History: Resolution 14-HCHRA-0043 authorized acceptance of Hennepin County capital funding and various agreements for the acquisition and development of property located at Hiawatha Avenue and Lake Street in Minneapolis for the development of the South Minneapolis Regional Human Services Center on behalf of Hennepin County.

The Human Services Center – South Minneapolis is a 100,000 square foot, five-story building, located at 2215 East Lake Street. Floors two through five are occupied entirely by the Hennepin County Human Services and Public Health Department (HSPHD) along with approximately 8,000 square feet in the middle portion of the first floor. On the two end caps of the first floor is 4,300 square feet (east end cap) and 3,202 square feet (west end cap) of retail space available for lease of which 1,780 square feet is currently leased to Briva Health (Resolution 17-HCHRA-0032).

Since 2008, Gandhi Mahal LLC has owned and operated the Gandhi Mahal restaurant located at 3009 27th Avenue South. Gandhi Mahal LLC’s restaurant at Lake and Hiawatha will operate under the name of Eden and will be open for breakfast, lunch, and dinner. For the initial year of operation, Gandhi Mahal LLC does not intend to serve alcohol of any kind. After one year, it may consider applying for a liquor license to sell wine and beer; however, it has no plans to sell hard liquor. Gandhi Mahal LLC is fully committed to sustainable methods and practices.

The initial term of the lease will be 15 years, from February 1, 2019 through January 31, 2034. This will be a modified gross rent lease, which will include base rent and operating expenses but will not include property taxes, special assessments, janitorial, or utility expenses, which Gandhi Mahal LLC will be responsible for paying. Gross rent will be $0 the first year, $6 per square foot years two through five, $7 per square foot year six followed by $.50 per square foot annual increases each year for years seven through 15. Gandhi Mahal will have seven five-year renewal options with nine months’ written notice with rent adjusted to reflect market rates as mutually agreed upon by the parties.

Gandhi Mahal LLC will take the space in a “grey shell” or “as-is” condition with no sheetrock walls, ceiling, lighting, plumbing, HVAC, or other base building improvements that are normally provided by landlords. In exchange for Gandhi Mahal LLC’s contractor to perform the base building improvements as well as tenant improvements, Gandhi Mahal LLC will receive a tenant improvement allowance of $200,000 plus 10 percent contingency for a total not to exceed amount of $220,000.

The HCHRA will soon transfer the office building and associated parking to Hennepin County. Lease Agreement A188897 will be assigned to Hennepin County upon transfer of the larger property.

Current Request: This request is for authorization to negotiate Lease Agreement A188897 with Gandhi Mahal LLC to lease approximately 4,300 square feet of space on the first floor of the Human Services Center – South Minneapolis building located at 2215 East Lake Street in Minneapolis during the period February 1, 2019 through January 31, 2034, in the receivable amount of $0 first year rent, with a not to exceed amount of $220,000 for building and tenant improvements and related construction expenses associated with building out the leased space; and authorization to assign Lease Agreement A188897 to Hennepin County upon transfer of the larger property.

Impact/Outcomes: The leasing of space to Gandhi Mahal LLC will fill the vacant 4,300 square feet of east end cap retail space at Hennepin County’s Human Services Center – South Minneapolis building and will provide the community with a coffee and café restaurant.