Approved Agreements and Contracts LRS ASP Updated Construction Agreement 11-07-22

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                     Agenda Item Review Form
                                                  us                             GO
                        Muskegon City Commission

Commission Meeting Date: November 7th, 2022               Title: LRS ARP Updated Construction

Submitted By: Jake Eckholm                                Department: Development Services

Brief Summary:
Staff is requesting that Commission amend the construction and development agreement with Mr.
Rubin Briggs, LRS Enterprises to accommodate a Priority Related Investment Loan from the
Community Foundation for Muskegon County.

Detailed Summary & Background:
Mr. Briggs proved capable of working with the city during the Jackson Hill Infill Housing Pilot,
where 2 homes on Leonard were constructed . Commission awarded LRS Enterprises with an ARP
agreement for 6 homes, with half the money from ARP and the other half from the developer's own
financing . We have found this to be a hardship for smaller, minority owned builders who do not
have the access to capital of some of our larger partners.

In an effort to be equitable and not let a systemic barrier to our own program disqualify builders of
color, staff has secured a Priority Related Investment Loan from the Community Foundation for
Muskegon County to cover Mr. Briggs' $750,000 of the original contract. This would be a loan in
the city's name at prime (5 .5%) plus 2 percent interest with a .5% increase on January 1, 2023,
and would be paid back first as the homes sell. Any additional profits from sale would go the Public
Improvement Fund . The updated purchase agreement reflects this PRI, which will return to the
Commission for final approval and signatures. The Act 99 Installment Purchase Agreement
agenda item on this docket is a precursor to the PRI approval.

Goal/Focus Area/Action Item Addressed:
Goal 1 (Image) Housing Focus Area, Goal 2 (Quality of Life) Housing Focus Area, Action Item 21-8
Expand Housing Options, Goal 3 (Revitalize Revenues) Social Equity Focus Area, Action Item 21-
11 Increase Opportunities for Minorities in Economic Development, and Goal 3 (Revitalize
Revenues) Housing Focus Area, Action Item 21-13 Increase Property Values in Urban Core and
Eastside Neighborhoods

Amount Requested : $750,000                          Amount Budgeted : NIA

Fund(s) or Account(s): (101) to (404)                 Fund(s) or Account(s) : N/A

Recommended Motion : Motion to accept the construction agreement as presented and to
authorize the Mayor and Clerk to sign.
Approvals:                                                  Guest(s) Invited / Presenting:
Immediate Division Head    ■   Information Technology   □   Yes
Other Division Heads
                           ■   Communication
                                                        □   No
For City Clerk Use Only:
Commission Action:




           LRS Enterprises

        This Agreement is effective on      ~t9:1/ · l           ,
                                                       2022 ("Effective Date") between LRS
Enterprises of 525 South Dangl Street, Muskegon, MI 49442 ("Builder") and THE CITY OF
MUSKEGON of 933 Terrace Street, Muskegon, MI 49440 ("Owner") with reference to the following


        Builder and Owner (individually, a "Party" or collectively, "Paiiies") agree that Builder shall
develop five (5) lots with six (6) owner-occupied housing units (collectively the "Residences") for Owner
on the terms and conditions set forth in this Agreement and in the general conditions attached as Exhibit
A ("General Conditions").

        The parties agree as follows:

       1. Building Site. Owner owns the building sites located at 754 Leonard, 750 Leonard, 740
    Leonard, 730 Leonard, and 628 Mulder Street, Muskegon, Michigan 49442 and legally described on
    Exhibit B (the "Propetiy"). Owner has agreed to hire Builder to build the Residences on the Propetiy.

        2. The Residences. Builder shall build the Residences in accordance with the plans and
    specifications attached as Exhibit C (the _"Plans").

       3. Price. The total price for constructing the Residences shall be One Million Five Hundred
    Thousand Dollars and 00/100 ($1,500,000.00) ("Price").

