Title
Introduction of Ordinance Authorizing the Interim City Manager to Execute Documents Necessary to Implement a Ten-Year Lease with SpinLaunch Inc., a California Corporation, for Building 530, Located at 120 West Oriskany Avenue at Alameda Point. (Base Reuse 819099)
Body
To: Honorable Mayor and Members of the City Council
From: David L. Rudat, Interim City Manager
EXECUTIVE SUMMARY
This action will authorize the City Manager to execute a ten-year lease, significantly in the form of the attached, with SpinLaunch, a spaceflight technology development company, for Building 530 at Alameda Point.
BACKGROUND
SpinLaunch is a spaceflight technology development company working on catapult technology to move payloads to space. The company was founded in 2015, by CEO Jonathan Yaney. The company has been working on an electric-powered kinetic energy launch system that starts by whipping the spaceflight vehicle around on a centrifuge, then catapults it spaceward at hypersonic speeds. As of February 2018, the company was operating as a stealth startup, and was working to raise $30 million in funding to support Research and Development (R&D) operations. Recently, SpinLaunch announced reaching its investment goal by an investment syndicate including Airbus Ventures, GV (formerly Google Ventures) and Kleiner Perkins.
DISCUSSION
SpinLaunch is interested in moving its Sunnyvale operations to Alameda Point, which will serve as the headquarters and research and operations center. Building 530 (Exhibit 1) will serve as the hub for the centrifuge and testing. The ability to provide a research and operations hub is key to SpinLaunch’s expansion and innovation. The CEO says that “applying the initial performance boost from a terrestrial-based launch platform enables SpinLaunch to lower the cost of space launching by orders of magnitude and launch many times per day.”
The recent funding will be used to scale-up the team and technology and bring Building 530 up to code for R&D. The proposed lease (Exhibit 2) allows for rent paid during months 1-14 to be subject to rent abatement to cover expenses related to bringing the building up to code for receipt of a Certificate of Occupancy. The allowable credits will be detailed in a Tenant Work Letter, which is an exhibit to the lease.
Building 530 is located in the Site B Enterprise District. The lease does not hinder development opportunities in the area and could serve as an attractant for a developer. The lease does not include a purchase option, so a developer could do a large parcel sale which includes the SpinLaunch lease. The City also could sell the parcels around SpinLaunch and choose to do a purchase/development transaction directly with SpinLaunch.
SpinLaunch also will have a license for approximately 300 linear feet of Pier 3 and will pay $35 per linear foot. The negotiated pier rate is the highest at Alameda Point and will establish a new market rate, which was previously $25 per linear foot.
The rent schedule for the lease is:
|
|
Rent/Month |
Annual Rent |
Rent Credit Applied |
|
Year 1 |
$ 45,238.00 |
$ 542,856.00 |
$ 542,856.00 |
|
Year 2 |
$ 43,595.14 |
$ 523,141.68 |
$ 87,190.28 |
|
Year 3 |
$ 47,992.99 |
$ 575,915.88 |
|
|
Year 4 |
$ 49,432.78 |
$ 593,193.36 |
|
|
Year 5 |
$ 50,915.77 |
$ 610,989.24 |
|
|
Year 6 |
$ 52,443.24 |
$ 629,318.88 |
|
|
Year 7 |
$ 54,016.54 |
$ 648,198.48 |
|
|
Year 8 |
$ 55,637.03 |
$ 667,644.36 |
|
|
Year 9 |
$ 57,306.14 |
$ 687,673.68 |
|
|
Year 10 |
$ 59,025.33 |
$ 708,303.96 |
|
|
|
|
|
|
|
|
Total |
$6,187,235.52 |
$ 630,046.28 |
|
|
|
|
|
|
|
City Revenue |
$5,557,189.24 |
|
*rent paid eligible for a credit for work completed by tenant during months 1-14
The SpinLaunch Board will meet after the publication of the agenda, therefore the lease form needs to be approved rather than the actual signed lease.
FINANCIAL IMPACT
The monies from the leases will be deposited into the Base Reuse Fund (Fund 858) Lease Revenue account and are limited to uses permitted under the Economic Development Conveyance Memorandum of Agreement with the United States 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
Introduce an Ordinance Authorizing the City Manager to Execute a Ten-Year Lease, Significantly in the Form of the attached, with SpinLaunch Inc. for Building 530, an 82,251 Square Feet Building Located at 120 West Oriskany Avenue at Alameda Point.
Respectfully submitted,
Debbie Potter, Base Reuse and Community Development Director
By,
Nanette Mocanu, Assistant Community Development Director
Financial Impact section reviewed,
Elena Adair, Finance Director
Exhibits:
1. Premises
2. Draft Form Lease