HomeMy WebLinkAbout12 - Lease Agreement to Rent Office Space at the Balboa Yacht Basin Located at 829 Harbor Island DriveQ �EwPpRT
CITY OF
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<,FORN'P City Council Staff Report
January 14, 2020
Agenda Item No. 12
TO: HONORABLE MAYOR AND MEMBERS OF THE CITY COUNCIL
FROM: Seimone Jurjis, Community Development Director - 949-644-3232,
sjurjis@newportbeachca.gov
PREPARED BY: Lauren Wooding Whitlinger, Real Property Administrator,
Iwooding@newportbeachca.gov
PHONE: 949-644-3236
TITLE: Lease Agreement with West Point Investment Corporation to Rent
Office Space at the Balboa Yacht Basin Located at 829 Harbor Island
Drive
ABSTRACT:
West Point Investment Corporation is a residential real estate developer and investment
company relocating their offices from San Diego to Newport Beach. The tenant is seeking
the City Council's consideration for a five-year lease agreement (Attachment A) to use
790 square feet of office space at the Balboa Yacht Basin, located at 829 Harbor Island
Drive.
RECOMMENDATION:
a) Find this activity exempt from the California Environmental Quality Act (CEQA)
pursuant to Sections 15060(c)(2) (the activity will not result in a direct or reasonably
foreseeable indirect physical change in the environment) and 15060(c)(3) (the activity
is not a project as defined in Section 15378) of the CEQA Guidelines, California Code
of Regulations, Title 14, Chapter 3, because it has no potential for resulting in physical
change to the environment, directly or indirectly; and
b) Authorize the City Manager and City Clerk to execute a five-year Lease Agreement
(Agreement) for use of office space at the City -owned Balboa Yacht Basin, located at
829 Harbor Island Drive, in a form substantially similar to the agreement attached to
the staff report.
FUNDING REQUIREMENTS:
Revenues collected pursuant to the proposed Agreement, $30,810 per year, which shall
be increased annually by the percentage change in the cost of living as indicated by the
Consumer Price Index, will be split between the General Fund and Tidelands Fund, and
posted to Real Property accounts in the Community Development Department, 010-
01050505 and 010-10050505.
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Lease Agreement with West Point Investment Corporation to Rent Office Space at the
Balboa Yacht Basin Located at 829 Harbor Island Drive
January 14, 2020
Page 2
DISCUSSION:
Background
The Balboa Yacht Basin ("BYB") located at 829 Harbor Island Drive (Attachment B) was
built in Newport Harbor in 1950 on filled state tide and submerged lands and City -owned
uplands. The tidelands were granted to the City in a trust to administer and oversee via
the "Beacon Bay Bill." The BYB includes a 172 -slip public marina, three residential
apartments, storage garages, a restaurant, marine store and boatyard, various office
spaces, public restrooms, and associated parking. Office space identified as "Suite D",
located on the second floor of the public restroom building at BYB, is divided into two
separate offices of 790 square feet and 136 square feet, respectively. Pacific Metals
Group, LLC leased both offices in 2016, and exercised their option to continue leasing
only the smaller office when their initial lease term expired in November 2019.
The office space was advertised for lease on several commercial listing services, and
while there were many offers to lease the smaller space, staff only received one offer to
lease the larger space. The proposed tenant, West Point Investment Corporation ("West
Point"), is a residential real estate development and investment firm and has a focus on
coastal communities. West Point is relocating their business from San Diego to Newport
Beach, where the company's President resides, and requests to lease the office space at
BYB for a five-year lease term, with one five-year option to extend.
City Council Policy F-7, Income and Other Property
Pursuant to City Council Policy F-7, Income and Other Property (Attachment C), the City
conducted an open bid process to select a tenant to occupy the office space. The property
was advertised for lease from July 2019 through December 2019, and while there were
many inquiries about the property, staff only received one proposal from a prospective
tenant. In consideration of West Point's offer to lease the office space, staff negotiated a
new lease agreement. A review of recent appraisals for similar properties, and a survey
of rents for comparable office spaces were used to determine the fair market rental rate
for the lease agreement.
Summary of Terms
The proposed terms of the Agreement are summarized below -
1 .
elow:1. The initial term is five years, with one (1) five-year extension option, unless
terminated earlier as provided by the Agreement;
2. Rent shall be set at $30,810 per year, due in monthly installments of $2,567.50 on
the first day of each month. Rent shall be adjusted annually, upon the effective date
of the Agreement, based on the percentage change in the Consumer Price Index
(CPI), limited to a maximum of 2.5% per year;
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Lease Agreement with West Point Investment Corporation to Rent Office Space at the
Balboa Yacht Basin Located at 829 Harbor Island Drive
January 14, 2020
Page 3
3. The tenant shall obtain and maintain during the term of the Agreement all
appropriate permits, licenses, and certifications that may be required by any
governmental agency to operate its business;
4. The tenant shall provide certificates of insurance to the satisfaction of the City's Risk
Manager, naming the City as additional insured;
5. The tenant must comply with the Balboa Yacht Basin Rules and Regulations.
The Agreement has been reviewed by the City Attorney's Office and has been approved
as to form.
Contract Summary
Proposed
Vendor Name
West Point Investment
Corporation
Term
5 Years, one 5 -Year
option
Escalation Clause
CPI, Annually
Revenue/Year
$30,810
Cost/Year
$0
Cost/Contract Term (est.)
Selection Process
Sole Source or RFP/RFQ
$0
RFP
Method (QBS vs. Low Bid)
QBS
# of Respondents
1
# of Qualified Respondents
1
ENVIRONMENTAL REVIEW:
Staff recommends the City Council find approval of the Agreement is not subject to the
California Environmental Quality Act (CEQA) pursuant to Sections 15060(c)(2) (the
activity will not result in a direct or reasonably foreseeable indirect physical change in the
environment) and 15060(c)(3) (the activity is not a project as defined in Section 15378)
of the CEQA Guidelines, California Code of Regulations, Title 14, Chapter 3, because it
has no potential for resulting in physical change to the environment, directly or indirectly.
NOTICING:
The agenda item has been noticed according to the Brown Act (72 hours in advance of
the meeting at which the City Council considers the item).
ATTACHMENTS:
Attachment A — Lease Agreement with West Point Investment Corporation
Attachment B — Maps
Attachment C — City Council Policy F-7, Income and Other Property
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Attachment A
Lease Agreement with West Point Investment Corporation
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LEASE AGREEMENT
by and between
CITY OF NEWPORT BEACH,
a California municipal corporation and charter city
"City"
and
WEST POINT INVESTMENT CORPORATION,
a California corporation
"Tenant"
Dated as of January , 2020
12-5
LEASE AGREEMENT
THIS LEASE AGREEMENT ("Agreement") is made and entered into as of the
day of January, 2020 ("Effective Date"), by and between the CITY OF NEWPORT
BEACH, a municipal corporation and charter city ("City") and WEST POINT
INVESTMENT CORPORATION, a California corporation ("Tenant"). City and Tenant are
at times individually referred to as "Party" and collectively as "Parties" herein.
RFr:ITAI S
A. City is the owner of certain harbor frontage and tidelands, together with
certain abutting upland property commonly known as the "Balboa Yacht Basin," located
at 829 Harbor Island Drive, Newport Beach, California, Assessor's Parcel Number 050-
210-02. The Balboa Yacht Basin includes a public marina, public restrooms, shipyard,
parking lot, garage buildings used for storage, and buildings with residential apartments,
offices and a restaurant ("Property"), as legally described and further depicted on Exhibit
"A" attached hereto and incorporated herein by reference. The Property includes a seven
hundred ninety (790) square foot office, which is depicted on Exhibit "B" attached hereto
and incorporated herein by reference ("Premises").
B. City and Tenant desire to enter into this Agreement to allow Tenant to
operate an office providing real estate services with a focus on coastal communities, not
to include retail sales, at the Premises.
C. Pursuant to City Council Policy F-7, the City conducted a review of recent
appraisals for similar office facilities, and reviewed comparable spaces on the market for
rent or lease to determine the maximum or fair market value of the highest and best use
rent for the Premises.
D. The uses to be made of the Premises are consistent with provisions of the
Local Coastal Plan and General Plan of the City, and the terms and conditions in this
Agreement are consistent with the provisions of the City Charter and the ordinances of
the City.
E. The uses to be made of the Premises are consistent with provisions of the
Tideland Grant pursuant to which the City obtained title to the Property.
AGREEMENT
NOW, THEREFORE, in consideration of the mutual covenants contained in this
Agreement, City and Tenant agree as follows -
1 .
ollows:
1. DEFINITIONS
1.1. General Definitions. As used in this Agreement, the following words and
phrases shall have the following meanings:
West Point Investment Corporation Page 2
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(a) Alteration — any addition or change to or modification of, the
Premises made by Tenant, its employees, agents, and contractors
including, without limitation, fixtures and signage.
(b) Authorized Representative — any officer, agent, employee, or
independent contractor retained or employed by either Party, acting
within authority given by that Party.
(c) Common Area — the areas immediately surrounding the Premises on
the Property, which are available for non-exclusive use by City,
Tenant, and other tenants and/or users.
(d) Delivery Date the date the City provides Tenant access to the
Premises.
(e) Expiration — the lapse of the time specified as the Term of this
Agreement, including any extension of the Term resulting from the
exercise of an option to extend,
(f) Good Condition — neat and broom -clean and in substantially the
same condition as of the Rent Commencement Date (reasonable
wear and tear and casualty excepted), and is equivalent to similar
phrases referring to physical adequacy in appearance and for use.
(g) Hazardous Materials — shall mean any substance whose nature
and/or quantity of existence, storage, use, manufacture, disposal or
effect, renders such substance and/or the user thereof and/or the
owner of real property affected thereby, subject to or controlled by
federal, state or local law, or regulation because such substance is
actually or potentially injurious or a threat to public health or welfare
or to the environment; or because such substance under federal,
state or local law requires remediation, removal, cleanup or other
action to bring such substance any areas impacted into conformance
with applicable law. Hazardous Materials may also include any oil,
flammable explosives, asbestos, urea formaldehyde, radioactive
materials or waste, or other hazardous, toxic, contaminated or
polluting materials, substances or wastes, including, without
limitation, any "hazardous substances", "hazardous wastes",
"hazardous materials" or "toxic substances" under applicable federal,
state and local laws, ordinances and regulations.
(h) Law — any judicial decision, statute, constitution, ordinance,
resolution, regulation, rule, administrative order, or other requirement
of any municipal, county, state, federal, or other government agency
or authority having jurisdiction over the Parties and/or the Premises.
(i} Lease Year — refers to successive twelve (12) month periods,
commencing with the Effective Date of this Agreement.
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(j} Maintenance or Maintain — repairs replacement, maintenance,
repainting, and cleaning,
(k) Person — one (1) or more natural persons, or legal entities, including,
without limitation, partnerships, corporations, trusts, estates,
associations, or a combination of natural persons and legal entities.
(1) Provision — any term, covenant, condition, or clause in this
Agreement that defines, establishes, or limits, the performance
required or permitted by either Party.
(m) Rent — includes rent, late payment penalties, interest, taxes, and
other similar monetary amounts and charges payable by Tenant
under the Provisions of this Agreement.
(n) Rent Commencement Date — the date Tenant begins paying Rent,
commencing the first day of the first month following the Effective
Date.
(o) Successor — assignee, transferee, personal representative, heir, or
other Person succeeding lawfully, and pursuant to the provisions of
this Agreement, to the rights or obligations of either Party.
(p) Termination — the termination of this Agreement, for any reason, prior
to Expiration.
