Title
Introduction of Ordinance Authorizing the Interim City Manager to Execute a Lease for a Restaurant Suite Portion of the Historic Alameda Theatre Complex, with Play House, LLC, Doing Business as Director's Cut (Project Burger), Located at 2319 Central Avenue, Alameda, California, for a Term of Thirty-Six (36) Months with One (1) Extension Option for Thirty-Six (36) Months. [Requires 4 affirmative votes]
This action is categorically exempt from further environmental review pursuant to CEQA Guidelines Sections 15301 (Existing Facilities) and 15061(b)(3) (Common Sense). (Base Reuse and Economic Development 24361815)
Body
To: Honorable Mayor and Members of the City Council
From: Adam W. Politzer, Interim City Manager
EXECUTIVE SUMMARY
Staff recommends that City Council authorize the Interim City Manager to execute a new Lease with the existing tenant, Play House, LLC doing business as Director’s Cut (“Project Burger” or “Tenant”) for an approximately 1,850 square foot existing restaurant space located in a portion of the Historic Alameda Theater Complex at 2319 Central Avenue, Alameda, California, for an initial term of thirty-six (36) months with one (1) extension option for an additional thirty-six (36) months depicted in Exhibit 1, attached here to.
BACKGROUND
The City of Alameda (City) owns the Historic Alameda Theater Complex (Complex) located at 2315 and 2319 Central Avenue. The Complex, designed by Art Deco architect Timothy L. Pflueger, was opened in 1932, and underwent significant renovations in 2006. The Complex includes the theater and cineplex leased to a private operator, and two retail suites with separate entrances on Central Avenue. One suite is currently occupied by a barber shop and the other by a restaurant, Play House, LLC, doing business as Director’s Cut but operating as Project Burger.
Project Burger has been a tenant of the City, and operating a family-friendly, sit-down restaurant at this location since 2018 in approximately 1,850 square feet of restaurant. The current lease expired at the end of October 2025 but the Tenant has continued to operate in the space under a short-term six-month license agreement. The extended period allowed appropriate time for staff to competitively market the space with the support of our commercial broker. The restaurant space was actively marketed for two (2) months and shown to prospective tenants, all were encouraged to submit a proposal to lease or Letter of Intent (LOI). At the end of the marketing period, the broker received one LOI for the space from the current restaurant operator and tenant, Project Burger, and a new Lease was negotiated.
DISCUSSION
The recommended Lease would commence on May 1, 2026, for an initial term of thirty-six (36) months with one (1) extension option for an additional thirty-six (36) months.
The proposed lease includes one (1) month of rent credit, in recognition of tenant’s continued tenancy, and to perform maintenance of the leased premises. Tenant owns all the restaurant fixtures and kitchen equipment within the leased premises. The negotiated monthly rental rate for the first 12 months of the new Lease term is $5,865 per month, or $3.17 per square foot, which reflects a negotiated 3% increase over Tenant’s current base rent rate. The lease also includes an annual 3% increase thereafter for the remainder of the term. Staff and the City’s broker agree that the negotiated rental rate in the proposed Lease reflects market value for a similar size space and use, particularly within Alameda’s Historic Downtown Area.
Staff worked with Project Burger to assess its continued financial suitability as a Tenant. The business is owner-operated, and Keyser Marston Associates, Inc, a real estate and financial advisory services consultant reviewed the business’s submitted tax returns for 2023 and 2024, as part of this analysis.
Project Burger is a Tenant in good standing with the City and has worked diligently to recover from the significant economic impacts of the COVID-19 pandemic. In 2023, City Council approved an amendment memorializing negotiated changes to the lease price and terms that established City’s expectations regarding hours and staffing. The tenant has met all expectations by expanding hours and staffing. Additionally, the business has completed recent façade improvements, refreshing its signage, marquee, lighting, and overhang within the past two years.
ALTERNATIVES
• Approve the first reading of the Ordinance authorizing the Interim City Manager to execute the Lease with Project Burger, on the terms described in this staff report.
• Choose not to approve the first reading and direct the Interim City Manager to terminate negotiations with Project Burger and notify the tenant to vacate at the termination of the current License agreement. In this case City Council should identify next steps.
• Elect not to approve the first reading and direct the Interim City Manager to continue negotiations with Project Burger. In this scenario, the City Council should identify the specific lease terms or conditions that require further negotiation.
FINANCIAL IMPACT
The Lease will contribute base lease revenues of $211,673 (net present value of $189,868) over the 36-month period. The revenues generated from the Lease will be deposited into the Commercial Revitalization Fund 24361815.
MUNICIPAL CODE/POLICY DOCUMENT CROSS REFERENCE
The proposed use as a restaurant is consistent with the General Plan and Alameda Municipal Code zoning requirements for the property. The proposed lease is consistent with Economic Development Strategic Plan vision and the City Fiscal Year 2023-26 Strategic Plan Project TIE26 to expand Citywide economic development activities. This action is subject to the Levine Act.
ENVIRONMENTAL REVIEW
In accordance with CEQA, this action is categorically exempt from further environmental review pursuant to CEQA Guidelines Sections 15301 (Existing Facilities) and 15061(b)(3) (Common Sense).
CLIMATE IMPACT
There are no identifiable climate impacts or climate action opportunities associated with the subject of this report.
RECOMMENDATION
Hold a public hearing and introduce an ordinance authorizing the Interim City Manager to execute a new lease with Play House, a California Limited Liability Company, doing business as Director's Cut (Project Burger), for approximately 1,850 square feet of retail space in the historic Alameda theatre complex, located at 2319 Central Avenue.
Respectfully submitted,
Abigail Thorne-Lyman, Base Reuse and Economic Development Director
By,
Annie Cox, Administrative Management Analyst
Financial Impact section reviewed,
Ross McCarthy, Finance Director
Exhibit:
1. Lease