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Title
Introduction of Ordinance Authorizing the City Manager to Execute a Second Amendment to the Lease with Small Size Big Mind, Inc., a California Corporation, Substantially in the Form of Exhibit 4, to Extend the Term for One Year with One 12-Month Extension Option for Building 35, Located at 2450 Pan Am Way in the Main Street Neighborhood at Alameda Point. (Community Development 29061822)
Body
To: Honorable Mayor and Members of the City Council
EXECUTIVE SUMMARY
The requested action would authorize a second amendment to the lease with Small Size Big Mind, Inc. (SSBM) to extend the lease term for an additional one (1) year with one (1) 12-month extension option and set monthly rent during the extension term for Building 35, containing approximately 2,764 square feet of rentable space located at 2450 Pan Am Way (Premises) in the Main Street Neighborhood at Alameda Point.
BACKGROUND
SSBM is a year-round infant care and preschool serving children from eight (8) weeks to five (5) years old with two campuses. The first campus was established in 2006 and is located on the east end of Alameda. The second campus, which is temporarily located at 2450 Pan Am Way (Building 35), has been at Alameda Point since 2018.
Building 35, SSBM’s interim West End expansion site, is located in the first development phase of the Main Street Neighborhood sub-district. In 2018, City Council authorized staff to issue an RFQ for the first phase of development, known as the West Midway Project. The West Midway Project is a 32.5-acre mixed-use development site that consists of a 9.7-acre affordable housing site (Rebuilding the Supportive Housing at Alameda Point or the RESHAP Site) and a 22.8-acre market rate site (Market Rate Site). Building 35 is located within the Market Rate Site, which is phase two of the West Midway Project.
Prior to moving into Building 35, SSBM had an extensive waiting list of over 80 families and expressed great interest in expanding into the west end of Alameda to serve not only those families on the waitlist but also new families moving into Alameda Point. City of Alameda (City) staff actively supported SSBM in its efforts to meet the growing demand for the preschool, and continues to support SSBM in its search for a permanent location for its West End campus. SSBM understands that the impending redevelopment means that Building 35 will not be available much longer and remains strongly committed to identifying a permanent location for its West End campus.
In 2018, the City executed a lease with SSBM with a two (2) year term and one 12-month extension option (Exhibit 2). The lease included a holdover clause requiring SSBM to pay 200% of the base rent in the event that SSBM failed to surrender the Premises at the termination of the lease. The lease also provided the City with a right to relocate SSBM with 90 days prior written notice. In 2020, SSBM exercised the 12-month extension option, and the City executed a first amendment to the lease (Exhibit 3) expiring August 31, 2021.
The proposed second amendment (Exhibit 4) to the lease extends the term for one (1) year with one (1) 12-month extension option, while maintaining the 200% hold over and the City’s relocation right. Staff is confident that the extended term is consistent with West Midway Project Phase 2 development timeline, but requires that SSBM provide at least six months and no more than 12 months prior notice of intent to exercise the 12-month extension option to ensure there is no delay to this important Main Street Neighborhood development.
DISCUSSION
The Premises includes 2,764 square feet of rentable space located at 2450 Pan Am Way in the Main Street Neighborhood at Alameda Point.
The proposed rent structure for the additional one (1) year of term is:
|
Months |
Monthly Rent |
|
1-12 |
$4,525.00 |
Under the proposed second amendment, SSBM must provide at least 6 months prior notice to exercise its one 12-month extension option. The holdover provision requiring SSMB to pay 200% of base rent if it fails to surrender the Premises at the expiration of the lease and the City’s right to relocate SSBM with 90 days prior notice, both included in the original lease, remain in the lease.
ALTERNATIVES
• Approve the second amendment with SSBM, as described above, for Building 35, located at 2450 Pan Am Way in the Main Street Neighborhood at Alameda Point.
• Direct staff to renegotiate second amendment terms with SSBM based on City Council direction.
• Direct staff to seek other prospective tenants.
FINANCIAL IMPACT
The revenue from the lease will be deposited into the Base Reuse/Alameda Point Fund 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 is consistent with the Alameda Municipal Code.
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 Small Size Big Mind, Inc., a California corporation, substantially in the form of the Exhibit 4, to extend the term for one year with one 12-month extension option for Building 35, located at 2450 Pan Am Way in the Main Street Neighborhood at Alameda Point.
CITY MANAGER RECOMMENDATION
The City Manager concurs with the staff recommendation to introduce an ordinance authorizing execution of a second amendment to the lease with Small Size Big Mind, Inc.
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. First Amendment
4. Second Amendment