HomeMy WebLinkAboutCC AG PKT 2008-03-10 #G
AGENDA STAFF REPORT
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DATE:
March 10, 2008
TO:
THRU:
FROM:
Honorable Mayor and City Council
David Carmany, City Manager
June Yotsuya, Assistant City Manager
SUBJECT: Approval of River's End Restaurant Lease
SUMMARY OF REQUEST:
The City Council to approve a Resolution Approving the Lease Agreement
between the City of Seal Beach and Michael E. Balchin for the operation of
River's End, and authorizing the City Manager to execute the agreement.
BACKGROUND:
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The City of Seal Beach and Michael E. Balchin entered into a lease agreement in
1996 for the operation of River's End, a patio cafe on the beach in the
concession building located in the City's First Street Building Complex. Since
then, the City has approved a first addendum that extended his lease agreement
through April 30, 2007.
Last year, Mr. Balchin approached the City regarding several improvements that
he would like to do to the building and restaurant operation in addition to some
minor changes to his lease agreement. Several of the changes will require a
Change in Mr. Balchin's Conditional Use Permit. Presently, Mr. Balchin continues
to operate River's End on a month-to-month tenancy under the terms of the
existing agreement until new terms are approved.
The proposed lease will be for a term of five years with an option to extend the
agreement for an additional five-year pe~iod. The new lease also establishes a
new minimum annual rent that will steadily increase over the life of the
agreement. In regard to maintenance of the public restrooms directly adjacent to
the facility whereby Mr. Balchin will be responsible for daily maintenance and the
City would be responsible for equipment repair/replacement and graffiti removal.
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Mr. Balchin has expressed an interest in submitting a request to amend his
Conditional Use Permit (CUP) to permit extended hours until 10 p.m. The
Second Addendum contains language that wiIJ allow changes to hours of
operation if approved through the CUP process.
Agenda Item G
Page 2
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FINANCIAL IMPACT:
Based on the proposed minimum annual schedule, revenue will increase from
$14,000 the first year of the extension to $15,570 in five years, not including
additional revenue collected based on the percentage formula for gross receipts
and beer and wine sales.
RECOMMENDATION:
City Council to approve:
"A Resolution of the City Council of the City of Seal Beach, Califomia Approving
the Lease Agreement between the City of Seal Beach and Michael E. Balchin:
SUBMITTED BY:
NOTED AND APPROVED:
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David Carmany, Ci Manager
Attachments:
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A,
B.
D.
Original Lease Agreement
Proposed New Lease Agreement
Resolution Approving Agreement
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FIRST ADDENDUM TO LEASE AGREEMENT
THIS ADDENDUM TO LEASE AORBBMENT Is llIIlllI'ed into by IIId betweom the Clll DfS..1
Buell ("City"), and MlcluleI B. Bafcbln {"Tcnlllt"), thi.I x=.. day DfMav.1001.
WHEREAS. 011 Dr about ABril 11. 19941. City and Tenant IIIIIInd Into a Leu. and OpcratiJlS
AplDCllt ("Leasc") whnby TcDant agreed to lease from City those certain Premiaes commonly
described as the conelllsion buildiug located In !be City's 'Pint Street Beacb Complex, wllcl'Cl T/lDsat
o)ll!l'llw the River's hd (patio eD on !be beach).
WHEREAS. City and TClIII1Il daW to modify, alter or amend certain proviaions of said Lease as
set fortb in this Addendum:
NOW 'lHE\lJl'PORE, City and Tenant IIJI1lll as follows:
I. TlIIIlIIlt agrcea to cxtem1 tbeIr Laasc from May 1,1002 to Api'll 30. 1007 .
2. The Minimum AnDIIII Rent Cor the Pramiaca sbaU be Nina '1'hausu1d Dollars (59,IIIIll),
)lI3'Ible in inslalbpanls otSeVllllIumdrad fitly .doJJan (S7!O) per month. Tha Minimum
Annual Rent sbaU Increase lbroushoul tho tcnn as lo\1owr.
lIIay 1, 1003 to Aprt130, 1004
May 1,1004 to Aprt130, 2005
May 1,1005 to AprU 30, 2006
May 1, 2006 to April 30. 2007
510,000
511,000
Su,ooo
SI3,SOD
3.
Tenant shall coolinuo to operate the pICIDisca dally !'rom 7am to 3pm but DlIIY extend tho
houn unb18pm.
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4.
TenIDI shall be allowed to plmlue a conditional1l!le permillD serve beer and win. (only)
00 tho premises.
S. PerccnlBge rents for beer ani! wine (1IIl1y) sball be leven pcn:cnt (7%).
6. City 8SIIOI to Cftdit TllIIllIIt fifty percent (SO%) of each IlIIIloIIIcr parking valldslion up
to a muimum of'S1.00 (SO cob per medlt per CIIIlomer) spinsl plll'Ceotaae real.
