Agenda - Council - 02/08/2016 - Laserfiche WebLink

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BRIGGS AND MORGAN At the closing for the Property, the HRA also executed a Restrictive Covenant recorded in the office of the Anoka County Registrar of Titles on March 3, 2014 as Document No. 522138.003 (the "Restrictive Covenant"). The Restrictive Covenant prohibits certain surrounding property from being leased, used or occupied as a Quick Service Restaurant (as defined therein) for 20 years from the date of the Restrictive Covenant. The Restrictive Covenant also contains a list of example restaurants that are prohibited from operating in the surrounding areas covered by the Restrictive Covenant (ex. Burger King, Wendy's, Hardee's, Five Guys, Chick-fil-A, etc.). The Restrictive Covenant provides that if McDonald's is not operating a McDonald's restaurant within 1080 days of the date listed in the Restrictive Covenant, the Restrictive Covenant will be null and void and of no further force or effect. That required operating deadline is February 9, 2017. McDonald's has not obtained a building permit or taken steps to commence construction on the Property before February 16, 2016. McDonald's has informed the HRA that it desires to delay construction of the McDonald's restaurant on the Property but that it intends to open the restaurant on the Property by February 10, 2017. Accordingly, McDonald's has requested that the HRA execute an agreement to modify the right of re-entry language in the Deed to remove the commencement date requirement. If the HRA executes such an agreement, the HRA will not be able to commence an action in District Court to seek re -vesting of title to the Property if McDonald's does not comply with the construction commencement deadline of February 16, 2016. The HRA would have to wait until the completion dates (February 9 and 10, 2017) under the Restrictive Covenant and Deed, respectively, to enforce its rights under those documents. As an alternative to removing the construction commencement date in the Deed, the HRA could revise the date to be later in 2016. This would force McDonald's to diligently proceed in the development process and would give the HRA an opportunity to enforce its right of re-entry much sooner if McDonald's does not move forward with development at the site. Whatever action is taken with respect to the construction commencement date, if McDonald's does not complete the improvements and open for business on or before February 10, 2017, the HRA will be able to commence such an action to seek re -vesting of title to the Property and the restrictions contained in the Restrictive Covenant will become null and void. 2 7443100v1