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HomeMy WebLinkAboutResolution 05-42 06/20/2005 . . . RESOLUTION ~ - ~ AUTHORIZING AND DIRECTING THE CITY MANAGER TO SIGN A PURCHASE AND SALE AGREEMENT WITH MCKENZIE FOREST PRODUCTS, LLC, TO ACQUIRE CERTAIN REAL PROPERTY,.DESCRIBED THEREIN, AND TO EXECUTE ALL CLOSING DOCUMENTS REQUIRED TO COMPLETE SUCH TRANSACTION WHEREAS, since the City acquired an interest in the Springfield Mill Race by gift from Georgia Pacific Corporation, the City has endeavored to undertake reasonable actions to preserve adequate flow in the Mill Race; and WHEREAS, engineering studies have documented that changing conditions in the Middle Fork ofthe Willamette River make it improbable that the Citycan achieve that objective with the inlet at its present location; and WHEREAS, the City is obliged to maintain and improve the water quality of the Mill Race by the terms of the clean Water Act; and WHEREAS, the Mill Race is a cultural and social amenity which is an important part of the history of the City of Springfield, and an important component of the public vision for the future of the downtown section of the City of Springfield; and WHEREAS, the rehabilitation of the Springfield Mill Race will facilitate the accomplishment of all of these objectives, and has been established as a high priority by the City Council; and WHEREAS, the U.S. Army Corps of Engineers has completed a preliminary restoration plan and environmental restoration report, each of which conclude that a rehabilitation of the Mill Race is consistent with the requirements of Section 206 of the Water Resources Development Act; and WHEREAS, the United States Department of the Army ("Department") has entered into a Project Cooperation Agreement ("PCA") between the Department and the City of Springfield, for the rehabilitation of the Springfield Mill Race; and WHEREAS, the PCA contemplates that the value of the land and property rights contributed by the City will approximate $1,910,710, leaving a maximum local cash obligation of not more than $380,460; and WHEREAS, a portion of the land and property rights anticipated to be contributed by the City, consisting ofthe eastern one-third ofthe Mill Pond, and certain portions of the Mill Race and the abutting bank east of the Mill Pond are presently owned by McKenzie Forest Products, LLC ("McKenzie"); and WHEREAS, McKenzie advised the City that it would sell certain property, including the property required for the Mill Race project, as part of a larger transaction involving certain parcels owned by McKenzie; and Page 1 of 2 WHEREAS, on September 8, 2003, council directed staff to negotiate an agreement with McKenzie under which the City could acquire the property offered for sale by McKenzie on the . basis of certain terms as proposed by City staff; and WHEREAS, McKenzie and the City have reached agreement on the terms of a Purchase and Sales Agreement in the form of a draft dated June 3, 2005 (the "Draft Agreement"), a true copy whereof, marked Exhibit 1, is annexed hereto and by this reference incorporated herein, under which McKenzie will convey to the City, inter alia, that property which it owns which is required for the Mill Race project in consideration of a cash payment in the amount of $1,277,000 and other terms as more particularly set forth in the Agreement; and WHEREAS, the City Manager has submitted a report reviewing the terms of the Draft Agreement and recommending that the Draft Agreement be approved; and WHEREAS, the Council has reviewed the terms of the Draft Agreement and is fully informed as to the contents thereof, and has determined that it is in the public interest to enter into the Draft Agreement; NOW THEREFORE, BE IT RESOLVED, that the common Council of the City of Springfield fmds and determines that it is in the public interest to enter into a Purchase and Sale Agreement with McKenzie Forest Products, LLC substantially in the form of the Draft Agreement; and BE IT FURTHER RESOLVED, that the City Manager is hereby authorized and directed to . execute the Purchase and Sales Agreement, with such changes or amendments thereto as he shall determine to be necessary to effectuate the direction of the Council and give effect to the terms of the Agreement, such determination to be evidenced by his execution of the Purchase and Sales Agreement with McKenzie Forest Products, LLC; and BE IT FURTHER RESOLVED, that the City Manager or his designee is hereby authorized and directed to execute such other closing documents as shall be necessary to complete the transaction; and BE IT FURTHER RESOLVED, that this Resolution shall take effect upon adoption by the Council and approval by the Mayor. Adopted by the Common Council of the City of Springfield, Oregon, by a vote of ~ for and ~ against, this 20th day of June ,2005. ATTEST: . ~ / . J1t~~er VJ((~ REVIEWED & APPROVED AS JO FORM '\ \ ~,:..., ~ ~\") DATE: b C) c::. ~ OFFICE OF CITY AT DRNEY Mayor . Page 2 of 2 Resolution #05-42 . . . PURCHASE AND SALE AGREEMENT DATE: , 2005 ("Effective Date") June FROM: McKenzie Forest Products, LLC ("Owner") An Oregon Limited Liability Company 1651 South F Street Springfield, OR 97477 TO: City of Springfield ( "City") A Municipal Corporation of the State of Oregon RECITALS Owner owns fee simple title to the parcels of real property described in Exhibit A together with all improvements situated thereon ( the ~Property"). City desires to purchase the Property for the purpose of facilitating the development of the Springfield Mill Race and Springfield downtown, and Corps of Engineers Ecosystem Restoration Project and the Property will be utilized as a portion of the City's share of such Corps of Engineers Project. Owner has agreed to sell to City the Prop~rty and City has agreed to purchase the Property upon the following terms and conditions: AGREEMENT Section 1. Purchase Price 1.1 Purchase Price. The total purchase price for the Property shall be $1,277,000.00 (Purchase Price). 