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HomeMy WebLinkAbout09985ORDINANCE NO. 9985 AN ORDINANCE APPROVING A CONTRACT TO BUY AND SELL REAL ESTATE AND A DEVELOPMENT AGREEMENT BETWEEN THE CITY OF PUEBLO, A COLORADO MUNICIPAL CORPORATION AND JIGNESH PATEL RELATING TO THE DEVELOPMENT OF 101 W. RIVERWALK, UNIT 1B, PUEBLO, CO 81003 AND AUTHORIZING THE MAYOR TO EXECUTE SAID CONTRACT AND AGREEMENT BE IT ORDAINED BY THE CITY COUNCIL OF PUEBLO, that: SECTION 1. The Contract to Buy and Sell Real Estate (“Contract”) and the Development Agreement (“Agreement”) between the City of Pueblo, a Colorado municipal corporation and Jignesh Patel, an individual, both dated July 26, 2021, copies of which are attached hereto, having been approved as to form by the City Attorney, are hereby approved. The Mayor is authorized to execute and deliver said Contract and said Agreement in the name of the City and the City Clerk is authorized to affix the seal of the City thereto and attest same. The Mayor is further authorized to execute and deliver at closing such other usual and customary documents which are necessary to conclude the sale transaction approved by this Ordinance. SECTION 2. The officers and staff of the City are authorized to perform any and all acts consistent with this Ordinance and the attached Contract and Agreement which are necessary or desirable to implement the transactions described therein. SECTION 3. This Ordinance shall become effective on the date of final action by the Mayor and City Council. Action by City Council: Introduced and initial adoption of Ordinance by City Council on July 26, 2021 . Final adoption of Ordinance by City Council on August 9, 2021 . President of City Council Action by the Mayor: ☒ Approved on August 12, 2021 . □ Disapproved on based on the following objections: _ Mayor Action by City Council After Disapproval by the Mayor: □ Council did not act to override the Mayor's veto. □ Ordinance re-adopted on a vote of , on □ Council action on _______ failed to override the Mayor’s veto. President of City Council ATTEST City Clerk City Clerk’s Office Item # R-10 Background Paper for Proposed Ordinance COUNCIL MEETING DATE: July 26, 2021 TO: President Lawrence W. Atencio and Members of City Council CC: Mayor Nicholas A. Gradisar VIA: Marisa Stoller, City Clerk FROM: Daniel C. Kogovsek, City Attorney SUBJECT: AN ORDINANCE APPROVING A CONTRACT TO BUY AND SELL REAL ESTATE AND A DEVELOPMENT AGREEMENT BETWEEN THE CITY OF PUEBLO, A COLORADO MUNICIPAL CORPORATION AND JIGNESH PATEL RELATING TO THE DEVELOPMENT OF 101 W. RIVERWALK, UNIT 1B, PUEBLO, CO 81003 AND AUTHORIZING THE MAYOR TO EXECUTE SAID CONTRACT AND AGREEMENT SUMMARY: Attached is a proposed Ordinance approving and authorizing the Mayor to sign a Contract to Buy and Sell Real Estate and a Development Agreement between the City and Jignesh Patel relating to the development of a bar and restaurant at 101 W. Riverwalk, Unit 1B near the HARP Riverwalk. PREVIOUS COUNCIL ACTION: In 2012, Professional Bull Riders, Inc. (PBR”) conveyed 101 W. Riverwalk, Unit 1A and Unit 1B to the City in exchange for a reduction of PBR’s repayment obligation under a previous employment agreement. In 2013, the City issued an RFP to sell Units 1A and 1B. Redding Corp, LLC and Koda LLC, two companies affiliated with SDL Properties, were the successful bidders with a proposal to purchase the Units 1A and 1B for $1,020,000. However, the City was unable to conclude the sale of the property to the successful bidders. In 2017, the City entered into a listing agreement with Rocky Mountain Realty for the sale of Units 1A and 1B. The listing contract has been extended by the City 3 times since then. In 2019, Rocky Mountain Realty presented the City with an offer from Cyrus Investments, LLC, a Colorado limited liability company (“Cyrus”) to purchase of Units 1A and 1B for $850,000. However, the City was unable to conclude the sale of the property to Cyrus. BACKGROUND: Jignesh Patel has offered to purchase Unit 1B only for Three Hundred Seventy-Five Thousand Dollars ($375,000.00) payable as follows: (a) $5,000.00 earnest money deposit;; (b) $320,000.00 in cash or certified funds payable on the Closing Date; (c) A promissory note in the face amount of $50,000.00 payable in 5 years at 6% interest secured by a first-priority Deed of Trust on Unit 1B. Because Mr. Patel has offered to purchase Unit 1B for less than the appraised