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Muskegon City Commission
Commission Meeting Date: 5/11/2021 Title: Community encompass Development
Agreement Amendment
Submitted By: Jake Eckholm Department: Economic Development
Brief Summary: The lot at 1259 Sanford has been removed from the agreement, and an alternative
city owned lot will take its place to be determined by city staff.
Detailed Summary: The Muskegon County Land Bank elected to not execute the purchase
agreement for 1259 Sanford that was previously approved. The prices for materials and the homes
keeps increasing on the manufacturer side and we need to execute the development agreement
soon, so staff is recommending that the agreement be amended with language to add a third city
owned lot that will be determined during project implementation. The city has many lots still
available in the McLaughlin neighborhood in proximity to the other two lots that would suit the
single family housin9.,_design, but we have not cleared title on a specific one to add to this
agreement as of yet. Approving the development agreement amendment and giving staff latitude
will help ensure that we complete these affordable homes in this building season, deliver the most
units possible within the budget, and also keep the project on track financially by allowing us to
move forward with the unit purchases before we are exposed to further material price increases.
Amount Requested: $0 Amount Budgeted: N/A
Fund(s) or Account(s) : N/A Fund(s) or Account(s): N/A
Recommended Motion: Motion to approve the amended development agreement as presented.
For City Clerk Use Only:
Commission Action :
Affirmative Action
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FAX (231)726-2501 Honorable Mayor Stephen J. Gawron
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FAX (231)755-5290 City of Muskegon, 933 Terrace Street, P.0, Box 536, Muskegon, MI 49443-0536
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RESIDENTIAL CONSTRUCTION AGREEMENT
This Agreement is effective on l11e...~ /r ,
2020 ("Effective Date") between
Community encompass, of 19 Hartford Ave, Mskegon, MI 49442_ ("Builder") and
THE CITY OF MUSKEGON of 933 Terrace Street, Muskegon, MI 49440 ("Owner") with reference to
the following facts:
Background
Builder and Owner (individually, a "Party" or collectively, "Parties") agree that Builder shall
construct three (3) single family residences (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 patties agree as follows:
1. Building Site. Owner owns the building site located on the real estate located at
180 Houston Street, 1141 Jefferson Street, and a residential lot to be determined by Owner, and
legally described on Exhibit B (the "Prope11y"). Owner has agreed to hire Builder to build the
Residences on the Property.
2. The Residences. Builder shall build the Residence in accordance with the plans and
specifications attached as Exhibit C (the "Plans").
3. Price. The price for constructing the Residences shall be Five Hundred-Seventy Thousand
Dollars ($570,000) ("Price").
4. Estimated Completion Date. Builder shall commence construction of the Residence within
30 days from the Effective Date ("Commencement Date"). Builder shall complete the Residence
within _20_ 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.
By:
Name:
Title:
Date:
By:
Name:
Title:
Date:
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. Certificate 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 fo1ih in
Sections 4 or 5, 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 Residence. Price is not based
on allowances or estimates of costs for items to be added to the Residence. 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 Residence with street frontage;
g. Edging and mulch;
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:
1. existing fences;
11. community garden;
111. existing sidewalks; and,
1v. 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.
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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"), the cost of which exceed $200, 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 Exhibit 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. Minor Modifications. Builder and Owner may from time to time agree on minor
modifications, the cost for which is less than $200 ("Minor Modifications"). Minor Modifications
may only be made by agreement between Builder and Owner, provided such agreement need not be
in writing. The cost or credit for Minor Modifications shal_l be added to or credited against the Price
and paid according to the remaining portion of the Payment Schedule.
6. 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 Residence or other improvements to the Prope1iy 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 pmtial
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.
7. Possession. Owner shall be entitled to possession of the Residence upon payment of the Price
in full.
8. 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.
