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HomeMy WebLinkAboutPublic Comment from Rosie Richie Kyle Brochard T 213.626.8484 350 South Grand Avenue F 213.626.0078 37th Floor E kbrochard@rwglaw.com Los Angeles,CA 90071 L AW rwglaw.com October 9, 2024 VIA ELECTRONIC MAIL Monte Cole mc@maddenjones.com Re: Beach House at the River v City of Seal Beach - Settlement Communication Dear Mr. Cole: I write in response to your September 5, 2004 letter and settlement proposal. As I mentioned in our call on September 19, the offer will be presented to the City Council for its consideration. However, I do not expect the offer will be well received by the City. The only thing Beach House offering the City is dismissal of its damages claims, for which Beach House previously demanded over$400,000. The City does not see Beach House's damages allegations as a credible liability, and with good reason. I would like to discuss realistic settlement terms. You and I both agree that it is in our clients' interests to settle the pending litigation. I understand that the Ms. Ritchie may have conveyed a modified settlement proposal involving below-market rate offers for space within the City Hall Annex and the City's Beach Yard, but I still see no basis for the City Council to accept a discount for use of public property. The Council will be discussing this case later this month, and I would like to present the best possible settlement proposal for the Council's consideration. If all the Council has to discuss is Beach House's last formal offer, I believe the meeting will be short and it will become significantly harder to resolve this case short of trial. We have spoken multiple times about what a settlement of this case could look like. As I have noted,the City will be entitled to recover its fees and costs to date, and will expect to do so. The City has already expended over$57,000 in costs and fees since Beach House initiated this litigation. That does not include the significant time and cost that went into responding to Beach House's actions prior to the lawsuit. The City will be entitled to recover its costs and fees as these were largely associated with the unpermitted storage container. (Seal Beach Municipal Code, § 7.40.010(b) ["prevailing party in an action ... to abate a public nuisance ... may recover its reasonable attorneys' fees"].) In San Francisco Orange County Temecula Central Coast Sacramento RI C H A R D S WATSON G E R S H O N f Mont€. Cole mc@maddenjones.com October 9, 2024 Page 12 denying Beach House's request for an injunction,the Court already noted it was prohibited from enjoining the City from abating the unpermitted storage container. If this litigation persists,the City will be forced to have the storage container removed and it will recover its fees and costs from Beach House. On the other hand, the contract between the parties does not contain an attorney's fee provision. As such, even if Beach House is somehow successful on some of its claims, it will have no way of recovering its fees and costs expended in doing so. Further, if Beach House wishes to keep the storage container, it will have to enter into an agreement with the City and pay rent. The market rate for a container of that size appears to be between $500 and $1,000 a month, and those units would lack the convenience of the current location. Beach House must pay a reasonable rate to retain access to the storage container. Anything less could be seen as an unlawful gift of public funds. (See San Vicente Nursery School v. Los Angeles County(1956) 147 Cal.App.2d 79, 80, 85-87 [private school's exclusive use of building and facilities in a public park "was an illegal diversion of the park"];Allen Hussey(1950) 101 Cal.App.2d 457, 473 [under market long-term lease for airport land by private individual to use for profit was void ab initio];Alameda County v. Ross (1939) 32 Cal.App.2d 135, 141-142 [County agreement to repair bridge used exclusively by private corporation was "illegal contribution of public funds"].) If Beach House offers to pay the City's legal fees ($57,000), and to lease the storage container for the going rate of$1,000 a month, I believe the City would agree to a dismissal of all claims between the parties, and not insist on Beach House maintaining the Restrooms that are identified in the Lease. Additionally, I believe the City would agree to work with the Beach House to identify a location for placement of the trash bins, and discuss what, if any improvements would need to be made to accommodate that move. I look forward to discussing this matter with you further on Friday at 1:30. Sincerely, /s/Kyle Brochard Kyle Brochard 57296-1172\3023504v3.doc WATSON GERSHON Montgomery Cole J J Direct:(562)594-1365 Telephone:(562)594-1360 Facsimile:(562)598-7041 Madden, Jones, Cole & Johnson Email:mc@maddenjones.com NV• • A PROFESSIONAL CORPORATION Reference No. 70954 October 25, 