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HomeMy WebLinkAbout2020 12-14 EDAPE conomic Development Authority V I RT UA L meeting being conducted by electronic means in accordance with Minnesota S tatutes, section 13D.021 P ublic portion available for connection by dialing 1-312-535-8110 A ccess Code: 133 791 1584 December 14, 2020 AGE NDA 1.Call to Order The City Council requests that attendees turn off cell phones and pagers during the meeting. A copy of the full C ity Counc il packet, including E D A (E conomic Development Authority ), is available to the public. The packet ring binder is located at the entrance of the council chambers. 2.Roll Call 3.Approval of Consent Agenda The following items are considered to be routine by the Economic Development Authority (E D A) and will been acted by one motion. There will be no separate disc ussion of these items unless a Commissioner so requests, in whic h event the item will be removed from the c onsent agenda and considered at the end of Commission Consideration I tems. 4.Commission Consideration Items a.Resolution A pproving the Second A mendment to L ease A greement and Relocation A ssistance A greement with Sheng Zheng, Wang L in, L in, I nc., Operating Under the Trade Name "Ocean B uffet" and Alatus Brooklyn Center - Motion to authorize approval of a Resolution Approving the Second Amendment to Lease Agreement and Relocation Assistance Agreement with Sheng Zheng, Wang Lin, Lin, Inc., Operating Under the Trade Name "Ocean Buffet" and Alatus Brooklyn Center 5.Adjournment Economic Development Authority DAT E:12/14/2020 TO :C ity C ouncil F R O M:C urt Boganey, City Manager T H R O U G H :N/A BY:M eg Beekman, C ommunity D evelopment D irector S U B J E C T:Res olu+on A pproving the S econd A mendment to Lease A greement and Reloca+on A ssistance A greement with S heng Z heng, Wang L in, L in, I nc., O pera+ng U nder the Trade Name "O cean Buffet" and A latus Brooklyn Center B ackground: O n November 12, 2013, the E DA adopted Res olu+on No. 2013-17, w hich authoriz ed the acquisi+on of certain parcels to facilitate redevelopment opportuni+es within the O pportunity S ite of the former Brookdale S quare S hopping Center. O n D ecember 23, 2013, the E DA closed on the proper+es and became the ow ner of the 23.2 acre commercial site w hich included a number of leases , including the O cean Buffet s tand alone restaurant. The city worked with exis +ng bus inesses w ithin the center to nego+ate voluntary termina+ons of leas es and ul+mately demolished the shopping center, leaving only the O cean Buffet restaurant remaining on site. O cean Buffet's current leas e expires in November 2021; however, they have within the leas e a five year op+on which they can exercise if they choos e. O ver the years the city has been in communica+on with O cean Buffet's ownership to make them aware of the city's long term goal to redevelop the s ite, but no formal reloca+on or leas e amendment nego+a+ons have occurred. More recently the city and O cean Buffet have been in communica+on about poten+al redevelopment of the s ite. A latus has con+nued their preliminary planning for a development project and has iden+fied the s outhw est corner of the site as the preferred loca+on. Before a development would be able to proceed, O cean Buffet's lease w ould need to be amended to be terminated and the city w ould be obligated to pay reloca+on benefits . W hen a government agency acquires property owned or leased by a private bus iness reloca+on benefits are required to be paid out under state law. Reloca+on benefits can be paid out in one of two ways. 1) The government agency pays the actual cost of reloca+on, up to a certain maximum amount under s tate law, for the busines s to move into a new loca+on; or 2) the bus iness receives a fixed payment amount in lieu of reloca+on as an up front payment. The amount of the fixed payment is determined based on the pas t three years income of the busines s and is capped at $40,000. The city, A latus and O cean Buffet ownership met to discuss their op+ons and determine a path forward. The terms agreed to and encompassed in the aDached agreement are as follows: 1. The E DA would pay O cean Buffet a fixed payment w ithin 30 days of execu+ng this agreement in an amount of $40,000. 2. A latus would pay O cean Buffet a lease termina+on payment amount of $300,000 at the +me of clos ing on the property. 3. O cean Buffet agrees to terminate the leas e at clos ing of the s ale of the property or on D ecember 31, 2021, whichever occurs first. 