HomeMy WebLinkAbout11 - Lease for 209 Washington Street & 608 Balboa BlvdCITY OF NEWPORT BEACH
CITY COUNCIL STAFF REPORT
Agenda Item No. 11
April 13, 2010
TO: HONORABLE MAYOR AND MEMBERS OF THE CITY COUNCIL
FROM: Planning Department
Leigh M. De Santis, Economic Development Administrator
949 - 644 -3207, Idesantis @newportbeachca.gov
SUBJECT: Month -to -Month Lease Agreement with Dave Salisbury for Parking
on Property Located at 209 Washington St. and 608 Balboa Blvd.
ISSUE:
Should the City lease the recently acquired Balboa Market property to Dave Salisbury
for valet parking to serve restaurant operations in the area, until such time as the City
develops a new surface parking lot on the property?
RECOMMENDATION:
1. Waive the requirements of City Council Policy F -7 for an appraisal and
open bid process; and
2. Approve and authorize the Mayor and City Clerk to execute the attached
month -to -month lease agreement.
DISCUSSION:
Background:
Though it was not disclosed during or through escrow, Dave Salisbury had been leasing
the parking spaces on the Balboa Market site from Levon Gugasian, the previous
owner. A few employees park there during the day and he uses it at night for valet
parking associated with restaurant and banquet operations of Harborside at the Balboa
Pavilion and /or Newport Landing. Mr. Gugasian did give Mr. Salisbury notice that he
would need to quit the property once the sale occurred.
Mr. Salisbury would like to continue to lease and use the parking until the City is ready
to demolish the building and construct a public parking lot on the site.
Month to Month Parking Lease
April 13, 2009
Page 2
City Council Policy F -7 addresses how the City manages income properties. The policy
provides that negotiations regarding the lease of income properties shall be based on
analysis of the maximum or open market value of the property conducted by an
appraiser or other consultant, that the City shall seek the revenue equivalent to the
open market value of the property, and that the City shall conduct an open bid or
proposal process to ensure the highest financial return.
Analysis:
Policy F -7 allows for exceptions to the appraisal and open bid process requirements
when the City Council makes findings setting forth its reasons. Staff believes the
proposed lease falls under exception E.3, "Converting the property to another use or
changing the manager, concessionaire or lessee of the property would result in
excessive vacancy, relocation or severance costs, which would outweigh other financial
benefits."
Mr. Salisbury has been the lessee of the property. Although the City did not agree to
continue his lease, doing so would maintain some use of and revenue from the
property. Staff estimates that the proposed lease may be in effect for 6 -9 months. An
appraisal could take 4 -6 weeks to obtain and cost as much as the City expects to earn
in 2 -3 months through the lease of the property. An open proposal process would take
a similar amount of time, during which the property would not be generating revenue.
The proposed lease rate is an increase over what Mr. Salisbury reports he was paying
Mr. Gugasian. Staff believes that there would be limited financial benefits to following all
the requirements of Policy F -7, and they would be outweighed by the immediate
generation of revenue that could be used for parking improvements in Balboa Village.
In addition, staff is of the opinion that Mr. Salisbury's use of the property will help deter
vandalism, and the proposed lease requires him to assist with maintenance of the
property. Therefore, staff recommends the City Council waive the requirements of
Policy F -7, making a finding that this lease falls under Section E.3.
Terms of the Proposed Lease:
The terms of the proposed lease are outlined below.
• The lease shall be month -to- month.
• Either Party may give thirty (30) days notice to terminate the lease.
• The Lessee may not sub - lease.
Month to Month Parking Lease
April 13, 2009
Page 3
• The Lessee assumes all liability for the use of this property by people he
authorizes to park or those who gain access when it is not chained.
• The City shall be named as an additional insured on the Lessee's liability
policy for $1,000,000.
• The Lessee assumes responsibility for keeping the property secure when
he is not using it for parking, for keeping it free of graffiti and litter, and
giving the City prompt notification of damage to City property, such as
broken windows.
• The Lessee waives any and all rights to relocation.
• The lease rate shall be one thousand dollars ($1,000) per month.
