HomeMy WebLinkAboutA070 - Council Action Form dated December 8, 2015 �,,_J
JeAg5 tn,5 D ITEM # 24
- Date 12-08-15
COUNCIL ACTION FORM
SUBJECT: REQUEST TO DEFER STREET WIDENING ASSESSMENT FOR
EASTGATE PROPERTIES
BACKGROUND:
First National Bank owns 12 lots within the Eastgate Subdivision (Near East 13th Street
and Dayton Avenue). In 1998, the original Eastgate developer signed a development
agreement promising payment for improvements to roads and utilities in the area. The
development was then the subject of a bankruptcy proceeding, and in 2001, the City
entered into a covenant that modified the owner's public infrastructure obligations. The
covenant was intended to clarify the owner's obligations and more strictly bind the
property owner to pay for improvements earlier than required under the development
agreement. The property was ultimately acquired by First National Bank through the
bankruptcy proceeding.
The covenant requires payment to the City for the estimated costs of widening Dayton
Avenue for a turn lane and for connections to water and sewer service. This payment
is to be made upon the sale or transfer of each lot. The water and sewer connection
fees have all been paid, and only the road widening cost remains outstanding. The road
widening cost was revised in 2004 to reflect increased construction costs. The amount
outstanding for the 12 lots remaining in the subdivision is $94,710.
First National Bank has requested that it be allowed to sell the properties to its
holding company, Ames National Corporation, without being required to pay the
outstanding road assessment. The rationale for this transfer is that federal regulations
prohibit national banks from holding real estate for periods greater than ten years.
December 15th is the ten-year anniversary of First National Bank's acquisition of the
properties.
In a previous staff report, City staff recommended that deferring payment for the road
widening costs should be made contingent upon a revision in the amount owed, since
construction costs have increased since the time when the .assessment was last
revised. First National Bank has requested that the construction cost not be
revised, because this transaction is to a. corporation with essentially the same
ownership, and it further believes an increase in the assessment amount will
make the lots more difficult to sell for development.
The covenant indicates that the original cost estimate for the road widening was
only binding until May 1, 2001. The City Council revised the construction cost in
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November 2004. It is City staff's belief that the City Council has the option in the
future to again unilaterally revise the construction cost estimate in response to
construction cost inflation, and therefore adjust the amount owed per lot for the
widening of Dayton Road. This request to transfer the ownership of the property
does not preclude adjustments in the construction cost estimate from being
made in the future.
Modifying the covenant and development agreement will have two additional effects:
First, it will allow the development agreement to be clarified as to what components
remain incomplete, and in what manner those components have been superseded by
the covenant. Second, it will extend the duration of the covenant another 21 years from
the date of revision. It is currently only binding until February 2022.
ALTERNATIVES:
1. Approve the attached amendments to the covenant and development agreement
with First National Bank for the Eastgate Subdivision, allowing the properties to be
sold to Ames National Corporation without requiring payment for the road widening
costs. The road widening costs would become payable upon the sale of the lots by
Ames National Corporation in accordance with the covenant.
2. Do not approve modifications to the covenant and development agreement.
MANAGER'S RECOMMENDED ACTION:
First National Bank has requested to transfer the Eastgate properties to its _holding
company without requiring payment for the road widening costs. The holding company
would not develop the lots, but would continue to market them for sale to developers.
The acquisition of the properties by Ames National Corporation is not an arm's length
transaction, since the ownership of First National Bank and Ames National Corporation
is largely identical. Therefore, the bank proposes that the costs owed not be due until
the holding company sells the lots to a developer.
The need for the Dayton Road widening is driven primarily by the development of this
subdivision. No project to widen the road has been designed, and the project remains a
medium-term priority in the Long-Range Transportation Plan.
Therefore, it is the recommendation of the City Manager that the City Council adopt
Alternative No. 1, thereby approving modifications to the covenant and development
agreement with First National Bank for the Eastgate Subdivision, allowing the properties
to be sold to Ames National Corporation without requiring payment for the road
widening costs. No revision to the road construction cost estimate has been proposed,
but the City Council has the option to update the cost if it chooses in the future. These
road widening costs would become payable upon the sale of the lots by Ames National
Corporation in accordance with the covenant.
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DO NOT WRITE IN THE SPACE ABOVE THIS LINE;RESERVED FOR RECORDER
Prepared by: Jessica D. Spoden, City of Ames Legal Department, 515 Clark Ave.,Ames,IA 50010; 515-239-5146
Return to: Ames City Clerk Ames City Hall 515 Clark Ave P.O.Box 811 Ames IA 50010
AMENDMENT TO EASTGATE SUBDIVISION
COVENANT FOR ASSESSMENT OF COSTS OF IMPROVEMENTS
DAYTON AVENUE
This Amendment to Eastgate Subdivision Covenant for Assessment of Costs of
Improvements made and entered into this day of , 2015, by and
between the City of Ames, Iowa (hereinafter called "City") and First National Bank, Ames, ,
Iowa, its successors and assigns (hereinafter called "Owner"), amends the Covenant for
Assessment of Costs of Improvement (hereinafter "Covenant") entered into between Eastgate
Development, Inc. (hereinafter called "Developer") and the City on the 131h day of February,
2001, and recorded in the office of the Story County Recorder on March 13, 2001, as Instrument
No. 01-02822.
