HomeMy WebLinkAbout04/10/1989 Item #I-1•
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*Agenda Item No. I-1
MEMORANDUM
OFFICE OF THE CITY ATTORNEY
April 10, 1989
TO: Honorable Mayor and Members of the City Council
FROM: Robert H. Burnham, City Attorney ,;Y !� Wp ;al 575 ��
CITY 'll ..cV�P0�7 cAC
RE: Bay elvb Ref-inaming APR 10 19&9
_ _APP-Unn_
Background:
International Bay Clubs, Inc. (IBC) has asked the City Council
to consent to an assignment of the 1986 Bay Club Lease to a lender
as partial security for a loan of $30 million dollars. At Council
direction, the City auditor and I met with Bill Ray and Dennis
O'Neil to discuss amendments to the proposed consent that would
ensure protection of the City's interest. These discussions
produced some amendments to the legal document that would evidence
the Council's consent (see attached). However, the document still
gives the lender more rights than the current lessee and, while
approval is recommended, the Council may not be legally bound to
give its consent to the proposed assignment.
The legal documents and security arrangements associated with
the proposed refinancing are somewhat complex, but the City's role
in the transaction is relatively simple. IBC proposes to use the
Bay Club Lease as partial security for a loan. A ground lease is
an interest in property, has value, and is commonly pledged as
security to guarantee repayment of loans. The Bay Club Lease is
presently collateral for loans amounting to more then $10 million
dollars. By analogy, when an individual buys a home, he or she
typically borrows a large portion of the purchase price and gives
the lender a note and trust deed to guarantee repayment. The
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Honorable Mayor and Members of the City Council
April 10, 1989
Page -2-
trust deed allows the lender to obtain title to the property in
the event the purchaser fails to pay the mortgage. If IBC were to
default on the loan, the lender has the right to step into the
lessee's shoes but does not acquire any right to the City's fee
interest in the property.
Discussion:
IBC and the lender have agreed to certain changes in the
proposed consent form and those amendments are shown by the
underlined and stricken text. The amended document more closely
conforms with the term of the 1986 lease, but the following
differences remain.
A. Assignment by bender.
The 1986 lease prohibits assignment without the City's
prior written consent which "shall not be unreasonably be
withheld." The proposed consent gives lender the right, in the
event of a foreclosure, to assign the lease to a "Class A
transferee" subject to ten days notice unless the assignment
arises from a public sale or auction. Class A transferees include
banks, financial institutions, insurance companies, or firms
actively engaged in the management of resort properties and having
a net worth in excess of $50 million dollars. Class A transferees
are, for the most part, very substantial companies possessing
resources and/or skill necessary to operate the Club in proper and
profitable manner.
B. Fire Insurance Proceeds.
The proposed consent authorizes the lender to receive
fire insurance proceeds and place the money in an interest bearing
escrow account to protect the lender's security, as well as
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Honorable Mayor and Members of the City Council
April 10, 1989
Page -3-
ensure restoration of improvements. According to the consent
form, the lender may apply insurance proceeds towards the
obligations of lessee in the event of a default under the security
documents. The consent form confirms lessee's obligations to
restore the premises in the event of a fire or other calamity as
required by the 1986 lease.
The 1986 lease provides that fire insurance proceeds shall be
paid to "lessor and lessor and to any other encumbrancer of lessee
in accordance with their respective interest therein as provided
in this lease and in any written consent to such incumbrance by
the lessor...." The 1986 lease apparently assumed that a lender
would, in the ordinary course of business, require a pledge of
fire insurance proceeds to protect its security interest.
Lessee is required, by the terms of the 1986 lease, to restore
buildings damaged or destroyed by fire or other casualty unless
the destruction occurs during the last five years of the lease
term. If lessee fails to rebuild, the City is entitled to receive
all insurance proceeds and terminate the lease. While the
proposed consent does not relieve lessee of these obligations, the
lender may, under certain circumstances, be entitled to use the
proceeds to pay off the loan rather than to rebuild.
Courts have ruled that a lender's right to insurance proceeds
is subject to an implied covenant of good faith and fair dealing.
A lender may not use fire insurance proceeds to pay off a loan
secured by a trust deed unless it proves its security would be
impaired if the proceeds were used to restore the improvements.
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Honorable Mayor and Members of the City Council
April 10, 1989
Page -4-
While circumstances may combine to support a finding of
security impairment, a brief analysis of various scenarios
suggests the risk to the City is relatively small. Assuming the
premises are damaged by fire late in the lease term when
rebuilding may not generate sufficient income to pay off the loan,
the balance of the loan will be relatively small and the majority
of the proceeds will still be paid to the City. In the event the
Bay Club is destroyed by a fire in the next few years, there
should be sufficient time left on the lease to permit restoration
of the premises and repayment of the loan proceeds.
Certain aspects of the proposed refinancing may benefit the
City. First, the lender is requiring IBC to provide insurance
against seismic damage. This insurance will facilitate prompt
rebuilding of the premises in the event of earthquake damage. The
lender has also required IBC to prepare environmental and
engineering reports to ensure the Bay Club fully complies with all
environmental quality laws and regulations. Finally, repayment of
the loan is guaranteed by Morgan Bank, Swiss Bank and Financial
Security Insurance. These financial institutions have a
significant interest in ensuring that the Bay Club is operated in
a proper and profitable manner.
Recommendation:
It is recommended the City Council awtheriae-the "Never --and
City Clerk to execute the Consent to Aams4}weent/4Wvdeppe1
Certificate attached to this me
Obert H. Burnham
RHB/mll ity Attorney
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fRevised 3/30/89)
RECORDING REQUISTED BY AND WHEN RECORDED HAIL TO:
ROGERS 4 WELLS
200 Park Avenue
Nov York, New York 1oide
Attnt Froderick B. Utley III, Esq.
LESSOR'S ESTOPPEL CERTIrICATE, ACKNOWLEDGMENT AND
CONSENT TO Iy^82 - xT OF v EHa • FATATE AX 0112 OF TRUST
KNOW ALL MEN BY TH38E PRESENTS:
THAT the CITY OF NEWPORT BEACH, a Municipal-
corporation
unicipalcorporation having an address at 3300 Newport Boulevard, Newport
Beach, Cal::fornia ("Lessor"), ..._.good,._ and valuakle
consideration. the receipt of which is hereby acknowledged,
hereby certifies to FIRST AMERICAN 'FRUST COMPANY, not personally
but solely as trustee under Land Holding Trust PLH-1187
("Leasee"), INTERNATIONAL BAY CLUBS, INC. ("IBC"), IBC
COMMIfRCIAL CREDIT CORPORATION ("Lender"), FINANCIAL SECURITY
ASSURANCE :SNC. ("Financial Security") (Lender and Financial
Security are hereinafter Collectively referred to as the
"Interested Parties") as follows:
1. Lessor is the landlord under that certain lease
with Lessee more fully described in Exhibit "A" attached hereto
(the "Leases") ,which grants a ground leasehold ijnte_reat to
lessee in the premises more Sully described in Exhibit "8"
attached hereto (Lessee's leasehold estate is hereinafter
jrsferred to as the "Premises"). The Lease (i) is in full force
and effect and has not been modified, amended or supplemented in
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any respect, except as set forth in Exhibit "A" and (ii)
constitutes the entire agreement between Lessor and Lessee with
respect to the Promises.
2. Lessor acknowltdgea and consents to the
transfer of the lessee's interest in the Lease from 19C to
Lessee pursuant to First Amended Land Holding Trust dated
November 1, 1983 which created Trust PLN -1187 (the "Trust").
Lessor acknowledges that the lease between. Lessor, as lessor,
and Balboa toy Club, Inc., as losses dated May 13, 1986 (the
"1986 Lease") was an extension of the prior lease agreements
affecting the Premises and that the lessee's interest in such
least vested in Lessee, and not Balboa Say club,, Inc.
simultaneously herewith, 19C's beneficial interest in the Trust
has been assigned, transferred and conveyed to a wholly-owned
subsidiary of IBC ("IHC Subsidiary") and Lessor consents to such
assignment, transfer and conveyance.
3. The commencement date of the term of the most
recent extension of the Loaae wmd Hay 11, 1986, and the term of
the Lease will expire on May 12, 2011. All !Minimum Rent due as
of 1989, has boon paid. Percentage Rent has been
paid and audited through the period ending [Sept. 10, 1989.
Lessee has laid in full all other sums preoently due and payable
under the mase.
1. To the best of Lessor's knowledge, neither
Lessor nor Lessee is in default under any of the provisions of
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the Lease, and Lessor knows of no event which would, with the
passage of tim#: and/or the giving of notice, constitute a
default under the Lease. There are no actions, voluntary or
otherwise, pending against Lessor, under any bankruptcy,
reorganization, insolvency or similar federal or state law.