2024 Kyle Brochard Richards, Watson & Gerson 350 South Grand Avenue, 37th Floor Los Angeles, CA 90071 RE: The Beach House at the River, LLC Dear Mr. Brochard: In my letter of September 5, 2024, I outlined terms for a settlement of the litigation between The Beach House at the River, LLC ("The Beach House") and the City of Seal Beach (the "City"). In your response on behalf of the City on October 9, 2024, you stated that the only thing The Beach House was offering the City is dismissal of its damages claim and added that the City does not see those claims as a credible liability. You went on to state that the market rate for a container the size of the one that the City authorized The Beach House to place in the City public works yard was between $500 and $1,000 a month. Finally, you noted that the City has incurred legal fees in the litigation the $57,000. You concluded by proposing that if The Beach House agree to pay the City's legal fees in the amount of $57,000 and to lease the storage container at the high end of the market rate at $1,000 a month, the City would agree to dismiss of all claims, cease its efforts to require The Beach House to maintain the public restrooms that are outside of the lease premises, and agree to "work with The Beach House" to identify a location for placement of the trash bins. Anyone familiar with the history of the relationship between the City and The Beach House since the lease was signed in March 2018, knows that it has been a very contentious and difficult relationship. The primary antagonists in the relationship were Bryan Kyle and Jill Ingram. Bryan Kyle is no longer a member of The Beach House and Jill Ingram is days away from stepping down as City Manager for the City. The Beach House has become one of the top 25 sales tax revenue sources for the City and the prospect of having a mutually beneficial and cooperative relationship only enhances the City's revenues. The Beach House is willing to agree to pay $500 per month to maintain the storage in the City yard for the term of the lease. This is within the market rate you identified in your October 9th letter. The proposal that The Beach House pay the City's legal fees is problematic. The Beach House is already offering to waive all its damage claims, the most significant of which are the damages that The Beach House suffered by the City's failure to install permanent electrical panel in a timely and diligent manner. 3010 Old Ranch Parkway, Suite 450 Seal Beach, CA 90740 www.maddenjones.com October 25, 2024 Page 2 As the City is well aware, not only did the City fail to act diligently in installing the permanent electrical panel, they waited until The Beach House was months into construction to even start the installation and did not complete it until early December 2022. There is substantial evidence to support the fact that The Beach House incurred over $400,000 in damages due to the delay, including both the increased costs in trying to construct the restaurant with a temporary electrical panel and the delays in opening the restaurant, which has grossed between $320,000 and $450,000 per month since opening in December 2022. The Beach House has also been damaged by the City's willful breach of the clear and unequivocal lease term regarding the trash disposal for the restaurant. Exhibit B of the lease addresses that issue in one sentence, "Relocate trash area to neighboring City Beach Maintenance Yard." Pursuant to that term, the City demolished the trash enclosure that was on the restaurant premises and allowed The Beach House to dispose of its trash in the City Beach Maintenance Yard until the restaurant actually opened. The Beach House was forced to rent a trash bin which has been placed in the First Street parking lot which is problematic for several reasons. By preventing The Beach House from accessing the City yard for trash disposal as specified in the lease,the trash container in the First Street parking lot which The Beach House has been paying for since the restaurant has opened is regularly used by members of the general public and often filled to capacity. It is also important to keep in mind that there are many current and former employees who have reported that they are willing to testify about the number of times they were instructed by Jill Ingram to make things as difficult as possible for The Beach House. Many of them have noted that they were forced to do things that they knew were not right but they had no choice. This is the best time to bring lawsuit to a close, to end the acrimony and combative relationship between The Beach House and the City and to move forward with a mutually cooperative and beneficial relationship. Stated another way, its time to put a period on the past and start a new chapter. Very truly yours, MADDEN, JONES, COLE& JOHNSON a professional corporation JkAA Montgomery 4`* MC:tc FACILITY LEASE This FACILITY LEASE ("Lease") is