HomeMy WebLinkAbout2007 04-23 EDAP EDA MEETING
City of Brooklyn Center
April 23, 2007 AGENDA
1. 11 to
Ca Order
—The EDA r
equests that attendees turn off cell phones and pagers durmg the meetmg. A
copy of the full City Council packet, including EDA (Economic Development Authority), is
available to the public. The packet ring binder is located at the front of the Council
Chambers by the Secretary.
2. Roll Call
3.. Approval of Agenda and Consent Agenda
—The following items are considered to be routine by the Economic Development Authority
(EDA) and will be enacted by one motion. There will be no separate discussion of these
items unless a Commissioner so requests, in which event the item will be removed from the
consent agenda and considered at the end of Commission Consideration Items.
a. Approval of Minutes
1. March 12, 2007 Regular Session
4. Commission Consideration Items
a. Resolution Authorizing Submission of an Application to the Hennepin County
Environmental Response Fund
•Requested Commission Action:
—Motion to adopt resolution.
b. Resolution Authorizing the City Staff of Brooklyn Center Economic Development
Authority (EDA) to Discontinue Development Agreement Negotiations with Steiner
Development Inc. for the Redevelopment of EDA Owned Property at 57�' Avenue
and Logan Avenue North
•Requested Commission Action:
—Motion to adopt resolution.
S. Adjournment
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MINUTES OF THE PROCEEDINGS OF THE
ECONOMIC DEVELOPMENT AUTHORITY
OF THE CITY OF BROOKLYN CENTER
IN THE COUNTY OF HENNEPIN AND THE
STATE OF MINNESOTA
REGULAR SESSION
MARCH 12, 2007
CITY HALL COUNCIL CHAMBERS
1. CALL TO ORDER
The Brooklyn Center Economic Development Authority (EDA) met in Regular Session called to
order by President Tim Willson at 8:33 p.m.
2. ROLL CALL
President Tim Willson and Commissioners Kay Lasman, Mary O'Connor, and Mark Yelich.
Also present were Executive DirectorlCity Manager Curt Boganey, City Attorney Charlie
LeFevere, Fire Chief Ron Boman, and Deputy City Clerk Camille Worley.
Commissioner Dan Ryan was absent and excused.
3. APPROVAL OF AGENDA AND CONSENT AGENDA
Commissioner Lasman moved and Commissioner Yelich seconded approval of the Agenda and
Consent Agenda, and the following item was approved:
3a. APPROVAL OF MINUTES
1. February 26, 2007 Regular Session
Motion passed unanimously.
4. COMMISSION CONSIDERATION ITEM
4a. RESOLUTION NO. 2007-OS OPTING NOT TO WAIVE LIMITED TORT
LIABILITY FOR 2007
Executive Director/City Manager Curt Boganey introduced the item and stated the purpose for
the proposed resolution.
Commissioner Yelich moved and Commissioner Lasman seconded adoption of RESOLUTION
NO. 2007-OS Opting Not to Waive Limited Tort Liability for 2007.
Motion passed unanimously.
03/12/07 DRAFT
-1-
5. ADJOURNMENT
Commissioner Lasman moved and Commissioner O'Connor seconded adjournment of the
Economic Development Authority meeting at 8:35 p.m.
Motion passed unanimously.
03/12/07 -2- DRAFT
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CQUNCIL ITEM MEMQRANDUM
TC}: Curt Baganey, Gity Manager
FRQM: Tom Bublitz, Cammunity Devetogmet�t Speciali
DA.'�E: Ap�i� 18, 2a07
SUBJ�CT: �tesa��tion Autharizing Submissian of an �pplicatian ta the Hennepin
Ca�nty Envirc�nmenta� Respons� �urtd
Rec4mmendation:
�taf€'recom€mends appraval of a Resolution Authorizing Submission of aF� Application to
t�e Hennepin County Environm�ntal Response Func�.
�ackgraund:
This res4lution wauld authonize the EAA to submit an appli�atian to the Hennepin
Ccaunty Enviranmental Services Degartment for fundin� und�r the Caunty's 2t?47
Environmental Response Fund (ERF}.
