Osseo approves gun club agreement

The Osseo City Council approved a subordination agreement to the Osseo Gun Club project during its meeting Monday, April 14.

The council also purchased property at 417 First Ave. N.E. to be used for the future city park.

Here are some of the meeting’s highlights.



City Attorney Loren Magsam presented the council with a revised subordination agreement for the Osseo Gun Club development. A subordination agreement is a legal document used to make the claim of one party junior to (or inferior to) a claim in favor of another.

Magsam said the leader that is doing the loan for the developer is requesting this agreement. “The request [is] to subordinate the development agreement to the construction financing for the project,” he said. “The effect of it would be that any rights of the city or the EDA has under the development agreement would be subordinate to the lender’s rights to the extent that they advance funding on the construction loan. In the instances where the project never starts, if the city and the EDA wish to take back the property, if there has been any money advanced they would have to pay that money to the lender to that property back.”

Magsam said the subordination agreement means the lender wants clarification that the rights the city and the EDA have under the development agreement are second to any amounts the lender lends on the property. He added this agreement doesn’t change the developers agreement.

The city and EDA did convey ownership of the Osseo Gun Club property to the developer in December 2013.

The council approved 4-0 the revised subordination agreement for the Osseo Gun Club development. Councilor Bonnie Heinen was absent.



The council also purchased property located at 417 First Ave. N.E., that will be used for the future city park.

The city plans to own all the parcels of land in the area east of Central Avenue, south of Fifth Street N.E., west of First Avenue N.E. and north of Fourth Street N.E. Currently Boerbroom Park is located on part of this area. The 2030 Comprehensive Plan calls for a large park and community facilities such as a senior center and/or library.

The city already owns the parcel of land and house at 17 Fourth St. N.E., that is rents out.

Back in August 2013, the property owners at 417 First Ave. N.E. contacted the city about possibly purchasing the property. An appraisal was conducted and the property was valued at $157,000. This March, the property owners came back to the city and said they were now ready to sell the property at the 2013 appraised value of $157,000. The city recently placed a pending assessment of $8,317 on the property for the purpose of reconstructing First Avenue N.E. City Administrator Doug Reeder said the city has agreed to pay half of the assessment charges.

“The total cost to the city would be $163,285,” Reeder said. “The Park Dedication Fund at this time doesn’t have that much money in it. We have a balance of about $800, because we pretty well cleaned it out when we purchased the last property.”

He added staff expects more money to come into the Park Dedication Fund from the Five Central project, bring in about $35,000 along with three other projects soon to happen. Reeder estimates the fund will have $45,000 in the fund over the next six months that would be used to offset the property purchasing costs. The rental income would bring in about $60,000 over the next two years. The remaining $58,500 would come from the General Fund.

Staff suggests if the property is purchased, the house be rented as well. The and other rental revenue would be placed in the Park Fund to replenish the purchase price.