1.2 Payment of Purchase Price. The Purchase Price shall be paid in cash at closing. Section 2. Requirement of Corps of Engineers Project. 2.1 The City of Springfield is planning on utilizing the Property for City's share in part of a grant from the US Army Corps of Engineers. If requested by City, Owner shall reasonably facilitate and work with the City to the extent that Owner's participation is necessary to secure such grant. Provided, however, Owner shall incur no cost in providing such help and assistance and to the extent that Owner incurs cost in providing Draft of June 3, 2005 Attachment A, Page 3 of 19 Exhibit 1, Page 1 of 17 such requested assistance the City shall promptly reimburse Owner for such costs. . Section 3. Remedies. 3.1 City. In the event Owner breaches any term or provision of this Agreement, then City, as its exclusive remedy and in lieu of any other relief, may either (1) terminate this Agreement by giving Owner written notice of termination or (2) tender performance of the obligations of City and specifically enforce all obligations of Owner. Except as noted in Section 3.3 and any specific remedies reserved elsewhere in this Agreement, City expressly waives the right to pursue any other right or remedy in law or equity against Owner other than the remedies specified above, including any action for damages, in the event of a default by Owner. 3.2 Owner. In the event City breaches any term or provision of this Agreement, then Owner, as its exclusive remedy and in lieu of any other relief, may either (1) terminate this Agreement by giving City written notice of termination, or (2) tender performance of the obligations of Owner and specifically enforce all obligations of City. Owner acknowledges (1) the adequacy of this exclusive remedy and (2) that this limitation of remedies is an essential part of this Agreement from the perspective of City. Except as noted in Section 3.3 and any specific remedies reserved elsewhere in this Agreement, Owner expressly waives the right to pursue any other right or remedy in law or equity against City other than the remedies specified above, including any action for damages, in the event of a default by City. . 3.3 Other Remedies. The limitations on remedies set forth in this section shall not preclude either party from seeking or obtaining injunctive relief or from seeking recovery against the other under any contractual indemnity set forth herein or for causing physical damage or injury to persons or property. Section 4. Conditions Precedent to City Closing In addition to any other conditions contained in this Agreement, set forth below are certain conditions precedent for the benefit of City (the "City Coriditions"). The City Conditions are intended solely for the benefit of City and City shall have the right to waive, by written notice, any of the City Conditions, at its sole discretion. In the event any City Condition is not satisfied or waived on or before the deadline for satisfaction specified herein, then City shall have the right to terminate this Agreement, at its sole election, by giving Owner notice of termination before the deadline expires, and to Draft of June 3, 2005 Attachment A, Page 4 of 19 Exhibit 1, Page 2 of 17 . . . . .~. I ~. ''': ',' , , 'J .~. ;;~~ exercise any remedy available to City in the event that the . subject City Condition was. not satisfied, by reason of a breach of this Agreement by Owner. If City does not give Owner notice of termination before the applicable deadline, then City shall be deemed to have waived the termination privilege with respect to the City Condition in question. The City Conditions specifically delineated in this section are the following: 4.1 On the Closing Date, the Title Company (defined below) shall be ready, willing, and able to issue, and shall issue to City upon recordation of the Owner's deed mentioned below, the title insurance policy required by Section 7.6. 4.2 On or before the Closing Date, Owner shall have performed all of the covenants, cOI;1ditions, agreements, and promises to be performed by it under this Agreement. 4.3 . Within 30 days from the date of execution of this Agreement., City shall have conducted an environmental review and audit (the "Environmental Audit") of the Property, indicating to the satisfaction of City that the Property does not contain, either on its surface or in its subsurface or underlying water table, any Hazardous Substances (defined in Section 13.1.4). The Environmental Audit may include an historical review of the use of the Property, review of all regulatory agency permits and compliance and enforcement files and records, soil tests, the acquisition of core samples and water table samples by drilling conducted on the Property, and such other tests and studies as City may deem appropriate. All tests and studies shall be conducted by agents selected by City and performed as City shall direct, subject to the approval of Owner, which shall not be unreasonably withheld, and the provisions of Section 10. City shall pay the cost of all tests and studies undertaken. If City elects to close the acquisition of the Property, the costs attributable to the Environmental Audit shall not be credited against the Purchase Price at Closing. If the sale does not close, City shall provide a copy of the Environmental Audit and related tests to Owner. 4.4 Within 30 days from the date of execution of this Agreement, City shall have obtained a survey of the Property (the "Survey") from a surveyor designated by City, indicating to City's reasonable satisfaction that (1) there are no discrepancies in the boundaries of the Property; (2) there are no material encroachments on, or protrusions from, the Property; (3) the Property has acceptable access to a dedicated public right-of-way; (4) the Property contains approximately 36.6 acres; and, (5) except for an area identified by Owner and acknowledged Draft of June 3, 2005 Attachment A, Page 5 of 19 Exhibit 1, Page 3 of. 17 by City, the Property does not lie within any area designated as wetlands by any governmental agency or any area determined by the . United States Department of Housing and Urban Development to be flood-prone or subject to a flood hazard. A copy of the survey will be provided to Owner. City shall pay the charges due for preparing the survey. If City elects to close the acquisition of the Property, then the fees paid'by City for preparing the Survey shall not be credited against the Purchase Price at Closing. 