HomeMy WebLinkAboutC-7345-6 - Beacon Bay, 58 - Lease 1994LEASE
THIS LEASE is made and entered into as of the Wday of 1994, by and between the CITY
O NEWPORT BEACH, a Charter City and nicipal corporation ("Lessor"), and
rklv+kms V\\Mtye ("Lessee"), regarding the real property commonly
referred to as Beacon Bay Lot
RECITALS
A. The City of Newport Beach, by virtue of a 1978 legislative grant found in Chapter 74 of the Statutes
of 1978 (the 'Beacon Bay Bill"), holds the right, title and interest to certain tidelands and uplands commonly
known as Beacon Bay and generally described in Exhibit A attached hereto and incorporated by reference.
B. The Beacon Bay Bill frees the "Westerly portion" of the filled tidelands from the public trust and
specifically authorizes the lease of the property for residential purposes subject to certain express statutory
conditions.
C. Beacon Bay, including the "Westerly Portion" thereof, has been divided into individual lots, with each
lot leased by the City for residential purposes until December 31, 2005.
D. On November 3, 1987, a majority of electors of the City approved a measure which authorized the
City Council to enter into new leases of residential lots in Beacon Bay for a period not to exceed fifty (50)
years.
E. On November 3, 1992, a majority of electors of the City approved Measure M which authorized the
City Council to lease tidelands and waterfront property consistent with the provisions of state taw.
F. The City Council, pursuant to the authority conferred by the electors, entered into negotiations with
current lessees and the parties have agreed on the terms and conditions of a new lease with a fifty (50) year
term, provision for adjustments in lease payments to reflect changes in the value of Beacon Bay leaseholds,
and a recalculation of lease payments in the event of a transfer of the Lease by the Current Lessee or any
Subsequent Lessee (as defined herein).
G. Lessee acknowledges that the terms and conditions of this Lease may result in Lessee paying
substantially more or less than another Lessee for similar property depending upon the date this Lease is
executed, the date of any subsequent transfer, and the consideration paid for transfers of similarly situated
property.
H. Lessee acknowledges that accurate and complete reporting to the City of all consiNration paid for
the transfer of this Lease is vitally important to the City in that failure to fully report all consideration could
materially reduce the amount of rent received by the City from other Beacon Bay Lessees.
I. Lessor and Lessee acknowledge that the City has agreed to a fifty (50) year term and limited lease
payment increases in consideration of provisions which require payment of rent approximating fair market
rental value, without regard to any advantage maintained by Current Lessees, upon transfer by Current
Lessees and payment of deferred rent in the event the Lease is not signed on or before the Effective Date
(as defined herein).
J. The California State Lands Commission has reviewed the form of this Lease and determined that
it is in conformance with the provisions of relevant statutes, rules and regulations, including, without
limitation, the Beacon Bay Bill.
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K. Lessor has determined that this Lease is consistent with provisions of the Beacon Bay Bill, the
Charter, General Plan and Zoning Ordinance of the City of Newport Beach, and of all other applicable state
and local laws.
L. Lessor has determined it is in the best interests of the citizens of Newport Beach to maintain the
residential character of Beacon Bay and to enter into new leases with Current Lessees under the terms and
conditions specified in this agreement.
NOW, THEREFORE, in consideration of the foregoing recitals and the covenants in this lease, the parties
agree as follows:
LEASED LAND.
Lessor hereby leases to Lessee the real property commonly known as Beacon Bay Lot (the "Leased
Land"), which is more particularly described in Exhibit B, and generally depicted on Exhibit A, each
attached hereto and incorporated by reference, subject to the limitations on use specified in Section 6. As
used in this Lease, the term "Premises" shall refer to the Leased Land and any improvements constructed
thereon.
Lessor expressly reserves all oil, oil rights, gas, minerals, mineral rights, natural gas rights and other
hydrocarbon substances in and under the Leased Land and the right to grant and transfer the same,
together with all necessary and convenient rights to explore for, develop, produce and extract and take the
same, subject to the express limitation that any and all operations for the exploration, development,
production, extraction and taking of any such substance shall be carried on at levels below the depth of five
hundred feet (500') from the surface of the land by means of wells, derricks and other equipment from
surface locations on adjoining or neighboring land, and subject further to all restrictions and regulations
concerning the drilling for, and production of, oil, gas, minerals, petroleum and other hydrocarbon
substances specified in the Newport Beach City Charter or the Newport Beach Municipal Code.
2. TERM.
The term of this Lease shall commence on the Execution Date, but in no event prior to the Effective Date,
and shall expire on the date fifty (50) years following the Effective Date, unless earlier terminated as provided
in this Lease.
3. RENTAL.
A. Definitions. For the purposes of this Lease, the following terms shall be defined as
specified in this paragraph. In certain cases, the definition of the term contains operative language
that affects the rights of the parties:
(1) "Actual Sales Value" shall mean the total of all consideration paid for, the
non-exempt transfer of this Lease or the Pre-existing Lease, including the improvements on
the Leased Land, from the Current Lessee, or Subsequent Lessee, to another person,
excluding any consideration paid for the transfer of personal property in connection with
such transaction.
(2) "Average Actual Sales Value Rent" shall mean two and one-half percent (21/2%) of
the mean of the Actual Sales Value of the non-exempt transfer of a similarly situated
(waterfront or interior) Beacon Bay parcels as specified in this subparagraph. Average
Actual Sales Value Rent shall be the mean of the Actual Sales Value of the three similarly
NB1-187371.V2 2 05/24/94
situated parcels most recently transferred. Exempt transfers, as defined in Paragraph
3.13(3), shall not be used to calculate Average Actual Sales Value rent.
(3) "CPP' shall mean the Consumer Price Index - Los Angeles -Anaheim -Riverside Area,
All Urban Consumers, All Items, published by the United States Department of Labor,
Bureau of Labor Statistics (1982-1984=100). If the 1982-1984 base of said Consumer Price
Index should hereafter be changed, then the new base shall be converted to the 1982-1984
base and the base as so converted shall be used. In the event that the Consumer Price
Index, as now compiled and published, shall cease to be published, then the successor
index shall be used provided that an appropriate conversion from the old index to the new
index can feasibly be made. If such conversion cannot be made, or if no such index is
published, then another index most nearly comparable thereto recognized as authoritative
shall be substituted by agreement.
(4) "Current Lessee" shall mean the person or persons who, as of April 1, 1994 (the
"Cut-off Date"), was or were the Lessee under the Pre-existing Lease.
(5) "Deferred Rent" shall mean the total rent that a Current Lessee would have paid
had this Lease been executed on the Effective Date, through and including the date on
which this Lease was first executed, less the rent actually paid pursuant to the Pre-existing
Lease, together with interest at the rate of eight percent (8%) per annum calculated on the
balance due at the end of each Lease Year or portion thereof.
(6) "Effective Date" shall mean July 1, 1994.
(7) "Execution Date" shall mean the date when this Lease is executed by Lessee.
(8) 'Initial Rent" shall mean the effective net rent for the Leased Land as determined
by the appraisal of George Hamilton Jones, with due consideration to the leasehold
advantage created by the Pre-existing Lease, all as shown on Exhibit C attached hereto
and incorporated herein by reference.
(9) "Person" shall mean any natural person or natural person(s) and does not include
any corporation, association, or business entity in any form except a financial institution or
other bona fide lender acting in the capacity of a lender or an inter vivos or living trust.
(10) "Pre-existing Lease" shall mean the Lease for the Leased Land which was effective
on January 1, 1988, and would, absent this Lease, expire on July 1, 2006.
st
(11) "Transferred" shall mean any sale, assignment, sublease or other transaction, other
than an exempt transfer as defined in Paragraph 3.6(3), pursuant to which the right to
possession of the premises and the right to sign a new lease identical to this Lease is
transferred to another person.
B. Rental Payments.
Lessee shall pay annual rent in the sum of4eh k`,ov4awc4 5evlvt �Ako A "Ing ($ I Q 0 07.00 ),
payable at the rate of E vwb►vt Rz ($ X33. `f2 )Per month. Lessee shall
also pay, if applicable, deferred ret in the sum of Ar
($ ) upon execution of this Lease. Rent shall Ishall not circle one) be adjusted every
seven (7) years after the date of transfer in accordance wit rovisions of Paragraph 3.13(4).
Annual rent, deferred rent, and periodic adjustments are based upon the following:
NB1-187371.V2 3 05/24/94
(1) Execution Before Effective Date.
