cityof CINCINNATI Interdepartmental Correspondence Sheet February 20, 2014 FOR YOUR INFORMATION To: Mayor and Members of City Council From: Scott C. Stiles, Interim City Manager Subject: Notice of Default for Mahogany’s at The Banks The Administration today received the attached notice of default from Jeffrey R. Anderson, as agent for NIC Riverbanks One, LLC (“NIC Riverbanks”). Mahogany’s landlord, NIC Riverbanks, acquired the property with its purchase of Phase IA of The Banks in October of 2013 from master developers Carter USA and The Dawson Company. The Administration is in the process of reviewing its various agreements regarding Mahogany’s and shall advise Council as this matter proceeds. As Council is aware, the City provided Mahogany’s with economic development support in March of 2012. City Council passed Ordinance No. 49-2012 and Ordinance No. 502012, which together provided Mahogany’s with economic development assistance consisting of a $300,000 loan and $684,000 grant to defray the costs of the particular fit out needed for constructing Mahogany’s Café and Grill restaurant at The Banks location. Mahogany’s paid the City a partial payment in January of this year, but had not paid their obligation in November and December of 2013. Representatives of Mahogany’s had been in contact with the City about a partial payment for February, but the City has not received that payment yet. I have also asked the City Solicitor to evaluate the City’s recourse under the loan and grant agreements if Mahogany’s were to default on its lease obligations and be evicted from the property. Attachment cc: Terrance A. Nestor, Acting City Solici1~o—~~ JEFFREY R ANDERSON REAL ESTATE February 20, 2014 VIA OVERNIGHT COURIER AND EMAIL Liz Rogers Mahogany’s at The Banks, LLC 6953 Tarrago Court Liberty Township, OH 45011 and City of Cincinnati Economic Development Division 805 Central Ave., Suite 700 Cincinnati, Ohio 45202 and Office of the City Solicitor 801 Plum Street, Room 214 Cincinnati, Ohio 45202 Re: Notice of Default for 180 East Freedom Way, cincinnati, Ohio 45202 (‘the “Prenilses ‘~ Dear Ms. Rogers: As you are aware, the terms of your Lease for the above-referenced Premises require that payment of rent, assessments, and other charges due under the Lease be made before the first of each month, in advance. This is the fourth notice that Mahogany’s at The Banks, LLC (“Mahogany’ s”) has received relating to the Premises. Mahogany’s was served the first written default notice on September 10, 2012. In September of 2012, Mahogany’s was past due in payment of rent and other charges in the amount of $19,828.66. Less than a year later, on August 26, 2013 Mahogany’s was served with a second notice relating to $16,478.98 in late rent and other charges. On January 24, 2014, Mahogany’s was served with a third notice, at that time $42,130.65 was owed. Mahogany’s promised to pay the Landlord money from catering jobs after the third notice and last Friday you contacted the Landlord’s agent and told her to meet you because you had checks to deliver to Landlord. Although you set up the meeting and agreed to the time and place, you never showed and did not contact the Landlord’s agent afterwards to explain why you missed the meeting. Mahogany’s failed to cure the defaults within the time Rookwood Tower • 3805 Edwards Road, Suite 700 • Cincinnati, Ohio 45209 www.anderson.realestate.com • Phone (513) 241-5800 Fax (513) 241-2637 period specified in the Lease. Accordingly, these incidents represent “Events of Default” under the Lease. Pursuant to Mahogany’s Lease, an “Event of Default” is defined, among other things, as: If Tenant shall fail to pay when due any Rent and shall not cure such failure within five (5) days after Landlord gives Tenant written notice thereof Qrovided, however, that Tenant shall be entitled to notice and opportunity to cure on account of any failure to pay Rent only one (1) time during any twelve (12) calendar month period, and any subsequent failure to pay any Rent during such twelve (12) calendar month period shall constitute an Event of Default without the giving by Landlord of any notice or opportunity to cure whatsoever) The above paragraph is taken directly from Section 14.2(a)(i) of Mahogany’s Lease. As you can see from the above quoted section, the Landlord, NIC Riverbank One, LLC (“NIC”) is not required to send you this notice because it has been less than a year since the last Event of Default. Also, because it has been less than a year since Mahogany’s last Event of Default, NIC is not required to provide Mahogany’s with an opportunity to cure the current default. With that said, NIC is providing Mahogany’s this written notice of default and is willing to give Mahogany’s an opportunity to cure the current default as outlined below. Our records reflect that, as of the date of this mailing, you are in arrears in the payment of rent, assessments, and other charges under the Lease in the amount of $50,658.47. You should also be aware that tomorrow, additional utility charges will be added to your account that will total slightly more than $2,000.00. You have not disputed that you are in default of the Lease. In the past, Landlord has provided you twice the required length of time you are entitled to under the Lease in order to cure the payment defaults. Despite this additional time, Mahogany’s did not cure the defaults. In accordance with the Lease, you are entitled to only five (5) days from the date of this letter to pay the amount owed. The Landlord shall again give you ten (10) days to cure the default. If at the end of ten (10) days the default is not entirely cured, the Landlord intends to retake the Premises. Although we are sending you this written notice of default now, this is not the first time we have made you aware of the current arrearage. We have been actively working with you to assist you in making the payments owed under the Lease. For example, although NIC is entitled under the Lease to impose a late fee of approximately $525 for each month you are late, NIC has not added that fee to your bill since October 2013. This is true despite the fact that you have written Landlord three (3) NSF checks in the last five (5) months. Each time you write a check on an account that has insufficient funds, the bank charges us a NSF check fee. Mahogany’s has failed to reimburse NIC for the NSF fees it has incurred. A substantial portion of the $50,658.47 now past due arises from Mahogany’s failure to pay utility charges. Mahogany’s owes $1,710.91 for electric charges for September 2013, $1,623.95 for October 2013, $1,991.47 for December 2013, and $1,691.04 for January 2014. NIC has paid these charges to the electric company on Mahogany’s behalf and Mahogany’s has failed to reimburse it for this expense. Moreover, Mahogany’s has failed to pay for gas and water charges paid by NIC over the same period in addition to common area maintenance charges, real estate taxes, marketing and other charges. This situation simply cannot go on. Mahogany’s has ten (10) days from the date of this letter to come current on its account. If Mahogany’s fails to pay the entire amount owed of $50,658.47, plus any additional fees or amounts that might accrue within the next ten days, Landlord will impose the late fee it has waived up to this point and reserves the option to explore all available remedies available to it under the Lease to include, but not limited to, acceleration of rent, recovery of the Premises, and legal proceedings to collect amounts owed. This is your last chance to come current with your rent and other charges. You must pay the entire amount owed. Landlord will no longer accept partial payments. Your prompt attention to this matter is requested. Jeffrey R. Anderson Real Estate, Inc. Agent for Owner