Get Full Government Meeting Transcripts, Videos, & Alerts Forever!
Get email alerts on the Redevelopment topic
No spam. Unsubscribe anytime.
Committee approves modifying redevelopment agreement after lease default at Royal Tire property
Summary
Staff told the committee that DLP Investments’ proposed lease with Crescent Electric does not meet an automotive-use requirement in the redevelopment contract for the Royal Tire property, creating a contract default. The committee voted to modify the redevelopment agreement rather than terminate the TIF district.
The Brainerd City Personnel and Finance Committee authorized staff to pursue modifying a redevelopment agreement for the property at 615 Washington Street after staff said a proposed tenant does not meet the automotive-use requirement in the original contract.
Staff reported the city entered a redevelopment contract with DLP Investments in June 2015 tied to a 27-year tax increment financing (TIF) district and a tax-increment revenue note. The redevelopment contract required the facility to operate as an automotive services facility; staff said DLP secured a lease with Crescent Electric that was to commence in December but that Crescent Electric does not satisfy the automotive-use requirement, which staff characterized as a default under section 10.3 of the redevelopment contract.
Staff presented two options for council consideration: (1) terminate the redevelopment agreement, decertify the TIF district and end the note, which could remove modest increment the district received this year; or (2) modify the redevelopment agreement to permit a non-automotive use of the facility. DLP Investments asked the city to modify the agreement; staff indicated it would request a deposit from DLP to cover legal fees if the city proceeds with a modification.
A committee member moved to proceed with option two, modifying the redevelopment agreement to permit a use other than automotive services; another member seconded, and the motion carried by voice vote.
Why it matters: The committee’s choice preserves the opportunity to keep the building occupied and retain some incremental revenue associated with the TIF district, while acknowledging the current tenant does not meet the original automotive-use requirement.
What’s next: Staff will proceed with drafting a modification to the redevelopment agreement and will request financial assurances from DLP Investments to cover potential legal costs before completing the modification process.