dated as of March 12, 2018 and is entered into by and between the CITY OF SEAL BEACH, a California municipal corporation ("City"), and BAY CITY LLC, a California limited liability company ("Tenant"). RECITALS A. On or about March 10, 2008, City entered into a Facility Lease dated March 10, 2008 with Michael E. Balchin (the "Prior Lease Agreement") whereby City leased those certain premises at 15 First Street, Seal Beach, California commonly described as the concession building located in the City's First Street Beach Complex (the "Premises") for the operation of the River's End Café. B. The fixed term of the Prior Lease Agreement expired April 30, 2017 and is currently on a month-to-month tenancy. C. City and Tenant wish to enter into a new lease agreement with Tenant for the Premises, which are more particularly described on Exhibit"A". D. The City had a leasehold interest in the Premises under that certain Tidelands Lease dated June 22, 1967 which expired on June 22, 2016 and must be extended in order to permit this Lease to become effective. E. The City owns a parking lot near the Premises which is described on Exhibit "A" (the "Parking Lot") and public restrooms described on Exhibit "A" (the "Restrooms") and the City and Tenant desire to specify herein the rights and obligations of the City with respect to the Parking Lot and Bathrooms. NOW, THEREFORE, in consideration of the foregoing recitals and the mutual covenants herein, City and Tenant hereby agree as follows: Section 1. Possession; Delivery; Term Commencement 1.1 Termination of Existing Tenancy; Extension of Ground Lease. Tenant acknowledges that Michael Balchin is currently in possession of the Premises and that the Tidelands Lease needs to be extended for thirty (30) years. City will promptly give the current tenant a 30 day termination notice. If the current tenant does not timely vacate the Premises, City shall use reasonable efforts to cause the current tenant to vacate by commencing and diligently prosecuting an unlawful detainer proceeding. If City is unable to cause the current tenant to vacate the Premises by the date that is six (6) calendar months after the date of this Lease, or if City is unable to so extend the Tidelands Lease (to accommodate the term of this Lease) by the date that is six (6) calendar months after the date of this Lease, then Tenant may terminate this Lease by written notice to the other party. 1.2 Permits and Approvals. Tenant shall use diligent efforts to submit applications and other items and fees required for a liquor license, City approvals and permits for Tenant's improvements to the Premises and signs, any Coastal Commission approvals and permits -1- S7296-000l\21)9132v5.doc required for Tenant's improvements and signs (collectively, the "Permits"). City shall cooperate in good faith as the owner of the Premises in connection with all applications for liquor license and Coastal Commission approvals and permits. 1.3 Base Building Work. Upon the existing tenant's vacating the Premises and the extension of the Ground Lease, City shall diligently publicly bid and then diligently perform the work described on Exhibit "B" ("Base Building Work"). City shall obtain reasonable warranties for the Base Building Work (including a warranty for the roof, and a warranty for the HVAC) and shall assign them in writing to Tenant whereupon Tenant shall maintain the Base Building Work, including the new roof and new HVAC, in good condition and repair. 1.4 Delivery of Possession; Term Commencement Date. City shall deliver possession of the Premises to Tenant promptly after completion of the City Work, whereupon the term of this Lease shall commence (and City and Tenant shall comply with Section 10.8 below). The date of such delivery is hereinafter referred to as the "Commencement Date". 1.5 Condition of Premises. Tenant acknowledges that Tenant has had the opportunity to inspect the Premises and, subject to City's obligation to complete the City Work, Tenant accepts the Premises in their current "AS IS" condition, without representation or warranty, express or implied. 1.6 Certified Access Specialist. The following disclosure is required by law: "The Premises have not been inspected by a Certified Access Specialist (CASp). A Certified Access Specialist (CASp) can inspect the Premises and determine whether the Premises comply with all of the applicable construction-related accessibility standards under state law. Although state law does not require a CASp inspection of the Premises, the commercial property owner or lessor may not prohibit the lessee or tenant from obtaining a CASp inspection of the Premises for the occupancy or potential occupancy; of the lessee or tenant, if requested by the lessee or tenant. The parties shall mutually agree on the arrangements for the time and manner of the CASp inspection, the payment of the fee for the CASp inspection, and the cost of