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HomeMy WebLinkAbout09-277JULY 14, 2009 09 -277 RESOLUTION (CARRIED 5 -2 LOST LAID OVER WITHDRAWN ) PURPOSE: AMEND DEVELOPMENT AGREEMENT TERMS WITH OSHKOSH RIVER DEVELOPMENT, LLC INITIATED BY: MAYOR ESSLINGER REDEVELOPMENT AUTHORITY ACTION: Approved WHEREAS, the Redevelopment Authority (RDA) and Common Council previously approved a Development Agreement Term Sheet, as amended, for disposition of the Marion Road /Pearl Avenue Redevelopment Phase II Area to Oshkosh River Development, LLC; and WHEREAS, Oshkosh River Development, LLC has actively pursued its due diligence of project activities for the Phase II Area and notified the City /RDA that they will proceed with previously approved development plans; and WHEREAS, Mayor Esslinger approached Oshkosh River Development with a proposal that would allow the City /RDA to solicit and consider proposals from other developers for Development Areas 1 and 4; and WHEREAS, Oshkosh River Development has indicated its willingness to allow this change to the Development Agreement, as amended, with the following conditions: ➢ that any solicitation and consideration of proposals be for uses other than those proposed by Oshkosh River Development to date; ➢ they retain the right to bring projects forward for consideration in the same area; ➢ a modification to remove from the Agreement their obligations to meet identified valuation thresholds. and WHEREAS, the proposed amendment will require changes and refinements to the Development Agreement as set forth in the attached. NOW THEREFORE BE IT RESOLVED by the Common Council of the City of Oshkosh that revisions to the Development Agreement, as amended, are hereby approved as set forth in the attached, and the proper City officials are authorized and directed to enter into a modified agreement that includes these amendments and to carry out all actions necessary to implement the City's obligations under the Development Agreement, as amended. Proposed Amendments to Development Agreement With Oshkosh River Development, LLC June, 2009 Modify Map Exhibit A to show revised Development Areas 1, 2, 3 and 4. Development Areas 2 and 3 relate to areas where zoning approvals have been given for The Rivers apartment project, and for a pharmacy project and mixed commercial /residential project north of Marion Road west of Jackson Street. Development Area 1 covers the riverfront area between The Rivers apartment building site and Jackson Street, while Development Area 4 is a site on the northeast corner of Marion Road and Riverway Drive extended. Giving the City /RDA the ability to solicit and consider proposals from other parties for Development Areas 1 and 4 for uses other than those that have been proposed by Oshkosh River Development, LLC. Uses proposed by Oshkosh River Development, and excluded from the solicitation include: office buildings; residential apartments and /or condominiums; mixed commercial /residential development; and a stand alone riverfront restaurant. Oshkosh River Development will have the right, but not the obligation to submit proposals to the City /RDA for Development Areas 1 and 4. • Eliminating the requirement that Oshkosh River Development, LLC, guarantee that given valuation thresholds be met for the overall project area. Instead, the City /RDA would gauge valuations for projects brought forward for review and approval in Development Areas 1 and 4 to ensure that valuation needs are being addressed as project development occurs. • Tying Oshkosh River Development's right to develop a marina adjacent to the proposed riverwalk to their proceeding with project activities in Development Area 1. • Gives Oshkosh River Development the right, with the City /RDA's approval, to convey a redevelopment parcel to another party for completion of an approved project. This relates to a proposal the group will be making later in July for the conveyance of the site on the southeast corner of Pearl Avenue and Riverway Drive for the construction of an office building in that location. • With the designation of revised Development Areas, language is included that stipulates that if Oshkosh River Development proceeds with development of projects in Development Area 1, that enhanced green space and a walkway be developed between or on one of the parcels that may be created in Development Area 1 between Marion Road and the Fox River in a location designated by the City /RDA. The existing language could have been construed to possibly require this green space /walkway on the immediate east side of The Rivers apartment project parcel. Since a walkway between Marion Road and the riverwalk will be developed on the immediate west side of The Rivers apartment project parcel, a walkway on the east side of that parcel would not be needed, but it would be further to the east between other parcels to be created in Development Area 1. Under the Environmental Remediation Section, add language to make it clear the City /RDA is responsible for undertaking remediation in accordance with plans that have been prepared for the project area, and adding language that also gives the developer and City /RDA the ability to withdraw from project development in the unlikely event that unforeseen environmental conditions are discovered on any particular parcel. While the City /RDA felt language in the existing agreement states that the City /RDA is responsible for remediation activities, Oshkosh River asked if some minor wording could be added for clarification purposes, especially as that relates to securing future financing on projects. Relative to the language that is being added to deal with unforeseen environmental conditions, this should be seen a precautionary measure to give all parties the ability to not proceed with a project, if extraordinary costs would be incurred in dealing with environmental conditions. The City /RDA has undertaken a significant level of testing in the overall project area, and remediation plans have been prepared based on the testing an analyses that have been done. While the City /RDA is confident that environmental remediation work can be done in accordance with the remediation plans prepared to date, the added language gives the City /RDA an extra level of liability protection. Clarifying the ownership interest of Art and Andy Dumke in projects the group is bringing forward for development. The change will give the Dumkes the ability to maintain different percentages of ownership for the different projects that are being proposed, which may include no ownership interest in the entities owing the projects, as long as the Dumkes have sole day -to -day management and control over the operations of Oshkosh River Development, LLC, the entities owning the project and the projects themselves. O,IHKOIH ON THE WATER TO: Honorable Mayor and