Bxcapt as exprcaIy modified, altered Dr III7'eDdaft by thi.I Acldcndum, sU otbcr tcnns,
conditions, IIIld ClIYllIIllIIlI of said Lease shall_in In fid1 me and efIl:ct.
LESSOR
City of'Seal Beach
TENANT
Michael E. Balobin
Dale:
~,.t", &..1. lib,\,-
. -: . Mayor
/)~ 1~"'It!J.,
BY: /&;~
MicbaaI E. Ba1chin
Da1e: 4~;b~
BY:
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FACILITY LEASE
This Facility Lease Agreement ("Lease") is made as ofMarch---..J 2008 by and between
the City of Seal Beach, a California municipal corporation ("City"), and Michael E. Balchin
("Tenant").
RECITALS
WHEREAS, on or about April 22, 1996, City and Tenant entered into a lease and
operating agreement (the "Prior Lease Agreement") whereby City leased to Tenant those certain
premises commonly descnbed as the concession building located in the City's First Street Beach
Complex (the "Premises") for the operation of the River's End Cafe (the ''Cafe'');
WHEREAS, Tenant has continued to operate the Cafe since 1996; and
WHEREAS City and Tenant wish to enter into a new lease agreement to continue to
allow Tenant to operate the Cafe on the Premises.
NOW, THEREFORE, CITY AND TENANT AGREE AS FOLLOWS:
AGREEMENT
Section 1. Lease
1.1 City grants Tenant a lease to those certain premises commonly described as the
concession building located in the City's First Street Beach Complex (the ''Premises'') to operate
the River's End Cafe (the "Cafe") on the Premises in accordance with the terms and conditions
set forth herein. Tenant shall not use the Premises in any manner contrary to the terms of this
Lease without City's prior written consent.
Section 2. Rent
2.1 Rent. All sums paid by Tenant to the City pursuant to this Lease shall be deemed
rent.
2.2 Base Rent. Tenant shall pay to City an annual base rent (''Base Rent"), payable in
12 equal monthly installments in accordance with the "following schedule:
Period Base Rent Monthly Payment
5/1107 - 4/30/08 $14,000 $1,166.67
511/08 - 4/30/09 $14,420 $1,201.67
5/1109 - 4/3011 0 $14,850 $1,237.50
5/1110 - 4/30/11 $15,300 $1,275.00
511/11 - 4/30112 $15,750 $1,312.50
',2.3 Additional Rent. In addition to the Base Rent payable pursuant to Section 2.2,
Tenant shall pay to City additional rent ("Additional Rent") equal to: (a) 6% of the Cafe's gross
receipts and (b) 7% of the Cafe's gross sales of beer and wine.
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2.4 Rent Waiver. The City Manager shall have the authority to waive the Base Rent,
on a prorated basis, for every day that the Tenant cannot use the Premises for regularly scheduled
operations of the Cafe due to the City's planned reconstruction of the parking lot.
Section 3. Term
3.1 Original Term. The term of this Lease shall extend from the effective date of this
Lease until April 30, 2012 (the "Original Term").
Section 4. Tenant's Option to Extend
4.1 Option to Extend. If Tenant is in good standing during the final year of the
Original Term, he may exercise an option to extend the term of the Lease for up to 5 additional
years. In addition to paying Additional Rent pursuant to Section 2.3, Tenant shall pay to City
Base Rent in accordance with the following schedule:
Period Base Rent Monthlv Pavment
5/1/12 - 4/30/13 $16,225 $1,352.08
5/1/13 - 4/30/14 $16,712 $1,392.67
5/1/14 - 4/30/15 $17,213 $1,434.42
5/1/15 - 4/30/16 $17,730 $1,477.50
5/1/16 - 4/30/17 $18,261 $1,521.75
4.2 In order to exercise his option to extend the Lease pursuant to this Section 4,
Tenant must provide written notice to the City on or before March 31,2012. City and Tenant
shall thereafter execute an addendum to this Lease, memorializing the extended term.
Section S. Relationship ofthe Parties
5.1 The only relationship created by this Lease is of that oflessor and lessee. Neither
City nor any of its officers, employees, or agents sball have control over the means ofservice 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 of Premises
6.1 Hours of Operations. Tenant may operate the Cafe from 7:00 a.m until 8:00 p.rn.
Tenant may apply for a conditional use permit to allow operations until 10:00 p.rn. If such
conditional use permit is approved, the hours of operation permitted under this Section 6.1 shall
correspondingly and automatically be extended.
