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HomeMy WebLinkAboutDraft Memorandum of Understanding (Cottonwood Ida) v2 5-04-18 Exhibit 2 DRAFT 05/04/2018 MEMORANDUM OF UNDERSTANDING (Cottonwood & Ida Project) THIS MEMORANDUM OF UNDERSTANDING (this “MOU”) is made as of [________], 2018, by and between COTTONWOOD AND IDA, LLC, a Montana limited liability company (the “Developer”), and CITY OF BOZEMAN, a municipality and political subdivision of the State of Montana (the “City”). RECITALS: A. The City has created under Montana law a tax increment district known as the Northeast Urban Renewal District (the “District”). B. The Developer holds fee title to approximately 2 acres of real property in the District located immediately to the northwest of the intersection of East Cottonwood Street and North Ida Avenue, a portion of which property is used for industrial purposes (the “Project Site”). C. The Developer desires to undertake the development and cause the construction on the Project Site of a mixed-use development consisting of buildings to be used for residential, office, and commercial purposes and related improvements and amenities (the “Proposed Project”). D. As currently envisioned, the Proposed Project consists of apartment buildings, townhouse style apartments, an office building, an existing building renovated to contain a community meeting room, open space, and underground parking. E. The Developer intends to request that the City consider issuing tax increment revenue bonds secured by the tax increment of the District (the “Bonds”) and use the proceeds thereof to reimburse the Developer for costs of certain off-site infrastructure that will serve the Proposed Project, such as sewer and water improvements, sidewalks, and dry utilities (including but not limited to, electrical, gas, telecommunications, CATV, etc) to reimburse the Developer for impact fees associated with the Proposed Project, and to pay to the Developer the purchase price of that portion of the underground parking that will be public parking (collectively, the “City Improvements”). F. The City is willing to consider such request, subject to the terms and conditions of this MOU. NOW THEREFORE, in consideration of the foregoing, the Developer and the City agree as follows: 1. Evaluation and Negotiation. The City and the Developer agree to undertake the process of evaluating the Proposed Project, the scope and details of the City Improvements, and the feasibility of using the proceeds of the Bonds to pay or reimburse the Developer for all or a portion of the costs of the City Improvements. 2 2. Development Agreement. The Developer and the City will work to negotiate a definitive development agreement (the “Development Agreement”) that will define the obligations of the Developer and the City in connection with the Proposed Project and the reimbursement or payment of the costs of the City Improvements. It is currently believed that the Development Agreement will address or contain provisions regarding, at a minimum, the following: (i) The scope and costs of the Proposed Project, including of the City Improvements, and the obligations of the parties with respect thereto. (ii) Confirmation that Developer has financial capacity, on its own, through investments, and/or by borrowing, to pay all costs of the Proposed Project through completion. (iii) Dates by which portions of the Proposed Project and all of the Proposed Project will be completed as evidenced by issuance of certificates of occupancy by the City. (iv) Responsibilities of the Developer as the owner of the Proposed Project and landlord and operator of most of the Proposed Project and of the City as the owner and operator of the portion of the parking that is public parking (such portion, the “Public Parking Unit”). (v) With respect to the Bonds: (a) That, pursuant to Resolution No. 4801 of the City, adopted by the City Commission on May 22, 2017 (the “Original Resolution”), the City has outstanding tax increment bonds payable from and secured by the tax increment of the District; (b) That the City expects to rely on the taxable value of the Proposed Project, and not other taxable property in the District, for sizing the Bonds and the City will have no obligation to, and cannot, issue the Bonds unless the City finds as of the date of issuance of the Bonds that there is sufficient tax increment to (i) repay the Bonds and the outstanding bonds, and (ii) satisfy that Additional Bonds test under the Original Resolution; (c) That because the parties expect to have to wait until all phases of the Proposed Project are substantially complete to have adequate taxable value to produce sufficient tax increment to issue and repay the Bonds, the parties will need to cooperate with one another and coordinate with and share information with the Montana Department of Revenue and that reimbursement of the Developer for eligible costs paid on the Proposed Project and payment of the purchase price of the Public Parking Unit is contingent on having adequate tax increment under state law and the Original Resolution and laws then being in effect to allow the issuance of the Bonds; and 3 (d) That interest on at least a portion of the Bonds will be includable in gross income for federal income tax purpose and therefore such “taxable bonds” will generally bear interest at a higher rate, resulting in higher interest payments than tax increment bonds that are tax-exempt bonds. (vi) Requirements that the Developer comply with laws that govern City contracting obligations, including public procurement laws relating to all of the City Improvements, such as, without limitation, laws and rules regarding prevailing wage and solicitation of work on a competitive basis. (vii) [That the purchase price of the Public Parking Unit is expected to be the lower of (a) a fixed dollar amount agreed to by the parties, or (b) the cost of constructing the Public Parking Unit.] (viii) Conditions to the City paying the acquisition price of the Public Parking Unit, including compliance by the Developer with all laws, rules, and regulations in the construction of that unit, review and approval by the City of the Public Parking Unit, including its suitability for public parking, and the Proposed Project generating sufficient tax increment to size the Bonds in an amount sufficient to pay the purchase price of the Public Parking Unit. (ix) That the material condominium documents relating to the Proposed Project and the Public Parking Unit, including, without limitation, the condominium plat, declaration, bylaws, and deed relating to the Public Parking Unit, are in forms satisfactory to the parties. (x) That as a condition to acquiring the Public Parking Unit title matters regarding that Public Parking Unit are acceptable to the City, including, without limitation, that the City shall have reviewed all exceptions to title and that the Developer shall cause to be removed, to the extent acceptable to the City, title exceptions the City finds objectionable and that at closing of the acquisition of the Public Parking Unit, a title company acceptable to the parties will issue a title policy acceptable to the City, insuring title vested in the City subject