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HomeMy WebLinkAbout13 - Lease Agreement with Balboa Angling Club for Use of the Real Property and Tidelands at 200 A StreetQ �EwPpRT c 9C/FOR TO: FROM: CITY OF NEWPORT BEACH City Council Staff Report August 27, 2024 Agenda Item No. 13 HONORABLE MAYOR AND MEMBERS OF THE CITY COUNCIL Seimone Jurjis, Assistant City Manager/Community Development Director - 949-644-3232, sjurjis@newportbeachca.gov PREPARED BY: Lauren Wooding Whitlinger, Real Property Administrator - 949-644- 3236, Iwooding@newportbeachca.gov TITLE: Lease Agreement with Balboa Angling Club for Use of the Real Property and Tidelands at 200 A Street ABSTRACT: The Balboa Angling Club (BAC) is a non-profit corporation organized to further the sport of fishing and has operated at the City of Newport Beach (City) owned property located at 200 A Street since 1947. BAC is seeking a new 20-year lease agreement (Agreement) (Attachment A), for continued use of the City -owned property, including the clubhouse, pier and parking facilities. RECOMMENDATIONS: a) Determine this action 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 Section 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 this action will not result in a physical change to the environment, directly or indirectly; b) Authorize the City Manager and City Clerk to execute the Lease Agreement by and between the City of Newport Beach and Balboa Angling Club, for use of the City -owned property located at 200 A Street, in a form substantially similar to the agreement attached to the staff report; and c) Approve a waiver of City Council Policy F-7 — Income and Other Property based on the findings contained in this staff report and the Agreement, that conducting an open bid process or changing the tenant would result in excessive vacancy, and the use of the property provides an essential or unique marine related services to the community and is of a public benefit, and might not otherwise be provided where an open bid or full fair market value of the property be required. 13-1 Lease Agreement with Balboa Angling Club for Use of the Real Property and Tidelands at 200 A Street August 27, 2024 Page 2 DISCUSSION: 200 A Street (Property), located near the Balboa Fun Zone on the harbor side of the Balboa Peninsula in Newport Beach (Attachment B), is a 0.08-acre site consisting of approximately 3,114 square feet of State of California -owned and City -managed tidelands and 479 square feet of City -owned uplands, all currently developed with an approximately 875-square-foot single -story clubhouse building on approximately 2,165 square feet of dock improvements, and three parking spaces. The building and docks were constructed in 1947, with various upgrades and maintenance and tenant improvements completed since then. History The Balboa Angling Club was founded in 1926 and incorporated as a nonprofit corporation in 1927, for the goodwill of persons in the fishing industry, the conservation of fish in local waters, and to promote `rod and reel' fishing as a sport. On April 1, 1947, the City leased the Property to BAC, and its founding members constructed the clubhouse, docks, floats and piers at their sole cost and expense. The most recent lease agreement for the Property was executed in 1999 and expires at the end of August 2024; BAC has requested a new lease for its continued use of the improvements and the operation of its clubhouse. Operation In addition to the promotion of fishing programs and educational seminars, the membership club provides access to worldwide sport fishing tournaments, sponsors prestigious Southern California fishing tournaments like the Master Angler Billfish Tournament and the Junior Angler's Tournament, and participates in most other regional tournaments. BAC membership is open to the public, regardless of city residency, on either a Junior, Individual or Family level. Each membership runs for a calendar year and provides members with full clubhouse access. The Junior membership is $50 per year and is open to anyone under 21 years of age whose parents do not belong to BAC. Individual and Family memberships require an endorsement from at least one active BAC member in good standing, and cost $240 and $300 per year, respectively. Conservation is also a key component of BAC's mission, and the club is affiliated with many conservation groups like the International Game Fish Association (IGFA) and the Billfish Foundation. BAC has also been instrumental in the conservation of the White Seabass since 1993. BAC partners with the Pacific Fisheries Enhancement Foundation and Hubbs/Seaworld Research Institute and manages grow pens for the White Seabass located on a mooring in Newport Harbor. The pens, which are filled in the spring and released in the fall, are operated by many volunteers from the BAC who donate hundreds of hours each year. 13-2 Lease Agreement with Balboa Angling Club for Use of the Real Property and Tidelands at 200 A Street August 27, 2024 Page 3 BAC also serves as an official International Game Fish Weigh Station and official weigh station for sportfishing in Newport Beach. BAC is one of only seven locations on the west coast with an IGFA-certified weigh station, and is the only location in the City. The weigh station provides anglers with access to a certified scale and knowledgeable individuals to assist with weighing potential IGFA world records and other significant catches. BAC maintains this designation at its sole cost and expense, and holds it open to any member of the public. City Council Policy F-7, Income and Other Property Due to BAC's long-term use of the property, and the unique services provided to the community, staff did not conduct an open bid process to solicit proposals from other operators, as typically required by City Council Policy F-7, Income and Other Property (Policy) (Attachment C). Staff believes the following findings can be made, as required by the Policy, when an open bid is not conducted, and when less than fair market value rent is received, and a waiver is requested: 1. Converting the property to another use or changing the operator of the property would result in excessive vacancy, which would outweigh other financial benefits; 2. BAC provides an essential or unique service to the community that might not otherwise be provided where full market value of the property be required; and 3. With the proposed rent charged at less than fair market value, the use provides a public benefit to the community, is a marine -related service, and is of statewide benefit and might not otherwise be provided were an open bid or full fair market value of the property be required. Proposed Agreement The proposed terms of the Agreement are summarized below: 1. The initial term is 20 years, with two, five-year extension options, for a total possible term of 30 years, unless terminated earlier as provided by the Agreement. 