• Payment shall be due the 1St of the month and deemed late after the 10th
of that month; the rent for April 2010, shall be pro -rated and due upon
execution of the lease.
• A late fee of 10% will be applied to any balance owed after the 10th of the
month.
Environmental Review:
The leasing of existing facilities, involving no or negligible expansion of use, is exempt
from environmental review under Section 15301 of the CEQA Guidelines
Potential Project Revenue:
It is anticipated that this lease will have a life of six to nine months and, in that time,
could generate $6,000 to $9,000.
Alternatives:
1. Do not enter into a month -to -month lease and instead chain the property
to keep cars off the site.
2. Direct staff to follow the provisions of City Council Policy F -7, and consider
a lease based on an appraisal and open bid process.
Prepared by:
Leigh Nr De Santis,
Economic Development Administrator
Attachment: Lease Agreement
Submitted by:
S, f, 1, 0 � � g T44 5:
Sharon Z. Wood,
Assistant City Ma ger
WHEN RECORDED, RETURN TO:
City of Newport Beach
3300 Newport Beach Blvd.
P.O. Box 1768
Newport Beach, California 92658 -8915
Attn: City Clerk
(Exempt From Recording Fees Pursuant to Government Code § 6103)
(SPACE ABOVE THIS LINE FOR RECORDER'S USE)
BALBOA MARKET PARKING LOT LEASE AGREEMENT
This Balboa Market Parking Lot Lease Agreement ( "Agreement ") is made and
entered into this — day of 2010 by and between the City of Newport
Beach, a California municipal corporation ( "City ") and Waterfront Enterprises, Inc., a
California corporation ( "Lessee "). City and Lessee are at times referred to individually
as "Party" and collectively as "Parties" herein.
RECITALS
A. City is the owner of the property located at 209 Washington Street and
608 Balboa Blvd., Newport Beach, California which is commonly referred to as the
Balboa Market. The Balboa Market currently houses a structure and an accompanying
parking lot ( "Parking Lot ").
B. City anticipates developing the Parking Lot with a future undetermined
project but at this time the City is not using the Parking Lot.
C. Lessee desires to use the Parking Lot for employee and valet parking
associated with the restaurant and banquet operations of Harborside at the Balboa
Pavilion and Newport Landing.
AGREEMENT
NOW, THEREFORE, in consideration of the mutual promises, covenants,
benefits, obligations and agreements set forth herein, the Parties agree as follows:
1. Incorporation of Recitals. The Recitals contained herein are true and
correct and are incorporated into the operative part of this Agreement.
2. Parking Spaces. City hereby agrees to rent the Parking Lot to Lessee on
a non - exclusive basis. The Parking Lot shall only be used by Lessee for parking of
Lessee's employees' and guests' vehicles and for no other use.
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3. Term. This Agreement shall be month -to -month commencing upon the
date first written above. This Agreement shall be cancelable by either Party upon thirty
(30) calendar days written notice, with or without cause. In the event of termination the
Lessee shall bear all relocation costs and not be entitled to any reimbursement from
City.
4. Rent. Rent shall be due on the first (1s) of each month and late on the
tenth (10th) of each month. Rent for any partial month shall be prorated in accordance
with the actual number of days in that month. Lessee agrees to pay to City as monthly
rent the sum of One Thousand Dollars ($1,000) ( "Rent ").
5. Late Payment. Lessee hereby acknowledges that late payment by Lessee
to City of Rent or other sums due hereunder will cause City to incur costs not
contemplated by this Agreement, the exact amount of which is extremely difficult to
ascertain. Such costs include, but are not limited to, processing and accounting
charges. Accordingly, any payment of any sum to be paid by Lessee not paid by the
tenth (10th) of each month shall be subject to a ten percent (10 %) late charge. Lessee
and City agree that this late charge represents a reasonable estimate of such costs and
expenses and is fair compensation to City for its loss suffered by such late payment by
Lessee.
6. Interest. Any sum to be paid pursuant to the terms of this Agreement not
paid within twenty (20) calendar days of the date due shall bear interest from and after
the that date until paid at a rate equal to ten percent (10 %) per year.