8. Lessor acknowledges that Lender is making a
loan to Lessen and LIBC Subsidiary in tha amount of
$30,00o,000.00 (the "Loan").A Lessor hgrgb`L consents to the
granting by Leasee to First American Title Insurance Company for
the benefit of Lender of a leasehold deed of trust and security
agreement (the "Deed of Trust") the granting by Lessee to Lender
of an assignment of Lessee's rights to e411ect Images and rents
arising from k-osee's operation of the Balboa Bay Club, located
gn the Premises (the "Assignment of Leases and Rants"), and the
granting by LISC Subsidiary1 to Lender of and acceptance of
assignment of beneficial interest in the Trust (the "Collateral
Assignment") (the Deed of Trust, the Assignment of Leases and
Rents, the Collateral Assignment and any other documents
executed in connection therewith are collectively, the "security
Documents") i:ncumbering all of Lessee's interest in the Premises
and [IBCA Subsidiary's) beneficial interest in the Trust,
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including, without limitation, Lessee's leasehold estate, all
personal property at the Preni"s owned by Leases and/or I8C
subsidiary and Lessee's and/or IBC's Subsidiary's interest in
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all subleases, rents, profits and other income of the premises
arising under the lease. Lessor understands that the Security
Documents will be assigned by Lender to Financial Security.
Lessor acknowledges that all references to "authorized
encumbrancer" shall be deemed to apply to Lender and Financial
security.
6. In the event that Financial security (a) cures
any defaults of Lessee under the Leake, (b) performs Lessee's
covenants and obligations under the Lease, or (c) exercises any
election, option or privileges, which Igo*** rwgUld -be entitled to
exercise under the Lease, Lessor shall accept Financial
Security's performance of the came as if it had been made by
Lessee.
7. Lessor shall not modify or amend any term or
provision of the Lease without the prior written approval of
Financial security, which shall not be unreasonabiv withheld,
provided_.Financial.. seourity!s.,.security.interest the Premises is
not affected by such modification or amendment. In the event of
a default by Lessee under the Lease, lessor shall not
voluntarily agree to or accept any surrender, cancellation or
modification of the Lease without Financial Security's consent.
8. Lessor shall give Financial security (or any
other substitute party designated in writing by Financial
Security) notice of any default by Lessee under the Lease
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simultaneously with the giving of such notice to Lessee. Upon
the giving of such default notice to Financial Security (or such
substitute party), Financial security shall have the right, but
not t2ie obligation, to cure (i) any monetary default within a
period of fifteen (15) days after the expiration of the
applicable grace and/or notice period set forth in the Lease and
(ii) any non -monetary default within a period of thirty (30)
days after the expiration of the applicable grace and/or notice
period set forth in the lease, or in the case of any
non -monetary default which cannot with due diligence be cured
within such 30 -day period, by commsheing to cure such default
within trio aforesaid 30 -day period and thereafter prosecuting
the .curing of such default with due diligence. With respect to
any non -monetary default not susceptible of cure by Financial
Security Lessor shall not exercise any of its rights or
remedies under the Lease if Financial Security, after receipt of
notice froza Lessor, shall (i) commence, and prosecute a
foreclosure of the Deed of Trust or (ii) diligently attempt to
acquire the Premises encumbered by the Deed of Trust through a
deed in lieu of foreclosure or otherwise, and upon completion of
such foreclosure or acquisition the then owner of the Premises
shall commouce to cure such defaults as have been specified in
any notice given to Financial Security as are then susceptible
of tura by such owner. Any exercise by Financial Security of
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its remedies under the security Documents shall not constitute a
default under the Lease.
9. If Financial security is not able to avoid a
termination of the Lease, Financial security may, within thirty
(30) days after such termination, require that Lessor grant to
it a new lease on the same terms and conditions as the
terminated Leas: Lessor agreefi to Grant each now lease to
Financial Security, provided Financial security pays all rent
then owing to Slassor.,... ineludina a 1_ arrearages and diligently
cures all defaults susceptible of cure by Financial Security
under the terminated Lease within thirty (30) days after
Financial Security requires such new Lease, or in the cess of
any non -monetary default which cannot be cured within such
thirty (30) day period, commences to cure such default within
such period and thereafter prosecutes the curing of such
defaults) with due diligence.
10, in the event of Lessee's default under the
Lease or any exercise by Financial Security of its remedies
under the Security Documents, Lessor shall not disturb the
estate of any subtenants of the Premises whose sublease has been
approved by Lessor pursuant to Article 17 of the 1986 Lj"9%a. Qr
for which no consent shall be required thereunder. Lessor
agrees not to cancel any license or rental agreements concerning
any apartments or boat slips located within the Promises in the
event of Lessee's default under the Lease or the exercise by
Financial Sticurity of its rights under the security Documents.
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M4W 31 '99 16:29 BALAOA BAY CLUB 714 642 6947 P.13 '-
11. IS Lessee defaults under the Deed of Trust,
Financial Security may foreclose the Deed of Trust through
private power of sale or otherwise, effect the appointment of a
receiver and take possession of the Promises. In the event of a
sale pursuant to such foreclosure or upon Financial Security
becoming the holder of Lessee's leasehold estate, Lessee's
leasehold estate in the Premises may, subject to provisions of
paragraph 12 below, be assigned, and upon such assignment and
the assumption of Lessee's obligations by the assignee,
Financial Security shall be released from all the Tease
obligations arising after the effective date of the assignment.
Financial security shall not be personally liable under the
Lease either before such foreclosure or after Financial security
further assigns or transfers the interest foreclosed.
12. Upon Financial security foreclosing the Deed of
Trust, or accepting a deed or surrender in lieu of foreclosure,
(which transfer may be made) the Lease may be (i) freely
assigned to any Class A Transferee (as hereinafter defined) upon
ten 10) days' rior notice to Lessor,. however, if the
assignment otiose from a ,public sale or_.,auction, w the
up rsuant to fcrecjomure.. pXogdi „yr gay nther nnurt OveAA-rd
sale, no such notice to Lessor shall be required, (ii) assigned
to any Class H Transferee (as heroinafter defined) after
obtaining Lessor's consent thereto, which consent shall not be
unreasonably withheld or delayed, or (iii) assigned to any Class
C Transferee (as hereinafter defined) after obtaining
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Lessor's consent thereto, which consent shall be granted or
denied at Lessor's sole discretion.
For purposes hereof:
"Class A Transferee,, shall mean:
(i) any bank, trust company, savings bank,
savings and loan association or insurance
company regulated by the United States or
any stater s pension, retirement or
profit sharing plan regulated under the
Federal Employees Retirement Income
Security Act, a corporation, partnership
or trust whose securities or beneficial
interests are listed on the New York or
American stock Exchange, or
(ii) any person or entity actively engaged in
the operation or management of hotel,
resort or vacation properties whose net
worth, in its most recent audited
financial statement prepared in
accordance with generally accepted
accounting principles, is not less than
$50,000,000, provided that the proposed
transferee, and it the proposed
transferee is an entity, its chief
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executive officer, chairman of the board,
president, chief operating officer, chief
financial officer, any director or
general partner and any person, firm or
corporation having a beneficial interest
In twenty (204) or more of the soneys
invested in the proposed transferee,
whether by loan, stock ownership or other
form of financial interest, has not,
within the past five years been convicted
or is not under current indictment for a
crime involving corruption or bribery of
a public official or body or misuse of
public funds.
"(:lass B Transferee" shall mean any person or entity
actively engaged in the operation or management of hotel, resort
or vacation properties whose net worth on its most recent
audited financial statement, prepared in accordance with
generally accepted accounting principles is less than
$50,000,000 but greater than $20,000,000, provided that the
proposed transferee, and if the proposed transferee is an
entity, its chief executive officer, chairman of the board,
president, chief operating Officer, chief financial officer, any
director or general partner and any person, firm or corporation
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having a beneficial interest in twenty percent (20%) or more of
the moneys invented in the proposed transferee, whether by loan,
stock ownership or other form of financial interest, has, as of
the date of the transfer, a good reputation for integrity.
"Class C Transferee" shall mean any individual or
entity which is not a Class A Transfer** or Class 8 Transferee.
Any parent, subsidiary, sister corporation or other
affiliate of the entities described in the definition of Class
A, Class B or Class C Transferee shall also respectively be
deemed Class A, class 8 or Class c Transferees.
