lew"*"ICnIgM frink - City of Pinole

ci.pinole.ca.us

lew"*"ICnIgM frink - City of Pinole

FEBRUARY 21, 2012

TO:

FROM:

BELINDA B. ESPINOSA, CITY MANAGER

MICHELLE FITZER, ASSISTANT CITY MANAGER

98

SUBJECT: ADOPT A RESOLUTION APPROVING PANERA BREAD, LLC AS A

PROPOSED TENANT AT THE PINOLE VISTA CROSSINGS

SHOPPING CENTER

RECOMMENDATION

That the City Council adopt a resolution approving Panera Bread, LLC as a

proposed tenant at the Pinole Vista Crossings Shopping Center.

BACKGROUND

Under the 1995 Disposition and Development Agreement (DDA) and Ground Lease

with TKG Pinole, LLC (TKG), the Redevelopment Agency must approve all tenant

leases for the Pinole Vista Crossings Shopping Center. Section 607 (c) of the

Ground Lease states that each sublease or the substantive terms of each sublease

shall be submitted to the Landlord for its prior written approval which shall not be

unreasonably withheld or delayed if the sublease is SUbstantially consistent with the

Marketing Plan and the standard form of sublease.

On February 24, 2011, the Agency conveyed fee title and all Agency rights in the

Pinole Vista Crossings Shopping Center to the City through the execution of

disposition and development agreements and related assignment and assumption

agreements.

On December 6, 2011, the Council and the Agency Board adopted resolutions to

enter into a Purchase and Sale Agreement with TKG Pinole, LLC, for the disposition

of the City's fee interest in the Center. The property is currently in escrow.

REVIEW AND ANALYSIS

Until escrow closes, the term of the DDA and Ground Lease requiring the

City/Agency to approve all new leases is in force. TKG Pinole, LLC is proposing

Panera Bread, LLC as a new tenant to enter into a lease for a 4,000 square foot

store in the Pinole Vista Crossings Shopping Center. The following is a brief

summary of the proposed terms for the Panera Bread lease agreement:


City Council Report 2012 - 34

February 21,2012

Panera Bread, LLC - 4,000 square feet (in the former Blockbuster site)

• Tenant Use: Operation of a bakery-cafe restaurant

• Lease Term: 15 Years (with 3 five-year renewal options)

• Rent: Years 1-5 $3.25 per square foot plus CAM

• Landlord Allowance $50.00 psf ($200,000)

• Rental Increases: Every 5 years as per schedule (Attachment B)

FISCAL IMPACT

There is no fiscal impact to approve proposed tenant.

ATTACHMENTS

A: Resolution

B: Panera Bread Executive Summary

2


RESOLUTION NO. 2012 - _______

A RESOLUTION OF THE CITY OF PINOLE APPROVING PANERA BREAD, LLC AS A TENANT AT

PINOLE VISTA CROSSINGS SHOPPING CENTER

WHEREAS, the Agency entered into that certain Ground Lease, Reciprocal Easement, Declaration of Covenants

Running with the Land, and Development Agreement by and between the Agency and TKG Pinole Vista, LLC (the “Lessee”)

with respect to the Pinole Vista Crossing Shopping Center (the “Shopping Center”), (the “Agreement”) whereby the

Agency had approval rights over the tenants; and

WHEREAS, On February 24, 2011, the Agency conveyed fee title and all Agency rights in the Pinole Vista

Crossings Shopping Center to the City through the execution of disposition and development agreements and related

assignment and assumption agreements; and

WHEREAS, On December 6, 2011, the City adopted a resolution to enter into a Purchase and Sale Agreement

with TKG Pinole, LLC for the disposition of the City’s fee interest in the Pinole Vista Crossings Shopping Center; and

WHEREAS, The property disposition is in escrow, so the term of the DDA and Ground Lease requiring City

approval of leases is in force; and

WHEREAS, Lessee desires to negotiate a 15-year retail lease, with three 5-year options for extension of the term,

for approximately 4,000 square feet of commercial retail space in the Pinole Vista Crossing Shopping Center with Panera

Bread, LLC, for the operation of a bakery-café restaurant; and

WHEREAS, Lessee will negotiate a lease agreement with Panera Bread, LLC in substantially the form on file with

the City Clerk or approved by the City Attorney.

