Title
Introduction of Ordinance Authorizing the Interim City Manager to Execute a New Lease with Kai Concepts, LLC., a California Limited Liability Company, for Sixty Months for a Portion of Building 168, Located at 1651 Viking Street, Alameda, CA; and a Lease with Kai Concepts, LLC., for Sixty Months for a Portion of Pier 1, Located at Alameda Point, Alameda, CA.
In accordance with the California Environmental Quality Act (CEQA), this action is categorically exempt from further environmental review pursuant to CEQA Guidelines Section 15301 (Existing Facilities) and 15061(b)(3) (Common Sense). (Base Reuse and Economic Development 29061822 and 29061821)
Body
To: Honorable Mayor and Members of the City Council
From: Adam W. Politzer, Interim City Manager
EXECUTIVE SUMMARY
Staff recommends that the City Council authorize the Interim City Manager to: (i) execute a lease with Kai Concepts, LLC (Kai Concepts) for sixty (60) months for approximately 28,636 square feet of interior space and 17,270 square feet of adjacent land of Building 168 located at 1651 Viking Street at Alameda Point (B168 Leased Premises [Exhibit 1]), and (ii) execute a lease with Kai Concepts for sixty (60) months for a portion of Pier 1 located at Alameda Point (Pier 1 Leased Premises [Exhibit 2]). These agreements are collectively referred to as Leases.
BACKGROUND
Kai Concepts is a company working on innovations in the field of water sports, including windsurfing and kitesurfing. The company employs a team of engineers, sailors and software developers who are building and testing kites for large-scale propulsion in waterborne transportation.
Since 2013, Kai Concepts has occupied two locations at Alameda Point; a portion of Building 168 for research and development of kite-powered craft, including design, manufacturing, and testing, and also a small space at Pier 1 for water access to launch and test kite-powered crafts.
Building 168, located in the Enterprise District of Alameda Point, was constructed in 1946 as a general warehouse for the former Naval Air Station. The most recent lease with Kai Concepts that included the portions of Building 168 and Pier 1, expired on October 26, 2025, and a short-term License was executed to bridge the gap until a new lease proposal could be considered by City Council.
All leases in the Enterprise District are short term to allow the City of Alameda (City) flexibility for future development of the area in alignment with the City Council approved Disposition and Development strategy. No further action is required under the Surplus Lands Act (SLA) for the City to execute these five-year leases.
DISCUSSION
The recommended new leases for the portion of Building 168 and the launch site at Pier 1 are both for a term of 60 months, with no options to renew, at the following negotiated rates reflective of market conditions:
Building 168 (B168): monthly rental rate of $23,000 per month, or approximately $0.80 per square foot, with annual 3% increase thereafter for the remainder of the term. The B168 Leased Premises include an interior area of approximately 28,636 square feet, 17,270 square feet of adjacent land, and no exclusive parking. The tenant will provide a security deposit, and pay all utilities, taxes, required licenses and fees, as well as its proportional share of other expenses for the B168 Leased Premises.
Pier 1: monthly rental rate of $4,150 per month with annual 3% increase for the remainder of the term. The Pier 1 Leased Premises include a non-exclusive portion of Pier 1 suitable for launching and retrieving craft, with no exclusive parking. Kai Concepts shares Pier 1 with Power Engineering and Construction, the primary user of the pier.
No rent credits or other incentives are included in the negotiated leases, as these are as-is leases with an existing tenant. The City’s broker has indicated that fair market value warehouse lease rates elsewhere in Alameda Point are in the range of $0.70 to $0.85 per square foot and the negotiated rate of $0.80 is reflective of the market for a similar type and age building.
Staff worked with Kai Concepts to confirm 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 tax returns for tax years 2023 and 2024. Additionally, Kai Concepts is a tenant in good standing, has demonstrated many years of reliable and responsible tenancy and is engaged in research and development that brings skilled jobs and supports economic development in the blue tech and maritime sector, which is a priority industry cluster in the City’s Economic Development Strategic Plan.
The lease for Building 168 includes an early termination right to allow the City more flexibility for future development. The City, as Landlord, has the right in its sole and absolute discretion to terminate after giving Tenant at least six (6) months prior written notice. The lease for the portion of Pier 1 includes a relocation right to allow the City to relocate the tenant’s use to another substantially comparable size section of a pier at Alameda Point with 90-day prior written notice. This is intended to accommodate future retrofit or redevelopment of the Piers, but no project is currently contemplated.
ALTERNATIVES
• Approve the first reading of the Ordinance authorizing the Interim City Manager to execute the two Leases with Kai Concepts, 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 Kai Concepts and notify the tenant to vacate at the termination of the current License agreement.
• Elect not to approve the first reading and direct the Interim City Manager to continue negotiations with Kai Concepts. In this scenario, the City Council should identify the specific lease terms or conditions that require further negotiation.
FINANCIAL IMPACT
The Building 168 Lease will contribute base lease revenues of $1,465,321 (net present value of $ 1,247,515) over the 60-month period. The Pier 1 Lease will contribute base lease revenues of $264,395 (net present value of $225,095) over the 60-month period. The revenues generated from the Leases will be deposited into the Alameda Point Fund and Alameda Pont Tidelands Fund (Funds 29061822 and 29061821).
MUNICIPAL CODE/POLICY DOCUMENT CROSS REFERENCE
The proposed uses for the building are consistent with General Plan policies for Alameda Point. This action helps implement the Strategic Plan goal (TIE 26) to expand Citywide business economic development activities, including an Alameda Point attraction and retention program. It aligns with the City’s Economic Development Strategic Plan (2018) by retaining a business in the blue tech and maritime priority cluster. It is consistent with the Alameda Municipal Code zoning requirements for the property. This action is subject to the Levine Act.
ENVIRONMENTAL REVIEW
This action does not constitute a “project” as defined in CEQA Guidelines Section 15378 and therefore no further CEQA analysis is required.
On a separate and independent basis, this action is categorically exempt from further environmental review pursuant to CEQA Guidelines Section 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 lease with Kai Concepts, LLC., a California Limited Liability Company, for sixty months for a portion of Building 168, located at 1651 Viking Street, Alameda, CA; and the lease for a portion of Pier 1, located at Alameda Point; Alameda CA.
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
Exhibits:
1. Lease for Building 168
2. Lease for a Portion of Pier 1