13. Notwithstanding any provision in the Lease to
the contrary, and as long as Financial security retains a
security interest in Lessee's interest in the Lsase, upon any
damage to or destruction of the improvements located on the
Premises where the insurance proceeds payable from such damage
or destruetoh exceed $2,000,000, Financial Security shall
receive all insurance proceeds from such destruction and shall
deposit same in an interest-bearing escrow account to protect
Financial Security's security and to assure completion of the
restoration of the improvements. financial Security shall
deliver the proceeds to Leasee no later than thirty (30) days
following ('.) completion of the restoration of the improvements
or any portion thereof that has been damaged or destroyed, to
the same co:adition, character and value as nearly as possible to
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that existing prior to such damage or destruction, and (ii) the
issuance of all applicable governmental approvals in connection
with the performance of such work. In the event that, in
Financial Security's sole judgment, the insurance proceeds held
by Financial security are not sufficient to fully accomplish
such restoration, Lessee shall promptly, on demand, deposit with
Financial Seeurity the additional amounts necessary to complete
such restoration. In lieu of holding such proceeds until after
completion of restoration of the improvements, Financial
Security shall be obligated to release such insurance proceeds
as the restoration of the improvements progresses upon receipt
of an unconditional, irrevocable standby letter of credit,
issued by an entity satisfactory to Financial Security in its
sole discretion, in an amount equal to the proceeds released for
restoration, and otherwise upon such terms and conditions as may
be set forth in the Security Documents. Anything to the
contrary notwithstanding, insurance proceeds may, at Financial
Security's option, be applied towards the obligations of Lessee
under the Security Documents in the event of a default under the
Security Documents. Lassor hereby consents to any subordinate
financing encumbering Lessee's leasehold estate or such
insurance proceeds solely in connection with financing the
restoration of the improvements. if the amount of insurance
proceeds exceed the than principal and interest due on the loan
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self -operative without the requirement of the execution of any
further instrument.
16. Lessor agrees to provide Financial security
with a copy of each notice giver. to Lesase at the same time and
in the same manner as such notice is provided Lessee and
addressed as fellows:
Financial Security Assurance Inc.
350 Park Avenue - 13th Floor
New York, New York 10022
Attentions Surveillance Department
with a copy to:
Rogers i Wells
200 Park Avenue
New York, Now York 10166
Attention: Frederick B, Utley III, Esq.
or to such other addresses as Financial security may hereafter
designate to Lessor in writing from time to time. No such
notice from Lessor to Lessee shall be effective until a copy of
the same is ao provided to Financial Security,
17. Lessor acknowledges that Lender and Financial
Security are relying upon this Certificate and the
representations Contained herein in providing financing to
Lessee, and Lessor makes the above representations for the
benefit and protection of Lesson, IBC, jIBC Subsidiary.1,
Interested Parties, and their respective successors and
assigns. Any rights granted to Financial Security shall apply
to Financial Security or its designee under the Security
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which is secured by the Deed of Trust, any excess proceeds shall
be distributed as otherwise in accordance with the Lease.
Financial security shall be entitled to participate in any
settlement or• adjustment of fire or other casualty losses.
Nothing contained in this paragraph 13 shall be deemed to alter
Lessee's obligations to restore the Premises pursuant to
Article 25(b) of the 1986 Lease.
14. prior to any distribution of the proceeds of
any award for any condemnation or public or quasi -public taking,
Financial seaurity shall be entitled to the amount of such award
up to the .hen full obligation for principal, interest and other
charges of Lessee under the security Documents but in no, event
in excess of the Value of Lessee's interest in the portion of
the Premises• subject to such "taking" on the day imnmediately
preceding to such taking. Nothing contained herein shall effect
Lessor's right to a condemnation award equal to Lessor's
reversionary interest in the premises on the date immediately
preceding such taking.
15. Lessor covenants that the Lease and all
amendments, revisions, or other modifications thereto, now or
hereafter made, whether recorded or unrecorded, shall be
superior to any and all /feacgIbrances placed on Lessor's fee
interest in /its Property which is subject to the Lease. The
foregoing covenant shall run with the land and shall be
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Documents. Lessor shall not, however, be liAplg to an party
for any default of Lessee under the Leate.
18. Alt-19 excresaly understood that the Loan and
the transactions to be entered into in connection therewith
shall encumber only the Lessee's leasehold estate under the
Lease,A shall notA in any way encumber the tee estate of Lessor,
and axaept as specifically set forth heroin, shall not impair
Lesscr's rights and remedies under the Lease.
IN WITNESS WHEREOP, the undersigned have executed and
acknowledged this certificate as of the __^_, day of
1989.
Approved as to force
and flue authorization
City Attorney
,A
CITY OF NEWPORT BEACR
By:
Mayor
ATTEST;
By:
City Clerk
PIP= AMERICAN TRUST COMPANY,
not personally but solely as
trustee under Land Holding
Trust PLH-1187
By.,
INTEMAT70NAL BAY CLUBS, INC.
By:
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The undersign96 hereby
ratifies and Confirms
the provisions of
paragraph 2 Wain
BALBOA BAY CLUB, INC.
eys
(Acknowledgements)
Exhibit A
1. Indenture of Lease dated March 24, 1946 by and between City
of Newport beach, as landlord, and The Newport Bay Company,
as tenant, recorded in the Official Records of the County
Recorder's Office of orange County, California in Book
2691, Page 126
2. Amendment to Lease dated April 10, 1950 by and between City
of Newport Beach, as landlord, and The Newport bay Company,
as tenant, recorded in the Official Records of the County
Recorder's Office of Orange County, California in Hook
2651, Page 146
3. Amendment to Lease dated September 29, 1952 by and between
City of Newport Beach, as landlord, and The Newport Bay
Company, as tenant, recorded in the Official Records of the
County Recorder's office of Orange County, California in
Book 2651, Page 152
4. Amendment to Lease dated March 28, 1960 by and among. City
of Newport Beach, as landlord, and The Newport Bay Company,
as tenant, and wrather investment, Inc., as assignee of
tenant's interest, recorded in the Official Records of the
County Recorders office of orange County, California in
Book 5179, page 430
S. Lease dated May 13, 1986 by and between City of Newport
Beach, as lessor, and Balboa Bay Club, Inc., as lessee, a
mamorandum of which is intended to be recorded in the
Official Records of the County Recorder's Office of Orange
County, California simultaneously herewith
IMFak,31 '�J9 iE 34 BALBOP _ CLUB 714 642 6947 P.23
Exhibit B
[legal description]
RECORDING REQUESTED BY AND WHEN RECORDED
PLEASE RETURN BY NAIL TO:
ROGERS & WELLS
200 Park Avenue
New York, New York 10166
Attention: Gail S. Wilson, Esq.
SPACE ABOVE THIS LINE FOR RECORDER'S USE ONLY
LESSOR'S ESTOPPEL CERTIFICATE
AND CONSENT TO CHANGE OF NAME
Dated: May 31, 1989
between
CITY OF NEWPORT BEACH,
FIRST AMERICAN TRUST COMPANY,
not personally but solely as
Trustee of Trust $PLH-1187
INTERNATIONAL BAY CLUBS, INC.,
BBC PROPERTY, INC.,
BALBOA BAY CLUB, INC.
and
FINANCIAL SECURITY ASSURANCE OF IOWA, INC.
LOCATION OF PREMISES:
Street Address: 1221 West Coast Highway
City: Newport Beach
County: Orange
State: California
•
LESSOR'S ESTOPPEL CERTIFICATE,
AND CONSENT TO CHANGE OF NAME
KNOW ALL MEN BY THESE PRESENTS:
THAT THE CITY OF NEWPORT BEACH, a municipal corporation
having an office at 3300 Newport Boulevard, Newport Beach,
California ("Lessor"), for good and valuable consideration, the
receipt of which is hereby acknowledged, hereby certifies to FIRST
AMERICAN TRUST COMPANY, not personally, but solely as trustee under
Land Holding Trust PLH-1187, a California corporation having an
office at 421 North Main Street, Santa Ana, CAlifornia 92702,
("Lessee"), INTERNATIONAL BAY CLUBS, INC., a California corporation
having an office at 1221 West Coast Highway, Newport Beach,
California ("IBC"), BBC PROPERTY, INC., a New York corporation
having an office at 1221 West Coast Highway, Newport Beach,
California ("BBC Property"), FSA/IBC Credit Co., a Delaware general
partnership, having an office at c/o Rogers & Wells, 200 Park
Avenue, New York, New York 10166 ("Lender"), FINANCIAL SECURITY
ASSURANCE OF IOWA, INC., an Iowa stock insurance company and
FINANCIAL SECURITY ASSURANCE, INC., a New York stock insurance
company having an office at 350 Park Avenue, Thirteenth Floor, New
York New York 10022 ("Financial Security") (Lender and Financial
Security are hereinafter collectively referred to as the
"Interested Parties") as follows:
1. Lessor previously executed a LESSOR'S ESTOPPEL
CERTIFICATE, ACKNOWLEDGMENT AND CONSENT TO ASSIGNMENT OF LEASEHOLD
ESTATE BY DEED OF TRUST dated May 2, 1989, executed by Lessor by
Donald A. Strauss, its Mayor, and by -Irene Butler, its assistant
City Clerk and approved by Robert Burnham, its City Attorney and
duly acknowledged on May 10, 1989. Said Certificate is hereinafter
referred to as the "CITY ESTOPPEL CERTIFICATE".
