Local Development Finance Authority

CITY OF STERLING HEIGHTS Regular Meeting of the LOCAL DEVELOPMENT FINANCE AUTHORITY 40555 UTICA ROAD 586-884-9322 CITY COUNCIL CHAMBERS March 26, 2013 5:30 PM MEETING CALLED TO ORDER PLEDGE OF ALLEGIANCE ROLL CALL APPROVAL OF AGENDA APPROVAL OF MINUTES OF March 26, 2013 Special Meeting NEW BUSINESS 1. To approve the Lease Agreement between Quality Field Team, and the Local Development Finance Authority (LDFA). 2. To approve the Lease Modification Agreement between Terra Telesis and the Local Development Financing Authority (LDFA), and authorize the LDFA Chairperson to execute the approved Agreement on behalf of the LDFA. OLD BUSINESS BOARD MEMBERS REPORT PUBLIC COMMENT ADJOURNMENT  CITY OF STERLING HEIGHTS LOCAL DEVELOPMENT FINANCE AUTHORITY Draft MINUTES OF THE SPECIAL MEETING March 25 2013 – 5:30 p.m. 40555 Utica Road, Sterling Heights, MI 48313 586-446-2489 City Council Chambers Victor Martin called the meeting to order at 5:35 p.m. Pledge of Allegiance Members present at roll call: David Corba, Lori Doughty, Stephanie Eagen, Richard Kincaid, John Lettang, John Lamerato, Victor Martin, Jill Tomyn, David Wilson Members absent: Stephan Cassin (excused), Casey Sobczak (excused) Paula Sorrell (excused), Orest Zachary (excused) Also in attendance: Kasey Green, Economic Development Manager, Julie Gustafson, Director Macomb OUIncubator Motion to Approve the Agenda Moved by Wilson, supported by Kincaid, to approve the agenda as presented. Ayes: All Nays: None Motion carried. Motion to Approve the Minutes of February 20, 2013 Regular Meeting Moved by Lettang, supported by Kincaid, to approve the agenda as presented. Ayes: All Nays: None Motion carried. New Business To approve the lease agreement between Coupon Wallet, LLC and the Local Development Finance Authority (LDFA). Moved by Lettang, supported by Kincaid to approve lease agreement Ayes: All Nays: None Motion carried. To approve the lease agreement between Logistics Specialties, Inc. and the Local Development Finance Authority (LDFA). Moved by Wilson, supported by Kincaid to approve lease agreement Ayes: All Nays: None Motion carried. Old Business None Board Members Report None Public Comment None Adjournment Moved by Lettang supported by Kincaid to adjourn. Ayes: All Nays: None Motion carried. The meeting adjourned at 5:40 pm TJ Minutes Approved 04/17/2013 John Lettang Secretary  LDFA Business Sterling Heights, Michigan 4/17/13 AGENDA STATEMENT OMB AS03 Rev. 11/04 Item Title: To approve the Lease Agreement between Quality Field Team, and the Local Development Finance Authority (LDFA) Submitted By: Kasey Green, Economic Development Manager 586-884-9327 Executive Summary Attached for LDFA review is an May 1, 2013 to April 30, 2014 lease agreement between Quality Field Team, and the LDFA. Quality Field Team has signed the standard lease agreement for space #2-K in section 2 of the building containing approximately 470 square feet of space. Monthly rent will be $185.00. Quality Field Team. is developing an interactive data base system that can be accessed through an app. Initial development has been for the mortgage industry (Brokers and mortgage companies) and they are on the verge of expanding the system to other industries. Macomb OU Incubator has classified them as a "Technology" based company. Suggested Action: MOVED BY: SECONDED BY: RESOLVED: to approve the Lease Agreement between Quality Field Team, and the Local Development Finance Authority (LDFA  LDFA Business Sterling Heights, Michigan 4/17/13 AGENDA STATEMENT OMB AS03 Rev. 11/04 Item Title: To approve the Lease Modification Agreement between Terra Telesis and the Local Development Financing Authority (LDFA), and authorize the LDFA Chairperson to execute the approved Agreement on behalf of the LDFA. Submitted By: Kasey Green, Economic Development Manager 586-884-9327 Executive Summary Terra Telesis has been a tenant at Velocity and a client of the Incubator since 2011 Terra Telesis is a start-up company working on low profile wind turbine technologies. The owner is Al Khavari. At this time, the company's position is cash flow negative and they are aggressively and actively seeking investors. The company is at a critical "make or break" point. Unfortunately, their situation has resulted in an inability to pay their rent that is past due since March, and future rent under the term of their lease, which will expire on August 31, 2013. The company has asked for assistance and relief on rent while they strive to secure an investor in the coming months. Therefore, approval of the attached Lease Modification Agreement is requested by the Board. The agreement provides that for deferment of current debt until an investor is secured, and a reduction of rent on the remaining months to $1 per month, until an investor is secured. Should an investor not be secured before the expiration, the past indebtedness would be forgiven. This is because it is simply unlikely that we could cost effectively collect on this amount. The lease modification also includes a legal provision about a "consent judgment". Basically, in exchange for this reduced rent, the tenant agree to a more streamlined eviction process, should that become necessary during this current lease. Suggested Action: MOVED BY: SECONDED BY: RESOLVED: to approve the Lease Modification Agreement between Terra Telesis and the Local Development Financing Authority (LDFA), and authorize the LDFA Chairperson to execute the approved Agreement on behalf of the LDFA.  