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HomeMy WebLinkAboutS19 - Bait Barge Lease in the Harbor Entrance ChannelCITY OF NEWPORT BEACH CITY COUNCIL STAFF REPORT Agenda Item No. S19 April 13, 2010 TO: HONORABLE MAYOR AND MEMBERS OF THE CITY COUNCIL FROM: Chris Miller, Harbor Resources Manager (949) 644 -3043, cmiller(a newportbeachca.gov SUBJECT: Bait Barge Lease in the Harbor Entrance Channel ISSUE: Should San Pedro Bait be selected as the next bait barge operator in the harbor entrance channel? RECOMMENDATIONS: 1. Select San Pedro Bait Company as the next bait barge operator based on the proposal submitted in response to the City's Request for Proposals dated December 4, 2009. 2. Authorize the Council to accept the RFP process as a fair market value determination in lieu of conducting an appraisal as required for leases in NBMC 17.60.060(D). 3. Authorize the Mayor to execute the Lease Agreement attached to this report. BACKGROUND: In 1987, the City Council issued a five -year permit to the Newport Beach Barge Company (later known as Newport Bait Company LLC) to operate a bait barge in the entrance channel. This operation had successfully served Newport's sportfishing and recreational fisherman for over twenty years, and the harbor community has appreciated the consistent availability of live bait at a convenient location. During this period, Newport Bait Company's permit had been renewed several times over the years, usually in five year increments. The rent in the most recent lease was $665.56 per month. In 2009, the Newport Bait Company sold the business to San Pedro Bait Company, who took over the operations in Newport Harbor via a short term lease with the City until a formal RFP could be issued. During this interim time, San Pedro Bait improved the bait barge operations and provided a reliable source of "cured" bait for the local fishing community. (The bait barge is currently deployed under a month to month extension of the interim lease in order to satisfy the bait demands of the local fishermen.) Bait Barge Lease April 13, 2010 Council Policy F -7 requires the City "to conduct an open bid or proposal process to ensure the highest financial return ", and it does not permit unlimited renewals of existing permits. NBMC 17.60.060 describes leases and the processes involved. Specifically, subsection D- Revenue states: "Rent under this Section shall be based upon fair market value, as determined by the City Council. Such determination shall be based upon the findings of a City selected appraiser." Primarily, this section applies to the many commercial marinas in the harbor, and gives staff direction when converting these commercial pier permits to leases as the Code intends. While the bait barge falls under these requirements, staff believes the intent of fair market value was satisfied through the RFP process. On December 4, 2009, the City issued a Request for Proposals to operate a bait barge in the channel entrance. Harbor Resources distributed the RFP to local Southern California bait operators as well as posting it on the City's website; and San Pedro Bait was the only respondent. In light of maintaining immediate availability of bait for the fishing community, and with the projected time and cost involved in completing an appraisal, staff is recommending that the RFP process be sufficient as a fair market value indicator for the bait barge in Newport Harbor. PROPOSED TERMS OF THE AGREEMENT: TERM: 5 years, expiring March 31, 2015 RENT: $700 per month during the operating period (April 1 through November 30,24/7) BUSINESS PURPOSES: The Bait Barge and Premises shall be used by Lessee solely for receiving, maintaining and /or curing of live bait for sale to commercial, charter and private boats. Lessee shall ensure that it will maintain sufficient live bait to adequately supply the needs of sport fishermen, commercial and recreational fishermen at Newport Harbor. Lessee expressly agrees not to use the Bait Barge and Premises for any other purpose or engage in or permit any other business activity within or from the Bait Barge and Premises including but not limited to, the sale or rental of any goods, the sale of any food, beverages, or other concessions not approved for sale by City or the provision of any services. Approved concessions are limited to promotional t- shirts, sweatshirts and sun - visors. SIGNAGE: Lessee may place unlit signs upon the bait barge subject to conformity with NBMC 17.35.090. LIGHTING Bait Barge Lease April 13, 2010 Bait barge will have no lighting other than that required for navigational purposes per Coast Guard regulations and safety purposes. GENERATOR: If a generator is to be used, it shall be subject to approval of the Harbor Resources Manager. SPACE: Enclosed spaces on the bait barge shall be used only by employees of the bait barge and only as a pilot house, office, storage room and /or restroom. COVERS: Bait wells and covers shall comply with NBMC Title 17. ANCHORAGE: The method of anchoring the Bait Barge shall be subject to the approval of the Harbor Resources Manager. SHORT TERM BERTHING: Defined as the minimum amount of time to perform the following activities: a) Bait boats — for the purpose of unloading live bait on the bait barge b) Sportfishing, commercial or recreational vessels — for the purpose of buying bait c) Service vessels — for the purpose of maintaining sewage holding tanks or other maintenance activities. No long term berthing is allowed. BAIT BOAT: This Agreement is not applicable to any bait boat that may be owned by Lessee. All bait boats operating in the City of Newport Beach must apply for and obtain a Marine Activities Permit pursuant to the terms of NBMC Title 17. BAIT BARGE: Only the bait barge described and depicted on Exhibit "A" may be used at the premises. BIRDS AND SEA LIONS: Bait receivers must be equipped with hard covers to deter birds and sea lions. Lessee shall establish a maintenance program to control the congregation of birds and sea lions. ENVIRONMENTAL REVIEW: This item is exempt from environmental review under Section 15301 of the CEQA Guidelines, which pertains to the leasing of existing facilities involving negligible or no expansion beyond that existing at the time of lead agency's determination. Bait Barge Lease April 13, 2010 PUBLIC NOTICE: This agenda item has been noticed according to the Ralph M. Brown Act (72 hours in advance of the public meetings at which the City Council considers the item). Submitted by: �%✓ 1 ! A C ris Miller Harbor Resources Manager Attachments: Lease Agreement with San Pedro Bait Company 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 California Government Code 6103) (SPACE ABOVE THIS LINE FOR RECORDER'S USE) AGREEMENT FOR LEASE OF SUBMERGED PUBLIC TRUST LANDS This Agreement for Lease of Public Trust Lands ( "Agreement ") is entered into this _ day of April 2010, by and between the City of Newport Beach, a California municipal corporation ( "Lessor" or "City "), and San Pedro Bait Company, a California corporation, whose address is 1231 West 26th Place, San Pedro, California 90731 ( "Lessee "). Lessor and