making any repairs necessary to correct violations of construction-related accessibility standards within the Premises." However, in that regard, the parties hereby agree that Tenant shall pay any such inspection fees and the cost of making any such repairs. Section 2. Rent, Utilities and Security Deposit 2.1 Rent. All sums payable by Tenant to City pursuant to this Lease shall be deemed rent. 2.2 Base Rent. Commencing on the date ("Rent Commencement Date") that is four(4) calendar months after the date on which the City delivers the Premises to Tenant with the Base Building Work completed, Tenant shall commence paying to City monthly base rent, in the amount of Six Thousand Seven Hundred and No/100 Dollars ($6,700.00), which shall be increased every two and one half years (i.e., every 30 months) (each, an "Adjustment Date") by the lesser of(i) five percent (5%); or (ii) the percentage increase in the CPI over such period, -2- S7296-0001\2119132v5.doc determined by comparing the latest CPI published at least one (1) month prior to the applicable Adjustment Date to the latest CPI published at least one (1) month prior to the previous Adjustment Date (or in the case of the first adjustment, published at least one (1) month prior to the Rent Commencement Date) ("Base Rent"). Base Rent shall be prorated for any partial month after the Rent Commencement Date and for any partial month at the end of the term. "CPI" shall mean the United States Department of Labor, Bureau of Labor Statistics' Consumer Price Index for All Urban Consumers for the Los Angeles-Anaheim-Riverside statistical area (CPI-U) (1982-84=100) the ("CPI"). Should the Bureau of Labor Statistics discontinue the publication of the CPI , or publish the same less frequently or alter the same in some other manner, then the most nearly comparable index or procedure as reasonably determined by Landlord, or substituted by the United States Department of Labor, Bureau of Labor Statistics, shall be substituted therefore. 2.3 Payments. All rent shall be paid in advance on or before the first day of each calendar month, without prior demand and without offset or deduction, to the City at 211 Eighth Street, Seal Beach, CA 90740 or to such other address as may be designated in writing by the City, except that the first partial month of Base Rent shall be paid promptly after the Rent Commencement Date. 2.4 Utilities. Tenant shall contract and pay for all utilities. 2.5 Security Deposit. Concurrently with Tenant's execution of this Lease, Tenant shall deposit with City the sum of$6,700.00, which shall be held by City as security for the faithful performance by Tenant of all the terms, covenants, and conditions of this Lease to be kept and performed by Tenant during the term hereof If Tenant defaults with respect to any provision of this Lease, City may(but shall not be required to) use, apply or retain all or any part of this Security Deposit for the payment of any amount which City may spend or become obligated to spend by reason of Tenant's default, or to compensate City for any other loss or damage which City may suffer by reason of Tenant's default. City shall not be required to keep the Security Deposit separate from its general funds, and Tenant shall not be entitled to interest on the Security Deposit. The Security Deposit or any balance thereof shall be returned to Tenant (or, to the last assignee of Tenant's interest hereunder) upon completion of the Base Building Work, Tenant's other improvement work, and the opening of the restaurant in the Leased Premises for business. If City transfers its interest in the Premises, City shall transfer the cash Security Deposit to City's successor in interest. TENANT HEREBY WAIVES THE PROVISIONS OF SECTION 1950.7 OF THE CALIFORNIA CIVIL CODE AND AGREES THAT THE FOREGOING PROVISIONS OF THIS SECTION SHALL GOVERN CITY'S USE AND RETURN OF THE SECURITY DEPOSIT. Section 3. Term 3.1 Initial Term. The term of this Lease shall continue from the Commencement Date until the date that is twenty(20)years thereafter, subject to Section 4 below. -3- S7296-0001\21 19132v5.doc Section 4. Tenant's Options to Extend 4.1 Options to Extend. Tenant shall have two (2) options to extend the term of this Lease each by giving City prior written notice of each extension at least six (6) months prior to the expiration of the then-current term. The first extension shall be for five (5) years, and the second shall extend this Lease to the date which is ninety (90) days prior to the expiration of the Ground Lease (as extended by 30 years under Section 1.1 above) 4.2 Extension Term Base Rent. The Base Rent for the first extension term shall be the then-Fair Market Rent, and such Base Rent shall thereafter be adjusted as set forth in Section 2.2 for the remainder of the first extension term and, if applicable, during the second extension term. As used herein, the term "Fair Market Rent" shall mean