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HomeMy WebLinkAbout07 - Balboa Bay Club Redevelopment Lease AddendumAgenda Item it 7 CITY OF NEWPORT BEACH CITY ATTORNEYS OFFICE April 11, 2000 TO: Mayor & Members of the City Council FROM: Robert H. Burnham, City Attorney RE: Balboa Bay Club Redevelopment Addendum to Lease The Balboa Bay Club (BBC) has asked the California Coastal Commission to amend Coastal Development Permit 5 -94 -265 to reflect the modifications to the project approved by the City Council in July, 1999. The Coastal Commission staff is recommending approval of the amendment to the Coastal Permit subject to compliance with certain conditions. The conditions include a requirement that the City and BBC "execute and record an addendum to the lease" that, in essence commits BBC and the City to preserve the public benefits associated with the redevelopment of the property. The Coastal Commission staff is also requiring compliance with a "Water Quality Management Plan" that has certain maintenance requirements that must be fulfilled by the City if BBC fails to do so. The City will be entitled to reimbursement from BBC for costs associated with BBC's failure to comply with the maintenance requirements. This office has prepared an "Addendum to Lease" (copy attached) that, in our opinion, complies with the conditions recommended by the Coastal Commission staff. We are recommending the Council authorize the Mayor to execute the Addendum prepared by this office. We are also recommending the Council authorize the Mayor to execute an Addendum that is modified to address new or slightly different conditions so long as the changes are not substantive. ACTION Authorize the Mayor to execute the proposed Addendum to Lease or a modified Addendum so long as the modifications are not substantive. Robert Burnham FIRST ADDENDUM TO GROUND LEASE THIS FIRST ADDENDUM TO GROUND LEASE (Addendum) is made as of , _, by and between THE CITY OF NEWPORT BEACH, a charter city and municipal by ( "Landlord "), and BBC PROPERTY, INC., a New York Corporation ( "Tenant'). RECITALS A. Landlord is the grantee of that certain parcel of real property located in the City of Newport Beach, County of Orange, State of California, as more particularly described on Exhibit A attached hereto (Premises, pursuant to the provisions of the Beacon Bay Bill (Chapter 74 of the Statutes of 1978). B. Tenant is currently occupying and in possession of the Premises pursuant to that certain Lease between Landlord, as lessor, and Tenant, as lessee, dated May 13, 1986 (Existing Lease. The Premises are operated as a multi -use hotel and private club facility by International Bay Clubs, Inc., an Affiliate of Tenant, operating under the name `Balboa Bay Club." C. Landlord and Tenant have entered into an OPTION AGREEMENT and a FIRST AMENDMENT TO OPTION AGREEMENT (collectively the Option) pursuant to which Tenant has the right, subject to compliance with certain conditions, to enter into a new GROUND LEASE (Lease). Tenant is obligated, pursuant to the Lease, to redevelop a portion of the Premises with a facilities open to the general public (Project). D. Landlord and Tenant intend, through this Addendum, to amend the New Lease to comply with conditions to approval of the Project that were imposed by the California Coastal Commission. NOW, THEREFORE, in consideration of the mutual covenants contained herein and other good and valuable consideration, the receipt of which is hereby acknowledged, the parties hereto agree as follows: 1. Section 7.4 is added to the New Lease to read as follows: Section 7.4 Public Use Landlord and Tenant agree and acknowledge that, during the term of this Lease: A. Membership in any private club or organization operated on or from the Premises, and access to any public area, shall not be denied or conditioned on the basis of race, religion, gender, creed, national origin, ethnicity, sexual orientation, or disability. However, this provision shall not prohibit Tenant from restricting access, on the basis of gender, to restrooms or portions of any private club specifically designated for females or males because of the proximity of the area to restrooms, showers, spas or athletic facilities. B. All portions of the Premises designated for public use on any plan, exhibit or drawing submitted to, and approved by, the Landlord or any State Agency (including the California Coastal Commission) shall remain available for public use during the term of this Lease . C. Any development (as that term is defined in Section 30106 of the Public Resources Code) that is proposed or contemplated by Tenant subsequent to approval of the Project by the California Coastal Commission shall required Landlord's approval and an amendment to the approved Coastal Development Permit or a separate Coastal Development Permit. D. The public access walkway described on Exhibit 3 of the California Coastal Commission Staff report prepared for the meeting to approve Coastal Permit 5- 94 -265- Al shall remain free of any development or improvement that would obstruct or limit public use, including, but not limited to, outdoor dining, furniture of any kind, screens or barriers. E. All Hotel rooms in structures open to the