Title
Introduction of Ordinance Approving a Lease and Authorizing the City Manager to Execute Documents Necessary to Implement the Terms of a Lease Agreement with Auctions By The Bay, Inc., a California Corporation, for a Sixty Four Month Lease for Building 525 Located at 2751 Todd 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 Lease Agreement with Auctions By The Bay, Inc., a California Corporation, for Building 525 Located at 2751 Todd Street at Alameda Point.
BACKGROUND
Auctions By the Bay is a well-known business that has been a tenant at Alameda Point since 2001. Now doing business as Michaan’s Antique & Art Auction House (Michaan’s Auctions), 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 their specialty departments include Asian Works of Art, Furniture and Decorative Arts, Modern & Contemporary European and American Paintings/Prints and Jewelry.
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 Auctions highest single selling lot to date. In June of 2015, Henri Labasque’s Madame Lebasque and her Daughters achieved $271,400 and Wojcieck Fangor’s M1 set a U.S. auction record for the artist at $169,400.
The City entered into the original lease agreement for Building 525 with Michaan’s Auctions in 2001 and approved a new lease (attached as Exhibit 1) in 2013. The term of the current Lease expired on August 18, 2017, and this new lease will replace that lease once it commences.
DISCUSSION
Building 525 is located at 2751 Todd Street at Alameda Point and consists of approximately 23,208 square feet of rentable space. This building is located in the Adaptive Reuse area near the “civic core”. These buildings are public serving and, because of the cost for upgrading, are envisioned to be part of a large multi-parcel development, which is why a purchase option was not offered. Building 525 is depicted on Exhibit 2. The adjacent parking in front of the premises is also included in the lease and is shown on Exhibit 3. Michaan’s Auctions intends to continue using Building 525 for warehouse, pre-sale viewing of antiques and other merchandise, public auctions and auction house purposes, and ancillary office use.
The proposed lease is for 64 months with one 10-year extension option. The term is anticipated to commence on December 1, 2017 and expire 64 months later on March 31 2023 with a potential extension to March, 2033. Under this lease the rent will be $15,781.44 per month for year one, $16,254.88 per month for year two, $16,742.53 per month for year three, $17,244.80 per month for year four, $17,762.15 per month for year five, and $18,295.01 for year six. A security deposit in the amount of $15,781.44 has been provided by Michaan’s Auctions, too. The lease contains the standard insurance, indemnity, assignment and termination clauses the City of Alameda requires in all its leases.
The following summarizes the major business terms of the lease amendment agreement:
|
Terms |
Building 525 |
|
Square Footage |
23,208 |
|
Uses |
Warehouse, pre-sale viewing of antiques and other merchandise, public auctions and auction house purposes, and ancillary office use |
|
Length of Term |
64 months |
|
Option to Renew |
One option to extend the Term for ten years |
|
Security Deposit |
$15,781.44 |
|
Monthly Base Rent |
$ 15,781.44 - $18,295.01 |
|
1-12 |
$15,781.44 |
|
13-24 |
$16,254.88 |
|
25-36 |
$16,742.53 |
|
37-48 |
$17,244.80 |
|
49-60 |
$17,762.15 |
|
61-64 |
$18,295.01 |
FINANCIAL IMPACT
The monies from the leases will be deposited into the Base Reuse Lease Revenue Fund (Fund 858) and are limited to uses permitted under the Economic Development Conveyance Memorandum of Agreement with the United States Navy (Navy).
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
Approve a lease and authorizing the City Manager to execute documents necessary to implement the terms of the lease agreement with Auctions By The Bay, Inc. a California Corporation, for building 525 located at 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. Aerial Map of Premises
2. Premises
3. Parking
4. Lease