The d�tails af the applicatic�n and backgmand infc�rmatian c�n �he grant requ�st c�nn be
fc�und in a staff inemc+randum relative to the Resc�lution Apprc>vxr�g ApplicaEion to th�
H�nnepin Cc�unty Envicanmental Respanse Fund irt the C�unci� items.
Budget Issues:
I Carnmissioner intraduce� the following resatutican and
maved its ad�ptic►n;
EDA RFS(�LUTI(JN NO.
RESOL.tJTCON AUTHt?RIZING SL.iBMISSIC}N OF' AI� AFP'LIeATIE�N TO
T'HE HENN��"IN COUNTY ENVIRf}I"dMENTAL RES�ONSE FUNI)
WHEREAS, an a�pliGation requesting �rant funds f�rorn the Hennepin Caunty
Environmental R�sponse Fund has been prepared far suhmissia�a by the Econann�c p�vetc�pment
Auth4rity (EDA} of Bz�oakiyn C�ntec; and
VGTHEREAS, the �rant fttnds will b� used far �nvironrnentai Investi�ation for the
I,ogan and 57 Redevelopment Site property, and
NOW, TH�REF(3RE, BE IT RES�LVED by the EDA in and far tl�e City of
Broaklyn Cer�ter that the Environn�ental Resgonse �und applicatic�n is hereby aettharized for
�submission ta the Hennepin County Department of Envirc�n�nental Servic�s.
Anri12�. 2007
Date President
The motion for the adoption of the �ore$oin� resotuti�n was cfuly seconded by carnmissia�er
and upon vote bein� tak�n therec�rt, the folCowing voted in favar there�f;
and the fcallawing voted against the same:
whereupon said resc�lution was declared duly passed and adapted.
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Stelner
Development, Ir�c.
3E�1Q Counry Ro�d 101
W�yz�t�, MN 55391
(952)473-56�0 F�3x iJ52)4737058
Apri123, 2007
Cornelius L. Boganey
City Ivlanager
City ofBrooklyn Center
6301 Shingle Creek Parkwa}+
Brooklyn Center,lVtN 55�30-219�
Dear Mr. Boganey:
I am writing in response to your letter dated April 16, 2007. It is with disappointment that we receive the
news of your recommendation to the EDA to end negotiations on the Development Agreement for the
Northbrook Village project. The Steiner Development team continues to work hard toward producing an
impressive mixed use development for the City and citizens of Brooklyn Center. We reach out to you in
an effort to preserve the efforts of all parties toward a sueeessful outcome at Northbroak Village.
Steiner Development's vision for the site is consistent with our proposal dated June 1, 2006. t�Ve have
enga�ed fully with city staff to arrive at a reasonable Develapment Ag�•eement. The concerns rnised in
your letter are a direct result of our efforts to mitigate changes in the marketplace.
Under the deal represented in our proposal, the residenrial developer could no longer perform. Steiner
Development intended to act as master developer, and had a residential developer workiYig through us on
the o�vner occupied housing component. In discussions with multiple residential developers, it vecame
clear that further City involvement would be necessary to implement tlie residential portion of Northbrook
Village. Therefore, our cunent plan is for the EDA ta retain the residential land portion of the
development. This enables the EDA to effectively negotiate �uith residential developers directly.
Steiner Development has a signed letter of intent with a grocery store and has significant retailer interest
for the remainder of Northbrook Villabe. Signing the grocery store lease is dependent on a signed
Development Agreement. Moving forward to complete the grocery and retail portion of the development
will only enhance the property, and therefore the ability of the City to secure residential development.
Please consider continuing this project and furthering the gvals of all concerned.
Best regards,
{f'�'-csild A. Johnson
Vice President—Development
cc City of Brooklyn Center Economic Developinent Authority f
David L. Kordonowy, President CEO, Steiner Development, Ina
I
STEINER CURTISS, P.A.
ATTORNEYS AT LAW
400 WELLS FARGO BAATK BUTLDING
1011 FIRST STREET SOUTH
HOPKiNS, MN 55343
JEREMY S. STEINER*
WYNN CURTISS
7ASON T. HUTCHISON
'�Real PropertyL.aw Speciatist, certified (952) 938
by the Ntinnesota State Baz Association FAX (452} 938-76'70
eVriter's Direct Dia1 No. 952-938-6219
April 10, 2007
VIA E�MAIL
Mary Dyrseth, Esq.