general public shall be available for use and occupancy by the general public without any restriction or any preference given to Balboa Bay Club members. However, Balboa Bay Club members may be given preference in reservations for the Hotel rooms proposed for the "Club facility" up to a maximum of twenty -eight (28) rooms per night. Any Hotel room in the "Club facility" that is reserved by a Balboa Bay Club member shall be made available to the general public if the member does not confirm the reservation at least forty -eight (48) hours in advance of occupancy. F. Notwithstanding any provision of this Lease or any permit, Tenant shall not install or construct any object or improvement that would obstruct or limit public views of the bay from within any area designated for public restaurant use on plans approved by the California Coastal Commission. G. All view corridors designated on plans approved by the California Coastal Commission shall remain free of any development that would obstruct or limit public views to the ocean and bay including, without limitation, landscaping or fencing. H. All signage required by California Coastal Commission Special Condition No. 3 shall be displayed at all times during the term of this Lease. I. All public amenities, including, without limitation, the bayfront public walkway shall be available to the general public at all times that any portion of the "Club facility" is open to any Balboa Bay Club member. F:\ cat\ shared\ Ag \BalboaBayClub \O &Moriginal.doc 2 J. Tenant shall not charge for parking on the premises except to the extent permitted by California Coastal Commission Special Condition No. 7 pertaining to special events. K. Tenant shall fulfill all maintenance and reporting responsibilities relative to the 'Polluted Runoff Control Plan" imposed as a condition to the approval of Coastal Permit 5 -94 -265 —Al by the California Coastal Commission. In the event that Tenant, or any successor in interest, fails to comply with any maintenance or reporting requirement of the Polluted Runoff Control Plan, the Landlord shall notify Tenant of its failure to do so and that Tenant will be in material default under this Lease if the maintenance or reporting is not completed within five (5) days after the notice. In the event Tenant fails to comply with the notice, Landlord shall perform the required maintenance and /or reporting and Tenant shall reimburse Landlord for all costs and expenses incurred by Landlord. The provisions of this Section shall bind Tenant and Landlord and any successor in interest to either Party for so long as any of the improvements approved by the California Coastal Commission remain on the Premises. The Parties acknowledge and agree that the Premises consists entirely of tidelands and the terms and conditions of this Lease are intended to preserve public benefits on behalf of the people of the State of California. 2. Except for the addition of Section 7.4, the terms and conditions of the Lease shall remain unchanged. LANDLORD: CITY OF NEWPORT BEACH, a municipal corporation Attest: City Clerk Approved as to Form: Mayor F:\ cat\shared\ Ag \BalboaBayClub \O &Moriginal.doc 3 City Attorney TENANT: BBC PROPERTY, INC., a New York Corporation m Its: Its: F:1 cat\ sharedV{ y \BalboaBayClub\O &Moriginal.doc 4 EXHIBIT A LEGAL DESCRIPTION OF LEASED PREMISES [TO COME] A -1 EXHIBIT B MEMORANDUM OF GROUND LEASE RECORDING REQUESTED BY AND WHEN RECORDED RETURN TO: International Bay Clubs, Inc. 1221 W. Coast Highway Newport Beach, California 92663 MEMORANDUM OF GROUND LEASE This Memorandum of Ground Lease ( "Memorandum ") is entered into effective as of (the "Commencement Date "), by and between THE CITY OF NEWPORT BEACH, a municipal corporation ( "Landlord "), and BBC PROPERTY, INC., a New York Corporation ( "Tenant "). RECITALS A. Landlord and Tenant have entered into that certain Ground Lease (the "Lease ") dated as of the Commencement Date relating to certain real property located in the City of Newport Beach, County of Orange, State of California described more particularly on Exhibit A attached hereto and by this reference made a part hereof (the 'Premises "). Landlord and Tenant each desires to execute this Memorandum for recordation in the real property records of the County of Orange in order to memorialize the existence of the Lease. NOW THEREFORE, with reference to the foregoing recital, the parties hereto agree as follows: 1. Lease of Premises. Landlord hereby leases to Tenant, and Tenant hereby hires from Landlord, the Premises, on the terms and conditions set forth in the Lease. 2. Term. The term of the Lease shall be for a period of fifty (50) years commencing upon the Commencement Date, unless sooner terminated pursuant to the provisions of the Lease. 3. Incorporation of Lease. This instrument is a memorandum of the Lease and is subject to all of the terms and conditions of the Lease. The terms of the Lease shall prevail if there is any inconsistency between the terms of this instrument and the terms of the Lease. 