2. Rent shall be set at $1 per year. 3. Additional consideration under the Agreement includes BAC's continued operation of the Premises as an angling club, and the provision and allowance of public access to the (International Game Fish Association) IGFA-certified weigh station and line testing. BAC shall continue to maintain the Premises, at no cost to the City or State. 13-3 Lease Agreement with Balboa Angling Club for Use of the Real Property and Tidelands at 200 A Street August 27, 2024 Page 4 4. BAC shall coordinate with the City to expand its community outreach and engagement to sustain its membership, including use of the Premises for additional recreational programming. 5. BAC will be required to submit annual financial and programmatic reports to the City, as well as forecasts of upcoming operations and maintenance work scheduled for the Premises. 6. BAC 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. 7. BAC shall provide certificates of insurance to the satisfaction of the City's risk manager, naming the City as additional insured. The Agreement has been prepared by the City Attorney's Office and has been approved as to form. BAC reviewed and approved the proposed Agreement, and its representatives' signatures are included on Attachment A. California Surplus Land Act Assembly Bill 1486 was signed into law in 2019, went into effect in 2020, and made significant changes to the California Surplus Land Act (Gov. Code §54220, et seq.) (SLA). A majority of the Premises is "exempt surplus land" as it is comprised of tidelands owned by the State of California and granted in trust to the City to manage on the State's behalf. Further, in compliance with the updated SLA, the Agreement is not subject to the SLA as the size of the Premises is less than one half an acre, and its terms do not provide for a "disposition of surplus land" as BAC is limited to tenant improvements and no demolition or development shall occur. FISCAL IMPACT: Revenues collected pursuant to the proposed Agreement, $1 per year, will be posted to the rental of property account in the Community Development Department (01050505-551115). Additional consideration under the Agreement ensures the Property will continue to be available to the public for angling related uses, at no cost to the City. ENVIRONMENTAL REVIEW: Staff recommends the City Council find this action 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. 13-4 Lease Agreement with Balboa Angling Club for Use of the Real Property and Tidelands at 200 A Street August 27, 2024 Page 5 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 Attachment B — Map Attachment C — City Council Policy F-7, Income and Other Property 13-5 Attachment A Lease Agreement 13-6 LEASE AGREEMENT BY AND BETWEEN THE CITY OF NEWPORT BEACH AND BALBOA ANGLING CLUB THIS LEASE AGREEMENT ("Lease") is made and entered into this day of 2024 ("Effective Date"), by and between the CITY OF NEWPORT BEACH, a California municipal corporation and charter city ("Lessor" also referred to herein as "City"), and BALBOA ANGLING CLUB, a California nonprofit corporation ("Lessee"). Lessor and Lessee may individually be referred to as "Party" and collectively referred to as "Parties" herein. R E C I T A LS A. Lessor holds title to certain real property, part of which is in fee and another part in trust on behalf of the State of California, located at the foot of A Street and the bayfront on the Balboa Peninsula, at 200 A Street Newport Beach, California 92661, Assessor's Parcel Number 048-133-16 ("Property"). The Property is legally described in Exhibit "A" and depicted in Exhibit "B," both of which are attached hereto and incorporated herein by reference. B. Lessee is a nonprofit corporation organized for the purposes of furthering the sport of rod and reel fishing, the conservation of fish, and the goodwill of persons in the fishing industry. C. Lessee has operated the Balboa Angling Club on said Property since the first lease with the City was entered into on April 1, 1947 ("1947 Lease"). D. Over the term of the 1947 Lease and pursuant to its terms, improvements were constructed on a portion of the Property including a pier, a clubhouse, and parking stalls ("Premises"). The Premises are legally described and depicted in Exhibit "C," which is attached hereto and incorporated herein by reference. E. On May 10, 1999, City and Lessee entered into the currently existing lease agreement to continue to operate the Premises as an angling club to be used for educational, civic, and recreational purposes, and that will generally be offered to the public for recreational, civic and educational programs ("Existing Lease"). F. The Existing Lease expires on August 30, 2024, and the Parties desire to enter into this Lease for a new term subject to the terms and conditions contained herein as of the Effective Date. Execution of this Lease shall concurrently terminate the Existing Lease. G. A portion of the Premises includes state tidelands ("Tidelands") and is thus subject to restrictions, including, but not limited to, limitations specified in Chapter 415 of the California State Statutes of 1975 and Chapter 74 of the California State Statutes of 1978, as amended ("Tidelands Grant"). 13-7 H. The Tidelands Grant requires the Tidelands to be used to promote the public's interest in water -dependent or water -oriented activities, as described more fully therein. The Tidelands Grant provides that the Tidelands shall not, at any time, be granted, conveyed, given, or alienated to any individual, firm or corporation for any purpose whatever except pursuant to Lessor's grant of either a franchise or lease. The Tidelands Grant authorizes Lessor to enter into leases of the Tidelands for a period not exceeding fifty (50) years so long as such leases are consistent with Lessor's obligations to hold the Tidelands in trust for the uses and purposes contained in the Tidelands Grant. 