HomeMy WebLinkAboutCC AG PKT 2002-06-05 Supplemental - Lease Agreement Addendum for River's End CafeJune 5, 2002
Mr. Michael Balchin
River's End Cafe
15 First Street
Seal Beach, California 90740
Dear Mr. Balchin,
Forwarded is a fully executed copy of the First Amendment to
the Lease Agreement between the City of Seal Beach and
yourself for the operation of River's End Cafe. The
Amendment was approved by the City Council at their regular
meeting of May 28th.
very truly yours,
Joanne M. Yeo, City Clerk
City of Seal Beach
Encl.
AGENDA REPORT
DATE:. May 28, 2002
TO: Honorable Mayor and City Council
THRU: John B. Bahorski, City Manager
FROM: June Yotsuya, ACM
SUBJECT: FIRST ADDENDUM TO LEASE AND OPERATING
AGREEMENT BETWEEN CITY OF SEAL BEACH AND
MICHAEL E. BALCHIN (RIVER'S END CAFE, 15 FIRST
STREET, SEAL BEACH 90740)
SUMMARY OF REQUEST
City Council to approve a first addendum to the lease and operating agreement between City of
Seal Beach and Michael E. Balchin, owner of River's End Caf6 located on City-owned property
at 15 First Street.
DISCUSSION
In 1996, Mr. Balchin entered into a lease and operating agreement with the City to operate a
business currently known as River's End Cafi at City-owned premises on the beach at First
Street. At that time, the prior tenant had defaulted on a lease agreement and the premises had
fallen into disrepair. Under the new agreement, Mr. Balchin refurbished the building and was
required to maintain it as well as the other buildings and grounds in the complex. Rent paid to
the City was set at 6% of gross proceeds, with a minimum of $6,000 per year during the five -
year tern of the lease.
The lease and operating agreement expired on April 30, 2001 and the tenant has been operating
his business on a month-to -month tenancy. The City's property management company, Bancap
Investment Group was directed by City Council to negotiate new terms of agreement to continue
the operation of River's End Caf i at its present location.
The following terms have been negotiated and agreed upon by Mr. Michael E. Balchin
Agenda Item
May 28, 2002
City Council Agenda Report — Lease and Operating Agreement for City-Owned Property at 15
First Street
Page 2
FISCAL IMPACT
The tenant operates a business on City-owned property and provides rental income for its use.
Approval of the addendum to the original agreement will ensure continued rental income for an
additional five years with the new minimum annual rent of $9000 to increase based on the scale
provided in the above table.
In the original agreement the tenant paid the City not less than $6000 annually. The new terms
of agreement will ensure that the City will receive at a minimum not less than $3000 more
annually.
Five -year term ending on April 30, 2001,
Five year extension from May 1, 2002 to
Terms
renewable for additional five years upon
April 30, 2007
mutual agreement between City and tenant
Annual
Minimum annual rent of $6,000 or 6% of
Minimum annual rent of $9,000 that
Rent
gross proceeds whichever is greater
shall increase throughout the term of
agreement as follows: 2003/04- $10,000;
2004/05- $11,000; 2005/06- $12,000;
2006/07- $13,500 and percentage rent of
7% on beer and wine only
Provision
No beer, wine or other intoxicating
Tenant shall be allowed to pursue a
to serve
beverages shall be sold from premises
conditional use permit to serve beer and
alcohol
-
wine only on premises
Hours of
6/1 thru 9/15 — 7 a.m. until at least 3 p.m.
Tenant shall confine to operate
operation
daily, no later than sundown and at tenant's
premises daily from 7 a.m. to 3 p.m. but
discretion, operate premises on same basis
may extend the hours until 8 p.m.
during balance of year
Customer
Tenant to pay City 50% of the fee City sets
City agrees to credit tenant 50% of each
parking
for the first one hour of customer parking
customer parking validation up to a
maximum of $1.00 (50 cents per credit
per customer) against percentage rent
All other terms of original agreement shall
remain in force
FISCAL IMPACT
The tenant operates a business on City-owned property and provides rental income for its use.
Approval of the addendum to the original agreement will ensure continued rental income for an
additional five years with the new minimum annual rent of $9000 to increase based on the scale
provided in the above table.
In the original agreement the tenant paid the City not less than $6000 annually. The new terms
of agreement will ensure that the City will receive at a minimum not less than $3000 more
annually.
May 28, 2002
City Council Agenda Report — Lease and Operating Agreement for City -Owned Property at 15
First Street
Page 3
It is recommended that the City Council approve the first addendum to the lease and operating
agreement between the City of Seal Beach and Michael E. Balchin, owner of River's End Cafe
located on City-owned property at 15 First Street, for an additional period of five years from
May 1, 2002 to April 30, 2007.
SUBMITTED BY:
John
Attachments: First Addendum to Lease and Operating Agreement
Original Lease and Operating Agreement
FIRST ADDENDUM TO LEASE AGREEMENT
THIS ADDENDUM TO LEASE AGREEMENT is entered into by and between the City of Seal
Beach ( "City"), and Michael E. Balchin ( "Tenant "), this 1" day of May. 2002.
WHEREAS, on or about April 22.1996, City and Tenant entered into a Lease and Operating
Agreement ( "Lease ") whereby Tenant agreed to lease from City those certain Premises commonly
described as the concession building located in the City's First Sheet Beach Complex, where Tenant
operates the River's End (patio cafe on the beach).