value and because Mr. Patel has asked the City for an “owner carry” of $50,000, the Mayor and City staff are recommending that Mr. Patel be required to enter into a Development Agreement for Unit 1B. Under the proposed Development Agreement, Mr. Patel is obligated, within two years after the closing of the sale, to construct a bar and restaurant in Unit 1B. In the event that the bar and restaurant are not constructed, Mr. Patel has agreed to pay the City liquidated damages in the amount of $50,000. FINANCIAL IMPLICATIONS: Sale proceeds of approximately $375,000 will be paid into the 1992-2026 Sales and Use Tax Capital Improvements Project Fund. BOARD/COMMISSION RECOMMENDATION: Not applicable to this Ordinance. STAKEHOLDER PROCESS: Not applicable to this Ordinance. ALTERNATIVES: If this Ordinance is not approved, Unit 1B will remain vacant and will not be placed on the real estate tax rolls. RECOMMENDATION: Approve the Ordinance. Attachments: Proposed Ordinance Proposed Buy and Sell Contract Proposed Development Agreement Proposed Special Warranty Deed Proposed Promissory Note Proposed Deed of Trust CONTRACT TO BUY AND SELL REAL ESTATE THIS CONTRACT TO BUY AND SELL REAL ESTATE ("Contract") is made and entered into as of July 26, 2021 (the "Effective Date") by and between the City of Pueblo, a Colorado municipal corporation (the "Seller") and Jignesh Patel, an individual (the "Purchaser"). Seller and Purchaser are sometimes referred to herein as a "Party" and collectively, as the "Parties." 1. Property Defined. The Seller agrees to sell and convey to the Purchaser, and the Purchaser agrees to purchase from the Seller, all that certain plat, piece, and improved parcel of land having the following legal description (the "Property"): Unit 1B, Riverwalk Place Building Condominiums, Pueblo County, Colorado, more commonly known as 101 W. Riverwalk, Unit 1B, Pueblo, CO 81003 The Property shall be conveyed by Special Warranty Deed ("Deed") a form of which, marked as Exhibit 1, is attached hereto and incorporated herein by reference. The Property shall be conveyed subject to and subordinate to all easements, reservations, restrictions, covenants, limitations, rights-of-way and conditions of record and zoning and subdivision regulations and resolutions of the City of Pueblo and the Permitted Exceptions (as hereinafter defined), which shall be listed as exceptions in the Special Warranty Deed, subject to satisfaction of the conditions listed in this Contract. The conveyance agreed to herein is of the surface estate of Property only. No mineral estate or water rights are conveyed hereby. 2. Purchase Price and Terms. The Purchase Price for the Property shall be Three Hundred Seventy-Five Thousand Dollars ($375,000.00) payable as follows: (a) $5,000.00 earnest money deposit to be paid upon execution of this Contract and held by the Land Title Guarantee Company ("Title Company"); (b) $320,000.00 in cash or certified funds payable on the Closing Date (as defined in Paragraph 5 below); (c) Delivery by Purchaser to Seller of(i) a promissory note in the face amount of $50,000.00 to be signed by Purchaser and made payable to Seller (a form of which, marked as Exhibit 2 is attached hereto and incorporated herein by reference).and (ii) a first-priority Deed of Trust encumbering the Property (a form of which, marked as Exhibit 3 is attached hereto and incorporated herein by reference). 3. Title Commitment and Policy. Within ten (10) days of the date hereof and, in any event, at least twenty (20) days prior to the Closing Date, Seller shall order and obtain, and deliver to Purchaser, at Seller's expense, a current commitment for extended coverage title insurance in the amount of the Purchase Price, together with legible copies of all documents listed as exceptions therein, and a current certificate of taxes due with respect to the Property, from the Title Company, on the current standard form of extended ALTA Owners Policy (collectively, the "Title Commitment"). The Title Company shall promptly provide copies of any amendments or modifications of the Title Commitment to Purchaser. Purchaser shall have the right to review the Title Commitment and the title documents and notify Seller in writing of any title objections to the title exceptions set forth in the Title Commitment. Seller shall have five (5) days from receipt of notice of such objections within which to eliminate or modify (or agree in writing to so eliminate or modify) any such unacceptable exceptions to the reasonable satisfaction of Purchaser, but Seller shall have no obligation whatsoever to so eliminate or modify any such unacceptable exceptions. In the event that Seller is unable or unwilling to 1 eliminate or modify (or agree in writing to so eliminate or modify) such unacceptable exceptions to the reasonable satisfaction of Purchaser on or before the expiration of said five (5) day period, Seller shall notify Purchaser in writing of such fact within said five (5) day period or be deemed to have so notified Purchaser with respect to all such unacceptable exceptions not theretofore cured upon the fifth (5th) day of said period. In such event, Purchaser shall, prior to the Closing Date either (i) waive such objections and accept title to the Property subject to title exceptions set forth in the Title Commitment (the "Permitted Exceptions"), or (ii) terminate this Contract by written notice to Seller, whereupon the $5,000.00 earnest money deposit shall be returned to Purchaser and this Contract shall automatically be terminated and of no further force and effect, except as otherwise expressly set forth herein. At Closing or as soon as reasonably practicable after Closing, the Title Company shall issue and deliver to Purchaser the owner's title insurance policy referred to above (the "Title Policy"), issued by the Title Company insuring Purchaser's title to the Property consistent with the Title Commitment subject only to taxes and assessments for the year of Closing and subsequent years, subject to and subordinate to all easements, reservations, restrictions, covenants, limitations, rights-of-way and conditions of record and zoning and subdivision regulations and resolutions of the City of Pueblo and the Permitted Exceptions. At Closing, Seller shall pay the premium for the Title Policy. Purchaser may obtain such other endorsements to the Title Policy as Purchaser desires, at the expense of Purchaser. Seller shall provide such affidavits or certificates, and pay such expenses, as may be required by the Title Company to remove all liens, including, without limitation, mechanics' or materialmen's liens, as exceptions to the Title Policy. 4. Transfer of Title. Subject to payment of the Purchase Price, compliance by Purchaser with the other terms and provisions hereof, Seller shall execute and deliver to Purchaser at Closing a Special Warranty Deed conveying marketable fee simple title to the Property to Purchaser free of financing, mortgage, judgment and tax liens, subject only to the Permitted Exceptions which shall include all matters shown on the Title Commitment accepted by Purchaser. 5. Closing Time and Place and Closing Costs. . Purchaser and Seller shall sign and complete all customary or required documents at or before Closing. Closing of the transaction contemplated hereby ("Closing") shall be held at the offices of Land Title Guarantee Company, 503 N. Main Street, Pueblo, CO 81003 on September 10, 2021. The Purchaser and Seller shall each be responsible for the payment of one half of all closing costs. All other costs and expenses incident to this transaction and the Closing thereof shall be paid by the party incurring same. 6. Prorations. General taxes and assessments for the year of Closing, if any (which shall be based on the taxes for the calendar year immediately preceding Closing), water, sewer, utility charges and other usual and customary items shall be prorated between Seller and Purchaser as of the Closing Date. 7. Possession. Possession of the Property shall be delivered to Purchaser by Seller on the Closing Date. 8. Historic Arkansas Riverwalk of Pueblo. Purchaser acknowledges that the Property is located within the Historic Arkansas Riverwalk of Pueblo ("HARP") and is governed by the HARP protective covenants of record and subject to the jurisdiction of the HARP Authority. In connection therewith, Purchaser acknowledges the following: (a) Common Area Maintenance Fees: From and after the date of Closing, Purchaser shall be obligated to pay annual Common Area Maintenance ("CAM") fees as follows: (i) Unit 1-B: approximately $4,183.33 per year; 2 (ii) Common Space (elevator and restrooms): approximately $2,940.38 per year. (b) Additional janitorial and elevator maintenance expenses: To be negotiated with the HARP Authority. (c) Patio: A patio space lease is available in front of Unit 1-B. Terms to be negotiated with the HARP Authority. (d) Parking. Purchaser may request reserved parking in the Lake Elizabeth parking lot managed by the HARP Authority. Terms to be negotiated with the HARP Authority. 