1. Lessor has determined that the continued operation of an angling club and the educational, civic, and recreational uses in which Lessee actively engages in are consistent with the limitations and restrictions imposed on the Property by, but not limited to, the Tidelands Grant and Council Policy F-7. J. In accordance with City Council Policy F-7, the City Council has determined that Lessee has continuously used the Premises to provide recreational, marine - related, and other non -financial benefits to the public since 1947 which are unique services to the community. These services enjoy substantial support in the community and might not otherwise be provided were full market value of the Premises be required. NOW, THEREFORE, IN CONSIDERATION OF THE MUTUAL COVENANTS hereinafter set forth, it is agreed as follows: 1. LEASED PREMISES 1.1 Lessor hereby leases the Premises to Lessee and Lessee leases the Premises from Lessor for the term specified in Section 2 and on the conditions contained in this Lease. Lessee agrees that no representations with respect to the condition or improvements on the Premises have been made by Lessor except as specifically set forth in this Lease, and are otherwise being delivered in an "as -is" condition by Lessor. 1.2 The Premises are located on property that is the subject to the Tidelands Grant, administered by the State of California. Lessee shall not take any action that would cause the City to be in violation of any provisions of the Tidelands Grant. If the State terminates the Tidelands Grant for any reason or prevents the Premises from being operated and used as set forth under this Lease, this Lease shall terminate as a result and the Parties shall be released from all liabilities and obligations under this Lease. 2. TERM 2.1 Initial Term. Lessor hereby leases the Premises to Lessee for the purposes only as described in this Lease, and subject to the terms and conditions contained herein, for a term of twenty (20) years beginning on the Effective Date ("initial Term"). BALBOA ANGLING CLUB Page 2 13-8 2.2 Option to Extend. Provided Lessee is not then in default beyond applicable notice and cure periods provided herein, upon Lessee's request and Lessor's approval of such request, Lessee may extend the term of this Lease for two (2) additional consecutive terms of five (5) years (each an "Option Term"), on the same terms and conditions as contained in this Lease as it may be amended from time to time. Lessee must give Lessor written notice of its intention to extend the Term for the Option Term at least one hundred eighty (180) days prior to expiration of the Term. 2.3 Terms of Lease. The "Term" as used herein is defined as the Initial Term and, as exercised, the Option Term(s). 2.4 Holdover. This Lease shall terminate and become null and void without further notice upon the expiration of the Term of this Lease. Any holding over by Lessee after the expiration of the Term shall not constitute a renewal or extension and shall not give Lessee any rights in or to the Property, or any part thereof, except as expressly provided in this Lease. Any holding over after the expiration of the Term with the consent of the Lessor shall be construed to be a tenancy from month -to -month on the same terms and conditions set forth in this Lease insofar as such terms and conditions may be applicable to a month -to -month tenancy ("Holdover Term"). The month -to -month tenancy may be terminated without cause by Lessee or Lessor upon thirty (30) days' prior written notice to the other Party. 3. CONSIDERATION 3.1 The consideration for this Lease shall be the payment of Rent as defined below, Lessee's obligation to complete any Improvements as defined below as required under this Lease, the continued maintenance and operation of the Premises for the Term of the Lease at no cost to Lessor, the commitment of Lessee to operate the Premises as an angling club as provided in Section 5 and shared use with the City as provided in Section 6. 3.2 In accordance with City Council Policy F-7, whenever an open bid process is not conducted or fair market value rent is not received for the use of City property, the City shall make specific findings setting forth the reasons thereof. The City finds that Lessee provides an essential or unique service to the community that might not otherwise be provided were full market value of the property required. Moreover, converting the property to another use or changing the operator or lessee of the property would result in excessive vacancy, expenses, or other negative impacts which would outweigh other financial benefits. Additionally, as the rent being charged is less than fair market value, the City Council finds this use provides a public benefit to the community by providing recreational facilities to the public and is therefore a matter of citywide benefit. 4. RENT 4.1 Lessee shall pay to Lessor, and Lessor shall accept as rent for the Premises, the sum of One Dollar and 00/100 ($1.00) per year ("Rent"). Rent for the entire BALBOA ANGLING CLUB Page 3 13-9 Initial Term shall be due and payable within thirty (30) days of the Effective Date. Rent for each Option Term(s) shall be due and payable on the first day of the Option Term. 4.2 Payment Location. All payments of Rent shall be made in lawful money of the United States of America and shall be paid to Lessor in person or by United States' mail, or overnight mail service, at the Cashier's Office located at 100 Civic Center Drive, Newport Beach, California, 92660, or to such other address as Lessor may from time to time designate in writing to Lessee. If requested by Lessor, Lessee shall make payments electronically (at www.newportbeachca.gov) or by wire transfer (at Lessee's cost). Lessee assumes all risk of loss and responsibility for late charges and delinquency rates if payments are not timely received by Lessor regardless of the method of transmittal. 5. USE OF PREMISES 5.1 Lessee shall use the Premises, solely and exclusively, to manage and operate an angling club, which will, among other things, instruct and promote adults and children in the sport of catch or release fishing, sponsor Southern California fishing tournaments, encourage marine conservation and operate White Seabass grow -out pens in the Newport Harbor. The Premises will be available to the public, to provide an International Game Fish Association ("IGFA")-certified weigh station and line tester. Lessee shall operate and manage the Premises in a manner which does not violate state or federal discrimination laws. Lessee shall make all services, programs and facilities available to the public on fair and reasonable terms. 