04-27-11 Council Agenda - Laserfiche WebLink

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Way i' &e 1°ana% MAYOR Bill Blesener COUNCIL Rick Montour John Keis Michael McGraw Shelly Boss 515 Little Canada Road, Little Canada, MN 55117 -1600 ADMINISTRATOR (651) 766 -4029 / FAX: (651) 766 -4046 Joel R. Hanson www.ci.little-eanada.mn.us MEMORANDUM TO: Mayor Blesener & Members of the City Council FROM: Joel Hanson, City Administrator DATE: April 22, 2011 RE: Construction Loan Agreement with Graba Properties, LLC - Modifications An earlier agenda topic for Wednesday's meeting is to modify the PUD Agreement with Graba Properties, LLC to allow a Thrift Store to be included in the "Allowed Tenants Listing ". If approved, this would allow the building owners to fill their space and be fully occupied. This action does have some consequences relative to our Construction Loan Agreement involving this property. Specifically, the thrift store would occupy the space that was to house NeatoScan. As you will recall, attracting NeatoScan to this building and enabling full occupancy were the primary factors in the City's decision to loan approximately $211,000 to Graba Properties, LLC. While full occupancy would be attained thereby providing good security for our loan, we would be losing potential job growth associated with Neatoscan's development as a company. (It should be noted that $100,000 of the loan amount is still in the City's possession as it was dedicated to the buildout of the NeatoScan space.) Attached is a letter from Robert Wagner, one of the partners in Graba Properties, LLC. This letter provides background on NeatoScan's problem in effectuating a move at this time. In reading the letter, it appears Mr. Wagner would prefer to keep NeatoScan in another property he owns in Oakdale. In my earlier discussions with him, I pointed out that a lease agreement for the Little Canada building was executed last September 7th and therefore shouldn't be a factor in their current issue. Mr. Wagner stated that while the partner being bought out was aware of that lease, it could be a problem because Mr. Wagner signed the lease and they lack corporate resolutions formally approving the transaction. I also discussed another option with Mr. Wagner whereby we could wait on NeatoScan until their litigation is settled. They could then move to Little Canada and occupy the 2,482 square feet currently leased by Mr. Wagner. In the attached letter, that option is not presented. As I see it, we have three options. They are as follows: Require Graba Properties, LLC to comply with the conditions of the loan agreement as approved. This would mean NeatoScan would move to Little Canada by no later than July 1, 2011. It 1