NOW, THEREFORE, THE CITY OF PINOLE DOES RESOLVE AS FOLLOWS:

Section 1. The City hereby finds that Panera Bread, LLC is the type of subtenant desired for the Shopping

Center and approves Panera Bread, LLC as a subtenant for the Shopping Center.

Section 2. The City hereby finds and determines that the Sublease will be substantially consistent with the

requirements of the Ground Lease and Agreement.

APPROVED AND ADOPTED this 21 st day of February 2012.

AYES: COUNCIL MEMBERS:

NOES: COUNCIL MEMBERS:

ABSENT: COUNCIL MEMBERS:

ABSTAIN: COUNCIL MEMBERS:

_________________________________

Patricia Athenour. CMC

City Clerk

Attachment A


TO:

FROM:

SUBJECT:

DATE:

CC:

THE

KIVEL5TADT

GROUP

MEMORANDUM

MICHELLE Fla:@CITYOFPINOLE(VIAFEDEX)

TOM ANGSTADT

PINOLE VIST C G-EXECUTIVE SUMMARY-PROPOSED PANERA BREAD LEASE

DECEMBER 31, 2011

BELINDA ESPINOSA @ CITY OF PINOLE; NANCY KIVELSON @ TKG

The following is a summary of the basic terms of the proposed Panera

Bread lease at the Pinole Vista Crossing Shopping Center. This summary is based on a

letter ofintent signed as ofAugust 31, 2011 (a copy ofwhich is attached). The lease will

be on the Tenant's form but modified to conform with the Landlord's lease form.

Premises - Approximately 4,000 square feet in Outlot A (part of the old

Blockbuster space).

Term - 15 years, with 3 renewal options, each for an additional 5 years.

The term will commence upon Landlord's delivery ofthe Premises. Rent will commence

120 days after the later of (i) the date Landlord delivers the Premises to Tenant with

Landlord's work completed, or (ii) the date the Tenant obtains its building permits.

Landlord's Work - Tenant to take the Premises "as is", except that

Landlord shall make certain utility, HVAC and trash enclosure improvements, as

identified in the LO!. See attached Summary of Estimated Lease Costs. In addition, the

Landlord is required to re-align the drive aisle immediately in front of Outlot A and

provide Tenant with an outdoor patio area ofapproximately 800 square feet.

Tenant Improvement Allowance - Landlord to provide a tenant

improvement allowance equal to $50.00 per square foot ($200,000).

Rent - the rent schedule for the initial term and the three renewal terms is

set forth below:

Year

1-5

6-10

1 st Option Term (11-15)

2 nd Option Term (16-20)

3 rd Option Term (21-25)

Annual Rent per square foot

$39.00

$43.36

$49.36

$55.53

$62.47

214 GRANT AVENUE. SUITE 325

SAN FRANCISCO, CA 94108

(415) 434-4030 PHONE (41 S) 434-8980 FAX

ATIACHMENT B

Monthly Rent

$13,000.00

$14,453.34

$16,435.34

$18,510.00

$20,823.34


Pass Throughs - Tenant is to pay its prorata share of operating expenses,

insurance expenses and property taxes. Tenant is not required to pay for an increase in

property taxes due to a sale more than once every 5 years.

Security Deposit: Percentage Rent - Tenant will not be obligated to

provide a security deposit or to pay any percentage rent.

Use - Operation ofa bakery-cafe restaurant.

Exclusive Use - Excluding existing tenants of the Center, Landlord will

not lease space in the center to any other retailer whose business sells bagels, baked

goods and breads (limited use pennitted at less than 500 sfor 15% ofsales).

Maintenance and Repairs - Landlord shall maintain HVAC

equipment serving the Premises, with the costs passed through to the

Tenant. Tenant to maintain its Premises.

2


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