        4. Estimated Completion Date. Builder shall commence construction of the Residences within
    _ _ days from the Effective Date ("Commencement Date"). Builder shall complete the Residences
    within _ _ weeks of the Commencement Date ("Completion Date").

         5. General Conditions. Owner and Builder agree to all of the General Conditions attached to
    this Agreement as Exhibit A.

                                                        Builder - LRS Enterprises

                                                          D '!fr..
                                                        Date:        /D/,io

                                                         Owner -THE CITY OF MUSKEGON

                                             EXHIBIT A

                                    GENERAL CONDITIONS

    1. Payment of the Price. The Price shall be paid in accordance with the following schedule
("Payment Schedule"):

            a.   Foundation installed .................................... 20% of the Price
            b.   Mechanicals installed ................................... 40% of the Price
            c.   Certification of Occupancy ............................. 30% of the Price
            d.   Completion of Punch List Items ...................... 10% of the Price

    2. Costs Included in Price. Unless excluded by Section 3 or adjusted as set forth in Sections 4,
the Price is fixed and includes all cost of labor and materials purchased, including all sales taxes
incurred by Builder, for complete construction of the Residences. Price is not based on allowances or
estimates of costs for items to be added to the Residences. The Price includes:

            a.   A security system;
            b.   A driveway;
            c.   Curb cut (Builder may use existing curb cut unless damaged);
            d.   Sod/seed over the entire front, back and side yards;
            e.   A street tree;
            f.   A small landscape package along each side of the Residences with street frontage;
            g.   Edging and mulch;
            h.   Builder fee in the amount of 10% of the Price. .

    3. Costs Excluded From Price. Owner shall be responsible for each of the following items and
the cost of each item shall be excluded from the Price and the sole responsibility of Owner:

            a. Lot Lines. Prior to the Commencement Date Owner shall own the Property with new
            lot lines established as depicted on the Site Plan.

            b. Site Preparation. Prior to the Commencement Date, Owner will prepare the Property
            for construction of the Residence, including the removal of the following:

                      i.      existing fences;
                      11.     community garden;
                      iii.    existing sidewalks; and,
                      iv.     debris.

            c.   Water and Sewer Leads. Owner will provide water and sewer leads to the Residence.

            d. Permit and Connection Fees. Owner shall be responsible for any municipal permits,
            connection fees, tap fees or assessments, including sewer and water connection fees.

            e. Site Variance. Any abnormal site conditions discovered during excavation will be
            communicated to Owner along with an estimated cost to proceed with construction.
            Examples include such items as buried debris, bad soils, or rear yard drainage constraints.
            Any additional site work required will be corrected by Owner unless Owner authorizes
            Builder to correct any site variance issues in writing and the appropriate Change Order is
            fully executed.
           f. Damaged Curb Cuts. Any damaged curb cuts will either be approved for use or
           removed by Owner.

           g. Irrigation. Irrigation can be added for $3,000, provided the appropriate Change Order
           is fully executed.

           h. Future Security System Service Fees. Ongoing monitoring service fees will be the
           responsibility of Owner or subsequent owner.

    4. Modifications/Extras. No modifications to the Plans ("Modifications") or requests for
additional construction ("Extras") shall be binding upon either party, unless the Modifications or
Extras are set forth on a written Change Order that is signed by Builder and Owner in substantially
the form as attached };xhibit E ("Change Order"). The Change Order must provide a detailed
description of the Modifications or Extras and the cost or credit to be charged. In those instances
where a Change Order increases or decreases the Price by more than $200 ("Adjusted Price"), the
Adjusted Price shall be paid according to the remaining portion of the Payment Schedule.

