HomeMy WebLinkAbout19- Development Agreement - West Peach, LLC - West Peach Condos DEVELOPMENT AGREEMENT
(West Peach Condominium Project)
This DEVELOPMENT AGREEMENT (this "Agreement") is dated as of May 20, 2019
by and between West Peach, LLC (the "Developer"), and the CITY OF BOZEMAN,
MONTANA, 121 N. Rouse Ave., Bozeman, Montana 59771 (the"City"). The Developer and
the City are each individually referred to herein as a"Party" and collectively as the "Parties."
RECITALS:
WHEREAS, under the provisions of Montana Code Annotated, Title 7, Chapter 15, Parts
42 and 43, as amended (the "Act"),the City is authorized to create urban renewal areas,prepare
and adopt an urban renewal plan therefor and amendments thereto, undertake urban renewal
projects therein,provide for the segregation and collection of tax increment with respect to
property taxes collected in such areas, and apply tax increment revenues derived from projects
undertaken within the urban renewal area to pay eligible costs;
WHEREAS,pursuant to the Act and Ordinance No. 1685 adopted by the City
Commission of the City (the "City Commission") on November 27, 2006, as amended by
Ordinance No. 1925, adopted by the City Commission on December 16, 2015 (collectively, the
"Ordinance"),the City has created the Bozeman Midtown Urban Renewal District (the
"District") as an urban renewal district and has approved the Bozeman Midtown Urban Renewal
Plan (the "Plan") as an urban renewal plan in accordance with the Act, which Plan provides for
the segregation and collection of tax increment revenues with respect to the District;
WHEREAS,the Developer proposes to undertake the construction of a residential
condominium project, expected to consist of approximately seventeen units with private garages,
and related public infrastructure improvements, including sidewalks, street lights, street
improvements and water and sewer infrastructure improvements, as described more particularly
on Exhibit A hereto (the "Project'), on land located in the District at the northwest corner of
West Peach Street and N. 3`d Avenue in Bozeman, Montana, which is legally described on
Exhibit B hereto (the "Land");
WHEREAS,the Developer submitted to the Midtown Urban Renewal Board of the City
(the "Board") an application for tax increment assistance with respect to certain eligible costs of
the Project;
WHEREAS, on May 2, 2019,the Board approved and recommended that the City
Commission approve, subject to the terms and conditions of this Agreement,the application of
tax increment assistance in the amount of$256,335 with respect to certain eligible costs of the
Project;
WHEREAS,pursuant to Resolution No. 5046 adopted on May 20, 2019, after a duly
called and noticed public hearing,the City Commission approved the Project as an urban
renewal project under the Plan and the Act and authorized the use of tax increment revenue of
the District to reimburse the Developer for eligible costs of the Project, consisting of the design,
engineering and construction of certain infrastructure improvements associated with the Project,
including sidewalks, street lights, street improvements and water and sewer infrastructure
improvements (the "Infrastructure Improvements"), described more particularly on Exhibit C
hereto, in the maximum amount of$256,335, subject to the terms and conditions of this
Agreement; and]
WHEREAS,the City Commission may determine in its sole discretion to issue tax
increment urban renewal revenue bonds in one or more series (the "Bonds")to finance all or a
portion of the Infrastructure Improvements to be reimbursed to the Developer in the maximum
amount of$256,335 and pay associated costs of the financing; and
WHEREAS, the Parties desire to enter into this Agreement which sets forth the
obligations and commitments of the Parties with respect to the Project, including the
Infrastructure Improvements.
NOW, THEREFORE,the City and the Developer,pursuant to the Act, each in
consideration of the representations, covenants and agreements of the other, as set forth herein,
mutually represent, covenant and agree as follows:
Section 1. Definitions; Rules of Interpretation; Exhibits.
1.1. Definitions. For all purposes of this Agreement, except as otherwise expressly
provided or unless the context clearly requires otherwise,the following terms have the meanings
assigned to them, respectively:
"Act"means Montana Code Annotated, Title 7, Chapter 15, Parts 42 and 43, as amended
or supplemented.
"Agreement"means this Development Agreement, dated as of May 20,2019,by and
between the City and the Developer, as it may be amended or supplemented from time to time in
accordance with the terms hereof.
"Bonds"has the meaning given in the Recitals above.
"City"means the City of Bozeman, Montana, or any successors to its functions under
this Agreement.
"City Commission"means the governing body of the City.
"Costs of Issuance"means, if the City issues Bonds,the following costs but only to the
extent incurred in connection with, and allocable to the Bonds: underwriter's spread, counsel
fees, financial advisor fees,rating agency fees,trustee fees,paying agent fees,bond registrar,
certificate, and authentication fees, accounting fees,printing costs for bonds and offering
documents,public approval process costs, feasibility study costs, guarantee fees, other than for
qualified guarantees; and similar costs.
"Developer"means West Peach, LCC, a Montana limited liability company, and its
successors and assigns in accordance with and as permitted under this Agreement.
"Developer Certificate"means the certificate attached hereto as Exhibit E.
2
"District"means the Bozeman Midtown Urban Renewal District, an urban renewal
district created by the Ordinance pursuant to the Act, as such may be enlarged or reduced from
time to time in accordance with the Act.
"DOR"means the State of Montana Department of Revenue.
"Environmental Laws and Regulations"means and includes the Federal
Comprehensive Environmental Compensation Response and Liability Act("CERCLA" or the
"Federal Superfund Act") as amended by the Superfund Amendments and Reauthorization Act
of 1986 ("SARA"), 42 U.S.C. §§ 9601 et seq.; the Federal Resource Conservation and Recovery
Act of 1976 ("RCRA"), 42 U.S.C. §§ 6901 et seq.; the Clean Water Act, 33 U.S.C. § 1321 et
seq.; and the Clean Air Act, 42 U.S.C. §§ 7401 et seq., all as the same may be from time to time
amended, and any other federal, state, county, municipal, local or other statute, code, law,
ordinance, regulation, requirement or rule which may relate to or deal with human health or the
environment including without limitation all land use, zoning, and stormwater control
regulations as well as all regulations promulgated by a regulatory body pursuant to any statute,
code, law, ordinance, regulation, requirement or rule.