Members of the Common Council FROM: Jackson Kinn Director of Co unity Development DATE: July 8, 2009 RE: Amend Development Agreement Terms with Oshkosh River Development, LLC BACKGROUND A Resolution will be presented to Council on July 14 that provides a Second Amendment to the Development Agreement with Oshkosh River Development, LLC (the Dumke group), for their project in the Marion Road area. The Redevelopment Authority (RDA) unanimously approved the amendment at a special meeting on June 29 Mayor Esslinger has asked the Dumke group if they would be willing to allow the City/RDA to solicit and consider proposals from other developers for the remaining riverfront area. The group has indicated their willingness to allow this change to the Development Agreement, with a condition that any solicitation and consideration of proposals be for uses other than those proposed by Oshkosh River Development to date, and as long as they retain the right to bring projects forward for consideration in the same area, and with a modification to remove from the agreement their obligations to meet identified valuation thresholds. Rather than rely on a guarantee from the developer, the City/RDA would gauge valuations for projects brought forward for approval in Development Areas 1 and 4 to ensure that needed valuations can be expected to be achieved. The proposed amendment would not alter /affect prior approvals that have been given on The Rivers apartment project, and the pharmacy and mixed commercial- residential projects north of Marion Road. The City/RDA received a letter on June 17 from Oshkosh River Development (a copy of which is attached) which notified the City/RDA that Oshkosh River Development has completed its due diligence on the overall project, and it is the intention of Oshkosh River Development to proceed with project implementation. Council received the Draft Development Agreement with the proposed changes identified in the Resolution with their packets on June 26th. ANALYSIS The change to the Development Agreement would give the City/RDA the ability to solicit and consider proposals from other interested parties in Development Areas 1 and 4 (see new Map Exhibit A) for development proposals that do not include office buildings, residential apartments and/or condominiums, mixed commercial /residential development, or a stand alone restaurant (all of which are uses that have been proposed for the subject area by Oshkosh River Development). The changes relating to solicitation of proposals from other parties and removing the valuation guarantees by Oshkosh River Development has necessitated a number of additional changes in the document. A key change is that the Development Agreement would now primarily apply to Development Areas 2 and 3, where Oshkosh River Development has already received zoning approvals on the senior living project, pharmacy and mixed commercial /residential project, and where they will be submitting for zoning review an office building on the southeast corner of Riverway Drive and Pearl Avenue. They will also be submitting for zoning review an expansion of the previously approved mixed commercial /residential building on the southwest corner of Pearl Avenue and Jackson Street. Under the revision, Oshkosh River Development will still have the right to bring forward project proposals for Development Areas 1 and 4, and if they do, and they receive approvals for projects, these projects would then fall under the terms of this revised agreement. If another party brings forward proposals for Development Areas 1 and 4, and they are approved by the City/RDA, a new Development Agreement would be needed for that other developer. With the agreement being modified to incorporate the primary change recommended by Mayor Esslinger, some additional refinements were requested by Oshkosh River Development. These changes include: making it clear in the Environmental Remediation Section that the City/RDA will be responsible for carrying out the remediation plan the City/RDA has prepared for the area; clarifying the ownership interest of Art and Andy Dumke in the project and noting they are responsible for day to day management and control over the project; and tying Oshkosh River Development's rights to develop marina slips along the proposed riverwalk to their proceeding with project activities in Development Area 1. While Oshkosh River Development has agreed to the change in the Development Agreement, I would note again that from our meetings and ongoing discussions with the group, and what they expressed at the RDA's June 29 meeting, they are very much interested in pursuing projects in the overall area. They have indicated that by agreeing to this change they are demonstrating a willingness to step aside in the remaining redevelopment area (i.e., Development Areas 1 and 4), if the community's interest is best served by allowing another development group to proceed with a high value, high quality project that does not include uses they have already proposed for the area. 2 FISCAL IMPACT As noted earlier, in agreeing to the change proposed by Mayor Esslinger, Oshkosh River Development asked that an additional modification be made to remove from the agreement their obligations to meet identified valuation thresholds. It would not seem reasonable to continue to hold Oshkosh River Development to overall valuation thresholds, when the change to the agreement would enable another developer to step forward and receive approval for undertaking projects in Development Areas 1 and 4, and especially in Development Area 1 where high valued projects will be expected to occur. Rather than rely on a guarantee from the developer, the City/RDA will gauge valuations for projects brought forward for approval in Development Areas 1 and 4 to ensure that needed valuations can be expected to be achieved. RECOMMENDATION The Department of Community Development is recommending that the Council approve the amendment to the Development Agreement Terms, and as noted previously, the RDA voted unanimously to approve the proposed changes at its meeting on June 29 Approved, City Manager Oshkosh River Development, LLC 230 Ohio Street, Suite 200 Oshkosh, W154902 920- 230 -36 June 17, 2009 Jackson Kinney — Community Development Lynn Lorenson — City Attorney 215 Church Ave Oshkosh, WI 54901 Dear Jackson and Lynn, Please accept this letter as notification to the City /RDA under Paragraph 5 of the Development Agreement, that Oshkosh River Development, LLC, has completed its due diligence activities with respect to the Project. To the extentthat any condition specified in paragraph 5 may not be completed or satisfied, we are specifically waiving such condition and it is our intention to proceed with the implementation of project activities. Sincerely, �. Arthur W umke Oshkosh River Development, LLC