4.5 Within 30 days from the date of execution of this Agreement, City shall have obtained a review of the Property from an engineer designated by City indicating to City's reasonable satisfaction that there are no geological, terrain, or ground water problems associated with the site which would render it unusable for the improvements contemplated by City. 4.6 On or before the Closing Date, City shall have obtained from Union Pacific Railroad Company the assignment to City, effective only upon closing, of the basic agreement between Southern Pacific Transportation Company and Springfield Forest Products dated August 7, 1990 as supplemented by the Adoption Agreement between Union Pacific Railroad Company and McKenzie Forest Products LLCdated April 28, 1998. City has been provided with a copy of a proposed "Assignment Rider," Assignment Document 980220, by Union Pacific Railway and Owner has reviewed said Assignment Rider and states that said Assignment Rider is . acceptable to Owner for purposes of achieving the assignment. Owner agrees to such assignment and shall reasonably cooperate with City to provide for such an assignment and agrees to sign all documents reasonably necessary to effectuate the assignment. 4.7 Owner shall provide to City a right of access satisfactory to City from the Mill Race to the road at the southern border of the retained property on the north side of the Mill Race for purposes of City access to Mill Race for maintenance purposes. Except in circumstances of emergency, City shall provide reasonable advance notice of access needed. Owner may fence and gate the southern border of the retained property. City may remove the fence and/or utilize the gate if necessary for access, and in such event City is responsible for any damage caused to the fence or gate while exercising such access. City shall provide security in the event the fence is removed or the gate opened by City. Section 5. Conditions Precedent to Owner Closing. In addition to any other conditions contained in this Agreement, set forth below are certain conditions precedent for the benefit of the Owner. (the "Owner Conditions"). The Owner Conditions are Draft of June 3, 2005 Attachment A, Page 6 of 19 Exhibit 1, Page 4 of 17 . . . . .. tJl' :.' 'f ;j .~. ~(; "." . f ::i;' intended solely for the benefit of Owner, and Owner shall have the right to waive, by written notice, any of the Owner Conditions at its sole discretion. In the event any Owner Condition is not satisfied or waived on or before the deadline for satisfaction specified herein, then Owner shall have the right to terminate this Agreement, at its sole election, by' giving City notice of termination before the deadline expires and to exercise any remedy available to Owner in the event that the subject Owner Condition was not satisfied by reason of a breach of this agreement by City. If Owner does not give City notice of termination before the applicable deadline, then Owner shall be deemed to have waived the termination privilege with respect to the Owner Condition in question. The Owner Conditions specifically delineated in this section are the following: 5.1 City shall provide an access easement from the property retained by Owner across the property to South B Street. The terms, form, location and dimensions of such access easement to be reasonpbly satisfactory to Owner. This access shall terminate upon the extension of South B Street to the property retained by Owner, p~oviding public access to such property. 'i.~ 5.2 Upon City obtaining from Union Pacific Railroad Company the assignment of the Basic Agreement as specified in Section 4.6. Owner has reviewed Assignment Document 980220 described in Section 4.6 and said Assignment Rider is acceptable to Owner for meeting the requirements of this Section 5.7. A copy is attached. 5.3 City shall provide an access easement through the railroad tunnel to Owner. In the event that City acquires an easement through the railroad tunnel, Owner may have access to such easement. Whether operating under the Basic Agreement 6r after acquisition of an easement from the railroad, City shall continue to provide Owner utility access through the railroad tunnel, and such access shall be documented to Owner's reasonable satisfaction. 5.4 City's agreement to provide to Owner an emergency access easement across the Property to South 28th Street to allow Owner to utilize that parcel for access in the event of an emergency. Owner shall endeavor to provide at least 24-hours' notice of such use, but it is understood that in the event of an actual emergency, such notice may be less. 5.5 City, at City's expense, has completed lot line adjustments necessary for this transaction. Draft of June 3, 2005 Attachment A, Page 7 of 19 Exhibit 1, Page 5 of 17 Section 6. Title Within 10 days following receipt of the Survey, Owner shall deliver to City, at Owner's expense, a preliminary title report (the "Title Report") covering the Property. The Title Report shall be issued by the Title Company (defined in Section 7.1). Within 10 days of receiving the Title Report, City shall give written notice (the "Initial Notice") to Owner of the exceptions that City shall require Owner to remove of record at or before Closing (the "Unacceptable Exceptions"). If City fails to give Owner the Initial Notice, then City shall be deemed to have approved the Title Report. Owner shall have 10 days following receipt of the Initial Notice to give written notice to City (the "Reply Notice") of those