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.
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.
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.