Lessee are at times referred to individually as "Party" and collectively as "Parties" herein. RECITALS A. Lessor is a municipal corporation duly organized and validly existing under the laws of the State of California with the power to carry on its business as it is now being conducted under the statutes of the State of California and the City's Charter; B. The State of California became the owner of tidelands on admission to the union in 1850. Lessor manages those tidelands pursuant to various legislative grants from the State. C. Newport Bait Company has been operating the bait barge in the City's harbor since 1986 by permit ( "Bait Barge "). Lessee purchased Newport Bait Company and its assets, including the Bait Barge; D. Newport Beach Municipal Code ( "Code ") Section 17.60.060(A) states that if public trust lands are used for commercial purposes by an entity other than the City, then that entity shall enter into a lease with the City. The Bait Barge is located upon public trust lands and therefore requires a lease. NOW, THEREFORE, in consideration of the mutual promises, covenants, benefits, obligations and agreements set forth herein, the Parties agree as follows: 1. Premises 1.1 Leased Premises Lessor hereby leases to Lessee those submerged tidelands located at the channel entrance in Newport Harbor, closest to the eastern jetty, approximately 330 35' 36.67 "N and 1170 52' 42.18V ( "Premises "). The location of the Premises is generally depicted in the attached Exhibit "A" which is hereby incorporated by reference. 1.2 Relocation During the term of this Agreement, Lessor, in its sole discretion, may direct Lessee to relocate the Bait Barge, temporarily or permanently, to a location of Lessor's designation, at Lessee's sole cost and expense. The area upon which the Bait Barge is relocated shall be designated the new Premises. Any such relocation shall not entitle Lessee to any compensation or reimbursement from Lessor. In no instance will the Bait Barge be permitted in a location which is in conflict with the main navigational channels. 1.3 Terms, Covenants and Conditions The rights granted herein are subject to the terms, covenants and conditions hereinafter set forth, and Lessee covenants, as a material part of the consideration for this Agreement, to keep and perform each and every term, covenant and condition of this Agreement. 2. Term The term of this Agreement shall commence on the date first written above and shall terminate on March 31, 2015 ( "Term "), unless terminated earlier as provided in this Agreement. 2.1 If Lessee holds over after expiration of the Term, without the express written consent of Lessor, Lessee shall become a tenant at sufferance, or in the sole and absolute discretion of Lessor, a month -to -month tenant, subject to each and all of the terms of this Agreement as may reasonably and logically be construed as applicable to a tenancy at sufferance or a month -to -month tenancy, and any holding over shall not constitute a renewal hereof or an extension for any further term. During such holding over, Base Rent (as defined in Section 3.1) shall be payable at a monthly rate equal to one hundred and fifty percent (150 %) the Base Rent applicable during the last monthly rental period of the Term. Nothing Lease of Submerged Public Trust Lands Page 2 contained in this Section 2.1 shall be construed as consent by Lessor to any holding over by Lessee, and Lessor expressly reserves the right to require Lessee to surrender possession of the Premises to Lessor as provided in this Agreement upon the expiration or other termination of this Agreement. 3. Rent 3.1 Base Rent. Lessee shall pay to Lessor Seven Hundred Dollars and no /100 ($700.00) per month ( "Base Rent "), during the Operating Period (as defined in Section 5.4), due and payable in advance on the first (1S) day of each month upon the execution of this Agreement. The Base Rent shall increase annually on May 1St of each year of the Term according to the Consumer Price Index ( "CPI "), but in no event shall the Base Rent decrease. Base Rent for any partial calendar month during which the Operating Period commences or terminates shall be prorated based on the actual number of days in such month. 3.2 Acceptance. Lessor's acceptance of any money paid by Lessee as rent payment for the Premises shall not be construed as an admission of the sufficiency of the amount owed to Lessor. Acceptance of such rent by Lessor shall in no event constitute a waiver of any default by Lessee with respect to any overdue amount, nor prevent Lessor from exercising any of the other rights and remedies granted hereunder. 3.3 Late Charge. Lessee hereby acknowledges that the late payment of Base Rent or other sums due hereunder will cause Lessor 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 within five (5) calendar days of its due date shall be subject to a ten percent (10 %) per month late charge. Lessor and Lessee agree that this late charge represents a reasonable estimate of such costs and expenses and is fair compensation to Lessor for its loss suffered by such late payment by Lessee. Late Charges shall constitute additional rent. 3.4 In Addition to Other Fees. Rental payments required to be paid pursuant to this Agreement shall be in addition to any other fee or fees required to be paid by Lessee, including, but not limited to, business license fees and permit fees. 3.5 Payment Location. All payments and other sums payable pursuant to this Agreement shall be directed to: Lease of Submerged Public Trust Lands Page 3 City of Newport Beach Attn: Cashiering Division 3300 Newport Blvd. PO Box 1768 Newport Beach, CA 92658 or at such other place as Lessor may hereafter designate in writing. 4. Utilities, Taxes and Assessments Lessee shall be solely responsible for obtaining all utilities for the Bait Barge and Premises, and shall promptly pay, and discharge prior to delinquency, any and all charges for water, gas, heat, electricity, telephone, rubbish, telephone, janitorial, garbage disposal, sewer and other services furnished to the Bait Barge and Premises. Lessee shall pay, prior to delinquency, any and all possessory interest taxes, property taxes, all taxes assessed against and levied upon fixtures, furnishings, equipment, or improvements, and all other personal property of Lessee located on the Bait Barge and Premises, real property taxes, and fees, service charges and assessments which may at any time be imposed or levied by any public entity and attributable to Lessee's use of the Bait Barge and Premises. Lessor hereby gives notice to Lessee, pursuant to Revenue and Tax Code Section 107.6, that this Agreement may create a possessory interest which is the subject of property taxes levied on such interest, the payment of which taxes shall be the sole obligation of Lessee. Any payments under this Section shall not reduce the rental payments due Lessor under this Agreement, and Lessor shall have no liability for such payments. Lessee shall hold Lessor harmless from any and all loss, damage, or liability that may result from the failure of Lessee to comply with the provisions of this Section. 