Title
Introduction of Ordinance Authorizing the City Manager to Execute Lease Amendments for Rent Relief Program with Alameda Point Beverage Group, Auctions By the Bay, Building 43 & Associates, Faction Brewing, Group Delphi, Proximo Spirits, Saildrone and USS Hornet Air & Space Museum via the Non-Profit Spirits Alley Program for Rent Relief in Response to the Covid-19 Pandemic. (Community Development 858)
Body
To: Honorable Mayor and Members of the City Council
EXECUTIVE SUMMARY
At its October 6, 2020 meeting, the City Council approved a new rent relief program for non-profits and Spirits Alley tenants at Alameda Point. The program allows for tenants to defer up to nine (9) months of rent and begin repaying the deferred rent over a three year repayment period beginning fiscal year 2020-21. Tenants that pay a minimum of three (3) months of deferred rent per year during the repayment period will accrue a maximum rent credit of up to three (3) months of rent depending on the pace of such repayment.
BACKGROUND
The Covid-19 pandemic continues to impact communities around the world, including Alameda. On March 17, 2020, the City Council adopted an urgency measure, consistent with Section 3-12 of the City Charter. The March 17 ordinance authorized certain actions until April 7, which was extended on April 21 until the State’s declaration of emergency is rescinded, unless City Council elects to shorten such time period. The City Council discussed a rent deferral and abatement policy at its April 21, 2020 meeting and asked staff to come back with more information and recommendations on a potential rent abatement program.
The City Council has been very active in adopting programs and policies to bring relief to its tenants, both residential and commercial. On March 17, 2020, at the onset of the Shelter in Place Order (SIP), the City Manager introduced a 60-day rent deferral program. After the SIP Order was extended, the Council approved an additional 30-day deferral at its April 21 meeting. To provide additional flexibility to tenants, the 90 days of rent deferral can be used for any three months during the next 12-month period.
Also at the April 21 City Council meeting, the Council approved a COVID-19 Small Business Relief Grant Program, which gave businesses citywide an opportunity to apply for $7,500 grants. To leverage this program, the City of Alameda (City), working with the community, has established the Alameda Strong fund (alamedastrong.org) which is soliciting tax-deductible donations from community members and corporate businesses to support small businesses, non-profit organizations and low-income tenants impacted by COVID-19. Small businesses can apply for a grant at the Alameda Strong website.
DISCUSSION
Most recently we have become aware of the continued strain the pandemic has had on Spirits Alley and Alameda Point non-profits, which are mostly museums. Because there is prohibition on large indoor gatherings, the decks, picnic tables and outdoor areas of Spirits Alley have been utilized to the maximum extent possible, but these efforts still do not recapture all lost revenue and allow the business to meet their overhead costs. In August, the County announced the reopening of outdoor areas to only shut these areas down the next day. Businesses that had re-staffed, then bore the burden of these ramp-up expenses with the uncertainty of future operations.
At its October 6, 2020 meeting the City Council approved a new rent relief program for Spirits Alley and non-profits at Alameda Point. The program is outlined below:
• Up to nine (9) month rent deferred, repayable over a repayment period of three (3) years, with a minimum of three (3) months of rent repaid during each year of the repayment period.
• Abate three (3) month of rent if all deferred rent is paid in the first year of the repayment period; abate two (2) months of rent if all deferred rent is paid in the second year of the repayment period; and abate one (1) month of rent if all deferred rent is paid in the third year of the repayment period.
• Require a lease amendment memorializing the repayment terms. Nonpayment of the deferred rent in a timely manner constitutes a default of the lease.
• No application required. Notice to the landlord by tenant, lease amendment is drafted and approved by the City Council. Each lease amendment will substantially be in the form of the attached Lease Amendment (Exhibit 1).
The City Council approved the program with a not to exceed $450,000 for the potential three (3) month abatement. Staff sent the approval out to the Spirits Alley, non-profit tenants and those who had applied for the loan conversion program. The following is the list of tenants who have requested to participate in the program and the amount of three (3) months abatement:
|
Alameda Point Beverage Group |
$ 28,023 |
|
Auctions By the Bay |
$ 82,611* |
|
Building 43 & Associates |
$ 9,078 |
|
Faction Brewery |
$ 64,131 |
|
Group Delphi |
$180,693** |
|
Proximo Spirits |
$ 39,000 |
|
Saildrone |
$196,962* |
|
USS Hornet Air & Space Museum |
$ 9,000 |
|
Non Profit Spirts Alley Total/ Loan Conversion Total |
$114,132 / $460,266 |
*to be deducted from the loan conversion fund because original applicant for loan conversion.
**Staff recommends Group Delphi automatically receive three (3) month rent abatement because in response to the pandemic, they completely changed their business model from manufacturing convention spaces to manufacturing construction panels for affordable housing.
ALTERNATIVES
• Approve all recommended tenants participation in the Nonprofits/Spirits Alley rent relief program on the terms generally described in this report.
• Approve some recommended tenants in the program.
• Do not approve any recommended tenants’ participation in the Nonprofits/Spirits Alley rent relief program.
FINANCIAL IMPACT
Any actions proposed will impact the Base Reuse Fund 858. The projected revenue for the fund for Fiscal Year (FY) 2019-2020 was $14 million and at the end of the FY the revenue was $16 million. The Alameda Point fund 858 maintains a healthy fund balance which could fund operations for more than one year with no revenue.
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
The California Environmental Quality Act (CEQA) applies only to projects that have the potential for causing a significant effect on the environment. This action is not a project pursuant to Public Resources Code section 21065 and CEQA Guidelines section 15378.
CLIMATE IMPACT
There are no identifiable climate impacts or climate action opportunities associated with the subject of this report.
RECOMMENDATION
Authorize the City Manager to execute lease amendments for Rent Relief Program with Alameda Point Beverage Group, Auctions By the Bay, Building 43 & Associates, Faction Brewing, Group Delphi, Proximo Spirits, Saildrone and USS Hornet Air & Space Museum via the Non-Profit Spirits Alley Program for Rent Relief in Response to the Covid-19 Pandemic (Fund 858)
CITY MANAGER RECOMMENDATION
The City Manager recommends approval to execute the lease amendments.
Respectfully submitted,
Lois Butler, Interim Community Development Director
By,
Nanette Mocanu, Assistant Community Development Director
Financial Impact section reviewed,
Annie To, Finance Director
Exhibits:
1. Form of Lease Amendment
cc: Eric Levitt, City Manager