9. Inspection. Commencing on the Effective Date and continuing during the term of this Contract until the first to occur of the Closing Date or termination of this Contract, Purchaser, its agents, consultants and employees, shall have the right to enter and access the Property at reasonable times and upon reasonable advance notice for the purpose of making such inspections and investigations as Purchaser may elect and which it deems necessary to determine the suitability of the Property for Purchaser's intended use. All such inspections shall be performed by Purchaser or its agents or employees at Purchaser's sole cost and expense. Purchaser shall indemnify, defend and hold Seller and the Property harmless from and against any and all direct costs, liabilities, claims, demands, actions and expenses arising from or in connection with such inspections and, in the event Purchaser does not close on the purchase of the Property, Purchaser shall repair any damage to the Property or improvements thereon caused by such inspections. If Purchaser is not satisfied with the physical condition of the Property, Purchaser may terminate this Contract by written notice given to Seller prior to the Closing Date and the $5,000.00 earnest money deposit shall be returned to Purchaser. 10. Notices. Any notice required or permitted to be given or delivered under this Contract shall be in writing and shall be given by personal delivery, or by the United States Postal Service, by registered or certified mail, postage prepaid, or reputable national overnight courier service: (a) If to Seller, addressed to: Mayor City of Pueblo 1 City Hall Place, 2nd Floor Pueblo, Colorado 81003 with a copy to: City Attorney 1 City Hall Place, 3rd Floor Pueblo, Colorado 81003 Telephone No. (719) 562-3899 (b) If to Purchaser, addressed to: Jignesh Patel or to such other address or person as any party may from time to time specify in a writing 3 delivered to the other party in the manner provided in this paragraph. Any notice shall be deemed delivered on the day on which personal delivery is effected or three (3) days after deposit in the mail in the case of registered or certified mail, and one (1) business day in the case of overnight courier. 11. Third Parties. The provisions of this Contract and of the documents to be executed and delivered at Closing are and will be for the benefit of Seller and Purchaser, and their respective heirs, executors, administrators, successors and assigns only and are not for the benefit of any third party, and accordingly, no third party shall have the right to enforce the provisions of this Contract or of the documents to be executed and delivered at Closing. 12. Modification. No subsequent modification of any of the terms of this Contract shall be valid or binding upon the Parties or enforceable unless made in writing and signed by the Parties. 13. Captions. The captions in this Contract are inserted for convenience of reference only and in no way define, describe or limit the scope or intent of this Contract or any of the provisions hereof. 14. Broker. Purchaser and Seller represent and warrant to the other as follows: (a) No broker or finder has been engaged by Purchaser in connection with this transaction. Purchaser agrees to indemnify, defend and hold Seller harmless from and against any and all claims, loss, liability, costs and expenses (including reasonable attorneys' fees), resulting from any claims that may be made against Seller by any broker or other person claiming a commission, fee or other compensation by reason of the transaction contemplated hereby if the same shall arise by, through or on account of Purchaser. (b) Seller has retained Shawn Martinez of Rocky Mountain Realty as Listing Broker ("Listing Broker") for the sale of the Property. At Closing, Seller shall be solely responsible for the payment of all commissions and fees owed to the Listing Broker under a Listing Contract entered into between the Seller and the Listing Broker, or otherwise. Seller agrees to indemnify, defend and hold Purchaser harmless from and against any and all claims, loss, liability, costs and expenses (including reasonable attorneys' fees), resulting from any claims that may be made against Purchaser by any broker (including the Listing Broker) or other person claiming a commission, fee or other compensation by reason of the transaction contemplated hereby if the same shall arise by, through or on account of Seller. 