CITY OF SAN MATEO
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CITY OF SAN MATEO
Agenda Report
City Hall
330 W. 20th Avenue
San Mateo CA 94403
www.cityofsanmateo.org
Agenda Number: 12 Section Name: {{section.name}} Account Number: 14-1311 File ID: {{item.tracking_number}} TO: City Council
FROM: Alex Khojikian, City Manager
PREPARED BY: City Manager's Office
MEETING DATE: November 06, 2023
SUBJECT:
375 2nd Avenue – Lease Agreement
RECOMMENDATION:
Approve a lease agreement with Cold Stone Creamery Leasing, Inc. for a five-year term and five-year option, for the City- owned space at 375 2nd Avenue and authorize the City Manager to execute the lease in substantially the form presented.
BACKGROUND:
There are six commercial spaces at the Main Street Garage, owned and managed by the City. These commercial spaces were created to attract retail tenants that enhance the downtown area. Cold Stone Creamery Leasing, Inc. provides customers with a premium ice cream experience.
Cold Stone Creamery Leasing, Inc. is the corporate entity for the national chain, and they intend to remain in their current retail space for their franchisees. Since May 2003 Cold Stone Creamery Leasing, Inc. has maintained an exemplary record of lease compliance and responsible tenancy. They have utilized all available lease extensions under the existing agreement. Consequently, the parties are proposing to enter into a new lease agreement with updated terms.
The City’s commercial property manager negotiated a five-year (60 month) lease term with Cold Stone Creamery, Inc. and one five-year (60) month extension option. The initial lease rate is $3,224.50 monthly or roughly $3.09 per square foot, with a 3% annual increase. Should Cold Stone Creamery Leasing execute the five-year extension option, the rent will be increased by the consumer price index annually.
The following is a summary of the key deal points:
•Term of Lease: Initial five-year (60 month) term with one five-year (60 month) extension option to renew. •Rent: $3,224.50 a month gross with 3% annual increases for the initial five-year term. •Use of premises: Cold Stone Creamery ice cream store.
•Broker Commission: Commission fee of $1,000.
BUDGET IMPACT:
The new lease will generate $205,431.70 in revenue to the City over the initial five-year term. The revenue is deposited in the Downtown Parking and Maintenance Fund (Fund 28) and is used to fund improvements to the Downtown parking facilities and to cover other Downtown maintenance expenses. The brokerage fee will be deducted from the commercial property revenues.
ENVIRONMENTAL DETERMINATION:
This lease agreement is not a project subject to CEQA, because it is an organizational or administrative activity that will not result in direct or indirect physical changes in the environment. (CEQA Guidelines Section 15378(b)(5).)
CITY OF SAN MATEO
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NOTICE PROVIDED
All meeting noticing requirements were met.
ATTACHMENTS
Att 1 - Proposed Lease
STAFF CONTACT
Jennifer Chen, Economic Development Manager
[email protected]
(650) 522-7009