2. LEASE OF PREMISES
City leases the Premises to Tenant and Tenant leases the Premises from City for
the Term and on the conditions contained in this Agreement. Tenant agrees to accept the
Premises in an "as is" condition as tendered by City. Tenant agrees that no
representations with respect to the condition or improvements of the Premises have been
made by City except as specifically set forth in this Agreement, and are otherwise being
delivered in an "as -is" condition. Tenant expressly accepts the Premises in such condition
and acknowledges that City has made no representations or warranties as to the
suitability of the Premises for Tenant's use.
3. TERM
3.1. Initial Term. The "Initial Term" of this Agreement shall be five (5) years from
the Effective Date and shall expire on January , 2025, unless extended as provided
in Section 3.2 below or terminated in accordance with the other provisions of this
Agreement.
3.2. Option to Extend. Provided Tenant is not then in default beyond applicable
notice and cure periods, and upon approval of the City, Tenant may extend the term of
this Agreement for one (1 ) additional term of five (5) years ("Option Term") commencing
on Expiration of the Initial Term, on the same terms and conditions as contained in this
Agreement. Tenant shall exercise the extension option by giving City written notice of its
West Point Investment Corporation Page 4
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intention to do so on or before one hundred twenty (120) calendar days prior to the
Expiration of the Initial Term. If exercised, the Option Term shall expire on January
2030.
3.3. Terms of Lease. The "Term" is defined as the Initial Term and, if exercised,
the Option Term.
3.4. Hold Over. Should Tenant, upon City's written consent, hold over and
continue in possession of the Premises after Expiration of the Initial Term or the Option
Term, Tenant's continued occupancy of the Premises shall be considered a month-to-
month tenancy subject to termination by either Party upon thirty (30) calendar days
advance notice and shall be subject to all the terms and conditions of this Agreement,
except the provisions of Sections 3.1 and 3.2.
3.5. Redevelopment of Property. Should City redevelop the Property or
Premises during the Term of the Agreement, or any extensions thereof, which will
materially interfere with Tenant's ability to occupy the Premises, City shall provide Tenant
with at least one hundred eighty (180) calendar days prior written notice of termination of
this Agreement.
C�:7=1.111111
4.1. Rent. Tenant agrees to pay City for the use and occupancy of the Premises
the sum of Two Thousand Five Hundred Sixty -Seven dollars and 50/100 ($2,567.50)
per month, payable in advance on or before the first day of the each month. Tenant shall
commence payment of Rent on the Rent Commencement Date.
4.2. Late Payment. Any payment due from Tenant to City under the provisions
of this Agreement which is not paid within five (5) calendar days of the date due shall be
subject to a ten percent (10%) late charge plus interest on the amount due at the rate of
ten percent (10%) per annum from the date due and payable by the terms of this
Agreement until the same shall be paid. All late charges and interest payments
hereunder, shall, as incurred, become Rent due under this Agreement. City and Tenant
agree that this late charge plus interest represents a reasonable estimate of such costs
and expenses and is fair compensation to City for its loss suffered by such late payment
by Tenant.
4.3. Rent Adjustments. Rent shall be adjusted annually, on the first day of each
Lease Year, to reflect increases in the cost of living as indicated by the Consumer Price
Index described below. Rent shall be adjusted if the Consumer Price Index for the Los
Angeles — Long Beach — Anaheim, CA Area, All Urban Consumers, All Items ("Index"),
as published by the United States Department of Labor, Bureau of Labor Statistics
("Bureau"), increases over the Base Period Index. The initial "Base Period Index" shall be
the Index for the calendar month which is four (4) months prior to the month of the
Effective Date. The initial Base Period Index shall be compared with the Index for the
same calendar month for each subsequent Lease Year ("Comparison Index"). The
Comparison Index used for a given year's adjustment calculation will become the Base
Period Index for purposes of the next annual Rent adjustment calculation. If the
West Point Investment Corporation Page 5
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Comparison Index is higher than the Base Period Index, then Rent for the next Lease
Year shall be increased by the amount of such percentage change, or two and one-half
percent (2.5%), whichever is less. Should the Bureau discontinue the publication of the
above Index, or publish the same less frequently, or alter the same in some other manner,
then the Parties shall adopt a substitute Index or substitute procedure which reasonably
reflects and monitors consumer prices. City shall notify Tenant in writing of any annual
adjustment pursuant to this Section 4.3.
4.4. Payment Location. All payments of Rent shall be made in lawful money of
the United States of America and shall be paid to City in person or by United States' mail,
or overnight service, at the Cashier's Office located at 100 Civic Center Drive, P.O. Box
1768, Newport Beach, California, 92558, or to such other address as City may from time
to time designated in writing to Tenant. If requested by City, Tenant shall make payments
electronically (at www. newportbeachca.govov) or by wire transfer (at Tenant's cost). Tenant
assumes all risk of loss and responsibility for late charges and delinquency rates if
payments are not timely received by City regardless of the method of transmittal.
4.5. Additional Rent. Any provision in this Agreement that requires Tenant to pay
additional amounts classified as `'Additional Rent" shall be paid within ten (10) calendar
days of City's written demand therefore (unless a different time for payment is expressly
provided in this Agreement). Additional Rent does not reduce or offset Tenant's
obligations to pay Rent.
5. BUSINESS PURPOSES AND USE OF PREMISES
5.1. "Approved Use". The Premises are to be used by Tenant:
(a) For the principal operation of a coastal community real estate office,
not to include any retail sales; and
(b) Tenant may not use the Premises for any other use except with prior
written consent of the City.
5.2. Operation of Premises. Tenant shall operate and manage the Premises in
a manner comparable to other high quality businesses providing similar real estate
services. Tenant shall not use or permit the use of the Premises in any manner that: (a)
creates a nuisance; (b) violates any Law; or (c) is not in compliance with all statutes, laws,
permits, use restrictions and regulations of City applicable to the Premises, Tenant,
and/or Tenant's use of the Premises. Tenant assumes the risk of and shall cause all its
workmen, customers and independent contractors to also comply with all laws regarding
their activities at the Premises. Prior to engaging in any conduct on the Premises which
is inconsistent with the terms of this Agreement, Tenant must obtain written consent from
the City Manager and any required City permits and approvals.
5.3. Sales Restrictions. Tenant shall not display, sell or store merchandise
outside the defined exterior walls and permanent doorways of said Premises, and no sale
by auction in, upon and from said Premises, whether said auction be voluntary,
involuntary, pursuant to any assignment for benefit of creditors or pursuant to any
West Point Investment Corporation Page 6
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bankruptcy or other solvency proceedings, shall be conducted except such auctions that
may be conducted by officers of a court with respect to any vessels in custody of Tenant.
5A. Advertising Display. Tenant may, at its own expense, place signs in or upon
the Premises subject to the prior written consent of the City as to the size, type, design
and method of installation and in compliance with the City's sign code regulations and the
deed restrictions applicable to the Premises. All signage placed by Tenant on, in or about
the Premises shall remain the property of Tenant and shall be removed by Tenant upon
Termination or Expiration of this Agreement at Tenant's expense; and any damage
caused by removal shall be repaired at Tenant's expense.
5.5. Independent Contractor. City shall have no interest in the business of
Tenant, and no liability for the business operations or sales of Tenant, whether or not
caused by City's enforcement of City laws and regulations which apply to the Premises
and/or Tenant. Nothing in this Agreement shall be deemed to constitute approval for
Tenant or any of Tenant's employees or agents, to be the agents or employees of City.
5.6. No Distress Sales. No auction, fire, bankruptcy, "going out of business" or
other distress sales of any nature may be conducted on the Premises without the prior
written consent of the City Manager or his/her designee.
5.7. Parking. City grants a non-exclusive right to the use of parking area(s) on
the Property as noted in Exhibit "A" attached hereto and incorporated herein by reference.
City reserves the right to assign parking in the future, but agrees that any such assignment
of parking shall not materially diminish access to the Premises.
5.8. Smokinq and Vaping. In addition to all other uses prohibited by this
Agreement, smoking or vaping is prohibited on the Property and the Premises. "Smoking"
means and includes inhaling, exhaling, burning, or carrying any lighted smoking
equipment for tobacco or any other weed or plant. "Vaping" means and includes inhaling
or exhaling any vaporized liquid or solid, usually from a battery-operated electronic
device.
5.9. Balboa Yacht _Basin_ Rules and Regulations. Tenant shall comply with the
Balboa Yacht Basin Rules and Regulations attached hereto and incorporated herein as
Exhibit "C", which may be amended from time to time.
6. TAXES, LICENSES AND OTHER OBLIGATIONS
6.1. Payment of Taxes. Tenant shall pay directly to the appropriate taxing
authorities all taxes applicable to this Agreement, fixtures and Tenant's personal property
on the Premises, that are levied or assessed against Tenant during the Term. Taxes shall
be paid before delinquency and before any fine, interest or penalty is due or imposed by
operation of law. Tenant shall, upon request, promptly furnish to the City satisfactory
evidence of payment. City hereby gives notice to Tenant, pursuant to Revenue and Tax
Code Section 107.6 that this Agreement may create a possessory interest that is the
subject of property taxes levied on such interest, the payment of which taxes shall be the
sole obligation of Tenant. Tenant shall advise in writing any subtenant, licensee, or third
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party using the Premises of the requirements of Section 107.6. Tenant shall pay, before
delinquency all taxes, assessments, license fees and other charges ("Taxes") that are
levied or assessed against Tenant's interest in the Premises or any personal property
installed on the Premises.
6.2. Payment of Obligations. Tenant shall promptly pay, when due, any and all
bills, debts, liabilities and obligations incurred by or charged to Tenant in connection with
Tenant's occupation and use of the Premises.
6.3. Challenge to Taxes. Tenant shall have the right in good faith, at its sole cost
and expense, to contest the amount or legality of any Taxes including the right to apply
for reduction. If Tenant seeks a reduction or contests such Taxes, Tenant's failure to pay
the Taxes shall not constitute a default as long as Tenant complies with the provisions of
this Section. City shall not be required to join in any proceeding or contest brought by
Tenant unless the provisions of any Law require that the proceeding or contest be brought
by or in the name of City or any owner of the Premises. In that case, City shall join in the
proceeding or contest or permit it to be brought in City's name and if requested by Tenant,
City shall execute any instrument or document necessary or advisable in connection with
the proceeding or contest as long as City is not required to bear any cost nor be liable for
payment of such Taxes. Tenant, on final determination of the proceeding or contest, shall
immediately pay such disputed tax and also discharge any decision or judgment
rendered, together with all related costs, charges, interest and penalties and provide City
with a copy of Tenant's payment and the underlying bill for such Taxes being paid with
Tenant's next Rent payment. Tenant shall indemnify, defend and hold harmless the City,
its council members, boards, commissions, committees, officers, employees, Authorized
Representatives, agents and volunteers from and against any liability, claim, demand,
penalty, cost or expense (including, but not limited to, attorney's fees and judgements)
arising out of or in connection with any contest by Tenant pursuant to this Section. Any
such contest of Taxes by Tenant shall be concluded (meaning that such Taxes shall be
fully paid or cancelled by the taxing authority) by Tenant within eighteen (18) months of
starting such action, or end of the Term, if earlier.
6.4. No Rent Offset. Any payments underthis Section 6 shall not reduce or offset
Rent payments. City has no liability for such payments.
6.5. License. Tenant shall obtain and maintain in good standing all required
licenses and permits required for operation of the business on the Premises, including
but not limited to a City business license as required by the Newport Beach Municipal
Code.
