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HomeMy WebLinkAboutMO #3313MUNICIPAL ORDER NO. 3313 A MUNICIPAL ORDER DECLARING CERTAIN CITY -OWNED REAL PROPERTY LOCATED ON SALEM AVENUE AND HAMPTON AVENUE AS SURPLUS PROPERTY; AUTHORIZING THE SALE OF SAID PROPERTY TO SALEM AVENUE, LLC; AUTHORIZING THE MAYOR TO EXECUTE A DEVELOPMENT AGREEMENT; AND AUTHORIZING THE MAYOR TO EXECUTE SPECIAL WARRANTY DEEDS AND OTHER DOCUMENTS NECESSARY TO COMPLETE THE CONVEYANCE WHEREAS, the City of Paducah owns certain real property located at 1200, 1209, 1215, 1216, and 1219 Salem Avenue and 1200 Hampton Avenue in Paducah, Kentucky; and WHEREAS, Salem Avenue, LLC owns adjacent properties and proposes to combine the City -owned parcels with its existing properties for the development of fifteen (15) new single-family homes; and WHEREAS, the City -owned properties were advertised for sale by sealed bid, and Salem Avenue, LLC submitted a bid in the amount of One Dollar ($1.00) per parcel; and WHEREAS, the City Commission finds that the properties are no longer necessary, appropriate, or in the best interest of the City to retain and should be declared surplus property; and WHEREAS, the City desires to enter into a Development Agreement with Salem Avenue, LLC establishing the terms and conditions for the conveyance and development of the properties, including construction deadlines, City incentives, progress reporting requirements, and remedies available to the City in the event of nonperformance. KENTUCKY: NOW, THEREFORE, BE IT ORDERED BY THE CITY OF PADUCAH, SECTION 1. The City Commission hereby declares the City -owned real properties located at 1200, 1209, 1215, 1216, and 1219 Salem Avenue and 1200 Hampton Avenue to be surplus property. SECTION 2. The City Commission hereby accepts the bid of Salem Avenue, LLC and authorizes the sale and conveyance of the six City -owned parcels to Salem Avenue, LLC for One Dollar ($1.00) per parcel, for a total purchase price of Six Dollars ($6.00), subject to the terms and conditions of the Development Agreement. SECTION 3. The Mayor is hereby authorized to execute, on behalf of the City of Paducah, the Development Agreement between the City of Paducah and Salem Avenue, LLC, in substantially the form attached hereto and made part hereof (Exhibit A), for the development of fifteen (15) new single-family homes on Salem Avenue and Hampton Avenue. SECTION 4. The Mayor is hereby authorized to execute Special Warranty Deeds conveying the City -owned parcels to Salem Avenue, LLC, together with any other documents necessary to complete the conveyance and implement the Development Agreement. SECTION 5. This Order shall be in full force and effect from and after the date of its adoption. George P. Bray, Ma ATTEST: Clerk Adopted by the Board of Commissioners, September 8, 2026 Recorded by Lindsay Parish, City Clerk, September 8, 2026 MO\Development Agreement Salem Avenue, LLC DEVELOPMENT AGREEMENT This DEVELOPMENT AGREEMENT (the "Agreement") is made and executed on this day of July, 2026, (the "Effective Date"), by and between the CITY OF PADUCAH, a Kentucky home rule class city, with an address of 300 South 5th Street Paducah, Kentucky 42001, (the "City"), and SALEM AVENUE, LLC a Kentucky Limited Liability Company, with an address of P.O. Box 271 Paducah, Kentucky 42002 (the "Developer"). WITNESSETH: WHEREAS, Developer holds fee title to certain properties located at 1206, 1207, 1208, 1210, 1211, 1212, 1213, 1214, 1218, and 1221 Salem Avenue and 1231 Hampton Avenue in Paducah, Kentucky; and the City owns certain properties located at 1200, 1209, 1215, 1216, and 1219 Salem Avenue and 1200 Hampton Avenue in Paducah, Kentucky, which the City intends to convey to Developer pursuant to this Agreement; and all such properties, collectively, are generally described as the "Development Site" as depicted in Exhibit A, which is attached hereto and incorporated herein; WHEREAS, the City recognizes that the construction of fifteen (15) new single-family homes on the Development Site aligns with the City's goal of investment in housing stock and will be beneficial to the community, along with a significant capital investment by Developer. WHEREAS, the City recognizes the efforts of the Developer to assist in revitalizing areas of the City that have seen severe declines in population. WHEREAS, the Development Site includes City -owned parcels and Developer -owned parcels, and Developer proposes to reconfigure and develop the combined properties for the purpose of constructing fifteen (15) new single-family homes; and WHEREAS, the City desires to convey the City -owned parcels and provide limited incentives to support the timely construction and sale of fifteen (15) new single-family homes, subject to Developer's compliance with the requirements of this Agreement; and NOW THEREFORE, in consideration of the foregoing recitals, the mutual covenants and obligations set forth herein and other good and valuable considerations, the parties do hereby covenant and agree as follows: 1. Conveyance of Development Site. Subject to the provisions of this Agreement, the City agrees to convey to Developer, the City -owned parcels located at 1200, 1209, 1215, 1216, and 1219 Salem Avenue and 1200 Hampton Avenue, Paducah, Kentucky, in fee simple for the purchase price of $1.00 per parcel, for a total purchase price of $6.00. City shall convey good and marketable title to the City -owned parcels by Special Warranty Deed (an exemplar of which is attached hereto as Exhibit B), subject to all easements, restrictions, covenants, rights-of-way, reservations, reversionary interests, and other matters of record or required by the City Page 1 of 13 pursuant to this Agreement. Closing of the conveyance of the City -owned parcels will occur within thirty (30) days after the City provides written notice to Developer that all conditions required for closing have been satisfied or waived by the City. The City shall not be required to close until: (a) the Board of Commissioners has approved the sale of the City -owned parcels and this Agreement; (b) the deed, including any reversionary clause, deed restriction, or other documents required by the City Attorney, is ready for execution. At that time, the parties shall bear the costs of closing as is customary in McCracken County, Kentucky and any prorations shall be made based on the date of the Closing Date. Possession of the Development Site shall be delivered to Developer on the Closing Date. As of the Closing Date, Developer shall be solely responsible for all maintenance, mowing, upkeep, security, taxes, insurance, and general condition of the City -owned parcels conveyed to Developer, and the City shall have no further maintenance responsibility for those parcels except as expressly provided in this Agreement. Risk of loss shall remain with the City until the Development Site is conveyed to Developer. 2. Reversionary Interest / Right of Reentry. The deed conveying the City -owned parcels shall include a reversionary clause, right of reentry, repurchase option, restrictive covenant, or other legal mechanism approved by the City Attorney providing that any City -conveyed parcel, or any portion thereof that remains undeveloped or is not used in accordance with this Agreement, may revert to the City, or be repurchased by the City for the original conveyance price if Developer fails to comply with this Agreement, fails to meet the approved development schedule, abandons the Project, transfers the property in violation of this Agreement, or fails to complete the Project in accordance with this agreement and any mutually agreed addendums thereto. 3. Development of the Development Site and Obligations of Developer for Residential Development. The Developer agrees to the following terms and conditions: a. Developer shall, at its sole cost, engage all architects, engineers, designers, contractors, surveyors, and other professionals necessary to design, permit, finance, construct, complete, market, and sell the Project in accordance with this Agreement and the approved development schedule. b. Prior to closing, Developer shall provide documentation reasonably satisfactory to the City demonstrating that Developer has sufficient funding, financing, or binding financing commitments to complete the Project. Such documentation may include a project budget, sources -and - uses statement, and one or more of the following: construction loan commitment, line of credit, bank letter, investor commitment, proof of Page 2 of 13 available equity, or other documentation approved by the City. Developer shall promptly notify the City if such funding or financing is withdrawn, materially reduced, expires, or otherwise becomes insufficient to complete the Project. Failure to maintain sufficient funding or financing shall constitute a material breach of this Agreement. c. Developer commenced construction of the subdivision on March 31, 2026, with the groundbreaking and commencement of construction of the first home located at 1207 Salem Avenue, which is substantially complete as of the Effective Date of this Agreement. Within a reasonable time not to exceed sixty (60) days after the Closing Date, Developer shall commence construction of the second home within the subdivision. Thereafter, Developer shall diligently continue construction of the subdivision, consisting of fifteen (15) homes, substantially in accordance with the site plan and the terms of this Agreement. All construction shall be performed in a good and workmanlike manner and in compliance with all applicable City design and construction standards and all applicable state and federal laws and regulations. For purposes of this Agreement, "commence construction" means the issuance of all required permits and visible construction activity on the applicable homesite, including mobilization of contractors, utility work, grading, excavation, foundation work, or other substantial construction activity. d. Developer agrees that each home constructed as part of the Project shall be sold at its fair market appraised value, as determined by a licensed residential appraiser; provided, however, that no incentive or reimbursement shall be paid for any home sold for more than Two Hundred Fifty Thousand Dollars ($250,000.00). This maximum eligible sale price is a material term of this Agreement. e. Developer shall make a good faith effort to sell each home constructed as part of the Project through an arm's-length transaction to an unrelated third party. If, despite such good faith efforts, a home is not sold within a commercially reasonable period, Developer may lease or rent the home; provided, however, that the home shall remain actively listed and marketed