7. Damaoe. Lessee shall be responsible for the cost of repairs of any and all
damage to the Parking Lot arising out of Lessee's use of the Parking Lot under this
Agreement.
8. Indemnity. To the fullest extent permitted by law, Lessee, its successors
or assigns, agrees to indemnify, defend and hold harmless City and its elected and
appointed officials, employees, volunteers, agents, consultants and contractors and
their respective members, managers, partners, officials, officers, directors,
shareholders, agents and employees ( "Indemnified Parties ") from and against any and
all claims (including, without limitation, claims for bodily injury, death, mechanics liens,
or damage to property), demands, obligations, damages, actions, causes of action,
suits, losses, judgments, fines, penalties, liabilities, costs and expenses (including,
without limitation, attorneys' fees, disbursements, costs of litigation, investigation,
appeal, expert witness fees and court costs) of every kind and nature whatsoever
(individually, a "Claim "; collectively, "Claims "), which arise from Lessee's, its
contractors', agents', employees', invitees', and their respective employees use of
and /or presence on all or any of the Parking Lot. The foregoing shall not serve as
authority for Lessee or its counsel to settle any Claim without the prior written consent of
City.
Notwithstanding the foregoing, nothing herein shall be construed to require
Lessee to indemnify the Indemnified Parties from any Claim arising from the negligence
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or willful misconduct of the Indemnified Parties. Nothing in this indemnity shall be
construed as authorizing any award of attorneys' fees in any action on or to enforce the
terms of this Agreement.
9. Insurance. At all times while this Agreement is in effect the Lessee shall
maintain, the types and minimum amounts of insurance set forth below:
9.1 General Liabilitv. General liability shall be for a minimum limit of
not less than One Million Dollars ($1,000,000) per occurrence, and Five Million Dollars
($5,000,000) in the annual aggregate.
9.2 Automobile Liability. Limits for automobile liability shall be for a
minimum limit of not less than Two Million Dollars ($2,000,000) per accident without
annual aggregate.
9.3 Workers' Compensation and Employers' Liability. Statutory
workers' compensation coverage as required by the State of California and employers'
liability limits of not less than One Million Dollars ($1,000,000) bodily injury by accident,
and One Million Dollars ($1,000,000) bodily injury by disease.
provisions: 9.4 Additional Provisions. Policies shall include the following
(a) The coverages shall contain no special limitations on the scope of
protection afforded to City. For general liability coverages, the additional insured clause
shall be no more restrictive than the coverage afforded by ISO Form No. CG 20 26 07
04 entitled "Additional Insured - Designated Person or Organization ". For automobile
liability coverages the additional insured clause shall be no more restrictive than ISO
endorsement number CA 20 48 02 99 "Designated Insured Endorsement ". Excess and
umbrella liability policies may include following form additional insured provisions in lieu
of specific endorsement language.
(b) A provision stating that the policy shall be primary and non - contributing
with respect to claims covered thereby and any self- insurance program or separate
insurance carried by City shall be excess and noncontributing with respect to such
claims.
(c) A provision similar to the ISO "separation of insureds" provision or
other commonly used "severability of interests" provisions. This provision shall apply
the coverage separately to each insured (except with respect to the limits of liability).
(d) Language stating that any failure to comply with the reporting
provisions of the policies shall not affect the coverage provided City.
(e) No cross suits exclusions (generally excluded in the excess policies).
(f) With regard to all property coverages, the following:
(i) Each policy shall be endorsed to state the coverage shall not
be cancelled or reduced in coverage or amounts by the insurance company except after
thirty (30) business days' prior written notice by certified mail, return receipt requested,
has been given to City. Any notice of cancellation due to non - payment of premium shall
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at a minimum comply with the requirement set forth by California law but in no event be
less than ten (10) business days. Lessee shall notify City of any material change in
policy terms and conditions that may impact the City, including any reduction in
coverage or limits.
(ii) The mailing address for all notices pertinent to these policies
shall be sent to City at the address set forth in this Agreement.
(iii) Insurance shall be placed with insurers licensed to do business
and admitted in the State of California and having an A.M. Best Company (Best's Key
Rating Guide) rating of no less than A -8.