     5. Payments, Sworn Statement and Lien Waivers. Payments required by the Payment
Schedule shall be made within 10 days of Builder's invoice by Owner to Transnation Title Insurance
Company of 570 Seminole, Muskegon, Michigan 49441(the "Title Company"). Builder will deliver
to the Title Company a sworn statement showing all amounts due for labor and materials furnished in
connection with construction of the Residences or other improvements to the Property through the
date of Builder's invoice together with waivers of lien showing all amounts from any previous draw
have been paid in full. The Title Company shall pay Builder per the Payment Schedule within 2
business days of approval by the Title Company of the last sworn statement provided proper partial
unconditional waivers of lien from Builder and for each supplier and sub-contractor to whom
payment has been made are received and approved by the Title Company.

    6. Possession. Owner shall be entitled to possession of the Residences upon payment of the
Price in full.

    7. Extension of Dates. Any date may be extended by agreement of the Builder and Owner and
the Commencement Date and the Completion Date may be extended as a result of circumstances
beyond the control of Builder, including, but not limited to, delays caused by suppliers or
subcontractors, delays for utility hook-ups, Acts of God, labor disputes, governmental inspections,
regulations, or permit processes, material back orders, Owner's requests for Change Orders, fire,
injury or disability to Builder, or weather.

    8. Builder's Warranties. Builder shall complete the Residences and all improvements on the
Property timely and in a first class manner. All building materials used in the construction of the
Residences shall be new. Builder guarantees its workmanship for a period of 12 months from the
date of sale or lease of the Residences to a party other than Owner or 24 months from the date of the
Certificate of Occupancy, whichever first occurs ("Warranty Period"). This warranty is fully
transferable by Owner and may be assigned to a 3rd party. Within the Warranty Period, Builder may
replace, at its option, any materials incorporated into the Residences which are defective. To make a
claim under this warranty, Owner or its successor must give Builder written notice of any such defect
in the workmanship and/or materials promptly upon discovery and not later than expiration of the
Warranty Period. This warranty does not apply to workmanship or materials requiring repair or
replacement because of normal wear and tear, natural settling or mold. Builder shall turn over and
transfer to Owner all manufacturers' warranties that are delivered directly to Builder by the
manufacturer at the time of final payment by Owner. In addition to this warranty between Builder and
Owner and successors of Owner, Builder shall also provide to Owner and successors of Owner at no
cost to Owner the Ten Year Warranty for New Homes provided by Residential Warranty Company,
LLC attached as Exhibit F ("Long Term Warranty"). Nothing in the Long Term Warranty shall limit
the scope of the warranties provided by Builder to Owner or its successors.

    9. Owner's Warranties. Owner covenants and warrants that Owner owns the Property in fee
simple, free and clear of all liens, except for those encumbrances specifically set fmih on Exhibit G.
Owner shall provide evidence satisfactory to Builder, such as a commitment for title insurance issued
by the Title Company, which indicates such ownership. Owner shall locate the exact location of the
Residences on the Prope1ty. All corners of the Prope1ty and the Residences shall be clearly marked
with surveyor stakes. Owner covenants and agrees that such location is in compliance with all
applicable federal, state, and local rules and regulations, including, but not limited to, building
restrictions, set-back requirements and zoning ordinances.

    10. License. Builder is a residential builder and a residential maintenance and altei"ation
contractor and is required to be licensed under article 24 of Act 299 of the Public Acts of 1980, as
amended, being sections 339.2401 to 399.2412 of the Michigan Compiled Laws. An electrician is
required to be licensed under Act No. 217 of the Public Acts of 1956, as amended, being sections
338.881 to 338.892 of the Michigan Compiled Laws. A Plumber is required to be licensed under Act
No. 266 of the Public Acts of 1929, as amended, being sections 338.901 to 338.917 of the Michigan
Compiled Laws. Builder is licensed by the State of Michigan as a licensed Michigan Contractor and
maintains its license in good standing. Builder's License number is 210115 5717 respectively.

    11. Laws, Ordinances and Regulations. In connection with the construction of the Residences,
Builder shall meet and comply with all applicable laws, ordinances, and regulations, including the
Muskegon Historical District rules.