5.2 Lessee shall not grant any sublease, concession, license, permit or privilege for the conduct of any business or other operation for profit on the Premises without the prior written approval of the City Manager. 6. SHARED USE OF PREMISES Lessor and Lessee shall meet regularly and proactively as needed to agree on any desired classes to be offered at the Premises by Lessee in cooperation with the City's Recreation and Senior Services Department ("RSS Department"). Lessee shall endeavor to expand its community outreach and engagement to sustain its membership. Lessee shall have exclusive access and use of the clubhouse, and any access and use of the Premises by Lessor shall be only to: i) ensure compliance with the terms of this Lease, or ii) as mutually agreed upon by the Parties to utilize the Premises for classes through the RSS Department. 7. IMPROVEMENTS 7.1 Subject to compliance with all applicable laws, Lessee may make improvements to the Premises ("Improvements") at no cost to Lessor which are intended to maintain Lessee's business operations at the Premises. All Improvements shall be submitted for review of improvement plans and permitting, and construction, and shall be subject to the prior written approval of the City Manager or his/her designee, which approval shall not be unreasonably delayed or withheld. For proposed improvements BALBOA ANGLING CLUB Page 4 13-10 estimated to cost more than Fifteen Thousand Dollars ($15,000.00), approval by the City Manager shall be based upon considering the impact on public views of adjacent property owners, compliance with City codes, and the impact on space available for public use of the Premises. As a condition of approval, the City Manager may require that Lessee agree to amendments to this Lease, including increases in the amount of Rent payable, if the proposed Improvements would materially increase the floor area or size of the building structures on the Premises. The City Manager may also require Lessee to provide, at Lessee's expense, appropriate engineering and feasibility studies regarding the structural integrity of the Premises. 7.2 Lessee shall maintain the Improvements as part of the Premises in compliance with the terms of this Lease, and more specifically as set forth under Section 13. 7.3 No improvements shall be erected or maintained on the Premises unless and until plans and specifications for the proposed scope of work have first been submitted to and approved, in writing, by Lessor. Lessee shall obtain, prior to commencing the construction of any Improvements, all permits, licenses or approvals that may be required from any local, state or federal entities and all work shall be performed by qualified and licensed contractors. If applicable, Lessee shall be responsible, at its sole cost and expense, for compliance with the California Environmental Quality Act ("CEQA") and the California Coastal Act in connection with Lessee's operation and use of the Premises. 7.4 Prevailing Wages. Pursuant to the applicable provisions of the California Labor Code, not less than the general prevailing rate of per diem wages including legal holidays and overtime work for each craft or type of workman needed to execute the work contemplated under this Section 7 shall be paid to all workmen employed on the work to be done according to this Section 7 by the Lessee's contractors and any subcontractor. In accordance with the California Labor Code (Sections 1770 et seq.), the Director of Industrial Relations has ascertained the general prevailing rate of per diem wages in the locality in which the work is to be performed for each craft, classification, or type of workman or mechanic needed to execute the Improvements. A copy of said determination is available by calling the prevailing wage hotline number (415) 703-4774, and requesting one from the Department of Industrial Relations. Lessee's contractors and subcontractors are required to obtain the wage determinations from the Department of Industrial Relations and post at the job site the prevailing rate or per diem wages. It shall be the obligation of Lessee's contractors or any subcontractor under him/her to comply with all State of California labor laws, rules and regulations and the parties agree that the City shall not be liable for any violation thereof. 7.5 Quality of Work Performed. All improvements shall be performed in a good and workmanlike manner, shall comply with the plans and specifications submitted to City, and shall comply with all applicable governmental permit requirements and laws in force at the time permits are issued. BALBOA ANGLING CLUB Page 5 13-11 7.6 Payment of Costs. Lessee, shall bear all costs and expenses associated with any improvements, including any fees assessed on the Premises by any governmental, or quasi -governmental agency or authority in connection with any regional transportation or other public improvements and school district taxes, development fees and assessments. 7.7 Disposition of Improvements at Expiration or Lease Termination. Any Improvements to the Premises shall remain on and be surrendered at no cost to Lessor on expiration or termination of this Lease, wear and tear excepted excluding Lessee's fixtures, equipment, furniture, and movable decorations (which Lessee can remove), subject to the right by Lessor to require Lessee to remove the Improvements. Lessee, at its sole cost, shall remove any such items from the Premises before the last day of the Term or within thirty (30) days after notice is given, whichever is earlier. Lessee shall repair any damage to the Premises caused by such removal, ensure that the structural future of the foundation and bulkhead areas of the Premises are not thereby worsened by such removal, and leave the Premises in broom clean and good condition. "Good Condition" shall mean the Premises and each portion thereof is in clean and safe physical condition and suitable for use by a subsequent tenant. Any items left at the Premises after the removal deadline shall be considered abandoned by Lessee and can be disposed by Lessor in its sole discretion and without compensation to or other obligation to Lessee, but also subject to any rights of lien holders to such items under an existing non - disturbance agreement between such lien holder and Lessor. 