for sale during the term of any lease or rental arrangement. f Developer agrees to provide plantings and/or green screens along the alleys on the sides of the property. g. Developer agrees that it will obtain and maintain all licensing, permitting and certification requirements for the lawful construction of the subdivision. h. Developer agrees to obtain and maintain, at its sole cost and expense, Page 3 of 13 comprehensive commercial general liability insurance and builders' risk insurance covering the replacement cost of the improvements and materials under construction. Developer shall maintain workers' compensation insurance in compliance with state law. Developer shall provide City with proof of such insurance prior to commencement of construction and within two (2) business days of any request by the City. Developer shall be responsible for all costs of planning, financing, permitting, constructing, marketing, and selling the Project, including materials, labor, professional services, utilities, landscaping, and all other Project costs, except for incentives expressly approved and payable by the City under this Agreement. Developer shall construct and sell fifteen (15) new single-family homes on the Development Site no later than August 1, 2029. k. Developer shall, in the event a lot is sold to a homeowner or other developer for their construction of a single-family residence, hold any future owner or developer to the same requirements imposed upon Developer under this agreement. 4. Incentives and Obligations of the City In recognition of the Developer's capital investment and public benefit anticipated from the construction and sale of fifteen (15) new single-family homes, the City agrees to the following incentives and abatements, subject to the Developer's compliance with this Agreement: a. The City agrees to provide these incentives to this Developer only (and not to any subsequent homeowner, contractor or developer) for the sale and/or construction of each of the units and/or lots. b. The City agrees to transfer to Developer the City -owned properties for $1.00 per parcel, for a total of $6.00, pursuant to Special Warranty Deed. c. The City agrees to pay or reimburse the reasonable costs associated with any survey work, plat preparation, lot line abolishment, lot consolidation, or related recording requirements necessary to combine or reconfigure the City -owned parcels and Developer -owned parcels for purposes of completing the Project in accordance with the approved Site Plan. Reimbursements under this subsection shall be within forty-five (45) days of receipt of an invoice and supporting documentation from the Developer. d. The City agrees to reimburse all City -imposed permit, inspection, zoning, and planning fees related to the approvals or the construction of Page 4 of 13 the Project within forty-five (45) days of receipt of an invoice and supporting documentation from the Developer. This reimbursement shall not apply to utility tap fees, state fees, recording fees, third -party charges, taxes, penalties, or fees imposed by any other governmental or private entities. e. Subject to Developer's full compliance with this Agreement, the City shall reimburse Developer in an amount not to exceed the lesser of: (1) five percent (5%) of the final sale price of each completed and sold home; or (2) Ten Thousand Dollars ($10,000.00) per completed and sold home. The reimbursement for the period of July 1, 2026 through June 30, 2027, shall not exceed Thirty Thousand Dollars ($30,000.00). The total reimbursement under this Agreement shall not exceed One Hundred Fifty Thousand Dollars ($150,000.00). No reimbursement shall be paid for any home sold above the maximum sale price established in this Agreement unless the increased sale price was approved by the Paducah Board of Commissioners by written amendment before the applicable home was sold. Reimbursement shall be available only when: (1) the applicable home has received all required final inspections or certificates of occupancy; (2) the home has been sold to a third -party homeowner, and the deed has been recorded; (3) Developer has submitted a complete reimbursement request to the City's Development Liaison; (4) Developer has provided closing documentation, proof of final sale price, proof of recorded deed, proof of final inspection or certificate of occupancy, and any other documentation reasonably requested by the City; and (5) Developer is not in default under this Agreement. The Development Liaison shall coordinate review of reimbursement requests with City Manager's Office, Finance, Engineering, Planning, Inspection, and other City staff as needed. Finance shall process approved reimbursements only after the Development Liaison confirms that the applicable milestone has been satisfied and the reimbursement request is complete. Page 5 of 13 f The City agrees to perform sidewalk rehabilitation work along Salem Avenue and Hampton Avenue in the area of the Development Site, as determined necessary by the City Engineer. The parties acknowledge that the City's work is intended to rehabilitate existing sidewalks in the area and not to construct sidewalks separately for each individual home. The City shall determine the scope, timing, design, and method of the sidewalk rehabilitation work. 9. Developer shall coordinate construction with the City