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HomeMy WebLinkAboutCC Min 1987-04-27 4-13-87 / 4-27-87 which, in his op~n~on after analyzing the points of the initiative, proposes preservation of open space as well as a disaster clause that would allow the owners of high density units to rebuild, as those units now exist, if destroyed in whole or in part without compliance to City Code. Mr. Weiler made reference to properties owned by the authors of the letters which he reported to be non-conforming dwellings. Mr. Weiler stated he felt the community should be alerted as to the goals of the proposed initiative. In I response to Mr. Stark, 204 Ocean, the City Manager advised that the restaurant lease would be made available for public review at no cost, a copy of the document could be obtained for a ten cent per page charge, or on a loan basis. Norma Strohmier, 209 Seal Beach Boulevard, took exception to comments of a prior speaker. There being no further communications, Mayor Clift declared Oral Communications closed. ADJOURNMENT Grgas moved, 11:54 p.m. AYES: NOES: second by Wilson, to adjourn the meeting at Clift, Grgas, Hunt, Risner, Wilson None Motion carried lerk and ex-o Beach City Council Approved: I Attest.: _ ' Seal Beach, California April 27, 1987 The City Council of the City of Seal Beach met in regular session at 7:00 o'clock p.m. with Mayor Clift calling the meeting to order with the Salute to the Flag. ROLL CALL Present: Mayor Clift Councilmembers Grgas, Hunt, Risner, Wilson Absent: None :1 Also present: Mr. Nelson, City Manager Mr. Stepanicich, City Attorney Mr. Joseph, Assistant City Manager Chief Picascia, Police Department Capt. Stearns, Police Department Capt. Garrett, Police Department Mr. Knight, Director of Development Services Mr. Osteen, Recreation Director Mrs. Yeo, City Clerk 4-27-87 WAIVER OF FULL READING The Council, by unanimous consent, waived the reading in full of all ordinances and resolutions and that consent to the waiver of reading shall be deemed to be given by all Councilmembers after reading of the title unless specific request is made at that time for the reading of such ordinance or resolution. I AGENDA AMENDED Risner moved, second by Grgas, to consider agenda item "C", the Fire Service proclamation, out of order at this time. AYES: NOES: Clift, Grgas, Hunt, Risner, Wilson None Motion carried PROCLAMATION Mayor Clift proclaimed Saturday, May 9, 1987 as "Fire Service Recognition Day." A representative of the Orange County Fire Department accepted the proclamation with appreciation, and extended an invitation to the Council and the community to visit the fire stations on May 9th. He also advised of the Department's desire to acomplish their theme of "a smoke detector for every residence." AGENDA AMENDED Risner moved, second by Wilson, to consider the items on the Consent Calendar at this time. AYES: NOES: Clift, Grgas, Hunt, Risner, Wilson None Motion carried I CONSENT CALENDAR - ITEMS "M" THROUGH "T" Wilson moved, second by Hunt, to approve the recommended action for items on the Consent Calendar as presented. M. Approved the minutes of the regular adjourned meeting of April 6, 1987. N. Approved regular demands numbered 64590 through 64753 in the amount of $197,080.70, and payroll demands numbered 25125 through 25293 in the amount of $164,100.30 as approved by the Finance Committee, and authorized warrants to be drawn on the Treasury for same. O. Denied the claim of Teresa Names and referred same to the City's insurance adjuster. P. Denied the claim of Margaret Pendray et al and referred same to the City's insurance adjuster. Q. Authorized the appropriation of the $75,000 annual grant from the Cable Television Trust Fund to the Seal Beach Communications Foundation. I R. Waived the formal bid process and authorized the purchase of a used replacement vehicle for the Recreation Department in the amount of $6435.00. S. Supported Assembly Bill 1488 (Leonard) which would provide funds to reconstruct the Big Bear Dam at a cost not to exceed four million dollars, and recommended the State Legislature be notified of such support. 4-27-87 AYES: NOES: T. Endorsed Assembly Bill 1608 (Katz), granting municipal police officers and county Sheriff's the statutory authority to remove unsafe commercial vehicles from local streets and highways, and that said support be transmitted to the City's State legislators. Clift, Grgas, Hunt, Risner, Wilson None Motion carried PRESENTATION - SEAL BEACH PIER RESTAURANT LEASE In supplement to the written staff report of April 22nd detailing the major components of the proposed restaurant lease, the City Manager reviewed the sequence of events since the municipal pier was destroyed and the pier restaurant severely damaged in January, 1983. He noted that ultimately the City Council decision was to demolish and rebuild the restaurant facility, which was determined to be the most cost effective approach based upon recommendation from the City's contract engineer and architect. Upon completion of the restaurant, reconstructed on the same footprint as existed previously, approval was then given to fixturize the facility which was based upon the premise that the previous lessee would operate the new restaurant. Mr. Nelson noted that the restaurant was completed in September, 1986 at a total cost, including City labor, of approximately $450,000, the funding for same from a Coastal Conservancy loan of $250,000 having a ten year annual debt service of $38,000, the remaining $200,000 from the City's General Fund. The City Manager reported that upon completion of the restaurant, staff was directed to negotiate with the previous operator for lease to operate the restaurant, during which tentative agreement was reached, the terms drafted and forwarded to Mr. Hale. He stated that after a period of more than four months, Mr. Hale rejected the previously agreed upon terms and submitted new terms that were to the advantage of Mr. Hale and not in the best interest of the City, noting that there was likewise no agreement reached after further discussions. Mr. Nelson reported that in December, 1986 staff was directed to prepare a request for qualification and proposal for potential tenants for the resturant, a notice of which was placed in the restaurant trade journal and more than eighty packets sent to various prospective operators. He advised that seven proposals were returned, two of which had pier restaurant experience although different concepts of operation, three with proven restaurant management experience, and two with inadequate information for evaluation purposes. Mr. Nelson stated that after evaluation of the proposals, the basic terms of which he highlighted, on February 2nd the Council directed the staff to negotiate with H.E.G. Enterprises, and further, should those negotiations fail, staff would then contact and commence negotiations with Ruby's diner. He reported that negotiations have been on- going, reviewed by the attorneys for both parties, and were presented to Council for consideration on April 13th. He stated that since April 13th, at which time the public requested further input and upon direction of the City Council, the publiC discussion for this date was published, press releases