Briggs and Morgan
W2200 First National Bank Building
332 Minnesota Street
St. Pa�r.l, MN 55101-1396
Re: Praposed Development Agreement Between Steiner Development; Inc.. ("SDP') and
Brooklyn Center EDA.
Dear Mary:
At the conclusion of our meeting at Brooklyn Center City Ha11, on April 4, we agreed to provide the
EDA with a proposal from SDI an the deadlines for constnzction of the three phases of the Commexcial
Project. We also agreed to advise the EDA of 5DI's position on inclusian of the Housing Project in the
Develapment Agreement. SDI's position on those two items is:
As we had previously indicated., it is imperative that SDI have the right to develop the Commerciai
Project in three separate phases.
Phase I of the Commercial Project will be the lot on which the 24,850 square foot cvmmercial
building depicted in the preliminary plans is to be constructed. SDZ is prepazed ta agree to commence
Phase I as soon as reasonably possible after the closing date and complete Phase I within tw�nty (20)
manths a,f�er the closing date. If Phase I is not completed within this iwenty (20) month time period, the
EDA's remedy would be to obta.in a mandatary injunction requiring the Developer to complete
performance of its obligations related to Phase T. The EDA would not have the rigk�t to reacquire or have
title to Phase I revert to the EDA.
SDI would also agree that the second Phase of development of tlie Commercial Project ri�ust be
completed within twenty-four (24) months after issuance of the Certificate of Campletion for Phase I, and
that the third Phase of the development of the Commercial Proj ect must lie completed within twenty-faur
(Z4) mont�s after issuance of the Certificate of Completion for the second Phase. If the Deve7oper fails to
�i i
Ms. Dyrseth
April 1 Q, 2407
P e 2
commence constructian of the building impravements for the secand� or third Phases of development in
accordance with the approved consiructian plans within these time periods, the EDA would have the right
to reacquire title to the remaini.ng uniinproved lots in the Commercial Project at a reacquisition price
calculated at the rate of $5.00 per square foot. We believe this would be of significant benefrt to the EDA
because the unimpraved lots would be reacquired at the original sa.le price, but with the uifrastruciure
improvements such as grading and utilities, campleted at the Developer's expense. At such t'vme as
building canstruction has cornmenced on eithez the secand Phase or third Phase of development, the
EDA's right to reacquire title to that Phase would terminate. Thereafter, the EDA's remedy for the Phase
on which building construction had comntenced would be to obtain a nnandatory injunction requiring the
Develaper to complete performance of its obligations related to that Phase of development.
We appreciate that we are asking the EDA to be flexible and accommoda�e SDI on the time lim.its
foz constructing the second aad tivrd Phases of the Comn�.ercial Project. Da�id Kardonowy has asked that
I communicate to the EDA that it is SDI's intention to actively market all three Phases of the Commercial
Praject as soon as the Developmen,t Agreement has been secured; and to com�Iete constr�iction of all three
e construction of all three Phases af the Commercial
Phases at the earhest possible date. Wkule we behev
Praject can be completed in advance of the deadlines that we have propased, it is only prudent for SDI to
establish outside dates that will allow for changing m�azket conditions that might prevent development of all
Phases before those deadlines.
It is critical to SDI th.a.t it ha,ve the opportunity to develop the Commercial Proj ect in three separate
phases, and that it bave the right to transfer the second and third Phases of the Cpmmercial Proj ect to third
parties and be released from its abligations after the effective date of transfer, pravided the transferee
assumes a11 liabitities under the Development Agreement that are applicable to the parcel transferred to it.
