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HomeMy WebLinkAbout2021 01-11 EDAMMINUTES 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 JANUARY 11, 2021 1. CALL TO ORDER The Brooklyn Center Economic Development Authority (EDA) met in Regular Session called to order by President Mike Elliott at 9:55 p.m. The meeting was conducted via Zoom. 2. ROLL CALL President Mike Elliott and Commissioners Marquita Butler, April Graves, Kris Lawrence - Anderson, and Dan Ryan. Also present were Executive Director Curt Boganey, Community Development Director Meg Beekman, City Clerk Barb Suciu and City Attorney Troy Gilchrist. 3. APPROVAL OF CONSENT AGENDA Commissioner Ryan moved and Commissioner Graves seconded to approve the Agenda and Consent Agenda, and the following item was approved: 3a. APPROVAL OF MINUTES 1. December 7, 2020 3b. RESOLUTION NO. 2021-01 OPTING NOT TO WAIVE LIMITED TORT LIABILITY FOR 2021 Motion passed unanimously. 4. COMMISSION CONSIDERATION ITEMS 4a. RESOLUTION NO. 2021-02 APPROVING THE SECOND AMENDMENT TO LEASE AGREEMENT AND RELOCATION ASSISTANCE AGREEMENT WITH SHENG ZHENG, WANG LIN, INC. OPERATING UNDER THE TRADE NAME "OCEAN BUFFET" AND ALATUS BROOKLYN CENTER Community Development Director Meg Beekman reviewed the proposed amendment to the lease agreement and relocation assistance agreement with Ocean Buffet. The Economic Development Authority (EDA) authorized acquisition of this property in 2013 along with certain parcels in the Opportunity Site, including Brookdale Square Shopping Center. O1/11/21 -1- President Elliott stated the interpreter is no longer on the line. Ken Liang stated he can interpret for Mr. Cheng. He added he is a manager for some of their other restaurants and has joined the meeting along with the owner. Ms. Beelcrrran stated the EDA became the owner of the 23-acre site in 2013, which included a number of leases, including Ocean Buffet, a stand-alone restaurant that has remained in their current location under the existing lease. The current lease expires in November 2021, but the owners have a 5-year option that they can exercise at any time. The City and Ocean Buffet have been in communication over the years regarding redevelopment of the site. Ms. Beekman stated the owners would receive relocation benefits that would be required to be paid under State law, including reimbursement of actual costs of relocation or a fixed upfront payment, with a maximum amount of $40,000 based on the past 3 years of income. Ms. Beekman stated Alatus have identified the southwest corner of the Opportunity Site as the preferred location and initiated an Environmental Assessment Worksheet (EAW) that will take 4- 5 months to complete. Discussions began recently with Ocean Buffet as their lease would need to be amended to allow termination due to redevelopment. Ms. Beekman stated, according to the terms of the Agreement, the EDA would pay a fixed payment A $40,000 and Alatus would pay the lease terminate payment of $300,000. Ocean Buffet agrees to terminate their lease on or before December 31, 2021. The EDA would waive rent payments during remaining term of lease and Ocean Buffet will be responsible for any additional payments above and beyond minimum annual rent being waived, if they choose to remain open for business. Mr. Liang asked whether Ocean Buffet will be responsible for base rent during this period. Ms. Beekman stated that is waived as part of this agreement. Ms. Beel�rnan stated the lease would continue to be in effect if the project does not move forward. Relocation benefits would have already been paid and the EDA's obligation met. If closing does not occur, the EDA may need to negotiate a lease buyout in the future, if another development occurs. Ms. Beelcrrran stated the Agreement does not obligate the EDA in any way to Alatus or redevelopment on the site. She added, however, the Agreement does obligate Alatus to pay for Ocean Buffet's lease buyout in the event that a redevelopment moves forward. Mr. Liana requested that the powerpoint presentation be provided to their lawyer. Ms. Beekman agreed, adding she has been in contact with their lawyer, and he has a copy of the Agreement that is in the meeting packet. Ms. Beekman stated City Staff recommends adoption of the Resolution approving the Second Amendment of the lease agreement and relocation assistance agreement with Sheng Zheng, Wang Lin, Lin, Inc., operating under Ocean Buffet, and Alatus Brooklyn Center. O1/11/21 -2- Commissioner Lawrence -Anderson asked whether Ocean Buffet intends to remain in Brooklyn Center. She added the restaurant is a favorite of many of the City's residents and it would be greatly missed. Mr. Liang stated Mr. Zheng said that everything is very uncertain right now due to the pandemic. Mr. Zheng indicated that they would consider relocation if there is a better opportunity. Ms. Beekman stated Alatus and Ocean Buffet have discussed their relocation within the redevelopment, but the City has not been part of those discussions. Commissioner Butler referred to the $40,000 in relocation costs and $300,000 for lease termination that will be provided for Ocean Buffet. She asked whether it is typical for cities to cover these costs. Ms. Beekman stated that is a good question. She added there is not a typical amount, and there are many different ways that deals like this get done. She noted if and when Alatus comes forward and presents a proposal, that will include a request for public subsidy, along with pro forma, and expenditures will be itemized. She added the City will be able to look at the project as a