7.8 In addition to the prior notice and approval requirements set forth above, before Lessee commences any other alterations, work, Improvements or construction of any building structure on the Premises, or of any substantial repairs, alterations, additions, replacement or restoration, in or about the Premises, Lessee shall provide Lessor with thirty (30) days' advanced written notice of the nature and location of the intended work which may only be performed between 7:00 a.m. and 6:00 p.m. on non - holiday weekdays. Lessor may, in its sole discretion, require Lessee to modify the dates and times that the work will be performed. 7.9 Lessee shall, at all times, indemnify and hold Lessor harmless from any and all claims for labor or materials in connection with the construction, repair, or installation of any structure, capital improvement, equipment or facilities on the Premises and from the costs of defending such claims, including reasonable attorney's fees. Lessee shall not suffer or permit to be enforced against the Premises, or any part thereof, any mechanic's, materialmen's, contractor's or subcontractor's liens arising from, or any claim for damage growing out of, the work of any construction, repair, restoration, replacement or improvement, or any other claim or demand arising from Lessee's operations under this Lease. in the event any lien or stop notices imposed or recorded on the Premises as a result of the construction, repair or alteration of the facility, Lessee shall pay or cause to be paid all such liens, claims or demands before any action is brought to enforce the same against the Premises. Notwithstanding anything to the contrary contained in this Section 7.8, if Lessee shall in good faith contest the validity of such lien, claim or demand, then Lessee shall, at its expense, defend itself and Lessor against the same and shall pay and satisfy any adverse judgment that may be rendered thereon before the BALBOA ANGLING CLUB Page 6 13-12 enforcement thereof against Lessor or the Premises upon the condition that upon Lessor's request Lessee shall furnish to Lessor a surety bond satisfactory to Lessor in an amount equal to such contested lien, claim or demand and shall indemnify Lessor against liability for the same and hold the leased Premises free from the effect of such lien or claim. 7.10 Lessor reserves the right to require Lessee to obtain performance and/or labor and materials bonds for Improvements. Lessor shall have the right, in its sole discretion, to require Lessee to furnish a surety bond satisfactory to Lessor to fully protect the Premises and Lessor from the effect or enforcement of any lien, claim or demand. 7.11 Any damage or destruction to the Premises or to Lessee's equipment located thereupon as a result of Lessee's Improvements or any other alteration by Lessee to the Premises shall not reduce or excuse Lessee's obligation to pay Rent in full and on time. 8. MANAGEMENT Lessee agrees that at all times during the Term, Lessee will be managed by Lessee's Club President and/or a designated liaison and operated by Lessee. Lessee's Club President and/or the designated liaison shall have a good reputation for honesty and integrity and experience in the operation and management of recreational clubs. Lessee's Club President or designated liaison shall have the financial ability to perform its obligations under a management agreement for the management of Lessee. 9. UTILITIES AND TAXES 9.1 Utilities. Lessee shall make arrangements for and be responsible for payment, prior to the delinquency date, all charges for utilities furnished to or used on the Premises including, without limitation, gas, electricity, sewer, water, refuse collection, telephone service, internet, and cable TV. Satisfactory evidence of such payments shall be delivered to Lessor within seventy-two (72) hours of a written request for such information. 9.2 Refuse Collection. Refuse collection shall be limited to the hours between 7:00 a.m. and 6:00 p.m. on non -holiday weekdays. 9.3 Payment of Taxes. Lessee shall pay directly to the appropriate taxing authorities all taxes, assessments, license fees and other charges ("Taxes") that are levied or assessed against Lessee's interest in the Premises or any personal property installed on the Premises. Taxes shall be paid before delinquency and before any fine, interest or penalty is due or imposed by operation of law. Lessee shall, upon request, promptly furnish to Lessor satisfactory evidence of payment. Lessor hereby gives notice to Lessee, pursuant to California Revenue and Tax Code ("RTC") Section 107.6 that this Lease 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 Lessee. Lessee BALBOA ANGLING CLUB Page 7 13-13 shall advise in writing any subtenant, licensee, concessionaire or third party approved by Lessor that is using the Premises of the requirements of RTC Section 107.6. 9.4 Payment of Obligations. Lessee shall promptly pay, when due, any and all bills, debts, liabilities and obligations incurred by Lessee in connection with Lessee's occupation and use of the Premises including the construction and/or maintenance of the Improvements. 9.5 No Rent Offset. Any payments under this Section 9 shall not reduce or offset Rent payments. Lessor has no liability for such payments. 10. INSURANCE Without limiting Lessee's indemnification of Lessor, Lessee shall provide and maintain at its own expense during the term of this Lease policies of liability insurance of the type and amounts described in Exhibit "D," which is attached hereto and incorporated herein by reference. 