15. Interpretation. Whenever the context so requires, the singular number shall include the plural and the plural the singular, and the use of any gender shall include all genders. 16. Survival of Representations. The representations, warranties, covenants and agreements of Purchaser and Seller in this Contract, including but not limited to the Disclaimers contained in Section 18 hereof, are and shall be construed to be covenants running with the Property, shall survive the Closing of the transaction contemplated hereby and recordation of the Special Warranty Deed, may be enforced by either Purchaser or Seller after Closing Date, and shall not be merged or be deemed to be merged into the Special Warranty Deed. 17. Time of Essence/Default and Remedies. Time is of the essence hereof. If any obligation required to be performed prior to closing (and including the obligation to close) is not performed there shall be the following exclusive remedies: (a) If Purchaser is in Default: In the event Purchaser defaults in the 4 performance of its obligations hereunder prior to Closing, Seller shall have the right to: (i) to terminate this Contract by written notice to Purchaser and all Earnest Money will be paid to and retained by Seller. It is agreed that the Earnest Money is liquidated damages and not a penalty and the Parties agree that the amount is fair and reasonable; or (ii) to treat this Contract as being in full force and effect and Seller has the right to specific performance or damages or both. (b) If Seller is in Default: In the event Seller defaults in the performance of its obligations hereunder, Purchaser shall have the right to: (i) terminate this Contract by written notice to Seller in which case all Earnest Money received hereunder shall be returned to Purchaser; or (ii) treat this Contract as being in full force and effect and to obtain specific performance, but not any damages. (c) Costs and Attorneys' Fees. Anything to the contrary herein notwithstanding, in the event of any action or litigation arising out of this Contract, the court shall award to the prevailing party all reasonable costs and expenses, including reasonable attorneys' fees. Exclusive venue and jurisdiction for any such litigation shall be in the District Court in and for Pueblo County, Colorado and to the maximum extent permitted by law, Purchaser and Seller waive their right to a trial by jury. The provisions of this subparagraph (c) shall survive Closing or termination of this Contract. 18. Disclaimers. EXCEPT AS EXPRESSLY SET FORTH IN THIS CONTRACT , IT IS UNDERSTOOD AND AGREED THAT SELLER IS NOT MAKING AND HAS NOT AT ANY TIME MADE ANY WARRANTIES OR REPRESENTATIONS OF ANY KIND OR CHARACTER, EXPRESS OR IMPLIED, WITH RESPECT TO THE PROPERTY, INCLUDING, BUT NOT LIMITED TO, ANY WARRANTIES OR REPRESENTATIONS AS TO HABITABILITY, MERCHANTABILTY, FITNESS FOR A PARTICULAR PURPOSE, TITLE (OTHER THAN SELLER'S SPECIAL WARRANTY OF TITLE TO BE SET FORTH IN THE SPECIAL WARRANTY DEED), ZONING, TAX CONSEQUENCES, PHYSICAL OR ENVIRONMENTAL CONDITION (INCLUDING, BUT NOT LIMITED TO, HAZARDOUS MATERIALS CONTAMINATION), UTILITIES, OPERATING HISTORY OR PROJECTIONS, VALUATION, GOVERNMENTAL APPROVALS, THE COMPLIANCE OF THE PROPERTY WITH GOVERNMENTAL LAWS, OR ANY OTHER MATTER OR THING REGARDING THE PROPERTY. PURCHASER ACKNOWLEDGES AND AGREES THAT, EXCEPT AS EXPRESSLY SET FORTH IN THIS CONTRACT AND THE SPECIAL WARRANTY OF TITLE TO BE SET FORTH IN THE SPECIAL WARRANTY DEED, UPON CLOSING, SELLER SHALL SELL AND CONVEY TO PURCHASER AND PURCHASER SHALL ACCEPT THE PROPERTY "AS IS, WHERE IS, WITH ALL FAULTS." 19. All understandings and agreements heretofore had between the Parties hereto are merged into this Contract , which alone fully and completely express their agreement, and this Contract is entered into after full investigation, neither party relying upon any statement or representation, not embodied in this Contract, made by the other. 20. If any provision of this Contract is determined by a court of competent jurisdiction to be invalid or unenforceable, the remainder of this Contract shall nonetheless remain in full force and effect. 