07-14-2009 Council Work Session Packet

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Page 1 of 1 �' Mike Gaffron From: Mike Gaffron Sent: Tuesday, July 07, 2009 8:58 AM To: Soren Mattick Cc: Ron Olson; Bill Wells; Tom Kellogg Subject: Stonebay Lofts LOC Soren — I have reviewed a variety of documents re: Stonebay Lofts which I can provide you copies today: 1) Original Mainstreet bank LOC dated July 15, 2005 in the amount of$230,213.00 with expiry date of July 15, 2007 2) MPG letter dated July 5, 2007 requesting extension of expiry date to July 15, 2008 3) Mainstreet Bank letter dated July 6, 2007 extending expiry to July 15, 2008 4) MPG letter dated November 14, 2007 authorizing reduction to $166,245.00 5) MPG letter dated July 3, 2008 authorizing reduction to $147,833.00 6) Mainstreet Bank letter dated July 8, 2008 indicating reduction t� $147,833.00 with expiry extended to July 15, 2009 7) MPG letter dated December 12, 2008 authorizing reduction to $45,750.00 8) Developers Agreement 9) Engineer's Estimate and punch list of work remaining I have the originals of the LOC documents to provide to you. For unknown reasons, Mainstreet Bank did not provide a reduction document responding to the 11-14-07 or 12- 12-08 reduction authorizations. It is possible that they still list it as $147,833.00 but I doubt it. Tom Kellogg has provided a punch list of work remaining associated with the Lofts, and an estimate of the costs to complete same. That amount is $25,550. 150% of that amount is $38,325. AdditionaUy, the Finance Department indicates that the Lofts is approximately 1 year in arrears on utility bills which now add up to approximately $1,256. Also, there are unpaid engineering review and inspection invoices that have been charged to the Lofts account to the tune o`$13,950.67 of which a portion, perhaps half, are attributable to the general Stonebay project as Erosion Control inspections, the remainder actually being attributable to the Lofts. As I see it, the work remaining and the unpaid bilis associated directly with the Lofts justify drawing the entire remaining LOC amount of$45,750. We should discuss what we can do with this money once it is in hand. I am not convince we want to contract for work to be completed; I would rather hold it as escrow for Arne to complete the work, then we pay him or his contractors as the work is completed. And, can we use it to cover his unpaid bills? Let's discuss this, this afternoon. I am in a training session from 9 until 11 today, then have a department head meeting from 11-12. See you at 1:00. Mike Michae! P. Gaffron Assistant City Administrator/Long Term Strategy City of Orono (Street Address)2750 tielley Parkway (Mailing Address) P.O. Box 66,Crystal Bay , MN 55323 Phone: (952)249-4600 Fax: (952)249-4616 7/14/2009