HomeMy WebLinkAbout22 - Marinapark LeasesITEM 22
TO: Members of the Newport Beach City Council
FROM: Dave Kiff, Assistant City Manager
Robin Clauson, Assistant City Attorney
SUBJECT: Marinapark Leases
RECOMMENDED - 1— Approve the 2�d Amendment and Extension of Lease for the tenants at
ACTIONS: Marinapark and authorize the City Manager to execute individual
documents on behalf of the City;
2 -- Maintain rent at the current level until September 1, 2002;
3 -- Authorize the City Manager or his designee to issue a 90 -day Notice to
Increase Rent based on the April 4, 2002 Appraisal of Fair Market Rental
Value offered by Mr. William Hansen; and
4 -- Authorize the City Manager to increase rent after the 90 -day Notice to the
amounts set forth by the Appraisal.
5 -- Authorize the City Manager to, at any time during the Lease, apply a rent
adjustment (increase) factor upon the sale of any home of 1.5x (for As and
Bs) and 1.3x (for Cs, Ds, and Es).
WHAT'S NEW: At the March 12, 2002 Council meeting, your Council adopted the following
motion:
"...authorize that a 314 parhj appraiser review the rent amounts using the
proposed lease terms and bring the facts back to Council."
The City discussed its appraisal options with three firms, including William
Hansen and Associates. Mr. Hansen then conducted what he called an Appraisal
of Fair Rental Value on April 1, 2002. Mr. Hansen's opinion of fair rental value is
not a formal appraisal of fair market value of the Marinapark lease sites, but
rather an opinion of a fair rent the City could charge with consideration to the
interests of both the City and the Lessees and the relatively short term of the
extension. Hansen came back with several rent values based on different lease
durations:
Page
We have calculated the approximate revenue generated by the rental values
proposed by Hansen by lease duration — they are as follows:
Hansen stated that the rents should be subject to an annual CPI adjustment.
Adjustment Upon Sale or Assignment. Hansen also — at our suggestion —
examined what an "appropriate" lease rent adjustment would be should a
current tenant sell to a new tenant that had not received any of the moderated
rent benefit provided in the 1985 and 2000 Leases. Upon sale of a coach, and
assignment of the Lease to the new owner Hansen suggests that:
• Rent for the As and Bs be adjusted by a factor of 1.50
• Rent for Cs, Ds, and Es be adjusted by a factor of 1.30
For example, if a person occupying an A space near the bay (at $1,550.00 per
month) sold to a new owner, the rent would become $_2,325.00 per month.
Mr. Hansen's appraisal was provided to the tenants representatives and is
available in the City Manager's office should any resident or Council member
wish to review it.
This Agenda Item asks the Council to authorize the City Manager to execute
separate 2nd Amendment and Extensions of Lease with the Marinapark tenants
that include:
• A one -year term with two one -year options exercisable at the City's
discretion to March 15, 2005;
• Rent increases effective September 1, 2002 to Hansen's 1 -year rental value
with further rent increases annually starting March 15, 2003 by CPI;
• Rent increases upon sale of the coach and assignment of the Lease either 1.50
or 1.30 per Mr. Hansen's appraisal.
DETAILED In recent months, the Council has discussed and heard testimony about a
BACKGROUND: proposal to extend the current leases for the coaches at the Marinapark Mobile
Home Park at 1770 West Balboa Avenue.
Parks and Lease History. The Marinapark mobile home park ( "Marinapark ") sits
today on a 4.34 acre parcel at 1770 West Balboa Boulevard on the Balboa
Peninsula between 181h and 15th Streets. Marinapark has 58 mobile home spaces
and 924' of beach frontage facing Newport Bay.
Hansen O .
Current
$
Generated
685,380
Difference
Rent
NIA
1 Year Lease
$
849,900
$
164,520
3 Year Lease
$
930,960
$
245,580
10 Year Lease
$
1,225,200
$
539,820
20 Year Lease
$
1,351,800
$
666,420
City's 1st Proposal
$
1,325,400
$
640,020
Hansen stated that the rents should be subject to an annual CPI adjustment.
Adjustment Upon Sale or Assignment. Hansen also — at our suggestion —
examined what an "appropriate" lease rent adjustment would be should a
current tenant sell to a new tenant that had not received any of the moderated
rent benefit provided in the 1985 and 2000 Leases. Upon sale of a coach, and
assignment of the Lease to the new owner Hansen suggests that:
• Rent for the As and Bs be adjusted by a factor of 1.50
• Rent for Cs, Ds, and Es be adjusted by a factor of 1.30
For example, if a person occupying an A space near the bay (at $1,550.00 per
month) sold to a new owner, the rent would become $_2,325.00 per month.
Mr. Hansen's appraisal was provided to the tenants representatives and is
available in the City Manager's office should any resident or Council member
wish to review it.
This Agenda Item asks the Council to authorize the City Manager to execute
separate 2nd Amendment and Extensions of Lease with the Marinapark tenants
that include:
• A one -year term with two one -year options exercisable at the City's
discretion to March 15, 2005;
• Rent increases effective September 1, 2002 to Hansen's 1 -year rental value
with further rent increases annually starting March 15, 2003 by CPI;
• Rent increases upon sale of the coach and assignment of the Lease either 1.50
or 1.30 per Mr. Hansen's appraisal.
DETAILED In recent months, the Council has discussed and heard testimony about a
BACKGROUND: proposal to extend the current leases for the coaches at the Marinapark Mobile
Home Park at 1770 West Balboa Avenue.
Parks and Lease History. The Marinapark mobile home park ( "Marinapark ") sits
today on a 4.34 acre parcel at 1770 West Balboa Boulevard on the Balboa
Peninsula between 181h and 15th Streets. Marinapark has 58 mobile home spaces
and 924' of beach frontage facing Newport Bay.