IIII1l�'IF-1►1all ION 1119:11110410]41x011[*7►1
7.1. Basic Utilities. City shall pay for electricity, gas, water, and trash service.
Tenant shall make all arrangements for and pay for all other utilities furnished to or used
on the Premises, including, without limitation, telephone service, cable television, and
janitorial service. Tenant bears all risk of interruption, cancellation and/or disruption of
utility services on the Premises.
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7.2. Refuse Collection. Refuse collection may occur between 7:00 a.m. and 5:00
p.m. on non -holiday weekdays.
8. ALTERATIONS TO THE PREMISES
8.1. Alterations Requiring Building_Permits. Any Alteration that requires a
building permit from City shall require the written consent of the City Manager or his/her
designee, which shall not be unreasonably withheld so long as Tenant's Approved Use
is not thereby being changed.
8.2. Non -Structural Alterations Costing Less than $10,000. Tenant shall have
the right to make, at its sole expense, such non-structural changes, Alterations,
improvements and additions, costing less than $10,000 in and to the interior of the
buildings, and Tenant may install therein such trade fixtures and equipment as it may
deem advisable for the conduct of its business for the Approved Use of the Premises.
Any Alteration costing more than $10,000 requires the prior written consent of the City
Manager or his or her designee.
8.3. Quality of Work Performed, All work shall be performed in a good and
workmanlike manner, shall substantially comply with the plans and specifications
submitted to City and shall comply with all applicable governmental permits and Laws in
force at the time permits are issued. All work shall be performed between 7:00 a.m. and
5:00 p.m. on non -holiday weekdays. Any contractors mired by Tenant shall be fully
licensed, bonded, and insured.
8.4. Payment of Costs. Tenant shall pay all costs related to the construction of
any Alterations by Tenant or its agents. Tenant shall keep the Premises free and clear of
all mechanics' liens resulting from construction performed at the direction of Tenant.
8.5. Indemnification and Insurance. Tenant shall indemnify, defend, and hold
harmless City, its elected or appointed officers, agents, officials, employees, and
volunteers, and any person or entity owning or otherwise in legal control of the Property,
except for Tenant, from any and all liability, losses, penalties, damage, costs, attorney
fees, expenses, causes of action, claims, or judgments with respect to any damage or
damages related to any work performed on the Premises by Tenant. Tenant's contractors
and any subcontractors shall obtain insurance in an amount and form to be approved by
City's Risk Manager, including workers' compensation insurance as required by law,
general liability, automobile liability and builder's risk insurance covering improvements
to be constructed, all pursuant to standard industry custom and practice. City, its elected
or appointed officers, agents, officials, employees, volunteers, and any person or entity
owning or otherwise in legal control of the property shall be named as an additional
insured on the contractor's and any subcontractor's policies. City shall promptly provide
Tenant with a copy of any claim filed by any third party with respect to work performed by
Tenant. City has no obligation to or liability to Tenant incident to City's approval of
Tenant's plans or issuance of permits for any improvements to the Premises.
8.6. Disposition of Alterations at Expiration or Termination. Any Alterations
made to the Premises shall remain on, and be surrendered with, the Premises on
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Expiration or Termination of this Agreement (excluding Tenant's fixtures, equipment,
furniture, and movable decorations). However, City may elect, not less than thirty (30)
calendar days prior to Expiration or Termination of this Agreement, to require Tenant to
remove, at Tenant's sole cost, any Alterations that Tenant has made to the Premises,
except those Alterations existing as of the Effective Date of this Agreement or approved
by City. If City requires removal of Alterations, Tenant shall, at its sole cost, remove the
Alterations and restore the Premises to its condition prior to installation of such
Alterations, ordinary wear and tear excepted, before the last day of the Term, or within
thirty (30) calendar days after notice is given, whichever is later. Prior to Expiration or
within fifteen (15) calendar days after Termination of this Agreement, Tenant may remove
any movable partitions, machinery, equipment, furniture, and trade fixtures previously
installed by and solely paid for by Tenant, provided that Tenant repairs any damage to
the Premises cause by removal and the structural future of the foundation and bulkhead
areas of the Premises are not thereby worsened by such Tenant removal.
9. REPAIRS AND MAINTENANCE OF PREMISES
9.1. Maintenance and Repair bV Tenant and Ci . Tenant agrees that it shall
keep the non-structural portion of the Premises in Good Condition throughout the Term
at its sole cost, and without expense to the City. City may perform Maintenance or repairs
in the event Tenant fails to commence required Maintenance or repairs within the time
provided by City in the written notice requesting such maintenance or repair (which shall
not be less than five (5) calendar days unless and in case of emergency or urgent
situation). Absent an emergency or urgent situation, should the Maintenance or repair
required by the City's written notice require more than five (5) calendar days to commence
or complete, Tenant must provide City with adequate assurance of due performance
within five (5) calendar days of receipt of City's written notice requesting such
Maintenance or repair or City may commence such requested repairs or Maintenance.
The cost of any Maintenance or repairs by the City pursuant to this Subsection shall be
payable as Additional Rent upon billing by City with the Tenant's next monthly Rent
payment.
9.2 Entry by City. City and its Authorized Representatives may enter upon and
inspect the Premises at any reasonable time for any lawful purpose. In case of
emergency, City or its Authorized Representatives may enter the Premises by the master
key if Tenant is not present to open and permit an entry. During entry, City and its
Authorized Representatives shall exercise reasonable care relative to the Premises and
to Tenant's property. Any entry to the Premises by City shall not be construed as a forcible
or unlawful entry into, or a detainer of, the Premises, or an eviction of Tenant from the
Premises or any portion thereof.
Tenant shall not permit to be enforced against said Premises, or any part thereof,
any mechanics', materialman's, contractors' or other liens arising from, or any claims for
damages growing out of, any work or repair or Alteration (except from the actions of City),
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and Tenant shall pay or cause to be paid said liens and claims before any action is
brought to enforce the same against Tenant or the Premises, or shall adequately
indemnify City and the Premises by payment bonds acceptable to City and as provided
for by Law. Tenant agrees to protect, defend, indemnify and hold harmless City and hold
the Premises free and harmless from all liability for any and all such liens and claims and
all costs and expenses in connection therewith. Tenant shall give City notice in writing
before commencing construction of any kind on the Premises and provide any additional
Tenant insurance required by this Agreement.
11. INDEMNITY AND EXCULPATION; INSURANCE
11,1. Hold Harmless Clause. Tenant agrees to indemnify, defend and hold
harmless the City, its Council, Boards, Commissions, Committees, officers, agents,
officials, employees, volunteers and any person or entity owning or otherwise in legal
control of the Property, excluding Tenant, (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, actions, causes of action, suits, judgments,
fines, penalties, liabilities, losses, damages, 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 this Agreement, the Tenant, Tenant's employees,
contractors or subcontractors, or agents on the Premises, or the occupation and use of
the Premises, specifically including, but not limited to, any claim, liability, loss, or damage
arising by and Tenant assumes all corresponding risk because of:
(a) The death or injury of any Person caused or allegedly caused by the
condition of the Premises or an act or omission of Tenant or an
agent, contractor, employee, servant, sublessee or concessionaire
of Tenant;
(b) Any work performed on the Premises or materials furnished to the
Premises at the request of Tenant or any agent or employee of
Tenant, with the exception of Maintenance performed by City; or
(c) Tenant's failure to perform any provision of this Agreement or to
comply with any requirement of Law or any requirement imposed on
the Premises by any duly authorized governmental agency or
political subdivision.
Tenant's obligation pursuant to this subsection shall not extend to any claim, loss,
liability, damages, costs or fees that are proximately caused by the sole gross negligence,
willful misconduct, or unlawful or fraudulent conduct on the part of the Indemnified Parties.
11.2. Exculpation of City, Except as otherwise expressly provided in this
Agreement, City shall not be liable to Tenant for any damage to Tenant or Tenant's
property goodwill, increased Tenant operating costs, or loss of business or income by
Tenant from any cause other than the sole gross negligence or willful acts of the
Indemnified Parties. Except as otherwise expressly provided in this Agreement, Tenant
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waives all claims against the Indemnified Parties for damages arising for any reason other
than the sole gross negligence or willful acts of the Indemnified Parties, City shall not be
liable to Tenant for any damage to the Premises, Tenant's property, Tenant's goodwill, or
Tenant's business income, caused in whole or in part by acts of nature including, without
limitation, waves, wind and tidal flows.
11.3 Insurance. Tenant shall maintain insurance in the types and amounts
specified in Exhibit "D," attached hereto and incorporated herein by this reference.
12. DAMAGE OR DESTRUCTION OF PREMISES
12.1. Destruction of Premises. If the Premises are totally or partially destroyed,
rendering the Premises or any portion thereof totally or partially inaccessible or unusable,
Tenant shall restore the Premises, at Tenant's sole cost and effort, to substantially the
same condition as immediately prior to such destruction (including all trade fixtures,
personal property, improvements and Alterations as are installed by Tenant, which shall
be replaced by Tenant at its expense). Alternatively, Tenant may elect to terminate this
Agreement, provided the damage was not caused by Tenant, without any liability from
the City, by giving written notice of such election to City within sixty (60) calendar days
after the date of the occurrence of any casualty if the cost of the restoration exceeds the
amount of any available insurance proceeds, if the damage has been caused by an
uninsured casualty or event, or if Tenant reasonably estimates that repairs of the
Premises will take more than six (6) months. Upon such termination, insurance proceeds
applicable to reconstruction of the Premises (excluding Tenant's personal property
therein) shall be paid to City and Tenant shall have no further liability or obligations,
excluding any indemnification or hold harmless provisions under this Agreement.
12.2. Replacement of Tenant's Property. In the event of the damage or
destruction of improvements located on the Premises not giving rise to Tenant's option to
terminate this Agreement, Tenant shall, at its own expense, replace and repair all
Tenant's trade fixtures, equipment, machinery, furnishings, furniture and inventory as
soon as reasonably possible to permit the prompt continuation of Tenant's business at
the Premises for the Approved Use.
12.3. Destruction of Property. In the event that all or a portion of the Property or
access to the Property in areas to be maintained by the City either under this Agreement
or because City owns such other areas, is damaged, deteriorates or destroyed by fire or
any other casualty not attributable to Tenant nor covered by Tenant insurance and as a
result the Premises or a material portion of the Premises becomes inaccessible or
commercially unusable for the Approved Use, and the damage or destruction cannot
reasonably be repaired within twelve (12) months after the date of the casualty, City shall
have the right, by notice to Tenant within sixty (60) calendar days of such casualty, to
either:
(a) Terminate this Agreement by giving Tenant written notice (which
notice shall be given, if at all, within thirty (36) calendar days following
West Point Investment Corporation Page 12
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the date of the casualty), in which case this Agreement shall be
terminated thirty (30) calendar days following such City notice,
(b) Confirm City's intention to repair such damage as soon as
reasonably possible at City's expense, in which event this
Agreement shall continue in full force and effect; however, Rent shall
be abated in accordance with the procedures set forth in Section 13,
below. Tenant may terminate this Agreement by giving City written
notice at any time prior to the commencement of repairs if City
agrees to repair the Property pursuant to this Section 12.3(b) and
City fails to commence repairs within one hundred twenty (120)
calendar days after giving Tenant written notice of its intention to
repair. In such event, this Agreement shall terminate as of the date
of notice from Tenant to City, and City shall have no further liability
to Tenant under this Agreement; or
(c) City has no liability to Tenant concerning such casualty or City
election to repair or not repair except solely arising under Section
12.1, above.
13. ABATEMENT OF RENT
General Rule. In the event of damage or destruction of the Premises or damage
to the Property that impacts the Premises and this Agreement is not terminated, Tenant
shall continue to utilize the Premises for the operation of its business for the Approved
Use to the extent it may be practicable and commercially reasonable. Rent shall abate in
proportion to the area of the Premises that is rendered unusable for the Approved Use.
