CITY OF SAN MATEO. Administrative Report

Transcription

1 CITY OF SAN MATEO City Hall 330 W. 20th Avenue San Mateo, CA Administrative Report Agenda Number: 5., Status: Consent Calendar TO: FROM: PREPARED BY: City Council Larry A. Patterson, City Manager City Manager s Office MEETING DATE: Monday, November 17, 2014 SUBJECT: Peninsula Puffs LLC - Lease Amendment RECOMMENDATION Approve a revised amendment to the retail lease with Peninsula Puffs, LLC, dba Beard Papa s Sweets Cafe, for the premises located at 365 2nd Avenue at the Downtown Main Street Garage and authorize the City Manager to execute the amendment. BACKGROUND Beard Papa s Sweets Cafe is a popular franchise retail company which specializes in cream puffs and other dessert items. San Mateo was their third regional retail location in The original lease, signed on July 1, 2009 (Attachment 1) agrees to 513 square feet of retail space, with a lease term of five years and with one option to renew for an additional five year term. The initial lease rate was $2.50 per square foot, equaling $1, per month. Due to Consumer Price Index (CPI) increases over the last five years, the existing rate is $2.81 per square foot, equaling $1, per month. On July 3, 2014, Peninsula Puffs, LLC formally notified Brett Barron of Capital Realty, the City s commercial real estate property manager, confirming their right to exercise the option of extending the lease for an additional five years. In an effort to update the base lease rate to existing market rates for downtown San Mateo, a new base rent was negotiated for the next five years based on local square footage comparisons. Beginning on December 1, 2014 the new base lease rate will be $3.00 per square foot, equaling $1, per month. The lease rate will increase 3% annually over the next five years, as described in Attachment 2. An initial amendment to increase the base lease rate to $3.10 per square foot was authorized by the Council on September 15, However, after further consideration with the tenant and property manager, staff recommends this revised amendment based on market conditions and mitigating the impact of the rate increase to a current tenant. This lease is a triple-net lease where the tenant covers utilities, taxes and other such expenses. The tenant is directly responsible for tenant improvements (including signage), equipment maintenance, and pro-rata share of the common area maintenance expenses. The City of San Mateo currently leases spaces to a total of six commercial tenants and two city departments at the Transit Center and Main Street Garage. The total gross annual income from these spaces in FY will amount to approximately $286,000. BUDGET IMPACT The amended lease would generate approximately $98, to the City in revenue over the next five years. Tenant revenue is budgeted and covers the City/Landlord expenses including repairs and staff management. Net lease revenue is contributed to the General Fund. ENVIRONMENTAL DETERMINATION The project is Categorically Exempt from further environmental review (Guidelines Section Class I Existing CITY OF SAN MATEO Page 1 of 2 Printed on 11/13/2014 powered by Legistar

2 Agenda Number: 5., Status: Consent Calendar Facilities ) in that it is a lease of an existing space in an existing building for a use permitted by the General Plan and Zoning Code in this location. NOTICE PROVIDED All meeting noticing requirements were met. ATTACHMENTS Attachment 1 - Peninsula Puffs, LLC Original Lease Attachment 2 - Peninsula Puffs, LLC Proposed Amendment to Lease STAFF CONTACT Marcus Clarke, Economic Development Manager mclarke@cityofsanmateo.org <mailto:mclarke@cityofsanmateo.org> (650) Vivian Ng, Administrative Technician ng@cityofsanmateo.org <mailto:ng@cityofsanmateo.org> (650) CITY OF SAN MATEO Page 2 of 2 Printed on 11/13/2014 powered by Legistar

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15 AMENDMENT NO. ONE TO THE LEASE BETWEEN THE CITY OF SAN MATEO AND PENINSULA PUFFS LLC, A CALIFORNIA CORPORATION DBA BEARD PAPA S SWEETS CAFÉ TO EXTEND TERM WHEREAS, the City of San Mateo ( City ), a municipal corporation of the State of California, and Peninsula Puff LLC, a California Corporation dba Beard Papa s Sweet Café ( Beard Papa ), entered into a lease for retail space ( Lease ) on September 1, 2009; and WHEREAS, the initial Lease term is five years; and WHEREAS, Section 6 (C ) of the Lease provided that the Lease by be extended for another five years, except that the rent may be increased; WHEREAS, City and Beard Papa wish to extend the Lease term for an additional five years. NOW, THEREFORE, the parties agree as follows: 1. Section 2 of the Lease is amended to read: Effective December 1, 2014 the new base rent schedule is as follows: December 1st, 2014 through November 30th, 2015 $1, per month December 1st, 2015 through November 30th, 2016 $1, per month December 1st, 2016 through November 30th, 2017 $1, per month December 1st, 2017 through November 30th, 2018 $1, per month December 1st, 2018 through November 20th, 2019 $1, per month 2. Sections 6 A of the Lease is amended to read: The lease for the above location expires on November 20th, Q:\CDD\Economic Development 2013-present (MC)\DT Lease Agreements\Beard Papas\Second Lease\Attachment 3. City of San Mateo - Peninsula Puffs, LLC Proposed Amendment to Lease.doc

16 3. The remaining terms of the Lease remain in full force and effect. CITY OF SAN MATEO PENINSULA PUFF LLC dba Beard Papa s Sweet Cafe Larry A. Patterson, City Manager Date: Luigi Cruz, Peninsula Puff LLC Date: Approved as to Form: Gabrielle Whelan, City Attorney Patrice Olds, City Clerk Q:\CDD\Economic Development 2013-present (MC)\DT Lease Agreements\Beard Papas\Second Lease\Attachment 3. City of San Mateo - Peninsula Puffs, LLC Proposed Amendment to Lease.doc