/
9
0
%
25
d
12
/
2
4
/
2
0
01
/
2
7
/
2
1
19
21
Go
v
e
r
n
m
e
n
t
a
l
A
p
p
r
o
v
a
l
s
75
d
11
/
2
6
/
2
0
03
/
1
0
/
2
1
22
Co
m
m
u
n
i
t
y
&
N
e
i
g
h
b
o
r
h
o
o
d
O
u
t
r
e
a
c
h
15
d
11
/
2
6
/
2
0
12
/
1
6
/
2
0
18
23
La
n
d
U
s
e
&
S
i
t
e
P
l
a
n
A
p
p
r
o
v
a
l
25
d
12
/
2
4
/
2
0
01
/
2
7
/
2
1
19
24
Bu
i
l
d
i
n
g
P
e
r
m
i
t
30
d
01
/
2
8
/
2
1
03
/
1
0
/
2
1
20
25
Fi
n
a
n
c
i
n
g
60
d
10
/
0
1
/
2
0
12
/
2
3
/
2
0
10
26
Cl
o
s
i
n
g
0
05
/
1
0
/
2
1
05
/
1
0
/
2
1
11
F
S
+
4
3
d
60
c
a
l
e
n
d
a
r
d
a
y
s
a
f
t
e
r
i
n
i
t
i
a
l
2
1
0
d
a
y
s
=
M
o
n
d
a
y
,
M
a
y
1
0
,
2
0
2
1
27
Ex
t
e
n
s
i
o
n
A
n
a
l
y
s
i
s
12
9
d
03
/
1
1
/
2
1
09
/
0
7
/
2
1
28
Du
e
D
i
l
i
g
e
n
c
e
E
x
t
e
n
s
i
o
n
1
(
6
0
c
a
l
e
n
d
a
r
d
a
y
s
)
43
d
03
/
1
1
/
2
1
05
/
1
0
/
2
1
11
60
c
a
l
e
n
d
a
r
d
a
y
s
a
f
t
e
r
i
n
i
t
i
a
l
2
1
0
d
a
y
s
=
M
o
n
d
a
y
,
M
a
y
1
0
,
2
0
2
1
29
Cl
o
s
i
n
g
(
a
s
s
u
m
i
n
g
E
x
t
e
n
s
i
o
n
1
)
44
d
05
/
1
1
/
2
1
07
/
0
9
/
2
1
28
60
c
a
l
e
n
d
a
r
d
a
y
s
a
f
t
e
r
1
s
t
e
x
t
e
n
s
i
o
n
=
F
r
i
d
a
y
,
J
u
l
y
9
,
2
0
2
1
30
Du
e
D
i
l
i
g
e
n
c
e
E
x
t
e
n
s
i
o
n
2
(
6
0
c
a
l
e
n
d
a
r
d
a
y
s
)
44
d
05
/
1
1
/
2
1
07
/
0
9
/
2
1
28
60
c
a
l
e
n
d
a
r
d
a
y
s
a
f
t
e
r
1
s
t
e
x
t
e
n
s
i
o
n
=
F
r
i
d
a
y
,
J
u
l
y
9
,
2
0
2
1
31
Cl
o
s
i
n
g
(
a
s
s
u
m
i
n
g
E
x
t
e
n
s
i
o
n
2
)
42
d
07
/
1
2
/
2
1
09
/
0
7
/
2
1
30
60
c
a
l
e
n
d
a
r
d
a
y
s
a
f
t
e
r
2
n
d
e
x
t
e
n
s
i
o
n
=
T
u
e
s
d
a
y
,
S
e
p
t
e
m
b
e
r
7
,
2
0
2
1
32
Co
n
s
t
r
u
c
t
i
o
n
-
C
o
m
m
e
n
c
e
m
e
n
t
T
a
r
g
e
t
0
05
/
1
0
/
2
1
05
/
1
0
/
2
1
26
Page 1 of 1
Ex
p
o
r
t
e
d
o
n
J
u
n
e
9
,
2
0
2
0
3
:
2
4
:
3
2
P
M
C
D
T
PID 19.63950.00.010 & PID19.63950.00.021
Letter of Intent – Hastings, MN
June 9, 2020 Page 1 of 6
June 9, 2020
Hastings Economic Development & Redevelopment Authority
Attn: Mr. John Hinzman
101 4th Street East
Hastings, MN 55033
RE: Purchase of Real Property | SE Quadrant of 1st St & Tyler St Hastings, MN
Dear Mr. Hinzman,
This Letter of Intent is for the purpose of outlining the present intentions of Mint
Development Company LLC with respect to the purchase of the City’s real property
described below. If you are in agreement with the terms below, we will prepare a purchase
agreement for your review, incorporating these and other terms.