"Fiscal Year"means the period commencing on the first day of July of any year and
ending on the last day of June of the next calendar year, or any other twelve-month period
authorized by law and specified by the Commission as the City's fiscal year.
"Indemnified Parties"has the meaning given to it in Section 7.1.
"Infrastructure Improvements"means the design, engineering, work, construction,
materials, equipment and the other improvements described as such in Exhibit C hereto, as the
same may be amended or supplemented from time to time, in accordance with the terms hereof.
"Land"has the meaning given to it in the recitals hereof.
"Land Use Regulations"means all federal, state and local laws, rules, regulations,
ordinances and plans relating to or governing the development or use of the Land or the Project.
"Milestone" of"Milestones"has the meaning given in Section 3.4 hereof.
"Milestone Date" or"Milestone Dates"has the meaning given in Section 3.4 hereof.
"Ordinance"has the meaning given to it in the recitals hereof.
"Person"means any individual, corporation, limited liability company,partnership,
limited liability partnership,joint venture, association,joint-stock company,trust, unincorporated
organization or government or any agency or political subdivision thereof.
"Prevailing Wage Rates"means the Montana Prevailing Wage Rate for public works
projects as published from time to time by and available from the Montana Department of Labor
and Industry, Research and Analysis Bureau, P.O. Box 1728, Helena, Montana 59624,telephone
number(800) 541-3904.
3
"Project"means the facilities to be constructed by the Developer on the Land pursuant to
this Agreement, as described more particularly on the attached Exhibit A.
"State"means the State of Montana.
"Tax Increment"means the amount received by the City pursuant to the Act from the
extension of levies of Taxes (expressed in mills) against the incremental taxable value (as
defined in the Act) of all Taxable Property, and shall include all payments in lieu of Taxes
attributable to the incremental taxable value and all payments received by the City designated as
replacement revenues for lost Tax Increment.
"Taxable Property"means all real and personal property located in the District and
subject to Taxes, including land, improvements and equipment.
"Taxes"means all taxes levied on an ad valorem basis by any Taxing Body against the
Taxable Property (exclusive of the six mill levy for university purposes levied by the State), and
shall include all payments in lieu of taxes received by the City with respect to Taxable Property.
"Taxing Body"means the City;the County of Gallatin, Montana; High School District
No. 7 (Bozeman), Gallatin County, Montana; Elementary School District No. 7 (Bozeman),
Gallatin County, Montana;the State; and any other political subdivision or governmental unit
that levies or may hereafter levy or cause to be levied Taxes against property within the District.
"Unavoidable Delay means a delay resulting from a cause over which the Party
required to perform does not have control and which cannot or could not have been avoided by
the exercise of reasonable care, including but not limited to, acts of God, accidents,war, civil
unrest, embargoes, strikes, unavailability of raw materials or manufactured goods, litigation, and
the delays of the other Party or its contractors, agents or employees in the performance of their
duties under or incident to this Agreement.
1.2. Rules of Interpretation.
(a) The words "herein," "hereof' and words of similar import, without reference to
any particular section or subdivision,refer to this Agreement as a whole rather than to any of its
particular sections or subdivisions.
(b) References to any particular section or subdivision hereof are to the section or
subdivision of this Agreement in its original signed form, unless otherwise indicated.
(c) The word"or"is not exclusive but is intended to contemplate or encompass one,
more or all of the alternatives conjoined.
1.3. Exhibits. The following Exhibits are attached to and by reference made a part of
this Agreement:
Exhibit A: Project and Project Costs
Exhibit B: Description of the Land
4
Exhibit C: Infrastructure Improvements
Exhibit D: Milestones
Exhibit E: Form of Developer Certificate
Exhibit F: City's Statement of Non-Discrimination
Section 2. Representations.
2.1. City Representations. The City hereby represents as follows:
(a) Pursuant to the Act, and after a public hearing duly called and held, the City by
the Ordinance has duly created the District.
(b) Pursuant to Resolution No. 5046 of the City Commission, the City approved the
use of Tax Increment, if available,to reimburse or, as appropriate,pay the costs of the
Infrastructure Improvements in a total amount not to exceed $256,335. Subject to the terms and
conditions of this Agreement, the City intends to reimburse the Developer for the Infrastructure
Improvements in an amount not to exceed$256,335.
(c) The DOR has advised the City that, as of January 1, 2019, the base taxable value
(as defined in the Act) of the District is $3,507,723.
(d) Based on the representations of the Developer, beginning in tax year 2019 (fiscal
year ending June 30, 2020), the completed Project is expected to have a market value of at least
$6,607,039.
(e) The City Commission has duly authorized the execution and delivery of this
Agreement.
2.2. Developer Representations. The Developer hereby represents as follows:
(a) The Developer is a limited liability company, duly formed,validly existing and in
good standing under the laws of the State and is duly qualified to do business in the State. The
Developer has the power to enter into this Agreement and by all necessary corporate action has
duly authorized the execution and delivery of this Agreement.
(b) The Developer has good marketable title to the Land, free and clear of all liens,
encumbrances and defects except such as do not materially affect the value of the Land or
materially interfere with the use made and proposed to be made of the Land by the Developer.
(c) The Developer has the financial capability or commitments to complete the
Project at a cost not less than$6,606,245.71.
(d) The Developer is not aware of any facts the existence of which would cause the
Developer to be in violation in any material respect of any Environmental Laws and Regulations
applicable to the Project or the Infrastructure Improvements. The Developer has not received
5
from any local, state or federal official any notice or communication indicating that the activities
of the Developer have been,may be or will be in violation of any Environmental Laws and
Regulations applicable to the Project or the Infrastructure Improvements.