Engineer so the City may complete the sidewalk rehabilitation work one time, after construction has progressed sufficiently to avoid unnecessary damage or repeated work. If the City has not completed the sidewalk rehabilitation work within six (6) months after completion of construction of the final home within the Project, the City and Developer shall confer in good faith regarding an appropriate path forward, which may include reimbursement of reasonable and documented costs incurred by Developer to complete the sidewalk rehabilitation work. Developer shall be responsible for repairing any sidewalk, curb, right-of- way, or public infrastructure damaged by Developer or Developer's contractors after the City completes the sidewalk rehabilitation work. h. All incentives offered under this Agreement are conditioned upon Developer's good -faith efforts to meet the milestones, deadlines, and benchmarks established in this Agreement. Any sale, transfer, assignment, abandonment, or attempted conveyance of any undeveloped portion of the Development Site without prior written City approval shall constitute a material breach of this Agreement and may result in termination of incentives, exercise of the City's reversionary or repurchase rights, and any other remedies available under this Agreement, the deed, or applicable law. In addition, upon such material breach, the City may require Developer to reimburse the City for all or a portion of any amounts paid by the City for survey work, plat preparation, lot line abolishment, lot consolidation, recording, sidewalk rehabilitation, or other incentives or project -related costs paid by the City in reliance upon Developer's performance under this Agreement. Any reimbursement required by the City shall be due within thirty (30) days of written demand. 5. Progress Reporting. Developer or its designee shall submit a monthly progress status update in the form of an e-mail to the City Development Liaison on or before the twenty-fifth (25th) day of each month. This e-mail shall detail the status of the project, including but not limited to work completed, milestones, work pending, photos of the Development Page 6 of 13 Site, and estimated time to completion. The status updates shall commence the month after the signing of this Agreement. 6. Force Majeure Neither the City nor Developer shall be liable for any delay or failure in performance of any part of this Agreement from any cause beyond its control and without its fault or negligence, including, but not limited to, acts of nature, acts of civil or military authority, governmental regulation, embargoes, epidemics or pandemics, terrorist acts, riots, vandalism, insurrections, fires, explosions, earthquakes, nuclear accidents, floods, work stoppages (including strikes), power blackouts, other major environmental disturbances, or unusually severe weather conditions (each a "Force Majeure Event"). Inability to secure products or services of other persons or acts or omissions of transportation carriers shall be considered Force Majeure Events to the extent any delay or failure in performance caused by these circumstances is beyond the control of Developer and without its fault or negligence. In the event of a Force Majeure Event, the party claiming the benefit of this section shall promptly notify the other and shall be excused from performance of its obligations hereunder on a day-to- day basis to the extent those obligations are prevented by the Force Majeure Event. Force Majeure shall not include lack of funds, failure to obtain financing, changes in market conditions, increases in construction costs, inability to sell homes at the desired price, contractor scheduling issues within Developer's reasonable control, or Developer's failure to timely apply for permits or approvals. 7. Governing Law; Venue; Waiver of Jury Trial This Agreement will be governed by and construed in accordance with the laws of the Commonwealth of Kentucky. Any litigation regarding this Agreement or its subject matter shall be submitted to McCracken Circuit Court. Each party irrevocably agrees and submits to the jurisdiction of those courts and waives all rights to protest either jurisdiction. Each party also waives their right to a jury trial. 8. Notices. All notices, communications, or deliveries under this Agreement shall be in writing, shall specify the section of this Agreement pursuant to which it is given, and shall be deemed given: a. When received if given in person or by courier or courier service. b. On the date of transmission if sent by facsimile or other wire transmission and a copy of such transmission is sent by overnight courier for delivery on the following business day; or C. Three business days after being deposited in the mail, certified mail, Page 7 of 13 return receipt requested, postage prepaid, and addressed to the parties as set forth below: If to City: City Manager City of Paducah P. O. Box 2267 Paducah, KY 42002-2267 With Copies to: City Clerk, Director of Planning & Community Development & Development Liaison If to Developer: Edward Cooper C/O Salem Avenue, LLC P.O. Box 271 Paducah, Kentucky 42002 or to such other address as may hereafter be designated by a party to the other. 9. Assignment. This Agreement shall be binding upon and shall inure to the benefit of the parties hereto, and their respective legal representatives, heirs, successors, and permitted assigns. This Agreement may not be assigned by any party hereto. 