2. The CITY ESTOPPEL CERTIFICATE was delivered at the
request of Financial Security and Lender in connection with the
placement of that certain Leasehold Deed of Trust, Assignment of
Rents, Security Agreement and Fixture Filing made by Lessee to
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Chicago Title Insurance Company, as Trustee, in favor of Lender,
as Beneficiary (the "Deed of Trust").
3. LESSOR is the landlord under that certain lease with
Lessee more fully described in Exhibit "A" attached to the CITY
ESTOPPEL CERTIFICATE.
4. The CITY ESTOPPEL CERTIFICATE ran in favor, among
others, of an entity named Balboa Bay Credit Co., a Delaware
general partnership, which entity was intended to be formed prior
to the execution of the Deed of Trust.
5. The Interested Parties have formed the entity
originally contemplated to be named "Balboa Bay Credit Co." has
been renamed "FSA/IBC Credit Co."
6. The change in name from Balboa Bay Credit Co. to
FSA/IBC Credit Co. is a change in name only. FSA/IBC Credit Co.
is to fulfill all functions and shall have all rights and
obligations of the Lender named in the CITY ESTOPPEL CERTIFICATE.
7. Financial Security Assurance of Iowa, Inc. has
replaced Financial Security Assurance, Inc, as an Interested Party.
The change in name from Financial Security Assurance, Inc. to
Financial Security of Iowa, Inc. is a change in name only.
Financial Security Assurance of Iowa, Inc. is to fulfill all
functions and shall have all rights and obligations of an
Interested Party.
S. Lessor acknowledges and consents to the change of
name of Lender from Balboa Bay Credit Co. to FSA/IBC Credit Co. and
the change in name from Financial Security Assurance, Inc. to
Financial Assurance of Iowa, Inc. and agrees that the original CITY
ESTOPPEL CERTIFICATE shall remain in full force and effect.
9. Page 1 of the CITY ESTOPPEL CERTIFICATE. is hereby
corrected to add the following address to line 11 thereof,
immediately following the words "BBC Property, Inc., a New York
corporation having an office at":
1221 West Coast Highway
Newport Beach, California 92660.
Page 1 is also hereby corrected to add the following
address to line 13 thereof, immediately following the words "Balboa
MZ
Bay Credit Co., a Delaware general partnership having an office
at":
C/o Rogers S Wells
200 Park Avenue
New York, NY 10166
10. Paragraph 3 of the CITY ESTOPPEL CERTIFICATE is
hereby corrected by deleting, in the fifth line thereof the words
"(Sept. 30, 1989]" and replacing it with the words Sept. 30, 1988.
11. Paragraph 5 of the CITY ESTOPPEL CERTIFICATE is
hereby corrected to replace the words "in the amount of" with the
words "in an amount not to exceed" immediately before the number
"$30,000,000.00" in line 2 thereof.
12. Except for the changes of name and the corrections
approved as described above, all remaining terms, covenants and
conditions of the May 10, 1989 CITY ESTOPPEL CERTIFICATE are hereby
ratified, reaffirmed and incorporated herein by this reference as
though fully set forth at length.
IN WITNESS WHEREOF, the undersigned have executed and
acknowledged this certificate as of the 31st day of May, 1989.
Approved as to form
and due thorizaattiion
By: -��—
ame: Robert H. Burnham
Title: City Attorney
CITY OF NEWPORT BEACH
By: Lav�
Name: Rithelyn Plummer
Title: Mayor Pro Tem
ATTEST:
By: 11 ._tet / �1CC11�
Name: 1RENE BUTLER
Title: City Clerk
- 4 -
FIRST AMERICAN TRUST COMPANY,
not personally but solely as
trustee of Trust Number PLH-1187
By: lt�
Name: William W. Rofne
Title: Attorney in Fact
INTERNATIONAL BAY CLUBS,
INCORPORATED
By:
Name: W.D. Ray
Title: Chief Exec tive Officer
BBC PROPERTY,
By:
Name: W.D. Ray
Title: Chief Executive Officer
BALBOA BAY CLUB, INC.
By:
Name: W.D. Ray
Title:
5
the year 1989 before me the
a Notary Public in and for said
n, personally appeared Robert H.
or proved to me on the basis of
person whose name is subscribed
known to me to be the City
:T BEACH, the corporation that
nd acknowledged to me that such
a same pursuant to its By-laws or
:tors.
eunto set my hand and affixed my
in this certificate first above
Signature r-
, 1989
ficate
>f Name
the year 1989 before me the
Notary Public in and for said
n, personally appeared Ruthelyn
r proved to me on the basis of
person whose name is subscribed
nown to me to be the Mayor Pro
, the corporation that executed
ledged to me that such CITY OF
pursuant to its By-laws or a
7S.
unto set my hand and affixed my
n this certificate first above
`ficate
' Name
Signature
STATE OF NEW YORK )
ss..
COUNTY OF NEW YORK )
On the Z- day of June, 1989, before me the
undersigned, a Notary Public in and for said County and State,
personally appeared William W. Rome, known to me (or proved to
me on the basis of substantial evidence) to be the person whose
name is subscribed to the foregoing instrument and known to me
to be the Attorney in Fact of First American Trust Company, the
corporation that executed the within instrument not personally
but solely as Trustee of Trust Number PLH-1187 therein described
and acknowledged to me that such corporation executed the
instrument as Trustee under Trust Number PLH-1187 pursuant to
itsy-laws and a resolution of its Board of Directors, made on
�, 1989 and a Power of Attorney dated Nab► _�, 1989 intended
to be recorded simultaneously herewith. 'Zwrq—
Given under my hand and notarial seal this Z day of June,
Z
, 4'&'6
Notary Publ'
My Commision Expires:
IRMA ROSCRELLE
Notary Public, State of New York
No. 4831515
Qualified n Nassau County
farm Ewpues July 31, 1989
•
STATE OF NEW YORK
COUNTY OF NEW YORK
On the _7 day of June, 1989, before me the
undersigned, a Notary Public in and for said County and State,
personally appeared W.D. Ray, known to me (or proved to me on
the basis of substantial evidence) to be the person whose name
is subscribed to the foregoing instrument and known to me to be
the Chief Executive Officer, of International Bay Clubs,
Incorporated, the corporation that executed the within
instrument and acknowledged to me that such corporation executed
the instrument pursuant to its By-laws or a resolution of its
Board of Directors.
Given under my hand and notarial
1989.
lh
Notary Public
My Commission Expires:
IRMA ROSCHELLE
Notary Public. State of New York
No. 4831515
Qualified in Ntssau County
Term Enprtes July 31. 1989
seal this Z— day of June,
STATE OF NEW YORK
ss..
COUNTY OF NEW YORK
On the day of June, 1989, before me the
undersigned, a Notary Public in and for said County and State,
personally appeared W.D. Ray, known to me (or proved to me on
the basis of substantial evidence) to be the person whose name
is subscribed to the foregoing instrument and known to me to be
the Chief Executive Officer, of BBC Property, Inc., the
corporation that executed the within instrument and acknowledged
to me that such corporation executed the instrument pursuant to
its By-laws or a resolution of its Board of Directors.
Given under my hand and notarial seal this day of June,
1989.
�4 O�
Notary Public
My Commission Expires:
IRMA ROSCHELLE
Notary Public, State of New York
No. 4Sj1b'L5
Qualified in rv.SSau County
Term E.apirac July 31, 1989
STATE OF NEW YORK
ss..
COUNTY OF NEW YORK
On the L day of June, 1989, before me the
undersigned, a Notary Public in and for said County and State,
personally appeared W.D. Ray, known to me (or proved to me on
the basis of substantial evidence) to be the person whose name
is subscribed to the foregoing instrument and known to me to be
the Chief Executive Officer, of Balboa Bay Club, Inc., the
corporation that executed the within instrument and acknowledged
to me that such corporation executed the instrument pursuant to
its By-laws or a resolution of its Board of Directors.
