HomeMy WebLinkAboutA051 - Council Action Form dated August 6, 2013 s s
ITEM # 1
DATE 8-06-13
COUNCIL ACTION FORM
SUBJECT: REPLACEMENT SECURITY FOR OUTLOT R, SOUTH FORK
SUBDIVISION, 1ST ADDITION (3908 MARIGOLD DRIVE)
BACKGROUND:
The South Fork Subdivision is located south of the west Hy-Vee grocery store and north
of the Ames Middle School. Two of the areas within the subdivision remain to be
developed; Outlot R, 1st Addition and Outlot U, 2nd Addition (Outlot U is currently being
subdivided as South Fork 4th Addition). The 2001 Memorandum of Agreement (or
"Developer's Agreement") for South Fork Subdivision contains stipulations
regarding future left turn lane improvements at the intersection of Lincoln Way
and Franklin Avenue that directly relate to further development of these Outlots.
• The developer is required to pay 50% of the costs of construction for
installation of the associated improvements at the intersection of Lincoln Way and
Franklin Avenue. The City will pay for the remaining 50%, as well as any engineering
design and right-of-way costs as needed to complete the project.
• The agreement further stipulates that these improvements will not be constructed
until such time as the intersection has fallen below the Institute of Traffic Engineers
Level of Service "C" or a final plat is sought for a part of the site east of Dotson Drive
and not abutting Dotson Drive, whichever occurs first. Neither stipulation has been
met; however, further platting of either Outlot could initiate the second trigger.
• The developer is required to guarantee this financial obligation by providing
security in an amount equal to 50% of the estimated costs of construction, as
specified by the City.
o Pinnacle Properties has provided a letter of credit to the City in the amount of
$175,100, as security interest for the obligation associated with Outlot U, 2nd
Addition (500 Dotson Drive).
o The obligation for Outlot R, 1st Addition, (3908 Marigold Drive) is secured through
a mortgage to the City of Ames on the land in Outlot R, which had an
approximate net value of $280,000.
Pinnacle Properties Ames, LLC is in the process of procuring the purchase of 3908
Marigold St. (Outlot R, South Fork Subdivision, 1st Addition) from the Marjorie Lucille
Cochrane Revocable Trust. In order to move forward with the purchase, the previously
mentioned mortgage would need to be released and replaced with a letter of credit for
$280,000.00 on behalf of Pinnacle Properties Ames, LLC with the City of Ames as
beneficiary. This would be similar to the arrangement entered on 500 Dotson (Outlot U),
and the corresponding Letter of Credit for $175,100.00.
ALTERNATIVES:
1. Release the City's interest in the current mortgage on 3908 Marigold Drive (Outlot R,
South Fork Subdivision, 1st Addition) and replace it with a letter of credit for
$280,000.00 on behalf of Pinnacle Properties Ames, LLC with the City of Ames as
beneficiary, as security for the Lincoln Way and Franklin Avenue improvements.
2. Maintain the current mortgage interest on 3908 Marigold Drive (Outlot R, South Fork
Subdivision, 1st Addition) as security for the Lincoln Way and Franklin Avenue
improvements.
MANAGER'S RECOMMENDED ACTION:
Releasing the mortgage interest in Outlot R and replacing it with a letter of credit will
facilitate the renewed development of the area at 3908 Marigold Drive while maintaining
security for the future intersection improvements at Lincoln Way and Franklin Avenue. A
letter of credit is generally a more stable and liquid form of security.
Therefore, it is the recommendation of the City Manager that the City Council adopt
Alternative No. 1 , thereby releasing the City's interest in the current mortgage on 3908
Marigold Drive (Outlot R, South Fork Subdivision, 1st Addition) and replacing it with a
letter of credit for $280,000.00 on behalf of Pinnacle Properties Ames, LLC with the City
of Ames as beneficiary as security for the Lincoln Way and Franklin Avenue
improvements.