S T A F F  R E P O R T
For the Business Meeting of December 1, 2009
Date: November 23, 2009

TO: City Council

FROM: Mike Robinette, Economic Development Director

Authorize Development Agreement and
the Acquisition of Real Estate

PURPOSE
Authorize the City Manager to enter into a development agreement with Duncan Oil Company and, acquire certain real estate for the development of the Central Avenue Gateway Project, appropriating funds and declaring an emergency.

BACKGROUND and FINDINGS
The Central Avenue Gateway Project will provide for the City to acquire certain real estate needed for the development of the Middletown Station (Ohio 3-C Passenger Rail Project) and provide for a new development by Duncan Oil Company of a convenience service station. The City will acquire certain real estate and exchange that real estate with Duncan Oil Company for real estate needed for the Middletown Station Project. Duncan Oil Company will use the land acquired through the
exchange with the City to develop a new convenience service station (Central Avenue Gateway project).

ALTERNATIVES
Do not proceed with the Central Avenue Gateway Project and Middletown Station Project.

FINANCIAL IMPACT
The total cost of the project is $550,000 to be appropriated from the Downtown Improvements Fund (Account
number: 481-990-54400)

CONFORMITY TO CITY POLICY
This conforms to city policy to convert underutilized commercial and industrial property to productive uses as provided for in the City’s Master Plan.

OTHER CONSIDERATIONS
None

RECOMMENDATION
Staff recommends approval of the development agreement with Duncan Oil Company and the acquisition of certain real estate related to the Central Avenue Gateway and Middletown Station Projects as an emergency because of the need to have ownership of certain real estate needed for the development of the Middletown Station Project.

ATTACHMENTS
None

ORDINANCE NO . O2009-99
AN ORDINANCE AUTHORIZING A DEVELOPMENT AGREEMENT WITH DUNCAN OIL COMPANY
AND DECLARING AN EMERGENCY.

WHEREAS, Duncan Oil Co. has expressed an interest in redeveloping certain real property bordered by Central Avenue, Grimes Street, First Avenue and University Boulevard; and

WHEREAS, such redevelopment would accommodate the City’s ability to develop a
Middletown station for the Ohio 3-C Passenger Rail Project; and

WHEREAS, a draft Development Agreement (attached hereto as Exhibit “A”) has been prepared and is being reviewed by the parties; and

WHEREAS, the development project will require the purchase and transfer of several parcels of real estate;

NOW, THEREFORE, BE IT ORDAINED, by the City Council of the City of Middletown, Butler/ Warren Counties, Ohio that:

Section 1
The City Manager is hereby authorized to enter into a Development Agreement with Duncan Oil Company which is consistent with Exhibit “A”, attached hereto, and makes no additional commitments by the City. Any changes to Exhibit “A” shall be subject to approval by the City Manager and the Law Director, prior to execution of the Development Agreement. The City Manager is further authorized to execute such other documents, including documents of conveyance, that are necessary to complete the terms of the Development Agreement.

Section 2
For the purpose of acquiring the necessary real property to comply with the terms of the Development Agreement, the Director of Finance is hereby authorized and directed to expend a sum not to exceed $550,000.00 from the Downtown Improvements Fund, which such sum is hereby appropriated from the Accounts of 481-990-54400.
Section 3 It is hereby determined that the subject matter of this legislation is not of a general and permanent nature, does not provide for a public improvement, and does not assess a tax or payment.

Section 4
This ordinance is declared to be an emergency measure necessary for the immediate
preservation of the public health, safety and general welfare, to wit: to assure the timely development of the project and that the parties can exercise the necessary options on acquisition of real estate before these options expire, and shall take effect and be in force from and after its adoption.
_______________________________
Lawrence P. Mulligan, Jr., Mayor
Adopted: _______________________
Attest: _______________________
Clerk of the City Council

DEVELOPMENT AGREEMENT

THIS DEVELOPMENT AGREEMENT is entered into by and between the City of Middletown, One Donham Plaza, Middletown, Ohio 45042 (hereinafter the City) and Duncan Oil Co., 849 Factory Road, Beavercreek, OH 45434 (hereinafter Duncan) an Ohio corporation, on the _______ day of __________________, 2009.

