Introduction of Ordinance to Approve
Third Lease Amendment for Building
22 (2501 Monarch Street, Suite 200)
with Faction Brewing LLC, a California
corporation
September 1, 2026
Building 22: 2501 Monarch Street, Suite 200
Natel Energy
Building 22 was constructed in 1941 by the Navy
as a maintenance hangar.
• Approximately 65,547 SF in total, with 50’ clear
height.
• Fully occupied, divided into two bays with
Faction Brewing & Gold Bar Spirits.
• Exclusive patio/paved yard space to the west,
with San Francisco skyline views abutting
federally-owned property.
• Outdoor use restrictions are in place to protect
the CA Least Tern per the Biological Opinion.
Gold Bar
Faction Brewing LLC (“Faction”)
• 2012: Faction became the first brewery at
Alameda Point, entering a 5-year, 3-
month lease with the City of Alameda
(City).
• 2018: Faction and the City entered a new
10-year lease that includes two 10-year
extension options.
• Current lease term expires April 30, 2028
• Current monthly rent is $25,525 or ($0.79
PSF)
3 Faction is a family-friendly brewery, tasting room, and event space with sweeping views of San Francisco skyline.
Amendment Timeline
• Amendment 1: October 2020 – Faction and seven other Spirits Alley tenants received assistance through a Council-approved rent deferral program, deferring 9 months of rent with a 3-year repayment timeline.
• Amendment 2: April 2024 – Council approved a 3-month retroactive deferral for Faction to be repaid over 12 months.
• November 2024 Closed Session – Updated Council and received direction • December 2025 Closed Session – Updated Council and received direction, including:
• Require full rent payments beginning February 1, 2025 • Encourage tenant to explore potential subleasing, shade structure and sign improvements
• Negotiate lease amendment with repayment plan.
4 Payment History
Faction currently owes:
• Amendment 1 Deferral: Paid in Full
• Amendment 2 Deferral: $46,719
• Partial rent September 2024-Current:
$164,000
• Assessed Late Fees: $11,317
• Total owed: $222,036
5 Economic Development efforts to enhance Alameda
Point - and Faction in Particular
1. Shade Structure approvals from U. S. Fish & Wildlife Service (USFWS):
working with a biological consultant and a structural engineering firm, staff received approval from USFWS for Monarch St. buildings to construct on-site shade structures behind buildings, with certain design guidelines to avoid creating perches. Installation prohibited during Least Tern nesting season.
2. Façade Grant Program: Faction applied for and received a Façade Grant to assist with new signage as well as the installation of shade structure
3. New Alameda Point website in development, to highlight business attraction activities and promote food, drink, and recreation activities 6 Use: Warehouse, beverage distribution, food grade equipment leasing, maintenance and repair, beverage bottling, and retail fountain bar
Premises: Interior space plus non-exclusive vehicular access and parking & exterior yard area Term: twenty-five (25) months to be coterminous with adjacent leases.
Rent: $14,198 per month w/ 3% increase in year 2.
Tenant pays share of all services, utilities and taxes (including possessory interest taxes) As-is condition, no-rent credits
Proposed Third Amendment Terms
• Amended Term: extend initial term by 3-years, plus one (1) 2-year Renewal Option
• Repayment: Memorializes repayment schedule, providing a mechanism to recover unpaid past due rent
• Shade Structure and Signage Credit: Per Council direction, issue one-time credit (equal to late fees assessed), as an incentive for successful installation of new shade structure and exterior signage
• Signage complete, shade structure awaiting the end of the Least Tern nesting season
• Update lease language: Incorporates Transportation Demand Management Fee, now standard in City’s new lease template
• Monthly Rent: $25,525 ($0.79 PSF), with 3% annual escalator • Revenue: Amended term with option generates $1,802,628 in revenue
• Approve the first reading of the ordinance authorizing the City Manager to execute the Third Lease Amendment with Faction Brewing, LLC, a California corporation, on the terms described in the staff report.
• The short-term nature of the lease amendment and renewal option provides:
• Repayment schedule amenable to both Tenant and City
• Incentivizes exterior improvements, thereby increasing value of City’s asset • Continues annual 3% escalator
• Supports Spirit’s Alley activation
Recommendation