Title
Introduction of Ordinance Approving a Lease and Authorizing the City Manager to Execute Documents Necessary to Implement the Terms of a Lease with Pacific Automated, LLC for Five Years with an Additional Five Year Option in a Portion of Building 25 Located at 1951 Monarch Street at Alameda Point. (Base Reuse 819099)
Body
To: Honorable Mayor and Members of the City Council
From: John A. Russo, City Manager
Re: Introduction of Ordinance Approving a Lease and Authorizing the City Manager to Execute Documents Necessary to Implement the Terms of a Lease with Pacific Automated, LLC dba Brix Beverage for Five Years with an Additional Five Year Option in a portion of Building 25 located at 1951 Monarch Street at Alameda Point
BACKGROUND
Pacific Automated, LLC, dba Brix Beverage, is a privately owned Bay Area business that provides one-stop services to food service management companies, nightclubs and restaurants. Pacific Automated provides fountain soda, juice, teas, and mixers to its clients, as well as servicing and repairing beverage dispensing machines. Launched in 2011, the business expanded quickly with the acquisition of Dr. Pepper's existing ice machine leasing business, and subsequently the purchase of Dr. Pepper's fountain beverage sales and distribution line. The company now has over 950 direct sales and delivery customers along 15 service routes from San Francisco to Monterey County and operates debt-free. Built on an environmentally-focused business model, everything from their containers to their reverse-osmosis and UV-water cleansing systems, to the biodiesel fuel used to operate their equipment is designed to be environmentally responsible.
Later this year, Brix plans to launch its new line of bottled watered beverages, BXZero. Made completely out of biodegradable material, BXZero has zero sugar and zero impact on the environment. Within the next two years, Brix has plans to partner with a local well-known organic brewing company (confidential at this time) to begin brewing and eventually distributing from the Alameda Point location. In the summer of 2015 a Fountain Soda Bar will open to the public allowing kids and adults to create their own custom soda flavors and enjoy pub-style food.
DISCUSSION
This Lease represents the attraction of a new business to Alameda from neighboring San Leandro with the proposed lease of 18,159 sq. ft. The company currently employs 19 people, with more employees planned as product expansion takes place over the next few years. The specialty beverage use and fountain soda bar concept mesh perfectly with the City's desire for public-facing specialty food and beverage businesses along Monarch Street.
The lease includes the use of one of three bays of Building 25, a 54,450-square-foot former airplane maintenance hangar, and its adjacent yard area. The tenant currently has a three-month license for the Premises provided at no cost to allow for installation of tenant improvements pending approval of a long term lease. The Base Rent for the proposed Lease term is:
August 1, 2014 - June 30, 2016 $ 6,356 per month
July 1, 2016 - February 28, 2018 $ 8,535 per month
March 1, 2018 - July 31, 2019 $ 8,818 per month
In addition to Base Rent, the Tenant will pay its share of common area maintenance costs, all costs for services, utilities and taxes for the Premises, and comply with lease requirements for insurance. The City holds an $8,818 security deposit.
The additional 5-year lease option must be exercised in writing no later than six months before the termination of the initial term. The option period rent is the greater of 95% Fair Market Value or the rent during the initial term. Future rent increases will be 3% annually.
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 of Alameda.
ENVIRONMENTAL REVIEW
This action is exempt from the California Environmental Quality Act ("CEQA") pursuant to CEQA Guideline section 15301 (Existing Facilities).
RECOMMENDATION
Approve an ordinance authorizing the City Manager to execute documents necessary to implement the terms of a lease with Pacific Automated, LLC dba Brix Beverage for five years with an additional five year option in a portion of Building 25 located at 1951 Monarch Street, Alameda Point.
Respectfully submitted,
Jennifer Ott, Chief Operating Office - Alameda Point
By,
Nanette Mocanu, Acting Assistant Community Development Director
Financial Impact section reviewed,
Fred Marsh, Finance Director
Exhibits:
1. Map of Premises
2. Lease