LEASE MODIFICATION AGREEMENT This Lease Modification Agreement (“Agreement”) is made on ____________________, 2012 between Terra-Telesis, Inc., a Michigan corporation, whose address is 6633 18 Mile Road, Unit 2-E, Sterling Heights, Michigan 48314 and the City of Sterling Heights Local Development Financing Authority, a Michigan local development financing authority (“LDFA”), whose address is 6633 18 Mile Road, Sterling Heights, Michigan 48314. RECITALS A. Terra-Telesis and LDFA entered into a Lease Agreement dated May 18, 2011 (the “Lease”) under which Terra-Telesis leased the premises identified as Unit 2-E, 6633 18 Mile Road, Sterling Heights, Michigan (the “Premises”) from the LDFA for a term beginning September 1, 2013 and ending August 31, 2013. B. Terra-Telesis has requested that the LDFA modify the Lease at the earliest possible date, C. The LDFA is willing to modify the Lease with Terra-Telesis on the terms and conditions contained in this Agreement. D. The parties wish to set forth their understandings with respect to the modification of the Lease in writing. NOW, THEREFORE, the parties agree as follows: 1. Lease Modification. The LDFA agrees to modify the Lease with Terra-Telesis effective April 17, 2013 to defer outstanding rent indebtedness of $800.00 under the Lease, and to modify the rental rate for remaining months of the lease to $1.00 until such time that an investor is secured or the lease expires, whichever occurs first. Terra-Telesis shall notify the LDFA in writing within one (1) business day of the date that an investor is secured and shall pay the deferred rent with thirty (30) days of the date an investor has been secured. Should an investor be secured, the rental rate shall return to the original rate of $400.00 per month. Should Terra Telesis fail to secure an investor prior to the expiration of the term of the Lease, than the outstanding rent indebtedness of $800.00 will be forgiven. 2. Delivery of Executed Copy of Consent Judgment. Terra-Telesis shall deliver within three (3) days of approval of this Agreement by the LDFA an executed Consent Judgment in favor of the LDFA prepared by counsel for the LDFA consenting to the issuance of a writ of restitution in favor of the LDFA which Terra-Telesis authorizes the LDFA to enter with the 41A District Court – Sterling Heights Division restoring possession of the leased premises to the LDFA if Terra-Telesis fails to pay the deferred rent within thirty (30) days of the date that Terra- Telesis secures an investor in its business or of the time that the Lease term has expired, whichever occurs first. Terra-Telesis irrevocably appoints Kasey Green, administrative liaison between the LDFA and the City of Sterling Heights, as its agent to enter the case name and number and any other necessary information so that she may enter the referenced Consent Judgment with the 41A District Court if an eviction proceeding is commenced against Terra- Telesis as a result of its failure to vacate the leased premises in accordance with the terms of this Agreement, which power of attorney shall terminate upon entry of the Consent Judgment with the 41A District Court. Terra-Telesis acknowledges that this covenant to execute and deliver the referenced Consent Judgment (with the referenced power of attorney to Kasey Green) to be entered with the 41A District Court upon the occurrence of specified conditions constitutes good and adequate consideration to the LDFA that is required to empower the LDFA to modify this Lease and defer payment of the rent as provided in this Agreement. 2  3. Entire Agreement. The entire agreement of the parties with respect to the modification of the Lease is set forth in this Agreement, and no prior agreements, understandings, whether verbal or in writing, shall be effective. Any modification of this Agreement shall be in a written agreement approved by the respective parties. 4. Severability. In the event that a court of competent jurisdiction finds any clause, sentence, section or paragraph of this Agreement to be invalid or unenforceable for any reason, then this Modification Agreement shall be null and void 5. Governing Law. This Agreement is made in the State of Michigan and shall be governed by its laws. TERRA-TELESIS, INC., CITY OF STERLING HEIGHTS LOCAL a Michigan corporation DEVELOPMENT FINANCING AUTHORITY, a Michigan local development financing authority By: ______________________________ By: ________________________________ Its: President Its: Chairperson And By: ________________________________ Its: Secretary 04/11/2013 J:\STERLING\LDFA (Local Development Financing Act)\LEASE MODIFICATION AGREEMENT - Terra Telesis.doc 3