    12. Notice of ,Commencement. Owner shall deliver a Notice of Commencement in accordance
with the Michigan Construction Lien Act within ten days of the Effective Date.

     13. Risk of Loss. Until a Certificate of Occupancy is issued for the Residences the risk of loss for
the Residences lies solely with Builder. Provided, Owner shall be solely responsible for building
materials on Property and Owner shall reimburse Builder for the cost of building materials vandalized
or stolen from the Prope1ty.

    14. Insurance. Builder shall procure and maintain an "all risk" insurance policy and shall name
Owner as an additional named insured. Builder shall maintain a policy of builder's insurance fully
insuring the Residences from the date construction commences until the date of substantial
completion. Owner may also maintain a policy of insurance on their interest in the Residences.
Builder shall also carry public liability insurance with coverage limits not less than $1,000,000
single-limit coverage and worker's compensation insurance in an amount not less than the statutory
minimum. Such policies shall name Owner as an additional named insured. Builder shall provide
Owner with evidence of such insurance upon request. Owner and Builder waive all rights against
each other for damages caused by fire or other perils to the extent covered by insurance provided
under this paragraph.

    15. Diligent Pursuit. Builder shall diligently pursue its obligations under this Agreement.

     16. Default. If either Party believes that the other Patty has failed to comply with this
Agreement ("Default"), the non-defaulting Patty shall provide the Defaulting Party not less than 10
days written notice of such non-compliance, a list of the non-defaulting Party's specific complaints,
and a reasonable time within which the defaulting Patty shall cure the Default ("Default Notice"). If
the defaulting Party fails to cure the Default within the period of time specified in the Default Notice,
the non-defaulting Party may pursue any and all remedies available, including specific performance
in that there may not be an adequate remedy at law. In addition, Owner may replace Builder with
another party to complete construction and may deduct from the Price any amount paid by Owner to
such third party to complete construction in accordance with the Plans. In the event either Party takes
any action to enforce this Agreement, the prevailing Party shall reimburse the other Party for all
expenses incurred by the prevailing Party, including attorney fees.

    17. Cross Default. Contemporaneously with the execution of this Agreement, Owner and
Builder are entering into _      similar agreements for the construction of homes similar to the
Residences on each of the        lots depicted on the Site Plan ("Other Agreements"). Owner and
Builder agree that a default of this Agreement or any of the Other Agreements shall constitute a
default of all Other Agreements and this Agreement.

    18. Dispute Resolution. Any claim or demand of either party arising out of this Agreement,
including without limitation, claims of fraud, misrepresentation, warranty or negligence and that
exceeds $5,500 in value shall be submitted to binding arbitration. The parties shall attempt to agree
on a mutually agreeable independent arbitrator. If the parties are unable to mutually agree on an
arbitrator, and arbitrator shall be selected in accordance with the rules of the American Arbitration
Association. The arbitration shall be conducted in accordance with the rules of the American
Arbitration Association, Home Construction Arbitration Rules and Mediation Procedures. A Circuit
Court judgment may render judgment upon the award made pursuant to this Agreement. This
Agreement is specifically made subject to and incorporates the provisions of the Michigan Arbitration
Act, MCL 600.5001 et seq. The cost of such arbitration shall be divided equally between both
patiies. Neither Party shall be required to submit to arbitration any claim or demand of a value less
than $5,500.