In the event this Lease is executed by the Lessee on or before the Effective Date, Rent shall
be paid as follows:
(a) Current Lessee: Current Lessee shall pay annual rent equal to Initial Rent
as specified in Exhibit C. Thereafter, so long as there has been no -transfer of this
Lease by the Current Lessee (other than an exempt transfer as set forth in
Paragraph 3.6(3), rent shall remain as specified in this subparagraph
notwithstanding the provisions of Paragraph 3.6(4).
(b) In the event of any transfer of this Lease to a Subsequent Lessee, the
Subsequent Lessee shall pay annual rent equal to two and one-half percent (21/2%)
of the Actual Sales Value determined as of the date of the transfer in accordance
with the provisions of paragraph 3.A(1). Thereafter, rent shall be adjusted every
seven years after the date of the transfer in accordance with the provisions of
paragraph 3.13(4).
(c) In the event of any transfer of this Lease to a Subsequent Lessee in a
transaction other than an arm's length assignment of this Lease, and sale of the
improvements on the Leased Land, if any, such as a gift or transfer by inheritance
other than an exempt transfer under Paragraph 3.6(3), the Subsequent Lessee shall
pay annual rent equal to the Average Actual Sales Value Rent calculated as of the
date of the transfer in accordance with the provisions of Paragraph 3.A(2).
(2) Execution After the Effective Date.
In the event this Lease is first executed after the Effective Date, rent shall be determined and
paid as follows:
(a) Current Lessee/Within Five Years After Effective Date: In the event this
Lease is executed by the Current Lessee within five (5) years after the Effective
Date, the Current Lessee shall pay annual rent equal to Initial Rent plus a sum
calculated by multiplying the difference between Initial Rent and Average Actual
Sales Value Rent by a fraction equal to the number of months between the Effective
Date and Execution Date, divided by sixty. The Current Lessee shall also pay all
Deferred Rent concurrent with the execution of this Lease. Thereafter, so long as
there has been no transfer of this Lease by the Current Lessee, rent shall remain
as specified in this subparagraph, notwithstanding the provisions of Paragraph
3.B(4).
(b) Current Lessee/More Than Five Years After Effective Date: In the event
this Lease is executed by the Current Lessee more than five (5) years after the
Effective Date, the Current Lessee shall pay annual rent equal to Average Actual
Sales Value Rent calculated as of the date of execution in accordance with the
provisions of Paragraph 3.A(2). The Current Lessee shall also pay all Deferred Rent
concurrent with the execution of this Lease. Thereafter, rent shall be adjusted
every seven (7) years after the date of execution in accordance with the provisions
of Paragraph 3.B(4).
(c) Subsequent Lessee: In the event the Current Lessee transfers the Pre-
existing Lease to a Subsequent Lessee who wishes to sign this Lease after the Cut-
NB1-187371.V2 4 05/24/94
off Date, the Subsequent Lessee shall pay annual rent equal to two and one-half
percent (21/2%) of Actual Sales Value determined as of the date of execution and in
accordance with Paragraph 3.A(1). The Subsequent Lessee shall also pay all
Deferred Rent concurrent with the execution of this Lease. The annual rent shall be
adjusted every seven (7) years following the Execution Date in accordance with the
provisions of Paragraph 3.13(4).
(d) Subsequent Lessee: In the event of any transfer of this Lease to a
Subsequent Lessee who wished to sign this Lease after the Cut-off Date in a
transaction other than an arm's length assignment of this Lease, and sale of the
improvements on the Leased Land, if any, such as a gift or transfer by inheritance
other than an exempt transfer under Paragraph 3.13(3), the Subsequent Lessee shall
pay annual rent equal to the Average Actual Sales Value Rent calculated as of the
date of the transfer in accordance with the provisions of Paragraph 3.A(2). The
Subsequent Lessee shall also pay all Deferred Rent concurrent with the execution
of this Lease. The annual rent shall be adjusted every seven (7) years following the
Execution Date in accordance with the provisions of Paragraph 3.13(4).
(3) Exempt Transfers.
The provisions of Paragraph 3.13 regarding transfers shall not operate to increase rent if:
(a) Lessee is assigning an interest in this Lease to a trustee under a deed of
trust for the benefit of a lender;
(b) the transfer is caused by the death of a spouse and the full interest of the
deceased spouse is transferred to a surviving spouse;
(c) the transfer of an interest in this Lease is between or among tenants in
common or joint tenants in ownership of the leasehold estate created by this
Lease, and such tenants in common or joint tenants first acquired their respective
interests in this Lease simultaneously;
(d) the transfer or assignment is by a bona fide lender acquiring title by
foreclosure or deed in lieu of foreclosure of a trust deed; or
(e) the transfer is a sublease of the premises for three years or less; provided,
however, that in determining the term of a sublease, any options or rights to renew
or extend the sublease shall be considered part of the term -Vhether or not
exercised;
(f) the transfer is caused by the dissolution of the marriage of Lessee and the
full interest of one of the spouses is transferred to the other spouse;
(g) the transfer is to an inter vivos trust, living trust or other similar estate
planning arrangement of Lessee; provided, however, that the provisions of
Paragraph 3.0 shall apply upon the death of such Lessee if the beneficiary of such
trust or other arrangement is other than the surviving spouse or a tenant in
common or joint tenant in ownership of the leasehold estate created by this Lease,
and such tenants in common or joint tenants first acquired their respective interests
in this Lease simultaneously; or
NB1-187371.V2 5 05/24/94
(h) the transfer is to a guardian or custodian of Lessee appointed due to the
physical or mental incapacity of Lessee; provided, however, that the provisions of
Paragraph 3.0 shall apply upon the death of such Lessee unless the transferee is
the surviving spouse or a tenant in common or joint tenant in ownership of the
leasehold estate created by this Lease, and such tenants in common or joint
tenants first acquired their respective interests in this Lease simultaneously.
(4) Rent Adjustments.
(a) Except as provided in Paragraphs 3.13(I)(a), 3.6(2)(a) and 3.6(3), on the
seventh (7th) anniversary of the Execution Date of this Lease, or the seventh (7th)
anniversary of the date of any transfer of this Lease by any Current or Subsequent
Lessee, rent shall be adjusted to reflect any increase or decrease in the cost of
living, which adjustment shall be determined as set forth hereinafter. The most
recently published CPI figure shall be determined as of the date ninety (90) days
prior to the adjustment date, and rent payable during the ensuing seven (7) year
period shall be determined by increasing or decreasing the then current rent by a
percentage equal to the percentage increase or decrease, if any, in the CPI as of
the Execution Date, or the date of the most recent rental adjustment, or the date
of any transfer of this Lease by any Current or Subsequent Lessee, whichever is
later. In no event shall rent be increased or decreased by a sum greater than forty
percent (40%) of the rent paid by Lessee as of the later of (i) the Execution Date,
or (ii) the last rental adjustment date. Lessor shall endeavor to notify Lessee of
rental adjustments at least forty-five (45) days prior to the end of each seventh (7th)
lease year; provided, however, failure of Lessor to give forty-five (45) days' notice
does not relieve Lessee from the obligation to pay increased rent or the right to pay
less rent in the event of a decrease in the CPI; and, provided further, that Lessee
shall have no obligation to pay rent increases which apply to any period greater
than ninety (90) days prior to the receipt by Lessee of Lessor's notice of an
increase in rent.
(b) In the event Lessee is two or more persons owning the leasehold estate
created hereby as tenants in common or joint tenants, and less than all of such
persons transfer their interest in this Lease to a person other than to an existing
tenant in common or joint tenant, the rent adjustment shall be prorated to reflect
the percentage interest being transferred to a third party. For example, if two
persons are the Lessee as tenants in common as to equal one-half interests, and
one of such persons transfers his/her 50% interest to a third party, the rent shall
be adjusted as provided in Paragraph 3.I3(2)(c), and thereaftevias provided in
Paragraph 3.13(4) (a), and the resultant rental increase multiplied by the percentage
transferred (50%) to determine the rental increase; provided, however, that any
subsequent transfer of an interest in this Lease to such third party shall not be
exempt under subparagraph 3.6(3).
(5) Installment Payments/Grace Period.
Lessee shall pay rent in equal monthly installments, in advance, with payment due on or
before the first day of the month for which rent is paid. Rent shall be prorated during any
month when a transaction which increases rent becomes effective other than the first day
of that month. No late payment charge applies to payments received by Lessor on or
before 5:00 P.M. on the fifteenth (15th) day of the month for which the payment is made
("Grace Period") . If a rent payment, or any portion thereof, is received by Lessor after
NB1-187371.V2 6 05/24/94
expiration of the Grace Period, Lessee shall pay Lessor a late payment charge equal to four
percent (4%) of each late payment, or portion thereof. Rent payments shall be payable to
the City of Newport Beach and sent, or delivered, to the Finance Director at the address
specified for service of notices. Rent shall be payable by Lessee to Lessor in such coin or
currency to the United States as at the time of payment is legal tender for public and private
debts. Lessor and Lessee agree that late charges specified in this paragraph represent a
fair and reasonable estimate of the cost Lessor will incur by reason of any late payment by
Lessee. Any late or missed payment of rent constitutes a default pursuant to paragraph 13
of this Lease. Any failure by Lessor to declare a default and initiate termination of this
Lease due to a late or missed payment shall not be considered a waiver of the right of
Lessor to do so for that or any other late or missed payment.