(e) Neither the execution and delivery of this Agreement,the consummation of the
transactions contemplated hereby, nor the fulfillment of or compliance with the terms and
conditions hereof is prohibited or limited by, conflicts with or results in a breach of the terms,
conditions or provisions of the certificate of formation,partnership agreement or operating
agreement of the Developer or any evidence of indebtedness, agreement or instrument of
whatever nature to which the Developer is now a party or by which it is bound, or constitutes a
default under any of the foregoing.
(f) There is no action, suit, investigation or proceeding now pending or,to the
knowledge of the Developer,threatened against or affecting the Developer or its business,
operations,properties or condition(financial or otherwise) before or by any governmental
department, commission,board, authority or agency, or any court, arbitrator, mediator or grand
jury,that could, individually or in the aggregate, materially and adversely affect the ability of the
Developer to complete the Project.
(g) The Developer acknowledges and agrees that the sole source of funds for
reimbursing the Developer under this Agreement is Tax Increment and/or proceeds of the Bonds,
which would be paid from Tax Increment. The Developer further acknowledges and agrees the
amount of Tax Increment is dependent upon a number of variables, including, without limitation,
the taxable value of the Project,the number of mills levied by Taxing Bodies, and then-
prevailing state laws regarding computation of Tax Increment. The Developer agrees that if Tax
Increment in the amount of$256,335 is not available to the City to reimburse the Developer
and/or, if the City, in its sole discretion, determines that it cannot reasonably sell the Bonds,
whether due to lack of Tax Increment,market conditions, or otherwise,the City shall have no
obligation to pay to the Developer the amount of reimbursement described in Section 4. The
Developer agrees that such event shall not constitute a default by the City hereunder.
(h) The Developer acknowledges and agrees that the estimates of assessed (market)
and taxable values set forth in this Agreement(and any resulting estimates of Tax Increment) are
estimates only and are based on information provided by the Developer to the City and various
assumptions that the City believes are reasonable. Actual assessed (market) and taxable values
of the Project and actual Tax Increment generated by the Project or in the District may vary
significantly based on variables over which the City has no control.
(i) The Developer acknowledges and agrees that the Bonds, if authorized and issued,
are special, limited obligations of the City and shall not be paid from any funds of the City other
than Tax Increment. The Developer understands and agrees the Bonds, if authorized and issued,
will be subject to all the terms and conditions of the bond resolution authorizing their issuance
(the "Bond Resolution"), including, without limitation, if the City determines in its sole
discretion, a requirement that the Developer make up any shortfalls in the Tax Increment
available to pay the debt service on the Bonds, and that, if the Bonds are draw-down bonds,the
City may be prohibited from making future draws on the Bonds if all the conditions applicable to
a draw are not satisfied. The Developer acknowledges and agrees that an event of default or
6
default under the Bonds or the Bond Resolution does not constitute a default under this
Agreement, unless the event of default or default is a result of the failure by the Developer to
perform an obligation of the Developer identified in the Bond Resolution.
Section 3. Developer Undertakings.
3.1. Construction and Maintenance of Project. The Developer hereby agrees and
commits to the City that it will diligently prosecute to completion the construction of the Project
in accordance with this Agreement,the site plan submitted to the City and all applicable federal,
State and local laws,rules, regulations, ordinances and plans relating to or governing the
development or use of the Project, including applicable Land Use Regulations and
Environmental Laws and Regulations. The Developer agrees and commits to the City that
construction of the Project shall be substantially complete by December 1, 2020, subject to
Unavoidable Delays. The total costs of the Project are shown on Exhibit A hereto. The
Developer has the financial capacity to complete the Project, and the Developer agrees to pay all
costs thereof. If there is an increase in the costs of the Project from that shown on Exhibit A
hereto that cannot be covered by the contingency amount,the Developer shall notify the City of
the increase and submit additional evidence in a form acceptable to the City that the Developer
has the financial capacity to cover such additional costs and complete the Project. At all times
during the term of this Agreement, the Developer will operate and maintain,preserve and keep
the Project or cause the Project to be operated,maintained, preserved and kept for the purposes
for which it was constructed, and with the appurtenances and every part and parcel thereof, in
good repair and condition. The Developer agrees to permit the City and any of its officers,
employees or agents access to the Land for the purpose of inspection of all work being
performed in connection with the Project; provided,however,that the City shall have no
obligation to inspect such work.
3.2. Preparation,Review and Approval of Construction Plans. In connection with the
Project,the Developer, at its sole expense, shall prepare and submit construction plans, drawings,
and related documents for each portion of the Project to the appropriate City officials for
architectural, engineering or land use review and written approval or permits. The Developer
acknowledges that no review or approval by City officials hereunder may be in any way
construed by the Developer to replace, override or be in lieu of any required review, inspection,
or approval by the City Planning Division, or any other building construction official review or
approvals required by any State laws or local ordinances or regulations. Nothing contained in
this Agreement indicates or evidences that the City has approved or will approve the Project or
any portion thereof. This Agreement does not affect or limit the City's regulatory powers with
regard to the Project, including, without limitation,those relating to building permits or other
permits or the payment of fees.
3.3. Construction of the Infrastructure Improvements. The Developer shall acquire,
install, construct or otherwise provide the Infrastructure Improvements. The Developer
acknowledges and agrees that the City is not responsible for acquiring, installing, constructing or
otherwise providing the Infrastructure Improvements. The estimated costs of the Infrastructure
Improvements are shown on Exhibit C hereto.
