Republic of Cake Asks For Additional $70k from City of Oakley

18

Oakley

Oakley’s cupcake shop has found itself back on Oakley City Council Agenda this week as Republic of Cake is seeking to execute an Amendment to the Lease Agreement with the City of Oakley for an additional $70,000 in funding which would come from the Oakley General Fund.

On February 26, the City of Oakley agreed to a lease agreement where the City of Oakley agreed to provide $220,000 to assist with the tenant improvements to the property—the new total, if approved, would be for $290,000.

The unfortunate part about this agenda item is it’s buried in the 257-page document and placed within the Consent Calendar (Page 144).

This means, that more than likely, it already has the votes to be approved and there will be no discussion unless someone from the public pulls a speaker card or someone on the council wants to discuss it further.  Meaning, if someone wants to call timeout, they need to attend the meeting and pull a speaker card.

According to the staff report:

Republic of Cake (ROC) officials commenced and completed design work for the tenant improvement and have recently sought bids for the construction. The cost estimates show that the construction of the tenant improvements is approximately 25% higher than expected. Three bids were received with pricing ranging from $299,960 to $356,075. ROC believes that after some “value engineering” that up to an additional $70,000 will be necessary to complete the project.

There are two core elements included in the tenant improvements that typically part of the shell construction: 1) the Heating Ventilation Air Conditioning (HVAC) system and 2) the restrooms. The completion of these two items are significant factors contributing to the cost increase. In addition, the most significant factor is the requirement of labor costs are paid at prevailing wage. The prevailing wage has increased the project costs by approximately 30%.

The staff report further states that Mr. McNiff and Mr. Fang have put in $82,500 into the project which is 40% more than originally estimate of $50,000. They have requested the lease amendment to increase the city’s participation in the tenant and other needed improvements by an amount not to exceed $70,000 out of our general fund.

Source:
http://www.ci.oakley.ca.us/subpage.cfm?id=344043

The staff report also calls the City participation “relatively small” in consideration of the entire Downtown Revitalization Investment from the City. It also claims the addition of a bakery is a unique concept to our City and there is no competition in the area.

Editorial Comments:

First off, to disprove the staff report as slanted to give the economic development department a “win”, a bakery is not unique as both local grocery stores have cupcakes available and a bakery inside. Second, what is the definition of no competition in the area? Is it a street, city or East County because one could make the trip to Brentwood (less than 5-minutes away) and have several choices for a cupcake.

This is now the second business who entered an agreement with the City that has come back for additional money due to overage costs–remember, Carpaccios came back to the City for another $160k for their HVAC unit.  You also had a $1.6 million increase in the Downtown Project in change orders that was just approved in April.

Quality control may be a problem in Oakley as a bid should never have been approved without a hard-line numbers. To approve a bid without factoring in HVAC unit or restrooms is irresponsible of our economic development department and our city council is not asking the right questions or paying enough attention to details.

This is a great deal for Republic of Cake and we wish them great success in Oakley, but to Mr. Taxpayer and other business owners in Oakley this is unacceptable.
Oakley appears to be a city with an open cash register for new business with a council who refuses to watch it while current business who seek help get the cold shoulder.


18 COMMENTS

  1. When will they learn? Everything in the consent calendar should be gone over with a fine tooth comb by residents. Mike is right! Important stuff gets buried on purpose. Staff doesn’t want any questions or perhaps the city manager. Council probably doesn’t know a thing about this one. They should work harder and smarter also. This isn’t done just in Oakley. It is a very common practice.

  2. Every employer that I have worked for has had to shoulder the cost of fixing the office/property to their business needs. why are we, the taxpayers having to foot the bill for the businesses in the so-called downtown area? And I question how long will this business be open. Its in an area that does not have foot traffic, off the beaten path, no high traffic volume and competing with numerous other bakerys-Frosted, TL Cakes, Raley’s, Lucky’s, etc. . So what if they are “high end” and have a good business in Orinda. Again, this is OAKLEY not Orinda. Oakley is totally different than Orinda and the Central County area. Some how I can’t see people getting a $5 burrito then going next door to get an over-priced cupcake.

    Its time for the rose colored glasses and blinders come off the people in City Hall and accept what the rest of us already know. Instead of trying to change Oakley, accept it and help preserve the small town rural lifestyle that so many of us have moved here to have.

  3. A city manager and city mayor who have lost their way and a council that just doesn’t care about the peoples money anymore. No doubt some people will pay for high end cupcakes, but most people will stick with the ones in grocery stores or make them at home.

  4. After eating some Mexican or Italian food, a cupcake is probably the last thing I want to eat. Is there no accountbility for city staff who goofed on the original bid? Why do these people still have jobs when this is the second time an HVAC unit has been added AFTER THE FACT????? Come on City Council, do the right thing and turn this money pit down.

  5. Enough is enough, vote these councilmembers out. Randy Pope, Doug Hardcastle, Kevin Romick, Diane Burgis and Carol Rios need to go. They are only working for the city, not for the people. This boondoggle continues. This is like the Montgomery House Deal except a smaller amount. Nothing against the cupcake shop, but this is only business. Pay their fair share if they want to come to Oakley, don’t expect Oakley residents to pay for them to come.

  6. As usual ECT is spot on. No where else have we heard about this crap! Thank you for raising awareness. I hope people show up to the Councilmeeting and speak up. If they have $290k to burn, give it to the local business that are already here and struggling.

  7. Instead of just telling people to go to the council meeting why don’t you go yourself! Everyone is all talk and no do. Show someone you mean it. People talk in Antioch all the time and just like Oakley no one goes. Mike gives you all the info you need. Fill out a speakers card and DO something.

    Council meetings are much more interesting in person. The interaction tells all sometimes. On TV it is just bs mostly and boring.