PROPERTY: PID: 19-63950-00-010 and
PID: 19-63950-00-021 per Exhibit A.
Approximately +/- 1.49 total acres.
SELLER: Hastings Economic Development &
Redevelopment Authority
101 4th Street East
Hastings, MN 55033
BUYER: A Partnership to be formed to be owned by
Mint Development Company LLC or related
entity and partners.
(Purchase Agreement may be assignable
by Buyer)
PURCHASE PRICE: The Purchase Price shall be based on the
actual number of dwelling units that the
Buyer proposes and obtains Site Plan
approval by the City of Hastings per the table
below. In no event shall the Purchase Price
be less than $105,000. Seller to pay off any
specials at closing.
PID 19.63950.00.010 & PID19.63950.00.021
Letter of Intent – Hastings, MN
June 9, 2020 Page 2 of 6
Number of Units Purchase Price
Less than 15 units $105,000
15 to 19 units $112,500
20 to 24 units $150,000
25 to 29 units $187,500
30 to 34 units $225,000
35 units or more $262,500
INITIAL INSPECTION PERIOD: Buyer requires the following conditions to be
completed, at Buyer’s expense, or waived
within 90 days of an executed Purchase &
Sale Agreement:
A. Satisfactory survey of property.
B. Satisfactory condition of title.
Seller to reimburse Buyer 50% of survey and
title costs if site is reasonably determined to
be un-developable upon receipt of
ALTA/NSPS survey due to existing physical
site constraints such as easements and/or
100-year flood plain.
INITIAL EARNEST MONEY: $2,500 in escrow deposit with First American
Title Insurance Company within 5 business
days of a fully executed Purchase & Sale
Agreement. Said Initial Earnest Money shall
be fully refundable through the Initial
Inspection Period, and apply toward
Purchase Price.
DUE DILIGENCE REVIEW PERIOD: Buyer requires the following conditions to be
completed, at Buyer’s expense, or waived
within 210 days of an executed Purchase &
Sale Agreement:
C. Satisfactory environmental reports and
condition. Buyer understands that City
has obtained a grant from Met Council for
PID 19.63950.00.010 & PID19.63950.00.021
Letter of Intent – Hastings, MN
June 9, 2020 Page 3 of 6
necessary environmental clean up. City to
provide MPCA No Action letter following
completion certifying that the site is clean
for redevelopment.
D. Satisfactory soils reports on the Property
following completion of City’s
environmental clean up.
E. Necessary approval for all utility and
other easements or easement vacations
which are necessary for the Buyer’s
contemplated development and use of the
Property.
F. Satisfactory market demand analysis
results.
G. Satisfactory governmental approvals for
Buyers development plan and all related
entitlements for the development
contemplated for the property.
H. No pending condemnation or litigation
affecting the property.
I. Satisfactory financing commitment for the
property.
ADDITIONAL EARNEST MONEY: Within five (5) days following expiration or
waiver of the Initial Inspection Period, Buyer
shall deposit Additional Earnest Money of
$2,500. The Initial Earnest Money and
Additional Earnest Money (collectively the
“Earnest Money”) shall be refundable through
the Due Diligence Review Period, and apply
toward Purchase Price.
