Title
Introduction of Ordinance Approving a Lease and Authorizing the City Manager to Execute Documents Necessary to Implement the Terms of the Third Lease Amendment with Artemis Racing, USA for Twenty-Four Months with Two Additional Options for Eighteen Months and Six Months in Building 12 Located at 1050 West Tower Avenue, a Portion of Taxiway H and Access to the Seaplane Lagoon at Alameda Point. (Base Reuse 819099)
Body
To: Honorable Mayor and Members of the City Council
From: John A. Russo, City Manager
Re: Introduce an Ordinance Approving a Lease and Authorizing the City Manager to Execute Documents Necessary to Implement the Terms of the Third Lease Amendment with Artemis Racing, USA for Twenty-Four Months with Two Additional Options for Eighteen Months and Six Months in Building 12 Located at 1050 West Tower Avenue at Alameda Point
BACKGROUND
Artemis Racing, past "Challenger of Record" for the 34th America's Cup, represents the Royal Swedish Yacht Club. Artemis has been a tenant at Alameda Point since May 2012 and has made Alameda its home. While the venue for the 35th America's Cup (AC35) has yet to be determined, Artemis wishes to remain at Alameda Point to continue using Building 12 and Seaplane Lagoon as their training facility and operations base. If it is ultimately decided that AC35 will be held on San Francisco Bay, Artemis will likely exercise one or both of its lease options to remain at Alameda Point through the end of that event, which is estimated to be held within the next 3-4 years.
DISCUSSION
Through this lease the City retains an existing tenant, its sailors, support team employees, and their families as well as continuing to support the maritime industry in the City and throughout the region. In addition to the Building 12 premises, the Lease provides for continued use of Seaplane Lagoon and a portion of adjoining Taxiway H for water access and training activities. These uses dovetail with the City's Phase 0 plan to make the Seaplane Lagoon area a space for outdoor activities and a gathering place for residents and visitors.
The lease includes the use of Building 12, a 110,561-square-foot former hangar building, 22,604-square-feet of Taxiway H, and portions of the Seaplane Lagoon. The City has entered into a license agreement with the Navy for access to the Seaplane Lagoon to facilitate this use. The rent previously paid by Artemis was $25,000 monthly. The base rent for the proposed extension term is:
May 1, 2014 - April 30, 2015 $ 47,624.40 per month
May 1, 2015 - April 30, 2016 $49,053.12 per month
3% increase each May 1st thereafter (option periods)
If Artemis Racing should decide at some point to relinquish their use of Taxiway H and the Seaplane Lagoon, then the monthly rent will be reduced by $3,400.
In addition to the base rent, the Tenant will pay all costs for services, utilities and taxes for the premises and comply with lease requirements for insurance. The City holds a $20,000 security deposit.
The Third Amendment to the Lease extends the lease term for 24 months (May 1, 2014 through April 30, 2016) up to 48 months if both extension options are exercised, and will trigger City Council approval.
FINANCIAL IMPACT
The monies from the new lease will be deposited into the Base Reuse Department lease revenue fund (Fund 858) and are limited to uses permitted under the Lease in Furtherance of Conveyance (LIFOC) and the Economics Development Conveyance Memorandum of Agreement with the United State Navy.
MUNICIPAL CODE/POLICY DOCUMENT CROSS REFERENCE
There is no impact on the Municipal Code.
ENVIRONMENTAL REVIEW
This action is exempt from the California Environmental Quality Act ("CEQA") pursuant to CEQA Guidelines Section 15301 (Existing Facilities).
RECOMMENDATION
Introduce an ordinance approving a lease and authorizing the City Manager to execute documents necessary to implement the terms of the third lease amendment with Artemis Racing, USA for twenty-four months with two additional options for eighteen months and six months in Building 12 located at 1050 West Tower Avenue at Alameda Point.
Respectfully submitted,
Jennifer Ott, Chief Operating Officer - Alameda Point
By,
Nanette Mocanu, Acting Assistant Community Development Director
Financial Impact section reviewed,
Fred Marsh, Finance Director
Exhibits:
1. Diagram of Leasehold Area
2. Lease