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The City of Newport Beach acquired Marinapark from Pacific Electric Land
Company in 1919. The initial use of the property after purchase was for a city
campground (where campers paid 75¢/ day for waterfront camp areas and
504 /day for interior spaces) and later (in approximately 1955) to a "deluxe trailer
court" for 120 trailers. A later renovation of Marinapark to accommodate larger
trailers put the park at today's capacity of 58 mobile homes. Today 56 of the
coach spaces are occupied with a coach.
The City and the residents at Marinapark ( "Lessees ") entered into a series of
short- and medium -term leases relating to the Lessees' occupancy at Marinapark.
An abbreviated schedule follows:
• 1973 Lease. The 1973 Lease extended an existing lease to September 30, 1977
at which time all Lessees would "unconditionally and without contest vacate
the premises without contest, legal and otherwise. Lessees further agree to
waive any relocation assistance or any other assistance from Lessor resulting
from vacating the premises." The 1973 Lease also dictated a new rental
schedule through 1977.
• 1976 Lease. A new 1976 Lease extended the Marinapark Lessees' tenancy
through September 30, 1985. The 1976 Lease offered an extension of five
years "should the City Council find and determine ... that Marinapark is not
required for any public trust purpose or other public purpose..." Rents at
the time were set by the Lease and deemed to be "the fair market rental
value" for the spaces.
• 1985 Lease. The City Council did, indeed, state its intent that Marinapark
should be converted "to a public recreation area" upon expiration of a new
1985 Lease. The 1985 Lease - with an expiration date of March 15, 2000 -
said that "the most significant rights obtained by Lessee, and given up by
City..." were:
Lessees long -term right to occupy the Premises...
Lessee's payment of "moderate rent... and the advantage of limited
rental increases in the future, while City gives up the right to charge
higher rents initially and the right to impose future rental increases in
excess of the cost -of -living index..."
The 1985 Lease also outlines the rights and benefits "given up" by the Lessee,
including:
— City's right to convert Marinapark into a public recreational use upon
Lease expiration.
— The full waiver of any right of the Lessee to receive relocation benefits
"or any other form of relocation assistance."
• 2000 Amendment and Extension of Lease. On February 8, 2000, the City
Council authorized the City to offer an amendment and extension ( "Lease
Extension') to the 1985 Lease. The Lease Extension acknowledged several
things - some new, others a restatement of information in the 1985 Lease.
The Lease Extension acknowledged (among other things):
-- Uncertainty over the tidelands status of the land upon which the park
sits - arguably, if the land is State -owned and City- managed "tidelands,"
then the residential uses at Marinapark may not be appropriate, because
tidelands are intended to be visitor - serving.
Page 4
The City's (at that time) review of up to eight responses to a Request for
Proposals (RFP) for future uses and development of Marinapark, some
of which envisioned the continuation of the mobilehome use.
— The "substantial and important benefit' of the economic and personal
rights of the Lessees under the 1985 Lease, including the Lessees'
payment of moderated rent AND the ongoing waiver of Lessees' claims
to any relocation benefits.
Current Rent and Residency. In 2000, the City believed that, of the 58 coaches
occupied at the time:
0 16 of the coaches were full-time residences for lessees;
e 6 of the coaches were full-time residences for persons other than the lessees;
e 36 coaches were part -time residences for lessees.
Rents at Marinapark are the following:
Space 11D (didn't sign 2000 Extension) $1,362.60/ month
Bay- adjacent lots (As and Bs) $1,225.08 /month
One lot distance from Bay (Cs and Ds) $ 924.83/month
Two lot distances from Bay (Es) $ 864.80 /month
Marinapark space rentals earn the City about $600,000 annually. Bendetti
Property Management of Irvine manages Marinapark for the City at a fee of
about $2,980 per month. Bendetti has been on a month-to -month contract since
March 2000. Residents have been generally quite happy with Bendetti's on -site
manager, Joe Albano, and its off -site manager, Bill Mecham. I have been very
pleased with Bendetti's service over the past 4 years.
The proposed 2"d Amendment and Lease Extension is Attachment A to this
document. A map of Marinapark appears in Exhibit A to Attachment A.
ATTACHMENT: Attachment A — Proposed 2nd Amendment and Extension of Lease
SECOND AMENDMENT
AND EXTENSION OF LEASE
This Second Amendment and Extension of Lease (Amended Lease), entered into and
effective this of day of , 2002 by and between the CITY OF NEWPORT
BEACH, a municipal corporation and Charter City (City) and
(Lessee), is made with reference to the following facts,
the materiality and existence of which is stipulated and agreed by the Parties:
A. City is the owner, and is in possession and control, of a parcel of real property,
located northerly of Balboa Boulevard and between approximately 15th Street and
18th Street in Newport Beach, commonly known as Marinapark, generally
described in Exhibit "A" (Property).
B. The Property was under lease prior to the effective date of the Charter of the City of
Newport Beach and, pursuant to the provisions of Section 1402 of the City Charter,
the City Council is empowered to authorize execution of this Lease by the Mayor.
C. Prior to the effective date of this Amended Lease, City leased 58 mobilehome
spaces on the Property pursuant to a standard lease dated March 24, 1976,
(hereinafter "1976 Lease"), which would have expired on September 30, 1985,
subject to the right of the Lessee to extend the term for a five (5) year period under
certain conditions.
D. Prior to the expiration of the 1976 Lease, City leased the same 58 mobile home
spaces on the Property pursuant to a lease that would have expired on March 15,
2000 (1985 Lease) but for an Amendment and Extension of Lease which expires
March 15, 2002 (2000 Amendment).
E. The City Council actively solicited proposals for non - residential uses at Marinapark
and, as of February 2002, has deemed a non - residential use of Marinapark the
most appropriate land use for the property. As such, City Council intends to close
the mobile home park no later than March 15, 2005.