only to title exceptions acceptable to the City. (xi) The Developer has conducted satisfactory environmental review of the Project Site and the City has received adequate assurances and protections regarding the environmental condition of such site and of the Proposed Project, including appropriate environmental indemnities. (xii) That users of the Public Parking Unit for parking purposes will be entitled to access and use the public parking spaces in such unit in accordance with and at the rates set by the policies and procedures of the City and that the Public Parking Unit has equipment, services, and amenities required by the City. 4 (xiii) That the City be indemnified and protected from liability with regard to the condition, use, nature, or events arising at or in connection with the Proposed Project. (xiv) That the Developer maintain insurance on the Proposed Project (including, without limitation, the Public Parking Unit until the date of its conveyance to the City) satisfactory to the City and as will be detailed in the Development Agreement. (xv) That the Development Agreement contain provisions detailing events that will give rise to events of default by Developer and remedies satisfactory to the City in connection therewith. (xvi) That the Development Agreement will contain language to the effect that no agreements or provisions contained in the Development Agreement or in any agreement, covenant, or undertaking of the City related in any way to the Proposed Project, the Public Parking Unit, or the Bonds will give rise to any pecuniary liability of the City or a charge against its general credit or taxing power. (xvii) That the Development Agreement is unique between the Developer and the City and will not be assigned without first obtaining the written consent of the other party. (xviii) That the Development Agreement will contain such other provisions as the parties negotiate and agree. 3. Meaning of this MOU. This MOU is intended to serve as a starting point for the parties to consider the preparation and negotiation of the Development Agreement. This MOU does not, and no party will construe this MOU to, obligate either party to enter into the Development Agreement and either party may determine in its discretion not to enter into the Development Agreement. Moreover, nothing contained in this MOU (i) obligates the City to finance or pay or reimburse the Developer for any costs related to the Proposed Project, or (ii) indicates or evidences that the City has approved or will approve the Proposed Project or any portion thereof. Without limitation of the meaning of the foregoing (ii), the Developer acknowledges and agrees that the Proposed Project is scheduled to be reviewed as a planned unit development (“PUD”) under the City’s municipal code and policies and procedures and nothing contained in this MOU will have a bearing upon or affect the City’s review and, if applicable, approval of the Proposed Project as a PUD. The City retains all powers and rights conferred upon it with regard to the PUD without any liability to or limitation on the City, including, but not limited to, the right, within legal limits, to reject all or a portion of the Proposed Project or impose conditions or limitations on the Proposed Project. In addition, this MOU does not affect or limit the City’s other regulatory powers with regard to the Proposed Project, including, without limitation, those relating to building permits or other permits or the payment of fees. 4. Term of this MOU. This MOU will remain in effect until ___(1Yr)_______, unless earlier terminated by the mutual written agreement of the parties. 5 5. Miscellaneous Provisions. (a) Financial Liability. The City shall not be liable for any costs, expenses or debts associated with or incurred by the Developer or its affiliates in connection with this MOU or any development, marketing or other activities with respect to the Proposed Project and the City Improvements. (b) Costs. Each party shall be solely responsible for all costs and expenses incurred by such party in connection with this MOU. (c) Assignability. Neither party shall assign this MOU without the prior written consent of the other party. (d) Amendments. This MOU may be supplemented or amended only by written instrument executed by the parties. (e) Applicable Law. This MOU and the legal relations between the parties hereto will be governed by and construed in accordance with the laws of the State of Montana, without giving effect to any choice of law statutes, rules, or principles. The parties hereby submit to the exclusive jurisdiction and venue of the Montana state and federal courts with respect to any action between the parties relating to this MOU. (f) Liability. The City and the Developer hereby acknowledge that the obligations of the parties described herein are merely a present statement of intent. Neither party shall be held liable should it determine to not proceed with the negotiation or execution of the Development Agreement or the undertaking of the Proposed Project or the City Improvements. Partial performance by any party of the terms of this MOU shall not be deemed evidence of intent by any party to be bound by the terms of any contract or agreement. The Developer further acknowledges that the City Commission must exercise its discretion in the completion of the statutory and municipal processes required for the approval of the Proposed Project and any participation of the City with respect thereto. The City will not be held liable in the event that the City Commission, through the exercise of its discretion, determines to not approve the Proposed Project or any of the actions outlined herein. (g) City Representatives Not Personally Liable. No member of the governing body, official, employee or agent of the City shall be personally liable to Developer, or any successor in the interest to Developer, pursuant to the provisions of or any action or undertaking related to this MOU. (h) Not A Partnership; Developer Not an Agent of City. The provisions of this MOU are not intended to create, nor shall they in any way be interpreted or construed to create, a joint venture, partnership or any other similar relationship between the parties. The Developer has no authority, express or implied, to act on behalf of City as an agent, or to bind City to any obligation whatsoever. The Developer shall be solely responsible for the performance of any of its employees, agents or sub-contractors under this Agreement. No agency or employment relationship is created between the Developer and the City by the execution of this MOU. 6 IN WITNESS WHEREOF, the parties have duly executed this MOU pursuant to all requisite authorizations as of the date first above written. CITY OF BOZEMAN, MONTANA By: _______________________________________ [Printed Name: Cyndy Andrus Title: Mayor] By: _______________________________________ [Printed Name: Andrea Surratt Title: City Manager] By _______________________________________ [Printed Name: Anna Rosenberry Title: Assistant City Manager] COTTONWOOD AND IDA, LLC By: ______________________________________ Printed Name: ______________________________ Title: _____________________________________