the fair market rent for the use of the Premises as a good quality beach restaurant as of the commencement of the applicable extension (i.e., the first extension and third extension), determined as follows. City shall notify Tenant in writing of City's determination of Fair Market Rent after Tenant exercises its extension option. If Tenant objects to City's determination, Tenant shall, within fifteen (15) days after delivery of City's notice to Tenant, notify City in writing of the specific reasons for Tenant's disagreement, whereupon City and Tenant shall meet and attempt to resolve such disagreement. If City and Tenant are unable to agree on the Fair Market Rent within twenty (20) days following Tenant's notice to City, then the Fair Market Rent shall be determined by an independent realtor in the manner provided below, and until the Fair Market Rent determination is completed, Tenant shall continue to pay to City the Base Rent in effect immediately prior to the extension. After such fair market determination is completed, Tenant shall promptly make payment to City for any underpayments owing for prior months. The process for determining the Fair Market Rent in the event of an aforesaid unresolved disagreement shall be as follows. An independent realtor with no less than seven (7) years of experience representing Citys and tenants in retail and restaurant leasing transactions in Los Angeles County, California chosen by City shall, in good faith, determine the Fair Market Rent for the Premises based on similar beach premises in the cities of Seal Beach, Long Beach and Huntington Beach leased for restaurant use ("First FMV Determination"), and City shall forward the resulting fair market determination to Tenant. If the First FMV Determination is unacceptable to Tenant, then Tenant shall so advise City in writing within ten (10) business days after the First FMV Determination is delivered to Tenant, and Tenant shall then have the right to engage an independent realtor with no less than ten (10) years of experience representing Citys and tenants in retail and restaurant leasing transactions in Los Angeles County to similarly determine, in good faith, the Fair Market Rent for the Premises, and the resulting fair market determination shall be delivered to City. If the Second FMV Determination is unacceptable to City, then City shall so advise Tenant within ten (10) business days after receipt of the Second FMV Determination, and the first independent realtor and second independent realtor shall then together choose a third independent realtor with no less than seven (7) years of significant experience representing Citys and tenants in retail and restaurant leasing transactions in Los Angeles County who shall -4- S7296.0001\21 19I32v5.doc similarly determine the Fair Market Rent for the Premises ("Third Appraisal") and shall send the resulting fair market determination to both City and Tenant. If the Third FMV Determination is greater than the highest fair market determination or lower than the lowest determination given by the first realtor and second realtor, then the Fair Market Rent shall be the average of the First FMV Determination and the Second FMV Determination. If the Third FMV Determination is not greater than the highest fair market determination nor lower than the lowest fair market determination by the first realtor and second realtor, then the Fair Market Value shall be the average of all three determinations. The cost of the First FMV Determination shall be borne by City. The cost of the Second FMV Determination shall be borne by Tenant. The cost of the Third FMV Determination shall be shared equally between City and Tenant. Section 5. Relationship of the Parties The only relationship created by this Lease is of that of lessor and lessee. Neither City nor any of its officers, employees, or agents shall have control over the means of service or means of production of Tenant or any of its officers, agents, or employees. Tenant is solely responsible for all aspects of its operations, including, without limitation, its use of the Premises. Tenant shall not, at any time or in any manner, represent that it or any of its officers, agents, or employees are in any manner agents or employees of City. Section 6. Use/Maintenance of Premises; Parking Lot; Signs. 6.1 Use. Tenant shall use the Premises primarily for a restaurant, but may also conduct ancillary uses permitted by applicable law, including the uses described in Section 6.2 below. 6.2 Music and Television. Tenant may install television monitors and play music on the Premises after having obtained all necessary City permits or approvals as required by the City's ordinances and policies as they currently exist or may hereafter be amended. 