Regarding the Housing Project, SDI has concluded it does not rr�a.ke sense, from its perspective or
from that of the EDA, to include that pzaperty in the Development Agreement. Yowr client is certainly
aware of the fact maxket conditions for housing development have deteriorated significantly since SDI first
submitted its proposal far the I�Torthbrook Village Development. In fact, Prima Land, Inc., the original
housing developer identified by SDI, has withdrawn from the project. SDI has determined that existing
m.arket conditions will nat, most likely, support development of the Housing Proj ect without some form of
financial assistance from the City or the EDA and some flexibility on the �art of the City as to what
housi�g uses would be allowed. The anly realistic way to accomplish thzs in tkxe near term is £ar the City to
negotiate directly with a housing developer who will actually develop the Housing Proj ect. Therefore; we
propose tha.t the Housing Project be excluded from the Development Agreement and that the purchase
price be reduced by multiplying the area of the land included within the Housirig Project times $5.00 per
square fvot. David Kordo�owy has identified two or three housii�g developers who have expressed interest
in the possible development of the Housing Pxoject. David is more than. willing to 'introduce those
Developers to the City's representatives.
Finally, assuming we are able to resolve the above issues in a way tkat is accepta.ble to both of our
clients, we propose that the following definitions of "Fast Food Restaurants" be inserted in Exhibit D to the
Development Agreement:
SDI.17.D}TSeth.04.09.07
Ms. Dyrseth
Apri110, 200'7
Page 3
"A single occupant restaurant building that derives over 50% of gross receipts from
the sale of prepared food, not including beverages, iatended far consumption off
premises."
Please get in touch with me to discuss the EDA's response to the items outlined in this letter. Your
client's prompt response wauld be very much appreciated as SDI needs to move forwa.rd with this project
in the very near futuxe if these issues can be resolved.
Very iruly yours,
2�
Jeremy S. Steiner
JSS/�j
cc (by email): David Kordonowy
Todd Johnson
SDI.Itr.Dyrseth.04.09.07
MEMORANDUM
TO: Curt Boganey
Tom Bublitz
FROM: Mary Dyrseth
DATE: April 5, 2007
RE: Development Agreement with Steiner Development
The following is a summary of our discussions on Wednesday, April 4, 2007, with
representatives of Steiner Development.
1. Contin�encv Period. The EDA agreed to a contingency period of 150 days for
environmental due diligence and an additiona130 days for approval of the zoning and final plat.
2. Adiustment of Purchase Price. The EDA agreed to adjust the purchase price by
deducting $5.00 per square foot for portions of the property if fee title is taken by a public entity
for street right-of-way purposes.
3. Environmental. The Developer agreed that the EDA contribution for
environmental work would be capped at $175,000. The EDA did not agree to guaranty that the
property would not be placed on a super fund list. The agreement by the MPCA to separate the
development property from the residential property is a contingency to closing for the Developer.
4. Governmental Annrovals. The EDA agreed that the approval of the plat and
zoning is a contingency, and is not a default under the Agreement.
5. Construction Schedules. The Developer will suggest a time schedule for
completion of at least two commercial buildings and remedies to the EDA in the event of a
default.
6. Commitment for Housin�. The Developer will suggest remedies for their failure
to construct the housing project. They would like the EDA to reimburse them for the portion of
the purchase price allocable to the housing property, and all of their carrying costs for that
property, if the housing property reverts to the EDA.
The EDA will consider not transferring the housing property to the Developer at closing.
7. Indemnification. The EDA will not agree to indemnify the Developer for
environmental matters.
2013310v1
8. Utilities. The EDA will not make any representations that the utilities are
adequate.
9. Assi�nments. The EDA agreed to consent to an assignment of the Development
Agreement to an affiliated entity, and that it would not unreasonably withhold its consent to
assignxnents of the obligations and sale of pad sites to other developers.
10. Remedies. Prior to closing, the EDA's sole remedy for a Developer default is to
retain the earnest money.
11. Certificate of Comnletion. Separate certificates of completion will be issued for
the individual phases of the development.
12. Fast Food Restaurant. The Developer will propose language defining fast food
facilities.
13. Assurances. Tom Bublitz will verify that the MPCA will name the Developer as
successor and assignee on environmental assurances, and if the EDA's consultants would issue
reliance letters to the Developer.
14. Renresentation on Environmental. The EDA agreed to make a representation that
it had furnished the Developer all information in its possession regarding the environmental
conditions of the proprety.
