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File #: 2016-3025 (10 minutes)   
Type: Regular Agenda Item
Body: City Council
On agenda: 7/5/2016
Title: Introduction of Ordinance Approving a Lease and Authorizing the City Manager to Execute Documents Necessary to Implement the Terms of a Ten Year Lease with One Five-Year Extension Option with La Costa Pacifica Inc. dba Urban Legend Cellars for Building 25, Unit 300 Located 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 - Premises, 2. Exhibit 2 - Lease, 3. Ordinance

Title

 

Introduction of Ordinance Approving a Lease and Authorizing the City Manager to Execute Documents Necessary to Implement the Terms of a Ten Year Lease with One Five-Year Extension Option with La Costa Pacifica Inc. dba Urban Legend Cellars for Building 25, Unit 300  Located 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 Lease and Authorizing the City Manager to Execute Documents Necessary to Implement the Terms of a Ten Year Lease with One Five-Year Extension Option with La Costa Pacifica Inc. dba Urban Legend Cellars for Building 25, Unit 300  Located 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]

 

BACKGROUND

 

Urban Legend Cellars (ULC) is an independent Urban Winery with a small hands-on crew that produces small lots of wine from a variety of vineyard sources from all over California.  It is a classic “mom and pop” business led by a husband and wife team founded in 2008 with first sales in 2010.  ULC has outgrown its current facility of approximately of 2,400 square feet (sf) and has assets scattered in multiple locations for an approximate total of 7,000 sf.  Building 25 will allow them to consolidate operations in a single location and accommodate long term expansion plans, which include a new cider joint venture. 

 

ULC has a growing wholesale business with distribution in Whole Foods, Nugget Markets and distribution in Illinois.  In addition, they have strong direct-to-customer retail programs.  They have recent accolades of 2015 Best of Class Italian Blend; Gold Medal Cabernet Sauvignon and 2015 California State Fair;  Best of Class of Region Grenache Blanc; Best of Class of Region Italian blend. 

 

DISCUSSION

Building 25 is located on the very outskirts of Spirit’s Alley but has been a location piquing the interest of fledgling breweries and wineries interested in capitalizing on the notoriety of the district.  Many of the predecessors have been hindered by the large investment needed to bring the infrastructure to the site over the proposed term of the lease.  In addition, staff has generally only offered a ten year term in this location because of the impact on view corridors and the potential effect of the building footprint on DePave-park. 

ULC has requested a ten year lease with a five-year option to renew for two reasons.  First, they need the time to finance the overall investment in the property.  The tenant has done extensive due diligence on what it will take to bring utilities to its location as well as address the health and safety code issues related to public access.  Second, they believe their facility will be an amenity to de-pave park and will increase, not hinder community enjoyment of the park and open space.    Currently ULC has over 400 quarterly wine club customers with over $3,500 weekend sales.

 

The following summarizes the major business terms of the lease agreement:

 

Terms

Building 25 Unit 300

Square Footage

18,160

Uses

Wine, cider and distilled beverage production, storage, tasting room activities and related administrative functions. 

Length of Term

10 years

Extension Options

One Option for a Periods of Five Years

Monthly Base Rent

$6,356 - $11,926  ($0.35 -$0.66/sf)

 

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.

 

MUNICIPAL CODE/POLICY DOCUMENT CROSS REFERENCE

 

This action does not affect the Alameda Municipal Code.

 

ENVIRONMENTAL REVIEW

 

In accordance with the California Environmental Quality Act (CEQA), this project is Categorically Exempt under the CEQA Guidelines Section 15301(c) - Existing Facilities.

 

RECOMMENDATION

 

Introduce an Ordinance approving a lease and authorize the City Manager to execute documents necessary to implement the terms of a ten year lease with one five-year extension option with La Costa Pacifica Inc. d/b/a Urban Legend Cellars for Building 25, Unit 300 located 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.                     Leased Premises

2.                     Lease