HomeMy WebLinkAboutItem 06.dJune 20, 2016
Item No.
AUTUMN MEADOWS ASSIGNMENT AND ASSUMPTION OF CITY
DEVELOPMENT AGREEMENTS
PROPOSED ACTION
Staff recommends adoption of the following motion: Move to approve the Assignment and
Assumption City Development Agreements for Autumn Meadows Second Addition, Third
Addition and Fourth Addition.
OVERVIEW
K. Hovnanian Homes representatives have submitted an Assignment and Assumption of
Development Agreements, which is being requested as part of K. Hovnanian Homes' intent to
sell the remaining lots in the Autumn Meadows development to Lennar Corporation. The
Autumn Meadows development is located east of Flagstaff Avenue and north of the
Farmington city limits boundary. The City Council approved the final plat and development
contracts for Autumn Meadows Second, Third and Fourth Additions on May 20, 2013, June
20, 2014 and April 6, 2015 respectively. Staff has determined that certain requirements and
obligations of the development agreements have been met and can be partially released. The
City Attorney has reviewed the attached partial release forms prepared by the developer's
attorney.
PRIMARY ISSUES TO CONSIDER
What impact will the Assignment and Assumption of Development Agreements have on the
remaining development phases? The Assignment and Assumption of Development Agreements
and the submittal of replacement letters of credit securities will ensure the Autumn Meadows
development is completed in accordance with the approved preliminary and final plat plans.
SUPPORTING INFORMATION
0 Assignment and Assumption of Development Agreements
0 Request for Assignment of City Development Agreements, dated May 6, 2016
0 Location Aerial Photo Map
Financial Impact: $ None Budgeted: Y/N Source:
Related Documents Autumn Meadows Second, Third and Fourth Addition Development Contracts
Notes: Envision Lakeville Community Values: A Home for All Ages and Stages of Life
Report Completed By: Frank Dempsev, AICP, Associate Planner
[Space Above this Line for Recording Office Use Only]
ASSIGNMENT AND ASSUMPTION
OF
CITY DEVELOPMENT AGREEMENTS
(CONSENT REQUIRED)
THIS ASSIGNMENT AND ASSUMPTION OF CITY gRELOPMENT
AGREEMENTS (this "Assignment") is made and entered into as of this day of May,
2016, by and among K. HOVNANIAN HOMES AT AUTUMN MEADOWS, LLC, a Minnesota
limited liability company ("Assignor"), and LEN -MN, LLC, a Delaware limited liability
company ("Assignee").
RECITALS
A. Assignor is the owner of certain real property being developed as Autumn
Meadows, a single family home community, located in the City of Lakeville, Dakota County,
Minnesota (the "Property"), legally described on attached Exhibit A.
B. Assignor and the City of Lakeville (the "City") are parties to the following
development agreements in connection with the Property;
1. Development Contract Autumn Meadows Second Addition dated 6-3-
2013, filed 8-9-2013, as Document No. T720843;
2. Development Contract Autumn Meadows Third Addition dated 6-2-2014,
filed 9-22-2014, as Document No. T736224; and
3. Development Contract Autumn Meadows Fourth Addition dated 4-6-
2015, filed 7-10-2015, as Document No. 747887.
(collectively, the "City Development Agreements").
C. In accordance with the terms of the City Development Agreements, Assignor
provided the following letters of credit to the City:
58018466.4 1
1. Citibank Letter of Credit for 2nd Addition - $132,428.00;
2. Citibank Letter of Credit for 3rd Addition - $164,979.00; and
3. Citibank Letter of Credit for 4th Addition - $322,847.70.
(collectively, the "Sureties").
D. Assignor and Assignee have entered into that certain Purchase and Sale
Agreement dated May 5, 2016 (the "Purchase Agreement'), whereby Assignor has agreed to
assign all of its rights and delegate all of its duties to Assignee in the City Development
Agreements.
E. Pursuant to the terms of the Purchase Agreement, Assignor has conveyed the
Property to Assignee by limited warranty deed of even date herewith.
F. In connection with this transaction, Assignor desires to assign to Assignee all of
Assignor's right, title, claim and interest in and under the City Development Agreements, and
Assignee has agreed to assume all of Assignee's responsibilities and obligations under the City
Development Agreements.
ASSIGNMENT
For good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties agree as follows:
1. Capitalized terms not otherwise defined in this Assignment have the meaning
given to such terms in the Purchase Agreement.
2. Assignor hereby conveys and assigns to Assignee all of Assignor's right, title,
claim and interest in and under the City Development Agreements, including specifically any and
all cash escrows and other deposits previously posted by Assignor with the City. Assignee
hereby assumes all of Assignor's responsibilities and obligations under the City Development
Agreements.