15. Grants. We discussed whether the EDA would apply for grants for environmental
remediation if the costs exceed $175,000. One suggestion is that the EDA will agree to consider
applying for a grant for the project, after taking into account other city priorities; however, the
receipt of grant monies would not extend the time to complete the project and would not require
any local match from the City or EDA.
16. Release from Liabilitv. The EDA agreed to release the Developer from liability
for any preexisting conditions on the development property. Language will be drafted for review
to the effect that the release does not apply to any releases of hazardous substances caused solely
by the Developers activities on the property.
17. Business Subsidv. The Developer suggested that the amount of business subsidy
is $50,000, (i.e. the difference between the fair market value of the commercial property and the
portion of the purchase price allocable to the commercial property). Tom will confirm if this is a
reasonable amount. They proposed 8 full-time jobs at $10.56 per hour. Tom will check to see if
that hourly wage is in accordance with the EDA's policy.
18. Survev. The EDA will obtain a current ALTA survey. The Developer will pay
for the costs.
19. Title Obiections. The EDA will not escrow money de�osit ($25,000) to cover
title objections.
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2013310v1
20. Notice. The EDA a reed to notice and cure eriods for defaults after closin
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2013310v1
i ECQNUMIC D�V�LUPMENT AUTHU�txT�' MEMCIL�ANDIIM
TUr BroQklyn Center Economic DevelopmeerEt Authority
F'ROM: �urt Eioganey, Executive Direetar, EI���
f��'
DATE: April I9, 24}07
SUBJECT: Resotutian to discontinue develapment �greeament n�gatiations with Steiner
Development Inc. for 57`� and Lagan Avenue Narth red�velopment prc�ject
Rec+�mmendation:
I recornmcnd adopticsn of the subject reso(ution endin� neg�tiatians with Steiner I�velopment
lnc for the redevelopment of the 57�' and Logan Avenue NortE� Fr�perty.
Backgrot�nd:
In July of 2f}Q6 the City CouncilfEC3A held a jaint meetin� with the 4�tp�ctunity Sit� Task Force
to ec�nsider prop�sats for the eed�velapment of the 57`� and Lcrgan Avenue �artt► �ite. At tf�at
meetin� the proposal from Steiner Deve[oprnent Inc. fQr a m�xed �ese cammerciat anc! residential
develapment was accepted as the preferred praposal. At the meetie�� staff was directed ta enter
into negatiations wit� Steiner so that development agreement eou[d be reached that wou[d al(gw
the proj�ct ta go farward.
The �roposal sub�nitted ineluded the purchase of the tand from the EI�A for $t.8 miilion doltars
a�d would consist of three commerciai/retail buildin�s and 6fi units of e�wner oecupied hQUSing.
The propo�ed timeiine indicated ali retail and housing would be completed within a year of
finalizing d�eve[opment rights.
Discussians began in Juiy and negotiations have been c�rtg�ic�g sin��, �nit�ally, many �fthe
sticking paints related to the status of the environmentaC conditions that the MPCA� notified the
City c�f in June, after the R�P had been requested. In additi�n issues related to the housi�g
dev�lopme�t became another poinc of cantention as marCcet �onditions continued to deEeriorate.
Finalty, tt�e timeline for the comm�rcia! develapment became another signif cant isse�� to resalve.
In addition ta these major poir�ts of disharrnony several technica[ assues remain on the table an
rescatved
Based �n the abav�e it is �y cansidered apinion the interest s�f the ��.}A. and the City of Brooktyn
Genfer will b� best served by ceasing negotiations with Steie��r D�velopment Inc.
I also believe that the E1�A shcruld wait until the environmenta� isse�es with the MPCA have been
resolved befare solici�iz�g new proposa{s,
C: Brad Haffmart
�`ity v►f .�rool�lyn �`ent�r
A Millenniurn Community Co�-nelius L. Boganey
City Manager
April l6, 2407
Jeremy S. �teiner
iner 'ss P.A. Atttt�me s at Law
Ste Curt� t Y
400 Wells Pazgo Ba,nlc Building
1411 First Street South
Hopkins, MN 55343
L}��tr Mr. Steiner:
Thanks to you and the members Qf yaur team for meeting w=ith the EDA representatiues and myself on
Apri14, 2(?07. I appreciate the candzd discussion and the fact tl�t your client has worked diligently to
an in
ne�atiate an agreerr�ent �rith Yhe EDA far the redevelopment of the praperty at 57 arkd Lag
Brook�yn Center.
