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HomeMy WebLinkAboutResolution No. 2011-78cciyof KENAI. ALASKA Suggested by: Administration CITY OF KENAI RESOLUTION NO. 2011 -78 A RESOLUTION OF THE COUNCIL OF THE CITY OF KENAI, ALASKA, AUTHORIZING A FIXED INTEREST RATE OF 7.5% PER ANNUM FOR FINANCING OF THE SALE OF CITY -OWNED LAND IDENTIFIED AS LOT 2, BLOCK 1, GUSTY SUBDIVISION TO MA & PA ALASKAN TREASURES, INC. WHEREAS, Ordinance No. 2553 -2011, adopted by the Council of the City of Kenai on May 4, 2011, authorized the sale of the City -owned lands described as Lot 2, Block 1, Gusty Subdivision, under the procedures and terms established for the sale of airport lands outside of the Airport Reserve set forth in KMC 21.15.180 et seq.; and, WHEREAS, the City Attorney prepared the attached draft Purchase and Sale Agreement which provides for traditional third -party financing or City financing; and, WHEREAS, Ma & Pa Alaskan Treasures, Inc. (the Buyer) has elected to utilize City financing; and, WHEREAS, on average the City's interest rate for financing of City -owned lands has been 3% higher than conventional mortgage rates; and, WHEREAS, at the time in which the Buyer submitted an application for sale of land, the conventional mortgage rate was 4.5 %; and, WHEREAS, Administration recommends financing over a twenty (20) year term with interest accruing at a fixed interest rate of 7.5% per annum; and, WHEREAS, KMC 21.15.200 (b)(2) requires that, in the event of a credit sale, the note shall bear interest at a rate to be determined by the City Council by resolution. NOW, THEREFORE, BE IT RESOLVED BY THE COUNCIL OF THE CITY OF KENAI, ALASKA, that, in the event of a credit sale to Ma & Pa Alaskan Treasures, Inc. of Lot 2, Block 1, Gusty Subdivision, the note shall bear a Fixed Interest Rate of 7.5% Per Annum. PASSED BY THE COUNCIL OF THE CITY OF KENAI, ALASKA, this 7th day of December, 2011. ATTEST: Corene A. Hall, Deputy Clerk PAT PORTER, MAYOR KENAI, ALASKA MEMO: Village with a Past, Cl */ with a F&tture" 210 FideIgo Avenue, Kenai, Alaska 99611 -7794 Telephone: (907) 283 -7535 / FAX: (907) 283 -3014 www.ci.kenai.ak.us TO: City Council FROM: Christine Cunningham, Assistant to the City Manager THROUGH: Rick Koch, City Manager DATE: November 30, 2011 SUBJECT: Resolution No. 2011 -78 - Authorizing a Fixed Interest Rate of 7.5% Per Annum for Financing the Sale of City -Owned Land Identified as Lot 2, Block 1, Gusty Subdivision to Ma & Pa Alaskan Treasures, Inc. Ke The purpose of this memo is to provide information in support of the referenced resolution. Ma & Pa Alaskan Treasures, Inc. currently leases the property from the City for the purpose of operating a retail professional center in which Bargain Basement and Redoubt Medical Clinic are located. Ordinance No. 2553-2011 authorized the sale to Ma & Pa Alaskan Treasures, Inc. A Summary Appraisal Report of the property was performed on June 23, 2011 by MacSwain Associates, LLC, which valued the vacant land at $200,000. The City Attorney prepared the attached draft Purchase and Sale Agreement which provides for traditional third -party financing or City financing. Ma & Pa Alaskan Treasures, Inc. has elected to utilize City financing and is able to provide a down payment of $30,000. KMC 21.15.200 (b)(2) requires that the interest rate be determined by the City Council by resolution. Historically, the City's average interest rate for financing of City -owned lands has been 3% higher than conventional mortgage rates. Administration recommends financing over a twenty (20) year term with interest accruing at a fixed interest rate of 7.5% per annum. If Council approves the interest rate of 7.5 %, the Purchase and Sale Agreement can be finalized and actions in preparation for sale can be taken by the City in accordance with KMC 21.15. Attachment cc: Ma & Pa Alaskan Treasures, Inc. PURCHASE AND SALE AGREEMENT THIS AGREEMENT is made by and between the City of Kenai, an Alaska home rule municipality (Seller) and Ma & Pa Alaskan Treasures, Inc., an Alaska corporation (Buyer). RECITALS WHEREAS, Seller is the owner of real property at 11472 Kenai Spur Highway in Kenai, Alaska, and described as Lot 2, Block J, v? Subdivision, Kenai Recording District, Third Judicial District, State of Alaska the Property); and, WHEREAS, the Property is leased to Buyer under a 55-year lease of the