    Oakley is a very young city on the wrong foot and you folks will pay for these mistakes forever!

  8. If you do not have the money to shoulder the cost of your business then you do not own a business. Plan and simple. I do not understand why the city of Oakley feels they need to help finance these businesses.

  9. I agree with Julio, If you don’t like it – go to a city council meeting and complain. Did anybody complain when this business put in it’s bid? I just looked at the old ECT article that announced the city was doing this and nobody said anything except one person asking if the lease was low. Were there people at the city council meeting complaining about this place coming in? I don’t remember hearing anything but I could be wrong.

    I drive around Oakley and there are lots of empty commercial properties in Oakley. I would like to see that change. A cupcake shop might work, who knows? The people bringing it here have to be putting their money in to this too right? They must have something to lose too if this doesn’t work. It takes effort, time, & money to open up a new business-

    What are the additional funds for? HVAC and restrooms. Unfortunately the city is currently a property management company having to rent and manage business space. Since these costs are for the building then it is an investment in that property that they have to maintain and provide the amenities expected from a property owner/ manager. As a renter of a business space I expect my building to have air conditioning, heat, water, sewage system etc. As a business owner it is my job to do the improvements to make it my business- shelving, false walls, carpeting, decorations, seating etc. If the money goes towards something that is specific to the business then I see it as giving something to a business if it is something going towards the building then it is continuing to invest in a property. I don’t think the city should be in the business of property management but with redevelopment money changes over the past few years they seem to be trying to make it work.

    As for whether people will buy overpriced cupcakes- I went to their website http://republicofcake.com/# to see how much they cost. Their highest priced item is a whopping $2.75. I am not sure how that compares to other cupcake store prices TLCakes & Frosted don’t have menus on their websites. My impression is this new place will focus on the tastiness of their cupcakes and having unique flavors as a opposed to the cake decorating that the other two focus on. After looking at their menu I can’t wait until they get here! I wish them the best of luck.

    • Cathy,

      Thank you for your comments.

      I am one of the owner’s of Republic of Cake and I wanted to respond to you post.

      This article leads off with “Republic of Cake asks for additional $70k from the City of Oakley”, which is misleading. In fact I sent a letter to the city stating my intention to pull out of the deal based on the need to add restrooms, air conditioning equipment, etc. to the project: things I had not anticipated. The reality is the city needs to put in restrooms and the air conditioning equipment regardless of who moves into the space. As we will be doing work in the space the city have asked if I would do the work for them, which I agreed to do. Does anyone honestly expect me to pay for building city owned restrooms an supplying air conditioning equipment, really?

      It is also important to keep in mind we are making an investment in the business, in fact before a single dollar comes through the doors we will have spent over $82,500 on equipment, supplies, signage, employee training and advertising. Yes, we hope to create some jobs in the area.

      The entire investment is this space is just that: an investment. The City of Oakley owns the building and every single items that has been nailed down. On top of this we will pay the City of Oakley a percentage of our gross and if all goes to plan, they city will be made whole within 10 years. If all goes south, the city still has the building and everything in it.

      Few people understand that when the State of California dismantled the Redevelopment Agencies they left nearly every city in the state with the task of taking over the role of that agency not too mention funding all development. Oakley now has a choice, it can take of this role, as it has done, or it can throw in the towel. I applaud the city for having courage and visions to pick up the pieces and take charge of the mess the state has left it in. In the commercial world what the city is doing is nothing different than commercial developers do all the time: they exchange construction dollars for a percentage of the sales. In fact many cities give big box stores thousands, and in some cases millions, of dollars in tax credits and construction money to open a store in their town. I for one am pleased Oakley has sought small businesses that are locally owned and operated to invest in: you could always get a WalMart instead.

      People need to keep in mind we responded to an RFP from the City of Oakley. It has been the the decision of the city to move forward with this venture and at no point has anyone held a gun to anyone’s head. To read some of the comments on here you would think we robbed the city at gun point: something I find shameful.

      We have every intention of being an active member of the local community and are excited about coming to Oakley. There has been nothing hidden in all of this and as Cathy points out you are all free to attend the council meetings are have your say. Alternately you can be content with posting your thoughts on here and and be frustrated that nothing changes.

      We are taking a risk in Oakley, one we think is worth taking.

      Peter

      • If you were to walk away, I take it the City of Oakley bribed you with a $70k loan? This should be considered a gift of public funds.

  10. If you want to come to Oakley, use your own money. Its easy for Oakley to be brave when they are spending taxpayer money. I will boycott you just like I do for Carpaccios. If the deal is that bad, you probably shouldn’t accept it and walk away.

  11. So does this mean the restrooms will be open to the residents of Oakley? Our money, our restrooms right?

  12. Most commericial leases generally always have construction money involved that the developer or building owner provides to build out the suite and that is after the essential utilitys are there air conditioning, plumbing and elctrical service. If as a building owner they don’t provide that all prospective tenants will look elsewhere and the building will sit empty for a long time and become an eyesore. We could always have the old Roundtable building back. I am happy to see what they are trying to do with the area it looks far better than it has ever looked and I have been here for 30 years. Now there definatly has been some issues with the city not haveing the background to run a project like this and hopefully in the future they will hire the right people so the projects are finished in a timely manner and with minimal change orders. But as a community we should bull together and support all buisness in our community I dont even like cake but I will definitley be buying my kids a cupcake or two when this bakery opens.

    • If the City of Oakley put out an RFP without HVAC and Bathrooms, its an incomplete RFP and therefore should void the bid and it should be reopened with appropriate specifications. This deal stinks to high heaven because maybe a higher bid would now be cheaper.

  13. I’m with Frank. This stinks. Oakley shouldn’t be in this business if staff doesn’t know bathrooms and heating and air are necessities.

Comments are closed.