Unacceptable Exceptions that Owner concludes, in good faith, that Owner cannot or will not remove at or before Closing. Owner shall not have any obligation to institute litigation or spend any sum of money to cure or remove any Unacceptable Exceptions; provided, however, that Owner shall be obligated to remove, at or before Closing, any Unacceptable Exception created or suffered to be created by Owner that is security for payment of a sum of money (including mortgages, deeds of trust, tax liens, contractor's liens, and judgment liens) and any Unacceptable Exception created, or suffered to be created, by Owner after the Effective Date. Owner agrees to remove all Unacceptable Exceptions not referenced in a duly given Reply Notice. If one or more of the Unacceptable Exceptions cannot be removed at or before Closing and Owner so states in a duly given Reply Notice, then City may exercise any of the following rights by giving written notice to Owner within 10 .days of receiving the Reply Notice: (1) City may terminate this Agreement, (2) City may accept title to the Property subject to any such Unacceptable Exceptions; or (3) City may attempt to cure the Unacceptable Exceptions or any of them without cost or liability to Owner (but Owner shall be obligated to cooperate with such cure efforts and to join in the execution of any curative instruments that will operate to remove such Unacceptable Exceptions)., Exceptions that are shown on the Title Report and to which City does not object or to which City agrees, in writing, to waive objection, are referred herein to as the "Permitted Exceptions." Section 7. Closing 7.1 Time and Place. Closing of the sale and purchase of the Property (the "Closing") shall occur on a date (the "Closing Date") selected by City, but in all events the Closing shall occur within thirty (30) days after the date that the Exercise satisfaction or waiver of all City Conditions and all Owner Conditions. If all City Conditions and all Owner Conditions have not been satisfied or waived by the appropriate party, either Draft of June 3, 2005 Attachment A, Page 8 of 19 Exhibit 1, Page 6 of 17 . . . . . . ",./.: ;'tr .~ , party may, at any time thereafter but prior to the satisfaction or waiver of all City Conditions and Owner Conditions, elect to terminate this Agreement by written notice to the other party. The escrow for the Closing shall be established at the office of Evergreen Land Title Company (the "Title Company"), at 1570 Mohawk Blvd., Springfield, Oregon. 7.2 Closing Obligations. On the Closing Date, Owner and City shall deposit the following documents and funds in escrow, and the Title Company shall close escrow in accordance with the instructions of Owner and City. 7.2.1 Owner shall deposit the following: (1) The deed described in Section 8, duly executed and acknowledged; (2) A duly executed affidavit certifying that Owner is not a foreign person, trust, partnership, or corporation in compliance with the requirements of IRC 1445; (3), Original counterparts or legible photocopies of all documents, feasibility studies, surveys, engineering reports, and other items of a similar nature in the possession of Owner that relate to the Property; (4) Such documents as City or the Title Company may require to evidence the 'authority of Owner to consummate this transaction; and (5) Such other documents and funds, including (without limitation) escrow instructions, as are required of Owner to close the sale in accordance with this Agreement. 7.2.2 City shall deposit the following: (1) The cash payment specified in Section 1, minus any credits available to City under the terms of this Agreement; (2) Such documents as Owner or the Title Company may require to evidence the authority of City to consummate the transaction contemplated; and (3) Such other documents and funds, including (without limitation) escrow instructions, as are required of City to close the sale and purchase of the Property in accordance with this Agreement, including, without limitation, the documents required to satisfy the Owner Conditions. Draft of June 3, 2005 Attachment A, Page 9 of 19 Exhibit 1, Page 7 of 17 7.3 Costs. City and Owner each shall pay one-half of the escrow fee of the Title Company with respect to the Closing. Owner shall pay the premium for the title insurance policy that ~ Owner is obligated to provide to City. City shall pay the fee or recording the deed referred to herein. 7.4 Prorations. All items of expense incurred by Owner with respect to the Property shall be paid by Owner at Closing, without proration. All real property taxes and assessments payable with respect to the tax year in which Closing occurs shall be prorated between Owner and City as of the Closing Date. 7.5 Tax Deferral/Acreage. At Closing, Owner shall pay all deferred taxes, and taxes in arrears, if any encumbering the property or, at the option of City, the amount of the deferred taxes and taxes in arrears shall be credited against the Purchase Price at Closing. 7.6 Title Insurance Policies. As soon as practicable after Closing Owner shall cause the Title Company to issue its standard form Owner's ALTA Title Insurance Policy in the amount of the Purchase Price, insuring fee simple title to the Property vested in City, subject only to standard printed exceptions, the Permitted Exceptions, and any Unacceptable Exception accepted by City. If City desires an extended coverage policy, City shall pay the additional cost thereof. . Section 8. Conveyance At the Closing, Owner shall execute, acknowledge, and deliver to City a Statutory Warranty Deed conveying the Property to City, subject only to the Permitted Exceptions and' any Unaccept~ble Exception accepted by City. Section 9. Possession City shall be entitled to exclusive possession of the Property on and after the Closing Date. Owner expressly acknowledges that all trees, shrubs, and plants are included in the Property and that Owner shall have no right to such vegetation after Closing. Section 