5. Use of the Premises 5.1 Business Purposes The Bait Barge and Premises shall be used by Lessee solely for receiving, maintaining and /or curing of live bait and approved concessions for sale to commercial, charter and private boats. Lessee shall ensure that it will maintain sufficient live bait to adequately supply the needs of sport fishermen, commercial and recreational fishermen at Newport Harbor. Lessee expressly agrees not to use the Bait Barge and Premises for any Lease of Submerged Public Trust Lands Page 4 :tea 5.3 5.4 5.5 5.6 other purpose or engage in or permit any other business activity within or from the Bait Barge and Premises including but not limited to, the sale or rental of any goods, the sale of any food, beverages, or other concessions not approved for sale by City or the provision of any services. Concessions approved for sale include and are limited to long sleeve and short sleeve t- shirts, sweatshirts, and sun - visors. The list of approved concessions may be expanded pursuant to the Harbor Resource Manager's written approval. Lessee shall pay California State sales tax on all concession items. Standard of Operations Lessee shall operate and manage the Bait Barge in a manner comparable to other high quality businesses providing similar services. Prices for all sales shall be prominently displayed on the Bait Barge during all hours of operation. Signage /Advertising Display Lessee may, at its own expense, place unlit signs upon the Bait Barge. The size, type, number, and design of the signs shall conform with Code Section 17.35.090 and shall be subject to the prior written approval of the Harbor Resources Manager. Other than the aforementioned approved signage, Lessee shall not paint, install decorations, or install any signs, lettering or advertising of any type, or any other type of visual displays, on or about the Bait Barge and Premises without the prior written consent of Lessor. Period and Hours of Operation The Bait Barge shall operate from April 1 through November 30 (the "Operating Period "), 24 hours /day per calendar year. Changes to the Operating Period or hours of operation shall be subject to Harbor Resources Manager's written approval. Li htin The Bait Barge and Premises' exterior lighting shall comply with the U.S. Coast Guard's lighting regulations for navigation and safety purposes. All interior lighting shall be approved in writing by the Harbor Resources Manager. Generator If a generator or compressor is operated aboard the Bait Barge, it shall be Lease of Submerged Public Trust Lands Page 5 subject to the approval of the Harbor Resources Manager. The Harbor Resources Manager may also limit the hours that the generator or compressor may be used in order to reduce impacts to surrounding residences. 5.7 Space on Bait Barge Enclosed spaces on the Bait Barge shall be used only by employees of the Bait Barge and only as a pilot house, office, storage room and /or restroom. All structures and supplies aboard the Bait Barge shall be properly secured. 5.8 Covers Bait wells and covers shall comply with Code Title 17 and are subject to the written approval of the Harbor Resources Manager. 5.9 Anchorage The method of anchoring the Bait Barge shall be subject to the written approval of the Harbor Resources Manager. The Bait Barge shall be moved to a safe location as directed by the Harbor Resources Manager in the event the Harbor Resources Manager determines, in his sole discretion, that the Bait Barge is likely to sustain damage caused by storm conditions. 5.10 Short -term Berthing Short-term berthing shall be defined as the minimum amount of time to perform the following functions: a) Bait boats - for the purpose of unloading live bait onto the bait barge; b) Sport fishing, commercial or recreational vessels - for the purpose of buying bait; and c) Service vessels - for the purpose of maintaining the sewage holding tank(s) and to perform any other maintenance activities on the bait barge. No long -term berthing is permitted except for a tender or dinghy for the sole purpose of transporting Bait Barge employees. Lease of Submerged Public Trust Lands Page 6 5.11 Bait Boat This Agreement is not applicable to any bait boat that may be owned by Lessee. All bait boats operating in the City must apply for and obtain a Marine Activities Permit pursuant to the terms of Code Title 17. 5.12 Bait Barge Vessel Only the Bait Barge described and depicted on Exhibit "B" may be used at the Premises. Lessee may not substitute or use another bait barge at the Premises without Harbor Resource Manager's express written approval. Lessee may not increase the dimensions of the Bait Barge described and depicted on Exhibit "A" without written authorization of the Harbor Resources Manager. 5.13 Birds and Sea Lions Bait receivers (holding tanks for bait) must be equipped with hard covers to deter birds and sea lions. Netting may not be used. Lessee shall establish a maintenance program for the purpose of controlling the congregation of birds on the Bait Barge and the Premises. This program shall include, but not be limited to, the installation of owl statues, horizontal rotating whip antennas as appropriate, and other measures reasonably employed in discouraging congregating bird activity. Lessee shall establish a maintenance program for the purpose of controlling the congregation of sea lions on the Bait Barge and Premises. This program shall be demonstrably effective in discouraging the congregation of sea lions on deck, but does not in any way violate any law or regulation or injure the sea lions. Lessee shall not be required to undertake any activity which will place it in violation of any Federal, State or local regulations, and will not be required to undertake any action or otherwise act so as to inhibit, harm, or in any way injure or obstruct endangered species or otherwise protected wildlife. 6. Environmental Requirements Lessee shall properly, and in compliance with all applicable laws, dispose of refuse matter, matter that constitutes an unlawful fire hazard, and any and all material detrimental to the public health. Lessee shall provide regular custodial services to ensure that no trash and /or debris accumulate on the Bait Barge and /or at the Premises or in surrounding waters. The Bait Barge shall have holding tanks with pump -out connections for sewage, Lease of Submerged Public Trust Lands Page 7 waste water and grey water, and any other necessary equipment to prevent the discharge of such waters into the ocean and /or surrounding waters. Lessee shall also provide regular and documented pump -out services for the routine pump - outs and disposal. Lessee shall provide such documentation immediately upon Lessor's request. Lessee shall regularly clean receivers to ensure that dead fish do not accumulate inside the receivers. Floating dead fish or other animal carcasses must be promptly removed from the water so as to minimize bacteria loading of harbor waters. Holding tanks for sewage and trash, litter receptacles and their removal from the Bait Barge, shall be subject to the Harbor Resources Manager's approval. Lessee shall practice conservation of water, energy, and other natural resources and shall prevent pollution and harm to the environment. Lessee shall prevent harm or injury to animals, birds, and other sea life. Lessee shall not violate any law or regulation whose purpose is to conserve resources, protect the environment and animals, birds, and other sea life. 7. Permits and Licenses Lessee, at its sole expense, shall obtain and maintain during the Term of this Agreement, all appropriate permits, licenses and certificates that may be required by any governmental agency in connection with the occupancy and use of the Premises and the operation of the Bait Barge. Any approvals required by State and Federal agencies shall be secured prior to the execution of this Agreement. 