Mr. Albrecht, Where's Our Grocery Store - The Contract
Download the Full Contract:> 2006062212515600.pdf [4.9 MB] What Can Be Done?
|
 |
Albrecht's Contract With the City of AkronThe members of the Highland Square Neighborhood Association, along with our attorneys, have spent time to read the entire contract several times. It outlines the gratuitous sweetheart deal that Mr. Albrecht received on the backs of Akron's taxpayers and clearly shows that he has neglected to fulfill many of his obligations. We've gathered some of the more egregious offenses below. 1. Promptly Commence Site Preparation and ConstructionJoint Development Agreement 1.B.(1), page 5. "Upon execution of the Triangle Site Ground Lease, Albrecht agrees to commence promptly site preparation and construction of the Triangle Site Retail Projects..." The lease was executed months ago and the only building that Albrecht hasn't completed is the grocery store. In the newspaper a few months back, this decision was defended by Albrecht by claiming that they needed to sign a grocery store operator first so that they can build to suit the store owner's needs. Of course, this "chicken or the egg" defense falls flat when one looks at all of the other empty buildings that he's built in the Square without signed leases. Additionally, the contract places the construction of the building before finding operator. If Mr. Albrecht wanted it the other way around, then perhaps he should have clarified that in the contract. Furthermore, the Henrettas, the previous owners of Highland Square's Star Market, proposed a store layout to Albrecht and were turned down because it didn't meet with his vision of what should be there. So much for "build-to-suit." 2. Complete Construction of Rentable Space Within Nine MonthsJoint Development Agreement 1.B.(1), page 5. "Albrecht agrees to use its commercially reasonable efforts to complete the Triangle Site Retail Projects to a degree sufficient to provide rentable space to tenants therein withing nine months of commencement thereof." There is debate on when the clock starts on the nine months. Even when we choose the option that is the most generous to Albrecht, starting the clock when construction began on the Triangle Site, the deadline has passed. As far as "commercially reasonable efforts" are concerned, he was able to finish EVERY OTHER BUILDING in the project, why wasn't he even able to get the grocery store started? 3. Sign a Lease With a Grocery Store OperatorJoint Development Agreement 1.B.(1) & (2), page 5. "Albrecht will use its commercially reasonable best efforts to lease to a grocery store operator, taking into account the commercial viability and nature of the store..." Despite the fact that Albrecht bemoaned the difficulties of signing a grocery store operator in a recent newspaper article, interviews which the HSNA has done with prospective operators which were in negotiations with Albrecht revealed that Albrecht's efforts could be best described as infexable, and at worst, sabotage. As previously stated, the Henrettas requested a building that would best fit their needs, and Albrecht outright refused. Later negotiations with Freshway ended after many months of negotiation when, just as the lease was about to be signed, the rent was jacked up to around double what a typical grocery store would pay. This was well beyond what would allow the store to run without losing money. This also speaks to Albrecht not "taking into account the commercial viability and nature of the store" as required by the contract. These kinds of price-hike tactics are especially offensive when you consider the bargain price that Albrecht is getting on the land from Akron's taxpayers, a mere $833 per month. 4. Provide 15 Full-time Equivalent JobsJoint Development Agreement 1.B.(3), page 6. "Albrecht agrees that it shall use its commercially reasonable best efforts, taking into account the commercial viability and nature of the Project, to provide for the creation of fifteen additional full-time equivalent jobs in the aggregate in connection with the Triangle Site Retail Project." Obviously, no store means no jobs. Forget fifteen, he didn't even create one. 5. Prime Business Real Estate, $833 Per MonthGround Lease Agreement 2.(a), page 1. "Redeveloper [Albrecht] shall pay as rent to the City the sum of $10,000 per year, payable in equal monthly payments..." Apparently one of the richest men in Akron needs his rent subsidized by Akron's taxpayers. It's unclear how this rent amount was determined, but it is clearly extremely low for what is one of the most visible properties in the Square. 6. $250,000 Optional BuyoutGround Lease Agreement 3.(a), page 3. "If the Redeveloper [Albrecht] has paid the rentals and required charges, and has complied with all the terms of the Joint Development Agreement and this Lease Agreement, the Redeveloper will have the option to purchase the Property..." The Lease Agreement goes on to say that the purchase price will be $250,000 and requires 120 days notice of intent to purchase. Otherwise, Albrecht can excerise this option at any time within the next 30 years. To do a little math, the city bought the land for $$782,994 and then are willing to take a $532,994 loss to sell him the property for $250,000. Meanwhile, we have the Mayor asking us to raise our taxes because they are running low on cash. Perhaps instead of more tax revenue, a little Economics 101 might do as much good. One important point is that Albrecht can only exercise this option if he has complied with the terms of the contract, which, reviewing the above highlights from the contract, it is clear that he hasn't. As a result, if city officials hold him to the contract that they and he signed, at this point he is never able to exercise this optional purchase of the land. |