WHEREAS, the parties acknowledge their mutual desire to enhance the eastern entry
into downtown Middletown on Central Avenue; and

WHEREAS, Duncan currently owns the following real property located on Central
Avenue, Charles Street and Manchester Avenue:

Parcel Nos.:

Q6532 018 000 060
Q6532 018 000 067
Q6532 018 000 074
Q6532 018 000 909
Q6532 018 000 910
Q6532 028 000 087
Q6532 028 000 088
Q6532 028 000 900

which are referred to hereinafter collectively as Site “A;” and WHEREAS, the City owns or has options to purchase the following real property, located on Central Avenue:

Q6532 017 000 089
Q6532 017 000 090
Q6532 017 000 091
Q6532 017 000 082
Q6532 017 000 083
Q6532 017 000 084
Q6532 017 000 085
Q6532 017 000 092
Q6532 017 000 093
Q6532 017 000 094
Q6532 017 000 095
Q6532 017 000 096
Q6532 017 000 097
Q6532 017 000 106
Q6532 017 000 107
Q6532 017 000 108
Q6532 028 000 067
Q6532 028 000 068
Q6532 028 000 069
Q6532 017 000 098
Q6532 017 000 099
Q6532 017 000 100
Q6532 017 000 101
Q6532 028 000 064
Q6532 028 000 065
Q6532 028 000 066

which are collectively referred to as Site “B;” and

WHEREAS, Duncan desires to develop Site “B” as a commercial operation; and

WHEREAS, the City desires to remove an existing gas station on the corner of Central Avenue and Charles Street, located on a portion of Site “A”;

NOW, THEREFORE, in consideration of the mutual promises contained herein, the
City and Duncan agree as follows:

I. Obligations of the City.

A. The City shall acquire all of the parcels in Site “B” at a closing date mutually
agreeable to the parties to take place on or before November 30, 2009.

B. The City shall transfer the parcels in Site “B” to Duncan on or before December
3, 2009, except that the City shall retain ownership of the eastern ten feet (10’) for
gateway enhancement to the downtown area.

C. The conveyance will be without monetary consideration from Duncan and all
taxes and assessments will be prorated to the date of closing. The City shall
convey marketable title by quitclaim deed and the property shall be free and clear
of all liens and encumbrances except:

1. Easements and restrictions of record;

2. All taxes and assessments not yet due and payable; and

3. Any matters as may be waived or may be deemed to be waived by Duncan
as set forth in section II. C. below.

D. Prior to closing, Duncan may, at its sole expense, undertake such investigations as
it deems necessary to assure it is receiving marketable title to all of the parcels,
and that there are no defects, liens, easements, restitutions, covenants,
encroachments or other encumbrances, other than those listed above. Duncan
shall provide written notice to the City of its objection to any such title matter.
Upon receipt of such objection, the City shall, in its sole discretion, promptly
undertake and complete all actions as are necessary to satisfy or eliminate the
objection. If the City is unwilling or unable to satisfy or remove the objection
prior to closing, Duncan may either:

1. Terminate this Agreement; or

2. Waive the objection and accept such title as the City is able to convey.

II. Obligations of Duncan.

A. Duncan agrees to convey to the City all of the parcels in Site “A” at closing to
take place concurrently with the City's conveyance of Site "B" to Duncan as set
forth in Section I.A. above, subject to the following contingencies:

1. Duncan's ability to obtain the approval of the current Site "A" mortgagee
to release the Site "A" mortgage in exchange for a substitute mortgage on
alternate Duncan-owned property, which substitute mortgage shall be
recorded immediately subsequent to conveyance of Site "B" from the City
to Duncan.

2. Governmental approval of the Planned Unit Development ("PUD") for
Site "B" in accordance with Duncan's preliminary development plan as set
forth in section II.F. below.

B. The conveyance will be without monetary consideration from the City and all
taxes and assessments will be prorated to the date of closing. Duncan shall
convey marketable title by general warranty deed and the property shall be free
and clear of all liens and encumbrances except:

1. Easements and restrictions of record;

2. All taxes and assessments not yet due and payable; and

3. Any matters as may be waived or may be deemed to be waived by the City
in accordance with section I.D. above.

C. Prior to closing, the City may, at its sole expense, undertake such investigation as
it deems necessary to assure it is receiving marketable title to all of the parcels
and that there are no defects, liens, easements, restitutions, covenants,
encroachments or other encumbrances, other than those listed above. The City
shall provide written notice to Duncan of its objection to any such title matter.
Upon receipt of such objection, Duncan shall, in its sole discretion, promptly
undertake and complete all actions as are necessary to satisfy or eliminate the
objection. If Duncan is unwilling or unable to satisfy or remove the objection
prior to closing, the City may either:

1. Terminate this Agreement; or

2. Waive the objection and accept such title as Duncan is able to convey.

D. The parties agree and acknowledge that prior to the execution of this Agreement,
Duncan caused to be performed on all parcels on Site “A” and Site “B”
environmental assessments at its own cost. Duncan agrees to indemnify and hold
the City harmless against any and all liabilities, damages and losses which relate,
in any manner, whatsoever to any environmental contaminate that may be found
on Site "A" subsequent to closing that was directly attributable to Duncan's
operation of a gas station on Site "A," including, but not limited to remediation of
the contamination until a no further action ("NFA") order is issued by the state in
accordance with B.U.S.T.R. regulations.

