Agenda - Council Work Session - 09/29/2009

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The S & W Agreement Exhibit B legally defines, by metes and bounds description the "Oakwood Properties". Included within the Oakwood Properties definition is the metes and bounds description of Sweetbay Ridge which is defined as a part of the "Oakwood Lots" in Section 3.01 of the S & W Agreement. Section 3.06 of the S & W Agreement relating to the Bank assignment references the "Additional Oakwood Lots as defined in Section 3.04." The Oakwood Lots are not included in the Additional Oakwood Lots definition in said Section 3.04. In addition, the assignment notification received by the City from the Bank and Oakwood dated May 3, 2006 states: Accordingly, in the event that Oakwood develops any lands within the ,service areas described in the agreement other than those identified in Section 3.01 thereof, the City is not to credit Oakwood for any Water Trunk Fees in those areas, but is to reimburse Oakwood for such fees pursuant to Section 3.03 and 5.01 of the agreement. Therefore, based on the above, it is the City's position that it acted in accordance with the S & W Agreement when it gave credits for the Sweetbay Ridge hookups, since the Sweetbay Ridge lots are excepted per Section 3.01 of the S & W Agreement. F. Future Development There are several outlots in the project that are slated for future platting. The ,comment has been made to the Bank by Staff that if the Bank forecloses, the Bank will have no "development rights" for those properties. This infers that the City might attempt to deny the right of the new owner to develop the outlots, or even to withhold building permits in existing platted but unimproved lots. The foreclosure of the mortgage will eliminate any existing Development Agreements, all of which were recorded subsequent to the first mortgage. We would take sharp issue with the concept that the City would have the right to retaliate against a lender by requiring the lender to perform beyond the scope of the lender's written obligations, or to deny the lender the right to continue the reliance on the previous approvals. In the absence of an agreement, the Bank and the City may have the issue of future development rights continuing to exist. CITY RESPONSE: The City is under a legal obligation to permit development of any property within the City in accordance with the City's zoning/subdivision regulations. The Bank and/or its successors will be afforded all development rights similar to any other city developer. III. Bank',s Proposal The Bank has been evaluating whether or not it wishes to assume the role of land developer when it recovers its collateral. We have concluded that acting in the role of land developer is not something within our area of expertise, nor is it the best course of action in light of the uncertainty of future project costs. The Bank is not willing to take on more exposure, and while 6