21. Applicable Law. Venue and Jury Trial Waiver. This Contract shall in all respects be governed by, and construed in accordance with, the laws of the State of Colorado. Seller 5 and Purchaser hereby irrevocably submit to the personal and subject matter jurisdiction of the District Court, Pueblo County, State of Colorado in any action or proceeding arising out of or relating to this Contract and hereby irrevocably agree that all claims in respect of such action or proceeding shall be heard and determined in the District Court of Pueblo County, State of Colorado. To the full extent permitted by law, Purchaser and Seller hereby waive their rights to a trial by jury. .4, 22. Liability of Seller. In no event shall Seller, its officers, agents or employees be liable to Purchaser for damages, including without limitation, compensatory, punitive, indirect, special or consequential damages, resulting from or arising out of or related to this Contract or the performance or breach thereof by Seller or the failure or delay of Seller in the performance of any covenant or provision under this Contract on its part to be performed. In consideration of City entering into this Contract, Purchaser hereby waives and discharges Seller, its officers, agents and employees from all claims for any and all such damages. In the event of a breach of this Contract by the Seller, Purchaser's sole and exclusive remedy shall be to bring an equitable action for specific performance in the District Court of Pueblo County, Colorado. Such violations may be restrained or such obligations enforced by injunction at the instance and request of Purchaser without the showing of any special damages or an inadequate remedy at law. 23. Counterparts. This Contract may be executed in any number of counterparts, and each such counterpart shall be deemed for all purposes to be an original, and all such counterparts shall together constitute but one and the same original. 24. The following schedules or exhibits attached hereto shall be deemed to be an integral part of this Contract : Exhibit 1 — Form of Special Warranty Deed Exhibit 2— Form of Promissory Note Exhibit 3— Form of Deed of Trust 25. The section headings appearing in this Contract are for convenience of reference only and are not intended, to any extent and for any purpose, to limit or define the text of any section or any subsection hereof. 26. The Parties acknowledge that the Parties and their counsel have reviewed and revised this Contract and that the normal rule of construction to the effect that any ambiguities are to be resolved against the drafting party shall not be employed in the interpretation of this Contract or any exhibits or amendments hereto. 27. The failure to enforce any provision of this Contract shall not operate as a waiver of any preceding or future breach of any such provision or any other provision hereof. 28. Neither party shall record this Contract or any short form memorandum of this Contract. Executed at Pueblo, Colorado, the day and year first above written. SELLER: CITY OF PUEBLO, CO A MUNICIPAL CORPORATION 6 By: Xes;e4s/ Nicholas A. Gr Isar Mayor ATTESTED BY: • CIT' C ERK PURCHASER: Jignesh Patel STATE OF COLORADO ) ) ss. COUNTY OF PUEBLO ) The foregoing instrument was acknowledged before me this day of 2021 by Jignesh Patel, as Purchaser. Witness my hand and official seal. My commission expires: [ SEAL ] Notary Public 7 PURCHASER: Jig atel STATE OF COLORADO ) ) ss. COUNTY OF PUEBLO ) rd The foregoing instrument was acknowledged before me this �3 day ofq4,11,1F, 2021 by Jignesh Patel, as Purchaser. Witness my hand and official seal. My commission expires: ]] I 5igln I . ,1 LISA M ROMO to ,� I ,//t [ SEAL] NOTARY PUBLIC Notary if bli• STATE OF COLORADO NOTARY ID 20094036278 My Commission Expires November 5,2021 7 DEVELOPMENT AGREEMENT THIS DEVELOPMENT AGREEMENT ("Development Agreement") is made this 26th day of July, 2021 between the City of Pueblo, a Colorado municipal corporation (hereinafter called the "Seller") and Jignesh Patel, an individual (hereinafter called the "Purchaser"). Seller and Purchaser are sometimes referred to herein as a "Party" and collectively, as the "Parties." Recitals WHEREAS, the Seller and Purchaser have entered into that certain contract to buy and sell real estate, of even date herewith, for the purchase and sale of that certain parcel of improved land having the following legal