SPECIAL JOINT CITY COUNCIL /
HAYWARD REDEVELOPMENT
SUCCESSOR AGENCY (HRSA) BOARD /
HAYWARD ECONOMIC DEVELOPMENT
CORPORATION (HEDC) BOARD MEETING
JANUARY 8, 2024
PRESENTATIONS
ITEM #1
CONS 24-014
Adopt Resolutions Pertaining to: City of Hayward
Authorizing Conveyance of Funds to the Hayward
Economic Development Corporation (Corporation);
Hayward Redevelopment Successor Agency
Approving the Conveyance Agreement and
Consenting to the Transfer of the Property Located
at 22631-228522 Foothill Blvd., and the Assignment
of the Seller's Rights, Duties, and Obligations to the
Corporation; and Corporation Approving the
Conveyance Agreement and Assignment of
Enforceable Obligations; and Finding the Action
is Exempt from CEQA Review
Hayward Police Department Year-End Report
1 Conveyance of 1069 B Street and
22695 Foothill Boulevard
(Cinema Place & Cinema Place Parking Garage)
January 8, 2024
City Council
Hayward Police Department Year-End Report
2 Background: Cinema Place Agreements
• In 2005, the Redevelopment Agency (RDA) entered into a ground lease with the Cinema Place developer, which
expires in 2056.
• A ground lease is an agreement in which a tenant can
develop property during the lease period, after which the developed property is turned over to the property owner.
Ground leases typically lease land for 50 to 99 years to tenants who construct buildings on the property.
• In 2007, the RDA entered into a Parking Lot Maintenance Agreement with the Cinema Place developer for
Municipal Lot 3 (the City oversees the maintenance,
including utilities, cleaning contracts, and facility updates) • The leasehold interest in the ground lease was purchased by 1069 B Street LLC in 2012 from the original developer of the building.
Hayward Police Department Year-End Report
3 Background: Cinema Place Agreements
• The lease and parking agreements were subsequently
transferred to the Redevelopment Successor Agency and
the current tenant: 1069 B Street, LLC. The Successor
Agency receives $50,000 payment annually from 1069 B
Street, LLC under these agreements.
• Hayward Economic Development Corporation (The
Corporation) is negotiating conveyance of the leased
asset from 1069 B Street LLC, with an appraised value as of September 2023 of $8.65M.
• The negotiated purchase price with 1069 B Street LLC is $8.5M. Staff is requesting up to $8.6M to cover
associated closing fees and other related expenses.
Hayward Police Department Year-End Report
4 Background on Current Property Operations
By the Numbers
• Property operated at a positive net income of $634k in 2022 (includes mortgage interest expense and property taxes totaling $362k which the Corporation will not be subject to)
• Weighted average lease term for current tenants is 3 years; all leases continue under the conveyance agreement.
• 52,920 Square feet of leasable space, of which 50,126 (95%) is currently leased
• Current tenants are mostly e-Commerce resistant lines of business. • Rent for theater reduced to $300,000 annually for three years as an incentive to remain operational. Additional three year lease secured.
Hayward Police Department Year-End Report
5 Staff Recommendations
1. Authorize the transfer of $8.6 million to the Corporation for purchase of 1069 B Street, LLC’s leasehold interest in the Cinema Place property and finding the action is exempt from CEQA review.
2. That the Successor Agency Board of Directors adopts a resolution approving the Conveyance Agreement and consenting to the transfer of the leasehold interest in the Cinema Place property from 1069 B Street, LLC, to the Corporation, and approving assignment of rights and duties under the various agreements that govern the relationship between the 1069 B Street, LLC and the Successor Agency, as well as finding the action is exempt from CEQA review.
3. That the Corporation Board of Directors adopts a resolution approving the Conveyance Agreement for the transfer of the leasehold interest in the Cinema Place property from 1069 B Street, LLC, to the Corporation, and accepting the assignment of rights and duties under the various agreements that govern the relationship between the Seller and the Successor Agency.
Hayward Police Department Year-End Report
6 Next Steps
• Staff will execute an agreement between the Hayward Economic Development Corporation (Corporation) and 1069 B Street, LLC for conveyance of the Building.
• Staff will bring back a loan agreement for Council to consider for repayment to the City (General Fund) by the Corporation with terms to include the purchase price and fees estimated at $8.6M. • Staff will take the conveyance agreement to the Alameda Countywide Oversight Board for their approval (currently scheduled for January 18, 2024). After Oversight Board approval, staff will take the conveyance agreement to the State Department of Finance for approval. • Longer term management/disposition strategy:
• Issue a request for proposals for leasing agent/property management firm to assist Corporation in management of property
• Issue a request for proposals for strategic use and operational analysis of the building; develop longer term strategic plan for the asset given the current movie theater environment
Hayward Police Department Year-End Report
7 Questions