Given under my hand and notarial
1989
zql'�
p0
Notary Public
My Commission Expires:
IRMA ROSCHELLE
Notary Public, State of New York
No. 48J1515
Qualified on Nassau County
7WM Cap.rca July 31. 1909
seal this �` day of June,
i^•)
0 EXHIBIT "A" •
ALL THAT CERTAIN IAND STRIATED IN THE STATE OF CALIFORNIA, COUNTY OF
ORANGE, CITY OF NEWDORT BEACH, DESCRIBED AS Falx -'S:
PARCEL 1:
THAT PORTION OF LOT 171, BLOCK 54 OF IRVINE'S SUBDIVISION, AS SHOWN
ON A MAP RECORDED IN BOOK 1, PAGE 86 OF MISCELLANEOUS RECORD MAPS, IN
THE OFFICE OF THE COUNTY RECORDER OF ORANGE COUNTY, CALIFORNIA, AND
THAT PORTION OF THE NAVIGABLE TIDE AND SUBMERGED LANDS, DESCRIBED AS
FOLLOWS:
BEGINNING AT A POINT ON THE U.S. BULKHEAD LINE EXTENDING FROM U.S.
BULKHEAD STATION NO. 129 TO U.S. BULKHEAD STATION NO. 130, AS SAID
BULKHEAD LINE AND BULKHEAD STATIONS ARE LAID OUT AND SHOWN ON A MAP
OF NEWPORT BAY, CALIFORNIA, SHOWING HARBOR LINES APPROVED BY THE WAR
DEPARTMENT, JANUARY 18, 1917, SAID POINT BEING DISTANT SOUTH 61
DEGREES 01' 07" EAST, MEASURED ALONG SAID BULKHEAD LINE, 1498.00 FEET
FROM THE INTERSECTION OF SAID BULKHEAD LINE WITH THE SOUTHWESTERLY
PROLONGATION OF THE CENTERLINE OF IRVINE AVENUE, AS SHOWN ON A MAP OF
FIRST ADDITION TO NEWPORT HEIGHTS, RECORDED IN BOOK 4, PAGE 94 OF
MISCELLANEOUS MAPS, IN THE OFFICE OF THE COUNTY RECORDER OF SAID
ORANGE COUNTY, SAID POINT ALSO BEING ON THE SOUTHEASTERLY BOUNDARY
LINE OF PARCEL 1, PER A DEED OF TRUST RECORDED MARCH 30, 1966 IN BOOK
7884, PAGE 298 OF OFFICIAL RECORDS IN THE OFFICE OF THE COUNTY
RECORDER OF SAID ORANGE COUNTY; THENCE ALONG SAID SOUTHEASTERLY
BOUNDARY LINE, THE FOLLOWING COURSES: NORTH 28 DEGREES 58' 53" EAST
130.00 FEET; THENCE NORTH 27 DEGREES 00' 00" WEST 16.66 FEET; THENCE
NORTH 28 DEGREES 58' 53" EAST 195.71 FEET TO A POINT IN THE SOUTH-
WESTERLY LINE OF THE 100 -FOOT RIGHT-OF-WAY OF THE CALIFORNIA STATE
HIGHWAY ORA -60-B, THENCE LEAVING SAID SOUTHEASTERLY BOUNDARY, SOUTH
74 DEGREES 21' 30" EAST ALONG SAID SOUTHWESTERLY LINE, 130.08 FEET TO
THE BEGINNING OF A TANGENT CURVE CONCAVE NORTHERLY, HAVING A RADIUS
OF 2550.00 FEET; THENCE EASTERLY 715.57 FEET ALONG SAID CURVE THROUGH
A CENTRAL ANGLE OF 16 DEGREES 04' 41" TO AN INTERSECTION WITH THE
NORTHEASTERLY PROLONGATION OF THE NORTHWESTERLY LINE OF TRACT NO.
1140, AS SHOWN ON A MAP THEREOF RECORDED IN BOOK 36, PAGE 28 OF
MISCELLANEOUS MAPS, IN THE OFFICE OF THE COUNTY RECORDER OF SAID
ORANGE COUNTY; THENCE SOUTH 28 DEGREES 58' 53" WEST 975.03 FEET TO A
LINE PARALLEL WITH AND DISTANT SOUTHWESTERLY 350.00 FEET FROM SAID
BULKHEAD LINE; THENCE NORTH 61 DEGREES O1' 07" WEST 776.91 FEET ALONG
SAID PARALLEL LINE OF THE SOUTHWESTERLY PROLONGATION OF THE SOUTH-
EASTERLY LINE OF SAID PARCEL 1; THENCE ALONG SAID PROLONGATION AND
SAID SOUTHEASTERLY LINE, NORTH 28 DEGREES 58' 53" EAST 350.00 FEET TO
THE POINT OF BEGINNING.
PARCEL 2:
THAT CERTAIN PARCEL OF LAND MORE PARTICULARLY DESCRIBED AS FOLLOWS:
BEGINNING AT A POINT ON THE U.S. BL'IQiEAD LINE, EXTENDING FROM U.S.
BULKHEAD STATION NO. 129 TO U.S. BULKHEAD STATION NO. 130, AS SAID
BULKHEAD LINE AND BULKHEAD STATIONS ARE LAID OUT AND SHOWN ON A MAP
OF NEWPORT BAY, CALIFORNIA, SHOWING HARBOR LINES APPROVED BY THE WAR
DEPARTMENT, JANUARY 18, 1917, WHICH SAID POINT IS DISTANT SOUTH 61
DEGREES 01' 07" EAST, MEASURED ALONG SAID BULKHEAD LINE, 700.00 FEET
FROM THE INTERSECTION OF SAID BULKHEAD LINE WITH THE SOUTHWESTERLY
PROLONGATION OF THE CENTERLINE OF IRVINE AVENUE, AS SHOWN ON A MAP OF
FIRST ADDITION TO NEWPORT HEIGHTS RECORDED IN BOOK 4, PAGE 94 OF
MISCELLANEOUS MAPS IN THE OFFICE OF THE COUNTY RECORDER OF SAID
COUNTY, SAID POINT OF INTERSECTION BEING THE MOST SOUTHERLY CORNER OF
IAT H OF TRACT NO. 919 AS PER MAP RECORDED IN BOOK 29, PAGES 31 TO 34
INCLUSIVE OF MISCELLANEOUS MAPS IN THE OFFICE OF THE COUNTY RECORDER
OF SAID COUNTY; THENCE NORTH 28 DEGREES 58' 53" EAST 154.19 FEET TO A
POINT IN THE SOUTHWESTERLY LINE OF THE 100 -FOOT RIGHT OF WAY OF THE
CALIFORNIA STATE HIGHWAY ORA -60-B, SAID POINT BEING RADIAL TO
ENGINEER'S STATION 6+56.15 IN THE CENTERLINE OF SAID HIGHWAY, SAID
RADIAL BEARS NORTH 19 DEGREES 37' 57" EAST FROM SAID POINT, SAID
SOUTHWESTERLY LINE BEING A CURVE CONCAVE NORTHEASTERLY AND HAVING A
RADIUS OF 2050.00 FEET; THENCE SOUTHEASTERLY ALONG SAID SOUTHWESTERLY
LINE, THROUGH A CENTRAL ANGLE OF 3 DEGREES 59' 27", 142.79 FEET TO A
TANGENT LINE; THENCE SOUTH 74 DEGREES 21' 30" EAST ALONG SAID TANGENT
LINE AND SAID SOUTHWESTERLY LINE, 662.08 FEET; THENCE SOUTH 28
DEGREES 5D' 53" WEST 195.71 FEET; THENCE SOUTH 27 DEGREES 00' 00"
EAST 16.66 FEET; THENCE SOUTH 28 DEGREES 58' 53" WEST 480.00 FEET TO
A LINE PARALLEL WITH AND SOUTHWESTERLY 350.00 FEET FROM SAID BULKHEAD
LINE; THENCE NORTH 61 DEGREES O1' 07" WEST ALONG SAID PARALLEL LINE,
A uib,ANCE OF 798.00 FEET TO A POINT WHICH BEARS SOUTH 28 DEGREES 58'
53" WEST 350.00 FEET FROM THE POINT OF BEGINNING; THENCE NORTH 28
DEGREES 58' 53" EAST 350.00 FEET TO THE POINT OF BEGINNING.
EXCEPT THAT PORTION DESCRIBED AS FOLLOWS:
BEGINNING AT A POINT ON THE SOUTHERLY LINE OF THE 100 -FOOT RIGHT OF
WAY OF THE CALIFORNIA STATE HIGHWAY ORA -60-B, SAID POINT OF
BEGINNING BEING AT RIGHT ANGLES TO ENGINEER'S STATION 7+95.46 IN THE
CENTERLINE OF SAID HIGHWAY; THENCE SOUTH 15 DEGREES 38' 30" WEST
44.00 FEET; THENCE NORTH 74 DEGREES 21' 30" WEST 34.00 FEET; THENCE
NORTH 15 DEGREES 38' 30" EAST TO AN INTERSECTION WITH THE SAID
SOUTHERLY LINE OF THE STATE HIGHWAY: THENCE SOUTHEASTERLY ALONG SAID
SOUTHERLY LINE TO THE POINT OF BEGINNING.