7
3.4. Milestones of the Project. Certain steps in the development of the Project are
listed on Exhibit D attached hereto (collectively,the "Milestones"; each a"Milestone"),
together with the dates by which the Developer is obligated to complete the Milestones
(collectively, the "Milestone Dates"; each as it relates to a particular Milestone, the "Milestone
Date"). The Developer acknowledges and agrees that the City in reserving or offering to make
available Tax Increment to pay or reimburse the Developer for the Infrastructure Improvements
necessarily means that certain Tax Increment is not available to pay or reimburse other
undertakings or costs for the benefit of the District and that the City reasonably expects
additional Tax Increment as a result of completion of the Project. The Developer acknowledges
and agrees that conditioning the availability of Tax Increment or proceeds of Bonds to pay or
reimburse the Developer for the Infrastructure Improvements on completion or satisfaction of the
Milestones by the corresponding Milestone Dates is reasonable. If the Developer is unable to
complete or satisfy a Milestone by the corresponding Milestone Date, the Developer shall make
a formal written request to the City Commission, with appropriate supporting material,to extend
the Milestone Date and, as appropriate, subsequent Milestone Dates. The City Commission may,
in its sole discretion, determine whether such extension is appropriate and, if so, fix a new and
superseding Milestone Date and also adjust other subsequent Milestone Dates, along with any
other terms or conditions, or it may, in its sole discretion, elect to terminate this Agreement, in
which case the City will have no obligation to reimburse or pay the Developer hereunder.
3.5. Prevailing Wage Rates; Competitive Bidding. The Developer understands that
the City is obligated to follow certain laws with respect to the expenditure of public funds, which
includes Tax Increment. The Developer agrees to comply with laws that govern City contracting
obligations, including public procurement laws relating to all of the Infrastructure Improvements,
such as, without limitation, laws and rules regarding prevailing wage and solicitation of work on
a competitive basis.
Without limitation of the foregoing,the Developer agrees that in the awarding of
contracts for the Infrastructure Improvements (i) it will, and it will cause its contractor to,
publicly bid competitively contracts for each component of the Infrastructure Improvements, and
(ii)through its contract with its contractor, it will, in addition to the requirements of Sections 3.9
and 3.10, require its contractor to,pay the Prevailing Wage Rates on such contracts related to the
Infrastructure Improvements. The Developer will provide to the City all documentation
requested to verify the compliance of the Developer and its contractor with the foregoing
requirements. Failure of the Developer or its contractor to bid competitively contracts for each
component of the Infrastructure Improvements or to require contracts entered into directly with
contractors or sub-contractors to include provisions requiring the contractor or sub-contractor to
pay the Prevailing Wage Rates on the work related to the Infrastructure Improvements will be
considered a breach of this Agreement and the City will be entitled, at its discretion and without
obligation,to exercise any and all measures to assure compliance and retroactive compensation
plus interest to workers not paid in accordance with this Agreement, and recovery of any penalty
or fine assessed by the State attributed to any failure to pay the Prevailing Wage Rates.
Additionally, the Developer acknowledges that a violation of these requirements may, in the
City's sole discretion, cause the Infrastructure Improvements to be ineligible for the application
of Tax Increment, in which case the City will have no obligation to reimburse or pay the
Developer hereunder.
8
3.6. Utilities. The Developer shall not interfere with, or construct any improvements
over, any public street or utility easement without the prior written approval of the City. All
connections to public utility lines and facilities shall be subject to approval of the City and any
private utility company involved. The Developer at its own expense shall replace any public
facilities or utilities damaged during the Project by the Developer or its agents or by others acting
on behalf of or under their direction or control of the Developer.
3.7. Permits and Compliance With Laws. The Developer will obtain, in a timely
manner, all required permits, licenses and approvals, and will meet all requirements of all local,
state and federal laws, rules and regulations which must be obtained or met in connection with
the acquisition and construction of the Project, including the Infrastructure Improvements.
Without limiting the foregoing,the Developer will request and seek to obtain from the City or
other appropriate governmental authority all necessary land use, zoning, and building permits.
The Developer will comply in all material respects with all Environmental Laws and Regulations
applicable to the construction, acquisition, and operation of the Project, including the
Infrastructure Improvements, will obtain any and all necessary environmental reviews, licenses
or clearances under, and will comply in all material respects with, Environmental Laws and
Regulations. In addition, the Developer shall comply fully with all applicable state and federal
laws, regulations, and municipal ordinances related to worker safety including but not limited to
the Occupational Safety and Health Act(OSHA), the safety rules, codes, and provisions of the
Montana Safety Act in Title 50, Chapter 71, MCA, all applicable City, County, and State
building and electrical codes, and the Americans with Disabilities Act.
3.8. Easements. To the extent that the Infrastructure Improvements are to be located
on the Land, the Developer hereby agrees to grant to the City and applicable utility companies
from time to time such easements, rights-of-way and similar licenses in a form required by the
City and as are reasonably necessary to permit the City to own, operate and maintain the
Infrastructure Improvements.
3.9. Non-Discrimination Statement. The Developer agrees to require its contractor(s)
to be in compliance with the City's Statement of Non-Discrimination attached hereto as Exhibit
F as well as Title 49, Montana Code Annotated,regarding activities related to the Project,
including the Infrastructure Improvements. The Developer agrees that in its contracts with its
contractors the Developer's contractor will be required to require its subcontractors to comply
with the City's Statement of Non-Discrimination attached hereto as Exhibit F, as well as Title
49, Montana Code Annotated,regarding activities related to the Project. The Developer agrees to
provide copies of all such contracts upon request by the City.
3.10. Worker's Compensation Insurance. The Developer shall provide in its
construction contracts related to the Project with all of its respective contractors that such
contractors are to be covered by a Worker's Compensation insurance program with the State, a
private insurance carrier, or an approved self-insurance plan in accordance with State law.
3.11. Cooperation with City and DOR. The Developer agrees to provide to the City
and, as requested,the DOR information that may be required by the City and/or the DOR to
determine, or make reasonable projections regarding, the amount and timing of receipt of Tax
Increment resulting from the Project. Such information may include, but is not limited to timing
9
of construction and estimated completion dates of all or portions of the Project, costs of
construction,materials used in construction,uses of the Project or any portion thereof,
allocations of uses to spaces and square feet of spaces included in the Project, and any other
information that may be relevant. The Developer understands and agrees that the City will rely
on such information from the Developer in making determinations regarding the amount of Tax
Increment resulting from the Project that may be available and the timing of the availability of
Tax Increment resulting from the Project, and that such information may be a critical factor in
the City's determination regarding whether to issue and the sizing and other features of the
Bonds.
