Title
Introduction of Ordinance Approving a First Amendment to a Lease and Authorizing the City Manager to Execute the Amended Lease Agreement with Kai Concepts, LLC, for Building 168, Suite 300, Located at 1651 Viking Street at Alameda Point. [In accordance with the California Environmental Quality Act (CEQA), this project is Categorically Exempt Under CEQA Guidelines Section 15301(c) - Existing Facilities.] [Requires Four Affirmative Votes] (Community Development 819099)
Body
To: Honorable Mayor and Members of the City Council
EXECUTIVE SUMMARY
This action will introduce an ordinance authorizing an extension of the Lease term for Kai Concepts, LLC (Kai) for an additional 36 months for monthly rent of $16,609.00-$17,754.32 for a portion of Building 168, including approximately 28,636 square feet of interior space and approximately 17,270 square feet of land, at Alameda Point (1651 Viking Street, Suite 300).
BACKGROUND
Kai is the home of the Kiteboat Project, where a team of marine architects, sailors, and software developers are building and testing kites for large-scale propulsion in waterborne transportation. To date, kite propulsion has primarily been used for kitesurfing and in single-person traction kiting. In small-scale kiting, the force of the kite can be controlled by an individual holding on to the kite directly, but as the kite gets larger, harnessing its power becomes more difficult. The Kiteboat Project's mission is to design a purpose-built vessel that is specifically designed to harness kite power and to advance kite design and kite controls to the point that power-assisted or autonomously controlled kites can be used by a broad audience.
Kai has occupied Building 168 since May 8, 2013. The term of the current Lease expires on July 31, 2019, so this Lease amendment is intended to retain an existing tenant. The First Amendment extends the term of the current Lease by thirty-six months.
DISCUSSION
This action requires City Council approval pursuant to City Charter Section 3-10. The affirmative vote of four (4) members of the City Council is required for approval. The portion of Building 168, located at 1651 Viking Street, Suite 300, is approximately 28,636 square feet of interior space and the adjacent land is approximately 17,270 square feet.
The premises may only be used by the tenant for research and development related to the kite-powered craft which involves designing, building, and testing.
The following summarizes the major business terms of the Lease First Amendment:
|
Terms |
Building 168 |
|
Square Footage |
28,636 |
|
Uses |
Research and development related to kite-powered craft which involves designing, building, and testing |
|
Length of Term |
36 months |
|
Extension Options |
None |
|
Monthly Base Rent |
Months 1-12 (8/01/2019-7/31/2020): $16,609.00; Months 13-24 (8/01/2020-7/31/2021): $17,181.60; Months 25-36 (8/1/2021-7/31/2022): $17,754.32. |
Building 168 is located in the Enterprise District at Alameda Point. All leases in the Enterprise District are short term to allow the City of Alameda (City) flexibility to develop the site. Kai had originally requested a shorter term, but because of the need for repeated amendments to add term to the Lease in the past, the City asked for a three year lease extension with a termination provision favorable to Kai.
The tenant has provided a $44,728 security deposit. In addition, the tenant will comply with all other leasing requirements, including providing insurance satisfactory to the City.
ALTERNATIVES
Alternatives to approving this Lease amendment are not renewing the Lease with KAI Concepts LLC, which would stop Lease revenues starting July 1, 2019, until a new tenant is approved by the City Council, or renewing the Lease with different terms to be negotiated with Kai.
FINANCIAL IMPACT
The funds for this Lease will be deposited in the Base Reuse Fund 858 and are subject to the restrictions included in the Economic Development Conveyance between the United States Government and the City.
The City Council previously approved the original contract and the contract amendments as presented below:
|
Contract |
Approval Date |
Authorized Amount |
Term |
|
Original Contract |
July 5, 2016 |
$11,852.00-$12,573.79 monthly |
3 Years |
ENVIRONMENTAL REVIEW
This action is exempt from the California Environmental Quality Act (CEQA) pursuant to CEQA Guideline section 15301 (Existing Facilities).
CLIMATE IMPACTS
No anticipated climate impacts.
RECOMMENDATION
Introduce an Ordinance approving a first amendment to the Lease and authorizing the City Manager to execute the amended Lease agreement with Kai Concepts, LLC, for Building 168, Suite 300, located at 1651 Viking Street at Alameda Point.
CITY MANAGER RECOMMENDATION
The City Manager recommends approval of the first amendment to the lease.
Respectfully submitted,
Debbie Potter, Community Development Director
By,
Nanette Mocanu, Assistant Community Development Director
Financial Impact section reviewed,
Elena Adair, Finance Director
Exhibits:
1. Premises
2. First Amendment
3. Lease Agreement
cc: Eric Levitt, City Manager