The abatement of Rent shall commence on the date that use of the Premises is impacted
and continue until the completion of those repairs necessary to restore full use of the
Premises and Tenant's re -opening of the Premises. Tenant's obligation to pay taxes,
assessments, license fees and other charges pursuant to this Agreement shall not be
abated or reduced. Rent shall not abate if the damage or destruction to the Premises is
the result of the negligence or willful act or omission of Tenant or its employees, officers,
or agents. Tenant's right to abatement of Rent is contingent on payment of insurance
proceeds, if any, equal to the amount of Rent pursuant to coverage required by Section
11, above.
14. PROHIBITION AGAINST VOLUNTARY ASSIGNMENT, SUBLETTING AND
ENCUMBERING
14.1. _Prohibition of Assignment. City and Tenant acknowledge that City is
entering into this Agreement in reliance upon the business experience and abilities of
Tenant to operate the Premises for the Approved Use. Consequently, Tenant shall not
voluntarily delegate, assign or encumber its interest in this Agreement or in the Premises,
or sublease substantially all or any part of the Premises, or allow any other person or
entity to occupy or use all or any part of the Premises without the prior written consent of
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City. City's consent to any assignment or other transfer is subject to Tenant providing City
with evidence reasonably satisfactory to City that the: (a) proposed transferee has
financial strength and experience comparable to Tenant; (b) the use of the Premises by
the proposed transferee is consistent with the terms of this Agreement and is for the
Approved Use or a use approved by the City; (c) proposed transferee agrees to assume
all current and future Tenant obligations and agrees that the City is not in default of the
Agreement; and (d) Tenant is not then in material default of this Agreement. Except as
otherwise expressly provided herein, any dissolution, merger, consolidation,
reorganization of Tenant, or the sale or other transfer resulting in a transfer of a controlling
percentage of the capital stock of Tenant, shall be deemed a voluntary assignment
requiring City's consent above. However, the sale or transfer of a controlling percentage
of the capital stock of Tenant pursuant to a public offering(s) of equity or debt instruments
issued by Tenant, or other transfers of publicly traded capital stock or debt instruments
shall not constitute a voluntary assignment and shall not require City's consent or
approval if there is no change in the management of Tenant's business and if such
successor otherwise maintains the Approved Use and satisfies the prior experience and
business expertise tests above and is at least as creditworthy as Tenant at the time this
Agreement is signed. The phrase "controlling percentage" means the ownership of, or the
right to vote, stock possession of at least fifty percent (50%) of the total combined voting
power of all classes of Tenant's capital stock issued, outstanding, and entitled to vote for
the election of directors, except for ownership of publicly traded shares, warrants or
similar equity interests in Tenant traded on a national exchange or over-the-counter
markets.
14.2. Exceptions. Notwithstanding the foregoing paragraphs or anything to the
contrary contained herein, City's consent shall not be required for a transfer or
assignment of any stock or interest by a shareholder or member if the Approved Use of
the Premises is maintained, if such transfer is to a spouse, children or grandchildren or
an assignment or subletting to an Affiliate, Subsidiary, or Successor of Tenant defined as
follows:
(a) An "Affiliate" is any corporation or other entity which directly or
indirectly controls or is controlled or is under common control with
Tenant (for purposes of this Section, "control" shall mean the
possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of such corporation or
other entity, whether through the ownership of voting securities or by
contract or otherwise);
(b) A "Subsidiary" shall mean any corporation or other entity not less
than twenty five percent (25%) of whose outstanding stock shall, at
the time, be owned directly or indirectly by Tenant and which is at
least as creditworthy as Tenant; and
(c) A "Successor" shall mean a corporation or other entity in which or
with which Tenant is merged or consolidated, in accordance with
applicable statutory provisions for merger or consolidation of
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corporations or a corporation or other entity acquiring a substantial
portion of the property and assets of Tenant.
14.3. Continuing Effect. City's consent to any assignment, encumbrance, or
sublease shall not relieve Tenant from its obligations or liabilities under this Agreement
nor act as a waiver of the requirement that such consent be obtained to any subsequent
assignment, encumbrance or sublease.
15. TENANT'S DEFAULT/CITY'S REMEDIES
15.1. Default by Tenant. The occurrence of any one (1) or more of the following
events shall constitute a default and material breach of this Agreement by Tenant:
(a) Failure of Tenant to pay Rent or any other payment required by this
Agreement, as and when due, when such failure shall continue for a
period of ten (10) calendar days after written notice of default from
City to Tenant;
(b) Except as specified in 15.1(a) above, the failure of Tenant to observe
or perform any of the covenants, conditions or provisions of this
Agreement to be observed or performed by Tenant where such
failure shall continue for a period of thirty (30) calendar days after
written notice thereof from City to Tenant; provided, however, that if
the nature of Tenant's default is such that more than thirty (30)
calendar days are reasonably required for its cure, then Tenant shall
not be deemed to be in default if Tenant commences such cure within
said thirty (30) calendar day period and thereafter diligently
prosecutes such cure to completion-,
(c) Tenant becomes a "debtor" as defined in 11 U.S.C. Section 101 or
any successor statute thereto, or should any adjudications in
bankruptcy be rendered against Tenant, or should Tenant take or
have taken against it, in any court pursuant to any statute either of
the United States or of any State, a petition in bankruptcy or
insolvency or for reorganization or for the appointment of a receiver
or trustee of all or a portion of Tenant's property, and should the
same not be dismissed within sixty (60) calendar days thereafter;
(d) The making by Tenant of any general arrangement or assignment
for the benefit of creditors;
(e) The vacating or abandonment of the Premises by Tenant for a
period of thirty (30) successive calendar days, without the prior
written permission of the City's Authorized Representative; excluding
closures caused by any force majeure, casualty, or condemnation,
or by remodeling, reconstruction, alteration, repairs or permitted
closures set forth under this Agreement);
West Point Investment Corporation Page 15
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(f) The appointment of a trustee or receiver to take possession of
substantially all of the assets of Tenant's assets located at the
Premises or of Tenant's interest in this Agreement, where such
appointment is not discharged within sixty (60) calendar days; or
(g) The attachment, execution or the judicial seizure of substantially all
of Tenant's assets located at the Premises or of Tenant's interest in
the Agreement, where such seizure is not discharged within sixty
(60) calendar days.
15.2. Remedies.
(a) Cumulative Nature of Remedies. If any default by Tenant shall
continue without cure beyond the time permitted under this
Agreement, City shall have the remedies described in this Section in
addition to all other rights and remedies provided by law or equity, to
which City may resort to cumulatively or in the alternative.
(b) Re-entry without Termination. City may re-enter the Premises, and,
without terminating this Agreement, re -let all or a portion of the
Premises. City may execute any agreements made under this
provision in City's name and shall be entitled to all rents from the use,
operation, or occupancy of the Premises. Tenant shall nevertheless
pay to City on the dates specified in this Agreement the equivalent
of all sums required of Tenant under this Agreement, plus City's
expenses in conjunction with re -letting, less the proceeds of any re-
letting or atonement. No act by or on behalf of City under this
provision shall constitute a termination of this Agreement unless City
gives Tenant specific written notice of termination.
(c) Termination Agreement. City may terminate this Agreement by
giving Tenant written notice of termination with a specified
termination date. In the event City terminates this Agreement, City
may recover possession of the Premises (which Tenant shall
surrender and vacate upon demand) and remove all persons and
property. City shall be entitled to recover the following as damages:
15.2.c.1. The value of any unpaid Rent or other charges
that are unpaid at the time of Termination;
15.2.c.2. The value of the Rent and other charges that
would have accrued after termination less the amount of Rent
and charges the City received or could have received through
the exercise of reasonable diligence as of the date of the
award, provided, however, that City shall use its best efforts
to re -lease the Premises and upon the City's re-leasing the
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Premises Tenant shall be released from all further liability for
Rent and other charges that would have accrued after
termination;
15.2.c.3. Any other amount necessary to reasonably
compensate City for the detriment proximately caused by
Tenant's failure to perform its obligations under this
Agreement, and
15.2.c.4. At City'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. City 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. City shall also be entitled to an award
of the costs and expenses incurred by City in maintaining or
preserving the Premises after default, preparing the Premises
for re -letting, or repairing any damage caused by an act or
omission of Tenant.
15.2.c.5. City may exercise any other right or remedy
which City may have at law or equity.
15.3. Use of Tenant's Personal Property. In the event Tenant is in default past
applicable notice and cure periods, City may use Tenant's personal property and any
trade fixtures located on the Premises or any of such property and fixtures without
compensation or liability to Tenant for use or damage. In the alternative, City may store
the property and fixtures at the cost of Tenant.
15.4. City's Right to Cure Tenant's Default. Upon continuance of any default
beyond applicable notice and cure periods, City may, but is not obligated to, cure the
default at Tenant's cost. If City pays any money or performs any act required of, but not
paid or performed by, Tenant after notice, the payment and/or the reasonable cost of
performance shall be due as Additional Rent not later than ten (10) calendar days after
service of a written demand accompanied by supporting documentation upon Tenant. No
such payment or act shall constitute a waiver of default or of any remedy for default or
render City liable for any loss or damage resulting from performance.
15.5. Waiver of Rights. Tenant 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 Tenant is evicted or City takes possession of the
Premises by reason of any default by Tenant.
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16.1. Termination of the Agreement. Tenant or the City shall have the right
to terminate this Agreement as of the date a public agency with lawful authority to
condemn obtains possession or title to ten percent (10%), or more of the land area
at the Premises, or the condemnation materially affects the conduct of Tenant's
business in the Premises, or the Premises will no longer be suitable for the conduct
of Tenant's business for the Approved Use. In the event of Termination pursuant
to this subsection, Rent shall be prorated to the date of Termination, any unearned
Rent shall be refunded to Tenant and Tenant shall have no further obligations
under this Agreement. Tenant shall not grant a right of entry to any condemnor
without the written consent of City.
16.2. No Termination of Agreement. If this Agreement is not terminated
under Section 16.1, above, then this Agreement shall terminate as to the portion
of the Premises taken upon the date which possession of said portion is taken, but
this Agreement shall continue in force and effect as to the remainder of the
Premises, Tenant shall, in the event of a taking of any portion of the Premises, be
entitled to a reduction in the Rent in reasonable proportion to the area of the
Premises so taken verses its impact on Tenant's continued operations for the
Approved Use.
16.3. Allocation of Award. In the event that an award is made for an entire
or partial taking or for damage to the Premises or any interest therein in any action
in direct or inverse condemnation or in the event of a taking under the power of
eminent domain, the Parties hereto agree that their respective rights to the award
or compensation paid shall be as follows:
(a) City shall be entitled to that Portion of the award received for the
taking of the real property within the Premises, the value of this
leasehold, including all buildings and other improvements to which
City is entitled on Expiration or Termination of this Agreement, and
for severance damages.
(b) Tenant shall be entitled to any award that may be made for the taking
of or injury to Tenant's business and profits, including any amount
attributable to Tenant's personal property, fixtures, installations, or
improvements in or on the Premises, Tenant's relocation expenses,
but excluding any "bonus value" attributable to this Agreement.
(c) Any interest payable on the total award shall be divided between City
and Tenant in the same ratio as are the awards granted to them
pursuant to the other provisions of this Section.