F. The Parties acknowledge that, subsequent to the effective date of the 1985 Lease,
California State Lands Commission staff has discovered evidence that a portion of
the Property consists of tidelands. City and Lessee have, in the past, claimed that
all or substantially all, of the Property leased for mobilehome residency purposes is
uplands owned by City, and City and Lessee have discussed evidence to support
that claim.
G. State Lands Commission staff has indicated that permanent residential use of
tidelands is inconsistent with State statutory, decisional and constitutional law.
However, City and Lessee may dispute that position.
H. The City Council finds and declares that the terms and conditions of this Amended
Lease comply, and are consistent, with the Charter of City, including, without
limitation, the provisions of Sections 200 and 1402 of the Charter.
The City Council also finds and declares that the provisions of this Amended Lease
are consistent with the plans, policies, rules and ordinances of City. The City
Council also finds that this Amended Lease is consistent with the General Plan and
the Land Use Plan of the Local Coastal Program.
J. The terms and conditions of this Amended Lease are in compliance, and
consistent, with the provisions of the Mobilehome Residency Law (Section 798 et.
seq. of the California Civil Code) and the State Zoning and Planning Act (Sections
65863.7 and 65863.8 of the California Government Code).
K. The purpose and intent of the Parties is to amend, and extend the term of, the 1985
Lease and the 2000 Amendment so that the Lessee may continue to reside on the
Property for the year commencing March 15, 2002 while the process of preparing
the Property for a different use continues. City may allow short extensions of this
Second Amended Lease but not past March 15, 2005.
NOW, THEREFORE, the Parties do hereby mutually agree as follows
1. DESCRIPTION OF PREMISES.
The City leases, and Lessee accepts the lease of, the portion of the Property
described as space as shown on Exhibit "A" (Premises).
2. TERM.
A. Term. The tenancy created by this Amended Lease shall extend the expiration
date of the 1985 Lease as modified by the 2000 Amendment, to March 15, 2003
(Term), unless extended as provided in subsection B below, or earlier terminated in
accordance with the terms of this Amended Lease and the Mobilehome Residency
Law.
B. Notice of Park Closure. If City does not provide notice to Lessee by September 15,
2002 of City's intent to close the park, then the Amended Lease is deemed
extended until March 15, 2004. During the first one -year extension, if City does not
provide notice to Lessee by September 15, 2003 of Citys intent to close the park,
then the Amended Lease is deemed extended until March 15, 2005. If the
Amended Lease is not extended for any reason, there shall be no holdover.
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3. USE OF PREMISES.
A. The Premises shall be used only for residential purposes, and no business or
commercial activity shall be conducted on the Premises. Permitted occupants are:
(i) Lessee;
(ii) An additional person if Lessee is living alone;
(iii) Family members entitled to occupy the premises pursuant to the
Mobilehome Residency Law; and
(iv) Short term guests.
The term "short term guest' shall mean any person who does not stay with Lessee
for more than a total of twenty (20) consecutive days or a total of thirty (30) days in
any calendar year. Other persons may occupy the Premises with the prior written
consent of City.
B. Lessee agrees that the primary residence requirement is fundamental to this lease,
stipulates that the residency requirement will not constitute an undue burden or
hardship on Lessee in light of the time allowed for compliance in the 1985 Lease,
and, subject to the provisions of Section 8 of this Amended Lease, Lessee agrees
that the Premises shall be Lessee's primary residence unless this requirement is
waived by the City Council due to hardship. Lessee shall provide satisfactory proof
of residency to City.
C. Lessee agrees to comply with the Rules and Regulations of Marinapark (Exhibit
"B ") and further agrees these Rules and Regulations may be amended as provided
in the Mobilehome Residency Law or other relevant statute.
4. CONSIDERATION.
A. Introduction.
City and Lessee agree that the terms and conditions of the 1985 Lease, the 2000
Amendment and this Amended Lease preserve and protect substantial and
important rights and benefits, economic and personal, that each Party would not
otherwise be entitled to receive. These economic and personal rights and benefits
are the consideration for the 1985 Lease, the 2000 Amendment and this Amended
Lease. The more important rights and benefits gained and given up by each Party
are specified in this section and the Parties agree that, like the 1985 Lease, this
Amended Lease should be interpreted such that each Party receives the rights and
benefits identified in this Section.
B. Consideration to Lessee.
(i) As consideration for Lessee's approval of this Amended Lease, City
commits to maintain the Property as a mobilehome park until March 15,
2003.
(ii) The City also commits that, if it decides to lease this space as a mobilehome
space during the period from March 15, 2003 through March 15, 2005, it will
not terminate or fail to renew this Amended Lease with the Lessee and
instead lease the Premises to another person.
(iii) Additional consideration for Lessee's approval of this Amended Lease is the
right to occupy the Premises subject to the payment of rent in the sum of
through August 31, 2002 at which time the rent shall be
. Although this sum is higher than the rent paid under the
1985 Lease and the Amended Lease, it is less than the market rent for this
space based upon a survey of similar beach front properties.