WITNESSETH THAT:
WHEREAS, Owner owns twelve (12) lots (hereinafter "Property") within the Eastgate
Subdivision(hereinafter called "Eastgate"); and
WHEREAS, the Developer, Eastgate Development, Inc., entered into a Development
Agreement (hereinafter called "Agreement") with the City promising payment for improvements
to roads and utilities in the area; and
WHEREAS, the Agreement required the Developer to pay for certain public
improvements in the area, including the widening of Dayton Avenue for a left turn lane; and
WHEREAS, during a bankruptcy proceeding for Eastgate, the City and Developer
entered into the Covenant that modified the Developer's public infrastructure obligations to
clarify the obligations and to more strictly bind the Developer and any future property owner(s)
to pay for improvements earlier than required under the Agreement; and
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WHEREAS, the Owner ultimately acquired Eastgate through the bankruptcy proceeding;
and
WHEREAS, as the successor to the Developer, Owner is bound by the Agreement and
required to pay for the cost of improvements upon sale or transfer of the property; and
WHEREAS, the total cost of the improvement was subject to change after May 1, 2001
pursuant to an increase in anticipated construction costs; and
WHEREAS, Owner desires to transfer the Property to its holding company, Ames
National Corporation (hereinafter "ANC"), while deferring the obligation to pay for the
widening of Dayton Avenue to add a left turn lane.
NOW, THEREFORE THE PARTIES HERETO HAVE AGREED TO THE
FOLLOWING:
1. The parties agree to amend the Covenant to clarify the obligation(s) related to the
widening of Dayton Avenue and the costs associated with the improvement.
Provision 3 of the Covenant is amended to state: "The Developer, its successors,
and assigns, including purchasers of lots, shall be responsible for all costs of
construction for a northbound left turn lane on Dayton Avenue by paying to the
City that amount that is the percentage shown on Exhibit A with respect to said
lot or lots to be sold or transferred. Such costs for the said left turn lane on
Dayton Avenue shall be due and payable upon the sale or transfer of the
property."
2. The parties agree to allow Owner to transfer the Property to ANC without paying
said costs for the left turn lane on Dayton Avenue. Owner shall be required to
pay such costs for the improvement upon the future sale or transfer from ANC to
a third party. At such time, Owner shall pay the costs established by Exhibit A, or
as revised by the City.
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IN WITNESS WHEREOF, the parties hereto have caused this amendment to be executed
as of the date referenced above.
CITY OF AMES, IOWA FIRST NATIONAL BANK, AMES, IOWA
By BY
Ann H. Campbell, Mayor Scott T. Bauer, President
Attest
Diane R. Voss, City Clerk STATE OF IOWA, COUNTY OF STORY, ss:
This instrument was acknowledged before me on
2015,by Scott T.Bauer,President of
STATE OF IOWA, COUNTY OF STORY, ss: First National Bank,Ames,Iowa.
On this day of 12015,
before me, a Notary Public in and for the State of Iowa,
personally appeared Ann H. Campbell and Diane R. Notary Public in and for the State of Iowa
Voss, to me personally known and who, by me duly
sworn, did say that they are the Mayor and City Clerk,
respectively, of the City of Ames, Iowa; that the seal
affixed to the foregoing instrument is the corporate seal
of the corporation; and that the instrument was signed
and sealed on behalf of the corporation, by authority of
its City Council, as contained in Resolution No.
adopted by the City Council on the day of
,2015,and that Ann H. Campbell and
Diane R. Voss acknowledged the execution of the
instrument to be their voluntary act and deed and the
voluntary act and deed of the corporation, by it
voluntarily executed.
Notary Public in and for the State of Iowa
EXHIBIT A
EASTGATE SUBDIVISION
December, 2015
LOT# AREA % of COST
ASSESSMENT ALLOCATION
8 0.95 3.1 $ 6,510.00
9 0.95 3.1 $ 6,510.00
10 0.95 3.1 $ 6,510.00
11 0.95 3.1 $ 6,510.00
12 2.00 6.6 $ 13,860.00
13 2.00 6.6 $ 13,860.00
15 1.00 3.3 $ 6,930.00
16 1.00 3.3 $ 6,930.00
17 1.00 3.3 $ 6,930.00
21 1.01 3.3 $ 6,930.00
22 0.91 3.0 $ 6,300.00
23 1.00 3.3 $ 6,930.00
TOTALS 19.23 $94,710.00*
*The total cost shall be subject to revision by the City in response to an increase in anticipated
construction costs. The revision shall not require an amendment to the Covenant.
