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HomeMy WebLinkAboutItem 06.cMarch 30, 2010 - Item No. FINAL ACCEPTANCE OF PUBLIC UTILITIES AND STREET IMPROVEMENTS AND APPROVAL OF HOLD HARMLESS AND INDEMNITY AGREEMENT WITH LEGACY CONSTRUCTION FINANCE, LLC Marsh View Proposed Action Staff recommends adoption of the following motion: Move to approve the final acceptance of public utilities and street improvements within Marsh View and approve the Hold Harmless and Indemnity Agreement with Legacy Construction Finance, LLC. Overview Legacy Construction Finance, LLC ("Legacy") submitted a letter requesting acceptance of the public utilities and street improvements within Marsh View. The major contractors performing work on this project were Richard Knutson, Inc. (Utilities) and McNamara Contracting, Inc. (Streets). The public utilities, curb and gutter and bituminous base course were constructed in 2006. The final bituminous wearing course was installed in 2008. The utility and street improvements for this project have been tested and inspected by WSB & Associates, Inc. and the Public Works Department. With the exception of erosion control and landscaping work, Legacy has completed the obligations of the Marsh View Development Contract and has requested release of the Letter of Credit. The City Attorney recommends that the City enter into the attached Hold Harmless and Indemnity Agreement with Legacy to protect the City against any claims. Upon acceptance of the utilities and streets, and approval of the Hold Harmless and Indemnity Agreement, the City will release the balance of the Letter of Credit, with the exception of $30,000 which will be retained to secure the remaining work. Primary Issues to Consider • A maintenance bond is not required, why? The Developer is required to warrant all improvements. The warranty period is one year for streets and two years for underground utilities. To secure the warranties, the City retained a portion of the Letter of Credit until the warranty period expired. Supporting Information • Letter from Legacy Construction Finance, LLC • Hold Harmless and Indemnity Agreement acha V.ldh.Qson Assistant City Engin Financial Impact: $ None Budgeted: Y/N Source: Related Documents (CIP, ERP, etc.): Notes: Zach Johnson, P.E. Assistant City Engineer City of Lakeville 20195 Holyoke Avenue Lakeville, MN 55044 Dear Zach: Legacy Construction Finance is requesting that the City of Lakeville provide final acceptance of the public streets and utilities that were constructed with the Marshview Development. Please send me notice at the address listed below when that is completed. Thank you for your help in this matter. Sincerely, Gary . Embretson Chief Financial Manager Legacy Construction Finance, LLC 3595 Woodland court Eagan, MN 55123 HOLD HARMLESS AND INDEMNITY AGREEMENT THIS H D HARMLESS AND INDEMNITY AGREEMENT (this "Agreement") is made as of ft*e.i 1(0'' , 2010, by and among the CITY OF LAKEVILLE, MINNESOTA, a governmental unit of the State of Minnesota ("Lakeville"), and LEGACY CONSTRUCTION FINANCE, LLC, a Minnesota limited liability company ("Legacy"). RECITALS A. Lakeville entered into a Development Contract with Manley Brother's Construction, Inc, a Minnesota corporation ("Manley"), dated June 5, 2006, and recorded in the Office of the Dakota County Recorder on November 7, 2006, as Document No. 2473882, for the approval and development of the Marsh View plat in Lakeville. The Development Contract was amended by an Addendum "A" to Development Contract for Marsh View dated September 5, 2006, and recorded in the Office of the Dakota County Recorder on November 07, 2006, as Document No. 2473883. The Development Contract, as amended, will be referred to herein as the "Development Contract." B. Legacy extended a loan to Manley with funds Legacy obtained from Highland Bank, a Minnesota banking corporation ("Highland"). The loan was secured in part by a mortgage encumbering the real property subject to the Development Contract ("Mortgage"). C. Pursuant to the requirements of the Development Contract, Highland, at the request of Legacy, furnished Lakeville a letter of credit for $920,777.71 ("Letter of Credit"). D. Manley defaulted on its loan with Legacy and Legacy and Highland foreclosed the Mortgage. E. Legacy completed Manley's obligations under the Development Contract and now requests that Lakeville release the letter of credit. NOW, THEREFORE, in consideration of their mutual covenants the parties agree as follows: 1. With the exception of up to $30,000.00, Lakeville hereby releases the Letter of Credit attached hereto and Exhibit "A". 2. Legacy agrees to hold Lakeville and its officers, employees, and agents harmless from claims made by itself and third parties for damages sustained or costs incurred resulting from plat approval and development pursuant to the Development Contract. Legacy shall indemnify Lakeville and its officers, employees, and agents for all costs, damages, or expenses which Lakeville may incur in consequence of such claims including attorneys' fees. CITY OF LAKEVILLE, MINNESOTA And Holly Dahl, Mayor Charlene Friedges, City Clerk LEGACY CONSTRUCTION FINANCE, LLC By 1 !q i ! t7 Its 149046v01 2 RNK: 12/07/2009 1 IRREVOCABLE STANDBY LETTER OF CREDIT No. 1dof3-�L Sc - TO: City of Lakeville ("City") Date: August 25, 2006 20195 Holyoke Avenue Lakeville, Minnesota 55044 Dear Sir or Madam: We hereby issue, for the account of Manley Brother's Construction, Inc., a Minnesota corporation ("Developer") and in your favor, our Irrevocable Standby Letter of Credit in the amount of Nine Hundred Twenty Thousand Seven Hundred Seventy Seven and 71/100 -Dollars ($920,777.71) ("Letter of Credit"), available to you by your draft drawn on sight on the undersigned bank. The draft must: a. Bear the clause, "Drawn under Letter of Credit No.l z i3 7L 5'Ok dated August 25, 2006, of Highland Bank, a Minnesota banking corporation; b. Be signed by the Chairperson or Clerk of the City of Lakeville; C. Be presented for payment at Highland Bank, on or before 4:00 p.m. on August 25, 2007. This Letter of Credit sets forth in full our understanding and is issued pursuant to that certain development contract between the Developer and the City, dated s. u=_ ,r LcGf- ("Development Agreement"), and shall not in any way be modified, amplified, or limited by reference to any document, instrument, or agreement, whether or not referred to herein. This Letter of Credit is not assignable. This is not a Notation Letter of Credit. More than one draw may be made under this Letter of Credit. Unless we so notify you in writing before July 10, 2007, this Letter of Credit shall automatically renew for an additional 12 months in the amount then outstanding. This Letter of Credit shall be governed by the laws of the State of Minnesota as supplemented (to the extent consistent with this Letter of Credit) by the most current provisions of the Uniform Customs and Practices for Commercial Documentary Credits, International Chamber of Commerce Publication No. 500. . We hereby agree that a draft drawn under and in compliance with this Letter of Credit shall be duly honored upon presentation. THE FOLLOWING PAGE IS THE SIGNATURE PAGE. EXHIBIT 66A" Highland Bank (a Minnesota banking corporation) By: 7Joltslenior ite Vice President This is the signature page to that certain Irrevocable Standby Letter of Credit dated August 25, 2006.