whole. Ms. Beekman stated the City is obligated by State statute to provide relocation benefits. She added Alatus has been at the table throughout the entire process, and they were willing to participate in the negotiation and cover expenditures related to lease termination. Commissioner Butler asked why it is necessary to act on this right now, when there are still so many moving pieces with the development project. She added it feels piecemeal, getting things approved here and there, when so many things have not been decided. She asked why there is urgency to move on this tonight. Ms. Beekman stated, in this case, we knew relocation benefits would be required. Ocean Buffet initiated discussion with the City regarding their lease and lease payments due to the pandemic, so it was a natural time to have these conversations regarding Ocean Buffet. The EDA benefits from having a known amount of liability that would be required as part of the payment. The City could probably wait until after the purchase agreement is negotiated, but there is risk that the cost of the deal would go up. Mr. Liang stated Mr. Zheng would like to know whether the City can notify him 30 days before close date. Ms. Beekman agreed, adding there is a 30-day notification in the contract, and City Staff can provide more notice if necessary. Mr. Liana stated Mr. Zheng asked when the lease buyout offer would need to be decided. Ms. Beel�nan stated the agreement requires initial payment of $40,000 within 30 days, as stipulated by State statute. President Elliott asked whether the City pays $40,000 now, if this agreement is signed. Ms. Beekman confirmed this, adding the EDA would agree to pay Ocean Buffet a fixed amount of $40,000 as part of the FDA's relocation obligation, regardless of when and if the site is developed. The lease termination payment is calculated based on the current lease. O1/11/21 -3- President Elliott stated we need to move forward on this, but Commissioner Butler's comments are not lost on him, regarding a need for the full picture of this big project rather than individual items coming before the EDA. He stressed the importance of knowing the full picture in terms of what this is going to cost the City. He added paying small amounts here and there and not lifting our heads to see the full picture, that is what is happening right now and needs to be rectified. Ms. Beekman stated she appreciates President Elliott's comments. She added this is a complex project and it is still in early development stages, so many issues are still up in the air. She added it is time for the EDA to have an update on the project. She noted a feasibility study is being conducted on the public market component, and City Staff intended to bring an update to the EDA in February 2021. President Elliott asked whether the feasibility study is being done by NEOO. Ms. Beekman confirmed this. President Elliott stated he came to City Hall to sign some documents, and one of them was a contract for $148,000 to NEOO for the feasibility study. Ms. Beekman stated the cost of the study will be a shared cost between NEOO and Acer, who have been contracted to complete the feasibility study for visioning for the public market. The feasibility study is being paid for by Alatus, and contracting with the City, since it is a City -led project. This work is being led by D'Angelos Svenkeson, NEOO Partners, who has significant experience with similar complex development projects. NEOO Partners serves as the owner's representative, representing the EDA, to guide the project. Ms. Beekrrian stated 50% of the contract with NEOO Partners is covered by Alatus through an escrow account through which expenditures are billed, including consultant fees. President Elliott stated he is struck by that, and he does not understand it fully. He asked whether the $148,000 would be paid by the City. Ms. Beekman stated that contract will be split 50/50 between Alatus and the Opportunity Site predevelopment fund. President Elliott stated so basically the City will pay $75,000. He added he is frustrated as he feels like there are a lot of things happening and money moving around that we are not aware of, and that is problematic. He noted the EDA needs to discuss this, so we know what we are entering into and why it is needed. President Elliott underscored Commissioner Butler's comments, adding we need to come together to look at this, to determine where we are and where we want to go. Commissioner Ryan stated Commissioner Butler has raised some legitimate concerns. These undertakings as we have observed are very complex and have a lot of moving parts, and there is a lot of uncertainty, and that is unsettling. Ol/11/21 -4- Commissioner Ryan stated, like in any great battle, we must seek tactical victories by attacking problems in a piecemeal manner. He thanked Ms. Beekman for laying out all this information so thoroughly and for bringing in the owner of Ocean Buffet, a valued stakeholder, in an attempt to protect the City's interests and move the process along. Commissioner Ryan stated, ID point, the EDA should approve this action but be aware that more information will be provided by City Staff, and there will be more issues to address along the way. He stressed the importance of trusting in the expertise of City Staff. President Elliott stated, to Commmissioner Ryan's point, tactical victories are what they are, but strategy is important. He stressed the importance of strategy and looking at the bigger picture instead of small tactical wins. Commissioner Graves asked whether the fixed payment of $40,000 is a