10. Access to Property 10.1 Access. Owner grants to City and its agents the right to enter on the Property at any reasonable times before the Closing Date for the purpose of conducting tests or studies that City may deem necessary or appropriate in connection with its acquisition of the Property. Owner shall reasonably cooperate with City in making such tests and studies. No soil tests or drilling shall be undertaken without first obtaining Owner's Draft of June 3, 2005 Attachment A, Page 10 of19 Exhibit 1, Page 8 of 17 . . . . ~, '1' approval with respect to the agents retained to perform such work and the location and purpose of the tests or drilling. City shall not interfere with or disturb the rights of Owner in possession of any portion of the Property. Subject to the limitations of the Oregon Government Tort Claims Act, City shall protect, defend, and hold Owner harmless from any loss, liability, or damage to persons or property arising out of or related to City's activities on the Property. If City fails to purchase the Property, City shall fully compensate Owner for any physical damage to the Property or any lien, encumbrance, or charge on it attributable to City's activities pursuant to this paragraph. The damages in this Section 10.1 are in addition to other damages which may be specified elsewhere in this Agreement. Section 11. Covenants of Owner Owner acknowledges that the covenants of Owner contained in this Agreement, including the covenants contained in this Section 11 (the "Covenants"), are material inducements to City to enter into this. Agreement. The Covenants specifically delineated in this section are the following: 11.1' Information. Owner agrees to deliver to City, within 10 days after the Effective Date, photocopies of all documents related to the use or ownership of the Property that Owner possesses, including (without limitation) all studies, environmental assessments, surveys, reports, aerial photographs, and other documents of a like nature. 11.2 Maintenance. Before the Closing Date, Owner shall ,maintain the Property in the same condition as it now exists, ordinary wear and tear excepted, and shall not cause or permit any waste. 11.3 Ownership. Before the Closing Date, Owner shall not sell, contract to sell, assign, lease,or otherwise transfer the Property or any part of it, nor grant an option to any third party to acquire all or any portion of it. Section 12. Ongoing Covenants. The parties agree that the covenants of the parties set forth below constitute ongoing covenants of each party that shall specifically survive and continue after the closing of the sale set forth in this Agreement. 12.1 Until such time as Owner may redevelop the retained property, Owner may continue current stormwater drainage as long as such drainage complies with municipal state and federal provisions relating to stormwater discharge, state water quality, Draft of June 3, 2005 Attachment A, Page 11 of 19 Exhibit 1, Page 9 of 17 and federal clean water act requirements. At the time of such redevelopment, City shall work in good faith with Owner to address and resolve stormwater issues which may arise in the . redevelopment approval process. Nothing herein affects any existing water rights to Millrace possessed by Owner. 12.2 City shall relocate and construct a fire pond at a location satisfactory to Owner arid City for the discharge of processed water by Owner into such pond. Additionally,City shall be responsible for all costs associated with the relocation and construction of such pond and the cost of new pumps and pipes from the pond to Owner's existing fire system. Owner shall be provided access to the fire P9nd to allow Owner to perform pump maintenance. Owner shall be responsible for all maintenance costs of the pump equipment after installation by City. Owner shall be responsible to maintain, at its expense, the fire pond. City agrees that to the extent reasonably required by Paragraph 4 of the Donation Agreement dated December 17, 1985 between the City of Springfield and Georgia Pacific Corporation it will maintain water in the Mill Race. Owner and City shall work together to provide for the use of the fire pond for storm drainage management to the extent reasonably feasible, but at a minimum at the same level as currently used by Owner. City shall agree not to impose a requirement for 50-foot riparian setback from the top of the north bank of the relocated fire pond. In the event that Owner ceases to need said fire pond for fire .. prevention, all of City's obligations with respect to the fire pond shall cease. 12.3 Owner may limit public access to may provide fencing for security measures. fencing shall be Owner's. The construction approval from City Building Division. Owner's property and The cost of such of a fence requires 12.4 City agrees that the industrial use which Owner maintains on the premises retained by Owner will, in the normal course of operations, result in noise associated industrial uses, and all such noise shall be permitted. 12.5 City acknowledges that the retained property of Owner is presently zoned Heavy Industrial and the uses permitted are specified in Springfield Development Code Section 20.020.To the extent permitted by the Springfield Municipal Code all existing buildings and improvements shall be grandfathered as complying structures as long as they exist and, if required, the same may be rebuilt in the same location for the same functions as currently used. In the event of a total redevelopment of the Draft of June 3, 2005 AttacmnentA,Page12of19 Exhibit 1, Page 10 of 17 . . . . t',' 'f' f ~ '~/ ,~ site, then all future improvements must comply with all then applicable laws and regulations. 12.6 City agrees to grant to Owner such utility easements over the Property necessary to provide utilities to the property being retained. 