E. Provided that the Site "A" and "B" conveyances between the parties are
completed as set forth hereinabove, Duncan shall be obligated to:

1. demolish all structures located on the parcels in Site “A," at its sole cost
and expense, on or before June 30, 2010. Demolition shall include the
removal of all underground storage tanks on any of the parcels. All
parcels on Site “A” will be environmentally “clean” and satisfy all state
and federal regulations, including B.U.S.T.R. regulations; and

2. demolish all structures on Site “B,” at its sole cost and expense, with the
exception of the Revlos building, on or before December 31, 2010; and
3. demolish the Revlos building on or before December 31, 2010, provided
the City shares equally with Duncan the cost of asbestos removal from the
Revlos building which is projected to be $60,000. In the alternative, the
City may, at its election, relieve Duncan of its obligation to demolish the
Revlos building.

F. The parties acknowledge that Duncan has developed a preliminary planned unit
development plan ("PUD") for Site "B" which plan has received preliminary
approval of the City. A copy of the preliminary PUD which contains the uses and
general concept of the proposed development of Site "B" is attached hereto as
Exhibit B. Duncan shall use its best efforts to complete such PUD and to open a
business on Site "B" on or before June 30, 2012.

G. Duncan's obligation to develop Site "B" and open a business thereon is contingent
upon Duncan's ability to obtain suitable financing for such venture.

III. Planned Unit Development Agreement.
The parties shall, by separate document, enter into a PUD Agreement for Site "B,"
including all necessary governmental approvals, on or before November 20, 2009, or as soon thereafter as practicable. The City specifically agrees that the PUD, irrespective of any zoning ordinance to the contrary, shall contain: sufficient curb cuts and ingress and egress for Site "B" to accommodate the PUD to Duncan's satisfaction; (ii) setback requirements to Duncan's satisfaction that accommodate Duncan's development plan for
Site "B"; and (iii) a legislative provision that the PUD zoning shall remain in effect for
(3) three years following the date that construction is to commence under the PUD
development plan. In the event that the PUD does not receive final approval for any
reason following conveyance of Sites "A" and "B" as set forth in sections I and II above, the parties agree as follows:

A. The City shall retain ownership of Site "A" and Duncan shall retain ownership of
Site "B" as conveyed pursuant to this Agreement; and

B. Duncan shall be relieved of all obligations under this Agreement with the
exception of its obligation to demolish all structures on Site "A" on or before
June 30, 2010.

IV. Termination.

A. Termination of Convenience. If either party desires to terminate this Agreement
prior to the City's acquisition of the real property on Site “B," they may do so by
providing fourteen (14) days prior written notice to the other party.

B. Duncan's Failure to Perform.

1. If Duncan fails to perform its obligations under section II.F. of this
Agreement, and such failure is not due to Duncan's inability to obtain
suitable financing, the City, at its election, may either:

a) Retain ownership rights in Site “A” with Duncan retaining ownership
of Site “B;” or

b) Reconvey Site “A” to Duncan and require Duncan pay the City an
amount equal to the City’s expenditures to purchase the Site “B”
property in the amount of $_____________.

2. If Duncan fails to perform its obligation under Section IIE. of this
Agreement, the City may either:

a) Retain ownership rights in Site “A” with Duncan retaining ownership
of Site “B," and cause the demolition and environmental remediation
to be performed at its own expense and recover such costs from
Duncan (with the exception of the cost of asbestos removal from the
Revlos building, which shall be shared equally by the parties); or

b) Reconvey Site “A” to Duncan and require Duncan to pay the City an
amount equal to the City’s expenditures to purchase the Site “B”
property in the amount of $_____________.

C. City's Failure to Perform.

1. If the City fails to perform its obligations under Section I of this
Agreement, Duncan may terminate all of its rights and obligations under
this Agreement and recover from the City any documented out-of-pocket
costs for the creation and drafting of its development plan for the Site “B”
property and for environmental reports performed on Sites "A" and "B."

D. Unless otherwise set forth in this Agreement, the remedies set forth in this Section
IV of this Agreement are the sole remedies of the parties for breaches of those
respective provisions.

V. Miscellaneous Provision.

A. Governing Law. This Agreement shall be governed by, and construed and
enforced in accordance with, the laws of the state of Ohio and applicable federal
laws.