11. HOLD HARMLESS 11.1 Lessee agrees to indemnify, defend and hold harmless Lessor and its elected and appointed officers, agents, officials, volunteers, employees and any person or entity owning or otherwise in legal control of the Premises (collectively, the "Indemnified Parties") from and against any and all claims (including, without limitation, claims for bodily injury, death or damage to property), demands, obligations, damages, actions, causes of action, suits, losses, judgments, fines, penalties, liabilities, costs and expenses (including, without limitation, attorney's fees, disbursements and court costs) of every kind and nature whatsoever (individually, a "Claim;" collectively, "Claims"), which may arise from or in any manner relate (directly or indirectly) to Lessee's, Lessee's employees, contractor, subcontractor, agents, guests, invitees, subtenant's, concessionaire's, licensee's possession, occupation or use of the Premises, specifically including, without limitation, any claim, liability, loss, or damage arising by reason of: 11.1.1 The death or injury of any person or damage to personal property related to a condition of the Premises or an act or omission of Lessee or an agent, contractor, subcontractor, supplier, employee, servant, or sublessee of Lessee; 11.1.2 Any work performed on the Premises including the construction and/or maintenance of the Premises and/or Improvements, or materials furnished to the Premises at the request of Lessee or any agent or employee of Lessee; and/or 11.1.3 Lessee's failure to perform any provision of this Lease or to comply with any requirement of law or any requirement imposed on the Premises by any duly authorized governmental agency or political subdivision. 11.2 Indemnified Parties shall not be liable to Lessee for any damage to Lessee or Lessee's property, goodwill, increased Lessee operating costs, or loss of business or BALBOA ANGLING CLUB Page 8 13-14 income by Lessee from any cause other than the gross negligent, intentional or willful acts of indemnified Parties. Except as otherwise expressly provided in this Agreement, Lessee releases and also waives all claims against Indemnified Parties for damages arising for any reason other than the gross negligent, intentional or willful acts of Indemnified Parties. Indemnified Parties shall not be liable to Lessee for any damage to the Premises, Lessee's property, Lessee's goodwill, or Lessee's business income, caused in whole or in part by acts of nature including, without limitation, waves, wind and tidal flows. 11.3 This indemnity section shall apply to all claims and liability regardless of whether any insurance policies are applicable. 12. HAZARDOUS SUBSTANCE 12.1 Hazardous Substance means: (i) any substance, product, waste or other material of any nature whatsoever which is or becomes listed, regulated, or addressed pursuant to the Comprehensive Environmental Response, Compensation and Liability Act, 42 U.S.C. Section 9601 et seq. ("CERLCA"); the Hazardous Materials Transportation Act, 49 U.S.C. Section 1801, et seq.; the Resource Conversation and Recovery Act, 42 U.S.C. Section 6901 et seq. ("RCRA"); the Toxic Substances Control Act, 15 U.S.C. Section 2601 et seq.; the Clean Water Act, 33 U.S.C. Section 1251 et seq.; the California Hazardous Waste Control Act, Health and Safety Code Section 25100 et seq.; the California Hazardous Substance Account Act, Health and Safety Code Section 25330 et seq.; the California Safe Drinking Water and Toxic Enforcement Act, Health and Safety Code Section 25249.5 et seq.; California Health and Safety Code Section 25280 et seq. (Underground Storage of Hazardous Substances); the California Hazardous Waste of Concern and Public Safety Act, Health and Safety Code Section 25169.5 et seq.; California Health and Safety Code Sections 25501 et seq. (Hazardous Materials Response Plans and inventory); or the Porter -Cologne Water Quality Control Act, California Water Code Section 13000 et seq., all as they, from time -to -time may be amended or re -codified, (the above -cited statutes are here collectively referred to as the "Hazardous Substance Laws") or any other Federal, State or local statute, law, ordinance, resolution, code, rule, regulation, order or decree regulating, relating to, or imposing liability or standards of conduct concerning any hazardous, toxic or dangerous waste, substance or material, as now or at any time hereafter in effect; (ii) any substance, product, waste or other material of any nature whatsoever which may give rise to liability under any of the above statutes or under any statutory or common law theory, including but not limited to negligence, trespass, intentional tort, nuisance, waste or strict liability or under any reported decisions of a state or federal court; (iii) petroleum or crude oil; and (iv) asbestos. 12.2 From the Effective Date and throughout the Term, Lessee shall not use, occupy, or permit any portion of the Premises or the surrounding area to be used or occupied in violation of any Hazardous Substance Laws. 12.3 Notwithstanding any contrary provision of this Lease, and in addition to the indemnification duties of Lessee set forth elsewhere in this Lease, Lessee shall indemnify, BALBOA ANGLING CLUB Page 9 13-15 defend with counsel reasonably acceptable to Lessor, protect, and hold harmless Lessor and its elected officials, officers, employees, agents, attorneys, volunteers and representatives from and against any and all losses, fines, penalties, claims, demands, obligations, actions, causes of action, suits, costs and expenses (including, without limitation, attorneys' fees, disbursements and court costs), damages, judgments, or liabilities, including, but not limited to, any repair, cleanup, detoxification, or preparation and implementation of any remedial, response, closure or other plan of any kind or nature which the Lessor and its officials, officers, employees, agents, attorneys, volunteers or assigns may sustain or incur, or which may be imposed upon them, in connection with any breach of Lessee's obligations or representations in this Lease or the use of the Premises under this Lease, arising from or attributable to the Lessee Parties (defined below) storage or deposit of Hazardous Substances in violation of applicable laws. This section is intended to operate as an agreement pursuant to Section 107(e) of CERCLA, 42 USC Section 9607(e), and California Health and Safety Code Section 25364, to insure, protect, hold harmless, and indemnify Lessor for any claim pursuant to the Hazardous Substance Laws or the common law. 12.4 Lessee does not, and shall not, authorize any third party to use, generate, manufacture, maintain, permit, store, or dispose of any Hazardous Substances in violation of applicable laws on, under, about or within the Premises. 