submitted to each newspaper, and two open houses held at the restaurant site that were attended by approximately forty-five persons. Also since the April 13th meeting the staff has met with Mr. Griffith to discuss and further negotiate concerns expressed at that time, noting also that Mr. Griffith met with each Council member, the President of the Old Town Business Association, a I I I 4-27-B7 I representative of the Seal Way Improvement Group, and individual business persons. The City Manager advised that as a result of the concerns expressed and discussions held, the following changes to the lease have been proposed: 1) the minimum rent increased by $2500 per year for parking, to commence upon completion of Phase II modifications and the requirement for twenty-five additional parking spaces, with provision that discussions would be reopened regarding that sum should it appear in the future that there is a loss of revenue from beach parking attributed to the use of those spaces by the restaurant~ 2) the minimum rent to have a CPI escalator which would adjust the rent every five years by the increase for the Los Angeles/Long Beach area~ 3) the proposed concession stand and public restrooms to be moved seaward to a location adjacent to zero tower, subject to State handicapped requirements and Health Department regulations for food service~ 4) the notification period for exercising the option to extend the agreement increased from ninety days to one year~ 5) the hours of operation to be 7:30 a.m. until midnight, the word "minimum" deleted, and should the need be indicated, the breakfast hours could be scheduled earlier, the lease presently allowing adjustment of the hours upon City Manager or City Council approval~ and 6) clarification that H.E.G. would be responsible for restaurant refuse collection costs, the City to continue disposal from the trash receptacles and general pier cleanup. The City Manager advised that H.E.G.'s architect has determined that the height of the structure would not change as a result of the Phase II improvements, the only change being to the roofline. Mr. Nelson recalled concerns expressed regarding crime and other undesirable activities on or near the pier with regard to the impact of this proposed restaurant, noting that the pier presently attracts loiterers, and stated that experience has shown that with increased public activity in an area undesirable activity decreases, therefore it is felt the restaurant will generate positive pier activity. He advised that through contact with the Marine Safety Department and the Police Department it is understood that loitering, vandalism and previous pier related crimes have been eliminated in the specific area of San Clemente since the restaurant opened in that community. With regard to the parking lots, he explained that with the proposed a~tomation the Eighth and Tenth Street lots would operate independently with entry and exit gates, the Tenth.Street lot to be closed to entry at 6:00 p.m., the Eighth Street lot open for entry until closing of the restaurant, however vehicles entering after 6:00 p.m. would be directed by barricades, or another means if necessary, to park near the pier away from the westerly residences. He noted that the proposal to automate the beach lots originated from the oil operators with offshore facilities whose employees use the beach parking lots, also advised of their willingness to participate financially in the automation. I I Mr. Hal Griffith reported his company, H.E.G. Enterprises, is based in Seattle, and within the last four years the California corporation was formed for the purposes of developing their Fisherman's restaurant in San Clemente, noting also that they have responded to Requests for Proposals for restaurant developments in Newport Beach, Oceanside, Seal Beach and Santa Monica, each facility located on public property. Mr. Griffith stated the Seal Beach proposal is in response to this City's RFP, a competitive process, and attempts to take into account all of the elements necessary to make the restaurant successful, as well as the concerns of the citizens, with the intent of 4-27-B7 becoming an integral part of the community. Mr. Griffith stated it was their goal to provide a menu and price range, with appealing decor that would provide a pleasurable dining experience and a successful operation. He noted that the proposed relocation of the concession and restroom facilities are thought to better meet the needs of the public. He made reference to and described at length the architectural drawings presented to detail their proposal for the facility, specifically the addition of awnings, a - flag pole and sign, outside seating of twenty-two seats for bar patrons, twenty-four seats for dining, with windscreens. II Mr. Griffith advised that although the floor plan would remain as it now exists, it is their intent to change the interior decor of the restaurant, adding wood paneling, historical photos, fan lights, and initially a small bar of six stools and nine seats, to accommodate the dining patrons. Mr. Griffith stated that Phase II modifications would add a second level, changing the roofline however not raising the height of the structure, the addition of a deck, outside seating and glass windscreens, and a stairway, and upon completion of Phase II the first level bar would be eliminated, relocated totally to the second level, the lower level then devoted entirely to dining. Mr. Griffith again pointed out that with all modifications, the structure is on the same footprint as presently exists, no increase in height, the roofline actually reduced with the installation of the deck and glass windscreens. Mr. Griffith described the second level as a horseshoe shaped oak bar, with stained glass of nautical scenes, nautical decor, brass railing, oak chairs and tables, hardwood floors, with interior seating for sixty, the exterior seating to be used as the weather permits. Mr. Griffith stated he felt their menu was unique, I consisting of a variety of local product as well as northern product shipped from Washington State, featuring "feast" dinners as well as an ala carte menu of a moderate price range, and noted that their restaurants are a casual atmosphere as is the dress of their patrons. He acknowledged the uniqueness of the Seal Beach pier location, offering charter fishing opportunities, and noted the importance of offering breakfast services, which he stated would commence at 7:30 a.m. and expanded if it is seen to be warranted. Also, that luncheon would be served until 4:00 p.m. with dinner seating from that hour until 10:00 or 11:00 p.m. with the restaurant secured and closed by approximately midnight dependent upon the time of year. Mr. Griffith reported approximately fifteen to twenty percent liquor to food sales in his Washington Fisherman's restaurant, and of the 2.5 million sales from the San Clemente bar and restaurant/bar operations, 1.5 million is food service, the remainder being all types of alcoholic beverages. He again stated that the lower level of the restaurant will be devoted strictly to food service with the bar on the second level, with some flexibility with regard to food service on the second level, which is proposed to