(h) All policies, other than workers compensation, shall name City, a
California municipal corporation as an additional insured.
10. Compliance with Laws. Lessee shall, at its sole cost and expense, comply
with all of the applicable requirements of all municipal, state and federal authorities now
in force or which may hereafter be in force pertaining to the use of the Parking Lot, and
shall faithfully observe in said use all municipal ordinances, including, but not limited to,
the General Plan and zoning ordinances, state and federal statutes, or other
governmental regulations now in force or which shall hereinafter be in force. Lessee's
violation of law shall constitute an incurable default under this Agreement. The
judgment of any court of competent jurisdiction, or the admission of Lessee in any
action or proceeding against Lessee, whether City is a party thereto or not, that Lessee
has violated any such order or statute in said use, shall be conclusive of that fact as
between the City and Lessee.
11. Compliance with Environmental Laws. Lessee shall not engage in any
activity on or about the Parking Lot that violates any environmental law, and shall
promptly, at Lessee's sole cost and expense, take all investigatory and /or remedial
action required or ordered by any governmental agency, City or environmental law for
clean -up and removal of any contamination involving any hazardous material created or
caused directly or indirectly by Lessee. The term "environmental law" shall mean any
federal, state or local law, statute, ordinance or regulation pertaining to health, industrial
hygiene or the environmental conditions on, under or about the Parking Lot and the
regulations and administrative codes applicable thereto. The term "hazardous material"
includes, without limitation, any material or substance which is (i) defined or listed as a
"hazardous waste ", "extremely hazardous waste ", "restrictive hazardous waste' or
"hazardous substance" or considered a waste, condition of pollution or nuisance under
the environmental laws; (ii) petroleum or a petroleum product or fraction thereof; (iii)
asbestos; and /or (iv) substances known by the State of California to cause cancer
and/or reproductive toxicity. It is the intent of the Parties hereto to construe the terms
"hazardous materials" and "environmental laws" in their broadest sense.
12. Signs. Lessee shall not place or permit to be placed any sign that is not in
compliance with the sign ordinance of the City upon the Parking Lot. Any sign not
constructed in accordance therewith shall be immediately removed by Lessee and, if
said sign is not removed by Lessee within five (5) calendar days of written notice from
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City to Lessee, then City may remove and destroy said sign without Lessee's approval
and without any liability to Lessee.
13. Relationship of Parties. The relationship of the Parties hereto is that of
landlord and tenant, and it is expressly understood and agreed that City does not in any
way or for any purpose become a partner of Lessee in the conduct of Lessee's business
or otherwise, or a joint venturer with Lessee, and that the provisions of this Agreement
and the agreements relating to Rent payable hereunder are included solely for the
purpose of providing a method whereby rental payments are to be measured and
ascertained.
14. Nondiscrimination. Lessee herein covenants by and for itself, its heirs,
executors, administrators and assigns and all persons claiming under or through it, and
this Agreement is made and accepted upon and subject to the following conditions:
That there shall be no discrimination against or segregation of any person or group of
persons on account of race, sex, marital status, color, creed, national origin or ancestry,
in the leasing, subleasing, transferring, use, occupancy, tenure or enjoyment of the
Parking Lot herein leased, nor shall Lessee itself, or any person claiming under or
through it, establish or permit any such practice or practices of discrimination or
segregation with reference to the selection, location, number, use or occupancy of
Lessee's, lessees, sublessees, sublesors or vendees in the Parking Lot.
15. Entry and Inspection. Lessee shall permit City and its agents to enter into
and upon the Parking Lot for the purpose of inspecting the same or for the purpose of
maintaining the Parking Lot. City shall be permitted to do any of the above without any
rebate of Rent and without any liability to Lessee for any loss of occupation or quiet
enjoyment of the Parking Lot thereby occasioned.
16. Assignment and Subletting. Lessee shall not assign this Agreement or
sublet the Parking Lot, or any interest therein without the prior written consent of the
City.