As yau knaw these discussions be�;an in June of 20U6 and we have yet to reaeh consensus �an several
irnpartant issues. Having read yaur April 1Q, 2007 let�er to Mary I3yrseth in respons� to our me�ting
April 4, 2007, I have coneluded that it wouid not be in tihe interest c�f tne EL�A or the City of Broalclyn
Cenier ta continue these negotiations, The tirne frarne for the proposed cornmercial redevelopment far
exceeds anything that I cauld reGOmmend. The fact ttxat housing is no langer a z�ealistic gart af yaur
pFOposal changes the scape sueh that, the EDA will be better served i�y p�oceecling with a new prt�posa]
as the basis.
i understand that som� af the issues affectin� your decisian are beyond yaur cvnt�ol, and you have made
a gaod faith effort to reach an acceptabie agreement. Given th� facts that cc�rrently exrst, I see na
realistic chance that vue will be able ta reach cansensus. A� the r�ext ze�ular meetin� of the �[�,A, I will
be adviszng thezn that we have reaehed ix�passe and there shauld be nc� f�zrther negatiatior�s,
Again, thank you for yatu tinne and effort. I sincerely wish you ct�ntinued su�cess in the futur�.
Sincerely,
Corneltt�s L. Boganey
City Manager
Cc: Brad Hoffman
Mary Dy�rseth
Tom Bublitz
6301 8hingle GreQk Pccrkway Recr�cxtioae and Commuruty Center Phone d: T13U Number
Braoktyn Center,lk�N 554,30-2199 (76�} 569-344+?
c��� .�4tt �z�.� .���.a�,� �fis�} �ss-��a� ��s.�a
�4.X (763) 569-349�1
u�urur. cityafbrooklyncetzter.arg�
I
Commissianer introduced the �allawing resalution alnd
moved its adoptic►n;
EDA RESOLUTIQN NO.
RES4LUTICIN A[:i'FH4RIZING THE GITY STAFF QF B�OOKLYN CENTER
�GONQMI� DEVELOPMENT AUTHt}RITY (�DA) TE} DISCC}NTIItiiUE
I}EV'ELC}PMENT AGREEMENT �t�G(?TIATTO�N� VVrTH STLIN�R
L}EVELC}PME�i'T INC FOR THE R�E�EV'EL.t)�MENT C}F EI?A UW1�EI�
PRQPERTY AT S7 AVENUE AND LE)GAN AVEI�JUE N4I2TH
WHEREAS, July 12`�, 204b the staff was direeted to enfier into deveiopment
a�reement negatiations witk� St�iner DeveIoprnent inc. for the purpc�se of redevelc�pi�g the EDA
owned gro�erty at 57`� and Lo�an Avenue North; and
WHEREAS, staff has met with representatives c�f Steiner d�velopt�ettt c�n several
oecasiun to in an attempt to reach consensus on a devel�rpment agreement that would achieve the
abjectives ofthe paraposal submitted by Steiner Development Inc; and
WHEREAS, Market conditions have chang�t€ r�ga�ding hous�ng demand and MPCA
appravals have be�n difficult tca achieve; and
WHERAS, continued negotiations are not likeCy to resolve the cc�mpetin� ir�t�rests of the
parties;
N4W, THEREFC?RE, BE IT RES()LVED by the Economic D�evelc�pment Authority
in and for the City o�Brcac�klyn Genter directs the Execut�ve I�ireetor ofth� �cat�Qmic Develc�pment
Authority to discontinue further ne�c�tiations with Steiner Devela�ment for the redevetogment t�fthe
EDA owned praperty �t 57�" and Logan Avenue North.
Dat� Aresiden�
Tlae rnatic�n far the ado tiar� a�" tk�e fore oin resolutian was dul seconded b commissianer
P Y Y
and t� n vQte bein taker� t1T:erean the fallowin vot�d in fa�°c�r ihereof:
g
and th� fcai�owing vt�ted against the same;
wher�upon said resolution was declared duiy passed and adrapted.
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