4. The E DA would agree to w aive rent payments during the remaining term of the lease. O cean Buffet w ill con+nue to be responsible for any real estate taxes, u+lity payments , or addi+onal payments above and beyond the minimum annual rent being w aived. The purpos e of structuring the agreement in this w ay w ill allow O cean Buffet to operate their bus iness in a w ay that is financially feas ible for them between now and w hen a clos ing might occur. I t also provides the city with a maximum liability in terms of reloca+on obliga+on. I n the event that the clos ing does n't occur and the project does n't proceed, the city and O cean Buffet w ill nego+ate a new lease moving forw ard; how ever, the city's reloca+on obliga+on w ill have been met by this agreement. The S econd A mendment to Lease A greement and Reloca+on A s s is tance A greement w as draEed by the City ADorney and would be a three-party agreement between the E DA , O cean Buffet's ow ners , and A latus. The agreement is aDached to this memo. B udget I ssues: $40,000 fixed payment in lieu of reloca+on from T I F 3 pooled administra+ve funds . S trategic Priories and Values: Targeted Redevelopment AT TA C H M E N TS : D escrip+on U pload D ate Type L eas e A mendment and Reloca+on A ssistance A greement 12/7/2020 Backup M aterial Res olu+on 12/14/2020 Resolu+on LeDer 1 SECOND AMENDMENT TO LEASE AGREEMENT AND RELOCATION ASSISTANCE AGREEMENT This Second Amendment to Lease Agreement and Relocation Assistance Agreement (“Second Amendment”) is entered by and between Economic Development Authority of Brooklyn Center (“Landlord” or “City”) and Sheng Zheng, individually, Wang Lin, individually, and Lin Inc., operating under the trade name Ocean Buffet (collectively “Tenant”) and Alatus Brooklyn Center, a Minnesota Limited Liability Corporation (“Purchaser”) (collectively, the “Parties”). RECITALS A. On March 10, 2011, Centro Saturn Holdings SPE, LLC, a Delaware limited liability company, Landlord’s predecessor in interest, and Zheng Asian, Inc., a Minnesota corporation, Tenant’s predecessor interest, entered into a Lease Agreement (“Lease”) whereby Tenant’s predecessor in interest leased from Landlord’s predecessor in interest that certain premises known as Store #5810 consisting of 8,100 rentable square feet located at 5810 Shingle Creek Parkway, Brooklyn Center, Minnesota 55430 (the “Premises”). B. In March 2016, Landlord and Tenant entered an Amendment to Lease (“First Amendment”). C. Landlord intends to sell the property that includes but may not be limited to the Premises (“Property”) to Purchaser for the purpose of the Property’s redevelopment, including the demolition of the Premises. D. Under the Minnesota Uniform Relocation Act, Minnesota Statutes, Section 117.52 (“Relocation Act”), should Tenant be required to relocate to facilitate the Property’s redevelopment, Tenant will be a “displaced person” and eligible to receive all relocation services and assistance provided under the Relocation Act. E. In anticipation of the potential sale of the Property, Landlord has engaged a relocation consultant, SRF Consulting, to provide all relocation services to Tenant required under the Relocation Act. F. SRF Consulting has provided relocation services to Tenant and advised Tenant of its rights to financial assistance under the Relocation Act, including without limitation the preparation of a Business Relocation Claim in the form of a Fixed Payment in Lieu of Actual Move and Reestablishment Payments (“Relocation Claim”) (Attachment A). G. The Parties have reached an agreement as to the provision of relocation assistance and lease termination, as set forth below. 2 AGREEMENT 1. Recitals. All recitals are incorporated by reference as terms of this Second Amendment. 2. Relocation Assistance. The total amount of relocation assistance for which Tenant is eligible to receive under the Relocation Act is $40,000. Upon executing this Second Amendment, Tenant shall execute the Relocation Claim and submit it to the City for processing. Within thirty (30) days of receipt of the executed Relocation Claim, City shall pay Tenant $40,000 (“Relocation Payment”). Tenant has been informed of its right to appeal the City’s decision regarding the amount of assistance available under the Relocation Act and, in exchange for the consideration outlined in this Second Amendment, waives its right to appeal the City’s decision The City’s payment of the Relocation Claim is non-refundable. Should the City and Purchaser fail to close on the sale of the Property, City and Tenant shall make a good faith attempt to agree on the terms of a new lease (see below). Regardless of whether the City and Tenant agree on the terms of a new lease, Tenant shall be ineligible for further relocation services or assistance. Tenant acknowledges that its continued occupancy of the Premises after it has received the Relocation Payment is an occupancy that begins after the date of the Property’s acquisition for the project under 49 C.F.R. 24.2(a)(9)(ii)(B) (definition of non-displaced persons). The City’s payment of the Relocation Claim is conditioned on Tenant not defaulting under the Lease. 