FnP:E'_ 3:
A NON-EXCLUSIVE EASEMENT FOR INGRESS AND EGRESS OVER THAT CERTAIN
PARCEL OF LAND INCLUDED WITHIN A STRIP OF LAND 25.00 FEET IN WIDTH,
THE NORTHEASTERLY LINE OF WHICH 15 DESCRIBED AS FOLLOWS:
BEG'NNING AT A POINT ON THE U.S. BULKHEAD LIN£ EXTENDING FROM U.S.
8:::_.FI.EAD STATICS' NO. 129 TO U.S. BULKHEAD STATION NO. 130, AS SAID
BULKHEAD LINE AND BULKHEAD STATIONS ARE LAID OUT AND SHOWN ON A MAP
OF NEWPORT BAY, CALIFORNIA, SHOWING HARBOR LINES APPROVED BY THE WAR
DEPARTMENT, JANUARY 18, 1917, WHICH SAID POINT IS DISTANT SOUTH 61
DEGREES 01' 07" EAST, MEASURED ALONG SAID BULKHEAD LINE, 700.00 FEET
FROM THE INTERSECTION OF SAID BULKHEAD LINE WITH THE SOUTHWESTERLY
PROLONGATION OF THE CENTERLINE OF IRVINE AVENUE, AS SHOWN ON A MAP OF
FIRST ADDITION TO NEWPORT HEIGHTS RECORDED IN BOOK 4, PAGE 94 OF
MISCELLANEOUS MAPS IN THE OFFICE OF THE COUNTY RECORDER OF SAID
COUNTY, SAID POINT OF INTERSECTION BEING THE MOST SOUTHERLY CORNER OF
LOT H OF TRACT NO, 919, AS PER MAP RECORDED IN BOOK 29, PAGES 31 TO
34 INCLUSIVE OF MISCELLANEOUS MAPS IN THE OFFICE OF THE COUNTY
RECORDER OF SAID COUNTY; THENCE NORTH 28 DEGREES 58' 53" EAST 154.19
FEET TO A POINT IN THE SOUTHWESTERLY LINE OF THE 100 -FOOT RIGHT OF
WAY OF THE CALIFORNIA STATE HIGHWAY ORA -60-B, SAID POINT BEING RADIAL
TO ENGINEER'S STATION 6+56.15 IN THE CENTERLINE OF SAID HIGHWAY, SAID
RADIAL BEARS NORTH 19 DEGREES 37' 57" EAST FROM SAID POINT, SAID
SOUTHWESTERLY LINE BEING A CURVE CONCAVE NO-ATHEASTERLY AND HAVING A
RADIUS OF 2050.00 FEET; THENCE SOUTHEASTERLY ALONG SAID SOUTHWESTERLY
LINE, THROUGH A CENTRAL ANGLE OF 3 DEGREES 59' 27", 142.79 FEET TO A
TANGENT LINE; THENCE SOUTH 74 DEGREES 21' 30" EAST ALONG SAID TANGENT
LINE AND SAID SOUTHWESTERLY LINE, 662.08 FEET TO THE TRUE POINT OF
BEGINNING; THENCE SOUTH 74 DEGREES 21' 30" EAST 130.08 FEET TO THE
BEGINNING OF A CURVE ON SAID SOUTHWESTERLY LINE, CONCAVE NORTH-
EASTERLY, HAVING A RADIUS OF 2550.00 FEET; THENCE SOUTHEASTERLY
715.56 FEET ALONG SAID CURVE, THROUGH A CENTRAL ANGLE OF 16 DEGREES
04' 40" TO THE NORTHEASTERLY PROLONGATION OF THE NORTHWESTERLY LINE
OF TRACT NO. 1140, AS PER MAP RECORDED IN BOOK 36, PAGE 28 OF
MISCELLANEOUS MAPS IN THE OFFICE OF THE COUNTY RECORDER OF SAID
COUNTY.
THE SOUTHWESTERLY LINE OF SAID 25.00 -FOOT STRIP IS TO BE SHORTENED SO
AS TO TERMINATE IN SAID NORTHWESTERLY PROLONGATION AND LENGTHENED SO
AS TO TERMINATE ON A LINE WHICH BEARS SOUTH 28 DEGREES 58' 53" WEST
FROM THE TRUE POINT OF BEGINNING.
PARCEL 4:
A NON-EXCLUSIVE EASEMENT FOR AUTO PARKING PURPOSES OVER THE SOUTH-
WESTERLY 20.00 FEET OF THE NORTHEASTERLY 45.00 FEET OF THAT CERTAIN
PARCEL MORE PARTICULARLY DESCRIBED AS FOLLOWS:
BEGINNING AT A POINT ON THE V.S. BULKHEAD LINE EXTENDING FROM U.S.
BULKHEAD STATION NO. 129 TO U.S. BULKHEAD STATION NO. 130, AS SAID
BULKHEAD LINE AND BULKHEAD STATIONS ARE LAID OUT AND SHOWN ON A MAP
OF NEWPORT BAY, CALIFORNIA, SHOWING HARBOR LINES APPROVED BY THE WAR
DEPARTMENT, JANUARY 18, 1917, WHICH SAID POINT IS DISTANT SOUTH 61
DEGREES 01' 07" EAST, MEASURED ALONG SAID BULKHEAD LINE, 700.00 FEET
FROM THE INTERSECTION OF SAID BULKHEAD LINE WITH THE SOUTHWESTERLY
PROLONGATION OF THE CENTERLINE OF IRVINE AVENUE, AS SHOWN ON A MAP OF
FIRST ADDITION TO NEWPORT HEIGHTS RECORDED IN BOOK 4, PAGE 94 OF
MISCELLANEOUS MAPS IN THE OFFICE OF THE COUNTY RECORDER OF SAID
COUNTY, SAID POINT OF INTERSECTION BEING THE MOST SOUTHERLY CORNER OF
LOT H OF TRACT NO. 919, AS SHOWN ON A MAP RECORDED IN BOOK 29, PAGES
31 TO 34 INCLUSIVE OF MISCELLANEOUS MAPS IN THE OFFICE OF THE COUNTY
RECORDER OF SAID COUNTY; THENCE NORTH 28 DEGREES 58' 53" EAST 154.19
FEET TO A POINT IN THE SOUTHWESTERLY LINE OF THE 100 -FOOT RIGHT OF
WAY OF THE CALIFORNIA STATE HIGHWAY ORA -60-B, SAID POINT BEING RADIAL
TO ENGINEER'S STATION 6+56.15 IN THE CENTERLINE OF SAID HIGHWAY, SAID
RADIAL BEARS NORTH 19 DEGREES 37' 57" EAST FROM SAID POINT, SAID
SOUTHWESTERLY LINE BEING A CURVE CONCAVE NORTHEASTERLY AND HAVING A
RADIUS OF 2050.00 FEET; THENCE SOUTHEASTERLY ALONG SAID SOUTHWESTERLY
LINE, THROUGH A CENTRAL ANGLE OF 3 DEGREES 59' 27", 142.79 FEET TO A
TANGENT LINE; THENCE SOUTH 74 DEGREES 21' 30" EAST ALONG SAID TANGENT
LINE AND SAID SOUTHWESTERLY LINE, 662.08. FEET TO THE TRUE POINT OF
BEGINNING; THENCE SOUTH 28 DEGREES 58' 53" WEST 195.71 FEET; THENCE
SOUTH 27 DEGREES 00' 00" EAST 16.66 FEET; THENCE SOUTH 28 DEGREES 58'
53" WEST 480.00 FEET TO A LINE PARALLEL WITH AND SOUTHWESTERLY 350.00
FEET FROM SAID BULKHEAD LINE; THENCE SOUTH 61 DEGREES O1' 07" EAST
235.68 FEET ALONG SAID PARALLEL LINE; THENCE NORTH 29 DEGREES 30' 13"
EAST 697.99 FEET; THENCE NORTH 11 DEGREES 45' 40" EAST 49.32 FEET TO
SAID SOUTHWESTERLY L114E OF THE STATE HIGHWAY, SAID SOUTHWESTERLY LINE
BEING A CURVE CONCAVE NORTHEASTERLY, HAVING A RADIUS OF 2550.00 FEET;
THENCE NORTHWESTERLY 118.56 FEET ALONG SAID CURVE, THROUGH A CENTRAL
ANGLE OF 2 DEGREES 39' 50" TO THE NORTHWESTERLY TERMINUS THEREOF;
THENCE NORTH 74 DEGREES 21' 30" WEST 130.08 FEET TO THE TRUE POINT OF
BEGINNING.