C. Consideration to City.
As consideration to City, Lessee agrees and acknowledges that City may convert
the Property to a different use upon expiration of this Amended Lease, or shortly
thereafter. Lessee agrees that, if City chooses to close the mobilehome park on
the Property it may do so without obligation to pay relocation benefits or provide
other forms of relocation assistance. Lessee acknowledges that the terms of the
1985 Lease, the 2000 Amendment and this Amended Lease constitute full and
adequate mitigation of any adverse impact on Lessee of any conversion of the
Property to a non - mobilehome use, and the extended term of the 1985 Lease and
this Amended Lease gives Lessee sufficient time to secure replacement space in
another mobilehome park or other alternative housing. Accordingly,
LESSEE HEREBY WAIVES, GIVES UP THE RIGHT TO RECEIVE, AND
RELEASES CITY FROM ANY OBLIGATION TO PAY, RELOCATION
BENEFITS, OR ANY OTHER FORM OF RELOCATION ASSISTANCE OR
OTHER PAYMENT OR CONSIDERATION THAT ARISE OUT OF, OR ARE IN
ANY WAY RELATED TO:
(1) THIS LEASE OR ANY FUTURE TENANCY;
(2) THE ULTIMATE TERMINATION OF LESSEE'S TENANCY PURSUANT
TO THE 1985 LEASE, THE 2000 AMENDMENT OR THIS AMENDED
LEASE, OR THE TERMINATION OR EXPIRATION OF ANY
SUBSEQUENT TENANCY HOWEVER CREATED;
(3) THE CONVERSION OF THE PREMISES TO ANY USE OTHER THAN A
MOBILEHOME USE;
(4) THE DISPLACEMENT OF LESSEE FROM HIS AND /OR HER PRIMARY
RESIDENCE;
4
(5) ANY FEDERAL, STATE OR LOCAL LAW, PLAN & POLICY OR RULE
WHICH RELATES TO SUCH DISPLACEMENT, OR REQUIRES THE
MITIGATION OF THE IMPACTS CAUSED BY DISPLACEMENT. THIS
RELEASE BY LESSEE, NOTWITHSTANDING SECTION 1542 OF THE
CALIFORNIA CIVIL CODE, WHICH PROVIDES THAT:
"A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS
WHICH CREDITOR DOES NOT KNOW OR SUSPECT TO
EXIST IN HIS FAVOR AT THE TIME OF EXECUTING THE
RELEASE, WHICH IF KNOWN BY HIM MUST HAVE
MATERIALLY AFFECTED HIS SETTLEMENT WITH THE
DEBTOR,"
RELEASES ALL CLAIMS OR LOSSES, WHETHER KNOWN,
UNKNOWN, FORESEEN OR UNFORESEEN, WHICH LESSEE MAY
HAVE AGAINST CITY. LESSEE UNDERSTANDS AND
ACKNOWLEDGES THE SIGNIFICANCE AND CONSEQUENCE OF THIS
RELEASE AND OF THIS SPECIFIC WAIVER OF SECTION 1542 OF THE
CALIFORNIA CIVIL CODE AND ASSUMES FULL RESPONSIBILITY FOR
ANY DAMAGES, LOSS OR CLAIM THAT LESSEE MAY INCUR AS A
RESULT OF THE CONVERSION, TERMINATION AND /OR
DISPLACEMENT REFERRED TO ABOVE. LESSEE IS FREELY AND
VOLUNTARILY EXECUTING THIS AMENDED LEASE, AND LESSEE, IN
EXECUTING THIS RELEASE, HAS NOT RELIED UPON ANY
INDUCEMENTS, PROMISES OR REPRESENTATIONS MADE BY CITY
OR ITS OFFICERS, AGENTS, REPRESENTATIVES OR EMPLOYEES,
OTHER THAN THE COMMITMENTS AND COVENANTS CONTAINED
WITHIN THIS AMENDED LEASE.
D. Provisions related to Consideration.
(i) This Amended Lease constitutes notice that City reserves the right to
physically convert the Premises to a non - mobilehome use on or about
March 16, 2003.
(ii) Upon expiration of the term of this Amended Lease, Lessee shall, within
sixty (60) days, remove any mobilehome or recreational vehicle, structure,
improvement, personal property or equipment located upon the Premises.
Upon the expiration of this sixty (60) day period, City shall have the right to
remove and dispose of any and all property improvement structures,
personal property (including the mobilehome) or any accessory equipment
that remain on the Premises. The cost of removing such shall be born by
the Lessee unless the Lessee has given written notice to City not less than
thirty (30) days prior to the expiration of this Amended Lease or applicable
renewal thereof, whichever is later, of Lessee's desire to abandon the
mobilehome and transfers all title and interest in the mobilehome, clear of all
liens and encumbrances, to City and the documents necessary to effectuate
such transfer are delivered on or before the date of termination. If City
5
receives such written notice from Lessee, City shall bear the cost of
removing and disposing of all property improvement structures, personal
property (including the mobilehome) or any accessory equipment that
remain on the Premises.
5. RENT.
Lessee shall pay as rent, without deduction or offset, on the 1st day of April 2002,
and on the first day of each month through August 2002 the sum of
. As of September 1, 2002 the rent shall be
and shall be paid on the first of each month thereafter without deduction or offset.
Lessee stipulates and agrees that this Amended Lease constitutes the ninety (90)
day written notice of rental increases required by the Mobilehome Residency Law
and Lessee acknowledges that no additional written notice need be given by City;
provided, however, City may provide Lessee with ninety (90) days written notice of
the precise amount of any rental increase authorized by this paragraph and City
and Lessee agree that such notice shall not constitute a waiver of City's right to rely
upon the adequacy of the notice provisions in this paragraph.
Lessee acknowledges that this Amended Lease may create a possessory interest
subject to property taxation and that Lessee may be subject to the payment of
property taxes levied on such interest. Lessee shall pay, in addition to rent and
before delinquency, all taxes, assessments, license fees and other charges (Taxes)
that are, during the Term, levied or assessed against Lessee's interest in the
Premises pursuant this Amended Lease and against any personal property
installed on the Premises.
City agrees that, once the rental rate which commences September 1, 2002
becomes effective, the rent will not be raised during the period from September 1,
2002 to March 31, 2003. If City offers a renewal of this Amended Lease, rent shall
be increased effective April 1, 2003, and if renewed again, on April 1, 2004, based
on the percentage change in the cost of doing business as measured by the U.S.
Department of Labor, Bureau of Labor Statistics, Consumer Price Index (CPI), for
all urban consumers for the Los Angeles, Long Beach, Anaheim areas, all items
(1967 =100) for the preceding twelve (12) months of the most recently published
CPI.
