In 2021, significant progress has been undertaken by Lab Holding, LLC (Developer) to move the Cottage Industries Project forward in light of challenges brought on by the COVID-19 pandemic.  Currently, the first phase of Cottage Industries known as the Farm Block (see attachment) is comprised of an adaptive reuse approach and tenant improvements to seven (7) buildings. The Developer has secured signed leases with several artisans and eateries including: Smoke Queen Barbeque, Spotless Burger (vegan), Spotless Ice Cream (vegan), and White Elephant (Thai). There are several Letters of Intents signed with additional tenant announcements forthcoming. 

The Farm Block will also incorporate retail kiosks with active discussions in process with: a local bake shop, a plant shop, a juice vendor, and a general store. As with all projects developed by the Developer, a key element is to create a sense of community at the Farm Block for locals, families and visitors to enjoy an active community garden, amphitheater, TOT play area, fenced-in dog play area, outdoor seating area and an activity/gaming court. Incorporation of local community art will provide for Cottage Industries to implement complementary art pieces throughout the Farm Block of which a notable oversized hen sculpture, a flying fence with roses, oversized adirondack seats, and a lemonade stand that is in the shape of a lemon are all in the works. This level of creative placemaking and imagination has necessitated a request for City support in extending the developer’s Amended Promissory for one additional year with payments beginning July 1, 2023.

Project development of Cottage Industries is led by Linda Sadeghi, a principal of LAB Holding, Inc. With the restructuring and impacts of the COVID-19 pandemic, and no income coming in from the project, the anticipation of making payments on the note has proven to be challenging.  The Developer has requested an extension to the Amended Promissory note dated January 1, 2020 for one year.  A one year extension will push out the payments on the City’s note to July 1, 2023.

Approval of a one year extension to the Amended Promissory Note will have limited impact to the General Fund.  The future Principal and Interest Payments will be deposited into two Housing Funds.  Fund 510 (Housing Authority Asset) receives 64 percent of the payments and Fund 507 (Housing Successor Fund) receives 36 percent of the payments. 

It is recommended that the City Council:

• Approve the one year extension to the Amended Promissory Note secured by a Deed of Trust; and

• Authorize the City Manager to approve any pertinent documents on behalf of the City, and authorize the City Manager to approve modifications as appropriate.