C. Credit to Tidelands Fund. In calculating Initial Rent under this Lease, a credit was given
to certain of the Current Lessees equal to the annual amortization of the present value of the
additional property tax to be paid by such lessees during the remaining period of the Pre-existing
Lease. This credit, commonly referred to as the 'tax advantage", is shown on Exhibit D for each
affected lot. This credit was extended by Lessor to Current Lessees as consideration for entering
into this Lease. As a consideration in its approval of this Lease, the California State Lands
Commission required Lessor to credit its State supervised Tidelands Trust Fund by an amount
equivalent to the tax advantage derived from those lots in Beacon Bay comprising tidelands. This
amount is shown on Exhibit D for each affected lot comprising tidelands. Accordingly, Lessor has
unilaterally agreed to annually calculate the amount of such tax advantage derived from the
tidelands parcels in Beacon Bay and to credit an equivalent amount as revenue to the State
supervised Tidelands Trust Fund. This provision is included in this Lease to acknowledge the
agreement of Lessor with the California State Lands Commission, and does not affect the rights and
obligations of Lessor or Lessee under this Lease.
4. TRANSFERS.
A. Conditions Precedent to Transfer. Lessee may transfer this Lease subject to the prior
written consent of Lessor, which consent shall not be unreasonably withheld, delayed or
conditioned. Lessor shall consent to any transfer when Lessee and the proposed transferee have
complied with the following:
(1) Lessee shall furnish Lessor with executed copies of each and every document used
to effect the transfer.
(2) Lessee or the proposed transferee shall pay to Lessor a transfer fee of one hundred
dollars ($100.00); 'Ai
(3) Lessee shall execute a 'Termination of Leasehold Interest" for recordation; and
(4) The proposed transferee shall execute a new lease and execute a "Memorandum
of Lease" for recordation, which lease shall be identical to this Lease and have a term equal
to the remaining term of this Lease at the time of the transfer.
B. Transfer Information. The parties to any non-exempt transfer of this Lease shall provide
Lessor with all information relevant to a determination of the total consideration paid for the transfer,
as well as all documents which are relevant to the total consideration paid for the transfer. Lessee
and the proposed transferee shall provide this information not later than forty-five (45) days prior
to the proposed effective date of the transfer of this Lease. Lessor shall have the right, at its sole
discretion, to commission an appraisal of the fair market value of this Lease and improvements
NB1-187371.V2 1 05/24/94
thereon as of the date of transfer. Any such appraisal shall be completed not later than thirty (30)
days after receipt by Lessor of the aforementioned information from the Lessee. If the value
determined by the appraiser commissioned by Lessor exceeds the stated total consideration to be
paid based on the information received from the Lessee by more than ten percent (10%), Lessor
shall so notify the Lessee and provide Lessee with a full copy of such appraisal report, and said
value shall be deemed the Actual Sales Value for purposes of calculating Average Actual Sales
Value Rent and rental payments unless within fifteen (15) days after receiving such -notice and the
report the Lessee notifies Lessor that Lessee elects to cause an appraisal of the fair market value
of this Lease and improvements thereon as of the date of transfer to be conducted by an
independent appraiser. In such event, Lessee cause such appraisal to be completed no later than
thirty (30) days after the notice to Lessor and shall provide Lessor with a full copy of the appraisal
upon completion. The Actual Sales Value for purposes of calculating Average Actual Sales Value
Rent and rental payments shall be the greater of (i) the stated consideration for the transfer, or (ii)
the average of the two appraisals. Any appraisal commissioned by Lessor or Lessee under this
Paragraph 4.6 shall be conducted by an MAI appraiser licensed to conduct business in the State
of California and experienced in residential appraisals in Southern California.
C. Exempt Transfer Information. Lessor's consent is not required for the "exempt transfers"
referenced in Paragraph 3.13(3); provided, however, Lessee shall furnish Lessor with copies of all
documents used to effect any exempt transfer.
D. Audit of Subleases. It is the intent of the parties that transfers referred to in Section
3.13(3)(e) shall only be exempt from the further provisions of Paragraph 3.13 (in respect of rental
adjustments) if such subleases are not substantially equivalent to, do not have substantially the
same economic effect as, or are intended to disguise, a transfer by the then Lessee of all or
substantially all of his/her interest in this Lease to the putative sublessee. Lessor shall at all times
have the right, upon written request to the Lessee, to receive copies of all written agreements, and
to be advised in full of all oral agreements, between the Lessee and any sublessee of the Leased
Land. Any purported sublease of the premises which is determined to be substantially equivalent
to, or have substantially the same economic effect as, or is intended to disguise, a transfer by the
then Lessee of all or substantially all of his/her interest in this Lease to the putative sublessee shall
be void and of no force or effect, and such attempted or purported sublease shall, at the option of
Lessor, (i) be an event of default by the Lessee under this Lease, or (ii) permit Lessor to treat such
sublease as a transfer of this Lease subject to the provisions of Section 3.13.
5. ENCUMBRANCES.
A. Right to Encumber. Lessee may encumber this Lease by deed of trust, mortgage, or
similar instrument, in favor of any bona fide lender ("Lender") in a bona fide loan transaction for any
purpose without the consent of Lessor. To determine whether a loan is a bona fide lending
transaction, and not an arrangement for transfer of the possession or title to the Premises to the
putative lender, Lessee and the lender agree to provide Lessor with all documentation executed
between Lessee and the lender concerning the loan upon request of Lessor. Neither Lessee nor
Lessor shall have the power to encumber Lessor's interest in the Leased Land. Any encumbrance
shall be subject to all covenants, conditions and restrictions in this Lease and to all rights and
interests of Lessor except as otherwise expressly provided in this Lease. Lessee shall give Lessor
prior written notice of any encumbrance.
B. Notice to Lender. Lessor shall have no obligation to give any Lender any written notice
pursuant to this Lease unless the Lender has given Lessor written notice of its name, address, and
nature of encumbrance ("Complying Lender") . Lessor shall give all Complying Lenders a copy of
any written notice of default, notice of termination or other notice which may affect Lessee's rights
NB1-187371.V2 8 05/24/94
under this Lease. Notice shall be deemed given by Lessor to Lender five (5) days following deposit
in the United States mail, certified and return receipt requested, postage prepaid, and sent to Lender
at the address furnished in writing by Lender.
C. Modification. Lessor and Lessee agree that they will not modify, surrender or cancel this
Lease by mutual agreement without the prior written consent of Lender.
D. Rights of Lender. Any Lender holding or the beneficiary of a security interest or lien on
this Lease and the leasehold estate created hereby shall have the right, during the term of the
Lease, to:
(1) perform any act required of Lessee pursuant to this Lease;
(2) transfer this Lease to the purchaser at any foreclosure sale, the assignee in the
event of an assignment in lieu of foreclosure, or to acquire the interest of Lessee pursuant
to foreclosure or assignment and thereafter transfer this Lease to the Lender's successor.
Lender shall have no right to transfer this Lease unless and until Lender has cured all defaults
requiring the payment or expenditure of money by Lessee.
E. Right of Lender to Cure Default. Lessor shall give written notice of any default or breach
of this Lease by Lessee to Lender and afford Lender the opportunity, after notice, to:
(1) cure the breach or default within ten (10) days after expiration of the time period
granted to Lessee for curing the default if the default can be cured by payment of money;
(2) cure the breach or default within thirty (30) days after expiration of the time period
granted to Lessee for curing the default when the breach or default can be cured within that
period of time; or
(3) cure the breach or default in a reasonable time when something other than money
is required to cure the breach or default and cannot be performed within thirty (30) days
after expiration of the time period granted to Lessee for curing the default, provided the acts
necessary to cure the breach are commenced within thirty (30) days and thereafter
diligently pursued to completion by Lender.
F. Foreclosure in Lieu of Cure. Lender may forestall termination of this Lease for a default
or breach by Lessee by commencing foreclosure proceedings subject to strict compliance with the
following: ';�i
(1) proceedings are commenced within thirty (30) days after the later of (i) expiration
of the time period granted to Lessee for curing the default, or (ii) service on Lender of the
notice describing the breach or default;
(2) the proceedings are diligently pursued to completion in the manner authorized by
law; and
(3) Lender performs all of the terms, covenants and conditions of this Lease requiring
the payment or expenditure of money by Lessee until the proceedings are complete or are
discharged by redemption, satisfaction, payment or conveyance of this Lease to Lender.