0 •
i i i li. LTJ i, i i i i
April 16, 1990 ?��
APR„c��
Ms. Wanda Raggio
City Clerk
City of Newport. Beach
3300 Newport Blvd.
Newport Beach, Ca. 92663
Dear Wanda:
Per your request, I am enclosing an executed copy
of the "Lessor's Estoppel Certificate and Consent
to Change of Name” dated May 31, 1989.
If you need anything further, please feel free
to call me.
Yours very truly,
W.D. Ray
Chairman of the Board
WDR:ml
CC: Robert Burnham, Esq.
1221 WEST COAST HIGHWAY. NEWPORT UACH. CAUFORN1A 92660 • TELEPHONE (74) 645-5000
C;JNCIL AGENDA �
N0. Z - /
`Parch 18, 1989
Mr. Donald Strauss, Mayor
City of Newport Beach
Dear Flavor Strauss:
0rx%
t.iaa,e r.r
I]OIMe
❑ APR 10 %
I would like to go on record with my disappointment of the
Council's action (or lack of action) at their session last
Monday evening in dealing with the Balboa Bay Club's
Memorandum of Understanding.
REC?.-. D,
fa,l n 211989 ►
Mayor
city of oort
I am an employee of the Balboa Bay Club, so you will probably
immediately conclude that I am biased. I probably am, but I
am also a resident of Newport Beach and this letter is
written in that capacity.
I attended the Council session and was amazed at what
observed. I have reflected below on a few of my
observations;
1. Most matters presented before the Council
"Rubber Stamp" approval with the Council
accepting the recommendations made by the
and other City staff employees.
were gkv
members \l
Citv Man
On the matter of the Balboa Bav Club Memorandum of
Understanding, a majority of the Council decided to
override the City Manager's recommendation and also to
disregard the City Attorney's opinion and conclusion.
2. Several members of the Council seem to believe they
are qualified to practice law, interpreting the City
Charter as they wish, rejecting the City Attorney's
and other legal opinions and conclusions.
Councilwoman Hart firmly stated she could never vote
to allow a lease extension of more than 25 years as
she did not. rare what the legal opinions stated, she
interpreted the Charter differently. Later during the
session, she inferred she might go along with a lease
extension of longer than 25 years for the club portion
of the BBC if the apartment building section was
excluded and could be razed and made into a park.
Isn't this a little inconsistent?
Councilman Sansone also had a question regarding the
legality of a lease extension beyond 25 years. He too
chose to disregard legal opinions, stating he "had an
inherent distrust" of attornevs. He them went on
rr.cor•d to vote to defer the matter to allow Mrs. Hart
time to meet with BBC officials and also to obtain
another legal opinion. This too seems inconsistent.
1
0
r1
One must wonder why the City has a City Attorney on
staff as a paid employee.
Even the testimony by one of the authors of the
Charter about the intent of the 25 year limitation was
not good enough.
:3. Councilwoman Hart seemed to be well versed on the
amount of rent received from the Balboa Bay Club on
the apartment revenue.
Unfortunately, this is a prime example of a little
knowledge being more dangerous than no knowledge at
all. Thede are a number of items which she failed to
recognize in the "Amount" of rent paid to the City for
the apartments.
a. She apparently did not take into account the
arbitrary allocation made on the internal
accounting by the City between tidelands and
uplands.
b. She failed to recognize the difference between
cash basis and accrual basis accounting.
c. She gave no recognition for the "Phase-in"
effect the City and BBC agreed upon as part of
the lease extension granted in 1986. This
"Phase-in" increases the rate paid by the BBC
from 3% to 16.5% of gross revenues from the
apartments from the existing rate in 1986 to the
year 1998 (the end of the original 50 year
lease). This is an increase of five and one-
half times the rate that was in existence in
1986.
4. There is much talk these days about environmental
impact. studies. What about doing an economical
impact study? Or isn't that important anymore.
Chances are neither _you nor myself, nor many others
on the Council for that matter, will be around in
2011 when this vision comes to pass. Unfortunately,
our kids and our kid's kids will be. They are the
ones who will have to pick up the price tag of a
park. The citizens of Newport Beach at that time and
in subsequent _years will be hit with a double whammy.
They will not only lose a significant revenue
Producing asset, but, will now have to dip into their
own pocket to pav for- a liability, year after year
,after Year.
2
0
0
5. Maybe paying for a park isn't a bad idea. It is,
though, it you aren't going to use it.
Let's look at the location of the proposed park.
Will the residents of Newport Beach use it? I doubt
it. it: isn't easily accessible or within walking
distance from a residential area. There isn't an
area for parking, or if you use part of the area for
parking, there won't be enough room for a park. It
would, however, be accessible by bus, which would
allow persons from the inland cities to utilize the
park. They would not spend any money in our city
which we could deposit into our bank account.. They
would only deposit their thrash which we would have
to pav for to clean up.
6. By converting this valuable piece of real estate into
a park, which probably won't be used by the citizens
of Newport Beach, we will have at least created a
view corridor so that all may enjoy a view of the bay
as they zoom by it on Pacific Coast Highway.
I question just how much bay you can see from street
level, standing on PCH. If you are biking by, I
would hope you will be watching where you are going
instead of looking at the view, or else you may be
enjoying the view of the bay from Hoag Hospital, or
even possibly Pacific View.
The views of a few residents on Kings Road or Cliff
Drive may be enhanced with better views of the bav
and thev will undoubtedly receive the benefits of
increased values in their property. Unfortunately,
the many other residents of Newport Beach will be the
ones that will pay for those increased values as they
will be the ones saddled with the loss of rent and
the cost to maintain the park.
7. Let's look now at the City's liability exposure for
the decision to put a park on PCH. Parks are for
kids.
I hope I'm not around when one of those kids strays
out onto PCH. That would certainly be an ugly sight.
B. The major issues of traffic congestion and the lack
of adequate parking still need to be addressed and
resolved.
9. One last point I would like to make is one of ,just
plain business mathematics.
The BBC was led to believe a lease extension would be,
granted on the existing BBC parcel. They even traded
I
0
off a very significant "rent advantage" in 1986 to
obtain a lease extension and the Memorandum of
Understanding.
The BBC expended several hundred thousand dollars for
preliminary engineering and design and put together a
plan for a substantial redevelopment, program for the
property. This will take a substantial investment by
the BBC. The BBC is willing to put up all the money;
the City of Newport Beach, their business partner,
doesn't put up a dime. Both parties, however, will
hopefully benefit by this investment. At the end of
the lease period, the City owns all the assets; lock,
stock and barrel. Not a bad deal.
We now, however, have a problem. The 13BC already
agreed to make a significant part of the property
accessible to the public as part of its redevelopment
plans. Now, it seems the Council is considering
taking a significant portion of the remaining
property away to make it public also. With the loss
of this income producing property (to both the BBC
and the City), it will not be economically feasible
to recover the intended investment from the remaining
portion of the property.
As the elected officials of our City, I was more than a
little disturbed with your decision to defer action on a
subject which should not have even been proposed. It is only
logical that a proposal be thoroughly reviewed and analyzed
before it is presented. It seemed apparent the Council did
not have the opportunity to do either and it certainly had
not been clone by Mrs. Hart. As a result, the majority of the
Council apparently had decided before the meeting to defer
action on the matter. Mrs. Hart indicated she would utilize
the time to meet and discuss the BBC plans. She has already
had that opportunity. I fail to see what will be gained by
the deferral.
cc: Evelyn Hart
Robert_ Wynn
A Concerned Citizen,
Robert 0. Basmajia
827 Gardenia Way
Corona del Mar, A 92625
4
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"RECEIVED TER AGENDA
a PRINTED:"
' 9,GIPM38CA
4-0098985071 03/12/89
ICS IPMRNCZ CSP
7146735004 FRS TORN NEWPORT BEACH CA 17 03-12 0610P EST
PMS NEWPORT BEACH CITY HALL, DLR
ATTN CITY COUNCIL. DLR C
3300 NEWPORT BLVD 6
NEWPORT BEACH CA 92663 n
BALBOA BAY CLUB MOU SHOULD BE APPROVED AS IS. EVELYN HARTS GGESTION
o` FOR A PARK IS WRONG. 3 4
GLORIA CARRAS •Z s
E 104 VIA HAVRE t_.tom
N NEWPORT BEACH CA 92663
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1811 EST
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4-0160305072 03/13/89
ICS IPMRNCZ CSP
• 07148528595 FRB TDRN NEWPORT BEACH CA 24
PMS NEWPORT BEACH CITY HALL RPT DLY MGM,
cCITY COUNCIL
°-N' NE14PORT BEACH CA
3EVELYN HART'S PROPOSAL FOR A BEACH SITE
ECONOMICALLY UNREASONABLE FOR THE CITY
C K KNICKERBOCKER
226 RUBY ST
BALBOA ISLAND CA 92663
4001 BIRCH SUITE A
NEWPORT BEACH CA 92660
1321 EST
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34-009933SO71 03/12/89
' ICS IPMRNCZ CSP
7146457277 FRB TORN NEWPORT BEACH CA 19
PMS NEWPORT BEACH CITY HALL, DLR
CITY COUNCIL, DLR
3300 NEWPORT BLVD
NEWPORT BEACH CA 92663
HAS EVELYN HART GONE CRAZY? HER PROPOSAL
CLUB SITE IS ECONOMICALLY UNREASONABLE.