WHEREAS, City and Tenant desire to modify, alter or amend certain provisions of said Lease as
set forth in this Addendum:
NOW THEREFORE, City and Tenant agree as follows:
1. Tenant agrees to extend their Lease from May 1, 2002 to April 30, 2007.
2. The Minimum Annual Rent for the Premises shall be Nine Thousand Dollars ($9,000),
payable in installments of Seven hundred fifty dollars ($750) per month. The Minimum
Annual Rent shall increase throughout the term as follows:
May 1, 2003 to April 30, 2004 $10,000
May 1, 2004 to April 30, 2005 $11,000
May 1, 2005 to April 30, 2006 $12,000
May 1, 2005 to April 30, 2007 $13,500
3. Tenant shall continue to operate the premises daily from 7am to 3pm but may extend the
boors until Spm.
4. Tenant shall be allowed to pursue a conditional use permit to serve beer and wine (only)
on the premises.
5. Percentage rents for beer and wine (only) shall be seven percent (7 %).
6. City agrees to credit Tenant fifty percent (50 %) of each customer parking validation up
to a maximum of $1.00 (50 cents per credit per customer) against percentage rent.
Except as expressly modified, altered or amended by this Addendum, all other terms,
conditions, and covenants of said Lease shall remain in full force and effect.
LESSOR
City of Seal Beach
BY: cJbH -a) 4: a„/�
Mayor
Date: OS 1 7,e I&L
TENANT
Michael E. Balchin
Michael E. Balchin
Date: _/ZZldj
LEASE AND OPERATING AGREEMENT
�
I
THIS LEASE AND OPERATING AGREEMENT ("Lease") is made this /
day of April, 1996, by and between the CITY OF SEAL BEACH ( "City ") and MICHAEL E.
BALCHIN ( "Tenant ").
1. LEASE OF PREMISES
City hereby leases to Tenant/ and Tenant hereby leases from City that certain
concession building ( "the Premises "), located in City's First Street Beach Complex, as shown
on Exhibit A attached hereto and by this reference made a part hereof.
The Premises are accepted as is and where is by Tenant subject to any and all
existing easements and encumbrances. City reserves the right to install, lay, construct, maintain,
repair, and operate such sanitary sewers, drains, storm water sewers, pipelines, manholes, and
connections; water, oil, and gas pipelines; telephone and telegraph power lines; and the
appliances and appurtenances necessary or convenient in connection therewith, in, over, upon,
through, across, and along the Premises or any part thereof, and to enter the Premises for any
and all such purposes. City also reserves the right to grant franchises, easements, rights of way,
and permits in, over, upon, through, across, and along any and all portions of the Premises.
No right reserved by City in this clause shall be so exercised as to interfere unreasonably with
Tenant's operations hereunder or to impair the security of any secured creditor of Tenant.
City agrees that rights granted to third parties by reason of this clause shall
a contain provisions that the surface of the land shall be restored as nearly as practicable to its
., original condition upon the completion of any construction. City further agrees that should the
n exercise of these rights temporarily interfere with the use of any or all of the Premises by
Tenant, the rental shall be reduced in proportion to the interference with Tenants use of the
Premises.
2. TERM
The term of this Lease shall be five (5) years, commencing May 1, 1996, and
ending April 30, 2001. The Lease may be extended for an additional five (5) years upon mutual
agreement by the City and Tenant. If at any time prior to April 30, 2001, when Tenant is not
in material breach of Tenant's obligations under this Lease, the City desires to enter into a lease
of the Premises with a third party for the period after expiration or termination of this Lease,
the City shall provide Tenant with a copy of the principal terms of the new lease which the City
is willing to enter into. If, within thirty (30) days after such terms are submitted to Tenant,
Tenant indicates in writing his acceptance of such terms, the parties shall enter into a new lease
containing the specified terms. If Tenant does not timely accept the proposed terms, the City
} -I-
,� WP57 \F:U..WAC..tr Ct\1A8.h
may enter into a new lease for the period after expiration or termination of this Lease with any
third party, so long as the terms of the new lease are not in the aggregate materially more
favorable to the new tenant than the terms proposed to Tenant.
3. USES AND SERVICES
3.1. Required Uses and Services: City's primary purpose for entering into this
Lease is to promote the development of facilities and provide the following services at the First
Street Beach Complex: Prepared food and beiverage sales (sale of a limited line of food products
for breakfast and lunch services plus additional limited snack items at walk -up window).
3.2. Permitted Uses and6ervices. Subject to the prior written approval of City,
Tenant may at Tenant's option provide additional services and uses which are ancillary to and
compatible with the required services and uses herein and which will not conflict with the
public's use and enjoyment of the beach.
3.3. Restricted Use. The above -fisted services and uses, both requited and
optional, shall be the only services and uses permitted. Tenant agrees not to use Premises for
any other purpose nor to engage in or permit any other business activity within or from the
Premises. NO BEER, WINE, OR OTHER INTOXICATING BEVERAGES SHALL BE SOLD
FROM THE PREMISES.
No coin- operated vending machine or other device shall be maintained on the
Premises without the express written permission of City.
4. RENT
a 4.1. Annual Renml. Tenant shall pay to City as annual rent for each accounting
year during the term, without deduction, setoff, prior notice, or demand, either the Minimum
Annual Rental (as defined in §4.2) or the Percentage Rental (as defined in §4.3), whichever is
greater.
4.2. Minimum Annual Rental. During the term of this Lease, the minimum
annual rental for the Premises shall be six thousand dollars ($6,000). For any period during the
term of less than a full accounting year, the applicable minimum annual rental shall be prorated
based on 12 -month years and 30-day months. The portion of Minimum Annual Rental for the
period prior to July 1, 1996, shall be waived.
WP51\F:Us rs \G \Co==t \t Stach 2
4.3. Percentage Rental.
4.3.1 Required and Permitted Uses. Percentage rental for the Premises
shall be six percent (6%) of gross receipts from business operations conducted on or from the
Premises pursuant to §3.1. Percentage rental rates for other uses and services for which Tenant
has obtained prior written approval from City under §3.2 shall be established by City.