NB1-187371.V2 9 05/24/94
G. New Lease. Notwithstanding any other provision of this Lease, should this Lease terminate
or be terminated because of any default or breach by Lessee, Lessor shall enter into a new lease
with Lender as lessee provided:
(1) the written request for the new lease is served on Lessor by Lender within thirty (30)
days after the termination of this Lease.
(2) the new lease contains the same terms and conditions as this Lease except for
those which have already been fulfilled or are no longer applicable.
(3) on execution of the new lease by Lessor, Lender shall pay any and all sums that
would be due upon execution of the new lease, but for its termination,and shall fully
remedy, or agree in writing to remedy, any other default or breach committed by Lessee
that can reasonably be remedied by Lender.
(4) Lender shall, upon execution of the new lease, pay all reasonable costs and
expenses (including attorney's fees) incurred in terminating this Lease, recovering
possession of the premises from Lessee, in preparing the new lease.
H. Miscellaneous. The following provisions shall apply to Lessor, Lessee and any Lender:
(1) Any Lender shall be liable to perform the obligations of the Lessee under this Lease
only so long as the Lender holds title to this Lease;
(2) Lessee shall, within ten (10) days after the recordation of any trust deed or other
security instrument, record, at Lessee's sole expense, Lessor's written request for a copy
of any notice of default and/or notice of sale under any deed of trust as provided by state
law.
6. USE AND MAINTENANCE.
A. Use of Leased Land. The Leased Land shall be solely for residential purposes. Lessee
may demolish, construct, remodel, reconstruct and maintain structures on the Leased Land for
residential purposes so long as the structures and construction are authorized by appropriate City
permit and fully comply with all City ordinances, resolutions, regulations, policies, and plans. Lessee
shall also obtain permission to construct and/or maintain structures from the California Coastal
Commission and any other state agency if required by law.
B. Maintenance of Improvements. Lessor shall not be required to mak* any changes,
alterations, additions, improvements, or repairs in on or about all or part of the Premises. Lessee
shall, at all times during the term of this Lease and without any cost or expense to Lessor, keep and
maintain, the Premises, including, without limitation, all structures, facilities, walks, curbs, parkways
and other improvements, in good order and repair and in a clean, safe, sanitary and orderly
condition. Lessee shall repair or reconstruct any improvements on the Leased Land following any
damage or destruction thereof, unless the improvements are being destroyed in conjunction with
remodeling or reconstruction and Lessor has consented, in writing, to the damage or destruction.
Lessee shall cause to be constructed, maintained and repaired all utilities, pipes, walls, sewers,
drains, and other improvements on the Premises to the extent required by law or as necessary to
maintain the improvement in good order and repair and safe and sanitary condition.
C. Compliance with Laws. Lessee shall make, or cause to be made, any additions, alterations
or repairs to any structure or improvement on the Premises which may be required by, and Lessee
NB1-187371.V2 10 05/24/94
shall otherwise observe and comply with, any law, statute, ordinance, plan, resolution or policy
applicable to the Premises. Lessee shall indemnify, defend and hold Lessor harmless from and
against any loss, liability, action, claim or damage, arising out of, or in any way related, to Lessee's
failure to comply with, and perform pursuant to, provisions of this subparagraph C. All repairs,
additions, and alterations to the structures or improvements on the Premises shall conform to all
applicable laws, ordinances, regulations, plans, policies and resolutions and all work shall be
performed with reasonable diligence, completed within a reasonable time, and performed at the sole
cost and expense of Lessee.
D. As Is Condition of Premises. Lessee expressly accepts the Premises "as is" and
acknowledges that Lessor has made no representations or warranties as to the suitability of the
property or any construction or improvement. Lessee shall conduct all tests necessary to determine
the suitability of the property for any proposed construction or improvement, including, without
limitation, the amount and extent of any fill, and related factors. Lessee expressly acknowledges
that Lessor shall not be liable for any damage or loss resulting from any subsurface or soil condition
in, on, or under the Premises or adjacent property. Lessee expressly acknowledges that, while the
legislature of the State of California has purportedly removed the public trust restrictions on use of
the Property pursuant to the Beacon Bay Bill, the Leased Land may constitute filled tidelands, and
Lessor has made no representation or warranty relative to the validity of the Beacon Bay Bill or the
power of the legislature of the State of California to remove public trust restrictions on tidelands
through legislation. Notwithstanding the foregoing, in the event of any challenge to the right and
power of Lessor to lease the Leased Land for the purposes provided in this Lease, Lessor agrees,
at its sole cost and expense, to use all reasonable efforts to resist and defend against such
challenge and to seek a ruling or judgment affirming and upholding the right and power of Lessor
to lease the Leased Land for the purposes provided in this Lease.
7. TAXES AND UTILITIES.
It is understood by Lessor and Lessee that this Lease shall give rise to a possessory interest tax obligation
and that the execution of this Lease will constitute a reassessment event which may give rise to a material
increase in the possessory interest tax currently payable by Lessee under the Pre-existing Lease. Lessee
shall pay, before delinquent, all utility charges and any general and special taxes, assessments or other
governmental charges, if any, which may be levied on the Leased Land, and/or any improvements,
including, without limitation, any possessory interest tax. Any lien for unpaid utilities, taxes, assessments
or charges shall not attach to the leasehold interest but only to improvements located on the Leased Land.
8. USE AND MAINTENANCE OF COMMON AREA.
Lessee shall have the right to use the streets, beaches, walkways, tennis courts, docks, pief;, and common
landscaped areas in Beacon Bay (as depicted on Exhibit A) and which are leased to the Beacon Bay
Community Association by Lessor in consideration of the maintenance thereof by such Association and rent
to be paid by individual Lessees under their respective leases.
9. MAINTENANCE AND IMPROVEMENT OF INFRASTRUCTURE.
Lessor has no obligation to install, improve, repair, or maintain streets, curbs, gutters, water lines, sewer
lines, drainage facilities, street lighting or other facilities used by the residents of Beacon Bay (Infrastructure).
Notwithstanding Section 8 above, Lessor reserves the right, after a five (5) year period following the Effective
Date and upon approval by the Lessees representing a majority of the lots in Beacon Bay, to improve and
maintain streets, curbs, gutters, water lines, sewer lines', drainage facilities, street lighting, telephone and
electricity lines and other Infrastructure facilities in Beacon Bay at its initial cost and to assess Lessee for
NB1-187371.V2 11 05/24/94
a pro rata share of such costs, and to collect such costs from Lessee in the form of rent over the remaining
term of this Lease.
10. COMMUNITY ASSOCIATION.
A. Membership in Association. As a material part of the consideration of this Lease, and as
an express condition to the continuance of any of the rights of Lessee pursuant to this Agreement,
Lessee agrees to become, and during the term of this Lease to remain, a member in good standing
of the Beacon Bay Community Association.
B. Compliance with Rules and Regulations. Lessee agrees to abide by the Articles of
Incorporation, bylaws, and all rules and regulations of the Association, and to pay to the
Association, before delinquency, all valid dues, fees, assessments and other charges properly levied
or assessed by the Association. Lessee's failure to comply with the provisions of Paragraph A and
this Paragraph B shall constitute a material breach of this Lease.
C. Lessor Maintenance of Common Areas. In addition to the rights reserved to Lessor
pursuant to the provisions of Section 9, if the Community Association fails or ceases to maintain
community facilities, Lessor may, at its option and without obligation, assume the obligations of the
Community Association to maintain, repair, install or improve community facilities. In such event,
Lessee shall pay a pro rata share of Lessor's reasonable expenses in maintaining and operating the
community facilities, including a reasonable management fee or the fee charged by a management
agent. Lessee's pro rata share shall be determined by dividing Lessor's costs by the number of
residential lots within Beacon Bay (currently seventy-two lots) . Lessee's pro rata share of the
annual costs incurred by Lessor shall be paid within thirty (30) days after written notice of the
amount due, and any failure to pay shall constitute a material breach of this Lease. The costs of
maintaining and operating community facilities shall be determined annually and solely from the
financial records of Lessor.
11. COVENANTS, CONDITIONS AND RESTRICTIONS.
Lessee agrees to abide and be bound by all covenants, conditions, restrictions and reservations as
contained in Exhibit D attached hereto and incorporated herein by this reference. Said covenants,
conditions and restrictions shall run with the Leased Land and shall be binding on Lessee and Lessee's
successors in interest.
