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Report regarding a resolution approving the Third Amendment to the Lease Agreement for use of the Economic Advancement Center located at 366 Grand Avenue in South San Francisco. (Ernesto Lucero, Economic Development Manager)
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RECOMMENDATION
Recommendation
Staff recommends City Council adopt a resolution authorizing the City Manager to execute the Third Amendment to the Lease Agreement for 366 Grand Avenue, for the use of the Economic Advancement Center, to extend the Lease until August 31, 2027.
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BACKGROUND
The City entered into a lease agreement with the Stacey S. Dobos Trust, owner of the building at 366 Grand Avenue in South San Francisco, beginning July 12, 2021 for use of the space for the Economic Advancement Center (EAC). The original lease expired October 31, 2024, and was subsequently renewed with a First Amendment to the lease, which extended the term to April 30, 2025. The City renewed the lease with a Second Amendment, which extended the term to August 31, 2025.
The property is approximately 6,900 square feet with 21 dedicated parking spaces, receives high foot traffic along Grand Avenue downtown, and provides walkability and proximity to many modes of transportation. The space also connects to the City-owned Breezeway next door and adjacent Miller Parking Garage. The building, parking lot, and adjacent Breezeway have hosted a variety of downtown activation efforts including a night market, fairs, holiday events, and makers space pop up events.
The EAC has been successful at growing its reputation as a resource hub in South San Francisco since 2021. A variety of nonprofit organizations continue to use the EAC for client support including JobTrain, Renaissance Entrepreneurship Center (Renaissance), Promotores Program, El Concilio of San Mateo County, San Mateo County Health and Human Services, YMCA, and Leadership Council of San Mateo County. Additional providers are planning to open office hours at the EAC in the coming months, including CORA, Unitedly, and the San Mateo Small Business Development Center (SBDC).
The First and Second Amendments to the lease were relatively short in duration due to the uncertainty of funding support for the EAC as partners continued to meet to determine a financial sustainability plan to support ongoing operational and programmatic costs of the three economic mobility centers throughout the County, with the other two centers being the North Fair Oaks Economic and Employment Center (EDD), and the Opportunity Center of the Coastside (OCC) in Half Moon Bay.
DISCUSSION
The Third Amendment to the lease provides a longer term to ensure operational stability of the space. Specifically, lease terms include a two-year lease extension beginning on September 1, 2025 with an option to renew for an additional year at the same lease rate. In addition, the City will receive the same lease rate of $2.40 per square foot, or $16,567 per month, a $500 janitorial credit per month, one month of free rent, and a $10,000 tenant improvement credit towards additional remodeling as needed. The total cost of the Third Amendment to the lease equals $397,608 and would expire on August 31, 2027.
Funding Support
On June 25, 2025, Council approved the Sixth Amendments to professional service contracts with both JobTrain for $75,835, and Renaissance for $184,165, which are fully funded by a County grant that expires at the end of this calendar year. Going into 2026, the City’s role of the EAC will begin to switch to a property manager partnership, where the City would control the space, operations, and maintenance, and allow partners to operate within the space under license agreements where organizations are funding programmatic costs outside of City funding. The City would continue to pursue grant funding when opportunities become available.
The Third Amendment to the lease will be funded through the Permanent Local Housing Allocation (PLHA) program, administered by the California Department of Housing and Community Development (HCD). The PLHA program is a reliable, ongoing source of funding for affordable housing and homelessness prevention. This program is funded through a fee collected on real estate transaction recordings and is designed to support counties and local jurisdictions across California in developing and preserving affordable housing and addressing homelessness in their communities.
On July 22, 2020, Council approved a resolution authorizing the submission of an application for the City’s entitlement of PLHA funds and execution of all necessary agreements to receive those funds. Following this approval, the City submitted its initial 5-Year PLHA Plan to HCD, which was subsequently approved. Under this program, the City is eligible to receive a total allocation of up to $1,307,880 over the five-year period. To date, the City has received $217,980 in PLHA funds for Year 1 (2019) and $338,809 for Year 2 (2020). These funds have been committed to a predevelopment loan to Rotary Plaza, Inc. to support an affordable housing development located at 500 and 522 Linden Avenue. The City has been awarded $372,849 for the Year 3 (2021) allocation, of which $223,709.40 have been approved for lease payments of the first year of the Third Amendment to the lease. City staff will be applying for the Year 4 (2022) and Year 5 (2023) allocations in conjunction with the submittal of the amended 5-Year Plan to HCD. Since the EAC has demonstrated its success in connecting valuable resources to some of the most vulnerable community members, HCD believes PLHA funding to be an eligible use of funds to support lease payments for the duration of the new lease renewal.
As discussed, staff continue to meet with EAC partners, and have recently included a funding request to the philanthropic organization, The Sobrato Organization, to provide some financial support to the three centers countywide. Federal and state funding is currently more difficult to pursue, unlike in 2021, however staff continue to make earmark funding requests, specifically to U.S. Senator Padilla earlier this year. Since its opening, the EAC has successfully raised $5.2 million from federal, state, and county funds, with $2 million coming originally from the City General Fund.
FISCAL IMPACT
There is no additional impact to the General Fund associated with adopting the associated resolution. The lease payments will be funded through the Permanent Local Housing Allocation (PLHA) program, administered by the California Department of Housing and Community Development (HCD).
CONCLUSION
Staff recommends that the Council adopt a resolution authorizing the City Manager to execute a Third Amendment to the Lease Agreement for 366 Grand Avenue, for the use of the Economic Advancement Center, to extend the Lease until August 31, 2027.