12.7 City hereby provides authorization to Owner to maintain an existing oil water separator on the north bank of the Mill Race at approximately 21st Street. The maintenance of such oil water separation facility is solely the responsibility of Owner. Owner shall be granted a perpetual license for such maintenance. Owner may gate the oil water separator. In the event that Owner determines to move the existing oil water separator, Owner may do so and in such event the perpetual license shall terminate. The continued existence of such oil water separator shall be subject to a stormwater discharge permit and shall be reviewed annually. Section 13. Warranties and Representations of Owner 13.A Warranties. Owner acknowledges that the warranties and repr~sentations of Owner contained in this Agreement, including the warranties and representations contained in this Section 13 (the "Warranties"), are material inducements to City to enter into this Option Agreement. All Warranties, and City's right to assert a breach of them, shall survive execution of this Agreement, the Closing, and the execution and delivery of the Closing documents. If, before Closing, City discovers or is advised that any of the Warranties was materially untrue when made, then City shall have the option to either (1) terminate this Agreement without waiving any cause of action that City may be entitled to assert against Owner by reason of the breach of the Warranty, or (2) continue this Agreement, without waiving any cause of action that City may be entitled to assert against Owner by reason of the breach of the Warranty. If, after Closing, City discovers or is advised that any of the Warranties was untrue when made, then City may pursue any remedy available to City at law or in equity by reason of the breach of such Warranty. Owner warrants and represents to City that the following matters are true and correct: 13.1.1 No Condemnation or Assessment Proceedings. There is no pending or threatened condemnation or similar proceeding or assessment affecting the Property, or any part of it and, to the knowledge of Owner, no such proceeding is contemplated by any governmental entity. Draft of June 3, 2005 Attachment A, Page 13 of 19 Exhibit 1, Page 11 of 17 13.1.2 Litigation; Law. There is no litigation, arbitration, or administrative hearing pending before any governmental authority that concerns or affects the Property or . any portion of it and, to the knowledge of Owner, no such proceeding is threatened. Owner has not received any notice from any governmental body that the Property fails to comply with all laws, ordinances, and governmental approvals and decisions that relate to it. 13.1.3 Access and Site Conditions. Owner warrants and represents to City that, to the knowledge of Owner, that portion of the property located north of the Union Pacific Railroad tracks has unimpeded access to South A Street, Springfield, Oregon. Owner has no knowledge of , any pending changes in the land use designation, (zoning ordinance or comprehensive plan) that apply to the Property. To the knowledge of Owner, there are no material encroachments onto the Property. 13.1.4 Hazardous Substances. For purposes of this subsection, the phrase "Hazardous Substahces" has the same meaning as is designated in ORS 465.200(9). Owner warrants, represents, and covenants as follows: (1) To the knowledge of Owner, Owner has not taken any action that would result in any Hazardous Substances in, upon, or buried on or beneath the Property and no Hazardous Substances . have been emitted or released by Owner from the Property in violation of any environmental laws of the federal or state government; (2) To the knowledge of Owner, Owner has not brought onto, stored on, buried, used on, emitted or released from, or allowed to be brought onto, stored on, buried, used on, or emitted or released from, the Property any Hazardous Substances in violation of any environmental laws of the federal or state government. 13.1.5 Status of Owner. Owner warrants that Owner is not a foreign person, foreign partnership, foreign corporation, or foreign trust, as those terms are defined in IRC 1445. 13.1.6 Breach of Agreements. Neither the execution of this Agreement, nor the execution, delivery, or recordation of any document or agreement referenced herein, nor Closing of the transaction contemplated herein, constitutes or will constitute' a default under any other agreement or contract that relates to the Property or to which Owner is a party, subject to documenting verbal consent previously granted by GE Capital. Draft of June 3, 2005 Attachment A, Page 14 of 19 Exhibit 1, Page 12 of 17 . . . . ~'\' ~~ 13.1.7 Contracts and Leases. Owner warrants and represents to City that there are no lease agree~ents, maintenance contracts, service agreements, or other contracts of any nature that pertain to, cover, or affect the Property or any part of it. As used herein, the phrase "to the knowledge of Owner" or any variation of that phrase shall refer to matters within the actual knowledge of Steven Killgore (CEO of Owner) and where circumstances within the actual knowledge of Owner would warrant a reasonable person to undertake further inquiry when presented with similar circumstances. Except as set forth in the previous sentence, actual knowledge shall not include constructive or imputed notice or knowledge and the use of that phrase shall not imply that Owner has undertaken any special inquiry or investigation with respect to the representation modified by such phrase. 