SITE CONDITION: Site to be purchased “as-is” following City’s
certification of environmental clean up
completion.
PID 19.63950.00.010 & PID19.63950.00.021
Letter of Intent – Hastings, MN
June 9, 2020 Page 4 of 6
CLOSING DATE: Sixty (60) days after satisfaction of all Due
Diligence Review Period conditions.
RIGHT TO EXTEND: Buyer shall have the right to extend the Due
Diligence Review Period by two (2) periods of
sixty (60) days by notifying Seller prior to the
expiration of the then current period. The
Initial Earnest Money of $2,500 shall become
non-refundable for the first option. The
Additional Earnest Money of $2,500 shall
become non-refundable for the second
option. Earnest Money apply to the Purchase
Price.
SELLER TO PROVIDE: Within thirty (30) days of an executed
Purchase & Sale Agreement, Seller to provide
any documents of significance to the
ownership, operations, and/or management
of the parcel, including, but not limited to,
existing septic tanks, wells, surveys, plat, civil
plans, soil and environmental reports, any
reciprocal operating easement agreement,
MPCA No Action letter and title work.
ACCESS: Seller agrees to provide Buyer access to the
property for inspection and due diligence
purposes following execution of the Purchase
& Sale Agreement.
SIGNAGE: Seller agrees to allow the Buyer to place one
or two signs on the Property.
NON-SHOP: The Seller and its principal shareholder or
partners, employees, agents and
representatives will not initiate, encourage
the initiation by others of discussions or
negotiations with third parties or respond to
solicitations by third parties relating to the
PID 19.63950.00.010 & PID19.63950.00.021
Letter of Intent – Hastings, MN
June 9, 2020 Page 5 of 6
purchase of the Property in whole or in part.
Further, Seller will not advertise or market
property.
BROKER: Seller and Buyer acknowledge that no
brokers or agents have been involved in this
transaction.
Seller and Buyer acknowledge that this proposal is not an offer, and that it is intended as the
basis for the preparation of the necessary purchase documents. Only a fully executed
purchase and sale agreement shall constitute a binding agreement for the purchase of the
Property. If the foregoing terms are sufficient to allow the preparation of the necessary
documents please sign in the space provided below, returning one original of this letter to
my attention.
Sincerely,
MINT DEVELOPMENT COMPANY LLC
Robert Barse | Principal & Owner
PO Box #134, Hastings, MN 55033
(612) 499-6095 | rob@mintdevco.com
SELLER:
Agreed and Acknowledged by
Name
It’s
Date
PID 19.63950.00.010 & PID19.63950.00.021
Letter of Intent – Hastings, MN
June 9, 2020 Page 6 of 6
Exhibit A
PID: 19-63950-00-010 & PID: 19-63950-00-021
Approximately 1.49 acres of land
1
PRELIMINARY DEVELOPMENT AGREEMENT
THIS AGREEMENT, is made on or as of the __________ day of _____________, 2020, by and
between the Hastings Economic Development and Redevelopment Authority in and for the City of Hastings, a public body corporate and politic under the laws of the State of Minnesota, (hereinafter referred to as "HEDRA"), having its principal office at 101 4th Street East, Hastings, Minnesota 55033-1955, and Spades, SBC, a Minnesota specific benefits corporation (hereinafter
referred to as the "Developer"), having its principal office at 906 East 1st Street, Hastings, MN
55033.