12. INDEMNIFICATION.
Lessee shall indemnify, defend and hold harmless Lessor, its City Council, Boards anck Commissions,
officers, agents, servants and employees from and against any and all actions, causes of action, obligations,
costs, damages, losses, claims, liabilities and demands of any nature whatsoever, including reasonable
attorneys' fees, regardless of the merit or outcome of any such claim or suit, arising out of, or in anyway
related, to the condition of the Premises, or the use or possession of the Premises by Lessee, or Lessee's
employees, agents, representatives, guests or invitees, as well as any activity, work or things which may be
permitted or suffered by Lessee in or on the Premises. Lessee shall indemnify, defend and hold harmless
Lessor, its City Council, Boards and Commissions, officers, agents, servants and employees from and
against any and all actions, causes of action, obligations, costs, damages, losses, claims, liabilities, and
demands of any nature whatsoever, including reasonable attorneys' fees, accruing or resulting to any and
all persons, firms or corporations furnishing or supplying work, services, materials, equipment or supplies
arising from or in any manner connected to the use or possession of the Premises by Lessee or from any
activity, work or things which may be permitted or suffered by Lessee in or about the Premises. Without
limiting the generality of the foregoing, Lessee hereby assumes all risk of damage to property or injury to
NB1-187371.V2 12 05/24/94
persons in or about the Premises from any cause except for damage or injury resulting from the negligence
or willful, fraudulent or criminal conduct by Lessor and/or its officers, employees, agents and
representatives, and Lessee hereby waives all claims in respect thereof against Lessor.
13. INSURANCE.
A. General Conditions. All insurance required to be carried pursuant to this Section 13 shall
be obtained from reputable carriers licensed to conduct business in the State of California. Each
policy required to be carried pursuant to this Section 13 shall name Lessee and Lessor as additional
named insureds, and shall provide that the policy may not be surrendered, cancelled or terminated,
or coverage reduced, without not less than twenty (20) days prior written notice to Lessor.
B. Fire Insurance. Lessee shall, during the term of this Lease, insure all structures and
improvements on the Leased Land against loss or damage by fire or other risk for residential
structures. The insurance shall provide coverage to at least ninety percent (90%) of the full insurable
replacement value of all improvements on the Leased Land, with the loss payable to Lessee unless
this Lease is terminated by Lessor for default of Lessee in which case the proceeds of insurance
shall be paid to Lessor.
C. Liability Insurance. Lessee shall, at Lessee's sole cost and expense, procure and maintain
during the term of this Lease, a broad form comprehensive coverage policy of public liability
insurance which insures Lessee and Lessor against any loss or liability caused by, or in any way
related to, the condition, for Lessee's use and occupation, of the premises in amounts not less than:
(1) $500,000 per occurrence for injury to, or death of, one person;
(2) $100,000 for damage to or destruction of property.
14. DEFAULT.
A. Events of Default. The occurrence of any one or more of the following events shall
constitute a material default and breach of this Lease by Lessee:
(1) the abandonment of the Premises by Lessee;
(2) the failure by Lessee to make any payment of rent when due if the failure continues
for three (3) days after written notice has been given to Lessee. In the event that Lessor
serves Lessee with a Notice to Pay Rent or Quit pursuant to applicable unlawful detainer
statutes, such Notice to Pay Rent or Quit shall also constitute the notice.&equired by this
paragraph;
(3) the failure by Lessee to perform any of the provisions of this Lease and any Exhibits
attached hereto to be performed by Lessee, other than described in Paragraph 14.14(2)
above, if the failure to perform continues for a period of thirty (30) days after written notice
thereof has been given to Lessee. If the nature of Lessee's default is such that more than
thirty (30) days are reasonably required for its cure, then Lessee shall, not be in default if
Lessee commences the cure within said thirty (30) day period and thereafter diligently
prosecutes the cure to completion; or
(4) the failure of Lessee to provide Lessor with all relevant information regarding the
total consideration paid in conjunction with any transfer of this Lease;
NB1-187371.V2 13 05/24/94
(5) the making by Lessee of any general assignment, or general arrangement for the
benefit of creditors; the filing by or against Lessee of a petition to have Lessee adjudged
a bankrupt or a petition for reorganization or arrangement of any law relating to bankruptcy
unless the same is dismissed within sixty (60) days; the appointment of a trustee or receiver
to take possession of substantially all of Lessee's assets located at the Premises or of
Lessee's interest in the Lease, where possession is not restored to Lessee within thirty (30)
days; or the attachment, execution or other judicial seizure of substantially all of Lessee's
assets located at the Premises or of Lessee's interest in the Lease, where such seizure is
not discharged within thirty (30) days.
Notices given under this Paragraph 14.A shall specify the alleged default and the applicable lease
provisions, and shall demand that Lessee perform the provisions of this Lease or pay the rent that
is in arrears, as the case may be, within the applicable period of time. No such notice shall be
deemed a forfeiture or a termination of this Lease unless Lessor so elects in the Notice.
B. Landlord's Remedies. In the event of any default by Lessee as defined in Paragraph 14.A,
Lessor may, in addition to any rights or remedies permitted by law, do the following:
(1) Terminate Lessee's right to possession of the Leased Premises by any lawful
means, in which case this Lease shall terminate and Lessee shall immediately surrender
possession of the Premises to Lessor. In such event, Lessor shall be entitled to recover
from Lessee all amounts to which Lessor is entitled pursuant to Section 1951.2 of the
California Civil Code, or any other provision of law, including, without limitation, the
following:
(a) The worth at the time of award of the amount by which the unpaid rent and
additional rent for the balance of the term after the time of award exceeds the
amount of the loss than Lessee proves could be reasonably avoided; and
(b) any other amount necessary to compensate Lessor for all detriment
proximately caused by Lessee's failure to perform obligations pursuant to this
Lease or which in the ordinary course of things would be likely to result from the
breach, including, without limitation, the cost of recovering possession, expenses
of reletting (including necessary repair, renovation and alteration) reasonable
attorneys' fees, and any other reasonable costs.
The "worth at the time of award" of all rental amounts other than that referred to in clause
(i) above shall be computed by allowing interest at the rate of ten percent (10%) per annum
from the date amounts accrue to Lessor. The worth at the time of award of the amount
referred to in clause (i) shall be computed by discounting such amount at one percentage
point above the discount rate of the Federal Reserve Bank of San Francisco at the time of
award.
(2) Without terminating or affecting the forfeiture of this Lease or, in the absence of
express written notice of Lessor's election to do so, relieving Lessee of any obligation
pursuant to this Lease, Lessor may, but need not, relet all or a portion of the Premises at
any time, or from time to time, and on such terms and conditions as Lessor, at its sole
discretion, deems appropriate. Whether or not the Premises are relet, Lessee shall pay all
amounts required by this Lease up to the date that Lessor terminates Lessee's right to
possession of the Premises. Lessee shall make such payments at the time specified in the
Lease and Lessor need not wait until termination of the Lease to recover sums due by legal
action. If Lessor relets all or a portion of the Premises, the reletting shall not relieve Lessee
NB1-187371.V2 14 05/24/94
of any obligation pursuant to this Lease; provided, however, Lessor shall apply the rent or
other proceeds actually collected by virtue of the reletting against amounts due from
Lessee. Lessor may execute any agreement reletting all or a portion of the leased premises
and Lessee shall have no right to collect any proceeds due Lessor by virtue of any reletting.
Lessor shall not, by any reentry or reletting or other act, be deemed to:
(a) Have accepted any surrender by Lessee of this
Lease or the leased premises;
(b) have terminated this Lease; or
(c) have relieved Lessee of any obligation pursuant to this Lease unless Lessor
has given Lessee express written notice of Lessor's election to do so.
(3) Lessor may terminate this Lease by express written notice to Lessee of its election
to do so. The termination shall not relieve Lessee of any obligation which has accrued prior
to the date of termination. In the event of termination, Lessor shall be entitled to recover the
amount specified in Paragraph 14.8(1).
C. Default By Lessor. Lessor shall not be in default unless Lessor fails to perform obligations
required of Lessor within a reasonable time, but in no event later than thirty (30) days after written
notice by Lessee to Lessor specifying wherein Lessor has failed to perform such obligation. If the
nature of Lessor's obligation is such that more than thirty (30) days are required for performance,
then Lessor shall not be in default if Lessor commences performance within such thirty (30) day
period and thereafter diligently prosecutes the same to completion.
D. Stay of Obligations. Neither party shall be under any obligation to perform or comply with
its obligations pursuant to this Lease after the date of any default by the other party.
E. Determination of Rental Value. In any action or unlawful detainer commenced by Lessor,
the reasonable rental value of the Leased Land shall be deemed to be the amount of rent and
additional rent (such as reimbursement for costs of Infrastructure improvements or the payment of
taxes or assessments) for the period of the unlawful detainer, unless Lessor/Lessee shall prove to
the contrary by competent evidence.
