Item Description:
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Consent to Assignment and Assumption and Neg Amend and Restatement of Ground Lease A140980; Consent to Assignment and Assumption and Neg Amend and Restatement of Lease/Use Agreement A140981
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Resolution:
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BE IT RESOLVED, contingent upon necessary approvals by the State of Minnesota, and following review and approval by the County Attorney’s Office, the Chair be authorized to sign consent to Assignment and Assumption of Ground Lease A140980 from the YWCA of Minneapolis to St. David’s Center Minneapolis, LLC, on behalf of the County; and
BE IT FURTHER RESOLVED, upon execution of the Assignment and Assumption of Ground Lease A140980, the County Administrator be authorized to negotiate an amendment and restatement of Ground Lease A140980, extending the term to June 1, 2052, and making various changes consistent with the assignment to St. David’s Center Minneapolis, LLC, and that following review and approval by the County Attorney’s Office, the Chair be authorized to sign the amended and restated agreement on behalf of the County; and
BE IT FURTHER RESOLVED, contingent upon necessary approvals by the State of Minnesota, and following review and approval by the County Attorney’s Office, the Chair be authorized to sign consent to Assignment and Assumption of Lease/Use Agreement A140981 from the YWCA of Minneapolis to St. David’s, on behalf of the County; and
BE IT FURTHER RESOLVED, upon execution of the Assignment and Assumption of Lease/Use Agreement A140981, the County Administrator be authorized to negotiate an amendment and restatement of Lease/Use Agreement A140981, making various changes consistent with the assignment to St. David’s Center, and that following review and approval by the County Attorney’s Office, the Chair be authorized to sign the amended and restated agreement on behalf of the County; and
BE IT FURTHER RESOLVED, that the Controller be authorized to transfer and disburse funds as necessary to carry out the intent of this Resolution.
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Background:
In 2014, the State Legislature appropriated $3 million to the County for the predesign, design, renovation, furnishing and equipping of an early childhood center at the YWCA of Minneapolis building located at 1130 Nicollet Mall. The State then provided these funds to the County through Grant Agreement A140979 between the County and the Minnesota Department of Human Services, the grantor. The original bonding appropriation and, subsequently the grant agreement, was amended in 2015 to expand the eligible uses of the funds to include other building improvements. The YWCA provided $3 million of matching funds toward the project.
State law required that the County, as grantee, have an ownership interest in the property to be improved, which would house the governmental program in question - the early childhood center. In order to fulfill this requirement and to accomplish the goals of the appropriation, the County entered into Ground Lease A140980 over the entirety of the property at 1130 Nicollet Mall owned by the YWCA. The County then leased the building back to the YWCA through Lease/Use Agreement A140981. The County Board authorized Agreements A140979, A140980, and A140981, through Resolution 14-0258, adopted July 17, 2014.
In 2023, the YWCA determined that it would close its fitness center in the Nicollet Mall building and put the property up for sale. The YWCA continues to operate its early childhood center in the building. Under state law, capital projects that are wholly or partially funded with state bond proceeds become “state bond-financed property” and are subject to a variety of requirements, including actions that must occur if there is a change in use or ownership of the property. County staff therefore reached out to the YWCA and to state officials at Minnesota Management and Budget and Minnesota Department of Human Services to plan for the potential sale and identify actions the County and the state must take if the building were sold.
On November 30, 2023, St. David’s Center submitted a letter of intent to purchase the underlying fee title of the YWCA building and subsequently entered into a purchase agreement with the YWCA. St. David’s is a leader in child and family development, offering educational, therapeutic, and support services including early childhood education, mental health and pediatric therapies, autism treatment, home visits, and disability services to approximately 4,300 children and families annually.
St. David’s proposes to purchase and renovate the building to expand early childhood services available for children struggling with trauma or behavioral and developmental issues. It would operate the majority of services itself and also lease a portion of the facility back to the YWCA to continue providing the current program of licensed childcare services. St. David’s has commenced a fund-raising campaign to fund a portion of the proposed renovation of the building and intends to seek additional state bonding support in the 2025 legislative session. It intends ultimately to use the entire building for children’s services; in contrast, the YWCA only uses a portion of the building for its early childhood education programming.
To accomplish this transition, St. David’s proposes that it acquire fee title to the property from the YWCA. At the same time, it would assume all rights and obligations of the YWCA under the ground lease and the lease-use agreement with the County. These two agreements would be amended and restated, to substitute St. David’s for the YWCA and to make assorted small conforming changes.
This Resolution would effectuate the proposed transactions. The first resolving clause would consent to the assignment by the YWCA of the Ground Lease to St. David’s. The second resolving clause would authorize negotiation of an Amended and Restated version of the Ground Lease, which would substitute St. David’s for the YWCA as the lessor and make other conforming changes. The third resolving clause would consent to the assignment by the YWCA of the Lease/Use Agreement to St. David’s. The fourth resolving clause would authorize negotiation of an Amended and Restated version of the Lease/Use Agreement, which would substitute St. David’s for the YWCA as the tenant and make other conforming changes.
recommendation
Recommendation from County Administrator: Recommend Approval