DO NOT WRITE IN THE SPACE ABOVE THIS LINE;RESERVED FOR RECORDER
Prepared by: Jessica D. Spoden,City of Ames Legal Department, 515 Clark Ave., Ames,IA 50010; 515-239-5146
Return to: Ames Cijy Clerk Ames City Hall 515 Clark Ave P.O.Box 811 Ames IA 50010
AMENDMENT TO DEVELOPMENT AGREEMENT
EASTGATE SUBDIVISION
This Amendment to Development Agreement made and entered into this day of
, 2015, by and between the City of Ames, Iowa (hereinafter called "City") and
First National Bank, Ames, Iowa its successors and assigns (hereinafter called "Owner") amends
the Development Agreement (hereinafter called "Agreement") entered into between Eastgate
Development, Inc. (hereinafter called "Developer") and the City on the 6ch day of October 1998,
and recorded in the office of the Story County Recorder on October 16, 1998, as Instrument
No. 98-14377.
WITNESSETH THAT:
WHEREAS, Owner owns twelve (12) lots (hereinafter "Property") within the Eastgate
Subdivision(hereinafter called "Eastgate"); and
WHEREAS, the Developer, Eastgate Development, Inc., signed the above reference
Agreement promising payment for improvements to roads and utilities in the area; and
WHEREAS, the Agreement required the Developer to pay for certain public
improvements in the area, including the widening of Dayton Avenue for a left turn lane; and
WHEREAS, during a bankruptcy proceeding for Eastgate, the City and Developer
entered into a covenant that modified the Developer's public infrastructure obligations to clarify
the obligations and to more strictly bind the Developer and any future property owner(s) to pay
for improvements earlier than required under the Agreement; and
WHEREAS, the Owner ultimately acquired Eastgate through the bankruptcy proceeding;
and
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WHEREAS, as the successor to the Developer, Owner is bound by the Agreement and
required to pay for the cost of improvements upon sale or transfer of the property; and
WHEREAS, Owner desires to transfer the Property to its holding company, Ames
National Corporation (hereinafter called "ANC"), while deferring the obligation to pay for the
widening of Dayton Avenue to add a left turn lane.
NOW, THEREFORE, THE PARTIES HERETO HAVE AGREED TO THE
FOLLOWING:
1. Certain provisions of the Agreement were superseded by the Eastgate Subdivision
Covenant for Assessment of Costs of Improvements Dayton Avenue (hereinafter
called "Covenant") Therefore, the parties agree to amend the Agreement. Section
II.2.d. Streets: Vehicular and Pedestrian Access of the Agreement is amended to
state: "Developer shall be responsible for all costs of construction for a
northbound left turn lane on Dayton Avenue to facilitate Plymouth Drive. Such
turn lane may be constructed by the City when there is sufficient traffic to warrant
that improvement under established standards of traffic engineering. The
Developer shall pay for the costs incurred for the said left turn lane on Dayton
Avenue upon the sale or transfer of the property. The costs for such improvement
shall be as listed in Exhibit A of the Eastgate Subdivision Covenant for
Assessment of Costs of Improvements Dayton Avenue, notwithstanding a
revision to the cost which may be made at any time by the City in response to an
increase in anticipated construction costs."
2. The parties agree to allow Owner to transfer the Property to ANC without paying
for the left turn lane on Dayton Avenue. Owner shall be required to pay such
costs for the improvement upon the future sale or transfer from ANC to a third
party. At such time, Owner shall pay the costs as established by the Covenant, or
as revised by the City.
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IN WITNESS WHEREOF, the parties hereto have caused this amendment to be executed
as of the date referenced above.
CITY OF AMES, IOWA FIRST NATIONAL BANK, AMES, IOWA
By BY
Ann H. Campbell, Mayor Scott T. Bauer, President
Attest
Diane R. Voss, City Clerk STATE OF IOWA, COUNTY OF STORY, ss:
This instrument was acknowledged before me on
STATE OF IOWA, COUNTY OF STORY, ss: ,2015,by Scott T.Bauer,President of
First National Bank,Ames,Iowa.
On this day of 12015,
before me, a Notary Public in and for the State of Iowa,
personally appeared Ann H. Campbell and Diane R. Notary Public in and for the State of Iowa
Voss, to me personally known and who, by me duly
sworn, did say that they are the Mayor and City Clerk,
respectively, of the City of Ames, Iowa; that the seal
affixed to the foregoing instrument is the corporate seal
of the corporation; and that the instrument was signed
and sealed on behalf of the corporation, by authority of
its City Council, as contained in Resolution No.
adopted by the City Council on the day of
,2015, and that Ann H. Campbell and
Diane R. Voss acknowledged the execution of the
instrument to be their voluntary act and deed and the
voluntary act and deed of the corporation, by it
voluntarily executed.
Notary Public in and for the State of Iowa