Section 4. City Undertakings. Subject to satisfaction of all conditions in Section 5
below, and solely from Tax Increment on hand or proceeds of the Bonds, the City agrees to pay
or reimburse the Developer for the Infrastructure Improvements in an amount not to exceed
$256,335. The Parties acknowledge and agree that, subject to the terms and conditions of this
Agreement, (i)the actual costs of the Infrastructure Improvements may exceed$256,335, but
$256,335 is the maximum amount that the City will reimburse the Developer for the
Infrastructure Improvements; and(ii) if the actual costs of the Infrastructure Improvements
exceed$256,335,the City has discretion to allocate the reimbursable amount among the
Infrastructure Improvements. The City may issue the Bonds in its sole discretion to pay or
reimburse the Developer for all or a portion of the costs of the Infrastructure Improvements to be
paid or reimbursed. The Bonds, if authorized and issued, will have such terms and conditions as
are approved by the City Commission. This Agreement does not require or imply that the City
has any obligation to issue the Bonds.
Section 5. Payment of Reimbursement Amount for the Infrastructure Improvements.
Payment of the amount of reimbursement described in Section 4 by the City to the Developer for
Infrastructure Improvements shall be subject to the following conditions and in accordance with
the following procedures:
5.1. Conditions to Payment or Reimbursement.
(a) (i) The Developer must have completed or satisfied each of the Milestones by the
applicable Milestone Date, as such date may have been extended by the City Commission
pursuant to Section 3.4 hereof, (ii)the City must have issued a certificate of occupancy for the
Project, (iii)the Infrastructure Improvements must have been completed in their entirety and the
City must have delivered to the Developer written acceptance of the Infrastructure Improvements
(which may be in the form of a Certificate of Completion or such other format as required by the
City), and (iv)the Developer must demonstrate to the City's satisfaction,by a title report or other
means acceptable to the City,that the Infrastructure Improvements are free of financial liens and
any encumbrances affecting the Infrastructure Improvements must be acceptable to the City.
(b) Reimbursement by the City for costs of the Infrastructure Improvements must be
based on paid invoices for costs incurred by the Developer, its contractors and subcontractors or
utility companies, which the Developer must supply to the City. The City may reject, in its sole
discretion, any invoice related to the Infrastructure Improvements. The City will notify the
Developer of any rejected invoice and the reason it was rejected.
10
(c) The Parties agree that the City will have no obligation to pay or reimburse the
Developer for any of the costs of the Infrastructure Improvements unless at the time of such
request (i) all of the Developer's representations as set forth in Section 2.2 are true and correct,
(ii)the Developer is not in breach of any covenant or undertaking as set forth in Section 3, and
(iii) unless and to the extent the City issues the Bonds, there shall be adequate Tax Increment on
hand to pay the amount of the reimbursement or cost or expense and satisfy all other financial
obligations related to the District.
(d) If some or all of the costs of the Infrastructure Improvements are to be paid or
reimbursed with the proceeds of the Bonds,the City shall have determined, in its sole discretion,
but with the cooperation of the Developer,that the Tax Increment is sufficient to pay the debt
service on the Bonds as and when due and, as applicable,to satisfy other requirements under the
Bond Resolution, such as funding an adequate reserve, meeting applicable debt service coverage
requirements, and paying costs of issuance, and to satisfy all other financial obligations related to
the District. The Developer understands and agrees the City shall have no obligation to and may
not issue the Bonds if the City is unable to find and determine that the Tax Increment is
sufficient to pay the Bonds timely, to satisfy the requirements of the Bond Resolution, and to
satisfy all other financial obligations related to the District.
If any of the above conditions are not satisfied in the determination of the City,the City
shall have no obligation to pay or reimburse the Developer for any of the costs of the
Infrastructure Improvements and the City's determination to refrain from paying or reimbursing,
or its inability to pay or reimburse, any of the costs of the Infrastructure Improvements shall not
be or result in a default of this Agreement.
5.2. Process for Payment or Reimbursement.
(a) By the date that is 90 days before the date the Developer estimates the Project will
be first placed in service, the Developer shall notify the City in writing of the components of the
Project remaining to be completed before it expects the City will issue the certificate of
occupancy for the Project. The Developer shall provide a further update to the City when it
reasonably expects that the Project will be placed in service in roughly 30 days.
(b) After receiving a certificate of occupancy for the Project, the Developer shall
provide to the City a signed request for reimbursement substantially in a form attached as Exhibit
E hereto and acceptable to the City, accompanied by the invoices and lien waivers from the
contractors or subcontractors performing or that have performed the work to be reimbursed. In
addition, the Developer agrees to provide to the City any additional information requested by the
City for the City to determine whether the Developer's request for reimbursement complies with
this Agreement.
(c) By the date that is five months after the submission by the Developer of a
complete and acceptable request for reimbursement, as determined by the City,the City, subject
to the terms and conditions of this Agreement, shall reimburse to the Developer costs of the
Infrastructure Improvements in an amount not to exceed $256,335, either directly from Tax
Increment or from proceeds of Tax Increment Bonds; provided, however, if the City shall earlier
determine that the Tax Increment is not sufficient to reimburse the Developer for the costs of the
11
Infrastructure Improvements it has paid, either because there is insufficient Tax Increment then
available or the City determines there is insufficient Tax Increment to permit the issuance of
Bonds, then the City shall so infoirn the Developer in writing and this Agreement shall thereupon
terminate and neither Party will have any further rights or obligations hereunder, except as set
forth in those provisions that expressly survive termination of this Agreement.
Section 6. Sources of Repayment; Covenants to Pay Taxes.
6.1. Taxes. The Developer shall pay or cause to be paid when due and prior to the
imposition of penalty all Taxes and all installments of any special assessments payable with
respect to the Land and the Project and any improvements thereto or extension thereof.