17. Damage and Destruction of Premises. In the event of (a) partial or total
destruction of the Parking Lot during the term of this Agreement which requires repairs
to the Parking Lot, or (b) the Parking Lot being declared unsafe or unfit for occupancy
by any authorized public authority for any reason other than Lessee's act, use or
occupation, which declaration requires repairs to the Parking Lot, City may either (i)
make said repairs or (ii) terminate this Agreement by providing written notice to Lessee
within thirty (30) calendar days following the date of such destruction. If City elects to
make said repairs, and provided City uses due diligence in making said repairs, this
Agreement shall continue in full force and effect, and the Rent shall be proportionately
reduced while such repairs are being made. If City elects to terminate this Agreement,
all rentals shall be prorated between City and Lessee as of the date of such destruction.
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18. Liens. Lessee shall keep the Parking Lot free from any liens arising out of
any work performed, material furnished, or obligation incurred by Lessee or alleged to
have been incurred by Lessee.
19. Alterations. Lessee shall not make, or suffer to be made, any alterations
to the Parking Lot, or any part thereof, without the prior written consent of City.
20 Maintenance and Repair. By entering into this Agreement, Lessee shall
be deemed to have accepted the Parking Lot as being in good and sanitary order,
condition and repair, and as built in conformance with Lessee's intended use at the time
of execution of this Agreement. Lessee shall maintain the Parking Lot free of litter and
graffiti and shall notify City of any damage to structures (e.g., broken windows) on the
Parking Lot, including damage done by third - parties.. Lessee agrees on the last day of
this Agreement to surrender the Parking Lot with appurtenances, in the same condition
as when received and in a good, clean and sanitary condition, reasonable use and wear
thereof, act of God or by the elements excepted. Lessee agrees to promptly reimburse
City for damages to the Parking Lot and any and all fixtures or appurtenances thereto,
as provided herein. City shall not be required to make any repairs to the Parking Lot.
21. Notices. Any notice, request, direction, demand, consent, waiver,
approval or other communication required or permitted to be given hereunder shall be in
writing and shall be personally delivered or sent by registered or certified mail, postage
prepaid, return receipt requested, or overnight courier, or electronic transmission as
defined below.
Notices or other communications shall be addressed as follows:
To Lessee: Waterfront Enterprises, Inc.
Attention: David Salisbury, President
400 Main Street
Newport Beach, California 92661
To City: City of Newport Beach
Attention: City Manager
3300 Newport Blvd.
Newport Beach, California 92658
22. Interpretation. The terms of this Agreement shall be construed in
accordance within the meaning of the language used and shall not be construed for or
against either Party by reason of the authorship of this Agreement or any other rule of
construction which might otherwise apply.
23. Waiver. A waiver by either Party of any breach, of any term, covenant or
condition contained herein shall not be deemed to be a waiver of any subsequent
breach of the same or any other term, covenant or condition contained herein, whether
of the same or a different character.
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24. Integrated Agreement. This Agreement represents the full and complete
understanding of every kind or nature whatsoever between the Parties hereto, and all
preliminary negotiations and agreements of whatsoever kind or nature are merged
herein. No verbal agreement or implied covenant shall be held to vary the provisions
herein.
25. Modification. This Agreement may be modified or amended only by a
written document executed by both Lessee and City and approved as to form by the
City Attorney.
26. Partial Invalidity. If any term or portion of this Agreement is held to be
invalid, illegal, or otherwise unenforceable by a court of competent jurisdiction, the
remaining provisions of this Agreement shall continue in full force and effect.
27. Jurisdiction and Venue. California law shall govern this Agreement and all
matters relating to it and any action brought relating to this Agreement. Venue shall be
in the County of Orange.
28. Recordation. This Agreement shall be recorded with the County Recorder
of Orange County pursuant to California Government Code Section 37393.
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IN WITNESS WHEREOF, the Parties hereto have caused this Agreement to be
executed on the day and year first above written.
City of Newport Beach Waterfront Enterprises, Inc.
A California Municipal Corporation A California Corporation
Keith Curry, Dave Salisbury,
Mayor President�'�l'O
Date
APPROVED AS T��//O FORM:
l5avv'k 4l�
Leonie Mulvihill,
Acting City Attorney s �
ATTEST:
Leilani Brown,
City Clerk
[END OF SIGNATURES]
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