Lessee agrees that during the term of the Amended Lease or the term of any
extension, if Lessee sells or assigns this Amended Lease as provided in Section 8
below, the rent shall be increased by multiplying the rent for the month before the
assignment by factor of 1.50 for the A & B pads and 1.30 for C,D and E pads. The
increased rent shall commence the 1st day of the month after the assignee or
transferee has executed an assignment of lease form provided by City and has
signed a new Amended Lease and shall continue for the remainder of the term or
any extended term. This adjusted rent is subject to CPI increases as provided
above.
0
6. RELEVANT STATUTES AND RULES.
The Mobilehome Residency Law requires this Amended Lease to contain, among
other things, the Rules and Regulations of Marinapark and the language of the
Mobilehome Residency Law. The Rules and Regulations of Marinapark are
attached as Exhibit "B," the provisions of the Mobilehome Residency Law are
attached as Exhibit "C," and both documents are incorporated into this Amended
Lease by reference. The Marinapark Rules and Regulations and the Mobilehome
Residency Law may be amended or modified from time to time, and these
amendments and modifications shall be deemed to be incorporated into the
documents attached as Exhibits "B" and "C," respectively, when effective.
7. LATE CHARGE.
If the entire rent owed by Lessee is not received by City by the 6th day following its
due date, then, without any requirement for notice to Lessee, Lessee shall pay to
City a late charge of thirty five dollars ($35.00). The Parties agree that such a late
charge represents a fair and reasonable estimate of the costs City will incur by
reason of any late payment of rent. An Acceptance of a late charge by City shall
not constitute a waiver of Lessee's default with respect to rent, or prevent City from
exercising any of the rights or remedies granted by this Amended Lease.
8. SALE OR ASSIGNMENT.
Subject to the terms of this Section, Lessee may sell the mobilehome located on
the Premises pursuant to the rights, and subject to the obligations, of Lessee under
the Mobilehome Residency Law and any other applicable statutes. If the
mobilehome that is the subject of the sale or transfer is to remain on the Premises,
or K Lessee proposes to assign Lessee's interest in this Lease to any person or
persons who is (are) to reside on the Premises, Lessee and /or the proposed
transferee must do the following:
A. Lessee must give notice of the sale or assignment to City prior to close of escrow.
B. The sale or assignment shall not be effective unless City has given prior written
approval and waived its First Right of Refusal in Section 8(F) of this Amended
Lesae, the transferee has executed an assignment of lease form provided by City,
and the transferee has expressly agreed to be bound by the waivers and releases
provided in this Amended Lease.
C. Lessee agrees that occupancy of the Premises shall be limited as provided in
Section 3 of this Amended Lease and Lessee agrees not to sublease or otherwise
transfer any partial interest in this Amended Lease.
D. City shall approve any such transfer, if the transferee has the financial ability to pay
the rent and charges and otherwise comply with the terms and conditions of this
Amended Lease, provided, however, City may withhold approval if it determines
that, based upon the transferee's prior tenancies, the transferee will not comply with
the Rules and Regulations of Marinapark (Exhibit "B ").
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E. City shall not approve any transfer or assignment of any interest in this Amended
Lease that would permit the installation of any mobilehome or structure that
exceeds twelve (12) feet in height.
F. Subject to Section 8(G) of this Amended Lease, City shall have right of first refusal
(First Right of Refusal). Before Lessee sells or agrees to sell or otherwise transfer
Lessee's interest in this Amended Lease, Lessee shall offer to sell its interest to
City, in writing and on terms and conditions identical to those proposed for the sale
of Lessee's interest to a third party. The third party must have previously fully and
truthfully completed an application for residency in the Premises that has either
been approved subject to this First Right of Refusal or has not been acted upon by
City within fifteen (15) days after delivery to City. The third party must acknowledge
and declare that he /she /they have an intent to reside in the Premises on a full -time
basis. Lessee must notify City of the essential terms of the sale, which shall
include, at a minimum, the following information: (i) the purchase price proposed for
the sale to the third party; (ii) the method of purchase price payment; (iii) the
amount and terms of any proposed Lessee financing in connection with the
proposed purchase; (iv) the time and location for the close of escrow; (v) the'name
of the proposed purchaser; and (vi) the other material terms and conditions of the
proposed sale.
City shall have ten (10) days (Acceptance Period) from the date of the notification
to inform Lessee that City will be purchasing the lease interest. If accepted, City
thereafter shall enter into an agreement on the terms and conditions set forth in the
notification. If the City chooses not to accept the offer, the third party may then
purchase the lease interest on the terms and conditions set forth in the notification
to City. Should any of the terms and conditions be altered, then City once again
shall have the Right of First Refusal and City shall have the right to refuse to grant
tenancy to the proposed buyer if the terms and conditions of sale differ in any
significant manner from those in the notification. However should City deny
tenancy, City thereafter must purchase the lease interest on the new terms and
conditions.
G. Notwithstanding any other provision in this Amended Lease, Lessee shall have the
right to assign its interest in this Amended Lease to a spouse, son and /or daughter
without any requirement that City be given the First of Right of Refusal to acquire
the interest, provided, however, the Premises shall be used as the primary
residence of the assignee and the assignee shall be bound by all provisions of this
Amended Lease, including, without limitation, the waiver of relocation assistance.
9. UTILITIES.
A. City shall not provide electricity or telephone service. Lessee shall make
arrangements directly with the utilities furnishing the services and promptly pay all
charges.
B. City shall provide Lessee with water and gas service. The charge to Lessee for
such services shall be the amount of the charges paid by Lessee as of June 1,
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2002. The charges for gas and water service may be increased or decreased on
the first day of October.
C. The charge for gas and water service shall be paid when rent is due, and is in
addition to the obligation to pay rent. In the event Lessee fails to pay the charge for
water or gas service within ten (10) days after the amount is due, Lessee shall pay
to City a late charge of thirty-five dollars ($35.00).
