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Re: Les Desirs and Sullivan St. Bakery -
10-02-2009, 01:54 PM
Here's the notice that was distributed to all Penn South Cooperators on October 1, 2009 explaining the situation.
A number of cooperators have expressed concern regarding the housing company’s need to take legal action against Les Desirs Bakery on Ninth Avenue. Therefore, we want to clarify the situation.
First, it is important to emphasize that the housing company offers leases, where possible, to our existing tenants provided that they are willing to pay market rent. It is very important to Mutual and its shareholders that the commercial spaces are rented at market rates, as that income is a vital factor in subsidizing the maintenance charges paid by our shareholders, and in offsetting the need for maintenance increases.
Second, it should be understood that the lease for Les Desirs Bakery expired on February 28, 2009, seven months ago, and sincere efforts have been made by Mutual to extend that lease. Here is the background:
Jean Pauget, the owner of Les Desirs Bakery came to us about a year and a half ago and expressed an interest in selling his business so that he could retire. At that time, he had an individual who was interested in taking over the lease. However, this person had no net worth nor any existing bakery business, and he was unwilling to pay a market rent for the space. Therefore, the Board, which is charged with the fiduciary responsibility of managing Mutual’s finances and seeking qualified tenants for the stores, would not consent to the transaction. Mr. Pauget did not bring to the Board any other prospective purchasers.
Because Mr. Pauget had indicated to the General Manager that he was planning to retire in the next couple of years, he was allowed to remain in the space on a month-to-month basis until a suitable tenant could be found to take over the location. We found such a potential tenant recently in the Sullivan Street Bakery, which is owned by Jim Lahey, who also runs “Co.”, the successful pizzeria/restaurant at Ninth Avenue and 24th Street.
Upon finding a potential tenant, Mutual’s General Manager went to Mr. Pauget and asked him how much time he would need to surrender the premises. Mr. Pauget indicated that he needed until the end of February 2010 to surrender the space, that is, a full year after his lease had run out. Nevertheless, the Manager agreed, and said that we would memorialize this agreement in writing. Our attorneys prepared the surrender agreement and the Manager contacted Mr. Pauget to have the agreement signed. However, Mr. Pauget apparently changed his mind and stated that he was not going to move out and that he would not sign the agreement.
At this point, Management and the Board were left with no choice but to start a legal action and terminate the occupancy of the premises. The surrender agreement still remains as an option for Les Desirs if they agree to surrender the premises by February 28, 2010.
Sullivan Street Bakery, the prospective tenant, is a successful small business bakery with a location on 47th Street where it does a large wholesale business in addition to a small retail business. Its breads are famous in New York City and around the country. Mr. Lahey has informed us that the location on Ninth Avenue would be primarily a retail location with a line of fresh baked goods in a newly renovated location that will offer patron seating as well.
Given the situation, the Board recognized that it was its fiduciary responsibility to find a tenant for this location who has the necessary experience and who is prepared to pay the going rent. The Board and Management are confident that the Sullivan Street Bakery will be a welcome addition to the community and a viable business and tenant for our space.
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