Home Oakley Oakley Council Preview: Cup Cake Shop May be Coming Soon

Oakley Council Preview: Cup Cake Shop May be Coming Soon

by ECT

Oakley

Before I get into the agenda, I would encourage many residents of Oakley to attend the very beginning of the meeting to honor one of Oakley’s finest as a proclamation will be given to U.S. Army Staff Sgt. Joseph M. Marcel for his bravery in Afghanistan.

If you recall, the Brentwood Press did a nice story on Staff Sgt. Marcel on February 8 regarding his heroism n Afghanistan in May of 2011, when he helped recover two pilots from a downed aircraft in the Paktika Province.  Marcel was awarded an Air Medal of Valor—you can read the article from the Brentwood Press by clicking here.

Aside from the debate on whether or not to accept a Lease Agreement with Republic of Cake,  the rest of the meeting appears to be pretty light in substance as it’s nearly a rehash of the last meeting with the approval of the procure for Mayor and Vice Mayor, sale of firearms and ammunition.

The big issue, however, is  if approved,  Republic of Cake, LLC would enter a lease agreement for the  retail space at 3080 Main Street.

For the record, I have nothing against a the Republic of Cake, but when there is only one bidder, that’s an auto re-bid attempt in my book to ensure the best value for Oakley is approved.  If it’s put out a second time and there is only one bid, that is another story, but the City should have tried a second time.

Having said that, its nice to see a business select Oakley for their expansion and I hope they do well.

According to their RFP response, there may be a problem with both the short-term and long-term lease as it states the following:

Short-term Lease

We are willing enter into a short-term lease based on an agreed-on long-term lease of five years with two built-in five years options. As this initial short-term lease would run through the construction period we request that all charges be waived until retail sales begin in accordance with the above timeline. Additionally, all triple-net charges should be covered by the landlord during the initial short-term lease.

Long-term Lease

The long-term lease should be based on three (3) five (5) year periods with basic rent starting at $1.00 per foot per month. For the initial five (5) year lease term we request triple-net (insurance, property taxes and Common Area Maintenance) charges be limited to $0.50 per foot per month.

Oakley’s return on investment (ROI) will be made through basic rent combined with percentage rent. For years 1 – 5 the break point will be set at $175,000 with a percentage rent of 5.0%.

Basic rent will increase at a rate 2.5% per year. We predict revenues of $350,000 in the first year of operation with estimated sustained growth of 6.5%.

Based on the above Oakley shall realize rental revenue of $12,000 in base rent with potential $8,750 in percentage rent. Over the initial 5 year period Oakley will see basic rent revenue of $62.448, with potential percentage rent revenue of $56,287 for a combined income of $119,363.

In year 6 through year 10 the breakpoint will increase to $200,000 with the percentage rent remaining at 5%. Over this year period Oakley will see basic rent revenue of $71,364 and percentage rent revenue of $88,351 for a combined income of $159,176.

Over the 10 year period Oakley will see an income of approximately $279,079 based on the above assumptions.

Hopefully through negotiations, this can be adjusted because this is a steal for any business given the fact that Black Bear Diner across the street is paying roughly $2 a square foot and are in an older building.

Moving on, the next portion of the proposal that will likely be tweaked is the liquidated damages and caveats.

Liquidated Damages

There is a certain amount of risk taken by ROC by entering into a short-term lease with the City of Oakley given the States decision to dissolve the Redevelopment Agencies. In the event the City of Oakley is forced to dispose of the property ROC could be liable for costs incurred. ROC in this case would seek liquidated damages from the City of Oakley equal to amount of any investments made, equipment purchased, and other expenses.

Other Caveats

1. City must have reached a decision regarding use of the existing Centr-O-Mart building.

2. Construction schedule for Centr-O-Mart building must be published.

3. City must be willing to co-sign any SBA or bank loan, due to the initial lease term of six months. Loans are normally contingent on signed leases where the lease duration is equal or greater than the term of the loan. A loan would most likely have a term of five (5) years.

4. Construction of the strip-mall where the ACE Hardware will be located must have started.

I am sure most of this will be worked out through negotiations, but lets hope the council are paying attention to the details.

One item that is receiving attention from some in the community is Item 3.9 within the consent calendar.  This item actually should not even be in consent and a formal discussion should occur on the cost. At any rate, the staff is suggesting the council Adopt a Resolution Approving an Agreement with Goodland Landscape Construction, Inc. for the Construction of Capital Improvement Project Number 131 (Downtown Plaza Project) and Authorizing the City Manager to Execute Said Agreement.

Some residents are complaining on social media about the cost and what is included in the bid breakdown, however, this is the City Council Acting As the Successor Agency to the Oakley Redevelopment Agency—meaning, its Redevelopment and funds from the State in the form of Bonds, not Oakley funds.

Staff recommends that the City Council adopt the resolution approving an agreement with Goodland Landscape for the construction of CIP Project 131 -Downtown Plaza Project for an amount not to exceed $1,160,000.00 and authorizing the City Manager to execute said agreement.

A full agenda can be viewed on the City of Oakley Website

 

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2 comments

Barbara DuMont Feb 26, 2013 - 8:24 am

Hey I just can’t believe that a garbage can costs $1750.

Michelle Feb 26, 2013 - 9:08 am

Mr. Burkholder, I don’t think you giving that $1 million plus bid a close enough look. A lot of waste within it and encourage you to go line item by line up. For example, do we really need a $20k trellis or the $1700 garbage can Barbara pointed out? The council can do better. They should rebid and go back to the drawing board.

I do agree with you on the cake shop, 1 bid should be an automatic rebid. Lazy city staff is all I have to say, very lazy

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