3. Lease Termination and Early Termination Payment. The Lease shall terminate upon the earlier of the closing of the sale of the Property or December 31, 2021. In exchange for the early termination of the lease and extinguishment of the options to extend the term, if the sale of the Property to Purchaser occurs, at closing Purchaser shall pay Tenant $300,000.00 (“Early Termination Payment”). The Early Termination Payment is conditioned upon Tenant’s timely vacancy of the Premises, as provided under the Lease. All options to extend the term under the Lease and First Amendment are extinguished by the execution of this Second Amendment. As soon as it appears that the sale of the Property will not close by December 31, 2021, Landlord shall notify Tenant and Landlord and Tenant shall make a good faith attempt to agree on the terms of a new lease agreement. Failure to reach agreement on the terms of a new lease is not a breach of this Second Amendment. 4. Rent. During the remaining term, Tenant shall pay $0.00 in rent under Section 4.01(a) of the Lease. 3 5. Governing Law. This Second Amendment is governed and controlled as to validity, enforcement, interpretation, construction, effect and in all other respects by the statutes, laws and decisions of the State of Minnesota. 6. Counterparts/.pdf Signatures. This Second Amendment may be executed in one or more counterparts, each of which shall be deemed an original, but all of which when taken together shall constitute one agreement. Signatures sent by .pdf via e-mail may be used in place of original signatures. 7. Entire Agreement. This Second Amendment is the entire agreement of the parties with respect to the lease amendment and payment of relocation assistance. Except as expressly provided in this Second Amendment, all other provisions of the Lease and First Amendment are not modified and remain in effect. 8. Effectiveness. The submission of a draft or copy of this Second Amendment for review or signature is not an offer to enter into a legally binding agreement and may not be relied on for legal or equitable rights or obligations. The Parties shall be bound by the terms of this Second Amendment only upon its execution by both parties. By executing the Second Amendment, Purchaser is obtaining no rights or obligations under, nor does it become a party to, the Lease or First Amendment. 9. Assignment. This Second Amendment may not be assigned without the City’s prior written consent. The Parties have executed this Second Amendment on the dates specified under their respective signatures. [signature page follows] 4 [Signature Page to Second Lease Amendment and Relocation Assistance Agreement] TENANT: ____________________________ Sheng Zheng _____________, 2020 ____________________________ Wang Lin _____________, 2020. Lin Inc., a Minnesota corporation _____________________________ By: Its: _____________, 2020. LANDLORD/CITY: Economic Development Authority of Brooklyn Center _____________________________ By: Curt Boganey Its: Executive Director _____________, 2020. PURCHASER: Alatus Brooklyn Center LLC _____________________________ By: Its: _____________, 2020. 5 6 Attachment A Relocation Claim [attached] BR305-1-692681.v1 Commissioner _________________ introduced the following resolution and moved its adoption: EDA RESOLUTION NO. 2020-____ RESOLUTION APPROVING THE SECOND AMENDMENT TO LEASE AGREEMENT AND RELOCATION ASSISTANCE AGREEMENT WITH SHENG ZHENG, WANG LIN, LIN, INC., OPERATING UNDER THE TRADE NAME “OCEAN BUFFET” AND ALATUS BROOKLYN CENTER WHEREAS, the Economic Development Authority of Brooklyn Center, Minnesota (the “Authority”) is the owner of certain premises known as Store #5810 consisting of 8,100 rental square feet located at 5810 Shingle Creek Parkway, Brooklyn Center, Minnesota (the “Premises”); and WHEREAS, the Authority leases the Premises to Sheng Zheng, individually, Wang Lin, individually, and Lin, Inc., operating under the trade name “Ocean Buffet” (collectively, the “Tenant”); and WHEREAS, the Authority and the Tenant’s predecessors in interest entered into a Lease Agreement for the Premises on March 10, 2011 (the “Lease”) and