6.3 Maintenance. Tenant shall keep the interior of the Premises (including the Restrooms) and all fixtures therein in good condition and repair. City shall clean and maintain and repair the Parking Lot and the structural portions of the Premises (except for damage caused by Tenant). Maintenance of the roof and HVAC and other Base Building Work shall be governed by Section 1.3 above. 6.4 Compliance With Law. Tenant shall comply with all applicable laws and regulations, including the Americans with Disabilities Act and any improvements required thereby as a result of Tenant's improvements or use of the Premises as a business open to the public. 6.5 Preservation of Insurance. Tenant shall not commit any acts on the Premises, nor use the Premises in any manner that will cause the cancellation of any fire, liability, or other insurance policy maintained by City insuring the Premises or the improvements on the Premises. -5- S 7 29 6-000 112 I 1913 2 v5.do c 6.6 No Waste or Nuisance. Tenant shall not commit any waste or any public or private nuisance upon the Premises. 6.7 Legal Compliance. Tenant shall not violate any law, rule, or order of any federal, state, or municipal government or agency that may be applicable to use of the Premises. 6.8 Vacating Premises. On or before the expiration or earlier termination of this Lease, Tenant shall vacate the Premises, remove all of Tenant's personal property from the Premises, and leave the Premises in good order and repair. 6.9 Parking. Tenant acknowledges that the Parking Lot is open to the public and governed by a pay-to-park system. 6.10 Parking Lot Events. City shall cooperate in good faith with Tenant to: (i) coordinate City events in the parking Lot that City desires (including any events described in the following clause), (ii) schedule events in the Parking Lot for local organizations as proposed by Tenant in writing (including such organizations as the Lions Club, Ladies of the Evening ("LOTE"), LAEF, Navy Weapons Station, and Surfrider Foundation) on terms reasonably acceptable to City; and (iii) schedule funerals, weddings and other similar events that relate to such events at the Premises upon written request by Tenant but on terms reasonably acceptable to City. City shall use good faith attempts to waive or minimize parking costs for such special events. 6.11 Delivery Area in Parking Lot. Tenant acknowledges that a delivery area exists in the Parking Lot and is marked. City shall maintain said markings and not reduce or eliminate them. Tenant may use such area for deliveries. 6.12 Tenant Signs. Subject to applicable laws and permits, and City's approval thereof (not be unreasonably withheld) in its proprietary capacity as the landlord under this Lease, Tenant may, at its cost, install a sign for the restaurant on the roof of the Premises and signs for the restaurant on City property, replacing the previous tenant's signs, at the locations described on Exhibit "C". Section 7. Indemnity Tenant shall indemnify, defend and hold harmless the City, its governing board and commissions and the individuals thereof, and all its officers, agents, employees and representatives (collectively hereinafter referred to as the "City" in this Section 7) from and against any and all claims, demands, debts, liens, claims, losses, damages, liability, costs, expenses (including, but not by way of limitation, fees and costs actually incurred, whether or not litigation has commenced),judgments or obligations, action, or causes of actions whatsoever, for or in connection to any injury, damage or loss (including, but not limited to bodily injury, death, personal injury, property damage, violation of any applicable Municipal, County, State, and Federal laws and regulations, Court Rules or ordinances, or any other type of loss) sustained or claimed to have been sustained by any person or persons, or corporation, or public or private entity arising out of the performance or nonperformance of services, operations, duties, and other obligations of the Tenant, its officers, agents, employees, representatives, and subcontractors under this Lease. The provisions of this indemnification clause shall not be limited to the -6- S7296.000I\2 119 I32v5.doc availability or ability to collect insurance coverage, and shall survive the termination of this agreement. Section 8. Risk Management/Insurance Tenant shall follow the principles of a sound risk management program. Whenever possible, risk shall be avoided. Tenant, at its own expense, shall obtain and maintain in effect at all times during the term of this Lease, all insurance coverage related to every aspect of its use of the Premises. Tenant is responsible for securing and maintaining all insurance coverage to operate the restaurant pursuant to requirements of City, State, or Federal statutes. Tenant shall provide proof of general liability, workers compensation, vehicle, and other insurance to City before the commencement of the term and again prior to each anniversary of the commencement of the operating term. Tenant shall obtain and maintain