6.2. Maintenance of Land and Project. The Developer agrees to use its commercially
reasonable best efforts to maintain and operate the Land and the Project so as to be able at all
times to pay promptly and when due all property taxes levied with respect to the Land and the
Project.
6.3. Injunction; Specific Performance. The Parties agree that, in the event of a breach
of this Section 6 by the Developer or its successors or assigns,the City would suffer irreparable
harm. Therefore, in the event the Developer or its successors or assigns fails to comply with the
provisions of this Section 6,the Developer agrees that the City may pursue any remedy at law or
in equity, including the remedies of injunction and specific performance.
Section 7. Indemnification and Insurance.
7.1. Indemnification. The Developer releases the City and all City Commission
members, board members, officers, agents, servants and employees of the City(the
"Indemnified Parties") from, and covenants and agrees that the Indemnified Parties shall not be
liable for, and agrees to indemnify, defend and hold harmless the Indemnified Parties against,
any loss, damage, cost (including reasonable attorneys' fees), claim, demand, suit, action or other
proceeding whatsoever (i) arising or purportedly arising out of, or resulting or purportedly
resulting from,the acquisition and construction of the Project, including the Infrastructure
Improvements, any violation by the Developer of any agreement, condition or covenant of this
Agreement,the ownership, maintenance and operation of the Project, or the presence on any
portion of the Land, of any dangerous,toxic or hazardous pollutants, contaminants, chemicals,
waste, materials or substances; or(ii) which is proximately caused by the Developer or its
officers, agents, contractors, consultants or employees.
7.2. Insurance. Developer shall keep and maintain the Project at all times insured
against such risks and in such amounts,with such deductible provisions, as are customary in
connection with facilities of the type and size comparable to the Project, and the Developer shall
carry an&maintain, or cause to be carried and maintained, and pay or cause to be paid timely the
premiums for direct damage insurance covering all risks of loss, including, but not limited to,the
following:
1. fire
2. extended coverage perils
3. vandalism and malicious mischief
12
4. boiler explosion(but only if steam boilers are present)
5. collapse
on a replacement cost basis in an amount equivalent to the Full Insurable Value thereof. "Full
Insurable Value" shall include the actual replacement cost of the Project, exclusive of
foundations and footings, without deduction for architectural, engineering, legal or
administrative fees or for depreciation. The policies required by this Section 7.2 shall be subject
to a no coinsurance clause or contain an agreed amount clause, and must contain a deductibility
provision not exceeding $100,000.
Subject to the terms of any mortgage relating to the Project, policies of insurance
required by this Section 7.2 shall insure and be payable to Developer, and shall provide for
release of insurance proceeds to Developer for restoration of loss. The City shall be furnished
certificates showing the existence of such insurance. In case of loss, Developer is hereby
authorized to adjust the loss and execute proof thereof in the name of all parties in interest.
During construction of the Project, any and all of the foregoing insurance policies maybe
maintained by the Developer's contractor; provided that once the Project is placed into service,
Developer shall maintain all of the foregoing insurance policies. In addition, as a condition to
placing the Project in service, the City may require that the Developer or owner of the Project
obtain additional insurance that would protect the City or the City's interest in the Infrastructure
Improvements.
In addition to and independent of the above, the Developer shall at the Developer's
expense secure liability insurance through an insurance company or companies duly licensed and
authorized to conduct insurance business in Montana. The insurance shall not contain any
exclusion for liabilities specifically assumed by the Developer in this Section. The insurance
shall cover and apply to all claims, demands, suits, damages, losses, and expenses that may be
asserted or claimed against, recovered from, or suffered by the City in relation to construction of
the Project and the Infrastructure Improvements without limit and without regard to the cause
therefore. The Developer must furnish to the City an accompanying certificate of insurance and
accompanying endorsements in amounts not less than as follows:
Commercial General Liability- $1,000,000 per occurrence; $2,000,000 annual
aggregate
The above amounts shall be exclusive of defense costs. The City, its officers, agents, and
employees, shall be endorsed as an additional or named insured on a primary non-contributory
basis on the Commercial General Liability policy. The insurance and required endorsements
must be in a form suitable to City and shall include no less than a thirty (30) day notice of
cancellation or non-renewal. The City must approve all insurance coverage and endorsements
prior to the Developer commencing work on Project or Infrastructure Improvements. Developer
must notify the City within two (2) business days of Developer's receipt of notice that any
required insurance coverage will be terminated or Developer's decision to terminate any required
insurance coverage for any reason.
13
Section 8. General Provisions.
8.1. Conflicts of Interest, City's Representatives Not Individually Liable. The
Developer represents that it does not employ,retain, or contract with an officer or employee of
the City and that no member, officer or employee of the City has a personal or financial interest,
direct or indirect, in this Agreement or in the Project, or a financial interest in the Infrastructure
Improvements. No member, officer or employee of the City shall be personally liable to
Developer in the event of any default under or breach of this Agreement by the City, or for any
amount that may become due to Developer for any obligation issued under or arising from the
terms of this Agreement.
8.2. Rights Cumulative. The rights and remedies of the Parties of this Agreement,
whether provided by law or by this Agreement, shall be cumulative, and the exercise by any
Party hereto of any one or more of such remedies shall not preclude the exercise by such Party,
at the same or different times, of any other remedy for the same default or breach or of any of its
remedies for any other default or breach of the Party subject to the limitation of remedies
provided herein. No waiver made by such Party with respect to the performance or the manner
or time thereof, of any obligation under this Agreement, shall be considered a waiver with
respect to the particular obligation of the other Party or a condition to its own obligation beyond
those expressly waived in writing and to the extent thereof, or a waiver in any respect in regard
to any other rights of the Parry making the waiver of any obligations of the other Party. Delay by
a Party hereto instituting or prosecuting any cause of action or claim hereunder shall not be
deemed a waiver of any rights hereunder.
8.3. Term of Agreement. This Agreement shall remain in effect until the date that it
terminates or is terminated by the City, as follows:
(a) If payment or reimbursement of costs of the Infrastructure Improvements is made
directly from Tax Increment and not proceeds of Bonds,this Agreement will terminate on the
date that is 10 days after the date the City makes the final payment or reimbursement of costs of
the Infrastructure Improvements to the Developer hereunder.