3. If the parties have not obtained all consents required in connection with the
transfer of the City Development Agreements from Assignor to Assignee (the "Necessary
Consents") prior to the date of this Assignment, the parties shall diligently pursue obtaining such
Necessary Consents as promptly as practicable after the date hereof, as may be more fully set
forth in the Purchase Agreement. If and when all Necessary Consents are obtained, Assignee
shall replace all Sureties required under the City Development Agreements, and Assignor and
Assignee shall use commercially reasonable efforts to obtain a release of Assignor from all
obligations under the City Development Agreements as promptly as practicable after the date
hereof. The replacement Sureties obtained by Assignee must be issued by a bank or bonding
company acceptable to the City. Assignor shall act reasonably, but at no material cost to
Assignor, to cooperate with Assignee in replacing the Sureties.
58018466.4 2
4. If after the date hereof, the City draws on any of Assignor's Sureties, Assignee
shall indemnify, defend and hold Assignor and its affiliates harmless, to the extent set forth in
Section 813(iii) of the Purchase Agreement, from all amounts drawn under such Sureties and all
related attorneys' fees, costs and damages.
5. To the extent that the Necessary Consents required under the City Development
Agreements are not obtained, this Assignment will not constitute an assignment or an attempted
assignment thereof unless and until such Necessary Consents are obtained.
6. Subject to the provisions of Schedule 13 of the Purchase Agreement, Assignee
shall indemnify, defend and hold Assignor, and Assignor's affiliates, harmless from and against
any and all loss or liability, including attorneys' fees, costs and damages, which may be asserted
against Assignor as a result of Assignee's failure to comply with the terms of this Agreement or
any obligations of Assignee as Purchaser under the Purchase Agreement relating to the City
Development Agreements and the Sureties.
7. This Assignment shall be binding on and inure to the benefit of the parties hereto,
their successors in interest and assigns.
8. This Assignment shall be governed by and construed and in accordance with the
laws of the State of Minnesota.
IN WITNESS WHEREOF, Assignor and Assignee have executed this Assignment as of
the day and year first above written.
The balance of this page has been left blank.
Signatures of the parties are set forth on the following page.
58018466.4 3
ASSIGNOR:
K. HOVNANIAN HOMES AT AUTUMN
MEADOWS, LLC, a
Minnesota lir,, qd liability company
By:
N e: F. le
Its: a resi ent and Chief Legal Counsel
STATE OF MINNESOTA }
ss.
COUNTY OF HENNEPIN )
This instrument was acknowledged before me on May 2416, by John F. Semple, the
Vice President and Chief Legal Counsel of K. Hovnanian Homes at Autumn Meadows, LLC, a
limited liability company under the laws of the State of Minnesota, on behalf of said limited
liability company.
SIGNATU OF NOTARY PUBLIC OR OTHER OFFICIAL
ZACHARY M. CROSBY
Notary PubNc-Minnes�a
58618466.4 4
ASSIGNEE:
LEN -MN, LLC, a Delaware limited liability
company
By
Na
Its:
STATE OF MINNESOTA )
) ss.
COUNTY OF HENNEPIN )
This instrument was acknowledged before me on May , 2016, by Bill Burgess, the
Vice President of Len -MN, LLC, a limited liability company under the laws of the State of
Delaware, on behalf of said limited liability company.
=M.m
This instrument was drafted by:
Fredrikson & Byron, P.A. (LML)
200 South Sixth Street, Suite 4000
Minneapolis, MN 55402
- <� JA/';viN
SIGNATUR TA 'i PUBLI&-& tTHER OFFICIAL
58018466.4 5
CONSENT
The undersigned hereby consents to the foregoing Assignment and Assumption of City
Development Agreements and hereby releases Assignor from any and all liabilities and
obligations set forth in the City Development Agreements.
Dated: , 2016
CITY OF LAKEVILLE
By:_
Name:
Its:
STATE OF MINNESOTA )
ss.
COUNTY OF )
This instrument was acknowledged before me on 2016, by
, the of ,
a under the laws of
of said
on behalf
SIGNATURE OF NOTARY PUBLIC OR OTHER OFFICIAL
58018466.4 6
EXHIBIT A
Legal Description of Property
Lot 4, Block 1;
Lots 9, 10 and 11, Block 3;
all in Autumn Meadows Second Addition, Dakota County, Minnesota;
and
Lots 1, 3 and 4, Block 1;
Lots 1, 2, 3 and 4, Block 2;
Lot 2, Block 4;
all in Autumn Meadows Third Addition, Dakota County, Minnesota;
and
Lots 2, 3, 4, 5, 6 and 7, Block l;
Lots 1, 2, 3, 4, 5, 6 and 7, Block 2;
Lots 1, 3, 4, 5 and 6, Block 3;
Lots 2, 3, 4, 5, 6 and 7, Block 4;
all in Autumn Meadows Fourth Addition, Dakota County, Minnesota.