4.3.2 Non- Rermitted Services and Uses. Percentage rental for the
Premises shall be calculated using 30nk of gross receipts from business operations conducted on
or from the Premises in violation of §3.3. qbe payment or receipt of rent under this section
does not authorize a particular service or use, does not cure or waive any breach caused by such
service or use, and shall not limit or diminish any rights or remedies of City to require
termination of such service or use.
4.3.3. Definition of Gross Receigts. As used in this Section 4.3, the term
"Tenant" shall include Tenant, Tenant's agents, sublessees, concessionaires or licensees, or any
person acting under contract with Tenant. The term "gross receipts" upon which percentage
rentals are to be based shall include:
4.3.3.1. The sale price of all goods, wares, merchandise, and
products sold on or from the Premises by Tenant, whether for cash or credit and whether
payment is actually made or not;
4.3.3.2. The charges made by Tenant for the sale or rendition on
or from the Premises of services of any nature or kind whatsoever, whether for cash or credit
and whether payment is actually made or not;
4.3.3.3. All admission, entry, rental, and other fees of any nature
or kind charged by Tenant (including but not limited to deposits accepted by Tenant);
4.3.3.4. The fair rental value of facilities used by Tenant or his
employee for purposes other than the business purposes for which the Premises are leased.
Gross receipts shall exclude all sales and excise taxes payable by Tenant to
federal, state, county, or municipal governments as a direct result of operations under this
Lease. Refunds for goods returned and deposits shall be deducted from current gross receipts
upon return, Bad debt losses shall not be deducted from gross receipts.
4.3.4. Records. Tenant shall, at all times during the term of this
agreement, keep or cause to be kept we and complete books, records, and accounts of all
financial transactions in the operation of all business activities, of whatever nature, conducted
WP51TF Users \MCon"a\1 13ch 3
in pursuance of the rights granted herein. The records must be supported by source documents
such as sales slips, cash register tapes, purchase invoices, or other pertinent documents.
Except as otherwise provided herein, all retail sales and charges
shall be recorded by means of cash registers or other comparable devices which display to the
customer the amount of the transaction and automatically issue a receipt. The registers shall be
equipped with devices which lock in sales totals and other transaction records, or with counters
which are not resettable and which record transaction numbers and sales details. Totals
registered shall be read and recorded at the beginning and end of each day. In the event of
admission charges or rentals, Tenant shall issue serially numbered tickets for each such
admission or rental and shall keep an adequate record of said tickets, both issued and unissued.
All retail sales and charges may be recorded by a system other than cash registers or other
comparable devices provided said system is approved by City.
4.3.5 Accounting Yeaz. The accounting year shall be twelve full calendar
months. The accounting year may be established by Tenant, provided Tenant notifies City in
writing of the accounting year to be used. Said accounting year shall be deemed to be approved
by City unless City has objected to Tenant's selection in writing within sixty days of Tenant's
written notification. In the event Tenant fails to establish an accounting year of its choice,
regardless of the cause, the accounting year shall be synonymous with the twelve -month period
contained in the first one -year term of the Lease. Any portion of a year that is not reconciled,
should the accounting year and the anniversary year of the lease commencement not be the same,
shall be accounted for as if it were a complete accounting year.
Once an accounting year is established, it shall be continued through
the term of the lease unless City specifically approves in writing a different accounting year.
w, City shall only approve a change in accounting years in the event of undue hardship being placed
'+ on either the Tenant or City, and not because of mere convenience or inconvenience.
4.3.6. Financial Statements. Within ninety days after the end of each
accounting year, Tenant shall at Tenant's expense submit to City a balance sheet and income
statement prepared or audited by a Certified Public Accountant, reflecting business transacted
on or from the Premises during the preceding accounting year. The Certified Public Accountant
must attest that the balance sheet and income statement submitted are an accurate representation
of Tenant's records as reported to the United States of America for income tax purposes. At
the same time, Tenant shall submit to City a statement certified as to accuracy by a Certified
Public Accountant wherein the total gross receipts for the accounting year are classified
according to the categories of business established for percentage rental. All Tenant's books of
account and records related to this Lease or to business operations conducted within or from the
Premises shall be kept and made available at one location within the limits of the County of
Orange. City shall, through its duly authorized agents or representatives, have the right to
examine and audit said books of account and records at any and all reasonable times for the
-4-
WP51 \F:U..r G \Contract \l smch
purpose of determining the accuracy thereof, and of the monthly statements of sales made and
monies received. The cost of said audit shall be borne by City unless the audit reveals a
discrepancy of mom than two percent between the rent due as reported by Tenant in accordance
with this Lease and the rent due as determined by said audit. In the event of a greater
discrepancy, the full cost of the audit, as determined by the City, shall be paid by Tenant.
Upon the request of City, Tenant shall promptly provide, at Tenant's expense,
necessary data to enable City to fully comply with any and every requirement of the State of
California or the United States of America for information or reports relating to this Lease and
to Tenant's use of the Premises. Such data( shall include, if required, a detailed breakdown of
Tenant's receipts and expenses.
4.4. Rent Payment Procedure
4.4.1. Payment of Rentals. On or before the twentieth day of each month,
Tenant shall render to City a correct statement of all applicable gross receipts for that portion
of the accounting year which ends with and includes the last day of the preceding calendar
month. The statement shall be signed by Tenant or his responsible agent under penalty of
perjury, and shall be in the form prescribed by City. Each statement shall indicate:
(1) The total gross receipts for said portion of the accounting
year, itemized as to each of the business categories for which a separate percentage rental rate
is established. A breakdown of the gross receipts of each business conducted on the Premises
must be attached to each statement where a reported business category is comprised of more than
one business operation;
k
° (2) The related itemized amounts of percentage rental computed
a. as herein provided and the total thereof;
(3) The total rental previously paid by Tenant for the accounting
year within which the preceding month falls; and
(4) The rental due for the preceding month.
