City of Sacramento City Council 915 I Street, Sacramento, CA,
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1 City of Sacramento City Council 915 I Street, Sacramento, CA, Meeting Date: 1/31/2012 Report Type: Consent Title: Lease Agreement: Retail Space in Memorial Garage Report ID: Location: th Street, District 4 Recommendation: Pass a motion 1) determining that, pursuant to City Code Section , the leasing of th Street without bidding is in the best interests of the City; and 2) authorizing the City Manager to execute a 15 year lease agreement with one 5-year extended term option, with Coyote Tap House, Inc. for retail space located in Memorial Garage. Contact: Howard Chan, Parking Services Manager, (916) ; Paul Sheridan, Program Analyst, (916) , Department of Transportation Presenter: None Department: Transportation Department Division: Off-Street Parking Admin Dept ID: Attachments: 1-Description/Analysis 2-Background 3-Exhibit A - Lease Agreement With Coyote Tap House, Inc. City Attorney Review City Treasurer Review Approved as to Form Reviewed for Impact on Cash and Debt Jerry Hicks Janelle Gray 1/11/2012 4:04:07 PM 12/23/ :06:24 AM Approvals/Acknowledgements Department Director or Designee: Jerry Way - 1/11/ :03:55 PM Eileen Teichert, City Attorney Shirley Concolino, City Clerk 1 of 30 Russell Fehr, City Treasurer John F. Shirey, City Manager
2 Description/Analysis Issue: Ken Le, dba Coyote Tap House, Inc., has submitted an offer to lease the City s property at th Street in Memorial Garage. Coyote Tap House will feature live entertainment from a rotation of over 30 different bands. They will provide a large menu of Asian fusion inspired dishes and have over 50 varieties of beers on tap. The restaurant will also have 15 or more large screen televisions to broadcast sporting events. Mr. Le has successfully owned and operated restaurants since 1990 including the popular Oshima Sushi and Fugu Lounge in Natomas which has been in operation since Policy Considerations: The recommendation is consistent with the City s strategic plan and the goal of the City Council to expand economic development throughout the City. Environmental Considerations: California Environmental Quality Act (CEQA): This project is exempt from the California Environmental Quality Act (CEQA) under Section 15301, Operation of existing public structures or facilities involving no expansion of use. Sustainability Considerations: None. Other: None. Commission/Committee Action: None. Rationale for Recommendation: City Code allows the City to lease City property without bidding when a firm and complete written offer at or above market value is received by the City, and the City Council finds that leasing the property without bidding is in the best interests of the City. Ken Le submitted a firm and complete written offer to lease wherein the rent specified is at or above the fair market rate for comparable property as determined by the City s real property supervisor. By leasing without bidding, the proposed lease agreement will enable the City to quickly fill a vacant commercial site with a quality new restaurant and entertainment venue to serve the downtown. Financial Considerations: th Street measures approximately 8,074 square feet in size. Based on a market rate of $1.30 per square foot, monthly rent payments will begin at $10,496 and increase annually based on the consumer price index (CPI). Total rent collected during the Initial term will be over $1,868,288. All rental income will be deposited in the Parking Fund (Fund 6004). In lieu of providing a tenant improvement allowance, rent payments will be abated for a period of 10 months, which is the equivalent of $13 per square foot in tenant improvement allowance. Emerging Small Business Development (ESBD): None. 2 of 30
3 Background Information Ken Le and his family have been operating restaurants and entertainment venues for over 35 years. Since 2004 they have owned and operated the popular Oshima Sushi and Fugu Lounge in Natomas th Street is located at the corner of 14 th & H Streets in the City's Memorial Garage and is 8,074 square feet in size. Memorial Garage has almost 18,000 square feet of commercial space. City Code allows the City to lease City property without bidding when a firm and complete written offer at or above market value is received by the City, and the City Council finds that leasing the property without bidding is in the best interests of the City. Ken Le submitted a firm and complete written offer to lease wherein the rent specified is at or above the fair market rate for comparable property as determined by the City s real property supervisor. The term of the lease will be 15 years and 8 months and include one 5-year extended term option th Street measures approximately 8,074 square feet in size. Based on a market rate of $1.30 per square foot, monthly rent payments will begin at $10,496 and increase annually based on the consumer price index (CPI). Total rent collected during the Initial Term will be over $1,868,288. All rental income will be deposited in the Parking Fund (Fund 6004). In lieu of providing a tenant improvement allowance, rent payments will be abated for a period of 10 months, which is the equivalent of $13 per square foot in tenant improvement allowance. 3 of 30
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