Title
Introduction of Ordinance Authorizing the City Manager to Execute Lease Amendments for Rent Relief Program with Pacific Pinball Museum and Wonky Kitchen 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 and allocated $400,000 for the program. 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. City Council approved eight tenants to participate in the Non-profit Spirits Alley Program on December 1, 2020. Staff now recommends that City Council approve two (2) additional tenants for inclusion in the program.
BACKGROUND
The Covid-19 pandemic continues to impact communities around the world, including Alameda. 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.
DISCUSSION
Staff has 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.
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.
• If the tenant is cited by the County, City Police Department or City code enforcement unit for a COVID-19 related health and safety violation, the tenant may immediately be required to repay all deferred rent to the City, as landlord, if approved by the City Manager and City Attorney.
• No application required. The process is as follows: 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 total not to exceed $400,000 in abated rent for all participating tenants. Staff sent the approval out to the Spirits Alley, non-profit tenants and those who had applied for the loan conversion program. On December 1, 2020, Council approved eight tenants to participate in the Non-profit Spirits Alley Program, for a total potential rent abatement of $114,132. The following is the list of additional tenants who have requested to participate in the program and the amount of potential abated rent:
|
Pacific Pinball Museum |
$ 34,500 |
|
Wonky Kitchen |
$ 7,725 |
|
Non Profit Spirts Alley Total |
$42,225 |
Of the $400,000 allocated for the Non-profit Spirits Alley Program, $156,357 could potentially be abated if City Council approves the addition of the two (2) tenants referred to above.
Consistent with previous Council Direction, staff has include a provision in the lease which permits the City to forfeit the benefits granted under this program, upon the written approval of the City Manager and the City Attorney, if the tenant is found to have violated a COVID-19 related health order, regulation or law.
ALTERNATIVES
• Approve both recommended tenants participation in the Nonprofits/Spirits Alley rent relief program on the terms generally described in this report.
• Approve one recommended tenant’s participation in the program.
• Do not approve either 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 the rent relief program with Pacific Pinball Museum and Wonky Kitchen via the Non-Profit Spirits Alley Program for tent relief in response to the Covid-19 Pandemic (Fund 858)
CITY MANAGER RECOMMENDATION
The City Manager concurs with staff recommendation to authorize the City Manager to execute lease amendments for the rent relief program.
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