• GARY DIAL
0
1813 EST
N IPM38CA
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03-12 0613P EST
FOR A PARK ON THE BALBOA BAY
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4-0240635072 03/13/89
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7149552690 FRB TDBN IRVINE CA 60 03-13 0313P EST
=PMS
MAYOR DON STRAUSS RPT DLY MGM, DLR
• iv
NEWPORT BEACH CITY HALL
•
m
3300 NEWPORT BLVD
3NEWPORT
BEACH CA 92663
• '
THE HART PARK IDEA ON A VERY BUSY COMMERCIAL HIGHWAY
IS CRAZY THE BAY
•
CLUB AND TERRACE APARTMENTS LEND DIGNITY TO THE AMBIANCE OF NEWPORT
•
BEACH AND THEY PROVIDE NEEDED REVENUE FOR THE CITY THERE ARE OTHER
AREAS IN THE CITY THAT MORE SUITABLE AND LESS EXPENSIVE FOR A PARK
•
SITE I OPPOSE COUNCILWOMAN HART IDEA IT HAS NO MERIT
HARRY ROTHBERG, HILDS ROTHBERG, LEONARD PEARLSTEIN
AND MELBA
•
PEARLSTEIN
•
E
2301 DUPONT SUITE 150
N
IRVINE CA 92715
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• „IPM38CA
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3
3
' "RECEIVED AFTER
PRINTED =� -- - DONALD E. VANCE
March 13, 1989
Councilwoman Evelyn Hart
Third District
C/O The Newport Beaqh City Hall
3300 Newport Blvd.
Newport Beach, CAlifornia 92663
Y
W ";E o
v
Re: BAC/Newport Beach Memorandum of Understanding
Dear Councilwoman Hart:
As a fourth generation Californian and a resident of the BBC Terrace
Apartments you can imagine my shock in reading about your plan to
convert our home into a park.
You must be aware of the historic position that the Balboa Bay Club
enjoys in the Newport Beach development resume. The Bay Club was
the catalyst that brought many successful businessmen to the area
that later invested in Newport Beach.
To suggest that the Bay Club Apartments should be converted into a
park would mean that the Council would have to ignore the General
Plan Ammendment approved in October 1988, the very rules of good
economic planning and the fact that any cloud over a project today
can effect the financing of the development on a permanent basis.
I must believe that a responsible Council would not take such an
action.
The fact that to convert the Bay Club to a park would cost the
City of Newport Beach millions of dollars in revenue from tax
seems to be lost on you. In addition, a study commissioned by
the City in 1985 considered a park and determined that the BBC
produced economic and community advantages for the City.
The Memorandum of Understanding is required to obtain proper
financing for the new improvements that are planned. You must
be aware of the Saving & Loan, Bank and Mortgage Broker problems
that are facing a developer in todays market. The City Council
would not be well served by delaying a project to study new
suggestions at this late date and the BBC is a community project
that needs the new improvements now!
f c urse we would like to think that you would vote in favor of
the M U. H ever, if you feel that you can't I would hope that
you w ul least vote and not attempt to delay the process.
Th k you or your consideration.
Oy1
D ald E. Vance
cc: Mayor Don Strauss
Newport Beach City Council
1221 West Coast Highway, Suite 310, Newport Beach, Calif. 92663
714/645-5000
0
March 13. 1989
• "RECEIVED AM ABENQA
PRINTED." Z-4
Your Office e7enie
RECEIVED
13196 �_
NFNCM
Hon. Don Strauss
Mayor
Newport Beach City Hall
3300 Newport Boulevard
Newport Beach, California 92663
Dear Sir:
2620 SOU": CaWorro .AveriJp.
MorrOva Cal fo"..a 91016
(818} 3573812 • (816) 358 9103 • (818) 303 8747
X213) 681 8604
It is our understanding that Ms. Evelyn Hart is opposing
a lease extension for the Balboa Bay Club involving the Terrace
Residents Section.
Our strong opinion is that the apartment resident section
of the Balboa Bay Club provides substantial income to the
City of Newport Beach in addition to the fact that the main-
tenance of this portion of property does not represent a
cost factor to the City. Additionally, not only would it
be extremely costly for the City to maintain a park in that
area, but have the crime factors ever been considered?
We have been long term residents of the Balboa Bay Club,
and not only is this our primary residence, but that of others.
The displacement of so many people would be extremely incon-
venient.
Has the cost factor to the City been considered in demolishing
the very large building to build a non -income producing park?
Your support of the Balboa Bay Club and its residents would
be sincerely appreciated.
Yo r very truly,
oG 60 a" Ido
arole Ciraulo
CC:bms
RECEIVED'
trAR 131989 P,
m8
aport
C-ity Of ,
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pmwr
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4
RECEIVED'
trAR 131989 P,
m8
aport
C-ity Of ,
"!iE c;=!ZDMLAS
• •
F ;ANTED."
K. AMMERMAN
Direct Line: 850-4455
HAND DELIVERY
Members of the City Council
Ladies and Gentlemen:
arch 13, 1989
I am greatly disturbed over a recent proposal to convert part of the
Balboa Bay Club into a regional park upon the expiration of its lease
in 25 years. As former chairman of the Parks, Beaches and Recreation
Commission of the City of Newport Beach, I am surprised that such an
ill conceived proposal would warrant serious attention. First of
all, the philosophy of the PBR department is to maintain fiscal
responsibility with respect to its parks. Park programming is
offered on a self supported basis to ensure that citizens are
provided the maximum benefit for their tax dollars. The subject
proposal fails to take into consideration that the City would be
loosing millions of dollars a year in revenue for a property that is
incapable of generating a fraction of that amount in park fee
revenues. It is my understanding the existing 25 year lease
currently provides the City with $500,000 per year of net revenues.
Given the terms of the lease extension, gross revenues from the
apartment units would generate 16 and one-half percent revenue to the
City and 33 and one-half percent from the operation of the marina.
This is projected to provide over $2,000,000 per year in revenue. In
short, the proposal to convert all or a portion of the Bay Club to a
park would have a detrimental impact from a fiscal perspective.
During my four year tenure on the Parks, Beaches and Recreation
Commission, I remember a statistic wherein approximately 25 percent
of the users Bay Club recreational facilities are local Newport Beach
residents. If the existing property is designed to be a regional
park, it is possible that the local residents would have less access
to the facility. First of all, ingress and egress to the property is
already subject to serious limitations. Opening up the facility to a
joint use/regional park would only compound the problem. Secondly,
the demolition costs involved would be enormous and any revenue
generating activities from the property would be incapable of
defraying such costs. Finally, converting the facility to a public
park on Coast Highway would result in a similar situation to the
traffic congestion on the Balboa Peninsula during the summer months
except that the situation would probably continue throughout the
vear.
U
Members of City Council
March 13, 1989
Page 2
0
As a final point, it is critical that the City Council send a clear
message to the owners of the Bay Club that they intend to cooperate
with its existing "joint venture". Any confused or mixed signals
regarding the lease extension or the use of the facility will clearly
result in the owners not expending money on necessary lease
improvements. The facilities are in need of repair and it is
doubtful to me that funds for the necessary improvements will be
expended while impractical suggestions such as the one before you are
being considered.
V ry try yours,( i
Douglas K. Ammerman
DKA:mlf/2157
cc: Ron Whittley
DONALD E OL8ON"
1221 WEST COAST HWY OT 214
NEWPORT BEACH'CA 92063 13PR
.IIL•Jr
190387863072003 83/13/80 ICS IPMRNC2 CSP SNAA
2 7148469481 MGM TORN NEWPORT BEACH CA 03-13 0704P EST
NEWPORT BEACH CITY COUNCIL
CARE CITY CLERK
3300 NEWPORT BLVD
NEWPORT BEACH CA 92063
THIS IS A CONFIRMATION COPY OF A TELEGRAM ADDRESSED TO YOUI
I STRONGLY SUPPORT THE BBC MOU, I THINK THE PUBLIC PARK IDEA I3
RIDICULOUS,
DONALD E OLSON
1221 WEST COAST HWY APT 214
NEWPORT BEACH CA 02663
19103 EST
MGMCDMP
TO REPLY BY MAILGRAM MFSSAGF. SEE REVERSE SIDE f017 WESTERN UNION "S TOLL - FREE PHONE NUMBERS