be located in the most accessible area, near the stairway for efficiency of service, also that it is not the type of bar that persons would be frequenting for entertainment or evening '1 activities. In response to Councilman Hunt, the City Manager explained that an entry and exit are proposed for both the Eighth and Tenth Street parking lots with payment upon exit, and that there would be no accessibility from one to the other except for emergency vehicles. Councilmember Risner recalled that approximately April, 1983, at the request of the City Manager a study was conducted by Economic Research 4-27-B7 I Associates to determine if a first class restaurant would be suited to the municipal pier location, the study concluding that a seafood restaurant up to one hundred fifty seats should be located close to the entrance of the pier or no further than mid-pier, that study ultimately presented to the downtown task force who concurred with the opinion of the City Council that a restaurant should not be allowed in either of the recommended locations. She also recalled that the City applied for and received a State Coastal Conservancy repayable loan as well as a Wildlife Conservation Board grant to rebuild the pier and the restaurant, and stated that the facility proposed by Mr. Griffith may not meet the provisions and restrictions placed on the pier and its facilities by those agreements. Mrs. Risner reviewed the events leading to negotiations with H.E.G. Enterprises, conCluding that the Council should, even at this point in time, review the complete proposals of H.E.G. and Ruby's since the Council had made decisions based upon a synopsis of those proposals, as well as investigate their current operations, and further, reevaluate the direction Council is taking, keeping in mind the history of the pier. I Councilman Grgas read his memorandum addressed to the members of the Council setting forth concerns expressed by constituents, various residents and business persons regarding the proposed pier lease and pier operations, and stated he had committed to representing these concerns to the City Council. Mr. Grgas outlined the expressed concerns as follows: 1) the validity of the proposed development costs for Phase I, Phase II and concession operations, the construction cost estimates thought to be overstated, and that start up costs, inventory and sales tax figures should not be included~ 2) the term of the lease should be fifteen years with one five year option only~ 3) there should be no reduction in percentage rents above the one million gross sales revenue level~ 4) percentage rents against food service should be separated from those of liquor sales and should be six percent and eight percent respectively~ 5) no second story or storage improvements should be permitted until H.E.G. has had at least three years operating history in the existing facility, and such improvements should require Council approval~ 6) no concession stand or public restrooms should be permitted on the pier, take-out service should be provided through the window as currently designed~ 7) a one-year Conditional Use Permit should be applied to the application for the issuance of a liquor license~ 8) the tenant should provide personal guarantees to the City for minimum lease payments during the term of the lease~ 9) tenant should be required to pay the same in-lieu payments for parking spaces necessary to the operation of the restaurant as those paid by other merchants in the downtown area~ 10) the provision excluding competition within eight hundred feet of the tenant's operation should be removed and consideration for ultimate disposition and use of pier premises by competing entities should be at the discretion of the Council if necessary or desired~ 11) all expenses incurred for trash removal and provision of trash receptacles associated with the operation should be borne by the tenant~ 12) construction of proposed storage facility warrants additional receipt of ground lease revenues~ 13) remove all references to authority delegated to the City Manager for modifying hours of operation~ 14) operating hours should be Sunday through Thursday, 6:30 a.m. to 10:00 p.m., Friday and Saturday, 7:00 a.m. to 11:00 p.m.~ and 15) sufficient financial statements, including personal income tax returns, should be provided to the City for review to verify the financial capability of the proposed tenant. I 4-27-B7 Councilman Grgas reported that he had an extensive meeting with individuals of the community at the request of persons who are knowledgable of and have restaurant operations, that he had commited to make this representation to the Council and further, to vote this commitment, and requested that the City Council accept and consider incorporating the suggestions into the lease, however clarified that he did not have personal concern with all of the items set forth in his memorandum. He added that he had as much concern with I the proposal of Ruby's as he did with that of Mr. Griffith, reported that he has patronized or visited the facilities of both, neither offering the perfect situation. Councilmember Risner stated her concerns were basically the same as expressed by Mr. Grgas, and requested further consideration of 1) the automated parking system being eliminated until further study, however the contract should reflect that the lessee would be required to pay the estimated $14,250 cost of installation~ 2) that input from the Police Department and City Attorney be provided in writing regarding potential liability; and 3) that all pier grants and loans be reviewed to insure there is no violation of provisions of those agreements. Councilman Hunt stated that when this matter was approached, his objectives for the purpose of analyzing the proposals was first economics, given the $450,000 investment in the facility and the City deserving a fair return on that investment, secondly, considering that the beach and pier belong to all residents of the community, he felt it was important to see that the interests of the entire community were served, and third, given the fact that the pier will be in existence for a long time, he felt it important to look forward to the future generation when making such long term decisions. With regard to points raised by Councilman Grgas, Mr. Hunt stated I he did not feel that payment of an in-lieu parking fee would be significant, the importance being that there be no loss of revenue from the parking lots, and spoke in support of the Council rather than the City Manager having the authority to modify the hours of operation. Councilmember Wilson stated that the majority of her concerns, the addition of a second story, parking, the hour of closing, the conduct of special events in the vicinity of the pier, and sub-leasing, have now been sufficiently addressed, also that storage of supplies will be at the foot of the pier therefore eliminating any truck deliveries on the pier. Expressing her feeling that competition is healthy for local business, Mrs. Wilson stated she felt Seal Beach deserves and would be proud of a nice eating facility, such as the Fisherman, which would also bring needed revenues into the City. Mayor Clift stated that as a member of the Downtown Task