1151 IN WITNESS WHEREOF, Landlord and Tenant have executed this Memorandum as of the date first set forth above. THE CITY OF NEWPORT BEACH, a municipal corporation M BBC PROPERTY, INC., a New York Corporation By: Its' By: Its: :b: STATE OF CALIFORNIA ) ) ss. COUNTY OF ORANGE ) On before me personally appeared , personally known to me (or proved to me on the basis of satisfactory evidence) to be the person whose name is subscribed to the within instrument and acknowledged to me that he executed the same in his authorized capacity, and that by his signature on the instrument the person, or entity upon behalf of which the person acted, executed the instrument. (SEAL) WITNESS my hand and official seal. Notary Public STATE OF CALIFORNIA ) ) ss. COUNTY OF ORANGE ) On before me personally appeared personally known to me (or proved to me on the basis of satisfactory evidence) to be the person whose name is subscribed to the within instrument and acknowledged to me that he executed the same in his authorized capacity, and that by his signature on the instrument the person, or entity upon behalf of which the person acted, executed the instrument. (SEAL) WITNESS my hand and official seal. Notary Public STATE OF CALIFORNIA ) ) ss. COUNTY OF ORANGE ) On before me personally appeared , personally known to me (or proved to me on the basis of satisfactory evidence) to be the person whose name is subscribed to the within instrument and acknowledged to me that he executed the same in his authorized capacity, and that by his signature on the instrument the person, or entity upon behalf of which the person acted, executed the instrument. WITNESS my hand and official seal. (SEAL) Notary Public NB1:215136.23 EXHIBIT C SIGNAGE REGULATIONS [TO COME] C -1 GROUND LEASE by and between CITY OF NEWPORT BEACH, a municipal corporation "Landlord" and BBC PROPERTY, INC., a New York Corporation "Tenant" Dated as of NB1:215136.23 TABLE OF CONTENTS Page ARTICLE DEFINITIONS, GRANT AND TERM 1.1 Definitions .............................................................................. ..............................2 ARTICLE GRANT OF LEASE AND TERM 2.1 Lease .................................................................................... ............................... 8 2.2 Term ...................................................................................... ..............................9 2.3 Quiet Possession ................................................................... ..............................9 2.4 Ownership of Improvements ................................................. .............................10 ARTICLE CONSTRUCTION AND IMPROVEMENT OF PREMISES 3.1 Improvements to be Erected by Tenant ................................ .............................10 3.2 Coastal Approval and Entitlements ....................................... .............................11 3.3 Compliance With Laws ......................................................... .............................11 3.4 Lien Free Completion ............................................................ .............................11 3.5 As -Built Drawings .................................................................. .............................12 3.6 Tenant's Architects and Contractors ..................................... .............................12 3.7 Costs of Construction ............................................................ .............................12 3.8 Renovation and Maintenance of Hotel .................................. .............................12 3.9 Renovation and Maintenance of Apartments ........................ .............................13 3.10 Maintenance of Marina Operations ....................................... .............................13 3.11 Landlord's Cooperation ......................................................... .............................13 ARTICLE IV REPRESENTATIONS AND WARRANTIES 4.1 Landlord's Representations and Warranties ......................... .............................14 4.2 Tenant's Representations and Warranties ............................ .............................15 ARTICLE V RENT 5.1 Rent ...................................................................................... .............................15 5.2 Percentage Rent ................................................................... .............................15 5.3 Base Rent During Construction ............................................ .............................16 5.4 Periodic Adjustments of Base Rent ....................................... .............................16 5.5 Fair Market Adjustment of Base Rent ................................... .............................16 5.6 Payment of Rent ................................................................... .............................17 5.7 Charges for Goods and Services .......................................... .............................17 5.8 Reconciliation of Annual Rent ............................................... .............................17 5.9 Place for Payment of Rentals ............................................... .............................18 TABLE OF CONTENTS (continued) Page 5.10 Records and Reports of Sales .............................................. .............................18 5.11 Additional Rent ..................................................................... .............................19 5.12 No Abatement or Reduction in Rent ..................................... .............................19 5.13 No Partnership Created ........................................................ .............................19 5.14 Net Lease ............................................................................. .............................19 ARTICLE VI TENANT'S OBLIGATION WITH RESPECT TO MAINTAINING PREMISES 6.1 Repairs and Maintenance ..................................................... .............................19 6.2 Taxes and Assessments ....................................................:.. .............................20 6.3 Capital Repairs and Replacements ....................................... .............................21 ARTICLE VII USE OF PREMISES 7.1 Use of Premises ................................................................... .............................21 7.2 Pump -Out Station ................................................................. .............................22 7.3 Environmental Requirements ................................................ .............................22 ARTICLE CONDUCT OF BUSINESS BY TENANT VIII 8.1 Standards of Operation ......................................................... .............................23 8.2 Management ......................................................................... .............................23 8.3 Competition by Tenant .......................................................... .............................23 8.4 Use of Name ......................................................................... .............................24 ARTICLE ALTERATIONS, FIXTURES AND SIGNS IX 9.1 Tenant's Right to Make Alterations ....................................... .............................24 9.2 Prohibition Against Liens ............................:......................... .............................24 9.3 Signs ..................................................................................... .............................24 ARTICLE INSURANCE, INDEMNITY AND CASUALTY X 10.1 Insurance ....................................................:......................... .............................24 10.2 Indemnification ...................................................................... .............................27 10.3 Settlement of Insurance Claims ..................:......................... .............................28 10.4 Casualty ...................................................... 1......................... .............................29 10.5 Casualty Late in Term ........................................................... .............................29 10.6 No Abatement of Rent .......................................................... .............................29 TABLE OF CONTENTS (continued) ARTICLE UTILITIES Page XI 11.1 Utilities .................................................................................. .............................30 ARTICLE XII ESTOPPEL CERTIFICATES Partial Taking; Restoration .................................................... .............................40 12.1 Estoppel Certificates ............................................................. .............................30 16.5 ARTICLE XIII ASSIGNMENT AND SUBLEASING Allocation of Award; Partial Taking ....................................... .............................41 13.1 Limitation on Right to Assign ................................................ .............................31 16.7 13.2 Grant or Denial of Consent ................................................... .............................31 13.3 Non - Application to Guest Rooms and Facilities .................... .............................32 Allocation of Award; Total Taking .......................................... .............................41 13.4 Assignment to Affiliate .......................................................... .............................32 13.5 Limitation on Transfer of Interest in Tenant .......................... .............................32 13.6 Participation in Sale Proceeds .............................................. .............................33 ARTICLE HYPOTHECATION XIV 14.1 Tenant's Right to Hypothecate .............................................. .............................34 14.2 Notice to and Rights of Mortgagees ...................................... .............................36 14.3 Nonsubordination of Fee ....................................................... .............................38 14.4 Equipment Financing ............................................................ .............................38 14.5 Cross Collateralization of Premises ...................................... .............................39 ARTICLE WASTE AND GOVERNMENTAL REGULATIONS XV 15.1 Waste or Nuisance ................................................................ .............................39 15.2 Governmental Regulations ................................................... .............................39 15.3 Tenant's Right to Contest Governmental Regulations .......... .............................39 ARTICLE EMINENT DOMAIN XVI 16.1 Lease Governs ..................................................................... .............................40 16.2 Termination of Lease ............................................................ .............................40 16.3 Partial Taking; Rental Abatement ......................................... .............................40 16.4 Partial Taking; Restoration .................................................... .............................40 16.5 Distribution of Award ............................................................. .............................40 16.6 Allocation of Award; Partial Taking ....................................... .............................41 16.7 Allocation of Award; Temporary Taking ................................ .............................41 16.8 Allocation of Award; Total Taking .......................................... .............................41 TABLE OF CONTENTS (continued) Page 16.9 Conduct of Proceedings ........................................................ .............................42 16.10 Notices .................................................................................. .............................42 ARTICLE DEFAULT PROVISIONS XVII 17.1 Events of Default .................................................................. .............................42 MISCELLANEOUS 17.2 Remedies Upon Default ........................................................ .............................43 Waiver ................................................................................... .............................45 17.3 Landlord Acting for Tenant's Account ................................... .............................44 Accord and Satisfaction ........................................................ .............................45 17.4 Limited Liability; Non - Recourse Ground Lease ..................... .............................44 Entire Lease .......................................................................... .............................46 ARTICLE XVIII LANDLORD'S ACCESS 18.1 Landlord's Right of Access ................................................... .............................45 ARTICLE XIX MISCELLANEOUS 19.1 Waiver ................................................................................... .............................45 19.2 Accord and Satisfaction ........................................................ .............................45 19.3 Entire Lease .......................................................................... .............................46 19.4 Termination of Existing Lease ............................................... .............................46 19.5 Force Majeure ....................................................................... .............................46 19.6 Notices .................................................................................. .............................46 19.7 Captions and Section Numbers ............................................ .............................47 19.8 Construction of Language ..................................................... .............................47 19.9 Broker's Commission ............................................................ .............................47 19.10 Limitation of Landlord's Obligations ...................................... .............................48 19.11 Landlord's or Tenant's Discretion ...............:......................... .............................48 19.12 Interest .................................................................................. .............................48 19.13 Successors ........................................................................... .............................48 19.14 Applicable Law ...................................................................... .............................48 19.15 Landlord's and Tenant's Rights are Cumulative ................... .............................48 19.16 Saving Clause ....................................................................... .............................48 19.17 Attorneys' Fees and Expenses ............................................. .............................48 19.18 Injunctive Relief .................................................................... .............................49 19.19 Appraisal ............................................................................... .............................49 19.20 Recording ............................................................................. .............................49 19.21 Incorporation of Preamble, Recitals and Exhibits ................. .............................49 -iv- April 11, 2000 AGENDA ITEM NO. 7 Supplemental CITY OF NEWPORT BEACH OFFICE OF THE CITY ATTORNEY April 11, 2000 TO: Mayor and Members of the City Council FROM: Robert H. Burnham, City Attorney RE: Balboa Bay Club Redevelopment Addendum to Lease Please disregard the attached Exhibits A, B and C and Table of Contents included in your pjackets on Wednesday. Burnham f: NusersNcatlsharedtccmemotbbcadde ndumsupp.doc ._c�,.__.�:� -s.S.: _ .. .:.�..� :..- n._-... _.:.... .. 'ei sY.- �cai3dy •°} - F.?e ":