    19. Miscellaneous.

            a. Authority to Bind Owner. No approval, agreement or consent and no document
    signed in connection with this Agreement shall be binding on Owner unless made, given or
    signed by Frank Peterson, Cathy Brubaker-Clarke, or Derrick Smith.

            b. Applicable Law. This Agreement is executed in, shall be governed by, and construed
    and interpreted in accordance with the laws of the State of Michigan.

            c. Entire Agreement. This writing shall constitute the entire Agreement, and shall
    supersede any other Agreements, written or oral, that may have been made or entered into by the
    patiies with respect to the subject matter hereof, and shall not be modified or amended, except in
    a subsequent writing signed by the patiy against whom enforcement thereof is sought.

             d. Binding Effect. This Agreement shall be binding upon, inure to the benefit of, and be
    enforceable by the parties and their respective legal representatives, successors, assigns, officers,
    directors, employees, agents, heirs, executors, and administrators.

             e. Full Execution. This Agreement requires the signature of both parties. Until fully
    executed on a single copy or in counterpatis, this Agreement is of no binding force or effect, and
    if not fully executed, this Agreement is void.

            f. Counterpatis. This Agreement may be executed in two or more counterparts, each of
    which shall be deemed an original as against any party whose signature appears thereon, and all
    of which together shall constitute one and the same instrument. This Agreement shall become
    binding upon the parties when one or more counterpatis, individually or taken together, shall bear
    the signatures of all parties.

        g. Non-Waiver. No waiver by any party of any provision of this Agreement shall
constitute a waiver by such party of such provision on any other occasion or a waiver by such
party of any other provision of the Agreement.

        h. Severability. Should any one or more of the prov1s1ons of this Agreement be
determined to be invalid, unlawful, or unenforceable in any respect, the validity, legality, and
enforceability of the remaining provisions shall not in any way be impaired or affected.

        i. No Discrimination. Discrimination on the basis of religion, race, creed, color,
national origin, age, sex, marital status, or handicapped condition by either party in respect to the
construction of the Residences is prohibited.

        j. Assignment or Delegation. Neither Builder nor Owner may assign all or any part of
this Agreement. Provided, that Builder may delegate all or any part of its obligations to perform
the services under this Agreement, to any persons or entities that Builder, in its sole discretion,
deems appropriate, including sub-contractors. Such delegation shall be at the sole expense of
Builder unless otherwise provided.

         k. Notices. Any notices required or permitted to be given under this Agreement must be
in writing and sent to the address shown below (or such subsequent address as may be designated
by either party in writing) by certified mail, return receipt requested and postage prepaid, a
recognized courier service (Federal Express, UPS, or DHL), or by email with confirmation of
delivery received. The notice will be effective upon receipt.

To Builder:
                 LRS Enterprises
                 525 South Dangl Street
                 Muskegon, MI 49442
                 Attn: Rubin Briggs
                 Phone: 231-855-3775
                 E-mail: Briggsbuilders21

To Owner:
                 City of Muskegon
                 933 Terrace Street
                 P.O. Box 536
                 Attn: Jake Eckholm
                 Phone: 231-724-6780
                 Fax:    231-722-1214

With a contemporaneous copy to:

                 Parmenter Law
                 601 Terrace Street
                 P.O. Box 786
                 Muskegon, Michigan 49443-0786
                 Attn: John Schrier
                 Phone: 231-722-5401
                 Fax:   231-722-5501

         I. Time is of the Essence. Builder and Owner acknowledge and agree that the time
related provisions set forth herein are critical and essential terms of this Agreement and that time
is of the essence with regard to the transactions contemplated in this Agreement. Failure to
strictly comply with the time related provisions of this Agreement will be considered a breach of
the entire Agreement.

        m. Pronouns. For convenience, Owner has been referred to this Agreement sometimes in
the singular and at other times in the plural.

        n. Notice of Sale or Lease. Upon the sale or lease of the Residences by Owner to a third
party, Owner shall provide notice to Builder of such sale or lease and provide builder with all
contact information for the buyer/tenant, including a phone number and an email address.


       EXIDBIT C



                                         CHANGE ORDERS

        Owner has requested, and Builder agrees to the following Modifications to the Plans with the
cost/credit set forth below:

  MODIFICATION                       COST                      CREDIT               ADJUSTED PRICE

                                                         Builder -


                                                         Owner       THE CITYOF MUSKEGON




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