Concurrently with the rendering of each monthly statement, Tenant shall pay the
greater of the following two amounts:
1. The total percentage rental computed for that portion of the
accounting year ending with and including the last day of the preceding month (Item (2) above),
less total rentals previously paid for the accounting year (Item (3) above), or
WP51 \F:Users \G \Contrut \15tBch 5
2. One- twelfth of the annual minimum rental, multiplied by the
number of months from the beginning of the accounting year to and including the preceding
month, less total rentals previously paid for the accounting year (Item (3) above).
4.4.2. Place of Payment and Filing. Rental payments shall be delivered
to, and statements required by this Lease shall be filed with the City of Seal Beach, Director of
Finance, at 211 8th Street, Seal Beach, CA 90740. The designated place of payment and filing
may be changed at any time by City upon ten days' written notice to Tenant. Rental payments
may be made by check made payable to the City of Seal Beach. Tenant assumes all risk of loss
if payments are made by mail. t
4.5. Late Charges. Ten§rtt acknowledges that late payment of rent will cause
City to incur costs not contemplated by this Lease, the exact amount of which will be extremely
difficult to ascertain, which costs include without limitation processing and accounting charges.
Accordingly, if any payment of rent is not received by City within ten (10) days after the due
date, then, without any requirement for notice to Tenant, Tenant shall pay to City a late charge
equal to 10% of the amount of the overdue payment. The parties agree that such late charge .
represents a fair and reasonable estimate of the costs City will incur by reason of late payment
by Tenant. Acceptance of the late charge by City shall not constitute a waiver of Tenant's
default with respect to the overdue amount, nor prevent City from exercising any of the other
rights and remedies available to City.
4.6. Interest on Unpaid Rent. In addition to late charges payable under §4.5,
any rent or other amounts payable under this Lease not paid when due shall bear interest at the
rate of 10% per annum from 30 days after the date due until paid. Acceptance of interest by
Landlord shall not constitute a waiver of Tenant's default with respect to the overdue amount,
nor prevent Landlord from exercising any of the other rights and remedies available to Landlord.
a
5. SECURITY DEPOSIT
A security deposit in the sum of Three Thousand Dollars ($3,000) shall be
provided to City by Tenant on or before May 1, 1996; the City shall not allow Tenant to take
possession of the Premises until the security deposit has been delivered. The security deposit
shall take one of the forms set out below and shall guarantee Tenant's full and faithful
performance of all the terms, covenants, and conditions of this lease.
5.1. Cash.
5.2. The assignment to Lessor of a savings deposit held in a financial institution
in Orange County acceptable to City. At the minimum, such assignment shall be evidenced by
the delivery to City of the original passbook reflecting said savings deposit and a written
assignment of said deposit to City in a form approved by City.
WP51 W:Use s \G \Conva tll afl.h 6
5.3. A Time Certificate of Deposit from a financial 'institution in Orange
County wherein the principal sum is made payable to City or order. Both the financial
institution and the form of the certificate must be approved by City.
5.4. An instrument or instruments of credit from one or more financial
institutions, subject to regulation by the state or federal government, pledging that funds
necessary to secure performance of the lease terms, covenants, and conditions are on deposit and
guaranteed for payment, and agreeing that said funds shall be trust funds securing Tenant's
performance and that all or any part shall bepaid to City or order upon demand by City. Both
the financial institution(s) and the form of the instrument(s) must be approved by City.
Regardless of the form in which Tenant elects to make said security deposit, all
or any portion of the principal sum shall be available unconditionally to City for correcting any
default or breach of this Lease by Tenant, Tenant's successors or assigns, or for payment of
expenses incurred by City as a result of the failure of Tenant, Tenant's successors or assigns,
to faithfully perform all terms, covenants and conditions of this Lease.
Should Tenant elect to assign a savings deposit to City, provide a Time Certificate
of Deposit, or provide an instrument of credit to fulfill the security deposit requirements of this
Lease, said assignment, certificate, or instrument shall have the effect of releasing the depository
or creditor therein from liability on account of the payment of any or all of the principal sum
to City or order upon demand by City. The agreement entered into by Tenant with a financial
institution to establish the deposit necessary to permit assignment or issuance of a certificate as
provided above may allow the payment to Tenant or order of interest accruing on account of said
deposit.
N, Tenant shall maintain the required security deposit throughout the lease term.
_< Failure to do so shall be deemed a default and shall be grounds for immediate termination of this
Lease.
The security deposit shall be rebated, reassigned, released, or endorsed to Tenant
or order, as applicable, at the end of the lease term, provided Tenant has fully and faithfully
performed each and every term, covenant, and condition of this Lease.
6. OPERATION OF THE PREMISES
6.1. R wired Hours of Operation. Tenant shall operate the Premises daily
from June 1st through September 15th annually from 7 a.m. until at least 3:00 p.m. At Tenant's
discretion, Tenant may operate the Premises on the same basis during the balance of the year.
WP53 TiU sins \G \Contract \1stBch 7
The Premises shall not at any time he open for business earlier than 7 a.m.
or later than sundown. No deliveries will be permitted in the public parking area after 12
o'clock noon.
6.2. Control of Hours procedures. and Prices.
Tenant shall at all times maintain a written schedule delineating the
operating hours and operating procedures fof each business operation on or about the Demised
Premises. A schedule of prices charged for all goods and/or services supplied to the public on
or from the Demised Premises shall also be maintained.