Force, he recalled that the proposal for the pier restaurant was rejected due to its location across the tee of the pier, another determination being that there be no restaurants located on the south, or beach side of Ocean Avenue. He acknowledged his concern with the concession stand at the location proposed that would be convenient for use by beachgoers while it could also unfairly compete with food I service businesses existing in the vicinity of Main Street and Ocean Avenue. He stated he felt that it would be feasible to relocate the concession to the seaward side of zero tower, without obstructing view, that would provide the necessary service to the fishermen and pier visitors and would pose no disadvantage to other businesses. Mayor Clift noted also the construction of restroom facilities would then allow the removal of the te~porary restrooms that are currently on the pier. Councilmember Risner responded that 4-27-87 I once the restaurant is open, persons on the pier could then use the rest rooms of that facility, and allow the removal of the temporary restrooms. She referred to the existence of a plan for the Seal Beach pier, developed with public input, that included facilities for fishermen, sport fishing, and a restaurant that would serve pier visitors, that plan eliminated any-activity that would directly compete with Main Street businesses, therefore the pier being 1,865 feet in length, businesses located at the end of the pier would comply with the overall original pier policy. Mrs. Risner stated that after the pier was rebuilt the Council first considered remodeling the existing restaurant, then approved demolition and reconstruction, the approved concept and plans being for a facility that would primarily serve customers of the sport fishing, pier visitors and fishermen, also that the approved RFQ indicated to the potential tenant the type of facility that was available for lease, a turn- key operation directed to a specific clientele, which was consistent with the City's long standing plan and policies regarding the pier. She stated the proposal under consideration does not fit that plan, and if approved the Council would be changing the historical philosophy of the City. She also spoke in opposition to placing public restrooms on the pier and stated the concession stand proposed would serve the needs no one. She voiced concern as to potential liability from use of the tram by persons having consumed alcoholic beverages, as well as violation of the existing ban of wearing high heels on the pier, noting also the possible loss of revenue from other business areas. She expressed doubt as to the accuracy of the estimated costs for capital improvements and objected to certain items included in that cost figure, suggested that the City should receive some additional consideration if the grace period for payment of rents is allowed, also that the City should have some authority over the amount spent for the improvements. Mrs. Risner stated that little consideration has been given to the loss of revenue from parking, and reported her calculation of the number of spaces that would be required if the square footage of the restaurant, concenssion, and storage area were all taken into consideration. She also referred to and compared the potential revenue that could be realized based upon the proposal submitted by Ruby's Diner. Mrs. Risner spoke favorably of the type of restaurant proposed by Mr. Griffith, however stated she did not feel the pier would be a proper location. She advised she would support a reasonable length of time for further negotiations and revision of the lease if the Council wished to continue consideration of the Fisherman's restaurant, with the condition that all operations be located at the end of the pier, that there be no pre-arrangement for a second story, and should that be a consideration in the future the City Council would have the authority over such approval. -With regard to parking revenues, Mr. Hunt stated he did not feel there would be any loss, also that that issue will be further detailed through negotiations, and although there may be some impact on area businesses initially from the new restaurant, in long term it will no doubt be of benefit to the community as well as those businesses. By unanimous consent, the Council declared a recess at 8:56 p.m. The Council reconvened at 9:19 p.m. with Mayor Clift calling the meeting to order. Mayor Clift reported for the record receipt of communications from the City of San Clemente in support of Mr. Griffith and his operation in that community, a letter from the Bank of San Clemente regarding Mr. Griffith's I I 4-27-B7 financial status, a communication in support of the restaurant proposed from Norma Hill, Ocean Avenue, a message from Jerry Mauier stating his concerns relating to the proposed facility, communications from Rosie Gruss requesting further community review of the proposal, and Beverly Casares setting forth her concerns with the proposed lease. Mr. Grgas reported receipt of a letter from Tracy COlberg dated April 24th in opposition to the pier lease. Mayor Clift also reported receipt of a letter from the I operator of the sportfishing operation, questioning the negotiations and terms offered to H.E.G. Enterprises that, he stated, were not offered to him for operation of the pier restaurant. Mayor Clift invited members of the audience to address the Council regarding this item. Mrs. Beverly Casares, 1045 Marvista Avenue, read her communication directed to the Council regarding documented financial information of H.E.G., proof of the California corporation status, assignment rights, approval of lease amendments, and addressed in detail her concerns regarding various provisions of the lease document. Mr. Larry Peters, 211 Ocean Avenue, diagramed his analysis and comparison of the lease terms, specifically the percentage of sales, the minimum annual rent, term and options, parking, and allowable alcohol, of the H.E.G. operation in San Clemente, Newport Beach and proposed in Seal Beach. Mr. Peters also objected to the condition of the premises of the Newport Beach facility and presented pictures of that location. Mr. Bruce Stark, 204 Ocean Avenue, also referring to the Newport Beach facility, suggested that the City investigate the potential restaurant operator with regard to his adherence to lease conditions and property maintenance. Mr. Art Boynton, 1111-1/2 Seal Way, President of the Seal Way I Improvement Association, stated he had surveyed by phone the members of the Association, all property owners, regarding the pier lease. He reported ninety percent opposed the restaurant as proposed, ten percent were in favor, and noted that the greatest objection was expressed with regard to overload on the pier, a concession near the beach, trucks on the pier, forty year lease, cocktail bar, and the affect on the quality of life. He requested that no action be taken on this item and additional time be allowed for review. Mr. Pete Peters, 160 - 12th Street, referred to the uniqueness of the community and the desire to retain its quality of life, stating he did not feel the majority of citizens would support this proposal. He objected to the City's expenditure to construct