RECITALS
WHEREAS, HEDRA is an economic development and redevelopment authority and is the owner of certain real property located within the City of Hastings legally described as Outlot A
and Outlot B, Riverfront Addition, Dakota County, Minnesota except that portion thereof platted
as Riverfront Second Addition, Dakota County, Minnesota, represented by Dakota County PIN 19-63950-00-021 and 19-63950-00-010 (which real property is referred to herein as the "Property"); and
WHEREAS, HEDRA has identified as one of its objectives the encouraging of economic
development and job growth within the City of Hastings by inducing and assisting new businesses
and organizations to locate in the City for the purposes of creating, fostering, and preserving affordable new jobs and a diverse visitor destination with a strong focus on the Mississippi riverfront near the eastern end of downtown Hastings; and
WHEREAS, the Developer is a Minnesota specific benefits corporation committed to
cultivating sustainable climate change mitigation by gently engaging human, environmental and
economic structures to repeatedly plant billions of trees; and
2
WHEREAS, the Developer wants to evaluate the feasibility of constructing an office building on the Property that would serve as the headquarters for its global operations (hereinafter referred to as the “Project”); and
WHEREAS, the Developer must satisfy certain other conditions before it would be in a position to purchase the Property and HEDRA is willing to grant to the Developer an option to purchase the Property, for a limited time period and upon certain conditions, to allow the Developer to proceed with its preliminary development plans and applications while having the assurance from HEDRA that the Property will be available for purchase by the Developer, should
the Developer elect to proceed with its development plans and purchase of the Property after satisfying any and all conditions HEDRA may impose on the development plans and purchase of the Property; and
WHEREAS, HEDRA is willing to grant an option to the Developer to purchase the
Property, but only if the parties are able to agree on the price by which the Property would be sold
to the Developer, and if Developer complies with the construction, employment and other covenants established by HEDRA; and
WHEREAS, HEDRA may consider providing business subsidy benefits to the Developer if Developer exercises its option to purchase granted hereunder but cannot grant or commit to granting such business subsidies unless and until Developer exercises its option to purchase the
Property; and
NOW, THEREFORE, in consideration of mutual covenants and obligations of the parties hereto, each of them does hereby covenant and agree with the other as follows:
1. OBLIGATIONS OF HEDRA. HEDRA will perform the following tasks to assist the
Developer in determining the feasibility of the Project:
a. Prepare ALTA Survey of the Property and provide results of the Survey to the Developer.
b. Provide the Developer with information on all known regulations that affect use of the Property including parking, building height and flood plain.
c. Perform cleanup of contamination on the Property pursuant to the terms of the
Grant Agreement with the Metropolitan Council.
d. Provide Developer with a written statement describing the post-cleanup condition of the Property and a description of all considerations for site development, such as the need for a vapor intrusion mitigation system.
e. Assist Developer in identifying options for providing adequate parking for the
Project.
f. Assist the Developer in identifying options for interim office space if needed prior to availability of the Project.
g. Work with Developer to create options to mitigate barriers to the Project.
3
h. Identify sources and uses of non-local financial assistance.
i. Investigate issues related to green cities including what it means to become a green city, what actions would the City take over the next ten years, what is the estimated cost pf these
actions, what benefits would be realized.
2. OBLIGATIONS OF DEVELOPER. Prior to exercising the option to purchase the property described herein, the Developer shall undertake the following:
a. Retain qualified architectural and engineering consultants to provide technical assistance in evaluating the ability of the Property to meet company needs.
b. Identify ways to improve the site by mitigating the impact of rail noise, power lines or other issues that may be identified.
c. Prepare detailed cost estimate for the Project.
d. Provide HEDRA with a table containing the sources and uses of funds for the Project.
e. Work with HEDRA to create options to mitigate barriers to the Project.
f. Provide HEDRA with timeline illustrating the construction process and the phasing of additional jobs at the Project.
g. Submit a site plan for review and approval by the City.
3. GRANT OF OPTION. For good and valuable consideration, including the option
payment of one thousand and no/100 dollars ($1,000.00) paid by Developer to HEDRA upon execution of this Agreement HEDRA hereby grants to the Developer a right and option upon the terms and conditions hereinafter set forth, to purchase the Property. The option granted herein is conditioned upon the Developer entering into a comprehensive purchase and development agreement
with HEDRA by which the Developer would agree to construct the Project.
4. OPTION TERM. The term of the option to purchase the Property shall commence from the date of this Agreement and shall terminate on June 30, 2021, unless extended by mutual written agreement of both parties. The Developer may terminate the Agreement prior to this date if it determines that the Project is not feasible.
