Title
Introduction of an Ordinance Approving the Lease Agreement for Six Years with Five Three-Year Options with Google Inc. in Building 11 Located at 1050 W. Tower Avenue and Building 19 Located at 2175 Monarch Street at Alameda Point. (Base Reuse 819099)
Body
To: Honorable Mayor and Members of the City Council
From: John A. Russo, City Manager
BACKGROUND
In 2006, the City of Alameda entered into a lease agreement for Building 19 with Makani Power, a "start-up" company researching and developing new wind power technologies, including an airborne wind turbine. The Makani Airborne Wind Turbine is a tethered wing that generates power by flying in large circles where the wind is stronger and more consistent. It eliminates 90% of the material used in conventional wind turbines, and can access winds both at higher altitudes and above deep waters offshore - resources that are currently untapped. Their goal is the utility-scale deployment of airborne turbines in offshore wind farms. In 2013, Makani Power was acquired by Google. As a result, Google would like to continue to lease not only Building 19 and an adjacent shed (i.e., air control tower) from the City, but also Building 11 (i.e., western most Seaplane Hangar) in order to expand Makani Power's research and development space.
DISCUSSION
The proposed lease agreement with Google replaces the existing lease with Building 19 and adds Building 11 to the agreement. The following summarizes the major business terms of the lease agreement:
Terms |
Building 19 |
Building 11 |
Square Footage |
16,888 |
110,561 |
Uses |
General Office, Engineering, R&D and Manufacturing |
Engineering, R&D, Manufacturing, General Office |
Length of Term |
6 Years |
6 Years |
Extension Options |
Five Options for Periods of Three Years Each |
Five Options for Periods of Three Years Each |
Monthly Base Rent |
$55,205-$62,134 |
Abatement of Rent |
First 12 Months of Term |
Right of First Offer |
For Adjacent Buildings 400/400A and Building 12 |
Right of First Negotiation for Purchase |
For Buildings 19, 11, 400/400A, and 12 |
The Right of First Offer (ROFO) to lease buildings 12, 400 and 400A is subject to the rights (like options) of existing tenants. Prior to marketing these spaces, the City agrees to offer Google the opportunity to lease them at market terms. This right is only applicable to Google and cannot be exercised by any subtenant or Assignee. Also in the lease is the Right of First Negotiation to Purchase. If the City creates legal parcels, and then elects to sell to a "non-governmental third party buyer" (but not a master developer or as part of a larger multi-parcel or portfolio sale) then Google shall first be offered the opportunity to purchase the parcels. The City shall provide Google with price and terms, then the parties will enter in to 90 day exclusive negotiation period. The City is not obligated to sell under this provision but it is obligated to offer the property to Google first if it does elect to sell. Price will be based on the market and remaining fair-share costs. If a purchase and sale agreement is negotiated, it will be subject to ratification by a further ordinance to be adopted at the time.
The City will carry insurance for the replacement value of the building and the tenant will have personal property insurance for replacement of property and any specialty tenant improvements.
Attracting jobs to Alameda Point (resulting in the incremental replacement of the thousands of jobs and economic base lost when the Navy decommissioned the former Naval Air Station) is one of the top priorities of all of the community planning documents previously prepared for the property. This lease with Google presents an exciting opportunity to cultivate a long-term relationship with a major, growing Bay Area employer. Staff anticipates that the execution of this lease will raise awareness in the greater Bay Area community of the potential that Alameda Point holds as a unique and competitive location for jobs. Staff and its leasing agents intend on leveraging this high-profile lease to attract other employment uses to Alameda Point.
FINANCIAL IMPACT
The monies from the leases will be deposited into the Base Reuse Department Lease Revenue Fund (Fund 858) and are limited to uses permitted under the Economic Development Conveyance Memorandum of Agreement with the United States Navy (Navy).
ENVIRONMENTAL REVIEW
This project involves leasing of an existing building and is exempt from the California Environmental Quality Act (CEQA) pursuant to Guidelines section 15301.
RECOMMENDATION
Introduce an Ordinance approving the lease agreement for six years with five three-year options with Google Inc. in Building 11 located at 1050 W. Tower Avenue and Building 19 located at 2175 Monarch Street at Alameda Point.
Respectfully submitted,
Jennifer Ott
Chief Operating Officer, Alameda Point
By:
Nanette Mocanu, Division Manager
Financial Impact section reviewed,
Fred Marsh, Finance Director
Exhibits:
1. Diagram of leasehold area
2. Lease