the building and subsequent attempt to recover the cost through this operation. He also spoke in opposition to the estimated percentage of liquor sales, suggesting that the City reconsider the type of restaurant that will operate on the pier. Daisy Funk, 215-1/2 - lOth Street, spoke of the fondness the residents feel for the community and its pier, referred to existing businesses that offer alcoholic beverages on Main Street and complaints resulting from activities in the beach parking lots, requesting that the downtown area, consisting of residential as well as commercial properties, be given consideration. Josie Greeley, 1629 Seal Way, expressed her objection to I this type of restaurant on the pier, trucks making deliveries to the end of the pier, the concession stand, and service of alcohol on the pier. She stated her support for a more casual facility offering an average menu, and voiced doubt that fishermen would frequent the restaurant proposed. Mr. Walt Huppenbauer, 472 Galleon Way, stated that if the pier is the focal point of the community, priorities should be kept in mind, and spoke in opposition to a large commercial restaurant at the end of the pier. Mr. John 4-27-87 I Schaefer, 137-1/2 Dolphin Avenue, referred to the community effort and the funds that were raised to rebuild the pier, and requested Council take into account the feelings of the community and consider a smaller, casual restaurant, even though it may not provide the economic return equal to the operation proposed. Mitzi Morton, 153 -13th Street, asked that consideration be given to the future where the Hellman property development, the addition of two hotels near the downtown area, development of the Zoeter site, the possibility of more housing on the Naval Weapons Station, and more businesses, as well as a future development of the Bixby property and expansion of Leisure World to the north, will have a significant impact on the community with regard to revenue, population and traffic congestion, with the beach being the most effected area. She recalled an action of years past to control growth and parking congestion through downzoning, noting that future parking needs of fishermen, offshore oil personnel, residents and tourists are unknown, with four hundred sixty-two parking spaces available in the beach lots, the only other available parking on residential streets, noting that no other parking facilities exist and none are currently planned. Ms. Morton indicated her opposition to the Phase II modifications proposed. Barbara Antoci, 1502 Ocean Avenue, complained about parking conditions in the old town area at the present time. She reported the City Manager had assured her that vehicles would not be allowed on the pier, therefore she questioned how the tram could accommodate the transportation of supplies, employees and fishermen. She acknowledged the need for additional City revenue, and stated her feeling that there is a need for additional police personnel, however asked that the parking problem be resolved first. I Mr. Walter Babcock, 201 Main Street, expressed his feeling, and what he believed to be the feeling of most businesses on Main Street, that there is no objection to a business at the end of the pier, in fact is necessary given the existing facility. He acknowledged that competition is healthy and the business will be welcomed regardless of whether the operation is a Fisherman or Ruby's as long as it is done in good taste, however requested that the Council insure that all loose ends that are apparent in the proposed lease be tightened. Juliana McCants, 421 Jade Cove Way, stated that the persons in attendance at the meeting were present because they care for their community, and urged that the Council listen to their wishes as it would not be politically wise to do otherwise. Mr. Dave Wulfslberg, real estate law attorney located in Long Beach, addressed the Council on behalf of Dr. Babcock, owner of Walt's Wharf, and stated he wished to suggest items for consideration in addition to those previously set forth by the Council. He stated that it is typical for a landlord to ask for a leasehold deposit of some amount that would guarantee performance under the terms of the lease, that the provision relating to remodeling of the people mover does not define how it will be remodeled or the duration of such remodeling, and that the lease does not specify the number of restrooms to be built, nor who will maintain or repair them as they deteriorate during the term of the lease. He added that there is concern on the part of the merchants with regard to payment of in-lieu parking, the feeling being that no merchant should be exempt from that payment. With regard to the term of the lease, he stated he did not feel that an opinion could be rendered that the lease could not be assigned, sold, or sublet, while the City would not be allowed the opportunity to renegotiate the terms, and suggested that a cost-of-living increase be added or a shorter lease term. Mr. Harold Rothman, 300 Ocean Avenue, I 4-27-87 reviewed his background as a restauranteur and owner of a restaurant equipment company, as well as a restaurant lease negotiator. He advised the Council he had no interest in leasing the space in question, his interest being that of a resident whose residence faces the pier. He advised that a standard restaurant lease is six percent of the gross, increasing rather than decreasing for sales over one million, with a higher percentage for liquor, ranging from seven to ten percent. Also, a 'standard lease term ranges I from ten to twenty years for a restaurant shell with no interior furnishings, noting that in this particular case the restaurant is a fixturized, turn-key operation consisting of approximately $200,000 of leasehold improvements which could be opened within a week. Mr. Rothman referred to the grace period for rental payment due to the capital investment the potential tenant has proposed, and stated that the estimated $810,000 investment includes inventory and start-up costs of $129,000 which is the operator's cost of doing business rather than an improvement to the benefit of the City. Mr. Rothman questioned the validity of the estimated costs for Phase I improvements and the cost and need for additional or replacement equipment, requesting that the Council thoroughly investigate those costs. Mr. Dave Potter, 1007 Seal Way, stated he did not wish to address the economics of this proposal, nor did he feel the adjustment of height to accommodate a second story would be a concern. He agreed however, that there should not be a concession stand or any new structures on the pier, and expressed some concern with reduction of the width of the walkway with the addition of outdoor seating. Mr. Potter stated he would be opposed to converting the Tenth Street lot to an entry to the parking lots based upon past experiences, also expressed some concern in transporting fishermen and their equipment if the tram is proposed to be I enclosed, and the availability of parking for restaurant patrons when the lots are being used by beachgoers and fishermen. Mr. Potter concluded that he felt the restaurant proposed would be nice, however questioned if it would be worth the problems