6.2 Music and Television. Tenant may install television monitors and play non-
amplified music on the Premises after having obtained all necessary City permits or approvals as
requir~ by the City's ordinances and policies as they currently exist or may hereafter be
amended.
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6.3 Maintenance of Premises. Tenant shall on a daily basis clean and maintain in a
manner presentable to the public, the public restrooms located on the Premises (the ''Public
Restrooms"). Tenant shall keep the interior of the Public Restrooms and the entirety of the
Premises free of graffiti The City shall be responsible fur repairs to the equipment in the Public
Restrooms, repair to any damage to the exterior of the Public Restrooms, and removal of any
graffiti on the exterior of the Public Restrooms.
6.4 No Unlawful Uses. Tenant agrees not to use the Premises fur any immoral or
unlawful purpose. Tenant shall comply with all Local, State, and federal ethics laws and
regulations.
6.5 Preservation ofInsurance. 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 insuring the Premises or the improvements on the Premises.
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 federa~
state, or municipal government or agency that may be applicable to use of the Premises.
6.8 Vacating Premises. On or before the effective date of 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, subject to the satisfaction of City.
Section 7. Indemnity
7.1 To the fullest extent permitted by law, Tenant shall indemnify, defend and hold
harmless the City, its governing board and conunissions and the individuals thereo 1; 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 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, fur 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
coIpOfBtion, or public or private entity arising out of the performance or nonperfurmance of
services, operations, duties, and other obligations of the Tenant, its officers, agents, employees,
representatives, and subcontractors \U1der this Lease. The provisions of this indemnification
clause shall not be limited to the availability or ability to collect insurance coverage, and shall
survive the termination of this agreement.
Section 8. Risk Management
.8.1 Tenant shall fullow 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 fur securing and maintaining all insurance
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coverage to operate the Cafe pursuant to requirements of City, State, or Federal statutes. Tenant
shall provide proof of general liability, workers compensation, vehicle, and other insurance to
City befure the commencement of the operating 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
9.1 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. mai~ retum 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 Manager City of Seal Beach
211 8th Street
Seal Beacb, CA 90740
Michael E. Balchin
157 Savona Walk
Long Beach, CA 90803-4135
Tenant:
Section.lO. Miscellaneous
10.1 Tenant hereby represents and warts that as of the date he signs this Lease; (a)
Tenant is not in default or breach of any of the terms, covenants, or conditions of any previously
existing lease of the Premises; and (b) Tenant has not committed any act or omission which, after
notice or the passage of time, or both, would constitute an event of default under any previously
existing lease of the Premises.
10.2 Assignment. Tenant shall not assign or sublet the Lease without the City's prior
consent, which shall be granted or withheld in the City's sole discretion.
10.3 Entire Agreement. This Lease, dated March ~ 2008 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.
10.4 Applicable Law. This Lease shall be governed and interpreted in accordance with
the laws ofthe State of California
10.5 No Brokers. Each party represents to the other that it bas not engaged or used the
services of any broker, finder, or salesperson in conn~ion with this Lease.
10.6 Counterparts. This Lease may be executed in multiple counterparts each ofwhich
shall be deemed an original fur all purposes.
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IN WITNESS WHEREOF, the parties have executed this Lease as of the date first
written above.
CITY OF SEAL BEACH
By:
TENANT
l"hdc~e/6~6
David Carmany, City Manager
Michael E. Balchin
Attest:
By:
Linda Devine, City Clerk
Approved as to Form:
By:
Quinn Barrow, City Attorney
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RESOLUTION NUMBER
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF SEAL
BEACH, CALIFORNIA APPROVING AN AGREEMENT
BETWEEN THE CITY OF SEAL BEACH AND MICHAEL E.
BALCHlN.
The City Council of the City of Seal Beach hereby resolves as follows:
Section 1. The City Council hereby approves the Agreement between City of
Seal Beach and Michael E. Balchln.
Section 2. The Council hereby directs the City Manager to execute the
Agreement with Michael E. Balchln.
PASSED, APPROVED, AND ADOPTED by the City Council of the City of Seal
Beach on the 10th day of March . 2008 by the fOllowing vote:
AYES:
NOES:
ABSENT:
ABSTAIN:
Council Members
Council Members
Council Members
Council Members
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Mayor
ATTEST:
City Clerk
STATE OF CALIFORNIA )
COUNTY OF ORANGE } SS
CITY OF SEAL BEACH }
I, Linda Devine, City Clerk of Seal Beach, California, do hereby certify that the
foregofng resolution Is the original copy Qf Resolution Number _on file In
the office of the City Clerk, passed, approved, and adopted by the City Council of
the City of Seal Beach, at a regular meeting thereof held on the ...1Q!lL day of
March, 2008.
City Clerk
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