minutes of the JOINT San José city council

AND REDEVELOPMENT AGENCY BOARD

SAN JOSÉ, CALIFORNIA TUESDAY, APRIL 8, 2003

The Council of the City of San José convened at 2:45 p.m. to hear Item 7.2 in a Joint Session with the Redevelopment Agency in Council Chambers at City Hall.

Present: Council Members - Chirco, Cortese, Dando, Gregory, LeZotte, Reed, Williams, Yeager.

Absent: Council Members - Campos, Chavez; Gonzales. (All excused)

JOINT REDEVELOPMENT AGENCY/CITY COUNCIL ITEM

7.2 Approval Actions related to the lease of property located at 170 South Market Street to Bijan Bakery & Café.

Recommendations:

(a) Adoption of a resolution by the City Council accepting the summary of costs and findings of the Summary 33433 Report and the Estimated Reuse Valuation pursuant to the California Health and Safety Code Section 33433 for the least of approximately 3,500 square feet at 170 South Market Street to Bijan Bakery & Café making certain findings and approving the lease.

(b) Approval by the Agency Board of a lease between Bijan Bakery & Café (Tenant) and the Agency (Landlord) for the property located at 170 South Market Street, for a ten-year term with two five-year options and up to $350,000 in Agency assistance for Tenant Improvements and a maximum of $130,000 for Landlord Improvements

CEQA: Exempt, PP03-03-089 [SAN ANTONIO PLAZA]

Documents Filed: Memorandum from Redevelopment Agency Executive Director Susan Shick, dated April 8, 2003, recommending acceptance of a Summary 33433 Report and Reuse Appraisal, and approval of a lease with Bijan Bakery, Inc.

Discussion/Action: Council Member Reed asked how Bijan Bakery Inc. fits into the Tier I, and II process, and Redevelopment Agency Executive Director Susan Shick replied money was put in Tier I to complete the improvements for the Fairmont in the Annex project, and the McCormick and Schmick lease had already been approved. Council Member Reed stated that he did not consider the Bijan Bakery, Inc. project was more important than the Camera Theatre, the Billy Frank Center or Parkland dedication in lieu fees or the other projects the City of San José cannot currently fund. Council Member Williams asked why Staff selected this particular bakery, and Director of Housing Leslye Corsiglia replied that the Redevelopment Agency wanted to provide the community with a broad base of tenants that respond to the downtown enhancing additional diversity. She stated the community is very interested in having additional tenants downtown that are small, uncommon, and unique, making San José special and different. She stated Staff decided this bakery was the best bakery for this location because of several factors, i.e. the quality of the products, the fact the bakery is a true French pastry bakery, and the products are baked on the premises. Mr. Bijan, owner of the Bijan Bakery and Café at Saratoga Avenue, in San José, since 1981, stated he has 32 employees, and since the new building is larger, he intends to hire 16 more full time employees to start. Council Member Chavez stated that once the Downtown Strategy Task Force completed their work, they envisioned the CIM Project at the Fourth Street Garage, and also how the City of San José would complete the Fairmont Annex, and she felt confident about taking this step today, because the City is responding to a community plan.

Council Member Chavez moved approval of the Staff recommendation for acceptance of a Summary 33433 Report and Reuse Appraisal, and approval of a lease with Bijan Bakery, Inc. Council Member Chirco seconded the motion. Council Member LeZotte stated she would be supporting the motion, but stated Staff should be cautious about spending future money, whether or not it is in Tier I, unless there is actual money that is left, and it is not being taken from another line item where the project has been completed, and there is a fund balance. Council Member Cortese stated he is supporting this motion but in regard to the lease document, it does not appear to have any indexing of the base rent or a cost of living adjustment after 10 years, and Redevelopment Agency Executive Director Susan Shick replied it is an ongoing index that starts at a base of $1.66, and increases over the life of the lease to $2.21. Council Member Cortese stated concern about indexing on leases, where the cost of living adjustment has been locked in, creating a situation of a dramatically discounted lease, in a continuous appreciation of real property and inflation cycles. He urged that future leases be calculated on base plus percentage, with a cost of living adjustment every 5 years on the base rent that is indexed in the greater San Francisco Bay Area or some outside standard that will keep pace with inflation. Executive Director Shick replied that Council Member Cortese was correct and that Staff has other kinds of standard living indexes.

Council Member Reed stated he would not be supporting the motion because he did not consider that the Bijan Bakery is more important than the Camera Theatre, in which the City negotiated a contract with, but just does not have the money or he did not consider it is more important than finishing the construction of the Billy Frank Center. He stated he did not think the City ought to move ahead on this project, at least until the rest of the budget is in front of everyone, and asked if there are any other Tier I projects that have money that is not going to be spent on the project as described in the description of the line items. However, he stated he believes the bakery is a wonderful project but there are several other projects ahead of the bakery. Redevelopment Agency Executive Director Susan Shick stated she would obtain a list for Council of other Tier I projects that have money that can be used for other project.

On a call for the question, the motion carried, and the said lease between Bijan Bakery & Café and the Redevelopment Agency for the property located at 170 South Market Street was approved, and Resolution No. 71490, entitled: “A Resolution of the Council of the City of San José Accepting the Summary of Costs and Findings of the Summary 33433 Report and the Estimated Reuse Valuation Pursuant to the California Health and Safety Code Section 33433 for the Lease of Approximately 3,500 Square Feet at 170 South Market Street to Bijan Bakery, Inc., Making Certain Findings and Approving the Lease”, was adopted. Vote: 9-1-1-0. Noes: Reed. Absent: Gonzales.

ADJOURNMENT

The Council of the City of San José adjourned at 3:13 p.m.

RON GONZALES, MAYOR

ATTEST:

PATRICIA L. O’HEARN, CITY CLERK