9. Builder's Warranties. Builder shall complete the Residence and all improvements on the
Property timely and in a first class manner. All building materials used in the construction of the
Residence shall be new. Builder guarantees its workmanship for a period of 12 months from the date
of sale or lease of the Residence to a party other than Owner or 24 months from the date of the
Ce1tificate of Occupancy, whichever first occurs ("Warranty Period"). This warranty is fully
transferable by Owner and may be assigned to a 3rd paiiy. Within the Warranty Period, Builder may
replace, at its option, any materials incorporated into the Residence which are defective. To make a
claim under this warranty, Owner or its successor must give Builder written notice of any such defect
2
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.
10. Owner's Warranties. Owner covenants and warrants that Owner owns the Prope11y in fee
simple, free and clear of all liens, except for those encumbrances specifically set forth 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
Residence on the Prope11y. All corners of the Property and the Residence 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.
11. License. Builder is a residential builder and a residential maintenance and alteration
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 2101131848 respectively.
12. Laws, Ordinances and Regulations. In connection with the construction of the Residence,
Builder shall meet and comply with all applicable laws, ordinances, and regulations.
13. 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.
14. Risk of Loss. Until a Certificate of Occupancy is issued for the Residence the risk of loss for
the Residence 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 Property.
15. 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 Residence from the date construction commences until the date of substantial
completion. Owner may also maintain a policy of insurance on their interest in the Residence. 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.
16. Diligent Pursuit. Builder shall diligently pursue its obligations under this Agreement.
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17. Default. If either Party believes that the other Party has failed to comply with this
Agreement ("Default"), the non-defaulting Party 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 Party 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.
18. 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
Residence 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.
19. 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 patiies 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.
20. 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 or Jake Eckholm.
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 party 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 patiies. 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.
4
f. Counterparts. 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 counterparts, 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
pmiy of any other provision of the Agreement.
h. Severability. Should any one or more of the provisions 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 ofreligion, race, creed, color,
national origin, age, sex, marital status, or handicapped condition by either party in respect to the
construction of the Residence 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
delive1y received. The notice will be effective upon receipt.
To Builder:
19 Hmtford Ave,
Muskegon,MI49442
Attn: Kimi George
Phone: 231-728-31 l 7
E-mail: Kimi@communityencompass.org
To Owner:
City of Muskegon
933 Terrace Street
P.O. Box 536
Muskegon,MI49443-0536
Attn: Jake Eckholm
Phone: 231-724-6780
Fax: 231-722-1214
E-mail: jake.eckholm@shorelinecity.com
5
With a contemporaneous copy to:
Parmenter O'Toole
601 Terrace Street
P.O. Box 786
Muskegon, Michigan 49443-0786
Attn: John Schrier
Phone: 231-722-5401
Fax: 231-722-5501
Email: john@parmenterlaw.com
I. Time is of the Essence. Builder and Owner acknowledge and agree that the time
related provisions set fmih 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 Residence by Owner to a third
pmiy, 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.
6
EXHIBITB
LEGAL DESCRIPTION
PIN: 61-24-205-352-0008-00
Address: 180 HOUSTON AVE
MUSKEGON, MI 49440
CITY OF MUSKEGON REVISED PLAT OF 1903 LOT 8 BLK 352
PIN: 61-24-205-364-0008-10
Address: 1141 JEFFERSON ST
MUSKEGON, MI 49440
CITY OF MUSKEGON REVISED PLAT OF 1903 S 68 FT LOT 8 BLK 364
EXHIBIT C
PLANS AND SPECIFICATIONS
*FORMAL SITE PLANS SUBMITTED TO PLANNING DEPARTMENT*
□EJ
p
Kitchen
Utility
Dining Room
[] Bedroom 3
10() X 10q
12° X o/
D Master&uite
12° X 14 2
r?:>L.. 1v1ng
161 X 142 Bedroom 2
10° X 120
CJ
□ □ □ o
Baldwin MasterGraft
EXHIBIT D
SITE PLAN
*FORMAL SITE PLAN SUBMITTED TO PLANNING DEPARTMENT*
EXHIBIT E
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 -
By:
Name:
Title:
Date:
Owner THE CITYOF MUSKEGON
By:
Name:
Title:
Date:
RESIDENTIAL CONSTRUCTION AGREEMENT
OWNER
THE CITY OF MUSKEGON
BUILDER
COMMUNITY ENCOMPASS
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