description: Unit 1B, Riverwalk Place Building Condominiums, Pueblo County, Colorado, more commonly known as 101 W. Riverwalk, Unit 1B, Pueblo, CO 81003 ("Property"); WHEREAS, Purchaser has agreed to develop the Property as a bar and restaurant in the Seller's emerging downtown area. NOW THEREFORE, in consideration of the foregoing recitals and other good and valuable consideration, the receipt and adequacy of which is hereby acknowledged, Seller and Purchaser agree as follows: 1. Construction of Bar and Restaurant. Purchaser agrees, at its own expense, to furnish and provide all labor, materials, permits, utility service, tools and equipment to construct a first-class bar and restaurant on the Property, in compliance with all applicable laws, codes and regulations. Purchaser agrees that it shall diligently construct same in an expeditious manner through qualified workers and contractors and shall fully complete all said construction and provide the bar and restaurant ready for occupancy, within two (2) years of the date of the closing of the sale of the Property by Seller to Purchaser. Time is of the essence hereof. The aforesaid two-year deadline shall not be extended for any reason, including but not limited to inclement weather, strikes, material shortages, acts of God or the inability of the Purchaser to procure sufficient workers or materials. Any failure by Purchaser to timely commence, prosecute or complete said construction in a timely manner shall be deemed a material default hereunder. This Section 1 of this Development Agreement shall hereinafter be referred to as the "Construction Covenant." 2. Liquidated damages. Seller and Purchaser stipulate and agree as follows: A. A major component of Seller's economic development plan is to make the City of Pueblo a tourist destination and thereby create jobs for local residents in the hospitality industry. The primary purpose of Seller in entering into the Contract to Buy and Sell Real Estate is to increase tourism and business activity in Seller's downtown area near the Riverwalk. If Purchaser breaches the Construction Covenant, Purchaser and Seller agree that Seller will suffer substantial actual damages in the form of lost or delayed sales and use tax and lodger's tax revenues to the Seller. Such actual damages would accrue over a number of years. B. The parties hereto likewise stipulate that, as of the date of this Development Agreement, it is difficult to ascertain the amount of actual damages that would result from Purchaser's breach of the Construction Covenant. Therefore, in the event of such breach, the parties intend to liquidate damages in the amount of Fifty Thousand Dollars ($50,000.00) to be immediately paid by Purchaser to Seller. 1 C. Seller and Purchaser further agree that, as of the date of this Development Agreement, $50,000.00 is a fair and reasonable estimate of the presumed actual damages that the Purchaser's breach of the Construction Covenant would cause Seller. The parties stipulate that said sum is a good faith estimate of actual damages and in no way constitutes a penalty. D. Purchaser and Seller hereby declare their intent to liquidate damages for two reasons. First, electing liquidated damages provides certainty of result should Purchaser fail to timely build a yet-to-be-constructed bar and restaurant. Second, the parties wish to forgo the possibility of lengthy and costly litigation over the issue of actual damages. 3. Deed of Trust. The Purchaser's performance of the Construction Covenant, including the payment of Fifty Thousand Dollars ($50,000.00) in liquidated damages, shall be secured by a Deed of Trust encumbering the Property. A form of the Deed of Trust, marked as Exhibit 3, is attached hereto and incorporated herein by reference. Purchaser covenants with and warrants to the Seller that the Deed of Trust shall constitute a first priority lien or encumbrances and that there are and will be no senior liens or encumbrances against the Property. Seller agrees that upon Purchaser's timely compliance with the Construction Covenant and payment in full of the Fifty-Thousand Dollar ($50,000.00) promissory note to be delivered by Purchaser at Closing, as part of the purchaser price, Seller shall cause said Deed of Trust to be released. 