14 staff report.Tait with attachments
Reviewed by: Town Manager, Assistant Town Manager, Town Attorney, and Finance Director
110 E. Main Street Los Gatos, CA 95030 ● (408) 354-6832
www.losgatosca.gov
TOWN OF LOS GATOS
COUNCIL AGENDA REPORT
MEETING DATE: 03/05/2024 ITEM NO: 14
DATE: February 26, 2024
TO: Mayor and Town Council
FROM: Laurel Prevetti, Town Manager
SUBJECT: Authorize the Town Manager to Send a Letter to Tait Firehouse, LLC to
Terminate the Lease for 4 Tait Avenue
RECOMMENDATION:
Authorize the Town Manager to send a letter to Tait Firehouse, LLC to terminate the lease for 4
Tait Avenue.
BACKGROUND:
In March 2019, the Town Council authorized an Exclusive Negotiating Agreement with Imwalle
Asset Management, LLC, to help guide the negotiations of a Master Lease Agreement. On
August 4, 2020, the Town Council authorized the Town Manager to execute a long term lease
agreement with Tait Firehouse, LLC for the property located at 4 Tait Avenue (Attachment 1).
While Tait Firehouse, LLC is a unique entity, Imwalle Asset Management, LLC is the master
tenant.
The decision to enter into a long term lease was predicated on the fact that the approach
would allow the property to remain in Town control, maintain the historic value of the
property, require no monetary resources from the Town, and ultimately provide an annual
revenue stream to the Town. In addition, the Tait property requires significant upgrades to
meet the Americans with Disabilities Act and the master tenant would take on those
obligations.
On February 7, 2023, the Town Council authorized a First Amendment (Attachment 2) to the
lease to modify the provisions which stipulate that if lease up has not occurred within certain
time periods, either party can terminate the leases. The modification extended the deadline for
the master tenant to find a subtenant to January 1, 2024. Even though the First Amendment
PAGE 2 OF 3 SUBJECT: Authorize the Town Manager to Send a Letter to Tait Firehouse, LLC to Terminate the Lease for 4 Tait Avenue DATE: February 26, 2024
BACKGROUND (continued):
was not executed due to missing documents from the master tenant, the Town honored the
one-year extension.
On December 22, 2023, Jim Foley (on behalf of Tait Firehouse, LLC) contacted the Town to
request an additional six-month extension to secure tenants. He explained that he has been
trying to secure tenants in a challenging economic environment and expects to find a subtenant
acceptable to the Town in the next six months. The Town has also been contacted by the
American Legion for a joint use with the Veterans Foundation as well as other parties interested
in the property.
The Town Council met in closed session on February 13, 2024 and the reportable action under
the Brown Act was direction to terminate the lease for 4 Tait.
DISCUSSION:
Given Council’s direction, the Council is now being asked during the regular open session to act
to authorize the Town Manager to send a letter of termination to Tait Firehouse, LLC.
CONCLUSION AND NEXT STEPS:
The action associated with this agenda item provides the Council with flexibility as to how it
would like to manage the asset. Staff is in the process of obtaining an appraisal and evaluating
other next steps.
At the second meeting in March, staff intends to bring a Resolution for Council consideration
affirming that due to the property’s size and location, it is exempt from the Surplus Lands Act.
In a future open session item, the Town Council will initiate the process to sell and/or lease the
property. The Council is not being asked to make a sale or lease decision with this agenda item.
COORDINATION:
The preparation of this report was coordinated with the Town Attorney and Community
Development Director.
FISCAL IMPACT:
There is no fiscal impact associated with the action of this item. At a later date, when Council
determines the disposition of the property, the fiscal implications of that action will be
disclosed.
PAGE 3 OF 3 SUBJECT: Authorize the Town Manager to Send a Letter to Tait Firehouse, LLC to Terminate the Lease for 4 Tait Avenue DATE: February 26, 2024
ENVIRONMENTAL ASSESSMENT:
This is not a project defined under CEQA, and no further action is required.