general liability insurance of$2,000,000. City shall be named as additional insured. Section 9. Notices All notices and demands that may be required or permitted by this Lease must be made in writing. All notices and demands must be sent by national overnight delivery service (e.g., Federal Express) or certified U.S. mail, return receipt requested, to the addresses specified below, or to any other place that the respective party may from time to time designate in a notice to the other. City: City of Seal Beach 211 8th Street Seal Beach, CA 90740 Attn: City Manager Tenant: Bay City LLC 134'/2 Main Street Seal Beach, CA 90740 Attn: Bryan Kyle Section 10. Miscellaneous 10.1 Assignment. Tenant shall not assign this Lease or sublet the Premises without the City's prior consent, which shall be granted or withheld in the City's sole and absolute discretion. 10.2 Entire Agreement. This Lease contains the entire agreement between the parties hereto with respect to the subject matter hereof, and any other prior agreement or purported agreement made shall be ineffective to change, modify, discharge or effect an abandonment of this Lease in whole or in part unless such purported agreement is in writing and signed by the party against whom enforcement is sought. 10.3 Applicable Law. This Lease shall be governed and interpreted in accordance with the laws of the State of California. -7- S7296-0001\21 19132v5.doc 10.4 Brokers. City's broker is CBRE (James Lehigh) and Tenant's broker is Davco Realty Advisors. City will pay a leasing commission to City's broker pursuant to a separate written agreement between City and the City's broker. Tenant's broker will need to make arrangements with City's broker to share in such commission. Each party represents to the other that it has not engaged or used the services of any other broker, finder, or salesperson in connection with this Lease. 10.5 Counterparts. This Lease may be executed in multiple counterparts each of which shall be deemed an original for all purposes. 10.6 Time of Essence. Time is of the essence of every provision hereof in which time is a factor. 10.7 Possessory Interest Taxes. Tenant acknowledges that although City is exempt from property taxes, Tenant's leasehold interest under this Lease is subject to possessory interest taxes (a type of property tax assessed and billed directly to and payable by tenants who lease property from tax-exempt government entities) and that City is legally obligated to report possessory interest such as this Lease to facilitate the assessment of such taxes payable by the holders of the possessory interests. Tenant shall pay all such possessory interest taxes billed to Tenant by the County. 10.8 Memorandum of Lease. Promptly after the Commencement Date, City and Tenant shall execute, acknowledge and record a Memorandum of Lease in the form of Exhibit "D" (as required by law). 10.9 Defaults. Neither party shall be in "Default" under this Lease unless such party shall have failed to cure the default within (i) five (5) business days after written notice of the default from the non-defaulting party in the case of monetary defaults; or (ii) thirty (30) days after written notice from the non-defaulting party in the case of non-monetary defaults;provided, that if the non-monetary default reasonably requires more than 30 days to cure, the defaulting party shall not be in Default if it commences the cure within the 30 day period and thereafter diligently prosecutes the cure to completion. However, the foregoing shall not affect the right of either party to obtain injunctive relief for any default. Upon a Default by Tenant, City may terminate this Lease. Upon a Default by either party, the non-defaulting party shall have any of its rights and remedies under applicable law. City's default notices may be in the form required by the unlawful detainer statutes. 10.10 Proprietary Capacity. The City is executing this Lease in its proprietary capacity. Nothing in the Lease shall waive or alter the City's rights or powers in its governmental capacity. 10.1 l City Manager Authority. The City Manager of the City shall have the authority to issue consents, approvals and notices and make elections for City under this Lease provided they are in writing. IN WITNESS WHEREOF, the parties have executed this Lease as of the date first written above. -8- S7296-0001\21 19132v5.doc CITY: TENANT: CITY OF SEAL BE H BAY CITY LLC By: (Nk-I /I i k.� BY:JillR. I gram, City Manage 'ta) Y.t,IB Y e, Man ger and Member Attest: ---: 1,5 H*d/1id�.. r / ik f•--p7. /;tc.;1#,,, By: i at Robin L. Roberts, City Clerk , . % , Approved as to Form �1''*06iSt\' By: Craig teele, City Attorney -9- S7296-0001\2119132v5.doc EXHIBIT "A" DESCRIPTION OF PREMISES, PARKING LOT AND RESTROOMS (Attached.) S 7296-000 I 119132v5.doc EXHIBIT "B" DESCRIPTION OF BASE BUILDING WORK 1. Replace existing roof, including roof supports. 