8. Acceptance of Condition of Premises Lessee acknowledges that the Premises are suitable for Lessee's intended uses and accepts the Premises in "as is" condition, with no warranty, express or implied from the Lessor as to any latent, patent, foreseeable and unforeseeable condition of the Premises. 9. Maintenance and Repair Lessee shall be responsible for maintenance and repair of the Bait Barge. Lessee shall conduct regular inspections to ensure that the Bait Barge is in a safe and sanitary condition and in compliance with all applicable Federal, State and local laws and regulations. Lessee shall perform all necessary modifications and repair work at Lessee's sole cost and expense as the need arises. Lessee shall designate in writing to the Harbor Resources Manager an on -site representative who shall be responsible for the day -to -day operation and level of maintenance, cleanliness, and general order. Lease of Submerged Public Trust Lands Page 8 iN] 11 12. 13. If Lessee fails to maintain or make repairs or replacements as required herein, Harbor Resources Manager shall notify Lessee in writing of said failure. Should Lessee fail to correct the situation within three (3) calendar days after date of written notice, Harbor Resources Manager may choose the remedies available herein, or by law. Lessor Paying Claim Should Lessee fail to pay and discharge, when due and payable, any tax or assessment, or any premium or other charge in connection with any insurance policy which Lessee is obligated to provide, or any lien or claim for labor or material employed or used in the repair, alteration, construction, or maintenance of improvements on the Bait Barge or Premises, then Lessor may, after ten (10) calendar days written notice to Lessee and at its option, pay any such tax, assessment, lien, claim, premium or charge, or settle or discharge any action, or satisfy and judgment thereon. All costs and expenses incurred or paid by Lessor pursuant to this Section, together with interest at the rate of ten percent (10 %) per annum from the date of payment, shall be deemed to be considered as additional rent and shall be paid by Lessee within ten (10) calendar days after written notice that such payments are due. Standard of Care Lessee agrees to perform all services required hereunder in a manner commensurate with community professional standards. Right to Enter the Premises Lessor expressly reserves the right and shall be entitled to enter the Bait Barge, to inspect the Premises at any time without prior notice for compliance with the terms of this Agreement, and for compliance with all applicable Federal, State and local (including those of the Lessor) government laws, statutes, ordinances, rules and regulations. Assig nm ent/S u bletting /Hypothecation 13.1 Except as expressly provided herein, Lessee shall not either voluntarily or by operation of law, assign, transfer, mortgage, pledge, hypothecate or encumber this Agreement and shall not sublet the Premises or Bait Barge, in whole or in part, or allow any person other than Lessee's employees, members, agents, servants and invitees to occupy or use all or any portion of the Premises without the prior written consent of Lessor which consent shall not be unreasonably withheld. 13.2 The following shall be deemed to be an assignment or transfer within the meaning of this Agreement: Lease of Submerged Public Trust Lands Page 9 (a) If Lessee is a corporation, any dissolution, merger, consolidation or other reorganization of Lessee or sale or other transfer of a percentage of capital stock of Lessee which results in a change of controlling persons, or the sale or other transfer of substantially all the assets of Lessee; or (b) If Lessee is a partnership, a transfer of any interest of a general partner, a withdrawal of any general partner from the partnership, or the dissolution of the partnership. 14. Bankruptcv Lessee agrees that in the event all, or substantially all, of Lessee's assets are placed in the hands of a receiver or trustee and remain so for a period of thirty (30) calendar days, or should Lessee make an assignment for the benefit of creditors or be adjudicated bankrupt, or should Lessee institute any proceedings under the Bankruptcy Act or similar law wherein Lessee seeks to be adjudicated bankrupt or to be discharged of its debts, or seeks to effect a plan of liquidation or reorganization, or should any involuntary proceedings be filed against Lessee and not dismissed or stayed within sixty (60) calendar days, then this Agreement or any interest in and to the Premises shall not become an asset in any such proceeding and, to the extent permitted by law and subject to the provisions of Section 16, Lessor may declare this Agreement terminated and take possession of the Premises. 15. Defaults The occurrence of any one or more of the following events shall constitute a material breach and default of this Agreement by Lessee: 15.1 Continued vacation or abandonment of the Bait Barge or Premises by Lessee for thirty (30) consecutive days after Lessor's written notice to Lessee; 15.2 Failure of Lessee to make any payment required by this Agreement when such failure continues for a period of ten (10) calendar days after written notice that payment is due; 15.3 Use of the Bait Barge or Premises by Lessee for any purpose other than that authorized by Section 5; 15.4 Inability of Lessee to maintain sufficient amounts of live bait pursuant to Section 5.1; 15.5 Use of the Bait Barge or Premises by Lessee which results in the Lease of Submerged Public Trust Lands Page 10 ............. cancellation of any insurance covering the Bait Barge or Premises; i 15.6 If Lessee is unable or does not renew or obtain any required permits, licenses and /or certificates; 15.7 Lessee's assignment, transfer, mortgage, pledge, hypothecation, encumbrance of the Agreement or sublease of the Premises without Lessor's consent pursuant to Section 13. 