Attachments:
1. Master Lease with Tait Firehouse, LLC
2. First Amendment
This Page Intentionally Left Blank
ATTACHMENT 1
This Page Intentionally Left Blank
ATTACHMENT 3
FIRST AMENDMENT TO AGREEMENT
This FIRST AMENDMENT TO AGREEMENT is dated for identification this 7th day of February 2023 and
amends that certain Lease Agreement for Property Management Services dated October 29, 2020, made
by and between the Town of Los Gatos ("Landlord” or the “Town"), and Tait Firehouse, LLC, a California
Limited Liability Company (“Master Tenant”).
RECITALS
A. Town and Master Tenant entered into a Lease Agreement for Property Management Services
for the management and leasing of 4 Tait Avenue dated October 29, 2020 (“Agreement”), a
copy of which is attached hereto and incorporated by reference as Attachment 1 to this
Amendment.
Whereas, now the Town and Master Tenant mutually agree to amend the terms of the Agreement as
follows:
FIRST AMENDMENT
1. The parties agree that the “Effective Date” referenced on Page 1 of the Master Lease
("Lease") shall be October 29th 2020.
2. Section 1.4 Lease Term. As provided in Section 3 below, the Term of the Lease commences
on the Commencement Effective Date and terminates, unless earlier terminated 34 years
and 11 months from the Commencement Effective Date as provided in Section 3.1 below.
3. Section 1.5 Lease Contingency. This Lease is contingent on the Master Tenant submitting
the necessary applications and documents to the Town for approval of the improvements
and use of the property, such as, but not limited to, general plan amendment, a proposed
site plan, concept drawings for the site plan, massing diagrams, and renderings identifying
the location, general configuration, and proposed design characteristics of the buildings,
parking spaces, landscaping, property subdivision, and other aspects of the improvement
and uses. The Master Tenant acknowledges that the Project Proposal requires approvals and
entitlements from the Town and shall submit a formal application for the Planning
Approvals. Costs and fees associated with the Planning Approvals review shall be borne by
the Master tenant. Nothing in this Agreement shall be construed to compel the Town to
approve or make any findings with respect to Planning Approvals. If Master Tenant is unable
to obtain Planning Approvals, either Landlord or Master Tenant may terminate this Lease by
giving written notice of termination to the other party. Upon the giving of such notice of
termination, this Lease shall terminate without liability of either party to the other.
This Lease is also contingent on Master Tenant and a Subtenant having executed a binding
initial Sublease for any portion of the Premises and occupancy by Subtenants (the
“Contingency”). If the Contingency has not been satisfied or waived by Landlord on or
before the date twelve (12) months following the Effective Date January 1, 2024, either
ATTACHMENT 3
Landlord or Master Tenant may terminate this Lease by giving written notice of termination
to the other party.
4. Section 3.1 Term. The "Term" of this Lease shall commence as of the Effective Date
("Commencement Effective Date") and shall end, unless earlier terminated or extended
pursuant to the terms and conditions of this Lease, on the date 34 years and 11 months
after the Commencement Effective Date ("Termination Date").
5. Section 7.3 Continuous Operations. Master Tenant shall use its commercially reasonable
efforts, subject to the provisions of Section 7.2 above, to continuously sublet the Premises
to approved Subtenants for commercial purposes during the term of this lease. If, for any
reason, a Subtenant quits its business operations on the Premises, Master Tenant shall use
its commercially reasonable efforts, in accordance with the provisions of Section 7.2 above,
to promptly secure another Subtenant reasonably acceptable to Master Tenant and
Landlord.
If for any reason during the first three (3) years following the Commencement Date after
January 1, 2024, the Premises in their entirety are left unleased for a continuous period of
eighteen (18) months or more, then either the Landlord or Master Tenant may terminate
this Lease by giving written notice of termination to the other, in which case, upon the
giving of such notice of termination, each party shall be released of any future liability to the
other, except as provided herein.
6. All other terms and conditions of the Agreement remain in full force and effect.
IN WITNESS WHEREOF, the Landlord and Master Tenant have executed this Amendment.
LANDLORD: MASTER TENANT:
THE TOWN OF LOS GATOS Tait Firehouse, LLC, a California Limited Liability Co.
By: Imwalle Asset Management, LLC
a California Limited Liability Co.
By: _________________________ By: _________________________
Laurel Prevetti, Town Manager Don Imwalle, Jr., Managing Member
Approved as to Form: Attest:
________________________ _________________________
Gabrielle Whelan, Town Attorney Wendy Wood, CMC, Town Clerk