Grand Forks’ Jobs Development Authority has authorized City Attorney Daniel Gaustad to provide the owners of the now-closed boutique Ann Love with a notice of default on its lease.
Gaustad also was authorized, at a JDA meeting on Sept. 8, to pursue collection of unpaid rent for the store, that, by the end of this year, will total around $63,000. The shop is located in the city-owned Corporate Center II, downtown. The move comes after the Growth Fund Committee -- the advisory arm of the JDA --recommended in late June to postpone taking action against Roman and Callie Schmidt, who own the boutique, until Gaustad could review their financial situation.
That meeting, between the Schmidts, Gaustad and Meredith Richards, director of community development, happened July 24. According to a city staff report, Roman Schmidt indicated he would supply financial documents through an attorney, but some time after that stated here would not be legal representation. The staff report notes the two parties have not had any contact since Aug. 11, though the door to future conversation between the parties remains open.
“I think the recommendation is still proceed with collection under the terms of the lease agreement,” Gaustad told the JDA. “Again, like any case that I'm involved with, we can always communicate to try to resolve the matter.”
Still, the Schmidts have made an offer to settle their debt to the JDA to the tune of 20 cents on the dollar. It is unclear when or where that offer was made, but Gaustad told the JDA he could not make a recommendation on whether or not to accept it, based on a lack of information.
“I don't know if that's a reasonable sum or not a reasonable sum without knowing what their financial condition is,” said Gaustad, adding he would continue to reach out to them.
Roman Schmidt, when contacted by the Herald on Thursday, declined to comment, though he indicated he would be willing to speak after the situation was finalized.
The Schmidts’ offer to settle the debt is the second they have made. The first came in mid June, when the business owners asked to cancel their lease, in a letter addressed to the Grand Forks City Council. They offered improvements made to their retail space, which they say add up to $40,000, be used to offset what they owe. Under the terms of the lease though, those improvements are the property of the business owners at lease termination.
City council and JDA member Bret Weber called the situation “unfortunate” and said it was “an exception in our experience over the last 20 years in these buildings.”
The JDA approved Ann Love’s lease late in 2017. It runs through the end of 2022 and has an “opt out” clause for the end of this year. In June 2019, the JDA granted a request by the Schmidts to reduce their $3,401-per-month rent by 50%, in anticipation of a business slowdown caused by a downtown construction project on DeMers Avenue. Only one rent payment was made following the lease modification.