16. Remedies 16.1 Cumulative Nature of Remedies. If any default by Lessee shall continue without cure, Lessor shall have the remedies described in this Section in addition to all other rights and remedies provided by law or equity, to which Lessor may resort cumulatively or in the alternative. (a) Reentry without Termination. Lessor may reenter the Premises, and, without terminating this Agreement, re -let all or a portion of the Premises. Lessor may execute any agreement made under this provision in Lessor's name and shall be entitled to all rents from the use, operation, or occupancy of the Premises. Lessee shall nevertheless pay to Lessor on the dates specified in this Agreement the equivalent of all sums required of Lessee under this Agreement, plus Lessor's expenses in conjunction with re- letting, less the proceeds of any re- letting or atonement. No act by or on behalf of Lessor under this provision shall constitute a termination of this Agreement unless Lessor gives Lessee specific written notice of termination. (b) Maintain Agreement. Lessor may maintain this Agreement in full force and effect and recover any rental, royalty, or other consideration as it becomes due, without terminating Lessee's right of possession, regardless of whether Lessee shall have abandoned the Bait Barge or Premises. (c) Termination. Lessor may terminate this Agreement with or without cause by providing Lessee with three (3) calendar days written notice and specifying a termination date. In the event Lessor terminates this Agreement, Lessor may recover possession of the Premises (which Lessee shall surrender and vacate upon demand) and remove all persons and property. Lessor shall be entitled to recover the following as damages: (i) The value of any unpaid rent or other charges unpaid at the time of termination; Lease of Submerged Public Trust Lands Page 11 (ii) The value of rent and other charges that would have accrued after termination less the amount of rent and charges Lessor received or could have received through the exercise of reasonable diligence as of the date of the award; (iii) Any other amount necessary to reasonably compensate Lessor for the detriment proximately caused by Lessee's failure to perform its obligations under this Agreement; and (iv) At Lessor's election, such other amounts in addition to or in lieu of the foregoing as may be permitted from time -to -time by applicable. California law. Lessor shall be entitled to interest at the rate of ten percent (10 %) per annum on all rent and other charges from the date due or the date they would have accrued. Lessor shall also be entitled to an award of the costs and expenses incurred by Lessor in maintaining or preserving the Premises after default, preparing the Premises for re- letting, or repairing any damage caused by the act or omission of Lessee. (d) Use of Lessee's Personal Property. Lessor may use Lessee's personal property and trade fixtures located on the Premises or any of such property and fixtures without compensation or liability to Lessee for use or damage. In the alternative Lessor may store the property and fixtures at the cost of Lessee. 16.2 Waiver of Rights. Lessee waives any right of redemption or relief from forfeiture under California Code of Civil Procedure Sections 1174 or 1179, or under any other present or future law, in the event Lessee is evicted or Lessor takes possession of the Premises by reason of any default by Lessee. 17. Surrender of Premises On or within ten (10) calendar days after the expiration or earlier termination of this Agreement, Lessee shall remove the Bait Barge from the Premises and restore the Premises as nearly as possible to the conditions existing prior to the anchorage of the Bait Barge. Such removal shall be to the satisfaction of the Lessor. If Lessee abandons the Bait Barge, the Lessor shall have the right to treat the Bait Barge as an abandoned vessel under the law and take all action in conformance with the law. 18. Condemnation 18.1 As used in this Agreement, the term "Condemnation" means a permanent taking of the Premises through (i) the exercise of any government power, Lease of Submerged Public Trust Lands Page 12 by any public or quasi - public authority or by any other party having the right of eminent domain ( "Condemnor') or (ii) a voluntary sale or transfer by Lessor to any Condemnor, either under threat of exercise of eminent domain by a Condemnor or while legal proceedings for condemnation are pending. 18.2 Lessor shall notify Lessee in writing of any Condemnation within thirty (30) business days after the later of (i) the filing of a complaint by Condemnor or (ii) the final agreement and determination by Lessor and Condemnor of the extent of the taking ( "Condemnation Notice "). 18.3 If the Premises are totally taken by Condemnation, this Agreement shall terminate as of the date on which Condemnor takes possession of the Premises that are subject to the Condemnation ( "Termination Date ") and Lessor shall be relieved of any obligations it has under this Agreement. If this Agreement is terminated under this Section, the termination shall be effective on the Termination Date, and Lessor shall prorate rent to that date. Lessee shall be obligated to pay rent for the period up to, but not including, the Termination Date, as prorated by Lessor. Lessor shall return to Lessee prepaid rent allocable to any period on or after the Termination Date. 18.4 If a temporary taking of part of the Premises occurs through (i) the exercise of any government power by Condemnor or (ii) a voluntary sale or transfer by Lessor to any Condemnor, either under threat of exercise of eminent domain by a Condemnor or while legal proceedings for condemnation are pending, Base Rent shall abate during the time of such taking in proportion to the portion of the Premises taken. 18.5 In the event of Condemnation of whole or part of the Premises, Lessor shall receive the entire award which may be made in such taking or condemnation, and Lessee hereby assigns to Lessor any and all rights of Lessee now or hereafter arising in or to the same whether or not attributable to the value of the unexpired portion of this Agreement; provided, however, that nothing contained herein shall be deemed to give Lessor any interest in or to require Lessee to assign to Lessor any award made to Lessee for Lessee's moving expenses, or the taking of the unamortized or the undepreciated value of Lessee's personal property, or that portion of the unamortized or undepreciated portion of Lessee's improvements, which were not purchased with any funds from a tenant improvement allowance supplied by Lessor. Lessee hereby waives any and all rights it might otherwise have pursuant to Section 1265.130 of California Code of Civil Procedure. Lease of Submerged Public Trust Lands Page 13 19 20. Indemnification To the fullest extent permitted by law, Lessee shall indemnify, defend and hold harmless Lessor, its City Council, boards and commissions, officers, agents, attorneys, volunteers, and employees (collectively, the "Indemnified Parties ") from and against any and all claims (including, without limitation, claims for bodily injury, death or damage to property), demands, obligations, damages, actions, causes of action, suits, losses, judgments, fines, penalties, liabilities, costs and expenses (including, without limitation, attorney's fees, disbursements and court costs) of every kind and nature whatsoever (individually, a "Claim'; collectively, "Claims "), which may arise from or in any