5. OPTION PRICE.
a. If the Developer elects to exercise the option within the option term, as set forth in Paragraph 2 herein, the purchase price for the Property shall be $470,700.00 (the “Base Price”).
b. HEDRA may consider a reduction in the Base Price to account for one or
more of the following conditions:
4
1. HEDRA determines that certain parts are unusable due to regulatory encumbrances or environmental condition; or
2. The Developer determines that a specified lower price is needed to
make the project financially feasible; or
3. HEDRA determines that it is necessary and appropriate to reduce the Base Price as an incentive for the Developer to undertake the Project.
c. In the event the Developer desires to seek a reduction in the Base Price, the Developer shall notify HEDRA in writing of the Developer’s proposed reduction in the Base Price
and the basis for the reduction. Such notice shall be deemed to have been duly given if delivered in person or deposited in the United States Mail, postage prepaid, for mailing by certified or registered mail, return receipt requested, to HEDRA at the address set forth in the initial paragraph of this Agreement. Upon receipt of such notice, the parties shall negotiate in good faith to agree on the purchase price for the Property. If the parties do not agree in writing on the purchase price of the
Property within 60 days after receipt of such notice, Developer may terminate the Agreement. If HEDRA agrees to any reduction of the Base Price, such reduction would be conditioned upon the Developer entering into a comprehensive purchase and development agreement with HEDRA by which the Developer would agree to construct the Project and establishing additional conditions which may include job creation and other requirements to further the goals and objectives of HEDRA.
6. BUSINESS SUBSIDY COMPLIANCE. The Developer acknowledges and agrees that if the Developer elects to exercise the option hereunder, the conveyance and sale of the Property to the Developer may be subject to the requirements of Minn. Stat. §§ 116J.993 – 116J.995 (the “Business Subsidy Act”). Developer agrees and acknowledges that neither HEDRA nor the City of
Hastings can commit to advancing any business subsidies unless and until Developer exercises its
option to purchase the Property and upon that occurrence the final decision whether to grant, or not grant, business subsidies to the Developer will be within the sole and absolute discretion of the then governing bodies of HEDRA and the City of Hastings, and will be subject to all laws and regulations governing business subsidies in effect at that time.
7. PERMITTED ENCUMBRANCES. In the event the Developer exercises the option
contained herein, the conveyance by HEDRA of the Property shall be subject to the following permitted encumbrances: the obligations and restrictions contained in the Development Agreement and any agreement required under the Business Subsidy Act; reservations of minerals or mineral rights to the State of Minnesota; public utility, roadway and other easements which will not
adversely affect the development and use of the Property pursuant to the Developer’s construction
plans; environmental covenants which may be imposed as a result of environmental remediation on the Property; easements for overhead powerlines currently in place on the Property; building laws, regulations and ordinances consistent with the proposed improvements; real estate taxes that the Developer agrees to pay or assume pursuant to the Development Agreement; restrictions,
covenants and easements of record that do not materially adversely affect the development and use
of the proposed improvements; and exceptions to title to the Property which are not objected to by the Developer upon examination of the title evidence to be delivered to the Developer pursuant to the Development Agreement.
5
8. TAXES AND ASSESSMENTS. HEDRA shall pay at closing all real estate taxes and installments of special assessments due in all years prior to the year of closing. Real estate taxes and special assessments due in the year of closing shall be prorated between the parties. The Developer
shall pay all real estate taxes and installments of special assessments due and payable in the year following the year of closing and subsequent years.