D. In the event City provides both master meter and submeter service of utilities to
Lessee, the cost of the charges for each billing period shall be separately stated
and shall contain opening and closing readings of the meter. In such event, City
shall post rates charged by the appropriate utility in a conspicuous place.
E. City shall not be liable for any loss, damage or injury, and Lessee shall not be
entitled to any abatement or reduction of rent, by reason of City's failure to furnish
any utility or service if the failure is caused by accident, breakage, repairs,
maintenance or any other cause beyond the reasonable control of City.
10. MAINTENANCE OF LANDSCAPING AND IMPROVEMENTS.
It is the responsibility of City to provide and maintain the physical improvements in
the common facilities of the Property in good working order and condition, and
management shall have a reasonable period to repair any sudden and
unforeseeable breakdown or deterioration and bring the improvements into good
working order and condition, after management knows or should have known of the
breakdown. Such period shall be not more than thirty (30) days unless there exist
exigent circumstances justifying a delay, and the required work shall be completed
as soon as possible in any event as to items affecting health and safety.
Lessee shall, at its cost and expense, maintain in good order and condition any
mobilehome, cabana or other improvement located on the Premises. Lessees also
agree that all landscaping on the Premises shall be limited to three feet (3') in
height, to preserve views and open space. City may charge a reasonable fee for
services relating to the maintenance of the Premises in the event Lessee fails to
maintain the Premises in accordance with the provisions of this Amended Lease
and the Rules and Regulations of Marinapark (Exhibit "B "), after giving written
notification to Lessee and Lessee's failure to comply within fourteen (14) days from
the date of written notice. The written notice shall contain all information required by
the Mobilehome Residency Law.
11. PHYSICAL IMPROVEMENTS AND SERVICES.
Lessee shall have the nonexclusive right to use all of the common areas and
common facilities located within Marinapark, including but not limited to streets,
nonrestricted parking areas, laundry facilities, restrooms and showers located in the
common areas and common facilities and designated for use by residents.
The services to be provided by City during the Term of this Amended Lease include
the services to be provided by the Marinapark property manager and other
9
representatives, agents, employees and officers of City, the utilities to be provided
by City specified in Section 9 of this Amended Lease and the maintenance of all
common areas and common facilities in good condition pursuant to Section 10 of
this Amended Lease.
It is the responsibility of the property manager to provide and maintain physical
improvements in the common areas and facilities in good working order and
condition.
It is understood by all Parties hereto that this mobilehome park may close as early
as March 15, 2003 and therefore, in exchange for City s concession in offering this
Amended Lease, it is agreed that City need not invest any funds in repairing or
replacing any facility so that it lasts longer than the Term hereof, provided that no
facility which affects health and safety will be ceased during the Term of this
Amended Lease.
12. CHANGES IN MARINAPARK RULES AND REGULATIONS, PHYSICAL
IMPROVEMENTS AND SERVICES.
City retains the right to amend or modify the Marinapark Rules and Regulations, the
Terms of this Amended Lease, and the nature of the physical improvements or
services to be provided, after complying with the provisions of the Mobilehome
Residency Law and other applicable law. The right to amend the Terms of this
Amended Lease, the Marinapark Rules and Regulations and the physical
improvements and services to be provided by City include, without limitation, the
right to reduce the size of, or eliminate, any physical improvement, common area,
common facility or equipment; provided, however, no changes shall be made to the
provisions of this Amended Lease, including the Term or the rent to be charged,
unless those changes or amendments are permitted by other provisions hereof.
13. RIGHT OF ENTRY.
Lessee, subject to the right of revocation as set forth in the Mobilehome Residency
Law, hereby grants written consent to City to enter the Premises and Lessee's
mobilehome for the purpose of improving, maintaining, repairing or replacing gas,
water and sewage systems owned and maintained by City. Subject to the
obligation of City to exercise ordinary care, any damage, loss or injury to Lessee's
home, property of Lessee or the Premises which results from efforts of City to
maintain, repair, improve or replace the gas, water or sewage systems shall be the
sole responsibility of Lessee, and City shall not be responsible for reimbursing any
cost or expense incurred by Lessee as a result of such efforts, nor shall City be
responsible for repairing, replacing or otherwise restoring the mobilehome, the
Premises or any improvements thereon to the state or condition immediately prior
to the maintenance, replacement or repair efforts. City also reserves the right to
enter the Premises for other purposes as specified in the Mobilehome Residency
Law.
10
14. NOTICE REQUIRED BY CIVIL CODE SECTION 2079.10(a).
The California Department of Justice, county sheriffs departments, police
departments serving jurisdictions of 200,000 or more and many other local law
enforcement authorities maintain for public access a data base of the locations of
persons required to register pursuant to paragraph (1) of subdivision (a) of Section
290.4 of the California Penal Code. The database is updated on a quarterly basis
and is a source of information about the presence of these individuals in any
neighborhood. The Department of Justice maintains a Sex Offender Identification
Line through which inquiries about individuals may be made. This is a "900"
telephone service. Callers must have specific information about individuals they
are checking. Information regarding neighborhoods is not available through this
telephone service.
15. HOLD HARMLESS.
Lessee covenants to indemnify, defend and hold City, and its representatives,
officers, agents and employees, harmless from any and all claims or demands of
any name or nature whatsoever arising out of, or incident to, Lessee's use and
occupancy of the Premises, and to indemnify City for any cost, liability or expense
caused by or arising out of any injury or death of persons or damage to property
which may occur upon or about the Premises or caused by or arising out of any
activities or omission of Lessee, or Lessee's agents, employees, licensees and /or
invitees, including, without limitation, injury or death of Lessee, or Lessee's agents,
employees, licensees and invitees and damage to their property or Lessee's
property, except for any damage or injury of any kind arising out of the sole
negligence, fraud or willful misconduct of City, its representatives, officers, agents
or employees.