manner relate (directly or indirectly) to any breach of the terms and conditions of this Agreement, any work performed or services provided under this Agreement including, without limitation, defects in workmanship or materials or Lessee's presence or activities conducted on the Bait Barge or Premises (including the negligent and /or willful acts, errors and /or omissions of Lessee, its principals, officers, agents, employees, vendors, suppliers, consultants, subcontractors, anyone employed directly or indirectly by any of them or for whose acts they may be liable or any or all of them). Notwithstanding the foregoing, nothing herein shall be construed to require Lessee to indemnify the Indemnified Parties from any Claim arising from the sole negligence or willful misconduct of the Indemnified Parties. Nothing in this indemnity shall be construed as authorizing any award of attorney's fees in any action on or to enforce the terms of this Agreement. This indemnity shall apply to all claims and liability regardless of whether any insurance policies are applicable. The policy limits do not act as a limitation upon the amount of indemnification to be provided by the Lessee. Insurance Without limiting Lessee's indemnification of Lessor, Lessee shall obtain, provide and maintain at its own expense during the Term of this Agreement, a policy or policies of liability insurance of the type and amounts described below and in a form satisfactory to Lessor. 20.1 Certificates of Insurance. Lessee shall provide certificates of insurance with original endorsements to Lessor as evidence of the insurance coverage required herein. Insurance certificates must be approved by Lessor's Risk Manager prior to commencement of performance or issuance of any permit. Current certification of insurance shall be kept on file with Lessor at all times during the Term of this Agreement. 20.2 Signature. A person authorized by the insurer to bind coverage on its behalf shall sign certification of all required policies. 20.3 Acceptable Insurers. All insurance policies shall be issued by an Lease of Submerged Public Trust Lands Page 14 insurance company currently authorized by the Insurance Commissioner to transact business of insurance in the State of California, with an assigned policyholders' Rating of A- (or higher) and Financial Size Category Class VII (or larger) in accordance with the latest edition of Best's Key Rating Guide, unless otherwise approved by Lessor's Risk Manager. 20.4 Occurrence -Made Form. All insurance shall be written on an occurrence - made form. A claims -made form of insurance is prohibited under this Agreement. 20.5 Coverage Requirements. (a) Workers' Compensation Coverage. Lessee shall maintain Workers Compensation Insurance and Employer's Liability Insurance for its employees in accordance with the laws of the State of California. Any notice of cancellation or non - renewal of all Workers' Compensation policies must be received by Lessor at least thirty (30) calendar days (ten (10) calendar days written notice of non- payment of premium) prior to such change. The insurer shall agree to waive all rights of subrogation against Lessor, its officers, agents, employees and volunteers for losses arising from work performed by Lessee for Lessor. (b) General Liability Coverage. Lessee shall maintain commercial general liability insurance in an amount not less than Two Million and no /100 Dollars ($2,000,000.00) per occurrence for bodily injury, personal injury, and property damage, including without limitation, contractual liability. If commercial general liability insurance or other form with a general aggregate limit is used, either the general aggregate limit shall apply separately to the work to be performed under this Agreement, or the general aggregate limit shall be at least twice the required occurrence limit. (c) Fire and Extended Coverage. Lessee shall maintain fire and extended coverage insurance, together with insurance against vandalism, theft and malicious mischief, for the full replacement cost of the Bait Barge. Such policies of insurance shall contain the "Replacement Cost Endorsement." (d) Marine Protection and Indemnity Insurance. Lessee shall maintain Marine Protection and Indemnity insurance in an amount not less than One Million and no /100 Dollars ($1,000,000.00) per occurrence. Lease of Submerged Public Trust Lands Page 15 20.6 Endorsements. Each general liability insurance policy shall be endorsed with the following specific language: (a) Lessor, its elected or appointed officers, officials, employees, agents and volunteers are to be covered as additional insureds with respect to liability arising out of work performed by or on behalf of Lessee. (b) This policy shall be considered primary insurance as respects to Lessor, its elected or appointed officers, officials, employees, agents and volunteers as respects to all claims, losses, or liability arising directly or indirectly from Lessee's operations. Any insurance maintained by Lessor, including any self- insured retention Lessor may have, shall be considered excess insurance only and not contributory with the insurance provided hereunder. (c) This insurance shall act for each insured and additional insured as though a separate policy had been written for each, except with respect to the limits of liability of the insuring company. (d) The insurer waives all rights of subrogation against Lessor, its elected or appointed officers, officials, employees, agents and volunteers. (e) Any failure to comply with reporting provisions of the policies shall not affect coverage provided to Lessor, its elected or appointed officers, officials, employees, agents or volunteers. (f) The insurance provided by this policy shall not be suspended, voided, canceled, or reduced in coverage or in limits, by either Party except after thirty (30) calendar days (ten (10) calendar days written notice of non - payment of premium) written notice has been received by Lessor. 20.7 Timely Notice of Claims. Lessee shall give Lessor prompt and timely notice of any claim made or suit instituted arising out of or resulting from Lessee's performance under this Agreement. 20.8 Additional Insurance. Lessee may also procure and maintain, at its own cost and expense, any additional kinds of insurance which Lessee deems necessary for its proper protection and prosecution of its work. 20.9 Change in Coverage. In the event Lessor's Risk Manager determines that (i) the Lessee's activities on the Bait Barge or Premises creates an increased or decreased risk of loss to the Lessor, (ii) greater insurance coverage is required due to the passage of time, or (iii) changes in the Lease of Submerged Public Trust Lands Page 16 industry require different coverages be obtained, Lessee agrees that the minimum limits of any insurance policy required to be obtained by Lessee may be changed accordingly upon receipt of written notice from the Risk Manager; provided that Lessee shall have the right to appeal a determination of increased coverage by the Risk Manager to the City Manager within ten (10) calendar days of receipt of notice from the Risk Manager. 