12.5 Upon expiration or earlier termination of this Lease, Lessee shall deliver possession of the Premises in compliance with Hazardous Substance Laws. 12.6 if during the Term of this Lease, Lessee becomes aware of (i) any actual or threatened release of any Hazardous Substances on, in, under, from, or about the Premises in violation of Hazardous Substance Laws; or (ii) any inquiry, investigation, proceeding, or claim by any government agency or other person regarding the presence of any Hazardous Substances in violation of Hazardous Substance Laws on, in, under, from or about the Premises, Lessee shall give Lessor written notice of the release or inquiry within five (5) days after Lessee becomes aware or first has reason to believe there has been a release or inquiry and shall simultaneously furnish to Lessor copies of any claims, notices of violation, reports, warning or other writings received by Lessee that concern the release or inquiry. 12.7 If the presence of any Hazardous Substances brought onto the Premises by Lessee or Lessee's employees, agents, subtenant, licensees, concessionaires, contractors, or invitees ("Lessee Parties"), or generated by same during the Term of this Lease, results in contamination of the Premises or adjacent properties in violation of Hazardous Substance Laws, Lessee shall promptly take all necessary actions, at Lessee's sole expense, to remove or remediate such Hazardous Substances in full compliance with applicable laws. Lessee shall provide notice to Lessor prior to performing any removal or remedial action. Lessee shall not propose nor agree to any covenant of use restriction as part of any removal or remediation required as a result of this provision without Lessor's written consent. Lessee shall pay any costs Lessor incurs in performing Lessee's obligation to clean-up contamination resulting from Lessee's operations or use of the Premises. BALBOA ANGLING CLUB Page 10 13-16 12.8 Should any clean-up of Hazardous Substances for which Lessee is responsible not be completed prior to the expiration or sooner termination of the Lease, including any extensions thereof, then Lessee shall transfer the amounts required to complete clean-up into an escrow account, together with Lessor -approved instructions for the disbursement of such amount in payment of the costs of any remaining clean-up as it is completed, and (ii) if the nature of the contamination or clean-up required of Lessee is of such a nature as to make the Premises untenable or unleasable, then Lessee shall be liable to Lessor as a holdover lessee until the clean-up has been sufficiently completed to make the Premises suitable for lease to third parties. The estimated cost of the clean- up shall require approval of the Lessor. 12.9 If Lessor determines, in its reasonable discretion, that Lessee does not have insurance or other financial resources sufficient to enable Lessee to fulfill its obligations under this provision, whether or not accrued, liquidated, conditional, or contingent, then Lessee shall, at the request of Lessor, procure and thereafter maintain in full force and effect such environmental impairment liability and/or pollution liability insurance policies and endorsements, or shall otherwise provide such collateral or security reasonably acceptable to Lessor as is appropriate to assure that Lessee will be able to perform its duties and obligations hereunder. 12.10 Lessee's obligations in this Section 12 shall survive the expiration or earlier termination of this Lease. 13. MAINTENANCE 13.1 Lessee Maintenance. Lessee shall maintain and repair all landscaping, buildings and Improvements on the Premises at its sole cost and without expense to Lessor or the State of California. Lessee agrees to maintain the Premises and all improvements constructed thereon in good order and repair, and to keep the Premises in a neat, clean, orderly, safe, and sanitary condition. Lessee's maintenance responsibility includes, but is not limited to, the prevention of accumulation of any refuse or waste materials that might constitute a fire hazard or a public or private nuisance. 13.1.1 Lessee further agrees to (a) repair or replace the outside stringer on the pier platform, immediately east of the gangway, and (b) repair or replace one section of floatation under the finger float that is missing an outer casing that prevents foam from splintering into the water. 13.1.2 Lessee shall be responsible for the repair of any damage caused by Lessee's, Lessee's employees, members, contractors, subcontractors, agents, guests, invitees, subtenants, concessionaires, or licensees. 13.2 Lessor May Elect to Repair and Maintain at Lessee's Expense. If Lessee fails to uphold its maintenance and repair obligations under Section 13, Lessor may perform such maintenance and repairs after giving Lessee written notice and Lessee fails to remedy the deficiency within thirty (30) days, or within 24 hours if the deficiency BALBOA ANGLING CLUB Page 11 13-17 constitutes an emergency. Lessee shall pay on demand any and all sums expended by Lessor in performing such work, together with interest at the legal rate. 13.3 Lessor's Right of Inspection. In addition to Lessor's rights to use the Premises as provided in this Lease, Lessor reserves the right by its authorized agents, employees or representatives to enter the Premises at any time, without notice, to inspect the Premises in order to attend to or protect the Lessor's interest under this Lease. 13.4 Site Walk. Lessor and Lessee shall annually perform a joint inspection of the Premises by July 15th of every year to determine what repairs and maintenance shall be scheduled for the following year. 13.5 Annual Report. Lessee shall provide a written report to Lessor on or before January 30th of every year, providing the following information: 13.5.1 All maintenance, repairs, or other work completed, including the costs incurred thereof, for the prior year. 13.5.2 Both short- and long-term capital improvement project plans and a capital repair and replacement schedule for the Premises. 13.5.3 All programs and services provided, including the number of people served, membership (resident and non-resident), events, classes, certifications with IGFA, revenues and expenses, and any successes or accomplishments of Lessee's programs, for the prior year. 14. ASSIGNMENT Lessee shall not assign, transfer, sublease, mortgage, hypothecate or give any grant of control of this Lease or the Premises, or any part hereof, either voluntarily or involuntarily. 