Title
Recommendation to Consider the Tenants Request to Amend Lease via Introduction of Ordinance Approving Amendment of a Lease and Authorizing the City Manager to Execute Documents Necessary to Implement the Terms of a Lease Amendment with Auctions by the Bay for Five Years in Building 525 Located at 2751 Todd Street at Alameda Point to Allow the Sale of Antique and Collectible Guns. (Base Reuse 819099)
Body
To: Honorable Mayor and Members of the City Council
From: Jill Keimach, City Manager
Re: Introduction of Ordinance Approving Amendment of a Lease and Authorizing the City Manager to Execute Documents Necessary to Implement the Terms of a Lease Amendment with Auctions by the Bay for Five Years in Building 525 Located at 2751 Todd Street at Alameda Point to Allow the Sale of Antique and Collectable Guns
BACKGROUND
In May 2013, the City approved a new lease with Auctions By the Bay for Building 535 located at 2751 Todd Street at Alameda Point. The original lease (Exhibit 1) was approved in 2002. Auctions By the Bay, now doing business as Michaan’s Antique & Art Auction House (Michaan’s Auctions), is a leading, full-service auction house on the west coast specializing in the appraisal and sale of antiques and fine art. Some of Michaan's Auctions’ specialty departments include Asian Works of Art, Furniture and Decorative Arts, Modern & Contemporary European and American Paintings/Prints and Jewelry.
Established in 2002, Michaan's Auctions holds up to thirty sales each year attracting a broad base of buyers and consignors worldwide. With one of the largest facilities in Northern California, Michaan's Auctions offers buyers the ability to preview and bid on many unique and desirable pieces. Some have garnered world record prices, including an A.D.M Cooper painting, The Three Graces, 1915, sold at auction for $21,060 in 2005, as well as an Eduard Gaertner, German City Street Scene, 1831, sold at auction for $266,000. Also noteworthy is a carving of Tang Ying that realized $2,235,000, recognized as Michaan’s highest single selling lot to-date.
DISCUSSION
In the spring of last year, the City was approached by Michaan’s Auctions to request consent to allow the sale of guns and firearms. Michaan’s Auctions recently began working with one of the top experts in the field of collecting guns and firearms and reports that every major auction house has a department selling Arms and Armor. As Michaan’s Auction house continues to grow, the company states its business plan must include this specialty auction category. Michaan’s Auctions anticipates selling large collections from major collectors and maintains that the vast majority of the items will be antiques. To provide an example of what could be auctioned, advertisements of various Arms and Armor are provided as Exhibit 2.
Staff researched the implications of selling firearms on City property. There was a great deal of discussion about whether the City should allow gun sales on public property, functioning and non-functioning collector’s items or firearms acquired as part of a larger estate. As the property owner at Alameda Point, the Council has had to make policy decisions that often conflict with business owner/market requests. For example, the Council has limited the number of cargo containers that are placed at Alameda Point even though that use would be very lucrative. As the property owner, the Council has also refused offers for motocross, drag racing and large rock/rap/rave music festivals, so it is not uncommon for the Council to have to weigh the desires of a business owner with its landlord responsibilities and community well-being.
After much debate at the staff level, and rather than unilaterally declining the request, staff determined that the policy decision should be made at the Council level. Staff provides below two options for the Council to consider:
Option One: Do not approve the request to amend the lease to allow the sale of guns and firearms.
The Federal government prohibited civilian possession and use of guns on Federal property. While the base was owned by the Navy, gun sales were prohibited. The City could continue the practice of keeping public properties gun-free.
Option Two: Approve a lease amendment (Exhibit 3) to allow the sale of guns and firearms. .
If the Council wants to consider gun sales on its property, staff recommends imposing strict parameters. A small working group from the Police and Fire Departments, City Attorney’s Office, and the Community Development Department developed a list of conditions for the approval of the sales, which is provided as follows:
1. Gun and firearm sales shall be limited to firearms as defined as curios and relics as it may be amended from time to time, which means that firearms must fall within one of the following categories:
a. Firearms which were manufactured at least 50 years prior to the current date, but not including replicas of such firearms; or
b. Firearms which are certified by the curator of a municipal, state, or Federal museum, which exhibits firearms to be curios or relics of museum interest; or
c. Any other firearms, which derive a substantial part of their monetary value from the fact that they are novel, rare, bizarre, or because of their association with some historical figure or period, including the sale of replicas.