Tenant agrees that when alternate forms of packaging are available, only
items packaged in a manner most compatible with the goals of reducing litter and preserving the
environment shall be sold. Sale of beverages in pop -top cans or in non - returnable metal or glass
containers shall not be permitted.
Upon written request, Tenant shall furnish City a copy of said schedules
and procedures. Should City's authorized representative, upon review and conference with
Tenant, decide any part of said schedules or procedures is not justified with regard to fairly
satisfying the needs of the public, Tenant, upon written notice from City's authorized
representative, shall modify said schedules or procedures to the satisfaction of City.
If Tenant does not agree with the modifications required by City's
authorized representative, Tenant may appeal the matter to the City Council, whose decision
shall be final and conclusive. Tenant's failure to comply with the provisions of this clause shall
'v, constitute a material breach of this Lease and City may immediately terminate this Lease.
s
Primary consideration shall be given to the public's benefit in
_ implementing this clause. All prices charged for goods and/or services supplied to the public
on or from the Premises shall be fair and reasonable, based upon the following considerations:
A. The degree of public service involved in the sale of the goods
and /or service.
B. The market prices charged by other competing and /or comparable
businesses.
C. The reasonableness of the profit margin as related industry-wide.
WP5I \F:User9\G\COnvect \I stach g
Tenant agrees to operate and manage the services and facilities offered in
a competent and efficient manner at least comparable to other well managed operations of similar
type.
Tenant shall at all tunes retain active, qualified, competent, and
experienced personnel to supervise Tenant's operations and to represent and act for Tenant.
Tenant shall require its attendants and employees to be properly dressed,
clean, courteous, efficient, and neat in appearance at all times. Tenant shall not employ any
person(s) in or about the Premises who shall 6se offensive language or act in a loud, boisterous,
or otherwise improper manner.
Tenant shall maintain a close check over attendants and employees to
insure the maintenance of a high standard of service to the public. Tenant shall replace any
employee whose conduct is detrimental to the best interests of the public.
6.3 EMPLOYEE AND CUSTOMER PARKING. City shall develop a parking
fee schedule and procedure applicable to employees and customers. Tenant shall be issued two
parking permits at no additional charge. In addition, upon request of Tenant a maximum of
three parking permits will be issued to Tenant for employees of Tenant upon payment of the
City's standard annual or monthly fees. The identities of the persons using each of the permits
shall be provided to City, and each such person shall comply with the City's rules and
regulations for use of the permits and the parking areas.
For customers of Tenant's business, Tenant agrees to pay to City one half (50 percent) of the
e fee City sets for the first one hour of customer parking. For example, if the parking fee
4, established by City is $1 for the first hour, the fee paid by customer is reduced through a
+ customer validation procedure to 50 cents, with the City receiving a payment of an additional
50 cents from the Tenant (total received by City is one dollar); the validation payments from
Tenant to the City for each month shall be payable as additional rent not later than the twentieth
day of the following month. Parking validation will be limited to a maximum of one hour a day.
6.4. Unlawful Use. Tenant agrees no improvements shall be erected, placed
upon, operated, nor maintained within the Premises, nor any business conducted or carried on
therein or therefrom, in violation of the terms of this Lease, or of any regulation, order, law,
statute, bylaw, or ordinance of a governmental agency having jurisdiction.
6.4. Nondiscrimination. Tenant agrees not to discriminate against any person
or class of persons by reason of sex, race, color, creed, or national origin. Tenant shall make
its accommodations and services available to the public on fair and reasonable terms.
WP5I T:Users \G \Contract \I stlich 9
7. UTILITIES
Tenant shall be responsible for and pay prior to delinquency date all charges for
utilities supplied to the Premises.
8. IMPROVEMENTS AND ALTERATIONS
8.1. Alterations. Tenant shall not, without having first obtained the written
consent of City, construct alterations or changes to the Premises.
r
8.2. Strict Compliance with Plans and Specifications.
All alterations constructed by Tenant within the Premises shall be constructed and
maintained in strict compliance with said working drawings and any other drawings or plans and
specifications approved by the City.
8.3. Improvements to Become Property of City.
All improvements, exclusive of Trade fixtures, constructed or placed within the
Premises by Tenant must, upon completion, be free and clear of all liens, claims, or liability for
labor or material and shall become the property of City at the expiration of this Lease or upon
earlier termination hereof.
8.4. Mechanics Liens. Tenant shall at all times indemnify and save the City
and the Premises harmless from all liens, claims and stop notices for labor or materials in
a connection with construction, repair, alteration, or installation of structures, improvements,
equipment, or facilities within the Premises, and from the cost of defending against such claims,
+. including attorneys' fees.
In the event a lien or stop notice is imposed upon the Premises as a result of such
construction, repair, alteration, or installation, Tenant shall either
Record a valid Release of Lien, or
2. Deposit sufficient cash with City to cover the amount of the claim
on the lien in question and authorize payment to the extent of said deposit to any subsequent
judgment holder that may arise as a matter of public record from litigation with regard to
lienholder claim, or
3. Procure and record a bond in accordance with Section 3143, Code
of Civil Procedure, which frees the Premises from the claim of the lien and from any action
brought to foreclose the lien.
WP51 \F:U sccrs \G \Contract\ IStBch -10-
Should Tenant fail to accomplish one of the three optional actions within 15 days
after the filing of such a lien, the Lease shall be in default and shall be subject to immediate
termination.
9. MAINTENANCE OBLIGATIONS
9.1. City's Obligation s. City shall maintain or cause to be maintained,
including repair and replacement as necessary, the public roadways, and other City -owned
utilities within the First Street Beach Complex but outside the Premises. Except for said main
utility lines, City shall not be required to marintain, repair, or replace improvements constructed
within the Premises.