the Lease was amended in March of 2016 by the Authority and the Tenant; and WHEREAS, the Authority intends to sell property that includes but may not be limited to the Premises to Alatus Brooklyn Center, a Minnesota limited liability company (the “Purchaser”) for the purpose of redevelopment, including the demolition of the Premises; and WHEREAS, the Tenant is eligible to receive relocation services and assistance from the Authority provided under the Minnesota Uniform Relocation Act, Minnesota Statutes, Section 117.52 if it is required to relocate due to the redevelopment of the Premises; and WHEREAS, the Authority contracted with a relocation consultant to provide relocation services to the Tenant; and WHEREAS, the Authority’s consultant has provided relocation services to the Tenant and advised the Tenant of its rights under the Minnesota Uniform Relocation Act; and WHEREAS, the Authority and the Tenant have reached an agreement that requires payment of $40,000 by the Authority to the Tenant for Tenant’s relocation assistance; and WHEREAS, the Tenant has also agreed to terminate the Lease early and the Purchaser has agreed to pay the Tenant an early termination payment of $300,000 if the sale of the Premises to the BR305-1-692681.v1 Purchaser occurs; and WHEREAS, during the remaining term of the Lease (until December 31, 2021), the Authority has agreed that Tenant does not need to pay any additional rent; and WHEREAS, in the event that the sale of the Premises does not occur by December 31, 2021, the Authority and the Tenant will make a good faith attempt to agree on the terms of a new lease agreement but no further relocation payments will be due to the Tenant because the Tenant’s continued occupancy of the Premises after it has received the relocation payment is an occupancy that begins after the date of the property’s acquisition for the project under 49 C.F.R. 24.2(a)(9)(ii)(B); and NOW, THEREFORE, BE IT RESOLVED by the Board of Commissioners of the Economic Development Authority of Brooklyn Center, Minnesota (the “Board”), as follows: 1. The EDA hereby approves the Second Amendment to Lease Agreement and Relocation Assistance Agreement substantially in accordance with the terms set forth in the form presented to the Board, together with any related documents necessary in connection therewith (collectively, the “Lease Amendment and Relocation Documents”) and hereby authorizes the President and Executive Director to negotiate the final terms thereof and, in their discretion and at such time as they may deem appropriate, to execute the Lease Amendment and Relocation Documents on behalf of the Authority, and to carry out, on behalf of the Authority, the Authority’s obligations thereunder. 2. The approval hereby given to the Lease Amendment and Relocation Documents includes approval of such additional details therein as may be necessary and appropriate and such modifications thereof, deletions therefrom and additions thereto as may be necessary and appropriate and approved by legal counsel to the Authority and by the officers authorized herein to execute said documents prior to their execution; and said officers are hereby authorized to approve said changes on behalf of the Authority. The execution of any instrument by the appropriate officers of the Authority herein authorized shall be conclusive evidence of the approval of such document in accordance with the terms hereof. In the event of absence or disability of the officers, any of the documents authorized by this Resolution to be executed may be executed without further act or authorization of the Board by any duly designated acting official, or by such other officer or officers of the Board as, in the opinion of the City Attorney, may act in their behalf. 3. Upon execution and delivery of the Lease Amendment and Relocation Documents, the officers and employees of the Authority are hereby authorized and directed to take or cause to be taken such actions as may be necessary on behalf of the Authority to implement the Lease Amendment and Relocation Documents. 4. The Board hereby determines that the execution and performance of the Lease Amendment and Relocation Documents will help realize the public purposes of the Economic Development Authority Act. BR305-1-692681.v1 _________________________ _________________________________ Date President The motion for the adoption of the foregoing resolution was duly seconded by Commissioner and upon vote being taken thereon, the following voted in favor thereof: and the following voted against the same: whereupon said resolution was declared duly passed and adopted.