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Recommendation to Provide Direction to Staff on Responses Received to the Request for Proposals for Leasing Building 11 Located at 1190 West Tower Avenue and Building 19 Located at 2175 Monarch Street, and Direction to Staff to Negotiate Leases with Prospective Tenants (Community Development 29061822)
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EXECUTIVE SUMMARY
As a result of changes to the Surplus Land Act (SLA) that became effective January 2020, the City of Alameda (City) is required to offer properties it intends to sell or lease on a long term basis, for certain public uses, as dictated by the SLA. At the May 18, 2021 City Council meeting, the City Council approved issuing Notices of Availability to Sell or ]Lease as prescribed by the SLA, for sites at Alameda Point, including the Enterprise District, Residential Parcels both Market Rate and Collaborative (Package K), Building 92; Building 11, Building 19 and Building 25. Because the City received no responses to these Notices, Requests for Proposals (each, an RFP) for Building 11 and Building 19 were issued on October 27, 2022. The City received a number of responses to the RFP’s, and staff is seeking direction from City Council regarding the selection of a tenant for each building, and direction to negotiate leases with the prospective tenants. Staff will return to City Council in the future with a proposed lease for each parcel.
BACKGROUND
Broadly speaking, the SLA, as amended by Assembly Bill (“AB”) 1486, is intended to make public lands available for certain public uses, such as open space or affordable housing, before it is disposed of to private parties. AB1486 expanded the reach of the SLA and emphasizes the use of surplus property for affordable housing. The bill is considered to be a legislative response to the housing crisis, and defines surplus land to mean land owned in fee simple by the local agency that the local agency declares to be surplus and that is not necessary for agency use.
The legislation requires surplus land to be declared “surplus” land or “exempt surplus” land prior to any disposition (i.e., sale or long-term lease). As a result, staff issued Notices, as prescribed by the SLA, for the Enterprise District, Package K, Building 92, Building 11, Building 19 and Building 25. Because the City received no responses to the Notices, RFP’s were issued for Building 11 and Building 19 on October 27, 2022. The City received a number of responses to the RFP’s for Building 11 and Building 19.
DISCUSSION
Following completion of the SLA process for the Enterprise District, Package K, Building 92, Building 11, Building 19 and Building 25, staff analyzed how to proceed with these highly desirable parcels. Staff elected to issue RFPs seeking tenants interested in leasing and developing Building 11 and Building 19. The lease terms proposed in the RFPs were based on an offer the City had received for the buildings, as this offer indicated the market-rate rental and other terms for the buildings. The RFP asked respondents to match or enhance the terms being offered.
To evaluate the RFP responses, staff formed a panel that included Assistant Community Development Director/Asset Management, Nanette Mocanu and Real Estate Technician, Lorie Curtis with the Cushman and Wakefield brokers The panel closely analyzed each proposal and came to the recommendations described below. Exhibit A lists the responses to the RFP and includes staff notes.
Building 11
The City received three proposals for Building 11 from Astra Space (Astra), Pyka, Inc. (Pyka) and srmErnst. The srmErnst proposal (Exhibit 2) was received after the proposal deadline and included an option to purchase. The RFP solicitation was for leasing only, so the srmErnst proposal was excluded from consideration. The remaining respondents were both competitive.
• Astra. Astra is a growing company which has chosen to make its headquarters at Alameda Point. Astra has outgrown both of the large buildings (Building 360 and Building 397) it currently occupies at Alameda Point and has very aggressive job growth projections. The review panel concluded that it would be interested in recommending Astra for an expansion into Building 11. However the panel expressed strong concerns about the fact that Astra has not yet executed leases with the City for its current buildings despite lengthy and protracted negotiations. As a result, staff recommends that Astra be given of firm deadline of October 15, 2022, to execute all pending leases, including a lease for Building 11. (Exhibit 3)
• Pyka. Pyka is a growing and innovative company that manufactures autonomous electric aircraft. It is a company consistent with the goals of the City Council and compatible with the tenant mix currently at Alameda Point. (Exhibit 4)
Recommendation: The panel conditionally recommends Astra for Building 11. However, as noted above, the recommendation is conditioned on Astra’s execution of all pending leases for its existing buildings and Building 11 by October 15, 2022, If Astra fails to meet the deadline, staff recommends that lease negotiations be commenced with Pyka if it remains interested. If not, staff will issue a new RFP for Building 11.
Building 19
The City received four proposals for Building 19 from Astra, Pyka, Rain Industries Inc. (Rain), and Saildrone, Inc. (Saildrone).
• Astra. Because staff conditionally recommends Astra for Building 11, it did not elect to offer Astra Building 19 as well. (Exhibit 5)
• Pyka. Pyka is a very desirable candidate for tenancy at Alameda Point. They are a growing, clean tech, innovative company. (Exhibit 6)
• Rain. Rain is a consultant to a company located at Alameda Point and in the process of executing a license agreement for use of the Northwest Territories. Rain also is an innovative company testing technology to assist with extinguishing wildfires in their early stages. The product is innovative and important to our state and the environment. (Exhibit 7)
• Saildrone. Saildrone is an existing tenant at Alameda Point. Saildrone began as a subtenant of a prior tenant during the America’s Cup regatta and grew into a great tenant partner. Saildrone proposes to use Building 19 to house its design division. (Exhibit 8)
Recommendation. Staff recommends selection of Saildrone for Building 19 and that the City Council direct staff to negotiate a lease with Saildrone for the building. Saildrone has been a solid tenant at Alameda Point and has invested in our community. Staff recommends that the City support Saildrone’s growth and expansion.
ALTERNATIVES
Select applicants other than those recommended by staff for either Building 11 or Building 19 or for both Building 11 and Building 19.
Negotiate different lease terms for either Building 11 and/or Building 19.
Reject all proposals and reissue both or either RFP.
FINANCIAL IMPACT
Lease revenue would be deposited in the Alameda Point/Base Reuse Fund (290) and is restricted by use as described in the Economic Development Conveyance Agreement. Leasing these properties will increase the projected revenue for this fund.
MUNICIPAL CODE/POLICY DOCUMENT CROSS REFERENCE
This action is consistent with the Alameda Municipal Code.
ENVIRONMENTAL REVIEW
In accordance with the California Environmental Quality Act (CEQA), this action is Categorically Exempt pursuant to CEQA Guidelines Section 15301(c) - Existing Facilities.
CLIMATE IMPACTS
There are no identifiable climate impacts or climate action opportunities associated with the subject of this report.
RECOMMENDATION
Recommendation to provide direction to staff on responses received to the Request for Proposals for leasing Building 11 located at 1190 West Tower Avenue and Building 19 located at 2175 Monarch Street, and direction to staff to negotiation leases with prospective tenants.
Respectfully submitted,
Lisa Nelson Maxwell, Community Development Director
By,
Nanette Mocanu, Assistant Community Development Director
Exhibits:
1. Proposal Summary
2. srmErnst - Building 11 Proposal
3. Astra Space, Inc. - Building 11 Proposal
4. Pyka, Inc. - Building 11 Proposal
5. Astra Space, Inc. - Building 19 Proposal
6. Pyka, Inc. - Building 19 Proposal
7. Rain Industries, Inc. - Building 19 Proposal
8. Saildrone, Inc. - Building 19 Proposal
cc: Dirk Brazil, Interim City Manager