The City offers Sala Thai friendly leasing terms…

Restaurateur finally poised for lease in Hercules
By Tom Lochner

Almost two years after she first negotiated with Hercules for a locale, restaurateur Kay Sala may finally get a lease for Sala Thai Restaurant, though she would end up at the Civic Arts building rather than the premises she originally sought.

A lease with Sala for the city-owned Civic Arts building is on the consent calendar for today’s Hercules City Council meeting. A lease with Sala for the city-owned Civic Arts building is on the consent calendar for today’s Hercules City Council meeting.

City Manager Nelson Oliva said last week the lease will be for 10 years, with two five-year renewal options, starting at $1.65 per square foot per month, with 2.5 percent increases each year, starting at the end of the third year.

A staff report provided by City Clerk Doreen Mathews shortly before 6 p.m. Monday shows slightly revised terms: five years with two five-year renewal options; and the same starting rent of $1.65 per square foot, but with the first four months rent-free, and one month free rent each year during the initial five-year lease period. There would be annual rent increases pegged to increases in the Bay Area Consumer Price Index with a 2.5 percent cap each year starting with the third year.

The building is about 2,100 square feet, which would put the starting rent at $3,465 a month.

A resolution to approve the lease also provides spending $370,000 of Hercules Redevelopment Agency funds for landlord-tenant interior improvements. The agency previously spent $1.3 million on exterior rehabilitation and improvements, according to the staff report, which would bring its investment in preparing the building for lease to $1.67 million.

The lease, if approved by the council, would resolve what once were contentious proceedings involving Sala Thai, the city and residents of the Hercules Homes that border the Civic Arts building.

In July, residents arguing that traffic, light, noise and odors from the restaurant would unfairly impact their neighborhood persuaded the Hercules Planning Commission to deny a conditional-use permit for the restaurant at Civic Arts. Two weeks later, the City Council rezoned the building; under the new zoning, a restaurant is a permitted use.

After complaints that they were blindsided by the rezoning, and even some talk of legal action against the city, the residents recently gave up fighting the restaurant plan and entered into a friendly dialogue with Sala Thai principals, who have said they want to be good neighbors and will do their best to address residents’ concerns.

Sala’s dealings with the city go back at least to May 2007, when she discussed with the city the possibility of renting premises at the corner of Sycamore and Railroad avenues.

Negotiations wound down with the parties far apart: The city wanted $3.75 a square foot a month, and rejected Sala’s final counteroffer of $1.50 a square foot a month, rising to $1.75 the third year and $2.25 the fifth year.

Today, those premises are occupied by the Powder Keg Pub.

Sala continued to look for a locale in Hercules. She told the Times last year that she came upon the Civic Arts building during a walk through the area, and responded to an advertisement from broker Michael Penner posted at the building.