Title
Introduction of Ordinance Authorizing the City Manager to Execute a Lease Amendment for a Portion of Building 25 with Alameda Point Beverage Group, a California Corporation Located at 1951 Monarch Street, Hangar 200, at Alameda Point, Alameda, California, for a Term of Twenty-Five Months.
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). [Requires 4 affirmative votes] (Base Reuse and Economic Development 29061822)
Body
To: Honorable Mayor and Members of the City Council
From: Jennifer Ott, City Manager
EXECUTIVE SUMMARY
Staff recommends that the City Council authorize the City Manager to execute a Fourth Amendment to the Lease Agreement with Alameda Point Beverage Group, a California corporation (“Alameda Soda”) for a portion of Building 25 located at 1951 Monarch Street at Alameda Point for a term of twenty-five months, with no extension options. Alameda Soda is one of the current occupants in Building 25, and its existing lease is set to expire on August 1, 2024. Alameda Soda is a long-standing local business. They have a mix of office, warehouse and workshop uses in the building. The recommended lease amendment will help support this commercial use at Alameda Point.
BACKGROUND
The City of Alameda (City) owns the former US Navy structure (Building 25) at Alameda Point, and it is located within the footprint of the planned De-Pave Park. Building 25 is approximately 54,450 square feet and was built in 1987 as a corrosion control building. It is divided into three (3) hanger spaces: two wine makers share one hanger, Alameda Soda leases the second hanger, and a distillery utilizes the third hanger for storage purposes. Alameda Soda occupies approximately 19,074 square feet of interior space of the building, a small exterior storage area and non-exclusive vehicle parking in the shared lot in front of the building.
Alameda Soda Company was founded in 2016 and creates various flavors of soda - such as Hanger 25 Cola, Golden Gate Orange and Lost Island Ginger Beer - made with natural ingredients. Their products can be purchased on-line or in stores by the can and are also found in many soda fountains and beverage programs in restaurants. Alameda Soda also services bar equipment.
Alameda Soda’s lease at Building 25 was first executed in August 2014 (under a different business name). The company expanded briefly in 2016 into additional space but retracted back to occupying Hanger 200, their current hanger within Building 25. In 2019 it renewed its lease with the City and in 2021 participated in the City’s COVID 19 Rent Relief Program. It has met its repayment obligations to the City.
At its November 7, 2023 meeting, City Council directed staff to remove Buildings 25 and 29 within the design of the future De-Pave Park, but also directed staff to make all efforts to ensure the buildings remain leased and revenue generating to the City until construction of the Park is ready to begin. This proposed lease amendment is intended to meet this City Council direction, which also will ensure the safety and security of this area of Alameda Point by maintaining occupancy. Staff designed this amendment to align the end dates of all leases in Building 25 in order to provide a cleaner path forward as the City works to secure funding for De-Pave Park, and ultimately construction.
DISCUSSION
The recommended lease amendment would commence August 1, 2024, for a term of 25 months, with no extension options. Over the initial 12 months of the lease, the rent would be $14,198.00 per month at $0.74 per square foot and in months 13-25 it will increase to $14,907.90 per month at $0.78 per square foot.
The lease establishes a lease premises, non-exclusive parking and an allowable use of an existing fenced area to the west of the building.
In conclusion, staff believes that a lease amendment to extend the length of occupancy for Alameda Soda in Building 25 is an acceptable interim use, while the City determines the funding strategy and timeline for the development of De-Pave Park.
ALTERNATIVES
After opening the public hearing and considering all of the documents and testimony, City Council may consider three alternative courses of action, including:
• Approve the first reading of the ordinance authorizing the City Manager to execute a lease amendment with Alameda Soda on the terms described in this staff report.
• Choose not to approve the first reading and direct the City Manager to terminate negotiations with Alameda Soda and notify Alameda Soda to vacate by August 1, 2024, the expiration of the current lease term.
• Choose not to approve the first reading and direct the City Manager to continue negotiations with Alameda Soda. In this scenario, City Council should identify the specific lease terms or conditions that require further negotiation.
FINANCIAL IMPACT
The lease will contribute annual revenues, as shown in the chart below, but will also keep Building 25 partially occupied which helps to provide security and minimize opportunities for vandalism of the premises and trespassing. These funds will be deposited into the Alameda Point Fund (Fund 290) and will assist with the operating expenses for City-owned Alameda Point properties and may also be allocated in part to funding the infrastructure requirements in the Alameda Point Master Infrastructure Plan.
|
Revenue to City |
|
Months |
Year |
Monthly |
Annual |
|
1-12 |
1 |
$14,198 |
$170,376 |
|
13-25 |
2 |
$14,908 |
$193,803 |
|
Total over 25 months |
|
|
$364,179 |
MUNICIPAL CODE/POLICY DOCUMENT CROSS REFERENCE
The proposed uses for the building are consistent with General Plan policies for Alameda Point and the Adaptive Reuse subdistrict and consistent with the Alameda Municipal Code zoning requirements for the property. The recommended lease is also consistent with the 2023 Keyser Marston Property Disposition Framework Analysis and in alignment with the Strategic Plan Goal to “Invest in Transportation, Infrastructure, Economic Opportunities and Historic Resources”. 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 Section 15301 (Existing Facilities).
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 approve the first reading of the ordinance authorizing the City Manager to execute a lease amendment with Alameda Beverage Company, a California corporation, at 1951 Monarch Street, Hangar 200, Building 25 at Alameda Point for a term of twenty-five months.
Respectfully submitted,
Abigail Thorne-Lyman, Base Reuse and Economic Development Director
By,
Alesia Strauch, Base Reuse Manager
Financial Impact section reviewed,
Margaret O’Brien, Finance Director
Exhibits:
1. Proposed 4th Amendment to Lease
2. Existing Lease and Amendments