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File #: 2016-3011 (10 minutes)   
Type: Regular Agenda Item
Body: City Council
On agenda: 7/5/2016
Title: Introduction of Ordinance Approving a First Amendment to a Lease and Authorizing the City Manager to Execute Documents Necessary to Implement the Terms of a First Amendment to the Lease Agreement with Pacific Automated LLC, a California Limited Liability Company, dba Brix Beverage (Pacific Automated, LLC) to Include a Portion of Building 25 (Unit 100), a Small Outbuilding Known as Building 491, and Additional Parking Common Areas as Part of the Original Premises at 1951 Monarch Street at Alameda Point. [In accordance with the California Environmental Quality Act (CEQA), this project is Categorically Exempt under the CEQA Guidelines Section 15301(c) - Existing Facilities.] [Requires Four Affirmative Votes] (Base Reuse 819099)
Attachments: 1. Exhibit 1 - First Amendment to Pacific Automated (Brix) Lease, 2. Exhibit 2 - Building 491, 3. Exhibit 3 - Building 25, Unit 100, 4. Exhibit 4 - Additional Premises Parking Area, 5. Exhibit 5 - Original Lease, 6. Ordinance

Title

 

Introduction of Ordinance Approving a First Amendment to a Lease and Authorizing the City Manager to Execute Documents Necessary to Implement the Terms of a First Amendment to the Lease Agreement with Pacific Automated LLC, a California Limited Liability Company, dba Brix Beverage (Pacific Automated, LLC) to Include a Portion of Building 25 (Unit 100),  a Small Outbuilding Known as Building 491, and Additional Parking Common Areas as Part of the Original Premises at 1951 Monarch Street at Alameda Point. [In accordance with the California Environmental Quality Act (CEQA), this project is Categorically Exempt under the CEQA Guidelines Section 15301(c) - Existing Facilities.] [Requires Four Affirmative Votes]  (Base Reuse 819099)

 

Body

 

To: Honorable Mayor and Members of the City Council

 

From: Jill Keimach, City Manager

 

Re: Introduction of Ordinance Approving a First Amendment to a Lease and Authorizing the City Manager to Execute Documents Necessary to Implement the Terms of a First Amendment to the Lease Agreement with Pacific Automated LLC, a California Limited Liability Company, dba Brix Beverage (Pacific Automated, LLC) to Include a Portion of Building 25 (Unit 100),  a Small Outbuilding Known as Building 491, and Additional Parking and Common Areas as Part of the Original Premises at 1951 Monarch Street at Alameda Point

 

BACKGROUND

 

Pacific Automated, LLC, dba Brix Beverage (Brix), 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. 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.

 

DISCUSSION

 

The lease amendment (Exhibit 1) adds additional premises to the Brix lease in Building 25 located at 1951 Monarch Street under two separate provisions.  First, Brix is adding Building 491 and the use of Common Areas to its lease under the terms (rate and term) of its original lease (Exhibit 2).  Second, Brix is exercising its right of first refusal, included in the original lease, to accept the negotiated terms offered to a proposed new tenant for Unit 100 and additional premises (Exhibits 3 and 4).  The rate under the right of first refusal is less than the original lease because it includes consideration for bringing that unit to an occupancy standard. The amendment term is up to 8 more years consistent with the original lease. 

 

Building 25 is in the Town Center plan.  While it is not openly identified as part of the De-Pave park, the term of the leases have historically not exceeded ten years to allow for development flexibility.  The building is one of the newer buildings providing unique height and hangar doors and is very desirable in the leasing market. 

The following schedule is for Monthly Base Rent with the addition of Building 491 at the rate of the original lease:

 

 

Base Rent:

Months

Monthly Base Rent per square foot

Monthly Base Rent

 

Effective Date - 43

$0.47

$8,964.78

 

44 - 60

$0.49

$9,346.26

 

The following schedule summarizes the terms for Monthly Base Rent for Unit 100 and parking area added as a result of the right of first refusal and at the rate negotiated with a proposed new tenant:

 

Base Rent:

Months

Monthly Base Rent

 

1 - 12*

$4,540.00

 

13 - 18

$4,540.00

 

19 - end of Term

$7,808.37

 

*Months 1 - 3 subject to abatement

 

Brix needs this additional space as it is expanding its “soda fountain” operations and is beginning to offer products in locations around Alameda and San Francisco.  As part of its expansion, BRIX is developing unique, artistic designs for its soda taps, which are being constructed at Building 25.

 

Concurrently with its execution of this First Amendment, Brix shall deliver the sum of $7,808 as the Security Deposit to be held by the Landlord without liability for interest (unless required by Law) as security for the performance of Tenant’s obligations under this First Amendment

 

This action requires City Council approval pursuant to City Charter Section 3-10.  The affirmative vote of 4 members of Council are required for approval

 

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 introduction of ordinance approving a first amendment to a lease and authorizing the City Manager to execute documents necessary to implement the terms of a first amendment to the lease agreement with Pacific Automated LLC, a California limited liability company, dba Brix Beverage (Pacific Automated, LLC) to include a portion of Building 25 (Unit 100),  a small outbuilding known as Building 491, and additional parking common areas as part of the original premises at 1951 Monarch Street at Alameda Point.

 

Respectfully submitted,

Jennifer Ott, Base Reuse Director

 

By,

Nanette Mocanu, Assistant Community Development Director

 

Financial Impact section reviewed,

Elena Adair, Finance Director

 

Exhibits: 

1.                     First Amendment to Pacific Automated Lease

2.                      Building 491

3.                     Building 25, Unit 100

4.                     Additional Premises Parking Areas

5.                     Original Lease