requirement, and whether it is based on revenue. Ms. Beekman stated the payment is based on relocation costs, and there is a maximum amount that can be allocated that is higher than $40,000. She added an alternative is a fixed payment that would be paid up front based on three years' income and capped at $40,000. She noted SRF Consulting, who specialize in relocation contracts, conducted an analysis and submitted a report that identified the fixed rate payment at $40,000. Commissioner Graves expressed concern about the fairness of the different options. She asked whether the maximum amount, which is not necessarily under the City's control, could change over time. Ms. Beel�nan stated SRF provided a significant amount of information related to relocation benefits and requirements, and also communicated that infoarnnation to Ocean Buffet and their attorney so they could weigh their options. She added Ocean Buffet is not currently at the point where relocation is an option for them. She noted the relocation benefit is required under State statute but has probably not been adjusted for a few years. Commissioner Lawrence -Anderson stated she completely understands the concerns expressed by Commissioner Butler and President Elliott. She asked how common it would be, in a development of this size, for there to be multiple entities entering into agreements at different times. She asked what the ultimate cost to the City will be if this option is not pursued, and what would be the downside to waiting a year to enter into an agreement. She noted she assumes the costs would increase. Ms. Beel�nan stated every project is different, within the context of the community, with differences between project size, developers and City goals. She added the biggest threat to any project or development is risk, which is associated with unknowns, of which there are many, in a complex project such as this. She noted she agrees with Commissioner Butler's point that this is probably not the correct order in which to do this. She noted an update on the prof ect and additional information could have been provided earlier, but the project is in early stages, and details have not been ready to be presented. O1/11/21 -5- Ms. Beelcman stated, however, it can be considered beneficial to move forward with opportunities at their own pace, however small, within the scope of the project. She added some elements will need to be worked through at their own pace, and the timing is not perfect. She noted City Staff will work on presenting the strategic plan to the EDA soon, to share goals and receive feedback and comment. She noted she agrees with everything that has been said. Commissioner Ryan moved and Commissioner Lawrence -Anderson seconded to adopt RESOLUTION NO. 2021-02 Approving the Second Amendment to Lease Agreement and Relocation Assistance Agreement with Sheng Zheng, Wang Lin, Inc. Operating Under the Trade Name "Ocean Buffet" and Alatus Brooklyn Center. Motion passed unanimously. 4b. RESOLUTION NO. 2021-03 ELECTING OFFICERS FOR THE ECONOMIC DEVELOPMENT AUTHORITY IN AND FOR THE CITY OF BROOKLYN CENTER President Elliott nominated Commissioner Butler for Vice President as she is also Mayor Pro Tem. President Elliott nominated Finance Director Mark Ebensteiner for Treasurer. Commissioner Butler nominated President Elliott for President to be consistent with City Council meetings. President Elliott stated the role of Assistant Treasurer/Secretary would be filled by the Finance Director. He added that role is combined in the By -Laws. President Elliott moved and Commissioner Butler seconded to adopt RESOLUTION NO. 2020- Approving Election of Officers for the Economic Development Authority in and for the City of Brooklyn Center as follows. -President -President Elliott -Vice President —Commissioner Butler -Secretary/Treasurer — Finance Director Mark Ebensteiner Motion passed unanimously. President Elliott asked whether the meeting is done. Commissioner Graves stated there are Work Session items, but it is very late. President Elliott stated we should wrap up for tonight. He thanked the Commissioners for all their hard work at this meeting. He stated he has medical reasons why he cannot continue to meet late into the night. He added we have to figure out how we can continue to meet and do so effectively. He noted we will have to have that discussion. President Elliott stated he will talk to the City Clerk and figure out how the meetings can be shortened. O1/11/21 -6- Commissioner Ryan stated he hopes the Mayor is alright. He asked that Mayor Elliott share any issues or concerns with the City Council. He added we want to support you. Mayor Elliott thanked Commissioner Ryan for his comments. 6. ADJOURNMENT Commissioner Butler moved and Commissioner Ryan seconded adjournment of the Economic Development Authority meeting at 10*54 p.m. Motion passed unanimously. STATE OF MINNESOTA) COUNTY OF HENNEPIN) ss. Certification of Minutes CITY OF BROOKLYN CENTER) The undersigned, being the duly qualified and appointed Secretary of the Economic Development Authority (EDA) of the City of Brooklyn Center, Minnesota, certifies: 1. That attached hereto is a full, true, and complete transcript of the minutes of a Regular Session of the Economic Development Authority (EDA) of the City of Brooklyn Center held on January 11, 2021. 2. That said meeting was held pursuant to due call and notice thereof and was duly held at Brooklyn Center City Hall. 3. That the Economic Development Authority (EDA) adopted said minutes at its March 8, 2021, Regular Session. Secretary President O1/11/21 -7-