envisioned. The Council, by unanimous consent, recessed at 10:44 p.m. and reconvened at 11:00 p.m. with Mayor Clift calling the meeting to order. Ms. Eve Kilger, 306 Central Avenue, noted that there are three seafood restaurants in the area, and requested that the pier restaurant be kept modest. Mr. Rich Elvidge, 1009-1/2 Seal Way, stated that this proposal is too commercial and would not enchance the pier. Mrs. Wendi Rothman, 300 Ocean Avenue, stated that her background as a licensed realtor, having a law degree, and ownership with her husband of the Fish Company in Los Alamitos, enabled her to review this proposal closely. Mrs. Rothman cited parking as a major concern and assuming the existing building is 2700 square feet, a like square footage with Phase II modifications, including the exterior patios, the restaurant would be approximately 7000 square feet, and with the additional square footage of the concession stand, restrooms and storage facility, there would be a total of approximately 9200 square feet of leased City property requiring ninety-two parking spaces that are being offered free to this tenant, for a potential $39,000 annual revenue loss to the City. She asked what the estimate of cost will be to chain the Eighth Street lot in the evening and reverse that procedure in the morning, the cost of manning the lots during the peak use periods, the cost of the automated parking, and inquired why the City has not automated the lots prior to this time if that would be more cost I 4-27-B7 I effective. She expressed doubt as to the number of employees reported by Mr. Griffith that would be at the restaurant at a given time, as well as the employee's willingess to pay for parking. Mrs. Rothman stated the type of bar is of concern since this is proposed to be a family restaurant, inquired by what means food will be transported to the second level diner, and noted that although the roof line may not change with the second level, the present open ceiling will be eliminated. She contended that this restaurant would generate its revenue from liquor sales rather than the dinner menu, with happy hours and big screen television. Mrs. Rothman questioned the need for the concession stand, stating that it would block sixty-five feet of ocean view, also that there is no limitation in the lease as to what constitutes retail sales from the concession, and suggested that if there is to be a concession that it be put to public bid. She questioned signing a lease with a Washington State corporation, suggested that a personal guarantee of the lease terms be obtained from Mr. Griffith, and asked to review his qualifications and financial statements. Mrs. Rothman requested the lease term, percentage of receipts, and amount of minimum rent be given further consideration, suggesting that the minimum rent be based on a specific dollar amount for each square foot of land the tenant is using. She expressed her objection to other provisions of the lease, specifically the City Manager's authority to close the restaurant to breakfast which, in her opinion, would force the patron to use the concession, City maintenance of the tram, trash receptacles and pickup provided by the City, and exclusive rights within eight hundred feet. She noted that other proposals were received that would be more suitable to this community, and made specific reference to Ruby's, with an operation on the Balboa Pier and a new location in South Coast Plaza, who would generate nearly the same revenue to the City, utilize the existing restaurant space, would not require free parking, six percent return of the gross, closing hour of 10:00 p.m., no concession stand, no forty year lease, and could open the restaurant, paying full monthly rent, within thirty days. She also described that facility as affordable, casual, having good food, and not a teenage hangout. Noting compliments by members of the Council to City staff for their efforts in negotiating the H.E.G. lease, Mrs. Rothman suggested that the City retain a competent leasing agent to negotiate the pier restaurant lease. Councilman Hunt acknowledged his compliment to the staff with regard to negotiating the lease, he also noted the comment that Ruby's would generate as much revenue as H.E.G., and to that comment he responded that if Ruby's prices are approximately one-half that of Fisherman's, there would then logically be more people/car impact to produce equal revenue, and should their business be derived from the luncheon crowd the parking lots would realize a greater impact since midday would be the peak use period as compared to the dinner hour. He added that if the Fisherman were located at the end of the pier, persons seeking a hamburger type dinner would then frequent other Main Street businesses offering that menu. Mrs. Rothman expressed her feeling that the H.E.G. operation will not attract the fine dining patron, it will attract the drinking patron, which is where their revenue will be generated, and those seeking a hamburger will patronize the concession. Mrs. Risner added that with Ruby's less expensive menu, their revenue is realized through faster turnover. Mr. Jay Covington, 4260 Dogwood Avenue, stated that after having reviewed the lease and investigating the potential tenant, he believed that the operator is a qualified I I 4-27-87 restaurant professional with a good operating record in the cities in which he does business, also that the Council has made a conscientious effort to achieve a lease in the best interest of the City. He expressed however, his dissatisfaction with the terms of the lease under consideration, suggesting that action on the lease be postponed for a period of thirty to sixty days and that the City engage the services of a commercial lease specialist to redraft the lease terms. Mr. Covington stated he felt the ,- terms did not reflect the market value of the location, did I not provide for a CPI adjustment, or periodic evaluation to insure the lease terms are in keeping with current market rates. Mr. Covington also expressed his concern with safety in the case of emergencies arising from storms, earthquake, fire, or tidal wave, inquiring as to procedures to evacuate persons from the pier to the shore, and for people control. He noted his concern that the lease places responsibility for damage to the pier with the City, citing as an example loosened pilings. Mr. Covington requested that his concerns with regard to safety be addressed. Charles Antos, 148 - 14th Street, referred to public input at the time the Land Use Element to the General Plan was considered, public opinion then and now that the pier remain as it exists without commercialization, also that there was little public notice regarding the decision to remove and rebuild the restaurant and to seek it's operator, therefore given the questions posed and proposals to revise the terms of this lease, suggested that this matter be held over. He questioned whether or not the terms of this lease are consistent with the provisions of the agreements with the State, stated that the parking spaces allowed this restaurant will deprive visitors and citizens of parking spaces in the beach lots, suggesting also that in-lieu parking be addressed and required of this tenant