9.2. Tenant's Obligations. Tenant shall, to the satisfaction of City, maintain
the exterior of the concession building, including walls, roof, patio area, stairs, lights, public
restrooms and landscaping within the premises. Tenant shall keep and maintain the interior
surface of the concession building, all improvements, equipment including heating and air
conditioning, and fixtures constructed or made thereon in good condition and substantial repair.
It shall be Tenant's responsibility to take all steps necessary or appropriate to maintain such
standard of condition and repair. Tenant expressly agrees to maintain the Premises in a safe,
clean, wholesome, and sanitary condition, to the complete satisfaction of City and in compliance
with all applicable laws. Tenant agrees to keep the Premises and the immediate surrounding
area free and clear of rubbish and litter. Tenant also shall be responsible for removal of trash
in the concession building trash containers furnished by City. City's contract disposal company
will place a trash bin at the location and Tenant shall pay all charges for trash service. City
shall have the right to enter upon and inspect the Premises at any time for cleanliness and safety.
Tenant shall designate in writing to the City an on -site representative who shall be responsible
^t, for the day -to -day operation and level of maintenance, cleanliness, and general order.
n
' 9.3. City's Right to Repair. If Tenant fails to maintain or make repairs or
replacements as required herein, City may notify Tenant in writing of said failure. Should
Tenant fail to correct the situation within a reasonable time thereafter, as established by City,
City may make the necessary correction and the cost thereof, including but not limited to the
cost of labor, materials, and equipment and administration, shall be paid by Tenant as additional
rent within 10 days of receipt of statement of said cost from City. City may, at its option,
choose other remedies available herein, or by law.
10. DAMAGE TO OR DESTRUCTION OF IMPROVEMENTS
10.1. Tenant - Constructed Improvements. In the event of damage to or
destruction of Tenanbconstmcted improvements located within the Premises or in the event
Tenant - constructed improvements located within the Premises are declared unsafe or unfit for
use or occupancy by a public entity with the authority to make and enforce such declaration,
11_
W P51 \F: U sers \G \Contrmtl 1 acB<h
Tenant shall, within thirty (30) days, commence and diligently pursue to completion the repair,
replacement, or reconstruction of improvements necessary to permit full use and occupancy of
the Premises for the purposes required by this Lease. Repair, replacement, or reconstruction
of improvements within the Premises shall be accomplished in a manner and according to plans
approved by City.
10.2. Existing Improvements. In the event of damage to or destruction of
improvements located within the Premises existing on the date of this Lease City shall, within
thirty (30) days, elect to either (1) terminate this Lease, or (2) commence and diligently pursue
to completion the repair, replacement, or rectonstruction of improvements necessary to permit
full use and occupancy of the Premises for the purposes required by this Lease. Repair,
replacement, or reconstruction shall be accomplished in a manner and according to plans
approved by City.
This Lease shall remain in full force and effect during repair, replacement or
reconstruction of said improvements. Tenant shall, however, be entitled to a reduction of
minimum rent while repair, replacement or reconstruction is under way. Such reduction shall
be proportionate to the interference of said damage, destruction, repair, replacement or
reconstruction with Tenant's concession operation within the Premises.
11. INDEMNIFICATION; INSURANCE
11.1. Indemnification. Tenant agrees to accept the Premises in an "as -is"
condition and shall indemnify and save harmless City, its officers, agents, and employees, from
and against any and all claims, demands, loss, or liability of any kind or nature which City, its
;,officers, agents, and employees may sustain or incur or which may be imposed upon them or
any of them for injury to or death of persons, or damage to property as a result of, arising out
i of, or in any manner connected with this Lease or with occupancy and use of the Premises by
"Tenant, its officers, agents, employees, subtenants, licensees, patrons, or visitors.
11.2 Insurance. Tenant shall maintain insurance acceptable to City in full force
and effect throughout the term of this Lease. The policy or policies of insurance shall name City
as an additional insured and shall, as a minimum, provide the following forms of coverage in
the amounts specified:
11.2.1. Comprehensive Public Liability
(1) $1,000,000 bodily injury, each person;
(2) $1,000,000 bodily injury, each occurrence; and
(3) $150,OOO property damage.
wP5I T: U se s \G \Contractk I stBch -12
11.2.2. Fire and Extended Coverage. Not less than 90% of the cost of
replacement of all insurable improvements within the Premises. Water damage and debris
cleanup provisions shall be included.
Insurance shall be in force the first day of the term of this Lease.
Additional fire insurance in the amount stated above shall be in force upon the date of
completion of construction or installation of each major insurable improvement by Tenant.
Each policy of insurance shall contain the following clauses:
"IT IS AGREED THAT THIS POLICY SHALL NOT BE CANCEL i FT) NOR
THE COVERAGE REDUCED UNTIL THIRTY DAYS AFTER THE CITY OF
SEAL BEACH SHALL HAVE RECEIVED WRITTEN NOTICE OF SUCH
CANCELLATION OR REDUCTION. THE NOTICE SHALL BE SENT BY
CERTIFIED OR REGISTERED MAIL AND SHALL BE DEEMED
EFFECTIVE THE DATE DELIVERED, AS EVIDENCED BY PROPERLY
VALIDATED RETURN RECEIPT."
"THE INCLUSION HEREIN OF ANY PERSON OR ENTITY AS AN
INSURED SHALL NOT AFFECT ANY RIGHT SUCH PERSON OR ENTITY
WOULD HAVE AS A CLAIMANT HEREUNDER IF NOT SO INCLUDED."