13.2 Changed Conditions. If prior to closing Owner discover~ that one or more of the Warranties or one of the conditions referred to in the Warranties has changed after this Agreement is executed, through no fault of Owner, 'Owner shall immediately inform City, in writing, of such discovery. If the changed condition or Warranty cannot be cured within 10 days of the date Owner discovers the change, then City may terminate this Agreement by giving written notice of termination to Owner within 15 days after receiving the notice from Owner. If the changed condition or Warranty can be corrected at reasonable cost within 10 days after discovery by Owneri City shall not have the right to terminate this Agreement pursuant to this section and Owner shall correct the changed condition or Warranty within 10 days of the discovery_ If City does not terminate this Agreement and the changed condition or Warranty can be corrected under the preceding sentence and is not corrected by the Closing Date, then City shall have the right to withhold 150% of the estimated costs of correcting the changed condition or Warranty until such time as the changed condition is corrected, and Owner shall correct such changed condition, at Owner's sole expense and in an expeditious manner, failing which City may use the withheld sums to make the correction. Any withheld funds shall be immediately paid to Owner when the condition or Warranty change is corrected. Section 14. Recording This Agreement shall not be recorded and Owner shall not cause, permit, or suffer any matter to be recorded with respect to the Property prior to the Closing Date. Draft of June 3, 2005 Attachment A, Page 15 of 19 Exhibit 1, Page 13 of 17 Section 15. Waiver No waiver of any right arising out of a breach of any covenant, term or condition of this Agreement shall be a waiver tit of any right arising out of any other or subsequent breach of the same or any other covenant, term or condition or a waiver of the covenant, term or condition itself. Section 16. Successors and Assigns Subject to the limitations on Owner's right to convey the Property set forth elsewhere herein, the terms, covenants, and conditions herein contained shall be binding on and inure .to the benefit of the heirs, successors, and assigns of Owner and City. Owner and City specifically agree that City may not assign its interest in this Agreement and the Property to any person or entity, without the consent of Owner. In the event that an assignee assumes the obligations of City hereunder, then City shall continue to have responsibility for compliance with terms and conditions of this Agreement for which only the City has jurisdiction or authority therefor, unless such responsibility is modified by the mutual agreement of the City and Owner. Section 17. Notices All notices required or permitted to be given shall be in writing and shall be deemed given and received upon personal . service or deposit in the United States Mail, certified or registered mail, postage prepaid, return receipt requested, addressed as follows: To Owner: McKenzie Forest Products, LLC 1651 South F Street Springfield, OR 97477 With a copy to: William R. Potter Arnold Gallagher Saydack Roberts Percell & Potter, P.C. 800 Willamette Street, Suite 800 P.O. Box 1758 Eugene, OR 97440-1758 To City: City of Springfield c/o Director of Public Works Department of Public Works 225 Fifth Street Springfield, OR 97477 Draft of June 3, 2005 Attachment A, Page 160f19 Exhibit 1, Page 14 of 17 . "', /. . The foregoing addresses may be changed by written notice, given in the same manner. Notice given in any manner other than the manner set forth above shall be effective when received by the party for whom it is intended. Section 18. Attorney Fees If litigation is instituted with respect to this Agreement, the prevailing party shall be entitled to recover from the losing party, in addition to all other sums and allowable costs, its reasonable attorney fees, both in preparation for and at trial and any appeal or review, such amount to be set by the court before which the matter is heard. . Section 19. Risk of Loss Owner shall bear the risk of all loss or damage to the Property from all causes, through the Closing Date. If, before the Closing Date, all or part of the Property is damaged by fire or by any other cause of any nature or if all or any portion of the Property is taken by condemnation, or if any such condemnation is threatened, Owner shall give City written notice of such event. City may terminate this Agreement by giving written notice to Owner within 15 days following receipt by City of written notice from Owner of such casualty or condemnation. If City does not elect to terminate this Agreement, then this Agreement shall continue in force and, if the Property is conveyed to City, then all interest of Owner in and to any insurance proceeds or condemnation 'awards that may be payable to Owner on account of such casualty or condemnation shall be assigned to City at Closing. Section 20. Integration, Modification, or Amendments This Agreement contains the entire agreement of the parties with respect to the Property and supersedes all prior written and oral negotiations and agreements with respect to the Property. Any modifications, changes, additions, or deletions to this Agreement must be approved by Owner and City, in writing. Section 21. Representation Owner and City have each been represented by separate legal counsel of choice with respect to this transaction. Except as otherwise provided in Section 18, each party shall be responsible for all attorney fees incurred by it with respect to this Agreement. . Section 22. Counterparts; Pronouns This Agreement may be executed in one or more counterparts, all of which shall be considered one and the same Agreement and shall be effective when one or more counterparts have been signed Draft of June 3, 2005 Attachment A, Page 17 of 19 Exhibit 1, Page 15 of 17 and delivered by Owner and City. With respect to any pronouns used, each gender used shall include the other gender and the singular and the plural, as the context may require. . Section 23. Governing Law; Interpretation This Agreement shall be governed by the laws of Oregon. In the event a court of competent jurisdiction holds any portion of this Agreement to be void or unenforceable as written, Owner and City intend that (1) that portion of this Agreement be enforced to the extent permitted by law, and (2) the balance of this Agreement remain in full force and effect. Section 24. Time Is of the Essence Time is of the essence of this Agreement. Section 