21. Hazardous Substances 21.1 Lessee shall not, at any time, use, store, manufacture or maintain any Hazardous Substances on the Bait Barge or Premises. 21.2 For purposes of this Agreement, the term "Hazardous Substance" means: (i) any substance, product, waste or other material of any nature whatsoever which is or becomes listed, regulated, or addressed pursuant to the Comprehensive Environmental Response, Compensation and Liability Act, 42 U.S.C. Section 9601 et seq. ( "CERLCA "); the Hazardous Materials Transportation Act, 49 U.S.C. Section 1801, et seq.; the Resource Conversation and Recovery Act, 42 U.S.C. Section 6901 et seq. ( "RCRA "); the Toxic Substances Control Act, 15 U.S.C. Section 2601 et seq.; the Clean Water Act, 33 U.S.C. Section 1251 et seq.; the California Hazardous Waste Control Act, Health and Safety Code Section 25100 et seq.; the California Hazardous Substance Account Act, Health and Safety Code Sections 25330 et seq.; the California Safe Drinking Water and Toxic Enforcement Act, Health and Safety Code Sections 25249.5 et seq.; California Health and Safety Code Sections 25280 et seq. (Underground Storage of Hazardous Substances); the California Hazardous Waste Management Act, Health and Safety Code Sections 25170.1 et seq.; California Health and Safety Code Sections 25501 et seq. (Hazardous Materials Response Plans and Inventory); or the Porter - Cologne Water Quality Control Act, Water Code Sections 13000 et seq., all as they, from time -to -time may be amended, (the above -cited statutes are here collectively referred to as "the Hazardous Substances Laws ") or any other Federal, State or local statute, law, ordinance, resolution, code, rule, regulation, order or decree regulating, relating to, or imposing liability or standards of conduct concerning, any hazardous, toxic or dangerous waste, substance or material, as now or at any time hereafter in effect; (ii) any substance, product, waste or other material of any nature whatsoever which may give rise to liability under any of the above statutes or under any statutory or common law theory, including but not limited to negligence, trespass, intentional tort, nuisance, waste or strict liability or under any reported decisions of a state or federal court; (iii) petroleum or crude oil; and (iv) asbestos. 21.3 Notwithstanding any contrary provision of this Agreement, and in addition Lease of Submerged Public Trust Lands Page 17 to the indemnification duties of Lessee set forth in this Agreement, Lessee agrees to indemnify, defend with counsel reasonably acceptable to Lessor, protect, and hold harmless Lessor, its officials, officers, employees, agents, and assigns from and against any and all losses, fines, penalties, claims, damages, judgments, or liabilities, including, but not limited to, any repair, cleanup, detoxification, or preparation and implementation of any remedial, response, closure or other plan of any kind or nature which the Lessor, its officials, officers, employees, agents, or assigns may sustain or incur or which may be imposed upon them in connection with the use of the Bait Barge or Premises provided under this Agreement, arising from or attributable to the storage or deposit of Hazardous Substances or alleged or actual violation of any Hazardous Substance Laws. This Section is intended to operate as an agreement pursuant to Section 107(e) of CERCLA, 42 USC Section 9607(e), and California Health and Safety Code Section 25364, to insure, protect, hold harmless, and indemnify Lessor for any claim pursuant to the Hazardous Substance Laws or the common law. 21.4 Lessor and Lessee agree that they will not, and will not authorize any third party to use, generate, store, or dispose of any Hazardous Substances on, under, about or within the Bait Barge or Premises in violation of any law or regulation. Lessor and Lessee each agree to defend, indemnify and hold harmless the other and the other's partners, affiliates, agents and employees against any and all losses, liabilities, claims and /or costs (including reasonable attorneys' fees and costs) arising from any breach of any representation, warranty or agreement contained in this Section. This Section shall survive the termination of this Agreement. Upon expiration or earlier termination of this Agreement, Lessee shall surrender and vacate the Premises and deliver possession thereof to Lessor on or before the termination date free of any Hazardous Substances released into the environment at, on or under the Bait Barge or Premises that are attributable to Lessee. 22. Quiet Possession 22.1 So long as no default by Lessee has occurred under this Agreement, Lessee shall peaceably and quietly use and enjoy the Premises for the Term, without hindrance or interruption by Lessor or any other person or persons claiming by, through or under Lessor. 22.2 Lessor shall in no event be liable in damages or otherwise, nor shall Lessee be released from any obligations hereunder, because of the interruption or termination of any service provided by Lessor (such as water or sewer service), or a termination, interruption or disturbance of any service attributable to any act or neglect (other than gross negligence or willful misconduct) of Lessor or its servants, agents, employees, Lease of Submerged Public Trust Lands Page 18 licensees, business invitees, or any person claiming by, through or under Lessee. 23. Easements and Reservations 23.1 Lessor reserves all rights, title and interest in any and all subsurface natural gas, oil, minerals, and water on or within the Premises. 23.2 Lessor reserves the right to grant and use easements or to establish and use rights -of -way over, under, along, and across the Premises for utilities, thoroughfares, or access as it deems advisable, in its sole discretion, for the public good. 23.3 Lessor has the right to enter the Premises for the purpose of making repairs to or developing municipal resources and services. 24. Compliance with Laws Lessee, at its sole cost, shall observe, perform, and comply with all laws, statutes, ordinances, rules, and regulations promulgated by any governmental agency, including, but not limited to, Code Title 17, and all applicable zoning ordinances, building codes, Hazardous Substance Laws and environmental laws. Lessee shall not occupy or use the Premises, or permit any portion of the Premises to be occupied or used for any use or purpose that is unlawful in part or in whole, or deemed by Lessor to be disreputable in any manner or extra hazardous in any way or for any use not expressly permitted herein. 25. Not Agent of Lessor Neither anything in this Agreement nor any acts of Lessee shall authorize Lessee or any of its employees, agents or contractors to act as agent, contractor, joint venturer or employee of Lessor for any purpose. 26. No Third Party Beneficiaries Lessor and Lessee do not intend, by any provision of this Agreement, to create in any third party, any benefit or right owed by one Party, under the terms and conditions of this Agreement, to the other Party. 