F. Waiver of Rights. The failure or delay of either party to exercise any right or remedy shall
not be construed as a waiver of such right or remedy or any default by the other party. Lessor's
acceptance of any rent shall not be considered a waiver of any preexisting breach of default by
Lessee other than the failure to pay the particular rent accepted regardless of Les&or's knowledge
of the preexisting breach of default at the time rent is accepted.
G. Waiver of Right of Redemption. Lessee waives any right of redemption or relief from
forfeiture pursuant to Code of Civil Procedure Sections 1174 and 1179 and/or pursuant to`'any
existing or future statutory or decisional law in the event Lessee is evicted or Lessor takes
possession of the Premises by reason of Lessee's default.
15. SURRENDER OF POSSESSION UPON EXPIRATION OR TERMINATION.
A. Surrender of Premises. Upon the expiration or termination of this Lease, Lessee agrees
to peaceably deliver possession of, and agrees to vacate without contest, legal or otherwise, the
Leased Land. Lessor, at its sole discretion, may record a document evidencing the expiration or
NB1-187371.V2 15 05/24/94
termination of the leasehold interest. Lessee waives any right to receive relocation assistance or
similar form of payment.
B. Removal of Improvements. Upon the expiration of the term of this Lease, and on
condition that Lessee is not then in default of any of the provisions of this Lease, Lessee shall have
the right to remove from the Leased Land all buildings and improvements built or installed on the
Leased Land. Removal of any building or improvement shall be at the sole cost and expense of
Lessee and removal must be complete no later than ninety (90) days after expiration of the term of
this Lease. Lessee shall fill all excavations and remove all foundations, debris and other parts of the
buildings or improvements remaining after removal and surrender possession of the Premises to
Lessor in a clean and orderly condition. In the event any of the buildings and improvements are
not removed within the time provided in this Paragraph 15.6, they shall become the property of
Lessor without the payment of any consideration.
16. EMINENT DOMAIN.
A. Definitions of Terms.
(1) The term "total taking" as used in this Section 16 shall mean the taking of the entire
Premises under the power of eminent domain or the taking of so much of the Leased Land
as to prevent or substantially impair the use thereof by Lessee for the residential purposes.
(2) The term "partial taking" shall mean the taking of a portion only of the Premises
which does not constitute a total taking as defined above.
(3) The term "taking" shall include a voluntary conveyance by Lessor to an agency,
authority or public utility under threat of a taking under the power of eminent domain in lieu
of formal proceedings.
(4) The term "date of taking" shall be the date upon which title to the Premises or
portion thereof passes to and vests in the condemnor.
B. Effect of Taking. If, during the term hereof, there shall be a total taking or partial taking
under the power of eminent domain, then the leasehold estate of the Lessee in and to the Leased
Land or the portion thereof taken shall cease and terminate as of the date of taking of said Leased
Land. If this Lease is so terminated in whole or in part, all rentals and other charges payable by
Lessee to Lessor hereunder and attributable to the Leased Land or portion thereof taken shall be
paid by Lessee up to the date of taking by the condemnor, and the parties shall thereupon be
released from all further liability in relation thereto.
C. Allocation of Award - Total Taking. All compensation and damages awarded for the total
taking of the Premises and Lessee's leasehold interest therein shall be allocated as follows:
(1) The Lessor shall be entitled to an amount equal to the sum of the following:
(a) The fair market value of the Premises as improved (exclusive of the
dwelling and appurtenances to such dwelling) as of the date of taking, discounted
by multiplying such fair market value by the factor for the present worth of one
dollar ($1.00) at nine percent (9%) per annum compound interest for the number
of years remaining from the date of taking to the date of the expiration of the term
of this Lease; and
NB1-187371.V2 16 05/24/94
(b) The present worth of rents due during the period from the date of taking
to the date of the expiration of the term of this Lease, computed by multiplying the
annual rent then payable by the factor for the present worth of one dollar ($1.00)
per annum at nine percent (9%) per annum compound interest (Inwood Coefficient)
for the number of years in such period.
(2) The Lessee shall be entitled to the amount remaining of the total award after
deducting therefrom the sums to be paid to Lessor as hereinafter provided.
D. Allocation of Award - Partial Taking. All compensation and damages awarded for the
taking of a portion of the Leased Premises shall be allocated and divided as follows:
(1) The Lessor shall be entitled to an amount equal to the sum of the following:
(a) The proportionate reduction of the fair market value of the Premises as
improved (exclusive of the dwelling and appurtenances to such dwelling) as of the
date of taking, discounted by multiplying such proportionate reduction in fair
market value by the factor for the present worth of one dollar ($1.00) at nine
percent (9%) per annum compound interest for the number of years remaining from
the date of taking to the date of expiration of the term of this Lease; and
(b) The present worth of the amount by which the rent is reduced computed
by multiplying the amount by which the annual rent is reduced by the factor for the
present worth of $1.00 per annum at 9% per annum compound interest (Inwood
Coefficient) for the number of years remaining from the date of taking to the date
of expiration of the term of this Lease.
(2) The Lessee shall be entitled to the amount remaining of the total award after
deducting therefrom the sums to be paid to Lessor as hereinabove provided.
E. Reduction of Rent on Partial Taking. In the event of a partial taking, the rent payable by
Lessee hereunder shall be adjusted from the date of taking to the date of the expiration of the term
of this Lease. Such rental adjustment will be made by reducing the basic rental payable by Lessee
in the ratio that the Fair Market Rental Value of the Premises at the date of taking bears to the Fair
Market Rental Value of the Premises immediately thereafter.
17. ATTORNEYS' FEES.
Should either party be required to employ counsel to enforce the terms, conditions and ggvenants of this
Lease, the prevailing party shall recover all reasonable attorneys' fees and charges (and court costs if
applicable) incurred therein, whether or not court proceedings were commenced.
18. REMEDIES CUMULATIVE.
The rights, powers, elections and remedies of the Lessor or Lessee contained in this Lease shall be
construed as cumulative and no one of them shall be considered exclusive of the other or exclusive of any
rights or remedies allowed by law, and the exercise of one or more rights, powers, elections or remedies
shall not impair or be deemed a waiver of Lessor's or Lessee's rights to exercise any other.
NB1-187371.V2 17 05/24/94
19. NO WAIVER.
No delay or omission of either party to exercise any right or power arising from any omission, neglect or
default of the other party shall impair any such right or power or shall be construed as a waiver of any such
omission, neglect or default on the part of the other party or any acquiescence therein.
No waiver of any breach of any of the terms, covenants, agreements, restrictions or conditions of this Lease
shall be construed as a waiver of any succeeding breach of the same or of any of the terms, covenants,
agreements, restrictions or conditions of this Lease.
20. COMPLIANCE WITH LAWS.
Lessee covenants and agrees to comply with all rules, regulations, statutes, ordinances and laws of the State
of California, County of Orange, City of Newport Beach, or any other governmental body or agency having
lawful jurisdiction over the Leased Land.
21. NOTICES.
Any notice or notices provided for by this Lease or by law, to be given or served by Lessee, may be given
or served by mail, registered or certified, with postage prepaid, on the City of Newport Beach, addressed
to the Mayor, City Manager, or City Clerk, 3300 Newport Boulevard, P.O. Box 1768, Newport Beach,
California 92659-1768, or at such other address as may be hereafter furnished to Lessee in writing. If notice
is intended to be served by Lessor on Lessee, it may be served either:
A. By delivering a copy to the Lessee personally; or
B. By depositing the Notice in the United States Mail, registered or certified, with postage
prepaid, to the residence or business address furnished by Lessee; or
C. If the Lessee is absent from the Leased Land by leaving a copy with some person of
suitable age and discretion who may be occupying the Leased Land; or
D. If no one can be found, then by affixing a copy of the notice in a conspicuous place on the
Premises and also sending a copy through the mail addressed to the Lessee.
Such service upon Lessor or Lessee shall be deemed complete upon the earlier of (i) actual delivery, or (ii)
the expiration of seventy-two (72) hours from and after the deposit in the United States mail of such notice,
demand or communication.
22. HOLDING OVER.
This Lease shall terminate and become null and void without further notice upon the expiration of the term
of this Lease. Any holding over by Lessee after expiration of the term shall not constitute a renewal ofthis
Lease or give Lessee any rights in or to the Premises except as expressly provided in this Section. The
parties agree this Lease cannot be renewed, extended, or in any manner modified except in a writing signed
by all parties. However, if Lessee, or anyone claiming under Lessee, shall remain in possession of the
Premises after expiration of the term of this Lease without any agreement in writing between the parties and
Lessor accepts rent from Lessee, then Lessee shall be deemed a tenant from month-to-month subject to
the provisions of this Lease insofar as they may be applicable to a month-to-month tendency. The
month-to-month tendency may be terminated by Lessor or Lessor upon thirty (30) days' prior written notice
to the other.