25. Authority to Execute Each person executing this Agreement on behalf of Owner and City, respectively, warrants his or her authority to do so. Section 26. Statutory Disclaimer THIS INSTRUMENT WILL NOT ALLOW USE OF THE PROPERTY DESCRIBED IN THIS INSTRUMENT IN VIOLATION OF APPLICABLE LAND USE LAWS AND REGULATIONS. BEFORE SIGNING OR ACCEPTING THIS INSTRUMENT, THE PERSON ACQUIRING FEE TITLE TO THE PROPERTY SHOULD CHECK WITH THE APPROPRIATE CITY OR COUNTY PLANNING DEPARTMENT TO VERIFY APPROVED USES AND TO DETERMINE ANY LIMITS ON LAWSUITS AGAINST FARMING OR ,FOREST PRACTICES AS DEFINED IN ORS 30.930. . THE PROPERTY DESCRIBED IN THIS INSTRUMENT MAY NOT BE WITHIN A FIRE PROTECTION DISTRICT PROTECTING STRUCTURES, THE PROPERTY IS SUBJECT TO LAND USE LAWS AND REGULATIONS, WHICH, IN FARM OR FOREST ZONES, MAY NOT AUTHORIZE CONSTRUCTION OR SITING OF A RESIDENCE AND WHICH LIMIT LAWSUITS AGAINST FARMING OR FOREST PRACTICES AS DEFINED IN ORS 30.930 IN ALL ZONES. BEFORE SIGNING OR ACCEPTING THIS INSTRUMENT, THE PERSON ACQUIRING FEE TITLE TO THE PROPERTY SHOULD CHECK WITH THE APPROPRIATE CITY OR COUNTY PLANNING DEPARTMENT TO VERIFY APPROVED USES AND EXISTENCE OF FIRE PROTECTION FOR STRUCTURES. (IF THE PROPERTY IS TAXED AS HISTORIC PROPERTY, INCLUDE A STATEMENT IN ORS 93.040(3)) Section 27. No Realtor's Commission Neither party has employed a real estate broker or sales person in arriving at this Agreement and there are no real estate brokers' fees or commissions which will accrue in the event of the sale of the property by Owner to City. Draft of June 3, 2005 Attachment A, Page 18 of 19 Exhibit 1, Page 16 of 17 . . . . Section 28. Truck Access Easement to Morse Bros. Quarry City agrees to confer with Owner and the owners of Morse Bros. Quarry to determine if an alternate route may be found to relocate the truck access easement to that quarry. Section 29. Land Use. Nothing in this Agreement shall be construed as waiving any requirements of the Springfield Development Code or Springfield Municipal Code which may be applicable to the use and development of this property. Section 30. Donation. Owner believes that the fair market value of the real property being sold hereunder exceeds the purchase price of $1,277,000. Owner intends to donate the excess to the City. After closing, Owner will obtain an appraisal of the real property. If the fair market value of the real property exceeds $1,277,000, the excess will be a donation by Owner to the City. In such event, City shall work with Owner at no cost to City to assist Owner in verifying the donation. OWNER: McKENZIE 'FOREST PRODUCTS, LLC By: CITY: By: V:\MILL_RAC\Purchase and Sale Agreement 06030S.wpd Draft of June 3, 2005 Attachment A, Page 19 of 19 Exhibit 1, Page 17 of 17 . . . McKenzie Forest Products TermS of Offer 1. The parties agree that the property included in parcel one may be used, as appropriate, to support reasonable storm water management of the run off from property retained by McKenzie Forest Products. The parties agree to collaborate on storm water management planning and solutions at the time the property retained by McKenzie is redeveloped. 2. McKenzie Forest Products will be granted an access easement over parcel one to South "B" Street until such time as South "B" street is extended as a public street to the property retained by McKenzie 3. City will assume the obligations of McKenzie with respect to the license granting access under the Union Pacific tracks immediately South of 16th Street. City will exercise best efforts to convert that license to an easement. If city acquires an easement it will, to the extent it is authorized by that easement, continue to allow for the provision of current and future utilities to the McKenzie property using the tunnel. 4. McKenzie will be granted an emergency access easement over tract 3 to allow them to use that parcel on 24 hours notice in the event of an emergency. 5. The north property boundary of parcel three will be set at least 90 feet from the top of bank of the Mill Race, so that, in conjunction with the 10 foot building setback required by the Springfield Development Code, as now in effect, any buildings would be at least 100 feet from the top of bank. 6. Where feasible, the north property line of parcel 2 will be established 25 feet from the top of bank of the Mill Race. To the extent that is not practicable, the City will work with the U.S. Army Corps of Engineers to make best efforts to assure that the top of bank of the reconstructed Mill Race, in the vicinity of the boundary of parcel 2, is at least 25 feet from that boundary. This may include, where possible, relocating the Mill Race to the south. Where this is not possible, the City would consider, on redevelopment, a variance to permit encroachment to no more than 25 feet from the top of bank of the reconstructed Mill Race. 7. As part of the Corps project, a fire pond will be constructed at the northeastern comer of the existing Mill Pond and pump facilities and piping will be provided to make it possible to bring that water to a point of connection to the existing McKenzie fire suppression system. 8. In the vicinity of the [lIe pond, there will not be a requirement for a 50 foot riparian setback from the top of bank of the north bank of the fire pond. City and McKenzie will collaborate on optimizing use of fire pond for storm drainage management. 9. McKenzie will be given a maintenance easement over the fire pond, and will assume responsibility for that maintenance. 10. The offer is contingent upon successful completion of borings recommended by staff as a result of the environmental assessment performed by Omnicom.. Attachment B, Page 1 of 2 11. City will pay McKenzie $1,277,000 as the cash portion of the consideration for the transfer of parcels one through four. . . . Attachment B, Page 2 of 2 -0 OJ )0- lD I':l: CD Dl Cl f--l ::r 3 o CD -t, a () f--l . . McKenzie Forest Products Property Attachment C . IIIJ] Tract 1 nm Tract 2 mIl Tract 3 mIl Tract 4 N