which would I be consistent with what is required of other local merchants. Mr. Antos stated he did not feel this type of restaurant serves the needs of the pier visitor or the fishermen, questioning also whether restaurant patrons would be willing to ride the tram after its use by the fishermen and the oil company employees. Mr. Antos requested that the Council take the public comments into consideration and make any further decisions regarding this matter in public. Mr. Jim Gilkerson, 1011 Electric Avenue, expressed his objection to allowing this tenant the use of public parking, stated he felt that required parking should be based on the entire square footage of public property being used for this operation and that the City should be compensated on that basis. He also referred to the second floor addition, expressing concern with the weight of that addition, as well as the concession stand, and its effect on the pier pilings and the potential cost to the City for their replacement, adding that he felt the sewer system to the end of the pier is inadequate to accommodate a large scale restaurant. Mr. Tommy Thompson, 809 Ocean Avenue and Main Street businessman, expressed his concern with the proposed concession operation, and stated he felt it should not be included in this restaurant proposal. Mr. Thompson noted I that the Main Street area, over the past two to three years has become alive and is beginning to thrive, properties being improved and a better mix of businesses, and added that the concession would undoubtedly be a detriment to a number of the Main Street merchants. Mr. LeRoy Brown, 705 Ocean Avenue, noted the number of persons in attendance at this meeting, and requested that the Council take into consideration that the people do not want this type of restaurant. Mr. Christopher Marra, 1009-1/2 Seal Way, stated his objection to the restaurant and the concession 4-27-87 I Q~and, requesting that this proposal be reevaluated. Mrs. Carla Watson, 1635 Catalina Avenue, stated she had spoken with many persons the past weekend regarding this issue, and urged that the Council consider the desires of the citizens before approving this type of restaurant. Mr. Rich Presicci, 417 Ocean Avenue, referred to the fondness that people feel for this community and traditionally its thinking to the long term, stating that as an environmentalist he would be disturbed if approval of this operation were considered, adding that he wondered if Mr. Griffith would still like to bring his business to this community. Ms. Jan Radetski, 412 Marble Cove, stated her satisfaction with the appearance of the restaurant building as it presently exists, and Sharon Russell, local realtor, expressed her feeling that the fishing public will not be comfortable patronizing a fancy restaurant at the end of the pier. Mr. Tom Greeley, 1629 Seal Way, expressed his concern with the promotion of tourism in Seal Beach, overdevelopment and intensification. He stated his support for retaining outside assistance to prepare the best lease arrangement possible that would be in the long term interest of the City, also urged Council consideration of the community's concerns. I Mayor Clift stated that after the discussions and compromises that have taken place over the past two weeks, he had felt that previous concerns expressed had been resolved, however after listening to the comments at this meeting, he felt it would be worthwhile to hold this matter over for further consideration, also that retention of a commercial leasing specialist may also be a possibility. Councilmember Wilson acknowledged the public testimony and the desire of all to retain the mode of living in Seal Beach, however noted that there is also a critical need to provide sufficient revenue to operate the City and should that revenue become available, she stated it would be the desire of the Council to increase Police personnel, and further, pointed out past criticism of the City's use of consultants. Reviewing the process over the past year that led to considering the operator of the pier restaurant, Councilman Hunt expressed his objection to retaining a leasing consultant and spoke in support of the staffs efforts in negotiating the H.E.G. lease, the terms of the lease, as opposed to the original proposal, actually increasing the benefit to the City through those negotiations. Mr. Hunt stated it would be his preference to indicate approval of the lease with the condition that certain items be further negotiated, and if that is not a possibility, this issue could then be held over. He stated also that it was his feeling that if negotiations were to take place with Ruby's or another operator, that the grievances that have been expressed will still not be be totally relieved, noting that his position on this matter is in keeping with his original objectives and throught to be in the best interest of the community. Councilmember Risner pointed out that no one at this meeting had spoken in favor of this restaurant, also that the need for more Police personnel was mentioned thus the need for additional City revenue. She referred to the previous restaurant that produced a very minimal revenue to the City annually, and stated that the facility that the City has built, consisting of ninety-six seats, is apparently the type of restaurant and a concept that the community prefers. She added that if further negotiations are considered, that it be done on the basis of specific terms and conditions agreed upon by the Council. I 4-27-B7 The City Attorney requested to respond to a number of comments that were directed to the City staff and negotiation of this lease. He stated that their office had been involved throughout the negotiation process, advising and working with staff on the terms of the lease, and ultimately drafting the lease document. He explained that initially the staff began with a concept that was approved in very general terms, the staff then attempted to negotiate a lease that would carry out that concept, with judgments having to be made during that process of what those terms should be. In terms of the qualifications of their firm to handle this matter, the City Attorney advised he had not participate in the draft of the lease as he is not a real estate attorney, therefore this matter was turned over to a partner of their firm with expertise in real estate law and the drafting of major loan and lease documents for both public and private clients. He explained that Mr. Renet, who worked on this lease, as an example has worked projects such as the Beverly Center master lease, a very large commercial development, therefore it was felt the expertise was present to properly represent the City on this matter. Mr. Stepanicich stated that a number of items had been raised during discussion with regard to legal terms, noting the importance of keeping in mind that there was a basic concept from which the staff had to proceed, and that testimony at this meeting has attacked the proposal and the nature of construction that would take place. He advised that before the City Council gives further direction to renegotiate individual terms of this lease, the Council should direct it's attention to whether or not this concept is still