Property dated August 20, 1970 (as amended and ;assigned to u' cr)(the Lease), and Buyer has applied to purchase the Property; and, WHEREAS, under the terms of that Lease, uyer as Lessee already owns and has a right to the structural improve on the Property (subject to some conditions that do not apply); and, WHEREAS, by City of Ken i Ord�iice No. 2553 -2011, the Kenai City Council authorized the sal of Property yer; and, NOW, THEREFORE, for good and valuable consideration, the receipt of which is acknowledged, the parties agree as follows: Seiler hereby agrees to sell the Property to Buyer and Buyer hereby agrees to purchase the Properly from Seller, subject to the terms and conditions set forth lip Purchase Price. (a) Buyer agrees to purchase the Property for the sum of TWO HUNDRED THOUSAND DOLLARS AND NO CENTS ($200,000 US) (the "Purchase Price"). The Purchase Price may be paid either through third -party financing or through owner financing under the terms set out in subsections 2(b) and (c), respectively. (b) If third -party financing is utilized by Buyer, the portion of the purchase price not paid in cash through application of any funds produced by Buyer at Closing shall be paid in full through third -party financing at Closing. Buyer represents that PURCHASE AND SALE AGREEMENT Page I of 9 U:A generalNmapa.agt.purch.11161.1 Buyer has consulted with lending professionals and reasonably believes such financing is available to Buyer. (c) If owner financing is utilized by Buyer, Buyer shall pay a down payment of $30,000, which down payment shall due in cash (or its equivalent) at Closing. The balance due (remainder of the purchase price and any closing or other costs due from Buyer) shall be paid in monthly installments over a term of 20 years with interest accruing at a fixed rate of 7.5% per annum. These terns shall be set forth in a promissory note signed by Buyer and guaranteed individually by Debora R. Loveall and Robert B. Loveall, jointly and severally, and further shall be secured by a first deed of trust on the Property and on any and all improvements thereon. Buyer and Debora Loyal" and Robert Loveall shall further execute any such other documents as may necessary to establish this financing under these terns. 3. Title. Title shall be conveyed conveying title to the Property shall further include and /or covenants: aim deed. The instrument owing restrictions, promises, (a) that the City of Kenai o that the grantee expressly agree for itself and its heirs, executors, administrators, sue ors, transferees, and assigns, for the use and benefit of the public a right of flight for the passage of aircraft in the airspace above the surface of the Property, together it the right to cause in said airspace such noise as may be inherent in the operation of aircraft, now known or hereafter used, for navigation of or flight in the said airspace, and for use of said airspace for landing on or at and for taking off from or operating on Kenai Municipal Airport; and, b) that the grantee expressly agree for itself and its heirs, executors, adrninistrrs, successors, transferees and assigns to restrict the height of structures, objects of natural grown, and other obstructions on the Property to a height of not more than 242 above mean sea level; and, (c) that the grantee expressly agree for itself and its heirs, executors, administrators, successors, transferees, and assigns to prevent any use of the Property which would interfere with landing or taking off of aircraft at the Kenai Municipal Airport, or otherwise constitute an airport hazard; and, (d) that all covenants heretofore stated shall run with the land and shall inure to the benefit of, and be binding upon the heirs, executors, administrators, successors, transferees, and assigns of the parties to the contract for sale and conveyance; and, PURCHASE AND SALE AGREEMENT Page 2 of 9 U: \general\mapa. agt.purch.11.1611 (e) that the City shall have a first right of the City to repurchase the Property at fair market value at the time of repurchase should Buyer or any of its executors, administrators, successors, transferees, or assigns propose to sell or otherwise transfer the Property to another person or entity; and, (0 that the conveyance is subject to all liens, encumbrances, restrictions, and covenants of record and are specifically, without being limited thereto, subject to any unreleased restrictions contained in the deed or deeds by which theCity received title to the land. 4. Closing. At the time of Closing, Seller shall deliver to Buyer a quitclaim deed for the Property properly executed and acknowledged -in proper form for recording and such other instruments and documents as may be reasonab y required and customarily given by a Seller to consummate the transaction contemplated, as may be reasonably required by the title company. 