STRATEGIC PRIORITY: Economic Development
AGENDA DATE: February 26, 2025
COUNCIL DISTRICT(S): 7
DEPARTMENT: Office of Economic Development
EXECUTIVE: Robin Bentley
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SUBJECT
Title
Authorize amendment and restatement of the Chapter 380 economic development loan agreement and the Chapter 380 economic development grant agreement (collectively, the “Agreement”) with MLK Kingdom Complex, LLC (“Borrower/Grantee”) previously approved on June 22, 2022, by Resolution No. 22-0993 related to the MLK Wellness Project (“Project”) proposed for the properties addressed as 3101 Martin Luther King, Jr. Boulevard and 2904 Meadow Street, including the following: (1) amend the Project completion deadlines to September 1, 2025; (2) replace the tenant Jasz LLC with Kadosh Coffee, LLC or similar business as approved by the City Manager or designee; (3) extend the tenant investment deadline to September 1, 2025; (4) amend the lease and occupancy dates to September 1, 2025; (5) amend the date by which the facility is opened to the public to September 1, 2025; (6) delete the minimum square footage requirement for the tenant leases; (7) delete the job creation requirement; (8) replace Exhibit B1 (budget) to the Agreement with Amended Exhibit B1 to reflect changes to the Project budget; (9) amend the Agreement to replace all references to “Small Business Center” with “Office of Economic Development”; (10) amend the loan payment schedule to reflect a six month forbearance as attached in Exhibit A, and in consideration; (11) amend the offset provision in the grant agreement to clarify that Grantee and its affiliates must be in good standing with the City for grant payment to occur; and (12) increase the Borrower/Grantee’s required minimum investment of non-City funding by $120,305.00, from $671,608.00 to $791,913.00, in accordance with the Economic Development Incentive Policy - Financing: No cost consideration to the City
Body
BACKGROUND
The South Dallas/Fair Park Opportunity Fund (“Opportunity Fund”) was established by City Council in 1989 to support projects within the Opportunity Fund service area. Under the current Program Statement, the Opportunity Fund may provide loans and grants to promote economic development projects that create new jobs, retain existing jobs, or increase the service area tax base as well as provide grants that support human development initiatives in the neighborhoods surrounding Fair Park.
On June 22, 2022, the City Council authorized the Agreement with Borrower/Grantee, including (1) a Chapter 380 economic development grant in an amount not to exceed $100,000.00 and (2) a Chapter 380 economic development loan in an amount not to exceed $350,000.00, in consideration of the MLK Wellness Project proposed for the properties addressed as 1301 Martin Luther King, Jr. Boulevard and 2904 Meadow Street by Resolution No. 22-0993.
The Agreement was conditioned upon Borrower/Grantee’s redevelopment of a vacant building and a vacant unimproved lot into a neighborhood retail health and wellness complex that consists of a single-story building for a 3,000 square foot fitness center, a 1,200 square foot healthy food restaurant, and a 863 square foot office space ("MLK Wellness Project"). The Agreement was subsequently executed by all parties on December 2, 2022 (“Execution Date”).
The Agreement was authorized with the following key terms and conditions: (1) construction completion of the Project improvements, including obtaining final certificates of occupancy (or equivalent evidence of completion issued by the City) by December 31, 2022; (2) full lease and occupancy of the 5,063 square foot retail building by November 30, 2022, consisting of a 3,000 square foot fitness center, a 1,200 square foot healthy food restaurant, and 863 square foot office space; (4) execution of a lease with G3 Health Club, Jasz LLC, and Kingdom Sandwich for minimum 5-year terms by the Execution Date; (5) opening to the public the retail and office space by December 31, 2022; and (6) creation of 27 jobs prior to the termination date of the loan compliance period, in conjunction with the hiring plan.
Due to construction delays and other changes, Borrower/Grantee submitted a request to City staff to amend the Agreement as follows: (1) amend the Project completion deadlines to September 1, 2025; (2) replace the tenant Jasz LLC with Kadosh Coffee, LLC or similar business as approved by the City Manager or designee; (3) extend the tenant investment deadline to September 1, 2025; (4) amend the lease and occupancy dates to September 1, 2025; (5) amend the date by which the facility is opened to the public to September 1, 2025; (6) delete the minimum square footage requirement for the tenant leases; (7) delete the job creation requirement; (8) replace Exhibit B1 (budget) to the Agreement with Amended Exhibit B1 to reflect changes to the Project budget; (9) amend the Agreement to replace all instances references to of “Small Business Center” with “Office of Economic Development”; and (10) amend the loan payment schedule to reflect a six month forbearance as attached in Exhibit A, and in consideration; (11) amend the offset provision in the grant agreement to clarify that Grantee and its affiliates must be in good standing with the City for grant payment to occur; and (12) increase the Borrower/Grantee’s required minimum investment of non-City funding by $120,305.00, from $671,608.00 to $791,913.00, in accordance with the Economic Development Incentive Policy.
While the Project has suffered from construction delays, Borrower/Grantee has remained current on loan payments to the City of Dallas; however, the Borrower/Grantee has requested six months forbearance of monthly loan payments to facilitate the completion of the Project. The $7,914.30 in total forborne loan payments would accrue and be due at loan maturity in July 2032. The amended loan payment schedule is attached as Exhibit A.
The additional consideration to the City for the amendments requested by the Borrower/Grantee is an increase in the Borrower/Grantee’s required minimum investment of non-City funding by $120,305.00, from $671,608.00 to $791,913.00.
PRIOR ACTION/REVIEW (COUNCIL, BOARDS, COMMISSIONS)
On June 22, 2022, the City Council authorized the execution of a Chapter 380 economic development loan agreement and Chapter 380 economic development loan agreement with MLK Kingdom Complex, LLC in consideration of the MLK Wellness Project proposed for the properties addressed as 3101 Martin Luther King, Jr. Boulevard and 2904 Meadow Street by Resolution No. 22-0993.
On January 27, 2025, the Board of Directors of the South Dallas/Fair Park Opportunity Fund was briefed regarding the proposed amendment and restatement of the Agreement and unanimously recommended City Council approval.
Information about this item was provided to City Council through a City Manager Friday Memo on February 21, 2025. The Economic Development Committee was briefed by memorandum regarding this matter on February 3, 2025.
FISCAL INFORMATION
No cost consideration to the City.
BORROWER/GRANTEE
MLK Kingdom Complex, LLC
Ferrell Fellows, Manager
MAP
Attached