B. Notices. All notices, demands and other communications under this Agreement
shall be in writing, and delivered in person, or mailed by certified mail, return
receipt requested, postage prepaid, or by express delivery service. Date of
mailing, with proof thereof, shall constitute the date of notice to the parties. All
notices shall be addressed to each of the following parties at the following
addresses:

1. “City”
City of Middletown, Ohio
Attn: City Manager
One Donham Plaza
Middletown, Ohio 45042

With a Copy to:
Law Director
City of Middletown
One Donham Plaza
Middletown, Ohio 45042

2. “Duncan”
Duncan Oil Co.
Attn: Mr. Roger W. McDaniel, President
849 Factory Road
Beavercreek, Ohio 45434
With a Copy to:

Michael P. McNamee, Esq.
McNamee & McNamee, PLL
2625 Commons Blvd.
Beavercreek, Ohio 45431

C. Binding Effect. This Agreement shall be binding upon and inure to the benefit of
the parties to this Agreement, and their respective successors and permitted
assigns.

D. Assignment. Unless otherwise specifically agreed upon in writing by the parties,
neither party may assign any of its rights, nor delegate any of its obligations,
under this Agreement without the prior written consent of the other party.

E. Amendment, Modification and Waiver. This Agreement shall not be amended or
modified, and no provision shall be waived, except in a writing signed by both
parties and all third party beneficiaries, which specifically refers to this
Agreement and the provisions intended to be amended, modified or waived.

F. Survival. This Agreement and the obligations of the parties hereunder shall
survive the closing of the transfer of Sites "A" and "B" between the parties, unless
otherwise agreed by the parties or terminated pursuant to the terms of this
Agreement.

G. Material Terms. All of the promises, agreements, representations and warranties
made by any party are material to this Agreement.

H. Further Assurances. The parties agree to do, execute, acknowledge and deliver,
or cause to be done, executed, acknowledged and delivered all such further acts,
assignments, documents, instruments, transfers and assurances as shall reasonably
be requested of them in order to carry out and give effect to this Agreement.

I. Partial Invalidity. If any provision of this Agreement, or its application to any
person or circumstance, is held to be void, voidable or invalid to any extent, then
the remainder of this Agreement, or the application of that provision to persons or
circumstances other than those as to which it is held void, voidable or invalid,
shall not be affected, and each remaining provision of this Agreement shall be
valid and enforceable to the fullest extent permitted by law.

J. Construction and Interpretation. For purposes of construction and interpretation
of this Agreement, neither party shall be deemed to be the draftsman, and this
Agreement shall not be interpreted or construed in favor of or against either party.

K. Headings. The headings of each paragraph and subparagraph are for convenience
of reference only and shall not be considered in interpreting or construing any
term or condition of this Agreement.

L. Complete Agreement. This Agreement and the attached Exhibits represent the
complete and exclusive statement of this agreement between the parties, and
supersede all prior written, oral, express or implied proposals, negotiations,
discussions, agreements representations and other communications between the
parties with respect to this subject matter.

M. Expenses. Each of the parties shall be responsible for payment of their own
respective costs and expenses, including without limitation attorney, accountant
and other professional fees, incurred by such party in the negotiation and
preparation of this Agreement and all other documents and matters associated
with consummation of this transaction, without any rights to contribution or
similar claims against the other party for such costs and expenses.

N. Counterparts; Copies. This Agreement may be executed by the parties in several
counterparts which when taken together shall be deemed to be one original and/or
may be executed in multiple copies, each of which shall be deemed an original.
All true and accurate copies of this fully executed agreement shall be valid and
binding evidence of the agreement of the parties, whether the document and/or
any or all of the signatures are reproductions of any original by photocopy,
telecopier transmission, or other method commonly accepted as accurate.

O. Authority. The parties represent and warrant that the individuals who have signed
this Agreement on their behalf have full power and authority to sign for and bind
the respective parties to this Agreement. City specifically warrants and represents
that this Agreement has been approved and ratified by City Council for the City of
Middletown via appropriate legislative action, and that the City Manager has been
duly authorized to execute this Agreement on behalf of the City. A true and
accurate copy of the legislative action authorizing this Agreement is attached
hereto as Exhibit “A.

IN WITNESS WHEREOF, the parties have set their hands on the dates written under the signature.

CITY OF MIDDLETOWN                      DUNCAN OIL CO.

By: ________________                            _______________ By:

Judy Gilleland, City Manager Roger                W. McDaniel, President
Date:_______________                              _______________ Date:

Attest:______________

Clerk of City Council

CERTIFICATION OF FUNDS
It is hereby certified that the amount required by the City to meet its obligations under
this Agreement has been lawfully appropriated for the purposes of this Agreement and is in the treasury or in the process of collection to the credit of an appropriate funds free from any previous encumbrances, obligations of certificates now outstanding.

Date:
Russ Carolus,         Director of Finance

CERTIFICATE OF THE LAW DIRECTOR
I hereby certify that I have reviewed and approved the form of this foregoing Agreement this ___ day of ______________, 2009.

                                                             Les Landen, Law Director