5. Closing and Other Costs. All escro fees and closing costs in connection with this sale shall be paid by Buyer unless otherwise stated in this agreement. If Buyer desires to obtain a preliminary eomani(nient for title insurance or title insurance to the Property, it shall be the responsibility of Buyer to obtain such commitment or insurance and to pay all cosh associated with the commitment or insurance. Seller ac payment was utilized to pay f responsibility of Buyer and is at Buyer has previously paid a $4,500 deposit which the cost of an appraisal of the Property, which cost is the atisfed. Any and a'11 prepaid expenses or income of any kind and all taxes and assessments shall be prorated to the date of Closing. Each party shall bear its own costs and attorney's fees, except as otherwise expressly provided. 6. Assessments. If at the time of Closing the Property or any part thereof shall be or shall have been affected by an assessment or assessments which are or may become payable in annual installments, whether or not the first installment is then a charge of lien or has been paid, then for the purposes of this agreement all the unpaid installments of any such assessment, including those which are to become due and payable after Closing, shall under no circumstances be deemed to be due and payable by Seller at PURCHASE AND SALE AGREEMENT U: Ageneral \rnapa.agt.purch.111611 Page 3 of 9 Closing or otherwise. Any said liens or assessments shall be paid and discharged by Buyer, at or before the Closing or Buyer may elect to take the Property subject to said liens or assessments. 7. Casualty to Property. If all or part of any of the Property or any structure thereon is destroyed or damaged by fire or other casualty, Buyer shall have the option to either: (a) complete the closing; but in such even il the net proceeds of any insurance proceeds prior to Closing shall be resolved according to flee terms of the August 20, 1970 Lease; or, (b) refuse to accept title tothe Property, in which case any portion of the Purchase Price paid shall immediately be, eruflded to Buyer. 8. Operation of the Property--Bu\ r. During the period between the date of this agreement and the Closing Buyer shall comply with the material terms, conditions, and provisions of the Lease. 9. Property Condition—AS IS; No W rranties. Buyer acknowledges that the conveyance of the Propert y shall be made by Seller to Buyer on an "AS IS, 'WHERE IS" basis, and with all defects and faults, latent or otherwise, including without limitation fire and water /flood damage and the environmental condition of the Property. Buyer acknowledges that Buyer is purchasing the Property in its present condition and that Buyer is relying solely on Buyer's own prior possession of the Property and structures thereon and on Buyer's own examination and inspections of the Property. Buyer is not relying on statements or representations made by Seller or any agents or representatives of Seller. Buyer acknowledges that Seller makes no warranty or representation, express or implied or arising by operation of law, including that Seller makes no warranty of condition, habitability, merchantability, or fitness for a particular purpose of the Property or any structure thereon, or with respect to the economical, functional, environmental, physical condition, or any other aspect of the Property or any structure thereon. Seller specifically disclaims any warranty, guaranty, or representation, oral or written, past, present or future, as to or concerning: (i) the nature and condition of the Property or any part thereof, including, but not limited to, its water, soil, or geology, or the suitability thereof for any and all activities and uses that Buyer may elect to conduct on the Property or within any structure on the Property, or any improvements Buyer may elect to construct on the Property, or any income to be