4. Cooperation with the Historic Arkansas Riverwalk of Pueblo ("HARP") Authority. The Property is located within the boundaries of the Historic Arkansas Riverwalk of Pueblo. Purchaser hereby agrees to cooperate, in good faith, with the HARP Authority in the development and operation the Property as a bar and restaurant. Purchaser agrees to comply with all covenants governing the construction and use of the bar and restaurant, including but not limited to, the timely payment of all Common Area Maintenance ("CAM") fees. 5. Seller and Purchaser agree that the provisions of this Development Agreement shall survive the Closing of the sale of the Property by Seller to Purchaser and the recording of the Special Warranty Deed to the Property. 6. All understandings and agreements heretofore had between the parties hereto are merged into this Development Agreement and the Contract to Buy and Sell Real Estate, which alone fully and completely express their agreement, and this Development Agreement and the Contract to Buy and Sell Real Estate are entered into after full investigation, neither party relying upon any statement or representation, not embodied in this Development Agreement or the Contract to Buy and Sell Real Estate, made by the other. 7. This Development Agreement may not be changed or terminated orally. 8. The provisions in this Development Agreement are to apply to and bind, and inure to the benefit of, the heirs, executors, administrators, successors, and assigns of the respective parties. 9. If any provision of this Development Agreement is determined by a court of competent jurisdiction to be invalid or unenforceable, the remainder of this Development Agreement shall nonetheless remain in full force and effect. 10. Applicable Law. THIS DEVELOPMENT AGREEMENT SHALL IN ALL RESPECTS BE GOVERNED BY,AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF COLORADO. SELLER AND PURCHASER HEREBY IRREVOCABLY SUBMIT TO THE PERSONAL AND SUBJECT MATTER JURISDICTION OF THE DISTRICT COURT, PUEBLO COUNTY, STATE OF COLORADO IN ANY ACTION OR PROCEEDING ARISING 2 OUT OF OR RELATING TO THIS DEVELOPMENT AGREEMENT AND HEREBY IRREVOCABLY AGREE THAT ALL CLAIMS IN RESPECT OF SUCH ACTION OR PROCEEDING SHALL BE HEARD AND DETERMINED IN THE DISTRICT COURT OF PUEBLO COUNTY, STATE OF COLORADO. PURCHASER AND SELLER AGREE THAT THE PROVISIONS OF THIS SECTION 10 SHALL SURVIVE THE CLOSING OF THE SALE OF THE PROPERTY BY SELLER TO PURCHASER AND THE SUBSEQUENT RECORDING OF THE SPECIAL WARRANTY DEED. TO THE FULL EXTENT PERMITTED BY LAW, PURCHASER AND SELLER HEREBY WAIVE THEIR RIGHTS TO A TRIAL BY JURY. 11. The provisions of this Development Agreement are and will be for the benefit of Seller and Purchaser, and their respective heirs, executors, administrators, successors and assigns only and are not for the benefit of any third party, and accordingly, no third party shall have the right to enforce the provisions of this Development Agreement. 12. The following exhibit attached hereto shall be deemed to be an integral part of this Development Agreement: Exhibit 3— Form of Deed of Trust 13. The section headings appearing in this Development Agreement are for convenience of reference only and are not intended, to any extent and for any purpose, to limit or define the text of any section or any subsection hereof. 14. The parties acknowledge that the parties and their counsel have reviewed and revised this Development Agreement and that the normal rule of construction to the effect that any ambiguities are to be resolved against the drafting party shall not be employed in the interpretation of this Development Agreement or any exhibit or amendments hereto. 15. The failure to enforce any provision of this Development Agreement shall not operate as a waiver of any preceding or future breach of any such provision or any other provision hereof. 16. Neither party shall record this Development Agreement or any short form memorandum of this Development Agreement. Executed at Pueblo, Colorado, the day and year first above written. SELLER: City of Pueblo, CO a Colorado municipal corporation By: t Nicholas K. radisar Mayor ATTESTED BY: eXQ - CI ix.yLERK PURCHASER: 3 Ji. atel STATE OF COLORADO ) ) ss. COUNTY OF PUEBLO ) ??� The foregoing instrument was acknowledged before me this 0J day of . , 2021 by Jignesh Patel, as Purchaser. Witness my hand and official seal. My commission expires: II 151 awl . / • [ SEAL] .-.-- I., 18_ Aa11 .1I .I LISA M ROMO Notary P j• is NOTARY PUBLIC , STATE OF COLORADO) NOTARY ID 20094036278 My Commission Expires November 5,2021 4