Tenant agrees to deposit with Lessor, at or before the times at
which required to be in effect, certificates of insurance necessary to satisfy City that insurance
provisions of this Lease have been complied with and to keep such insurance in effect and the
certificates therefor on deposit with City during the entire term of this Lease.
t,. City shall retain the right at any time to review the coverage, form,
and amount of the insurance required hereby. If, in the opinion of City, the insurance
provisions in this Lease do not provide adequate protection for City and for members of the
public using the Premises, City may require Tenant to obtain insurance sufficient in coverage,
form, and amount to provide adequate protection. City's requirements shall be reasonable but
shall be designed to assure protection from and against the kind and extent of the risks which
exist at the time a change in insurance is required.
City shall notify Tenant in writing of changes in the insurance
requirements; and if Tenant does not deposit copies of acceptable insurance policies with City
incorporating such changes within sixty days of receipt of such notice, this Lease shall be in
default without further notice to Tenant, and City shall be entitled to all legal remedies.
The procuring of such required policy or policies of insurance shall
not be construed to limit Tenant's liability hereunder nor to fulfill the indemnification provisions
WP51 \F:Usa \G \ContracM aB6 -13-
and requirements of this Lease. Notwithstanding said policy or policies of insurance, Tenant
shall be obligated for the full and total amount of any damage, injury, or loss caused by
negligence or neglect connected with this Lease or with use or occupancy of the Premises.
Tenant shall carry worker's compensation insurance as required by
the laws of the State of California and a certificate of such insurance shall be filed with the City.
12. ASSIGNING, SUBLETTING, AND ENCUMBERING
12.1. General. Any mortgage, pledge, hypothecation, encumbrance, transfer,
sublease, or assignment (hereinafter in this clause referred to as "Assignment ") of Tenant's
interest in the Premises, or any part or portion thereof, shall first be approved in writing by
City, unless otherwise provided herein. City may withhold its approval in City's sole discretion.
Failure to obtain City's written approval of an Assignment will render such Assignment void.
Occupancy of the Premises by a prospective transferee, sublessee, or assignee before approval
of the transfer, sublease, or assignment by City shall constitute a breach of this Lease.
If the Tenant hereunder is a corporation or an unincorporated association or
partnership, the Assignment of any stock or interest in said corporation, association, or partner-
ship in the aggregate exceeding 25 % shall be deemed an assignment within the meaning of this
Lease.
Should City consent to any Assignment, such consent shall not constitute a waiver
of any of the terms, covenants, or conditions of this Lease. Such terms, covenants, or condi-
tions shall apply to each and every Assignment hereunder and shall be severally binding upon
each and every party thereto. Any document to mortgage, pledge, hypothecate, encumber,
w, transfer, sublet, or assign the Premises or any part thereof shall incorporate directly or by
? _ 5 reference all the provisions of this Lease.
12.2. Personal Information to be Supplied City. Tenant shall supply City with
the necessary information to conduct background investigations on all persons or firms that
Tenant proposes to sublet to or rent to, or that might establish rights to enter, occupy or
otherwise control the Premises by reason of agreements made by Tenant.
WP5I T: Us . \G \COnvatt \I sd5ch 14
13. TAXES AND ASSESSMENTS.
Tenant shall pay or cause to be paid, before delinquency, any and all tares and
assessments levied and assessed against its interest in the Premises, upon all Tenant's leasehold
improvements, equipment, furniture, fixtures, and any other personal property located in or on
the Premises, or which become a hen against the Premises or Tenant's interest therein or its
property. Tenant recognizes and understands that this Lease may create a possessory interest
subject to taxes levied upon such interest.
14. DEFAULT BY TENANT i
14.1. Tenant's Default. The occurrence of any one or more of the following
events shall constitute a default and breach of this Lease by Tenant: (a) The vacating or
abandonment of the Premises by Tenant; (b) The failure by Tenant to make any payment of rent
or any other payment required to be made by Tenant hereunder, as and when due, where such
failure shall continue for a period of three (3) days after written notice thereof by City to
Tenant; (c) The failure by Tenant to observe or perform any of the covenants, conditions or
provisions of this Lease to be observed or performed by the Tenant, other than described in
subsection (b), where such failure shall continue for a period of 30 days after written notice
thereof by City to Tenant; provided, however, that if the nature of Tenant's default is such that
more than 30 days are reasonably required for its cure, then Tenant shall not be deemed to be
in default if Tenant commences such cure within said 30 day period and thereafter diligently
prosecutes such cure to completion; (d) The making by Tenant of any general assignment or
general arrangement for the benefit of creditors; or unless prohibited by Bankruptcy Law or
other paramount law, the filing by or against Tenant of a petition to have Tenant adjudged a
.; bankrupt, or a petition or reorganization or arrangement under any law relating to bankruptcy
(unless, in the case of a petition filed against Tenant, the same is dismissed within 60 days); or
d the appointment of a trustee or a receiver to take possession of substantially all of Tenant's
' assets located at the Premises or of Tenant's interest in this Lease, where possession is not
restored to Tenant within 30 days; or the attachment, execution or other judicial seizure of sub -
stantially all of Tenant's assets located at the premises or of Tenant's interest in this Lease,
where such seizure is not discharged within 30 days.
14.2. Remedies on Default. In the event of any such default or breach by
Tenant, City may at any time thereafter, in its sole discretion, with or without notice or demand
and without limiting City in the exercise of a right or remedy which City may have by reason
of such default or breach, in addition to any other remedies available by law:
A. Terminate this Lease. All rights of Tenant and those who claim
under Tenant, stemming from this Lease, shall end at the time of
such termination; or
WP5I T:Usm \G \Contract \I stBch IS
B. At City's sole option, cure any such default by performance of any
act, including payment of money, and add the cost thereof, plus
reasonable administrative costs, to the rent.