17. SUBJECT TO STATE LANDS COMMISSION GRANT
The Premises are located on property that may be the subject of a grant from the
State of California to the City that is administered by the State Lands Commission. Tenant
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shall not take any action that would cause the City to be in violation of any provisions of
that grant. If the State Lands Commission terminates this grant for any reason or prevents
the Premises from being used for the Approved Use, this Agreement terminates as a
result and the Parties shall be released from all liabilities and obligations, excluding any
outstanding Rent, indemnification or hold harmless provisions, under this Agreement.
18. WASTE OR NUISANCE
Tenant shall not commit or permit the commission of any waste on the Premises.
Tenant shall not maintain, commit, or permit any nuisance as defined in Section 3479 of
the California Civil Code on the Premises. Tenant shall not use or permit the use of the
Premises for any unlawful purpose.
19. NO CONFLICTS OF USE, HAZARDOUS MATERIALS
Tenant shall not use, occupy or permit any portion of the Premises or Property to
be used or occupied in violation of any Law. City represents and warrants that, to the best
of City's knowledge: (i) Tenant's use of the Premises does not conflict with applicable
Laws, and City knows of no reason why Tenant would be unable to obtain all required
permits, licenses and approvals from the appropriate governmental authorities; (ii) the
Premises is not in violation of any environmental laws, rules, or regulations and Tenant's
contemplated uses will not cause any such violation, and (iii) the Premises is free of any
and all Hazardous Materials as of the Delivery Date. In the event that the presence of any
Hazardous Materials not caused by Tenant is detected at the Property at any time during
the Term of this Agreement and any Option Term, all remedial work shall be performed
by City at City's expense. Tenant's obligation to pay Rent shall be abated pursuant to
Section 13 to the extent Tenant is unable to conduct its business upon the Premises as
a result of any remedial work that is performed subsequent to Tenant opening for
business. Tenant shall have the right (but not the obligation) to terminate this Agreement,
upon thirty (30) calendar days advance written notice to City in the event that Hazardous
Materials, not caused by Tenant, are detected at the Premises and the presence or the
remediation materially affects Tenant's ability to conduct its business at the Premises.
20. EVENT OF BANKRUPTCY
24.1. Assignment. If this Agreement is assigned to any Person or entity pursuant
to the provisions of the Bankruptcy Code, 11 U.S.C. Sections 101 et seq. or any similar
or successor statute ("Bankruptcy Code"), any and all monies or other consideration
payable or otherwise to be delivered in connection with such assignment shall be paid or
delivered to City, shall be and remain the exclusive property of City and shall not
constitute property of Tenant or of the estate of Tenant within the meaning of the
Bankruptcy Code. Any and all monies or other consideration constituting City's property
under this Section not paid or delivered to City shall be held in trust for the benefit of City
and be promptly paid or delivered to City.
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20.2. Assumption of Obligations. Any Person or entity to which this Agreement is
assigned pursuant to the provisions of the Bankruptcy Code shall he deemed without
further act or Gleed to have assumed all of the obligations arising under this Agreement
and any Amendments on and after the date of such assignment.
21. NOTICES
Any notice, demand, request, consent, approval or communication that either party
desires or is required to give shall be in writing and shall be deemed given three (3)
calendar days after deposit with the United States Postal Service, postage prepaid, by
registered or certified mail, return receipt requested or upon delivery if personally served.
Unless notice of a different address has been given in accordance with this Section, all
notices shall be addressed as follows:
If to City: City of Newport Beach
Attention: Real Property Administrator
100 Civic Center Drive
P.O. Box 1768
Newport Beach, CA 92658
If to Tenant: West Point Investment Corporation
Kevin Hayes
829 Harbor Island Drive, Suite D1
Newport Beach, CA 92660
22. SURRENDER OF PREMISES
At the expiration or earlier termination of this Agreement, Tenant shall surrender,
at no cost to City, the possession of the Premises. Tenant shall leave the surrendered
Premises, required personal property and fixtures in good and broom -clean condition,
reasonable wear and tear excepted. All property that Tenant is not required to surrender,
but that Tenant does abandon shall, at City's election, become City's property at
expiration or termination. City shall owe no compensation to Tenant for any personal
property or fixtures left at the Premises by Tenant more than fifteen (15) calendar days
after the expiration or termination of this Agreement.
23. COMPLIANCE WITH ALL LAWS
Tenant shall at its own cost and expense comply
regulations and requirements of all governmental entities,
or municipal, whether now in force or hereinafter enacted
Premises and/or this Agreement.
24. WAIVERS
with all statutes, ordinances,
including federal, state, county
and relating in any way to the
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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 or covenant of this Agreement, or any applicable
law, ordinance or regulation.
25. SEVERABILITY
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.
26. CONFLICT
In case of conflict, the more specific provision of this Agreement shall control. 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.
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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, State of California.
28. ENTIRE AGREEMENT; AMENDMENTS
28.1. The terms and conditions of this Agreement, all exhibits attached, and all
documents expressly incorporated by reference, represent the entire agreement of the
parties with respect to the subject matter of this Agreement.
28.2. This Agreement shall supersede any and all prior agreements, oral or
written, regarding the subject matter between Tenant and City.
28.3. 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.
28.4. The terms and conditions of this Agreement shall not be altered or modified
except by a written amendment to this Agreement signed by Tenant and the Authorized
City Representative and approved as to form by the City Attorney.
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28.5. 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.
28.6. Each party has relied on its own inspection of the Premises and examination
of this Agreement, the counsel of its own advisors, and the warranties, representations,
and covenants in this Agreement. The failure or refusal of either party to inspect the
Premises, to read this Agreement or other documents, or to obtain legal or other advice
relevant to this transaction constitutes a waiver of any objection, contention, or claim that
might have been based on such reading, inspection, or advice.
29. TIME IS OF THE ESSENCE
Time is of the essence for this Agreement.
30. SUCCESSORS
Subject to the provisions of this Agreement on assignment and subletting, each
and all of the covenants and conditions of this Agreement shall be binding on and shall
inure to the benefit of the heirs, successors, executors, administrators, assigns, and
personal representatives of the respective parties.
31. 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 this Agreement or any other rule of construction which might otherwise
apply.
32. HEADINGS
The captions of the various sections of this Agreement are for convenience and
ease of reference only and do not define, limit augment, or describe the scope, content,
or intent of this Agreement.
33. NO BROKERS
Each party warrants to and for the benefit of the other than it has had no dealings
with any real estate broker or other agent (attorneys excepted) in connection with the
negotiation or making of this Agreement, and that no commission, fee or other
compensation is owed regarding this Agreement by such other Party.
34. GENDER; NUMBER
The neuter gender includes the feminine and masculine, the masculine includes
the feminine and neuter, and the feminine includes the neuter, and each includes
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corporation, partnership, or other legal entity whenever the context requires. The singular
number includes the plural whenever the context so requires.
35. EXHIBITS
All exhibits to which reference is made in this Agreement are incorporated by
reference. Any reference to "this Agreement" includes matters incorporated by reference.
36. CITY BUSINESS LICENSE
Tenant shall obtain and maintain during the duration of this Agreement, a City
business license as required by the Newport Beach Municipal Code.
37. NO 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.
R1.11IIIIIIIIIIIII ►1i]'11]&*]01i►iII'1,110Is] '
Tenant, for itself and its successors, agrees that in the performance under this
Agreement, Tenant shall not discriminate against any person because of the marital
status or ancestry, gender, sexual orientation, etc. of that person or any characteristic
listed or defined in Section 11135 of the Government Code.
39. MEMORANDUM OF LEASE AGREEMENT
A Memorandum of Lease Agreement, in a form and content similar to that
contained in Exhibit "E" shall be recorded by the parties promptly upon execution of this
Agreement. Upon execution by both parties, the Memorandum of Lease Agreement shall
be recorded against the Premises in the office of the Orange County Clerk -Recorder, as
required by Government Code Section 37393.
40. NO THIRD PARTY BENEFICIARIES
City (both as a lessor and as the City of Newport Beach) and Tenant 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.
41. LAWS
It shall be the obligation of Tenant to comply with all laws, statutes, rules, and
regulations relating in any way to the Premises including, but not limited to, State of
California labor laws, rules and regulations and the parties agree that the City shall not
West Point Investment Corporation Page 23
12-27
be liable for any violation by Tenant (or Tenant's agent, sublessee or any party affiliated
with Tenant) thereof.
42. Na DAMAGES
Tenant acknowledges that City would not enter this Agreement if it were to be liable
for damages (including, but not limited to, actual damages, economic damages,
consequential damages, lost profits, loss of rents or other revenues, loss of business
opportunity, loss of goodwill or loss of use) under, or relating to, this Agreement or any of
the matters referred to in this Agreement, including, without limitation, any and all plans,
permits, licenses or regulatory approvals, and CEQA documents. Accordingly, Tenant
covenants and agrees, except as otherwise provided herein, on behalf of itself and its
successors and assigns, not to sue City (either in its capacity as lessor in this Agreement
or in its capacity as the City of Newport Beach) for damages (including, but not limited to,
actual damages, economic damages, consequential damages, lost profits, loss of rents
or other revenues, loss of business opportunity, loss of goodwill or loss of use) or
monetary relief for any breach of this Agreement by City or for any dispute, controversy,
or issue between City and Tenant arising out of or connected with this Agreement or any
of the matters referred to in this Agreement, including, without limitation, any and all plans,
permits, licenses or regulatory approvals, CEQA documents, or any future amendments
or enactments thereto, and the parties expressly agree that declaratory relief, injunctive
relief, mandate and specific performance shall be Tenant's sole and exclusive judicial
remedies.
CIce1e14 =INL,IiJ11:421d154W1TlT, TM
Tenant and City agree that in addition to any claims filing or notice requirements
in this Agreement, Tenant shall file any claim that Tenant may have against City in strict
confon-nance with the Government Claims Act (Government Code sections 909 et seq.),
or any successor statute.
44. COUNTERPARTS
This agreement may be executed in two (2) or more counterparts, each of which
shad be deemed an original and all of which together shall constitute one (1) and the
same instrument.
[SIGNATURES ON NEXT PAGE]
West Point Investment Corporation Page 24
12-28
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first written above.
APPROVED AS TO FORM:
CITY ATTORNEY'S OFFICE
Date: AjoL
By: xz'z�44! : C111__
A n C. Harp �p
City Attorney
ATTEST:
Date:
in
Leilani I. Brown
City Clerk
CITY OF NEWPORT BEACH,
a California municipal corporation
Date:
Grace K. Leung
City Manager
TENANT: WEST POINT INVESTMENT
CORPORATION, a California corporation
Date:
In
Kevin John Hayes
Chief Executive Officer/
Chief Financial Officer
Attachments: Exhibit A — Property Legal Description and Depiction
Exhibit B —
Premises Depiction
Exhibit C
— Balboa Yacht Basin Rules and Regulations
Exhibit D
— Insurance Requirements
Exhibit E —
Memorandum of Lease
West Point Investment Corporation Page 25
12-29
1/3/2020 Screen Shot 2020-01-03 at 10.22.43 AM.png
IN `iNi"MESS.WW EdF,.the parties heretID have p4 I i Agreennent as of
ft' date first written arm:
APPROVED.AS TO FORM:.
CITY ATTORNEY'S OFPiCIE
Date:
BY:-
AdWn C. Harp "1
City Attorney
ATM
"8-
By:
Lail ani I Brod
Coy Clerk
CITYOE NEWPORT BEACH,
a California municipal corporation
Date:
By.