Lessee, as a material part of the consideration under this Amended Lease, hereby
waives all claims against City for any damage or loss from any cause arising at any
time, including, but not limited to fire, theft, Acts of God, vandalism or any physical
damage while the mobilehome remains on the Property, unless caused by the
negligence, fraud or willful misconduct of City's representatives, officers, agents or
employees. Lessee agrees to indemnify and hold City, and its representatives,
officers, agents and employees, harmless from and on account of any and all
damage or injury to any person or equipment in or on the mobilehome arising from
any cause or from the negligence of Lessee, and Lessee's family or guests.
Since a substantial portion of the present value of Lessee's mobilehome or coach is
attributable to the value of the Premises and the proximity of the Premises to
Newport Bay, and not solely to the value of the structural improvements, Lessee, in
addition to the other commitments specked in paragraph 4 of this Amended Lease,
agrees to indemnify and hold City, and its representatives, officers, agents and
employees, harmless from any and all loss or injury of any nature whatsoever
arising out of or attributable to future change of use of the Premises and the
requirement that Lessee remove his /her mobilehome and other property from the
Property.
11
16. TERMINATION.
A. Lessee may terminate this Amended Lease, without any further liability to City,
upon sixty (60) days written notice to City and upon condition that all persons
occupying the Premises terminate their tenancy within that period and remove the
mobilehome and all other improvements from the Premises.
B. City may terminate this Amended Lease for the reasons specified, and according to
the procedures set forth in the Mobilehome Residency Law.
C. In addition to the rights specified in subparagraph B, City reserves the right to
terminate this Amended Lease in the event: (1) a court of competent jurisdiction
determines that residential use of the Property is inconsistent, or is in conflict, with
the provisions of the public trust imposed upon those portions of the Property that
constitute state tidelands, or that the residential use is inconsistent with any
provision of the State Constitution or State law; or (2) there is a major failure in one
or more of the public utilities furnished to Lessee by City, and, in the opinion of
City, the cost of repairing the system is excessive when viewed in light of the
highest and best use of the Property.
D. The waivers and releases relative to relocation benefits or assistance shall operate
to preclude recovery of same by Lessee in the event this Lease is terminated
pursuant to the provisions of this Section 16.
17. ATTORNEYS' FEES.
Should either City or Lessee be required to employ counsel to enforce the terms,
conditions and covenants of the 1985 Lease, the 2000 Amendment, or this
Amended Lease, the prevailing Party shall recover all reasonable attorneys' fees
(and court costs if applicable) incurred'therein whether or not court proceedings
were commenced.
18. REMEDIES CUMULATIVE.
The rights, powers, elections and remedies of the Parties contained in this
Amended Lease shall be construed as cumulative and no one of them shall be
considered exclusive of the other or exclusive of any rights or remedies allowed by
law, and the exercise of one or more rights, powers, elections or remedies shall not
impair or be deemed a waiver of either Party's right to exercise any other.
19. NO WAIVER.
No delay or omission of either Party to exercise any right or power arising from any
omission, neglect or default of the other Party shall impair any such right or power
or shall be construed as a waiver of any such omission, neglect or default on the
part of the other Party or any acquiescence therein.
No waiver of any breach of any of the terms, covenants, agreements, restrictions or
conditions of this Amended Lease shall be construed as a waiver of any
12
succeeding breach of the same or of any of the terms, covenants, agreements,
restrictions or conditions of this Amended Lease.
20. COMPLIANCE WITH LAWS.
Lessee covenants and agrees to comply with all rules, regulations, statutes,
ordinances and laws of the State of California and City or any other governmental
body or agency having lawful jurisdiction over the Premises and /or the Property.
21. MOBILEHOME RESIDENCY LAW /ZONING AND USE PERMIT INFORMATION.
A. Lessee acknowledges having received and read a copy of the 1985 Lease, the
2000 Amendment and this Amended Lease, the provisions of the Mobilehome
Residency Law (Exhibit "C ") as presently constituted, and the Marinapark Rules
and Regulations (Exhibit "B ").
B. The Property is currently zoned unclassified and there are no conditional use
permits or other permits required to operate the Property as a mobilehome park.
City owns the Property, except to the extent the Property is determined to be
tidelands and subject to the public trust applicable to tidelands.
22. ENTIRE AGREEMENT.
This Amended Lease and the documents referred to in this Amended Lease
represent the entire agreement between City and Lessee.
23. NOTICES.
All notices and other communications shall be in writing, shall be sent by first class
registered or certified United States mail, postage prepaid, and shall be deemed
effective at the expiration of seventy -two (72) hours after the day of mailing
addressed:
A. To Lessor:
City Manager
City of Newport Beach
3300 Newport Blvd.
Newport Beach, CA, 92658
With a copy to:
City Clerk's Office
City of Newport Beach
3300 Newport Blvd.
Newport Beach, CA, 92658
or at such other addresses as Lessor shall have furnished to Lessee; and
13
To Lessee:
By delivering a copy to the Lessee personally; or Lessee be absent from the
mobilehome, by leaving a copy with some person of suitable age and discretion
who may be occupying the mobilehome; or no one can be found, then by affixing a
copy of the notice in a conspicuous place on the Premises or mobile home and also
sending a copy through the mail addressed to Lessee.
B. Following notice by City of any amendment, all other provisions of the Lease shall
remain in full force and effect in their original form.
24. TIME OF ESSENCE.
Time is of the essence in this Amended Lease and each and every provision
hereof.
25. EFFECTIVE DATE.
The Parties agree that the effective date of this Amended Lease is March 15, 2002,
whether executed before or after that date.
IN WITNESS WHEREOF, the Parties have caused this Amended Lease to be executed
the day and year first above written.
LESSEE
By:
UWE ACKNOWLEDGE AND AM/ARE AWARE OF THE PROVISIONS OF THIS
AMENDED LEASE INCLUDING THE RELEASE AND WAIVER PROVISIONS OF
SECTION 4
14
CITY OF NEWPORT BEACH
a municipal corporation.