2. Sale and storage of ammunition, including gun powder shall be strictly prohibited.
3. Sale of assault rifles and firearms with high capacity magazines shall be strictly prohibited.
4. Testing or firing of firearms on the Property or in Alameda is strictly prohibited.
5. All firearms shall be secured in a vault when not on public display.
6. Security cameras shall be provided within the Building and on the exterior of the Building. Tapes shall be recorded and preserved for a period of at least 60 days.
7. Tenant shall provide an inventory list of all firearms to the Police Department on a monthly basis.
8. All display and sales shall be conducted within the Building.
9. There shall be no signs on the outside of the Building advertising firearms.
10. A security plan shall be submitted to the Alameda Chief of Police for review and approval prior to approval of the first amendment to Lease.
11. Tenant shall comply with all Federal firearms sales, storage and repair requirements as directed by U.S. Department of Justice and Bureau of Alcohol, Firearms, Explosives.
12. Tenant shall comply with all State firearms sales, storage and repair requirements as directed by the State of California Department of Justice and State Board of Equalization.
13. No more than five (5%) percent of floor area of all of the available auction showroom floor space (approximately 4,350 sf) shall be devoted to uses relating to firearms.
Tenant shall notify the City in writing at least forty-five (45) days prior to the anniversary of the Effective Date of the First Amendment to Lease requesting an annual review of the conditions. To facilitate this review, Tenant shall submit a letter outlining its compliance with the conditions.
While Michaan’s Auctions has agreed to all of the conditions associated with Option Two, the tenant is also requesting up to four (4) single-focused (Arms & Armor) sales annually. The tenant says that assembling single focus sales appeals to the serious collectors in a specific category and any major sale in a specific area of collecting draws both the collectors and dealers to preview, participate, or at least bid in the sale online or by telephone. Creating a critical mass in a specific area brings the most buyers. According to the tenant, single-focus sales deliver the highest level of competition and, thus, the best results, which will make Michaan’s Auctions more desirable to owners seeking to consign collections. Without permission to conduct up to four single-focused sales, the concern is that a potential consignor of a large collection in this category would place the collection in a different auction venue if Michann’s Auctions were required to break up his/her collection into multiple sales.
The Tenant has also requested the following changes to the conditions:
1) Reduce the required age of the guns from 50 years old to 20 years; and
2) the review period commence from the date of the first sale in this category.
Although staff does not support the sale of guns manufactured less than 50 years prior to its sale, staff does support the one year review period commencing with the first sale event in order to better coincide with the Tenant’s processing approval with the Bureau of Alcohol, Tobacco, Firearms and Explosives.
The City of Alameda prohibits gun shops in the Park and Webster Street commercial zoning district (C-C), except that a sporting goods retailer can use up to 5% of its retail floor area for gun sales with a use permit. The proposed lease amendment includes a condition consistent with the 5% standard. Due to the larger buildings at Alameda Point, 5% translates to approximately 4,350 square feet of floor area for the sale of guns and firearms at the Auction House. Further, if the Council approves the Tenant request for up to four gun and firearm sale events annually without this 5% floor area restriction, this approval may result in other retailers requesting an exemptions from the 5% limitation.
Staff is requesting that the Council provide direction regarding a tenant-requested first amendment to lease that would allow gun sales as conditioned above at Michaan’s Auctions.
FINANCIAL IMPACT
The funds received from this lease are deposited in the Base Reuse Fund and are subject to the restrictions included in the Economic Development Conveyance between the United States Government and the City of Alameda. The lease amendment will not generate additional lease revenue.
ENVIRONMENTAL REVIEW
This action is exempt from the California Environmental Quality Act ("CEQA") pursuant to CEQA Guideline section 15301 (Existing Facilities).
RECOMMENDATION
Staff recommends Option 1 to not amend the lease to allow the sale of guns and firearms.
If, however, the Council desires to allow the sale of guns and firearms by Auctions By the Bay, staff recommends the Council adopt the lease restrictions provided under Option 2 and Approve a First Amendment to lease with Auctions By the Bay to allow the sale of antique and collectible guns and firearms at Building 525, with an address of 2751 Todd 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. Original Lease
2. Various Auction Arms and Armor Advertisements
3. First Amendment to Lease