2. If necessary, install/repair electrical panels and breakers. 3. Replace existing HVAC and related vents. 4. Relocate trash area to neighboring City Beach Maintenance Yard. S7296-0001\21 19132v5.doc EXHIBIT "C" SIGN LOCATIONS Subject to applicable laws, Tenant shall replace the former Tenant's signs at: 1. First & Ocean. 2. Beach side of Premises on leased building. 3. At bike entry. S7296-0001\2119132v5.doc EXHIBIT "D" FORM OF MEMORANDUM OF LEASE (Attached.) S7296-000 I\21 19I32v5.doc RECORDING REQUESTED BY, AND WHEN RECORDED MAIL TO: City of Seal Beach 211 Eighth Street Seal Beach, CA 90740 Attn: City Clerk SPACE ABOVE THIS LINE FOR RECORDER'S USE The undersigned Landlord declares that this Memorandum of lease is exempt from Recording Fees pursuant to California Government Code Section 27383, and is exempt from Documentary Transfer Tax under Reserve and Taxation Code Section 11922. MEMORANDUM OF LEASE THIS MEMORANDUM OF LEASE (this "Memorandum") is dated as of_ March 12, 2018 and is entered into by and between the CITY OF SEAL BEACH, a municipal corporation ("Landlord') and BAY CITY LLC, a California limited liability company ("Tenant"). RECITALS A. Landlord and Tenant executed that certain Facility Lease dated March 12, 2018 (the "Lease") affecting the property in the City of Seal Beach, California(the"Property") located at 15 First Street. B. Landlord and Tenant now desire to record this Memorandum in order to, among other things, comply with law requiring that municipal leases be recorded, giving constructive notice of the existence of the Lease, and permitting the Tenant to obtain title insurance for its leasehold interest (if desired). AGREEMENT NOW, THEREFORE, in consideration of the foregoing recitals, and the covenants and conditions contained herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Landlord and Tenant hereby agree as follows: 4. Ground Lease. Landlord has leased the Property to Tenant, and Tenant has leased the Property from Landlord, upon and subject to the terms and conditions set forth in the Lease, which are hereby incorporated herein by this reference. 5. Term. The term of the Lease commenced on March 12, 2018 and expires twenty (20) years thereafter; provided, however, that the Tenant has two (2) options to extend the term, as more particularly described in the Lease. S7296-0001\21 I9132v5.doc IN WITNESS WHEREOF, Landlord and Tenant have executed this Memorandum as of the date and year first above written. LANDLORD: CITY OF SEAL BEACH, a municipal corporation By: I ' ` Trull Print : Jill R. Ingram Title: ity Manager TENANT: BAY CITY LLC ---) By: _ :3(?,\A le, M ager and Memb' [ALL SIGNATURES MUST BE DULY ACKNOWLE GED] S7296-OOO I\21 19132v5.doc CALIFORNIA ALL-PURPOSE ACKNOWLEDGEMENT A notary public or other officer completing this certificate verifies only the identity of the individual who signed the document to which this certificate is attached,and not the truthfulness,accuracy,or validity of that document. State of California ) County of Orange ) On Mach ILA afl\1 , before me, Robin Lynn Roberts (insert name aid ttitle of the officer) Notary Public, personally appeared /j'(0 '1' who proved to me on the basis of satisfactory evidence to be the person whose name) is/are subscribed to the within instrument and acknowledged to me that hefshetthey executed the same in his/hethheir authorized capacity(ies), and that by his/her/Their signatureC ) on the instrument the person), or the entity upon behalf of which the person( acted, executed the instrument. I certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing - - - S paragraph is true and correct.:' w, -RCOOMM. #20078 86 o�Ti i6 z t--: . ;.4;,`,.,. Notary Public•California c WITNESS my hand and official seal. z 47 COMM.ange County p.• '7eri.it9 , 111O A . 113 ',1 V Signature Seal) CALIFORNIA ALL-PURPOSE ACKNOWLEDGEMENT A notary public or other officer completing this certificate verifies only the identity of the individual who signed the document to which this certificate is attached,and not the truthfulness,accuracy,or validity of that document. State of California ) County of Orange • ��,,, ) On r V , before me Robin Lynn Roberts (inset{name and tac of thc officer) Notary Public, personally appeared <3\`\ Qn CQ 1 nC `(` \ , who proved to me on the basis of satisfactory evidence to be the person(54 whose name) is/are. subscribed to the within instrument and acknowledged to me thatfiefshe/t ey executed the same in his/her/their authorized capacity('iss), and that by-his/her/their signatures on the instrument the person or the entity upon behalf of which the person() acted, executed the instrument. I certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing paragraph is true and correct. WITNESS my hand and official seal. Signature U, .x Rte(Seal) ROBIN LYNN ROBERTS COMM. #2078186 z Nohlty Public • California oz z VrTi >/ range County 57296-0001\21 19I32v5.doc Comm, !Ir01180., 13 2018'