Title
Recommendation to Modify Rent Relief Programs Offered at Alameda Point in Response to the Covid-19 Pandemic to Allow Loan Conversion Applicants to be Eligible for the Newly Approved Assistance for Non-Profits and Spirits Alley Businesses and to Allow Recipients of Business Assistance Grants to be Eligible for the Alameda Point Programs with the Obligation to Repay the Business Assistance Grant. (Community Development 858)
Body
To: Honorable Mayor and Members of the City Council
EXECUTIVE SUMMARY
In response to the impacts of the Covid-19 pandemic, the City Council discussed a rent deferral and abatement policy at its April 21, 2020 meeting and asked staff to return with more information and recommendations on a potential rent abatement program. On October 6, 2020, the City Council authorized commencement of a “Loan Conversion” program with up to $1.5 million in funding and a new rent relief program for Non-Profit and Spirts Alley tenants with up to $400,000 for abating rent. City Council asked that the agreements come back to them for approval in the form of a lease amendment.
BACKGROUND
At its May 19 meeting, the City Council approved a Loan Conversion program for tenants where the City of Alameda (City), as landlord, converts past due rent into a loan payable over time. The loan and its repayment terms will be documented in a lease amendment.
City Council established three (3) criteria for applicants for the Loan Conversion program:
• Tenant’s business operations must be consistent with the long-term land use and development plan for Alameda Point.
• Tenant must have 25 or more full-time employees or generate significant sales tax.
• Tenant must demonstrate loss of income of 35% or greater since March 17, 2020, and cannot have received a business assistance grant.
In October, City Council approved a $1.5 million budget for the Loan Conversion program, and a rent assistance program for Non- Profits and Spirits Alley.
The Non- Profits and Spirits Alley 9/3 program is a rent deferral program with the potential of up to three (3) months of abated rent for each year the deferred rent is paid in advance of the outside deadline for payment. Each tenant may defer up to nine (9) months’ rent over a three (3) period, so long as a minimum of three (3) months of deferred rent is repaid during each year of the repayment period. One (1) month of rent is then abated for every year the debt is paid early.
DISCUSSION
Staff is requesting approval of two program modifications:
§ Loan Conversion applicants may be considered for the Non-profit and Spirits Alley 9/3 program. Allowing tenants to change programs is beneficial for the City because rather than potentially abating six (6) months of rent, only three (3) months’ rent is eligible for abatement and the remaining six (6) months will be repaid over the next three (3) fiscal years. Since the October meeting, two previous Loan Conversion applicants have requested to participate in the Non-Profit and Spirits Alley 9/3 program.
§ Allow tenants who received business assistance grants to be considered for additional rental relieve programs with the condition described in this paragraph. One of the Spirit’s Alley tenants received a business assistance grant. That tenant pays more than $20,000 per month in rent. Staff asks that this tenant not be excluded from the overall program because they received a grant. Staff is recommending that the tenant pay back the $7,500 grant either directly or receive reduced rent abatement in order to participate in the program.
ALTERNATIVES
§ Approve the suggested modifications to rent relief programs for Alameda Point commercial tenants:
o Allowing Loan Conversion applicants to be considered for the Non- Profits and Spirits Alley 9/3 program; and
o Removing the exclusion of business assistance grant recipients from rent relief programs if the grant is paid back either directly or by receiving reduced rent abatement.
§ Do not approve the suggested modifications.
§ Do not approve the modification allowing Loan Conversion applicants to be considered for the Non- Profits and Spirits Alley 9/3 program.
§ Do not approve the modification removing the exclusion of business assistance grant recipients from rent relief programs if the grant is paid back either directly or by receiving reduced rent abatement.
FINANCIAL IMPACT
The proposed Rent Relief Program modifications would impact the Base Reuse Fund (858). The extent of the impact on the Base Reuse Fund (858) would depend on the timing of commercial tenants re-paying the deferred rent to be eligible for up to three (3) months of rent abatement, and the amount of the abatement would depend on each tenant’s rent.
As of November 10, 2020, $5,702,611, or 43%, of the $13,228,000 revenue budget for FY 2020-21 had been received. In FY 2019-20, Fund 858 received $16.6 million on a revenue budget of $14.2 million, so staff forecasts that the fund currently has sufficient balance to sustain reduced revenues from rent abatement. However, it should be noted that the revenue effects of rent abatement would occur in future fiscal years as the deferred rent comes due.
MUNICIPAL CODE/POLICY DOCUMENT CROSS REFERENCE
This ordinance is proposed and drafted pursuant to the City’s general police powers, Section 3-12 of the Charter of the City of Alameda, Article XI of the California Constitution, and Government Code Section 36937.
ENVIRONMENTAL REVIEW
This action is exempt from the California Environmental Quality Act (“CEQA”) pursuant to CEQA Guidelines section 15601(b)(3), which is known as the “General Rule” exemption and is used where it can be seen with certainty that there is no possibility that the activity in question may have a significant effect on the environment.
CLIMATE IMPACTS
There are no identifiable climate impacts or climate action opportunities associated with the subject of this report.
RECOMMENDATION
Modify rent relief programs offered at Alameda Point in response to the Covid-19 Pandemic to allow Loan Conversion applicants to be eligible for the newly approved assistance for Non-Profits and Spirits Alley businesses, and to allow recipients of business assistance grants to be eligible for the Alameda Point programs with the obligation to repay the business assistance grant.
CITY MANAGER RECOMMENDATION
Due to the fiscal strain being experienced by the City’s tenants the City Manager recommends approval.
Respectfully submitted,
Lois Butler, Interim Community Development Director
By,
Nanette Mocanu, Asst. Community Development Director
Financial Impact section reviewed,
Annie To, Finance Director
cc: Eric Levitt, City Manager