Gfar K. Leung
City Maroger
TENANT: WEItT POINT INVESTMENT
CQRPORATIt3U a California corporation
Arte: lr�t� 3 Zoo
Attachments: Exhibit A - Property Legal Description and Depiction
Exhibit B -. Pt- Depiction
ExhibitC - Balboa Yadit Basins Dula send Regu.lations
Exhibitp - InsuranoaeRegui rnents
Exh b t E MemoranOur n of Lease
Wast Point Investment Corp cx tot Page 25
12-30
https://mail.google.com/mail/u/0/#inbox/FMfcgxwGCbJBpTjFlWpZVddJNddFwttB?projector-1 1/1
EXHIBIT "A"
Property Legal Description and Depiction
West Point Investment Corporation
Page A-1
12-31
EXHIBIT "A"
Property Legal Description and Depiction
A parcel of land situated in the Northwest quarter (NW 114) of Section Thirty Five (35),
Township Six (6) South, Range Ten (10) West, S.8.B.& M., Orange County, Califomia,
more particularly described as follows, to -wit:
Beginning at a point in the U.S. Bulkhead line between Station No. 200 and Station No.
101 as shown upon a map entitled "Harbor Lines, Newport Bay Harbor, California,"
approved May 2, 1936, by the Secretary of War, and on file in the office of the U.S.
District Engineer at Los Angeles, California, said point of beginning being East 754.25
feet of said bulkhead Station No. 200, running thence North 424.71 feet to a point in the
Northerly line of that certain parcel of land conveyed to City of Newport Beach by the
Irvine Company, as described in a deed recorded September 25, 1929, in Book 306,
Page 375, of official records of Orange County, California; thence South 850 43' East
772.15 feet to the Northeasterly corner of the fast mentioned parcel of land; thence
South along the Easterly line of the last mentioned parcel of land 367.01 feet to a point
in said U.S. Bulkhead line between Station No. 200 and Station No. 101, thence West
along said bulkhead line 770 feet to the point of beginning, containing approximately
seven (7) acres.
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101512(11^
12-35
EXHIBIT "B"
Premises' Depiction
West Point Investment Corporation
Page B-1
12-36
EXHIBIT B
Office RSF: 790 s€
SCALE. 112" = 1'-0" SHEET SIZE: 11x17
78' 0' S6'
GRAPHIC SCALE
1614
829 Harbor Island Drive
Newport Beach, CA WorkSpaeePlans
kimQr.warXspaceplans.com jillr@workspaceplans.com
EXHIBIT "C"
Balboa Yacht Basin Rules and Regulations
West Point Investment Corporation Page C-1
12-38
BALBOA YACHT BASIN
829 Harbor Island Drive
Newport Beach, CA 92660
(949) 673-0360
Rules and Regulations
When a boat enters the Balboa Yacht Basin ("BYB"), it immediately comes under the
jurisdiction of BYB and shall be berthed only where ordered and maneuvered as directed.
Vessels may be relocated within BYB at City's discretion. The City ordinances, rules and
regulations, summarized herein and as amended from time to time, and all other regulations
established by regulatory bodies having jurisdiction at BYB, shall form a part of all Slip Rental
Agreements as though printed thereon.
The Balboa Yacht Basin is owned by the City of Newport Beach ("City") and managed by Basin
Marine Inc., located onsite at 829 Harbor Island Drive.
There is no warranty of any kind as to the condition of the floats, walks, gangways, ramps or
mooring gear, nor shall City be responsible therefore, or for injuries to persons or property
occurring thereon or for any other reason, whether herein specifically stated or not.
1. No Vessel may be moored at the BYB unless a current Slip Rental Agreement or
Temporary Slip Rental Agreement (collectively, the 'Agreements") is in effect between
Vessel Owner and City. All defined terms herein shall have the same meaning as in the
Agreements.
2. Only the Vessel described in the Agreements and registered to Vessel Owner may occupy
the assigned Slip. Only one boat is permitted to occupy a slip at any one time, unless
otherwise approved by the Marina Manager.
3. Use of boats moored at BYB for unauthorized commercial purposes is prohibited.
4. No major repairs or complete overhauls shall be made on boats in BYB. Extent of the
permitted repairs shall be at the discretion of the City. Disc sanding and spray painting
are strictly forbidden.
5. Supplies, materials, accessories or gear of all kinds shall not be stored within BYB except
in approved lockers. No additional locker boxes shall be placed on the docks by Vessel
Owner. Maximum weight in lockers shall not exceed 70 pounds.
& City reserves the right to inspect all boats to determine if they are properly identified and
equipped for safe operation in accordance with Coast Guard and other applicable
regulations.
7. No Vessel Owner shall throw, discharge, pump or deposit from any boat or float any
refuse, oil, spirits, flammable liquid, or other polluting matter into BYB. All such matter
shall be deposited in appropriately marked containers within BYB.
Page 1 of 4 12-39
4WPp
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rtIFOVL
BALBOA YACHT BASIN
829 Harbor Island Drive
Newport Beach, CA 92660
(949) 673-0360
Rules and Regulations
When a boat enters the Balboa Yacht Basin ("BYB"), it immediately comes under the
jurisdiction of BYB and shall be berthed only where ordered and maneuvered as directed.
Vessels may be relocated within BYB at City's discretion. The City ordinances, rules and
regulations, summarized herein and as amended from time to time, and all other regulations
established by regulatory bodies having jurisdiction at BYB, shall form a part of all Slip Rental
Agreements as though printed thereon.
The Balboa Yacht Basin is owned by the City of Newport Beach ("City") and managed by Basin
Marine Inc., located onsite at 829 Harbor Island Drive.
There is no warranty of any kind as to the condition of the floats, walks, gangways, ramps or
mooring gear, nor shall City be responsible therefore, or for injuries to persons or property
occurring thereon or for any other reason, whether herein specifically stated or not.
1. No Vessel may be moored at the BYB unless a current Slip Rental Agreement or
Temporary Slip Rental Agreement (collectively, the 'Agreements") is in effect between
Vessel Owner and City. All defined terms herein shall have the same meaning as in the
Agreements.
2. Only the Vessel described in the Agreements and registered to Vessel Owner may occupy
the assigned Slip. Only one boat is permitted to occupy a slip at any one time, unless
otherwise approved by the Marina Manager.
3. Use of boats moored at BYB for unauthorized commercial purposes is prohibited.
4. No major repairs or complete overhauls shall be made on boats in BYB. Extent of the
permitted repairs shall be at the discretion of the City. Disc sanding and spray painting
are strictly forbidden.
5. Supplies, materials, accessories or gear of all kinds shall not be stored within BYB except
in approved lockers. No additional locker boxes shall be placed on the docks by Vessel
Owner. Maximum weight in lockers shall not exceed 70 pounds.
& City reserves the right to inspect all boats to determine if they are properly identified and
equipped for safe operation in accordance with Coast Guard and other applicable
regulations.
7. No Vessel Owner shall throw, discharge, pump or deposit from any boat or float any
refuse, oil, spirits, flammable liquid, or other polluting matter into BYB. All such matter
shall be deposited in appropriately marked containers within BYB.
Page 1 of 4 12-39
8. Use of boat toilets not equipped with storage devices approved by the state or local health
departments is not permitted within BYB. City reserves the right to inspect all boats for
installation and proper operation of such devices and holding tanks.
9. Unnecessary operation of engines in berths is not permitted. No excessive noise is
allowed. Halyards should be tied away from masts.
10. Except for entering or leaving slips, marine engines, power generating equipment or other
noise making machinery shall not be operated between the hours of 5:00 P.M. and 9:00
A.M. Engines may not be operated in gear while boats are secured to dock.
11. Water or power lines shall not cross main walks.
12. All boats shall be moored by Vessel Owner in a safe manner, on cleats, with strong and
adequate lines.
13. The speed limit within BYB shall be dead slow, or wakeless speed, whichever is slower.
14. Fishing from the slips is not allowed. No cleaning offish is permitted in BYB.
15. There shall be no laundering or drying of wearing apparel on the docks or on the dock or
rigging of a boat in BYB.
16. Restrooms will remain locked at all times. All keys must be returned to the Marina
Manager office upon termination of the Agreement. If not returned, the Key Deposit will
be retained by the City. Keys must not be duplicated.
17. Vessel Owner shall notify the Marina Manager when they expect Vessel to be away from
the Slip for any period in excess of thirty (30) days. Vessel Owner shall not sublet or
otherwise grant others the use of the Slip. During any absence of the Vessel, City may
use the Slip for any purpose without credit or compensation to Vessel Owner.
18. For security reasons, no dinghy, sabot, float or other similar boat shall be permitted to
cruise up and down the fairways. All such boats must be kept on Vessel. The use of
another slip at any time, for ANY non -emergency reason is not permitted.
19. The maximum distance by which any boat (including all projections such as transom
platforms, booms, gait tanks, bowsprits, etc.) may extend beyond the end of the berth
may not be more than ten percent (10%) of the length of the Slip beyond the end of the
Slip. No part of the Vessel shall at any time extend over any portion of any dock at BYB.
No part of any boat shall extend over the main walkway.
20. All equipment and electrical connections made by Vessel Owner must be approved by
the Marina Manager.
21. No fueling or transferring of fuel from docks shall be permitted at any time.
22. Vessel Owner shall be responsible for any oil, paint, or other materials spilled, dripped or
otherwise applied to the concrete fingers or walks adjacent to the boat slip.
Page 2 of 4 12-40
23. Boat boarding steps shall be a maximum of one-half (1/2) the width of the finger and shall
be of lightweight, open construction. No storage will be allowed under the boarding steps.
24. No dinghies, masts, bicycles, hibachis, etc. shall be stored on the docks. Items left or
stored on the docks will be confiscated.
25. Trash containers are provided. Vessel Owners shall not place their own trash containers
on the docks.
26. No cleats, dock wheels or other accessories shall be installed by Vessel Owner. The
dockmaster should be contacted if additional accessories are necessary.
27. Any paint, varnish, etc. spilled on the docks or lockers shall be cleaned up immediately.
If the spill cannot be removed by Vessel Owner, he should contact the Marina Manager
for assistance.
28. Vessel Owner is encouraged to inform the Marina Manager of any leaks or other
malfunctions with water or electricity, etc., so that they may be corrected as soon as
possible.
29. ANIMALS SHALL BE LEASHED AT ALL TIMES. Should the size or temperament of a
pet disturb others or should the pet commit any nuisance on the property of BYB, such
animal shall be removed from BYB by Vessel Owner.
30. Children under twelve (12) years of age are not permitted on docks without the immediate
presence of a parent or other responsible adult.
31. Disorderly or discourteous conduct by Vessel Owner or guests that might injure a person,
cause damage to property or harm the reputation of BYB shall be cause for termination
of the Vessel Owner's Agreement,
32. Vessel Owner shall park vehicles in areas designated for Basin parking. Parking areas
shall not be used for storage of trailers without City's consent.
33. Vessel Owners are advised that it will be unlawful for any unauthorized person to solicit
business or to offer goods, wares, merchandise or services for sale on the premises of
BYB without the consent of the City.
34. "For Sale" or other unauthorized advertising signs are prohibited in BYB.
35. City is not responsible for any losses or damage to boats at BYB. Each Vessel Owner is
responsible for damage which he and/or his boat may cause to other boats or
improvements in BYB,
36. No swimming is permitted in BYB waters.
37. The City will not provide space for the storage of dinghies or miscellaneous Vessel Owner
equipment on Basin property.
Page 3 of 4 12-41
38. Hydro -lift hoists will not be allowed in BYB.
39. The Marina Manager may ascertain that strangers aboard yachts are authorized by
Vessel Owner to be aboard.
40. Riding of skateboards, bicycles or motorcycles on the docks is not permitted.
Slip Fees specified in the Agreement are determined by the size of the slip space or vessel
size and permitted overhang. Rent is due in advance, payable by the first of the month.
