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Request for Committee Action

Assignment, Assumption and Modification of Redevelopment Contract with Tied House Properties, LLC and Double Black Diamond, Inc. for property located at 201 Lowry Ave NE (RCA-2018-00275)

ORIGINATING DEPARTMENT
Community Planning & Economic Development
To Committee(s)
# Committee Name Meeting Date
1 Economic Development & Regulatory Services Committee Mar 27, 2018
Lead Staff:
Kevin Carroll
Presented By:
Kevin Carroll
Action Item(s)
# File Type Subcategory Item Description
1 Action Contract/Agreement

Authorizing an Assignment, Assumption and Modification of Redevelopment Contract with Tied House Properties, LLC (as assignor) and Double Black Diamond, Inc. or an affiliate (as assignee/new developer) regarding the redevelopment of the commercial component of the property located at 201 Lowry Ave NE.
 

Previous Actions

On April 26, 2013, City Council adopted Resolution 2013R-167, authorizing acquisition of property from Hennepin County Tax-Forfeited Land & simultaneous disposition to First & First LLC, plus administrative costs; and authorizing redevelopment contract.

On June 28, 2013, City Council approved transfer of the 201 Lowry Ave NE site from First & First LLC to 201 Lowry Development, LLC & consent to the assignment and assumption of the Redevelopment Contract between the City of Minneapolis and First & First to 201 Lowry Development, LLC for the redevelopment.

On August 19, 2014, City Council approved the 201 Lowry Ave NE Site and Redevelopment Contract (2014-00927).

Ward / Neighborhood / Address
# Ward Neighborhood Address
1. Ward 1 Marshall Terrace 201 Lowry Ave NE
Background Analysis

The two-story commercial building located at 201 Lowry Ave NE was, for many years, the site of "Little Jack’s" restaurant. In 2010, Hennepin County foreclosed on the property for non-payment of taxes. A development team that included First & First, LLC and DJR Architecture, Inc. proposed

to renovate the existing vacant building for a new restaurant and/or for other commercial uses and, in partnership with Clare Housing, construct new high-density affordable rental housing on the north half of the one-acre site in question, which had formerly been used for surface parking. The proposed development was consistent with the 201 Lowry Ave NE Redevelopment Plan, which was approved by the City Council on March 8, 2012. The future land use specified in the Plan was "Mixed-Use," a category that included both affordable and market-rate housing, as well as commercial development.

In June 2013, the City acquired the property from Hennepin County and conveyed it to 201 Lowry Development, LLC for construction of a Phase 1 commercial project and, subject to satisfaction of reasonable conditions to assignment, subsequent transfer of a subdivided portion of the site to an affiliate of Clare Housing for construction of a Phase 2 rental housing project. Clare completed the housing project last year, but the commercial component remains undone.

In August of 2014, the City Council authorized an extension of the commercial component completion deadline and assignment of the commercial component of the Redevelopment Contract from 201 Lowry Development, LLC to a corporate entity created by Paul Dzubnar, a partner in the local Green Mill Restaurant and Crooked Pint Ale House chains.

The Dzubnar entity, Tied House Properties, LLC, now wishes to sell the property to Double Black Diamond, Inc., which is a development entity created by Luke Shimp. Mr. Shimp is the owner of the Red Rabbit restaurant in the North Loop, and he also owns four Red Cow restaurants --- one in St. Paul, one near 50th & France in Minneapolis, one on Hennepin Avenue in Minneapolis, and one at MSP airport. Mr. Shimp has indicated to City staff that he intends to demolish the existing building at 201 Lowry and construct a new one-to-three story commercial building of at least 5,000 square feet, to be used as a restaurant, catering and events facility, with a rooftop patio and a commissary kitchen for his Red Cow and Red Rabbit operations.

The 2013 Redevelopment Contract, as amended, prohibits transfer of the property or any interest in the agreement without the express written approval of the City, which approval shall not unreasonably be withheld.

City staff is therefore requesting that the City Council approve 1) the conveyance of the property and assignment of the remaining commercial component Redevelopment Contract obligations to Double Black Diamond, Inc. or an affiliated entity, and 2) corresponding modifications to the Redevelopment Contract, including redefining the minimum improvements as a new construction building as described above and extending the commencement and completion deadlines to May 31, 2019 and May 31, 2020, respectively. Staff anticipates closing will occur next month and land use applications will be submitted later this summer.

FISCAL IMPACT STATEMENT
  • No fiscal impact anticipated