NB1-187371. V2 18 05/24/94
23. QUIET ENJOYMENT.
Lessor covenants and agrees that Lessee, upon paying the rent set forth herein and observing and keeping
all covenants and agreements to be observed or kept by Lessor hereunder, shall quietly have and enjoy the
Leased Land during the term of this Lease without hindrance or molestation by anyone claiming by or
through Lessor.
24. SEVERABILITY.
If any term or provision of this Lease shall, to any extent be invalid or unenforceable, the remainder of this
Lease shall not be affected thereby, and each term and provision of this Lease shall remain valid and
enforceable to the fullest extent permitted by law.
25. MISCELLANEOUS.
A. Representations. Lessee agrees that no representations as to the Premises have been
made by Lessor or by any person or agent acting for Lessor. Lessor and Lessee agrees and
acknowledges that this document contains the entire agreement of the parties, that there are no
verbal agreements" representations, warranties or other understandings affecting this agreement,
and Lessor and Lessee, as a material part of the consideration of this Lease, waives all claims
against the other for recision, damages, or otherwise by reason of any alleged covenant, agreement
or understanding not contained in this Lease.
B. Inurement. Each and all of the covenants, conditions and agreements herein contained
shall,' in accordance with the context, inure to the benefit of Lessor and Lessee and apply to and
bind Lessor and Lessee, as the case may be, their respective heirs, legatees, devisees, executors
and administrators, successors, assigns, licensees, permittees, or any person who may come into
possession or occupancy of said Leased Land or any part thereof in any manner whatsoever.
Nothing in this paragraph shall in any way alter the provisions herein contained against assignment
or subletting.
C. Joint Several Liability. If Lessee consists of more than one person, the covenants,
obligations and liabilities of Lessee pursuant to this Lease shall be the joint and several covenants,
obligations and liabilities of such persons.
D. Captions. The section and paragraph captions used in this Lease are for the convenience
of the parties and shall not be considered in the construction or interpretation of any provision.
E. Gender. In this Lease, the masculine gender includes the feminine and. neuter and the
singular number includes the plural whenever the context so requires.
NB1-1B7371.V2 19 05/24/94
IN WITNESS WHEREOF, the parties have caused this Lease to be executed as of the date first above
written.
v
ATTEST: C%1/
CITY CLERK
APPROVED AS TO FORM:
ITY ATTORNEY
LESSOR:
CITY OF NEWPORT BEACH,
By:
Title: MAYOR
LESSEE:
NB1-187371.V2 20 05/24/94
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EXHIBIT B
Beacon Bay Lot 58 described as follows:
Lot 58 as shown on the map filed in Book 9, Pages 42 and 43 of Record
of Surveys, in the office of the County Recorder, County of Orange, State
of California.
SUMMARY OF SALIENT FACTS AND CONCLUSIONS - continued
SUMMARY OF VALUE INDICATIONS:
Existing
(1st year)
Unencumbered
Fair Market
Contract
Effective
Lot No.
Fee Lot Value
Rental Value
Rent
Net Rent
Water Front Lots
A
$1,330,000
$48,520
$23,125.08
$31,940.00
B
$1,200,000
$43,320
$12,506.85
$22,270.00
C
$1,031,000
$37,560
$16,625.04
$22,480.00
1
$947,000
$34,200
$8,020.80
$15,030.00
2
$1,131,000
$41,640
$8,825.40
$17,950.00
3
$1,263,000
$46,920
$24,250.08
$31,560.00
4
$1,318,000
$49,120
$10,458.96
$21,260.00
5
$1,341,000
$50,120
$20,012.04
$28,840.00
6
$1,386,000
$51,680
$25,000.00
$34,260.00
7
$1,210,000
$44,800
$24,999.96
$31,870.00
8
$1,177,000
$43,480
$43,750.00
$43,480.00
9
$1,298,000
$47,840
$42,500.04
$44,350.00
10
$1,342,000
$49,600
$24,999.96
$33,540.00
� 11
$1,122,000
$41,280
$9,020.52
$17,020.00
12
$1,100,000
$40,400
$14,250.00
$22,190.00
13
$1,100,000
$40,400
$23,625.00
$29,450.00
14
$1,243,000
$45,640
$10,312.56
$19,690.00
15
$1,265,000
$46,520
$10,836.47
$20,240.00
16
$1,067,000
$39,080
$8,508.48
$16,480.00
17
$1,067,000
$39,080
$16,250.04
$21,750.00
18
$1,067,000
$39,080
$8,508.48
$16,480.00
19
$1,243,000
$45,640
$10,020.02
$19,500.00
20
$1,147,000
$42,320
$8,727.84
$17,910.00
21
$1,058,000
$38,760
$20,224.50
$26,660.00
22
$1,036,000
$37,880
$41,250.00
$37,880.00
ES 1
$1,037,000
$37,880
$28,749.96
$31,920.00
ES 2
$1,037,000
$37,880
$24,625.00
$29,220.00
Subtotals:
$31,563,000
$1,160,640
$519,983.08
$705,220.00
Exhibit C - Page 1
SUMMARY OF SALIENT FACTS AND CONCLUSIONS - continued
Exhibit C m Page 2
Existing
(1st year)
Unencumbered
Fair Market
Contract
Effective
Lot No.
Fee Lot Value
Rental Value
Rent
Net Rent
Interior Lots
23
$478,000
$14,487
$2,782.32
$6,297.00
24
$501,000
$15,237
$6,125.04
$8,897.00
25
$509,000
$15,537
$3,399.12
$6,977.00
26
$511,000
$15,612
$3,417.72
$6,942.00
27
$519,000
$15,912
$3,436.44
$7,102.00
28
$542,000
$16,775
$4,137.72
$7,785.00
29
$518,000
$15,650
$15,375.00
$15,470.00
30
$510,000
$15,462
$3,551.16
$7,102.00
31
$517,000
$15,725
$8,750.00
$10,515.00
32
$520,000
$15,837
$3,588.48
$7,217.00
33
$528,000
$16,137
$3,607.08
$7,307.00
34
$589,000
$18,200
$4,454.64
$8,490.00
35
$559,000
$17,000
$3,776.28
$7,780.00
36
$548,000
$16,662
$3,795.00
$7,672.00
37
$517,000
$15,725
$14,625.00
$15,005.00
38
$520,000
$15,837
$3,780.36
$7,967.00
v 39
$528,000
$16,137
$9,125.04
$11,557.00
40
$588,000
$18,162
$11,133.60
$13,572.00
41
$513,000
$15,500
$3,719.64
$7,300.00
42
$548,000
$16,662
$3,795.00
$7,672.00
43
$556,000
$16,962
$11,250.00
$13,232.00
44
$558,000
$17,037
$3,832.20
$7,787.00
45
$565,000
$17,300
$4,056.84
$7,990.00
46
$588,000
$18,162
$4,454.64
$8,492.00
47
$539,000
$16,475
$3,459.36
$7,365.00
48
$551,000
$16,775
$6,249.96
$9,305.00
49
$520,000
$15,837
$3,551.16
$7,197.00
50
$523,000
$15,950
$3,569.76
$7,240.00
51
$520,000
$15,837
$3,780.36
$7,857.00
52
$528,000
$16,137
$12,750.00
$13,927.00
53
$588,000
$18,162
$4,479.00
$8,492.00
54
$530,000
$15,987
$3,344.88
$7,227.00
55
$559,000
$17,075
$10,625.04
$12,865.00
56
$567,000
$17,375
$3,603.96
$7,915.00
57
$546,000
$16,737
$3,551.16
$7,427.00
58
$528,000
$16,137
$6,750.00
$10,007.00
59
$525,000
$16,025
$10,125.00
$12,175.00
60
$533,000
$16,325
$3,533.88
$7,315.00
Exhibit C m Page 2
SUMMARY OF SALIENT FACTS AND CONCLUSIONS - continued
v
Unencumbered Fair Market
Lot No. Fee Lot Value Rental Value
Interior Lots - continued
61
$588,000
ES 3
$474,000
ES 4
$467,000
ES 5
$470,000
ES 6
$468,000
ES 7
$461,000
ES 8
$471,000
Subtotal Int.: $23,786,000
$18,162
$14,225
$13,962
$14,075
$14,000
$13,737
$13,925
Existing
Contract
Rent
$4,436.16
$8,750.04
$3,021.96
$10,000.08
$2,982.96
$2,966.04
$3,118.08
$724,637 $254,617.16
Subtotal W.F.: $31,563,000 $1,160,640 $519,983.08
(1st year)
Effective
Net Rent
$8,482.00
$10,325.00
$6,322.00
$11,415.00
$6,310.00
$6,057.00
$6,455.00
$397,807.00
$705,220.00
Grand Totals: $55,349,000 $1,885,277 $774,600.24 $1,103,027.00
Exhibit C = Page 3'
Distribution of Rents and Tax Advantage between Tidelands and Uplands*
Beacon Bay 6/6/94 - Page 1
Exhibit D
(lstyear)
Proportionate Proportionate
Annual Amort.
