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Report regarding a resolution approving a Lease and Concessionaire Agreement between the City of South San Francisco and Mata MV Corporation (d.b.a. Morning Vibes Café) to operate a café at the Library | Parks and Recreation Center. (Han-Ching Wong, Management Analyst II)
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RECOMMENDATION
Recommendation
It is recommended that the City Council approve a Lease and Concessionaire Agreement between the City of South San Francisco and Mata MV Corporation (d.b.a. Morning Vibes Café) to operate a café at the Library | Parks and Recreation Center.
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BACKGROUND/DISCUSSION
The Library | Parks and Recreation Center (LPR) opened on October 28, 2023, featuring an 80,0000-square-foot facility alongside a 1.3-acre park.
The proposed café space is located on the third floor of the LPR near the Administration offices, and measures approximately 192 square feet. Originally not contemplated, during the later phases of design, the third floor was identified by project architects as a future café location as it provided ample space for a small operator and better complemented the adjacent Adult Library. Basic furniture, fixtures, and utility hookups were installed in anticipation of a future café serving food and beverages. The second floor was anticipated to be a more lively space with the Youth Library, Discovery Center, and Recreation classrooms. The first floor, however, was not specifically designed to accommodate a café, and with its bustling lobby and event spaces, it was determined there was insufficient space for this amenity while maintaining ample circulation.
At the request of City leadership and with the direction of the City Manager, staff issued a Request for Proposals (RFP) to identify a qualified café operator capable of managing a unique business opportunity: a privately operated café within a City facility. The intent is to activate the space as a vibrant community amenity that supports gathering, social interaction, and studying, while providing additional revenue for the City.
The RFP identified Mata MV Corporation (d.b.a. Morning Vibes Café) as the highest ranked proposer. The original staff recommendation proposed a lease revenue structure consisting of a $240 minimum monthly rent, in addition to percentage rent calculated from monthly gross sales at the following rates: 3% in year 1, 3.5% in year 2, and 4% in year 3. Based on direction from the City Council, staff reengaged in negotiations with the proposer, resulting in an increased base monthly rent of $500, along with percentage rent based on monthly gross sales at the following rates: 4% in year 1, 4.5% in year 2, and 5% in year 3.
Based on additional input from the City Council about interest in pursuing a broader use of LPR that would activate the commercial kitchen, staff is preparing to issue an RFP for priority catering for events held within the facility as an additional revenue enhancing endeavor. Staff expects to issue this RFP later this calendar year.
FISCAL CONSIDERATIONS
If the café operator is selected, tenant improvements (TI) will be necessary to prepare the space for its operations. The estimated duration of the TI period is expected not to exceed three months. The proposer did request waivers or credits to their rents during the tenant improvement period, as detailed below.
|
|
Monthly Rent |
Est. Rent Credit Duration |
Total Rent Credit to Vendor |
|
Morning Vibes Café |
$500 |
3 months |
$1,500 |
Based on the estimated revenue share from gross sales, combined with the base monthly rent, the City is projected to receive approximately $12,600 in year one, $14,775 in year two, and $17,250 in year three.
RELATIONSHIP TO CITY COUNCIL PRIORITIES ACTION PLAN
The proposed café will contribute to the City Council’s Priorities Action Plan under the Major Focus Area “Welcoming and Connected Community” by activating lively community spaces.
CONCLUSION
Approving the renegotiated Lease and Concessionaire Agreement with Morning Vibes Café will enhance the Library | Parks and Recreation Center as a well-utilized community facility by supporting social well-being, encouraging community gathering, and providing functional spaces for work and recreation. The café’s operations and programming will complement existing Library and Parks and Recreation services, strengthen community engagement, and provide a much-requested amenity to residents and visitors while providing additional revenue for the City.