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Johanna Leonard, Community Development Director for the City, informed City Council members last week that the City has decided to terminate the lease with Sweet Vendome, Inc., doing business as Café Coralie at 633 Howard St., and initiate eviction procedures.
At its Aug 14, 2017 meeting, 2017, City Council approved a lease, a loan and a grant for the Howard Street café to Sweet Vendome for a café and bakery. Aldermen Don Wilson 4th Ward, and Tom Suffredin, 6th Ward, voted against the measures.
According to staff information in the City Council packet for its Aug. 14, 2017, meeting – at which the loan, the lease and the grants were approved – the lease was for 10 years and contained two consecutive five-year options for renewal.
The loan would be used for a build-out and restaurant equipment at the City-owned Howard Street location. The loan would be secured by the equipment and by a personal guarantee from the owner, who also owns and operates Patisserie Coralie at 600 Davis St. As with the lease, the term of the loan was 10 years, with no payments due in the first 12 months – that is, until roughly September 2018.
An additional $50,000 went to the business in the form of grants from the City’s Economic Development Department.
In her June 14, 2019, email to members of the City Council and certain City staff members, Ms. Leonard wrote, “It has come to staff’s attention that Cafe Coralie was not making monthly rental payments or payments toward the business loan that was provided for the purchase of equipment at the cafe.”
According to the City, Café Coralie is in arrears $91,228, which includes back rent, late fees, the principal of the loan and unpaid interest. The City issued a formal Notice of Default of the loan and lease terms on May 22, Ms. Leonard wrote.
The owner proposed either renegotiating the terms of the lease or terminating it altogether. The City chose the second option, “based on the history of non-payment and inability to demonstrate capacity to make future payments, the City moved forward with the second option and on June 13 issued a Notice of Termination and Loan Default. The café must vacate the property by June 28.
Staff also inspected the equipment procured with the $50,000 of City money. “All equipment was accounted for,” Ms. Leonard wrote, and the pieces will become property of the City, the value to be deducted from the amount owed.
In the June 13 notice, the City also said it will “pursue all legal remedies available to recover the funds due and owing under the Loan and Lease Agreement.”