viable, and if it is believed that the concept should be changed it would therefore not be beneficial to commence renegotiation of specific terms of the lease. He stated that after addressing that question and if the Council determines that the original concept should be followed through, the staff could then take direction from the Council as to particular terms to be revised or added to the lease, negotiate those with the prospective operator and then it would be the operator's decision as to whether or not to accept those changes. Mr. Stepanicich stated serious criticisms have been made as to why certain decisions were made regarding the lease, and from a professional standpoint he found it necessary to address those issues. With regard to the WaShington corporation of H.E.G., he stated it would make no difference whether the firm is an in-state or out- of-state corporation with regard to the legality of the City enforcing its rights against that particular lessee, of importance is that they are licensed to conduct business in the State of California, a point that had been verified by their firm. with regard to the CPI, he advised that including that provision will not change the proceeds that the City is going to receive, the CPI or any escalation clause being a critical factor when there is a fixed rate lease, and in this case having a percentage rent lease, the CPI would make no difference. To the suggestion to require the operator to be personally liable, he stated that would be a factor if the City were making a loan to the operator or the corporation, however making the operator personally liable in this case will not put the City in a stronger position, explaining that the operator is going to make an investment in the property and if he does not comply with the terms of the lease the City has the ability to terminate the lease and take over all of the improvements that are made, therefore it would be incumbent upon the operator to satisfy his obligations to the City, whether that be from personal or corporate assets. In terms of the financial provisions of the lease he stated there were judgments made during the negotiating process as to what those terms should I I I 4-27-87 ~e, noting that the comparison made by a member of the audience showed that the financial terms between San Clemente, Newport and Seal Beach were virtually the same in general. He explained that the terms are basic to a lease of this type, however advised it would be possible to negotiate those terms further, noting again that first of all the concept should be addressed and if determined to be acceptable, then the changes should be further addressed. I I Councilman Grgas noted the changes he had earlier placed before the Council as he had committed to do, stating he did so because of the large vocal opposition to the proposed operation from District One. He stated his objectives in selecting an operator were to provide a decent, safe and sanitary facility that would provide an eating opportunity for people of Seal Beach and from outside the city, and that breakfast, lunch and dinner be served. He stated further that considering the amount of funds that have been spent in Old Town over the past few years, which includes $1.8 million dollars for the Zoeter property acquisition, and taking into consideration the budget and capital improvement requests for the City as a whole, economics then become very important. Mr. Grgas explained that if it were possible to gain $106,000 per year from a single source, that would be equal to seventy-six million dollars of new property construction or generation of almost one hundred million dollars of new retail sales. He reported his patronage of restaurants in the area, including the facility of the concessionaire represented at this meeting, stating he was pleased with their menu and service, the dinner price range higher than some residents may be comfortable with, however provides breakfast and luncheon at reasonable prices, and their patronage consisting of persons of all ages. Mr. Grgas stated he has also patronized Ruby's for breakfast, lunch, and dinner, also during evening hours, and found the operation to be enjoyable. He referred however to his concern associated with the difference of clientele from the morning to the evening hours of their operation, and the potential that their operation could become a meeting place for a young crowd, noting that upon his evening visit there was no one over thirty-five years of age, and that he also viewed a number of law enforcement personnel in the area. Mr. Grgas advised that if the concerns he presented are not agreed to, he would vote against the lease, and likewise he may find it necessary to vote in opposition to a Ruby's proposal should that be considered. Mayor Clift cited the concept that this operation may be a liquor bar and the location and/or existance of the concession stand as the major concerns of those addressing the Council, and requested Council's comments or direction to staff. He noted however that whether the operation be Fisherman's or Ruby'S, the service of alcoholic beverages will be present for both. Discussion continued. Risner moved, second by Grgas, that the concession stand be colocated with the restaurant. I Councilman Hunt stated he would vote against the motion pending input from the City's negotiators and Mr. Griffith to determine the effect of this action on the entire proposal. Mayor Clift also stated he would vote in opposition to the motion as presently framed and pending further discussion. The motion was withdrawn from consideration. 4-27-87 / 4-2B-B7 Grgas moved, second by Wilson, that the fifteen items proposed to the Council be presented to the operator for further consideration and negotiation, and that the staff bring this item to the Council for consideration at the next regular meeting. AYES: NOES: Clift, Grgas, Hunt, Risner, Wilson None Motion carried Councilmember Risner moved that her previously expressed concerns be included for consideration along with those that I were subject of the previous motion, and asked that a list of all of the points be typed and transmitted to the Council for their information. Mayor Clift seconded the motion. AYES: NOES: Clift, Grgas, Hunt, Risner, Wilson None Motion carried Mayor Clift advised that all items on the agenda not acted upon at this meeting would be continued until the next regular meeting. A member of the audience requested that the next meeting be held at the McGaugh School. There was a brief discussion with regard to holding a formal public hearing or continuing the public input session regarding the pier restaurant. ADJOURNMENT Grgas moved, second by Wilson, to adjourn the meeting until April 28th at 10:00 a.m. for a departmental workshop. AYES: NOES: Clift, Grgas, Hunt, Risner, Wilson None Motion carried The meeting was adjourned by unanimous consent at 12:55 a.m. I Approved: c ~rrL t:~ Mayor - Attest: Seal Beach, California April 28, 1987 The City Council of the City of Seal Beach met in regular adjourned session at 10:08 a.m. with Mayor Clift calling the meeting to order for a departmental workshop. I ROLL CALL Present: Mayor Clift Councilmembers Hunt, Risner, Wilson Absent: Councilman Grgas