(b) If the City issues Bonds,this Agreement will remain in effect until the final
maturity or payment date of the Bonds or such earlier date that the Bonds are prepaid in full,
discharged, and no longer outstanding.
(c) This Agreement may be terminated by the City in its sole discretion on a date
earlier than described in(a) or(b) above at any time after failure by the Developer to complete or
satisfy a Milestone by the applicable Milestone Payment Date.
(d) If the City has determined Tax Increment is insufficient under Section 5.2(c)
above,this Agreement shall terminate in the manner and on the date described in Section 5.2(c)
above.
(e) Notwithstanding the foregoing provisions of this Section, Sections 6, 7, and 8 of
this Agreement shall in all events survive the termination of this Agreement.
14
8.4. Limitation on City Liability. No agreements or provisions contained in this
Agreement nor any agreement, covenant or undertaking by the City contained in any document
in connection with the Project, including the Infrastructure Improvements, shall give rise to any
pecuniary liability of the City or a charge against its general credit or taxing powers, or shall
obligate the City financially in any way except with respect to then-available Tax Increment. No
failure of the City to comply with any term, condition, covenant or agreement herein shall
subject the City to liability for any claim for damages, costs or other financial or pecuniary
charge except to the extent that the same can be paid or recovered from then-available Tax
Increment; and no execution on any claim, demand, cause of action or judgment shall be levied
upon or collected from the general credit, general funds or taxing powers of the City (except as
such constitute then-available Tax Increment). Nothing herein shall preclude a proper party in
interest from seeking and obtaining specific performance against the City for any failure to
comply with any term, condition, covenant or agreement herein; provided that no costs, expenses
or other monetary relief shall be recoverable from the City except as may be payable from the
Tax Increment. This Agreement shall not constitute or be construed to give rise to a debt of the
City.
8.5. Assignment. This Agreement is unique between the City and Developer and no
Party may assign any rights or privileges, or delegate any duties or obligations under this
Agreement, without first obtaining the written consent of the other Party.
8.6. Successors Bound By Agreement;No Third Party Beneficiary;No Property
Interest. Subject to compliance with Section 8.5, this Agreement will inure to the benefit of and
be binding upon the Parties to this Agreement and their respective successors in interest and
permitted assignees. This Agreement is for the exclusive benefit of the Parties, does not
constitute a third-party beneficiary agreement, and may not be relied upon or enforced by a third
party. This Agreement, by itself, does not create or give rise to a property interest in the Land or
the Project.
8.7. Prior Agreements. This Agreement supersedes, merges and voids any and all
prior discussions,negotiations, agreements and undertakings between the Parties with respect to
the subject matter of this Agreement. The Parties waive and release each other from any claims,
actions, or causes of action that relate in any manner to any prior discussions, negotiations,
agreements and undertakings between the Parties with respect to the subject matter of this
Agreement.
8.8. Entire Agreement. This Agreement, including any exhibits and attachments
hereto, embodies the entire agreement and understanding of the Parties with respect to its subject
matter. All Parties shall be prohibited from offering into evidence in any arbitration or civil
action any terms, conditions, understandings, warranties, statements or representations, whether
oral or written,with respect to the subject matter of this Agreement and that are not contained in
this Agreement.
8.9. Amendments, Changes and Modifications. This Agreement may be amended and
any of its terms may be modified only by written amendment authorized and signed by the
Parties hereto.
15
8.10. Headings. The headings of articles and sections in this Agreement are inserted for
convenience of reference only and do not limit or amplify the terms and provisions of the
Agreement in any manner. The headings will be ignored and will not affect the construction of
any provisions of this Agreement.
8.11. Notice. Any formal notice, demand or communication required or permitted by
the terms of this Agreement to be given to the City or Developer will be in writing and will be
delivered to such Party either: (i)by personal hand-delivery; or (ii)by depositing the same in the
United States mail, certified mail with return receipt requested, addressed to such Party at the
address named below, with postage prepaid thereon. Notice will be deemed complete upon
receipt of the notice pursuant to any of the foregoing methods of notice.
If to City:
City of Bozeman
Attention: Bozeman City Manager
121 N. Rouse Ave.
P.O. Box 1230
Bozeman, MT 59771
With a copy to:
Bozeman City Attorney
121 N. Rouse Ave.
P.O. Box 1230
Bozeman, MT 59771
If to Developer:
West Peach, LLC
Attention: Julien Morice
320 West Lamme
Bozeman, MT 59715
The City and the Developer,by notice given hereunder, may designate different addresses to
which subsequent notices, certificates or other communications should be sent.
8.12. Severability. If any provision of this Agreement is declared void or held invalid,
such provision will be deemed severed from this Agreement and the remaining provisions of this
Agreement will otherwise remain in full force and effect.
8.13. Duplicate Originals or Counterparts. This Agreement may be executed in two or
more counterparts, each of which will be deemed to be an original copy of this Agreement and
all of which, when taken together, will be deemed to constitute one and the same agreement.
16
8.14. Place of Performance. The place of performance of this Agreement will be in the
City of Bozeman, Gallatin County, Montana.
8.15. Governing Law. This agreement 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.
8.16. Dispute Resolution.
(a) Any claim, controversy, or dispute between the Parties, their agents, employees, or
representatives shall be resolved first by negotiation between senior-level personnel from each
Party duly authorized to execute settlement agreements. Upon mutual agreement of the Parties,
the Parties may invite an independent, disinterested mediator acceptable to the Parties to assist in
the negotiated settlement discussions.
(b) If the Parties are unable to resolve the dispute within thirty (30) days from the date
the dispute was first raised,then such dispute may only be resolved in a court of competent
jurisdiction in compliance with the applicable law and the provisions of this Agreement.
