Title
Introduction of Ordinance Authorizing the City Manager to Execute a Second Amendment to the Lease with Dreyfuss Capital Partners, a California Limited Liability Company to Extend the Term for Five Years for Building 29, Located at 1701 Monarch Street, at Alameda Point. (Community Development 29061822) [Not heard on July 20, 2021]
Body
To: Honorable Mayor and Members of the City Council
EXECUTIVE SUMMARY
The requested action would authorize execution of a second amendment to the lease with Dreyfuss Capital Partners (DCP) to extend the lease term for four years, 11 months, and set monthly rent during the extended term for Building 29, containing approximately 8,107 square feet of rentable space located at 1701 Monarch Street at Alameda Point (Premises [Exhibit 1]).
BACKGROUND
DCP leases a multi-tenant building that is subleased to skilled workers, craftspeople, and artists. DCP has been a tenant at Alameda Point since 2009. Building 29 is one of the last remaining multi-tenant shop/office spaces at Alameda Point, and includes approximately 8,107 square feet of work, office and shared spaces, providing creative and living wage jobs to skilled fabricators, welders, and artists working in mediums such as steel, metal, and glass. A recent review of the financials for the tenant shows that the rent collected from the sub-tenants and the cost of utilities for the building equate to the City of Alameda’s (City) monthly rent reflected in the lease.
In 2016, the City executed a new lease with DCP with a five (5) year term (Exhibit 2). In 2020, a first amendment to the lease (Exhibit 3) was executed, extending the term for an additional twelve (12) months, terminating February 28, 2022. The second amendment (Exhibit 4) extends the term of the lease for an additional four years and 11 months, until January 31, 2027, and continues to provide the City the right to terminate the lease at any time with twelve (12) months prior written notice.
Staff believes that an additional four years and 11 months of term, plus the termination option, is consistent with the long-term development strategy for Depave Park and will not interfere with any plans to commence implementation of that effort.
DISCUSSION
The Premises consists of approximately 8,107 square feet of rentable space, approximately 6,000 square feet of which is subleased and approximately 2,107 square feet of which is used as office and shared spaces.
The proposed rent structure for the additional five (5) years of term is:
|
Months |
Monthly |
|
1-12 |
$4,843.12 |
|
13-24 |
$4,988.41 |
|
25-36 |
$5,138.06 |
|
37-48 |
$5,292.20 |
|
49-59 |
$5,450.97 |
The termination option (in the original lease) provides the City the right to terminate the lease at any time with twelve (12) months prior written notice.
In 2016, City Council was hesitant to go beyond the five (5) year term provided by the lease due to comments from the Sierra Club regarding potential delay to development of Depave Park. The 12-month termination right allows for park planning and development to occur uninhibited, while providing sufficient notice to DCP and its subtenants.
ALTERNATIVES
• Approve the second amendment with DCP, as described above, for Building 29, located at 1701 Monarch Street, at Alameda Point.
• Direct staff to renegotiate second amendment terms based on City Council direction.
• Direct staff to seek and market to other prospective tenants.
FINANCIAL IMPACT
The revenue from the lease will be deposited into the Base Reuse/Alameda Point Fund lease revenue account and is 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 has no impact on the Alameda Municipal Code and is consistent with the adopted Waterfront Town Center Precise Plan for Alameda Point.
SURPLUS LANDS ACT
The proposed transaction does not implicate the Surplus Land Act, as amended by AB1486 (2019), because the term of the lease extension is less than five years. See HCD Surplus Land Act Guidelines, Section 102(h).
ENVIRONMENTAL REVIEW
This action is exempt from the California Environmental Quality Act (“CEQA”) pursuant to
CEQA Guidelines Section 15301(c) (Existing Facilities).
CLIMATE IMPACT
There are no identifiable climate impacts or climate action opportunities associated with the subject of this report.
RECOMMENDATION
Introduce an ordinance authorizing the City Manager to execute a second amendment to the lease with Dreyfuss Capital Partners, a California Limited Liability Company to extend the term for four years and 11 months for Building 29, Located at 1701 Monarch Street, at Alameda Point.
CITY MANAGER RECOMMENDATION
The City Manager concurs with the recommendation to introduce an ordinance authorizing the City Manager to execute a second amendment to the lease with Dreyfuss Capital Partners for Building 29.
Respectfully submitted,
Lisa Maxwell, Community Development Director
By,
Nanette Mocanu, Assistant Community Development Director
Financial Impact section reviewed,
Annie To, Finance Director
Exhibits:
1. Premises
2. Lease
3. 1st Amendment
4. 2nd Amendment
cc: Eric Levitt, City Manager