10. Counterparts. This Agreement may be executed in counterparts and by electronic signature, each of which shall be deemed an original and all of which together shall constitute one agreement. 11. Singular or Plural; Gender. In this Agreement, where applicable, references to the singular shall include the plural and references to the plural shall include the singular. Any reference in this Agreement to the masculine shall include the feminine or neuter and any reference in this Agreement to the feminine shall include the masculine or neuter. 12. Headings. The headings of this Agreement are included for convenience of reference only and shall not affect the construction or interpretation of any of its provisions. 13. Entire Agreement; Modifications; Waivers; Construction. Page 8 of 13 This Agreement (including, without limitation, the exhibit(s) hereto) constitutes the entire agreement of the parties with respect to the subject matter hereof. All prior and contemporaneous oral and written discussions and agreements of the parties with respect thereto being merged herein and superseded hereby. This Agreement may be amended only by written instrument executed by the parties hereto. The failure of any party hereto at any time to require performance of any of the provisions hereof shall in no manner affect the right to enforce the same. No waiver of any party hereto of any condition, or of the breach of any term, provision, warranty, representation agreement or covenant contained in this Agreement whether by conduct or otherwise, in any one or more instances, shall be deemed or construed as a further or continuing waiver of any such condition or breach or a waiver of any other condition or of the breach of any other term, provision, warranty, representation agreement or covenant herein contained. Should any provision of this Agreement require judicial interpretation, the parties hereto agree that the court interpreting or construing same shall not apply a presumption that the terms hereof shall be more strictly construed against one party by reason of the rule of construction that a document is to be construed more strictly against the party who itself or through its agents drafted the same. 14. Indemnification. Developer shall indemnify and defend the City and its respective representatives, officers, employees, agents, insurers, successors, and assigns, and hold them harmless from and against any and all claims, demands, administrative proceedings, and causes of action that relate to or arise from the development and construction of the Development Site, and from any and all damages, losses, judgments, obligations, liabilities, costs and expenses, including legal costs and expenses, that result therefrom. This indemnity shall specifically apply, but not be limited to, all acts of contractors or subcontractors. This indemnity shall remain in full force and effect until all claims, demands, and causes of action are fully and finally adjudicated. Developer accepts the City -owned parcels in their existing "as -is, where -is" condition, subject to all faults, conditions, restrictions, easements, and matters of record, except as expressly provided in the deed. Developer shall be solely responsible for due diligence regarding the condition, suitability, zoning, utilities, environmental condition, and development feasibility of the City -owned parcels. 15. Attorneys' Fees. In the event either party asserts a claim or legal action to enforce or interpret this Agreement, the prevailing party shall be entitled to reimbursement from the other for its reasonable attorneys' fees and costs incurred in connection with the enforcement or interpretation, in addition to any other sums recoverable by, or remedies available to, such prevailing party. Page 9 of 13 16. Time of Essence. Time will be of the essence with respect to the performance of the terms and conditions of this Agreement. 17. Exhibits. All exhibits attached hereto are incorporated by reference herein. Page 10 of 13 IN WITNESS WHEREOF, the parties have hereunto set their hands and as of the date first set forth above. DEVELOPER CITY SALEM AVENUE, LLC CITY OF PADUCAH, KENTUCKY By: By: Print Name: Print Name: COMMONWEALTH OF KENTUCKY ) COUNTY OF ) Subscribed and sworn to and acknowledged before me this day of , 2026 by Ed Cooper on behalf of SALEM AVENUE, LLC. My commission expires: Notary Public, State at Large COMMONWEALTH OF KENTUCKY ) COUNTY OF MCCRACKEN ) Subscribed and sworn to and acknowledged before me this day of , 2026 by George P. Bray, Mayor of the City of Paducah, on behalf of the City of Paducah. My commission expires: Notary Public, State at Large Page 11 of 13 EXHIBIT A The entire development area is shown. Properties outlined in yellow are those being transferred to Salem Avenue, LLC from the City of Paducah. Properties outlined in orange are those currently owned by Salem Avenue, LLC. City -owned parcels to be conveyed Page 12 of 13 1200 Salem Avenue 103-42-09-020 40 X 114 1209 Salem Avenue 103-24-14-016 20 X 114 1215 Salem Avenue 103-24-14-019 20 X 114 1216 Salem Avenue 103-42-09-012 40 X 114 1219 Salem Avenue 103-24-14-020 40 X 114 1200 Hampton Avenue 103-42-12-001 40 X 144 Page 12 of 13 Exhibit B Special Warranty Deed Page 13 of 13