15. HOLDING OVER
If Tenant shall with City's consent continue in possession of the Premises
after the expiration or termination of this Lease, such possession shall not be considered a
renewal of this Lease but a month- to-mouth tenancy, terminable on 30 days' notice given at any
time by either party, at a monthly rental equal to 150% of the monthly rental in effect
immediately prior to expiration or termination. All provisions of this Lease except those
pertaining to rent and term shall apply to the month -to -month tenancy.
16. REMOVAL, RESTORATION, AND OWNERSHIP OF IMPROVEMENTS
On the expiration or termination of this Lease, Tenant shall redeliver
possession of said Premises to City in substantially the same condition that existed immediately
prior to Tenant's entry thereon, reasonable wear and tear, damage by the elements, earthquakes,
acts of God, war and any act of war, excepted.
All buildings, improvements, and facilities, exclusive of trade fixtures,
constructed or placed within the Premises by Tenant must, upon completion, be free and clear
of all liens, claims, or liability for labor or material and at City's option shall become the
property of City at the expiration of this Lease or earlier termination thereof. City retains the
right to require Tenant, at Tenant's cost, to remove all Tenant improvements located on the
Premises at the expiration or termination thereof. _
a
17. DISPOSITION OF ABANDONED PERSONAL PROPERTY
If Tenant abandons the Premises or is dispossessed thereof by process of
law or otherwise, title to any personal property belonging to Tenant and left on the Premises 45
days after such abandonment or dispossession shall be deemed to have been transferred to City.
City shall have the right to remove and to dispose of such property without liability therefor to
Tenant or to any person claiming under Tenant, and shall have no need to account therefor.
18. QUITCLAIM OF TENANT'S INTEREST UPON TERNIINAT10N
Upon termination of this Lease for any reason, including but not limited
to termination because of default by Tenant, Tenant shall execute, acknowledge, and deliver to
City, within 30 days after receipt of written demand therefor, a good and sufficient deed
whereby all right, title, and interest of Tenant in the Premises is quitclaimed to City. Should
Tenant fail or refuse to deliver the required deed to City, City may prepare and record a notice
we5I kF:Us mrs G\ContractU stBch -16
reciting the failure of Tenant to execute, acknowledge, and deliver such deed and said notice
shall be conclusive evidence of the termination of this Lease and of all right of Tenant or those
claiming under Tenant in and to the Premises.
19. INSPECTION
City or its authorized representative shall have the right at all reasonable
times to inspect the Premises to determine if the provisions of this Lease are being complied
with.
20. SIGNS
Tenant shall not construct, maintain, or allow any sign upon the Premises except
as approved by City. Unapproved signs, banners, flags, etc., may be removed by City.
21. PERMITS AND LICENSES
Tenant shall be required to obtain any and all permits and /or licenses which may
be required in connection with the operation of the Premises as set out herein.
22. MISCELLANEOUS
22.1. Time. Time is of the essence of this Lease.
22.2. Amendments. This Lease sets forth all of the agreements and
ti understandings of the parties and any modification must be written and properly executed by
^c, both parties.
n
22.3. Notices. All notices pursuant to this Lease shall be addressed as set forth
below or as either party may hereafter designate by written notice and shall be sent through the
United States mail.
To: City TO: Tenant
City of Seal Beach Michael Balchin
211 Eighth Street 157 Savona Walk
Seal Beach, CA 90740 Long Beach, CA 90803
22.4. Successors in Interest. Subject to the provisions of this Lease regarding
Assignment, the terms, covenants, and conditions contained herein shall apply to and bind the
heirs, successors, executors, administrators, and assigns of all the parties hereto, all of whom
shall be jointly and severally liable hereunder.
WP51 \F: Users \G \Contract \l st&<h 17
22.5. Circumstances Which Excuse Performance. I
either party hereto shall be delayed or prevented from the performance of any act required
hereunder by reason of acts of God, restrictive governmental laws or regulations, or other cause
without fault and beyond the control of the party obligated (financial inability excepted),
performance of such act shall be excused for the period of the delay and the period for the
performance of any such act shall be extended for a period equivalent to the period of such
delay. However, nothing in this clause shall excuse Tenant from the prompt payment of any
rental or other charge required of Tenant, except as may be expressly provided elsewhere in this
Lease.
r
22.6. partial Invalidity. If any term, covenant, condition, or provision of this
Lease is held by a court of competent jurisdiction to be invalid, void, or unenforceable, the
remainder of the provisions hereof shall remain in full force and effect and shall in no way be
affected, impaired, or invalidated thereby.
22.7. Waiver of Rights. The failure of City to insist upon strict performance
of any of the terms, covenants, or conditions of this Lease shall not be deemed a waiver of the
right to require strict performance of all the terms, covenants, and conditions of the Lease
thereafter, nor a waiver of any remedy for the subsequent breach or default of any term,
covenant, or condition of the Lease.
22.8. Cost of Sustaining an Action for Breach or Default. In the event either
City or Tenant commences legal action against the other claiming a breach or default of this
Lease, the prevailing party in such litigation shall be entitled to recover from the other costs of
sustaining such action, including reasonable attorney fees, as may be fixed by the Court.
22.9. City's Approvals. Neither City's execution of this Lease nor any consent
a or approval given by City hereunder in its capacity as landlord shall waive, abridge, impair or
'otherwise affect City's powers and duties as a governmental body. Any requirements under this
Lease that Tenant obtain consents or approvals of City are in addition to and not in lieu of any
requirements of law that Tenant obtain approvals or permits.
IN WITNESS WHEREOF, the parties have executed this agreement the day and year
first above written.
MICHAEL E. BALCHIN ( "Tenant ")
WP51 \F:U se s \G \Convacl \I stBch 18
rl�
, W
4 ,ty Clerk
C�
CITY OF SEAL BEACH ( "Lessor ")
WP51T Umrs%MConmct \lstBch -19-
I