REPORT TO THE CITY COUNCIL FROM: GEORGEANNE A. WHITE, City Manager Office of the Mayor & City Manager BY: RUTH F. QUINTO, CPA, Assistant City Manager Office of the Mayor & City Manager SUBJECT ..Title Actions pertaining to the Sequoia Brewery located at 777 East Olive in the City of Fresno: 1. Ratify the Lease Assignment and Amendment Agreement between J&A Mash & Barrel, a California limited liability company, J&A Mash No More, a California limited liability company and the City of Fresno. 2. Approve the Transfer Agreement between J&A Mash No More, a California limited liability company, J&A Mash & Barrel, a California limited liability company and the City of Fresno. 3. Approve the Restated and Amended Agreement for Purchase and Sale of Real Property and Joint Escrow Instructions between the City of Fresno, and J&A Mash & Barrel, a California limited liability company, and Fidelity National Title Insurance Company, a corporation. ..Body RECOMMENDATION Staff recommends that the City Council ratify the Lease Assignment and Amendment Agreement, and approve the Transfer Agreement and the Restated and Amended Purchase and Sale Agreement for the Sequoia Brewery property. EXECUTIVE SUMMARY In April 2022, the City Council approved a purchase and sale agreement with J&A Mash & Barrel as part of the purchase of the Tower Theatre subject to compliance with the Surplus Land Act (SLA). The Sequoia Brewery property is being sold by the City based on the terms of the lease that was upheld by the Court of Appeal in prior litigation involving the Sequoia Brewery and the former owner of the Tower Theatre. The City has complied with the SLA requirements to sell the property in accordance with updated SLA regulations that went into effect on January 1, 2024. On August 8, 2025, the California Department of Housing and Community Development (HCD) issued a letter to the City with HCD's final determination that the subject property is "exempt surplus land" under the SLA. BACKGROUND Original Purchase and Sale Agreement (PSA) In April 2022, the City Council approved a purchase and sale agreement (PSA) with J&A Mash & Barrel as part of the purchase of the Tower Theatre subject to compliance with the Surplus Land Act (SLA). The PSA also includes a leasehold interest between J&A Mash & Barrel and the City of Fresno. J&A Mash & Barrel is in breach of the lease and desires to transfer its leasehold interest and its interest under the PSA to J&A Mash No More, and unrelated third party. However, the transfer and assignment are subject to the City's consent. Staff recommends that the Council ratify the Lease Assignment Agreement, and approve the Transfer Agreement and Amended PSA thereby consenting to the assignment of both the leasehold interest and the PSA. The City Manager authorized the Lease Assignment Agreement on October 23, 2025 in an effort to allow the new owners group access to the property to prepare for the reopening of Sequoia Brewery. The PSA is consistent with the terms of the lease that was upheld by the Court of Appeal in prior litigation involving the Sequoia Brewery and the former owner of the Tower Theatre, and is pursuant to the terms of the negotiated Transfer Agreement. Payment of Transfer Amount The Transfer Agreement requires that J&A Mash & Barrel pay a transfer amount to the City in accordance to the PSA terms which specify the remaining lease payments plus insurance and possessory taxes, plus the increased default amounts incurred as a result of the breach: Remaining lease payments $911,284.79 Insurance and possessory taxes* 16,200.00 Interest and penalties* 55,317.67 Total Transfer Amount* $982,802.46 *As of October 2025; amount will increase by increased default amounts for every month thereafter. Surplus Land Act (SLA) Compliance The City has complied with the SLA requirements to sell the property in accordance with updated SLA regulations that went into effect on January 1, 2024. On August 8, 2025, the California Department of Housing and Community Development (HCD) issued a letter to the City with HCD's final determination that the subject property is "exempt surplus land" under the SLA. ENVIRONMENTAL FINDINGS The operations of the brewery/restaurant will be the same as before. As such, CEQA is not applicable. LOCAL PREFERENCE Local preference is not applicable. FISCAL IMPACT No fiscal impact is anticipated beyond the proceeds for the sale of the property, estimated at $982,802.46 as of October 2025, (amount will increase by the increased default amounts for every month thereafter). Attachments: Lease Assignment Agreement Transfer Agreement Restated and Amended Agreement HCD's approval letter under SLA