Electricity is charged for the previous month's use. Vessel is subject to impound if the account
is delinquent. Vessel Owner will be liable for any cost of impounding and collection of account.
These rules and regulations are subject to change upon five day's notice.
Dave New
Balboa Yacht Basin Manager
Dave _3 Basi nMarine. com
(949) 673-9360
Revised February 4. 2013
Page 4 of 4 12-42
EXHIBIT "D"
Insurance Requirements
West Point Investment Corporation
Page D-1
12-43
EXHIBIT "D"
Insurance Requirements
Without limiting Tenant's indemnification of City, Tenant shall obtain, provide, and
maintain at its own expense during the Term of this Agreement, a policy or policies of
insurance of the type, amounts, and form acceptable to City. The policy or policies shall
provide, at a minimum, those items described below.
1. Provision of Insurance. Without limiting Tenant's indemnification of City, and prior
to commencement of work on Premises by Tenant or Tenant's agents,
representatives, consultants, contractors and/or subcontractors, Tenant shall
obtain, provide and maintain at its own expense during the term of this Agreement
policies of insurance of the type and amounts described below and in a form
satisfactory to City. Tenant agrees to provide insurance in accordance with
requirements set forth here. if Tenant uses existing coverage to comply and that
coverage does not meet these requirements, Tenant agrees to amend,
supplement or endorse the existing coverage.
2. Acceptable Insurers. All insurance policies shall be issued by an 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 the City's
Risk Manager.
3. CoverageRequirements.
A. Workers' Compensation Insurance. Tenant and Tenant's agents,
representatives, consultants, contractors and/or subcontractors, shall maintain
Workers' Compensation Insurance, statutory limits, and Employer's Liability
Insurance with limits of at least one million dollars ($1,000,000) each accident
for bodily injury by accident and each employee for bodily injury by disease in
accordance with the laws of the State of California, Section 3700 of the Labor
Code.
Tenant and Tenant's agents, representatives, consultants, contractors and/or
subcontractors, shall submit to City, along with the certificate of insurance, a
Waiver of Subrogation endorsement in favor of City, its officers, agents,
employees and volunteers.
B. General Liability Insurance. Tenant and Tenant's agents, representatives,
consultants, contractors and/or subcontractors, shall maintain commercial
general liability insurance, and if necessary umbrella liability insurance, with
coverage at least as broad as provided by Insurance Services Office form CG
00 01, in an amount not less than one million dollars and 001100 ($1,000,000)
per occurrence, two million dollars and 00/100 ($2,000,000) general aggregate.
The policy shall cover liability arising from premises, operations, personal and
advertising injury, and liability assumed under an insured contract (including
the tort liability of another assumed in a business contract) with no
Vilest Point investment Corporation PageD-1
12-44
endorsement or modification limiting the scope of coverage for liability assumed
under a contract.
C. Fire and Extended Coverage. Tenant shall maintain fire and extended
coverage insurance, together with insurance against vandalism, theft and
malicious mischief, on the improvements and fixtures, alterations, trade
fixtures, signs, equipment, personal property and inventory on or upon the
Premises from loss or damage to the extent of their full replacement value.
D. Loss of Rent. Tenant shall maintain loss of rent insurance insuring that the Rent
will be paid to City for a period up to six (6) months if the Premises are
destroyed or rendered unusable or inaccessible for commercial purposes by a
risk insured under a special form property coverage policy including vandalism
and malicious mischief endorsements.
E. Automobile Liability Insurance. Tenant and Tenant's consultants, contractors
and/or subcontractors shall maintain automobile insurance at least as broad as
Insurance Services Office form CA 00 01 covering bodily injury and property
damage for all activities of Tenant or all activities of Tenant's consultants,
contractors and/or subcontractors arising out of or in connection with work to
be performed on the Premises, including coverage for any owned, hired, non -
owned or rented vehicles, in an amount not less than one million dollars and
00/100 ($1,000,000) combined single limit each accident.
F. Builder's Risk Insurance. During construction, Tenant shall require that
Tenant's construction contractors and subcontractors maintain Builders Risk
insurance or an installation floater as directed by City, covering damages to the
work for "all risk" or special causes of loss form with limits equal to one hundred
percent (100%) of the completed value of the work, with coverage to continue
until final acceptance of the work by Tenant and City. City shall be included as
an insured on such policy, and Tenant shall provide City with a copy of the
policy.
G. Pollution Liability Insurance. Tenant shall require that Tenant's construction
contractors and subcontractors maintain a policy providing contractor's
pollution liability ("CPL') coverage with a total limit of liability of no less than
one million dollars and 001100 ($1,400,440) per loss and in the aggregate per
policy period dedicated to this project. The CPI. shall be obtained on an
occurrence basis for a policy term inclusive of the entire period of construction.
If all or any portion of CPL coverage is available only on a claims -made basis,
then a 10 -year extended reporting period shall also be purchased. The CPL
policy shall include coverage for cleanup costs, third -party bodily injury and
property damage, including loss of use of damaged property or of property that
has not been physically injured or destroyed, resulting from pollution conditions
caused by contracting operations. Coverage as required in this paragraph shall
apply to sudden and non --sudden pollution conditions resulting from the escape
or release of smoke, vapors, fumes, acids, alkalis, toxic chemicals, liquids, or
gases, waste materials, or other irritants, contaminants, or pollutants. The CPL
shall also provide coverage for transportation and off-site disposal of materials.
West Point Investment Corporation Page D-2
12-45
The policy shall not contain any provision or exclusion (including any so-called
"insured versus insured" exclusion or "cross -liability" exclusion) the effect of
which would be to prevent, bar, or otherwise preclude any insured or additional
insured under the policy from making a claim which would otherwise be
covered by such policy on the grounds that the claim is brought by an insured
or additional insured against an insured or additional insured under the policy.
4. Endorsements: Policies shall contain or be endorsed to contain the following
provisions:
A. Additional Insured Status. City, its elected or appointed officers, officials,
employees, agents and volunteers are to be covered as an additional
insured under all general liability and pollution liability policies with respect
to liability arising out of Tenant's activities related to this Agreement and
with respect to use or occupancy of the Premises. City, its elected or
appointed officers, officials, employees, agents and volunteers shall be
named as an additional insured on any of Tenant's contractor's and
subcontractor's policies.
B. Prima and Non Contributory. Policies shall be considered primary
insurance as respects to City, its elected or appointed officers, officials,
employees, agents and volunteers as respects to all claims, losses, or
liability arising directly or indirectly from Tenant's operations. Any insurance
maintained by City, including any self-insured retention City may have, shall
be considered excess insurance only and not contributory with the
insurance provided hereunder.
C. Liability Insurance. Liability 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. Waiver_ of Subrogation. All insurance coverage maintained or procured
pursuant to this Agreement shall be endorsed to waive subrogation against
City, its elected or appointed officers, agents, officials, employees and
volunteers or shall specifically allow Tenant or others providing insurance
evidence in compliance with these requirements to waive their right of
recovery prior to a loss. Tenant hereby waives its own right of recovery
against City, and shall require similar written express waivers from each of
its consultants, contractors or subcontractors.
E. Reporting Provisions. Any failure to comply with reporting provisions of the
policies shall not affect coverage provided to City, its elected or appointed
officers, officials, employees, agents or volunteers.
F. Notice of Cancellation. The insurance required by this Agreement shall not
be suspended, voided, canceled, or reduced in coverage or in limits except
after thirty (30) ca€endar days (ten (1 p) calendar days' written notice of non-
payment of premium) written notice has been received by City. It is Tenant's
obligation to ensure that provisions for such notice have been established.
West Point Investment Corporation Page D-3
12-46
G. Loss Payee. City shall be included a loss payee under the commercial
property insurance.
5. Additional Requirements.
A. In the event City determines that (i) the Tenant's activities on the Property
creates an increased or decreased risk of loss to the City, (ii) greater
insurance coverage is required due to the passage of time, or (iii) changes
in the industry require different coverage be obtained, Tenant agrees that
the minimum limits of any insurance policy required to be obtained by
Tenant or Tenant's consultants, contractors or subcontractors, may be
changed accordingly upon receipt of written notice from City. With respect
to changes in insurance requirements that are available from Tenant's then -
existing insurance carrier, Tenant shall deposit certificates evidencing
acceptable insurance policies with City incorporating such changes within
thirty (30) calendar days of receipt of such notice. With respect to changes
in insurance requirements that are not available from Tenant's then-- existing
insurance carrier, Tenant shall deposit certificates evidencing acceptable
insurance policies with City, incorporating such changes, within ninety (90)
calendar days of receipt of such notice.
B. Any deductibles applicable to the commercial property or insurance
purchased in compliance with the requirements of this section shall be
approved by City.
C. Tenant and Tenant's consultants, contractors and/or subcontractors shall
be subject to the insurance requirements contained herein unless otherwise
specified in the provisions above or written approval is granted by the City.
Tenant shall verify that all consultants, contractors and/or subcontractors
maintain insurance meeting all the requirements stated herein, and Tenant
shall ensure that City is an additional insured on insurance required from
contractors, consultants and/or subcontractors,
D. For General Liability coverage, contractors, consultants and/or
subcontractors shall provide coverage with a format at least as broad as
provided by Insurance Services Office form CG 203 80413.
E. If Tenant maintains higher limits than the minimums shown above, the City
requires and shall be entitled to coverage for the higher limits maintained
by the tenant. Any available insurance proceeds in excess of the specified
minimum limits of insurance and coverage shall be available to the City,
F. Tenant shall give City prompt and timely notice of any claim made or suit
instituted arising out of or resulting from Tenant or Tenant's agents,
representatives, consultants, contractors or subcontractors performance
under this Agreement.
G. Tenant shall provide certificates of insurance, with original endorsements
as required above, to City as evidence of the insurance coverage required
herein. Insurance certificates must be approved by City prior to
West Point Investment Corporation
Page d-4
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commencement of work or issuance of any permit. Current certification of
insurance shall be kept on file with City at all times during the term of this
Agreement.
H. All required insurance shall be in force on the Effective Date, and shall be
maintained continuously in force throughout the term of this Agreement. In
addition, the cost of all required insurance shall be borne by Tenant or by
Tenant's consultants, contractors or subcontractors.
If Tenant or Tenant's consultants, contractors or subcontractors fail or
refuse to maintain insurance as required in this Agreement, or fail to provide
proof of insurance, City has the right to declare this Agreement in default
without further notice to Tenant, and City shall be entitled to exercise all
available remedies.
Tenant agrees not to use the Premises in any manner, even if use is for
purposes stated herein, that will result in the cancellation of any insurance
City may have on the Premises or on adjacent premises, or that will cause
cancellation of any other insurance coverage for the Premises or adjoining
premises. Tenant further agrees not to keep on the Premises or permit to
be kept, used, or sold thereon, anything prohibited by any fire or other
insurance policy covering the Premises. Tenant shall, at its sole expense,
comply with all reasonable requirements for maintaining fire and other
insurance coverage on the Premises.
West Point Investment Corporation Page D-5
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EXHIBIT "E"
Memorandum of Lease
West Paint Investment Corporation Page E-1
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EXHIBIT "E"
Memorandum of Lease
RECORDING REQUESTED AND
WHEN RECORDED RETURN TO:
City Clerk's Office
City of Newport Beach
100 Civic Center Drive
Newport Beach, CA 92660
[Exempt from Recordation Fee - Govt. Code sec. 6163]
MEMORANDUM OF LEASE AGREEMENT
This Memorandum of Lease Agreement ("Memorandum") is dated , 2020,
and is made between City of Newport Beach, a California municipal corporation and
charter city ("City") and West Point Investment Corporation, a California corporation
("Tenant"), concerning the Property and Premises as legally described and depicted in
Attachment "A" attached hereto and by this reference made a part hereof.