Homer Bludau,
City Manager
APPROVED AS TO FORM:
Robin L. Clauson,
Assistant City Attorney
15
EXHIBIT A
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05/24/2002 15:05 FAX 16203048711 JENRENS & GILCHRIST PASA 9 002
`'li�;�l'dc kfTERAGENUR
(Rjrdi�U:,,
Jenkens & Gilchrist, LLP (512 4"T-3800 ,
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11 12)415.3900
55 So TIHLAKEAvE.
SUITE 650
PASADENA, CALIFORNIA 91101`
Cary D. Lowe (626) 578 -7400
(626) 578 -7421 FAcsuvEms (626) 3049711
clowe@jLnkens.com www.icnkens.com
May 22, 2002
VIA U.S. MAIL & FACSIMILE (949/644 -3139)
City Attorney Bob Burnham
City of Newport Beach
3300 Newport Boulevard
P.O. Box 1768
Newport Beach, California 92659 -1768
Re: Marinapark Property
Extension of Leases
DwAS, 7VAS
(214) 855-1500
,dJ?TA oH,'i m"
- '�)�3) 951 -3300
-La3�ANGQ.ES, CALWOoU
(310)820.8800
Nawroax,NawYouc
(212) 70¢6000
SAN ANmN[q 71. S
(710) 246 -5000
wASuNGTON, D.C.
(202)32(x1500
I appreciated the opportunity to meet with you and Robin Clauson recently to discuss the
proposed terms of extension of the residential leases at Marinapark. I understand that you are
preparing a report to the City Council, and that the Council will consider the issue at the meeting of
May 28, 2002. la preparation for that discussion, I would like to clarify a few points.
I discussed with the tenants your suggestion that they join with the City in proposing a
settlement with the State Lands Commission regarding the alleged tidelands status of the
Marinapark site, including a phase -out of the current residential use of the site, accompanied by a
lease extension for the duration of such a phase -out period The tenants wish to defer participating
in any such settlement discussions, at least until such time as we have had an opportunity to review
the opinion being prepared by Commission counsel Curtis Fossum. In light of the significant effort
and expense which the tenants have devoted to building a case for the site being classified as
uplands, they do not want to concede this issue prematurely. I spoke with Curtis shortly after our
meeting, and he reassured me that he would allow both you and us an opportunity to review and
comment on his opinion before he finalizes and releases it It seems to us that prevailing on this
issue would be in the City's best long -term interest, regardless of whether the site remains in its
current use for an extended period of time, so we hope that the Council and City staff will continue
to work with us in seeking that outcome.
PASADENA 13749v1 41750 -00001
MAY -24 -2002 16:11 16263049711 971: p,02
05/24/2002 15:09 FAX 10208048711
JENRENS & GILCHRIST PASA Z003
Jenkens
&
Gilchrist,
LLr
City Attorney Bob Burnham
City of Newport Beach
May 22, 2002
Page 2
With regard to the lease extension, the tenants reiterate their request for an extended term of
at least three years. All parties acknowledge that it is highly unlikely that the City will be prepared
to make any other use of the site sooner than that, even if the current proposal for a hotel
development proceeds. On the other hand, if the City subsequently should elect to move more
quickly to convert use of the site, the longer lease term would not preclude the City from giving
notice of closure of Marinapark at an earlier date. The longer term, however, would provide the
tenants with greater certainty and stability, and provide an incentive for them to continue investing
in the maintenance and improvement of their units, to the benefit of both the residents themselves
and the community as a whole.
We understand that City staff is recommending that rents be adjusted based on the Appraisal
of Fair Rental Value, dated April 4, 2002, prepared for the City by William Hansen, MAI. The
tenants are satisfied with Mr. Hansen's qualifications and support his conclusions. We further
understand that the proposed lease extension will include a provision allowing staff to limit rent
adjustments for tenants who demonstrate genuine hardship. While this is something that will affect
only a few tenants, we appreciate the City addressing the issue.
There is another "hardship" issue which remains to be addressed, however. The proposed
lease extension provides for a very significant rent increase for any successors to current tenants,
apparently as a means of bringing rents up to full market level. While we are not contesting this
provision as a general rule, we are concerned that it will cause considerable hardship in those
occasional cases where a tenant is forced to terminate their occupancy for personal reasons outside
their control. This is a special concern given the advanced age of many of the tenants. In such a
case, the resulting greatly increased rent level would be a major burden for their family even if the
latter opt to occupy the unit and would greatly inhibit their ability to sell the coach unit. After
considerable discussion, the tenants propose that, rather than trying to define a hardship exception,
the City instead defer implementing this provision for a period of one year, to allow those tenants
who fear their units may become subject to this rule an opportunity to sell and relocate in advance.
Finally, I would like to reiterate the tenants' request for a copy of the relocation study that
was performed for the City with regard to Marinapark You initially indicated that the study was
still in draft form and therefore not a public document, but there does not appear to be any action
being taken to refine it further and we understand that it has been shared with both Council
members and members of the press. Accordingly, as the parties most directly impacted by the
study, the tenants would like an opportunity to review it at the earliest possible time.
PASADENA ]3749.1 41750-90001
MAY -24 -2002 16 11 16263049711 9?% P.03
05/24/2002 15:00 FAX 16203049711 JEMIENS & GILCHRIST PASA
jenkens & Gilchrist, LLP
City Attorney Bob Burnham
City of Newport Beach
May 22, 2002
Page 3
Z 004
I will be happy to discuss any of these items with you or other City staff in advance of the
upcoming City Council meeting. Thanks for your consideration.
Sincerely,
JENKENS & GTLCHRIST, up
J, "'3z
Cary A. Lowe
CDL:mh
cc: Stewart Berkshire, President, Marinapark Homeowners Association
PASADENA 13749v141750-00001
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