8.17. Further Assurances and Corrective Instruments. The Parties agree that they will,
from time to time, execute, acknowledge and deliver, or cause to be executed, acknowledged and
delivered, such supplements hereto and such further instruments as may reasonably be required
for correcting any inadequate or incorrect description of the Project, including the Infrastructure
Improvements, or for carrying out the expressed intention of this Agreement.
8.18. Reports/Accountability/Public Information. Developer agrees to develop and/or
provide documentation as requested by the City demonstrating the Developer's compliance with
the requirements of this Agreement. Developer shall allow the City, its auditors, and other
persons authorized by the City to inspect and copy its books and records for the purpose of
verifying that the reimbursement of monies distributed to Developer pursuant to this Agreement
was used in compliance with this Agreement and all applicable provisions of federal, state, and
local law. The Developer shall not issue any statements,releases or information for public
dissemination regarding this Agreement or the work contemplated hereunder without prior
written approval of the City.
[Balance of page intentionally left blank]
17
IN WITNESS WHEREOF,the Parties hereto have caused this Development Agreement
to be executed as of the 20 day of May, 2019.
CITY OF BOZEMAN, MONTANA
By:
Printed Name: Andrea Surratt
Title: City Manager
[Signature Page to Development Agreement]
18
WEST PEACH, LLC
By: -
Name• ie`n Morice
_Pffe: Managing Partner
[Signature Page to Development Agreement]
19
EXHIBIT
PROJECT AND PROJECT COSTS
SUMMARY DESCRIPTION UFPROJECT: Design and construction ofmresidential
condominium project, expected to include approximately seventeen units with private gnzugou
and related improvements.
PROJECT COSTS:
Land (Fair Market Value) .......................................................................................$},050,000.00
Soft Costs (Engineering, Architecture, Planning, Permitting, Carrying Costs, Marketing, etc.)
..................................................................................................................................$],l05,208.45
Hard Costs (Direct Construction Costs) ..................................................................$5,5Ol,037.26
Total Project Costs.......................................................................................
EXHIBIT B
LEGAL DESCRIPTION OF THE LAND
WESTLAKES 1ST ADD, SO1, T02 S, R05 E, Block 1, Lot 1-2-3,AMND PLAT F-25A
B-1
EXHIBIT C
The Parties acknowledge and agree that, subject to the terms and conditions of this
Agreement, (i)the actual costs of the Infrastructure Improvements may exceed$256,335, but
$256,335 is the maximum amount that the City will reimburse the Developer for the
Infrastructure Improvements; and(ii) if the actual costs of the Infrastructure Improvements
exceed $256,335,the City has discretion to allocate the reimbursable amount among the
Infrastructure Improvements.
Summary Description of the Infrastructure Improvements:
Offsite improvements, including water and sewer infrastructure, street
improvements, sidewalk improvements, street lights, and related
improvements
$222,900
Contingency
33,435
Total Costs of Infrastructure Improvements
$256,335
C-1
EXHIBIT D
MILESTONES
MILESTONE MILESTONE DATE
Building Permit Application (Phase 1 and 2) July 1, 2019
Building Permit Application(Phase 3 and 4) December 1, 2019
Issuance of Certificate of Occupancy for all Phases December 1, 2020
D-1
EXHIBIT E
FORM OF DEVELOPER CERTIFICATE
TO: City of Bozeman, Montana
FROM: West Peach, LLC (the "Developer")
SUBJECT: Reimbursement for Infrastructure Improvements
This Developer Certificate requests $ for reimbursement of costs of the
Infrastructure Improvements, as defined in the Development Agreement between West Peach,
LLC and the City of Bozeman,Montana, dated as of[ , 2019 (the "Development
Agreement"). Capitalized terms used but not otherwise defined herein shall have the respective
meanings given such terms in the Development Agreement.
Pursuant to Section 5.2(b) of the Development Agreement, the undersigned hereby
certifies on behalf of the Developer that:
(a) the expenditures for which reimbursement is requested are listed in
summary form in the attached schedule headed"Project Expenditures;"
(b) invoices paid by the Developer corresponding to the expenditures set forth
on the attached Project Expenditures Schedule are appended to the attached schedule
headed"Project Invoices;"
(c) the amounts for which reimbursement is requested have been paid by the
Developer to contractors, subcontractors,materialmen, engineers, architects or other
persons who or that have performed necessary or appropriate services or supplied
necessary or appropriate materials for the acquisition, construction,renovation,
equipping, and installation of the Infrastructure Improvements;
(d) the contractor and subcontractors were solicited and retained
competitively and all persons performing work on the Infrastructure Improvements were
paid the Montana prevailing wage for such work;
(e) no part of the several amounts requested to be paid, as stated in such
certificate, has been or is the basis for the payment of any money in any previous request;
(f) the reimbursement of the amounts requested will not result in a breach of
any of the covenants of the Developer contained in the Development Agreement; and
(g) no litigation has been instituted or is threatened with regard to any
amounts sought to be reimbursed, and binding and enforceable lien waivers have been
obtained from all contractors, subcontractors,materialmen, and others with regard to all
work related to any amounts for which reimbursement is requested.
The Developer represents that all of the representations of the Developer in Section 2.2 of
the Development Agreement are true and correct as of the date hereof and the Developer is not in
E-1
default of the performance of any of its undertakings or obligations under Section 3 of the
Development Agreement as of the date hereof.
Dated: , 20 1
By:
Authorized Developer Representative
E-2
EXHIBIT F
CITY'S STATEMENT OF NON-DISCRIMINATION
Statement of Non-Discrimination
W,,�c Vc,,k-, L-L C_ (name of entity submitting) hereby affirms it will
not discriminate on the basis of race, color, religion, creed, sex, age,marital status, national
origin, or because of actual or perceived sexual orientation, gender identity or disability and
acknowledges and understands the eventual contract will contain a provision prohibiting
discrimination as described above and this prohibition on discrimination shall apply to the hiring
and treatments o 's employees and to all subcontracts.
Na Itle of person authorized to sign on ehalf of submitter
F-1