derived therefrom, or any expenses to be PURCHASE AND SALE AGREEMENT Page 4 of 9 U :Ageneral\mapa.agt.purch.111611 incurred with respect thereto, or any obligations or any other matter or thing relating to or affecting the same; (ii) the absence of asbestos or any environmentally hazardous substances on, in, or under the Property or on, in or under any property adjacent to or abutting the Property or on, in or under any structure on the Property; (iii) the manner of construction or condition or state of repair or lack of repair of any improvements on the Property; (iv) the nature or extent of any easement, restrictive covenant, right -of -way, lease, possession, lien, encumbrance, license, reservation, zoning, condition or other similar matter pertaining to the Property, or portion thereof; and (v) the compliance of the Property or the operation of the Property or portion thereof with any laws, rules, ordinances or regulations of any government or other body. The provisions of this paragraph shall survive the execution and delivery of the deed by Seller and the closing of the transaction contemplated by this agreement. 10. bldemnification; Waiver. (a) Bu +eragrees to indemnify and defend Seller from and against any and all losses and )iahslities, claims, costs (including costs of settlement, attorney's fees, consultant and expert ke' ), judgments, penalties, fines, and /or damages from personal injury, death, or property damage of any nature, resulting or arising from the sale of the Property or resulting or arising from or attributable to the operations or activities of Buyer under the Lease and Buyer's activities on or about the Property prior to Closing. Buyer waives any against Seller with respect to the e date of Closing. fight, clain vironmen cause of action that Buyer may have onditions existing at the Property on the h Purther, if contamination of the Property or other property by a Hazardous aterial(s) occurs or has occurred due to or arising in any way from Buyer's operations on the Property as an occupant and /or lessee of the Property prior to Closing (or thereafter as owner) Buyer shall indemnify and defend Seller from any and all losses and liabilities, claims, costs (including costs of settlement, attorney's fees, consultant and expert fees), judgments, penalties, fines, and /or damages (and including costs of settlement, attorney's fees, consultant and expert fees), which arise during or after Closing and as a result of such contamination. This indemnification of Seller by Buyer includes, but is not limited to, costs incurred in connection with any investigation of site conditions and /or any cleanup, remediation, removal, or restorative work required by any federal, state, or local governmental agency because of a Hazardous Material(s) being present in the soil or groundwater or under the Property or other properties affected by the contamination. PURCHASE AND SALE AGREEMENT Page 5 of 9 U :Agenera1Amapa.agt.purch.111611 (c) "Hazardous Materials" shall mean (i) all substances, the clean up and disposal of which is regulated by the Comprehensive Environmental Response Compensation and Liability Act of 1980 (CERCLA) and the Resource Conservation Recovery Act (RCRA), both as amended and all implementing regulations; (ii) hazardous materials and hazardous substances as those terms are used in the applicable provisions of Title 46 of the Alaska Statutes and all implementing regulations, (and as amended from time to time); and, (iii) all substances containing petroleum or other hydrocarbons, asbestos, or other materials, substances, or waste that are or become regulated as hazardous or toxic under federal, state, or local law. (d) The provisions of this paragraph shall survive the execution and delivery of the deed by Seller and the closing of the transaction conterrjplated by this agreement. 11. Miscellaneous Disclosures. The structure on the Property is not conveyed as part of this sale of land. Notwithstanding, Seller provides notice to Buyer that radon gas is a naturally occurring radioactive gas, that,, when it has accumulated in a building in sufficient quantities, may present. a health risk to persons who are exposed to it over time. Buyer, in Buyer's sole discretion, may contact the State of Alaska, Department of Environmental Conservation, or other departments for additional information regarding radon and radon testing. 