Tidelands
Effective
%
%
Rent
Rent
of PV of Tax
Tax
Lot No.
Net Rent
Tidelands
Uplands
Tidelands
Uplands
Advantage
Advantage
Waterfront Lots
A
$31,940.00
100%
0%
$31,940
$0
$0
$0
B
$22,270.00
100%
0%
$22,270
$0
$930
$930
C
$22,480.00
100%
0%
$22,480
$0
$1,410
$1,410
1
$15,030.00
100%
0%
$15,030
$0
$2,080
$2,080
2
$17,950.00
100%
0%
$17,950
$0
$2,260
$2,260
3
$31,560.00
100%
0%
$31,560
$0
$560
$560
4
$21,260.00
100%
0%
$21,260
$0
$2,610
$2,610
5
$28,840.00
100%
0%
$28,840
$0
$1,620
$1,620
6
$34,260.00
100%
0%
$34,260
$0
$0
$0
7
$31,870.00
95%
5%
$30,276
$1,594
$0
$0
8
$43,480.00
50%
50%
$21,740
$21,740
$0
$0
9
$44,350.00
5%
95%
$2,217
$42,132
$0
$0
10
$33,540.00
0%
100%
$0
$33,540
$0
$0
11
$17,020.00
0%
100%
$0
$17,020
$3,200
$0
12
$22,190.00
0%
100%
$0
$22,190
$1,130
$0
13
$29,450.00
0%
100%
$0
$29,450
$0
$0
v
14
.
$19,690.00
0%
100%
$0
$19,690
$2,880
$0
15
$20,240.00
20%
80%
$4,048
$16,192
$2,980
$596
16
$16,480.00
95%
5%
$15,656
$824
$2,640
$2,508
17
$21,750.00
100%
0%
$21,750
$0
$2,420
$2,420
18
$16,480.00
100%
0%
$16,480
$0
$2,640
$2,640
19
$19,500.00
100%
0%
$19,500
$0
$2,880
$2,880
20
$17,910.00
100%
0%
$17,910
$0
$2,470
$2,470
21
$26,660.00
100%
0%
$26,660
$0
$0
$0
22
$37,880.00
100%
0%
$37,880
$0
$0
$0
ES 1
$31,920.00
100%
0%
$31,920
$0
$0
$0
ES 2
$29,220.00
100%
0%
$29,220
$0
$0
$0
Waterfront
Subtotal:
$705,220.00
$500,848
$204,372
$34,710
$24,984
Beacon Bay 6/6/94 - Page 1
Exhibit D
Distribution of Rents and Tax Advantage between Tidelands and Uplands*
Beacon Bay 6/6/94 - Page 2
Exhibit D
(1st year)
Proportionate
Proportionate
Annual Amort.
Tidelands
Effective
%
%
Rent
Rent
of PV of Tax
Tax
Lot No.
Net Rent
Tidelands
Uplands
Tidelands
Uplands
Advantage
Advantage
Interior Lots
23
$6,297.00
0%
100%
$0
$6,297
$550
$0
24
$8,897.00
0%
100%
$0
$8,897
$390
$0
25
$6,977.00
5%
95%
$349
$6,628
$630
$31
26
$6,942.00
99%
1%
$6,873
$69
$710
$703
27
$7,102.00
100%
0%
$7,102
$0
$660
$660
28
$7,785.00
100%
0%
$7,785
$0
$740
$740
29
$15,470.00
0%
100%
$0
$15,470
$0
$0
30
$7,102.00
0%
100%
$0
$7,102
$580
$0
31
$10,515.00
30%
70%
$3,154
$7,361
$660
$198
32
$7,217.00
100%
0%
$7,217
$0
$620
$620
33
$7,307.00
100%
0%
$7,307
$0
$650
$650
34
$8,490.00
100%
0%
$8,490
$0
$730
$730
35
$7,780.00
0%
100%
$0
$7,780
$580
$0
36
$7,672.00
0%
100%
$0
$7,672
$590
$0
37
$15,005.00
5%
95%
$750
$14,255
$0
$0
38
$7,967.00
99%
1%
$7,887
$80
$0
$0
39
$11,557.00
100%
0%
$11,557
$0
$0
$0
40
$13,572.00
100%
0%
$13,572
$0
$0
$0
41
$7,300.00
0%
100%
$0
$7,300
$510
$0
42
$7,672.00
0%
100%
$0
$7,672
$590
$0
43
$13,232.00
0%
100%
$0
$13,232
$0
$0
44
$7,787.00
0%
100%
$0
$7,787
$630
$0
45
$7,990.00
15%
85%
$1,198
$6,792
$660
$99
46
$8,492.00
0%
100%
$0
$8,492
$720
$0
47
$7,365.00
0%
100%
$0
$7,365
$610
$0
48
$9,305.00
0%
100%
$0
$9,305
$600
$0
49
$7,197.00
0%
100%
$0
$7,197
$620
$0
50
$7,240.00
0%
100%
$0
$7,240
$630
$0
51
$7,857.00
0%
100%
$0
$7,857
$110
$0
52
$13,927.00
0%
100%
$0
$13,927
$0
$0
53
$8,492.00
0%
100%
$0
$8,492
$730
$0
54
$7,227.00
0%
100%
$0
$7,227
$500
$0
55
$12,865.00
0%
100%
$0
$12,865
$0
$0
56
$7,915.00
0%
100%
$0
$7,915
$470
$0
57
$7,427.00
0%
100%
$0
$7,427
$700
$0
58
$10,007.00
0%
100%
$0
$10,007
$0
$0
59
$12,175.00
0%
100%
$0
$12,175
$0
$0
60
$7,315.00
0%
100%
$0
$7,315
$660
$0
Beacon Bay 6/6/94 - Page 2
Exhibit D
Distribution of Rents and Tax Advantage between Tidelands and Uplands*
*Effective Net Rents consider tax advantage. Discount rate for present value of annual
advantage is 6%. Rate for amortization of advantage is 7%. Rent and advantage
figures are from 10/8/93 appraisal. Lots 3, 7, and 21 have been adjusted for new contract rent real estate taxes.
Beacon Bay 6/6/94 - Page 3
Exhibit D
(1st year)
Proportionate
Effective
Lot No.
Net Rent
Interior Lots - continued
%
61
$8,482.00
ES 3
$10,325.00
ES 4
$6,322.00
ES 5
$11,415.00
ES 6
$6,310.00
ES 7
$6,057.00
ES 8
$6,455.00
Interior Lots
$0
Subtotal:
$397,807.00
Add Waterfront
$705,220.00
Grand Total:
$1,103,027.00
% of Total:
100%
*Effective Net Rents consider tax advantage. Discount rate for present value of annual
advantage is 6%. Rate for amortization of advantage is 7%. Rent and advantage
figures are from 10/8/93 appraisal. Lots 3, 7, and 21 have been adjusted for new contract rent real estate taxes.
Beacon Bay 6/6/94 - Page 3
Exhibit D
Proportionate
Proportionate
Annual Amort.
Tidelands
%
%
Rent
Rent
of PV of Tax
Tax
Tidelands
Uplands
Tidelands
Uplands
Advantage
Advantage
0%
100%
$0
$8,482
$720
$0
100%
0%
$10,325
$0
$320
$320
100%
0%
$6,322
$0
$500
$500
85%
15%
$9,703
$1,712
$0
$0
0%
100%
$0
$6,310
$500
$0
0%
100%
$0
$6,057
$650
$0
0%
100%
$0
$6,455
$410
$0
$109,592
$288,215
$19,930
$5,251
$500,848
$204,372
$34,710
$24,984
$610,440
$492,587
$54,640
$30,235
55%
45%
100%
55%
*Effective Net Rents consider tax advantage. Discount rate for present value of annual
advantage is 6%. Rate for amortization of advantage is 7%. Rent and advantage
figures are from 10/8/93 appraisal. Lots 3, 7, and 21 have been adjusted for new contract rent real estate taxes.
Beacon Bay 6/6/94 - Page 3
Exhibit D