For good and adequate consideration, City leases the Premises to Tenant, and Tenant
leases the Premises from City, for the term and on the provisions contained in the
Agreement dated , 2020, including without limitation provisions prohibiting
assignment, subleasing, and encumbering said leasehold without the express written
consent of City in each instance, all as more specifically set forth in said Agreement,
which said Agreement is incorporated in this Memorandum by this reference.
The term is five (5) years, beginning , 2020, and ending , 2025,
and one (1) elective additional successive "Option Term" of five (5) years, on the same
terms and conditions contained in the Agreement.
This Memorandum is not a complete summary of the Agreement. Provisions in this
Memorandum shall not be used in interpreting the Agreement's provisions. In the event
of conflict between this Memorandum and other parts of the Agreement, the other parts
of the Agreement shall control. Execution hereof constitutes execution of the Agreement
itself.
[SIGNATURES ON NEXT PAGE]
West Point Investment Corporation Page E-1
12-50
IN WITNESS WHEREOF, the Parties hereto have executed this Memorandum as
of the date first written above.
APPROVED AS TO FORM:
CITY ATTORNEY'S OFFICE
Date:
By:
Aaron C. Harp
City Attorney
ATTEST:
Date
CITY OF NEWPORT BEACH,
a California municipal corporation
Date-
ate:
By-
By:
Grace
Grace K. Leung
City Manager
TENANT: WEST POINT INVESTMENT
CORPORATION, a California corporation
Date:
By: By:
Leilani I. Brown Kevin John Hayes
City Clerk Chief Executive Officer/
Chief Financial Officer
[END OF SIGNATURES]
ATTACHMENTS: Attachment A Legal Description and Depictions of Property
and Premises
West Point Investment Corporation Page E-2
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ACKNOWLEDGMENT
A notary public or other officer completing this
certificate verifies only the identity of the individual who
signed the document to which this certificate is
attached, and not the truthfulness, accuracy, or validity
of that document.
State of California
County of ?ss.
On 20 before me,
Notary Public, personally appeared
who proved to me on the basis of satisfactory evidence to be the person(s) whose name(s) is/are
subscribed to the within instrument and acknowledged to me that he/she/they executed the same
in his/her/their authorized capacity(ies), and that by his/her/their signatures(s) on the instrument
the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument.
I certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing
paragraph is true and correct.
WITNESS my nand and official seal.
Signature (seal)
ACKNOWLEDGMENT
A notary public or other officer completing this
certificate verifies only the identity of the individual who
signed the document to which this certificate is
attached, and not the truthfulness, accuracy, or validity
of that document.
State of California
County of }ss,
On 20 before me,
Notary Public, personally appeared
proved to me on the basis of satisfactory evidence to be the person(s) whose name(s) islare
subscribed to the within instrument and acknowledged to me that helshelthey executed the same
in his/her/their authorized capacity(ies), and that by his/her/their signatures(s) on the instrument
the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument.
I certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing
paragraph is true and correct.
WITNESS my hand and official seal.
Signature
(seal)
West Point Investment Corporation Page E-3
12-52
ATTACHMENT A
PROPERTY AND PREMISES DESCRIPTION AND DEPICTIONS
A parcel of land situated in the Northwest quarter (NW 114) of Section Thirty Five (35),
Township Six (6) South, Range Ten (10) West, S.B.B.& M., Orange County, California,
more particularly described as follows, to -wit:
Beginning at a point in the U.S. Bulkhead line between Station No. 200 and Station No.
101 as shown upon a map entitled "Harbor Lines, Newport Bay Harbor, California,"
approved May 2, 1936, by the Secretary of War, and on file in the office of the U.S. District
Engineer at Los Angeles, California, said point of beginning being East 754.25 feet of
said bulkhead Station No. 200, running thence North 424.71 feet to a point in the Northerly
line of that certain parcel of land conveyed to City of Newport Beach by the Irvine
Company, as described in a deed recorded September 25, 1929, in Book 306, Page 375,
of official records of Orange County, California; thence South 85° 43' East 772.15 feet to
the Northeasterly corner of the last mentioned parcel of land; thence South along the
Easterly line of the last mentioned parcel of land 367.01 feet to a point in said U.S.
Bulkhead line between Station No. 200 and Station No. 101, thence West along said
bulkhead line 770 feet to the point of beginning, containing approximately seven (7) acres.
Page 1
West Point Investment Corporation Page E-4
12-53
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West Point Investment Corporation Page E-7
12-56
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West Point Investment Corporation Page E-8
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Attachment B
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Office #1
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829 Harbor Island Drive
Newport Beach, CA
RSF: 790 sf
SHEET SIZE: 11x17
WorkSpacePlans
kim@workspaceplans.com jill@workspaceplans.com
1614
12-61
Attachment C
City Council Policy F-7 — Income and Other Property
12-62
F-7
INCOME AND OTHER PROPERTY
The City owns and manages an extensive and valuable assortment of property including
streets, parks, beaches, public buildings and service facilities. The City also owns or
ground leases and/or operates a yacht basin, resort hotel and apartment property, a
luxury residential development and various other income-producing properties. Much
of the income property is tidelands, filled tidelands or waterfront. Unencumbered fee
value of income property is substantial.
As owner/manager of property, the City is the steward of a public trust, and state law
requires the City to maximize its returns on state -managed property or be subject to a
charge of making a gift of public funds. Nevertheless, the City Council recognizes the
importance of this property not only as a revenue generator, but also as a means to
provide otherwise financially less feasible uses and facilities that benefit the community.
In managing its property, the City will continually evaluate the potential of all City
owned property to produce revenue. This may include leasing or licensing unused land,
renting vacant space, and establishing concessions in recreation areas or other similar
techniques. The City Council will evaluate the appropriateness of establishing new
income generating opportunities on City controlled areas using sound business
principles and after receiving input from neighbors, users and the public.
The policy of the City Council is that income and other property be held and managed in
accordance with the following:
A. Whenever a lease, license, management contract, concession or similar action
regarding income property is considered by the City, an analysis shall be
conducted to determine the maximum or open market value of the property. This
analysis shall be conducted using appraisals or other techniques to determine the
highest and best use of the property and the highest income generating use of the
property.
B. All negotiations regarding the lease, license, management contract, concession, or
similar action regarding income property shall include review of an appraisal or
analysis of the use being considered for the property conducted by a reputable and
independent professional appraiser, real estate consultant, or business consultant.
C. The City shall seek, whenever practical and financially advantageous, both in the
short and long term, to operate or manage all property and facilities directly with
City staff or contractors, provided staff have the expertise needed to competently
do so, or to oversee the work of contractors.
11
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F-7
D. In most negotiations regarding the lease, license, management contract,
concession, or similar action regarding an income or other property, the City shall
seek revenue equivalent to the open market value of the highest and best use; and,
whenever practicable the City shall conduct an open bid or proposal process to
ensure the highest financial return.
E. However, in some circumstances the City may determine that use of a property by
the public for recreational, charitable or other nonprofit purpose is preferred and
has considerable public support, in which case the City may determine that non-
financial benefits justify not maximizing revenue from such property. In such
circumstances, the City has a vested interest in ensuring that the lessee of such
property operates the activities conducted on or from the property in the manner
that has been represented to the City throughout the duration of any lease or
contract with the City.
F. Whenever less than the open market or appraised value is received or when an
open bid process is not conducted, the City shall make specific findings setting
forth the reasons thereof.
Such findings may include but need not be limited to the following:
1. The City is prevented by tideland grants, Coastal Commission guidelines
or other restrictions from converting the property to another use.
2. Redevelopment of the property would require excessive time, resources,
expertise and costs, which would outweigh other financial benefits.
3. Converting the property to another use or changing the operator, manager,
concessionaire, licensee, or lessee of the property would result in excessive
vacancy, relocation or severance costs, real estate commissions, tenant
improvement allowances, expenses or rent concessions which would
outweigh other financial benefits.
4. Converting residential property to another use or opening residential leases
to competitive bid would create recompensable liabilities and other
inequities for long-term residents.
5. The property provides an essential or unique service to the community or
a clearly preferred use that enjoys substantial support in the community
that might not otherwise be provided were full market value of the
property be required.
2
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F-7
6. The property serves to promote other goals of the City such as affordable
housing, preservation of open space, uses available to the public or marine
related services.
7. If the lessee is not (a) a statewide or national nonprofit organization, or (b)
a public entity or subdivision thereof, then the City finds that the By -Laws
and charter documents of such lessee (i) establishes a procedure wherein
the election of directors of such lessee is accomplished by an open,
democratic and transparent process that allows members to vote, (ii) has a
governance and operational structure that is consistent with best practices
for non-profit public benefit corporations as determined by the City
Council, and (iii) cannot be amended to affect subparts (i) or (ii) without the
prior written consent of the City as lessor.
G. Generally, lengths of licenses, leases, management contracts, concessions, or
similar agreements will be limited to the minimum necessary to meet market
standards or encourage high quality improvements and will contain appropriate
reappraisal and inflation protection provisions. Also, all agreements shall contain
provisions to assure complete audits periodically through their terms.
H. All negotiations regarding the license, lease, management contract, concession or
similar action regarding income property shall be conducted by the City Manager
or his/her designee under the direction of any appropriate City committees.
I. To provide an accurate accounting of actual net revenues generated by the City's
income property, all costs directly attributable or allocable to the management of
a specific income property shall be charged against the gross revenues collected
on that property in the fiscal year the costs are incurred. Costs so chargeable
include, but are not limited to, property repairs and maintenance, property
appraisals, and consultant fees, as authorized by the City Council, City Manager,
or by this Income Property Policy.
J. The City Manager or his/her designee is authorized to sign a license, lease,
management contract, concession, or similar agreement or any amendment
thereto, on behalf of the City. Notwithstanding the foregoing, the City Manager
or his/her designee, or a City Council member, may refer any license, lease,
management contract, concession or similar agreement or any amendment
thereto, to the City Council for its consideration and/or action.
K. The City's portfolio of quality income producing properties adds an element of
diversification to a portfolio otherwise invested primarily in financial assets.
Certain of those income properties are restricted from sale by their terms of grant,
state agency regulations or rules, other federal and state guidelines, private
3
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F-7
covenant or agreement or otherwise. For those properties not so restricted from
sale, an analysis shall be prepared to determine the following prior to such
income producing property being offered for sale:
1. The maximum open market value of the City's interest in the property in
its as is condition.
2. If the property is in an important location, a determination of the possible
future consequences of the City no longer controlling that property.
3. If the current rent is contractually low and significant rent increases are
likely within a finite period.
4. The likelihood of significant increases in the ability of the property to
generate income after the expiration of any current lease of the property.
5. The likelihood of a lease extension being requested by the tenant and the
ability to substantially increase rents or require significant improvements
to enhance the utility and the value of the property as consideration for
granting such an extension.
6. The value of the revenue stream from (i) lease income over the life of an
existing lease and/or (ii) likely lease revenue if an existing lease were to be
renewed or the property re -let to a different tenant; and/or (iii) lease
income from the property if it were to be converted to its highest and best
use, compared with the financial benefits of the use of the proceeds of a sale
and if, considering the totality of the circumstances, such use of the
proceeds of a sale is preferable to retaining the property in question.
Adopted - July 27,1992
Amended - January 24,1994
Amended - February 27,1995
Amended - February 24,1997
Amended - May 26,1998
Amended - August 11, 2009
Amended - May 14, 2013
Amended - February 12, 2019
Formerly F-24
0
12-66