12. Delivery of Possession. Seller shall immediately after Closing, and without further notice or demand, deliver unto Buyer full possession of the Property. 3. No Broker. Seller and Buyer each represent and warrant to the other that it has not dealt with any broker regarding the Property and this transaction. Each party shall be responsible to defend, indemnify, and hold harmless the other as to any claim made by any person or entity for a commission claimed as being due as a consequence of the indemnifying party's acts or conduct. 14. Closing Date. Closing shall occur no later than 2011, at a title company or bank in the Kenai, Alaska area unless otherwise agreed by the parties. 15. Time. Time is of the essence in the performance of all obligations hereunder. 16. Notices. All notices, demands, and requests that may or are required to be given by either party to the other under this agreement shall be in writing and given by PURCHASE AND SALE AGREEMENT U:Ageneral \napa.agt.purch.1 11611 Page 6 of 9 first -class mail, postage prepaid, to Seller at City of Kenai, Attn: City Manager, 210 Pidalgo Avenue, Kenai, AK 99611, and to Buyer at 11472 Kenai Spur Highway, Suite 1, Kenai, AK 99611. 17. Relationship of the Parties. This agreement does not constitute an agreement of partnership or joint venture and does not authorize Seller to act as an agent for Buyer for any purpose nor does it authorize Buyer to act as an agent for Seller for any purpose. 18. Governing Law and Venue. This agreement shall be governed by and construed under the laws of the State of Alaska. Venue of any dispute shall be the Superior Court for the State of Alaska at Kenai. 19. Integration and Modification. This agreement contairis the entire agreement of the parties. All negotiations, statements, representations, warranties, and assurances, whether oral or written, which are in any v. a y. related to the subject matter of this agreement or the performance of either party, are merged and integrated into the terms of this agreement. This agreement may not be modified or amended except by a writing signed by both parties. 20. Binding Effect. This agreement shall be binding upon and inure to the benefit of the parties, their heirs, executors, administrators, successors, transferees, and assigns, and may be modified or cancelled only by a written instrument signed by both parties. 21 Survival. Ail wa a ties and representations in this agreement survive the execution and delivery of the deed by Seller and the closing of the transaction contemplated by this agreement. 22. Captions. All captions contained in this agreement are for convenience of reference only and shall not be considered in any way in connection with the interpretation or enforcement of any provision. 23. Authority. Each person signing this agreement on behalf of a party has been authorized to do so by a duly - enacted resolution of that parties' Board of Directors or Council (as may be required by law). 24. Multiple Counterparts. This agreement may be executed in multiple counterparts, each of which will signify each party's agreement to the terms, and together will constitute the Agreement. PURCHASE AND SALE AGREEMENT U: \general\mapa.agt.purch.111611 Page 7 of 9 25. Effective Date. This agreement will become effective when all the parties have signed it. The date of this agreement is signed by the last party to sign it (as indicated by the date associated with the party's signature) will be deemed the date of this agreement. SELLER: CITY OF KENAI By: Rick R. Koch Its: City Manager BUYER: MA & PA ALASKAN TREASURES, INC. Debra R. Loveall President STATE OF ALASKA THIRD JUDICIAL DISTRICT )ss The foregoing instrument was acknowledged before me this day of 2011„ by Rick Koch, City Manager of the City of Kenai, an Alaska ion, on behalf of the City. municipal co Notary Public for Alaska My Commission Expires: PURCHASE AND SALE AGREEMENT U:\general Page 8 of 9 STATE OF ALASKA )ss THIRD JUDICIAL DISTRICT The foregoing instrument was acknowledged before me this day of 2011, by Debra R. Loveall, President of Ma & Pa Alaskan Treasures, Inc., an Alaska Corporation, on behalf of the corporation. Approved as to form: Krista S. Stearns City Attorney Notary Public of Alaska My Commission Expires: PURCHASE AND SALE AGREEMENT U: \general \mapa. agt.purch.111611 Page 9 of 9