9. TITLE AND REMEDIES. HEDRA shall within a reasonable time after notification by the Developer of the exercise of the option provide for the Developer’s inspection an Abstract of Title certified to date, or at HEDRA’s option, a commitment for an owner’s policy of title insurance,
including proper searches covering bankruptcies, state and federal judgments and liens. The Developer shall be allowed 10 days after receipt thereof for examination of said title and the making of any objections thereto, said objections to be made in writing or deemed to be waived. If any objections are so made the Developer shall be allowed to rescind the transaction in which event
HEDRA shall refund to the Developer any payments made pursuant to the terms of this Agreement,
or if HEDRA elects to remedy said title objections, HEDRA shall be allowed 60 days to make such title marketable. Pending correction of the title the date of closing shall be postponed but upon correction of the title and within 30 days after written notice to the Developer the closing shall occur. If said title is not marketable and is not so made within 60 days from the date of the written objections
thereto as above provided, this Agreement shall be null and void at the option of the Developer and
HEDRA shall refund to the Developer any of the payments made pursuant to the terms of this Agreement and neither party shall be liable for damages to the other party.
10. EXERCISE OF OPTION AND CLOSING. In the event the Developer desires to exercise the option herein granted, the Developer shall notify HEDRA in writing of the Developer’s
intent to do so and such notice shall be deemed to have been duly given if delivered in person or
deposited in the United States Mail, postage prepaid, for mailing by certified or registered mail, return receipt requested, to HEDRA at the address set forth in the initial paragraph of this Agreement.
11. NO PARTNERSHIP OR JOINT VENTURE CREATED HEREBY. Nothing contained in this Agreement shall be interpreted as creating a partnership or joint venture between the
Developer and HEDRA relative to the Property.
12. ASSIGNMENT. The Developer may not assign its interest in this Agreement without the prior written consent of HEDRA, which consent may be granted or withheld in the sole and absolute discretion of HEDRA. An unconsented assignment by the Developer shall be void, and at the option of HEDRA, shall be grounds for the termination of this Agreement.
13. AMENDMENT, MODIFICATION, OR WAIVER. No amendment, modification,
or waiver of any condition, provision, or term shall be valid or of any effect unless made in writing, signed by the party or parties to be bound or a duly authorized representative, and specifying with particularity the extent and nature of such amendment, modification, or waiver. Any waiver by any party of any default of another party shall not affect or impair any right arising from any subsequent
default. Except as expressly and specifically stated otherwise, nothing herein shall limit the remedies
and rights of the parties hereto under and pursuant to this Agreement.
14. SEVERABLE PROVISIONS. Each provision, section, sentence, clause, phrase, and word of this Agreement is intended to be severable. If any provision, section, sentence, clause, phrase,
6
and word hereof is illegal or invalid for any reason whatsoever, such illegality or invalidity shall not affect the validity of the remainder of this Agreement.
15. CAPTIONS, HEADINGS, OR TITLES. All captions, headings, or titles in the
paragraphs or sections of this Agreement are inserted for convenience of reference only and shall not constitute a part of this Agreement as a limitation of the scope of the particular paragraphs or sections to which the apply.
16. MINNESOTA LAW. This Agreement shall be construed and enforced in accordance
with the laws of the State of Minnesota and any dispute shall be venued in the Dakota County District
Court.
IN WITNESS WHEREOF, the parties have executed this Agreement effective the ____day of _______, 2020.
Dated: _______________, 2020 SPADES, SBC A Minnesota special benefits corporation
By: Raymond Menard Its: Chief Executive Officer
ACKNOWLEDGMENT
STATE OF MINNESOTA ) ) ss. COUNTY OF )
The foregoing instrument was acknowledged before me this _____day of _________, 2020, by Raymond Menard, the Chief Executive Officer of Spades SBC, a Minnesota special benefits corporation.
_________________________________ Notary Public
7
Hastings Economic Development and Redevelopment Authority in and for the City of Hastings, a public body corporate and
politic under the laws of the State of Minnesota Dated: _______________, 2020 By: ________________________________ Martha Sullivan, President
(SEAL) ACKNOWLEDGMENT
STATE OF MINNESOTA ) ) ss. COUNTY OF DAKOTA )
The foregoing instrument was acknowledged before me this _____ day of _________, 2020, by Martha Sullivan, the President of the Hastings Economic Development and Redevelopment Authority in and for the City of Hastings, a public body corporate and politic under the laws of the State of Minnesota.
_________________________________ Notary Public