27. Limitation of Leasehold This Agreement and the rights and privileges granted Lessee in and to the Premises are subject to all covenants, conditions, restrictions, and exceptions of record, including those which are set out in the Tidelands Grant by the State of California to Lessor. Lessee agrees not to use the Premises in any manner which will be inconsistent to any uses set out in the Tidelands Grant. Lease of Submerged Public Trust Lands Page 19 001:1 29 Nothing contained in this Agreement or in any related document shall be construed to imply the conveyance to Lessee of rights in the Premises which exceed those owned by Lessor. Notices All notices and other communications required or permitted to be given under this Agreement, including any notice of change of address, shall be in writing and given by personal delivery, or deposited with the United States Postal Service, postage prepaid, addressed to the Parties intended to be notified. Notice shall be deemed given as of the date of personal delivery, or if mailed, upon the date of deposit with the United States Postal Service. Notice shall be given as follows: To Lessor: City of Newport Beach Attn: Harbor Resources Manager 829 Harbor Island Dr. Newport Beach, CA 92660 With a copy to: City of Newport Beach Attn: City Manager PO Box 1768 Newport Beach, CA 92658 To Lessee: Mr. Todd Phillips San Pedro Bait Co 1231 West 26th Place San Pedro, CA 90731 Entire AareemenVAmendments 29.1 The terms and conditions of this Agreement, all exhibits attached hereto, and all documents expressly incorporated by reference, represent the entire Agreement of the Parties with respect to the subject matter of this Agreement. 29.2 This written Agreement shall supersede any and all prior agreements, oral or written, regarding the subject matter between Lessee and Lessor. 29.3 No other agreement, promise or statement, written or oral, relating to the subject matter of this Agreement, shall be valid or binding, except by way of a written amendment to this Agreement. 29.4 The terms and conditions of this Agreement shall not be altered or modified except by a written amendment to this Agreement signed by Lessee and Lessor and approved as to form by the City Attorney. Lease of Submerged Public Trust Lands Page 20 29.5 If any conflicts arise between the terms and conditions of this Agreement, and the terms and conditions of the attached exhibits or the documents expressly incorporated by reference, the terms and conditions of this Agreement shall control. 29.6 Any obligation of the Parties relating to monies owed, as well as those provisions relating to limitations on liability and actions, shall survive termination or expiration of this Agreement. 30. Waivers The waiver by either Party of any breach or violation of any term, covenant or condition of this Agreement, or of any ordinance, law or regulation, shall not be deemed to be a waiver of any other term, covenant, condition, ordinance, law or regulation, or of any subsequent breach or violation of the same or other term, covenant, condition, ordinance, law or regulation. The subsequent acceptance by either Party of any fee, performance, or other consideration which may become due or owing under this Agreement, shall not be deemed to be a waiver of any preceding breach or violation by the other Party of any term, condition, covenant of this Agreement or any applicable law, ordinance or regulation. 31. Costs and Attorneys' Fees The prevailing Party in any action brought to enforce the terms and conditions of this Agreement, or arising out of the performance of this Agreement, shall not be entitled to recover its attorneys' fees. 32. City Business License Lessee shall obtain and maintain during the duration of this Agreement, a City business license as required by the Code. 33. Applicable Law This Agreement shall be construed in accordance with the laws of the State of California. Any action brought relating to this Agreement shall be adjudicated in a court of competent jurisdiction in the County of Orange. 34. Interpretation The terms of this Agreement shall be construed in accordance with the meaning of the language used and shall not be construed for or against either Party by reason of the authorship of the Agreement or any other rule of construction which might otherwise apply. Lease of Submerged Public Trust Lands Page 21 35. Incorporation of Recitals The Recitals contained herein are true and correct and are incorporated into the operative part of this Agreement. 36. Recordation This Agreement shall be recorded with the County Recorder of Orange County pursuant to California Government Code Section 37393. 37. Time is of the Essence Time is of the essence for each and every term in this Agreement. IN WITNESS WHEREOF, the Parties hereto have executed this Agreement as of the date first written above. CITY OF NEWPORT BEACH ( "Lessor "), a California municipal corporation In Keith D. Curry, Mayor ATTEST: Leilani Brown, City Clerk APPROVED AS TO FORM: OFFICE OF THE CITY ATTORNEY Leonie Mulvihill, Acting City Attorney -KST ylsjlu San Pedro Bait Company ( "Lessee "), a California corporation M Mark Pisano, President Todd Phillips, Financial Officer Lease of Submerged Public Trust Lands Page 22 EXHIBIT A Premises Lease of Submerged Public Trust Lands Page 23 T v /` •♦ Y • , i f all 4 , San Pedro Bait Co. N HOME: 7•- r EXHIBIT B BAIT BARGE Bait Barge is constructed of three - sixteenth inch (3/16 ") thick A36 steel formed and welded into thirty -six inch (36 ") x thirty -six inch (36 ") pontoons as the perimeter. The overall outside dimensions of the Bait Barge is twenty -eight feet (28') wide x one hundred and fourteen feet (114') long. The interior of the Bait Barge consists of eight (8) ten feet (10') x six inch (6 ") openings for rigid "boxes" and two (2) twenty -two foot (22') x twenty -two foot (22') openings with a depth of eight feet (8') for net wells. The "boxes" are ten feet (10') x ten feet (10) across the top by ten feet (10) deep and are made of three (3) x three (3) s quarter ('/) type 316L stainless steel angle which is enclosed with a PVC coated, half inch ('/2') square opening, wire mesh. The Bait Barge was designed with specific intent to create a superior method of eliminating floating bait by disposing of it through the bottom of the Bait Barge, thus protecting and eliminating attraction by wildlife to the discarded bait. The "house" is raised three (3) feet off the deck, supported by three (3) x three (3) x two- hundred and fifty (250) type three - hundred and sixteen (316) stainless steel tube and is approximately eight feet (8') wide x nineteen feet (19') long and constructed to local building codes. The one hundred ten (110) volt power to the Bait Barge is supplied by a super quiet Honda gas generator model EU6500. The twenty -four (24) volt system is supplied by a closed cell battery system, which is charged by three (3) solar panels on top of the house. The super quiet generator will only need to be run approximately three (3) hours per day, due to solar panels and an inverter, which converts a twenty -four (24) volt power supply to a one hundred ten (110) volt power supply. The Bait Barge is painted gray