58018466.4 7
K. HOVNANIAN HOMES
12701 Whitewater Drive, Suite 120
Minnetonka, MN 55343
May 6, 2016
Via Regular Mail & Email
City of Lakeville
Attn: Daryl Morey
20195 Holyoke Avenue
Lakeville, MN 55044
dmoreyglakevillemn. gov
James Hill, VP Operations
(952-253-0450 Direct
ihillnkhov.com
Re: Autumn Meadows - Request for City Consent for Assignment of Development Agreements
and Replacement of Letters of Credit for Autumn Meadows
Dear Mr. Morey,
On May 5, 2016, K. Hovnanian Homes sold certain property in its Autumn Meadows neighborhood to
LEN -MN LLC (LEN) a subsidiary of Lennar Corporation. The legal descriptions of the property
conveyed are attached Exhibit A.
As part of this transaction, we assigned our development agreement rights and responsibilities together
with ownership of the cash escrows currently held by the city for the community. These are:
1. Development Contract Autumn Meadows Second Addition dated 6-3-2013, filed 8-9-2013, as
Document No. T720843.
2. Development Contract Autumn Meadows Third Addition dated 6-2-2014, filed 9-22-2014, as
Document No. T736224.
3. Development Contract Autumn Meadows Fourth Addition dated 4-6-2015, filed 7-10-2015, as
Document No. 747887.
We request that the City provide its consent to this assignment of development agreement rights and
obligations together with the replacement of our letters of credit by LEN. The outstanding letters of credit
are referenced in Exhibit B. A copy of the assignment document for City signature is found in Exhibit C.
The original documents in recordable form will be provided for execution when the City is prepared to
execute.
Please proceed with whatever administrative and council actions are necessary at your earliest
convenience.
Sincerely,
K. HOVNANIAN OMES OF MINNESOTA AT AUTUMN MEADOWS, LLC
James Hill, Jr.
Vice President of Operations
cc: Jonathan Aune, Director of Land, Lennar (jon.aune@lennar.com)
John Semple, Esq., K. Hovnanian's VP & Group Counsel (jsemple(aDkhov.com)
EXHIBIT A
�Ti��I�LK�JRVA Wd_a
Legal Description:
Lots 4, Block 1;
Lots 9, 10 and 11, Block 3;
all in Autumn Meadows Second Addition, Dakota County, Minnesota;
on
Lots 1, 3 and 4, Block l;
Lots 1, 2, 3 and 4, Block 2;
Lot 2, Block 4;
all in Autumn Meadows Third Addition, Dakota County, Minnesota;
and
Lots 2, 3, 4, 5, 6 and 7, Block 1;
Lots 1, 2, 3, 4, 5, 6 and 7, Block 2;
Lots 1, 3, 4, 5 and 6, Block 3;
Lots 2, 3, 4, 5, 6 and 7, Block 4;
all in Autumn Meadows Fourth Addition, Dakota County, Minnesota.
EXHIBIT B
OUTSTANDING LETTERS OF CREDIT
APPLICANT BANK LC# BENEFICIARY AMOUNT ISSUED MATURITY
DATE
K. HOVNANIAN HOMES OF
MINNESOTA AT AUTUMN
MEADOWS, LLC
K. HOVNANIAN HOMES OF
MINNESOTA AT AUTUMN
MEADOWS, LLC
K. HOVNANIAN HOMES OF
MINNESOTA AT AUTUMN
MEADOWS, LLC
CITIBANK 63668761 CITYOF LAKEVILLE
CITIBANK 69601255 CFFYOF LAKEVILLE
CITIBANK 69604072 CITYOF LAKEVILLE
132,428.00 07/24/13 07/24/16
164,979.00 07/01/14 07/01/16
322,847.00 05/05/15 05/05/17
EXHIBIT C
ASSIGNMENT AND ASSUMPTION OF CITY DEVELOPMENT AGREEMENTS
(Agreement on Following Pages)
Disclaimer: Map and parcel data are believed to be accurate, but accuracy is not Map Scale
guaranteed This is not a legal document and should not be substituted for a title 1 inch —400 feet
search, appraisal, survey, or for =oning verification. 6/8/2016