15. RESTORATION 15.1 If during the Term the Premises are totally or partially destroyed, rendering the Premises or any portion thereof totally or partially inaccessible, unusable or are declared unsafe or unfit for use or occupancy by a public entity with the authority to make and enforce such declaration, Lessee shall, at its sole cost and expense, repair, restore, or replace the Premises to substantially the same condition as immediately prior to such destruction, including all trade fixtures, personal property, Improvements and alterations as are installed by Lessee. Any such work of repair, restoration or replacement shall be commenced within one hundred and eighty (180) days after the damage or loss occurs and shall be completed with due diligence, but no later than one (1) year after such work is commenced unless delay is caused by events beyond the control of Lessee. 15.2 Alternatively, Lessee may elect to terminate this Lease by giving written notice of such election to Lessor within sixty (60) days after the date of the occurrence of any casualty if (i) the cost of the restoration exceeds the amount of any insurance BALBOA ANGLING CLUB Page 12 13-18 proceeds available to Lessee, (ii) the damage has been caused by an uninsured casualty or event, or (iii) Lessee reasonably estimates that repairs of the Premises will take more than one hundred and eighty (180) days. Upon such termination, insurance proceeds applicable to the repair, restoration, or replacement of the Premises (excluding Lessee's personal property therein) shall be paid to Lessor, and Lessee shall have no further liability or obligations under this Lease. 16. RESERVED. 17. FORCE MAJEURE; EXTENSIONS OF TIME OF PERFORMANCE 17.1 Force Maieure. Neither Party shall be liable for any failure or delay in performing an obligation under this Lease that is due to any of the following causes: acts of God, war, terrorist act, government -mandated quarantine restrictions, riot, natural catastrophes, Federal or state governmental acts or omissions, national strikes, fire, or explosion (hereinafter each defined as "Force Majeure"), provided that the Force Majeure is unforeseeable, beyond the control of, and not due to the fault or negligence of the Party claiming the Force Majeure. For the avoidance of doubt, Force Majeure shall not include (a) any epidemic, pandemic, or government mandated quarantine restriction; (b) financial distress or the inability of either Party to make a profit or avoid a financial loss, (c) changes in the market prices or conditions, (d) a Party's financial inability to perform its obligations hereunder, (e) maintenance and repair of the Premises as required by Lessee under this Lease; (f) disruption of utilities; (g) limited or no bay access to the Premises not caused by Lessee; and (h) other causes beyond the control of Lessee that prevents Lessee from operating the Premises totally or materially. Lessee shall be prevented from operating the Premises totally or "materially" (which is defined as causing Lessee's revenue dropping by more than fifty percent (50%) over a twelve (12) month period as compared to club revenue prior to such event during such same time span. 17.2. Notice; Excuse or Delay in Performance. A Party claiming Force Majeure shall promptly notify the other Party in writing, no later than fifteen (15) calendar days after the commencement of delay or inability to perform, and the Party shall continue with reasonable diligence in an effort to limit the period of such Force Majeure nonperformance or delay. A Party's excuse from failure or delay in performing an obligation under this Lease due to Force Majeure shall only be to the extent caused by the Force Majeure and shall not be any longer than the period commencing from when the requisite written notice is given and ending when the Party is no longer delayed or prevented from performing on account of the Force Majeure. Time of performance under this Lease may also be extended in writing by City and Lessee. 18. DEFAULT AND TERMINATION OF LEASE 18.1. Default; Material Breach. The occurrence of any one (1) or more of the following events shall constitute a default and material breach of this Lease by Lessee (each defined as a "Lessee Default"): BALBOA ANGLING CLUB Page 13 13-19 18.1.1. Keeping the Premises in good order and repair, and in a neat, clean, orderly, safe and sanitary condition; 18.1.2. Maintaining the Premises in compliance with any applicable provisions of the City's charter, municipal code and zoning code, state or federal law; 18.1.3. Payment of Rent at the time and in the amount herein required; 18.1.4. Section 8, Section 13, Section 15, or Section 20; 18.1.5. The vacating or abandonment of the Premises by Lessee for a period of thirty (30) successive days, without the prior written approval of Lessor or its authorized representative, excluding closures during periods of casualty, condemnation or permitted closures set forth in this Lease; 18.1.6. The appointment of a trustee or receiver to take possession of substantially all of Lessee's assets located at the Premises or of Lessee's interest in this Lease, where such appointment is not discharged within sixty (60) days; or 18.1.7. Providing and maintaining valid proof of insurance coverage as required in Section 10. 18.2 Remedies. Lessee's failure to comply with any of the foregoing terms, covenants, or conditions and subsequent failure to (i) remedy such default within fourteen (14) days of a written notice from Lessor to do so, if the default may be cured by the payment of money, (ii) remedy any default of Section 18.1.1 that presents a life safety issue within fourteen (14) days of Lessor's written notice, or (iii) commence in good faith to remedy any other default within thirty (30) days of Lessor's written notice and thereafter diligently prosecute the same to completion shall constitute a material breach of this Lease. Lessee's abandonment or vacating of the Premises for more than thirty (30) days other than for periods of repair or remodel that have been approved in advance by Lessor shall also constitute a material breach. Upon a material breach by Lessee, Lessor may, without further notice or demand, terminate this Lease and enter upon the Premises and take possession thereof, and remove any and all persons therefrom in the appropriate manner provided by law. 18.2.1 Re-entry Without Termination. Lessor may re-enter the Premises, and, without terminating this Lease, re -let all or a portion of the Premises. Lessor may execute any agreements made under this provision in Lessor's name and shall be entitled to all rents from the use, operation, or occupancy of the Premises. Lessee shall nevertheless pay to Lessor on the dates specified in this Lease the equivalent of all sums required of Lessee under this Lease, plus Lessor's expenses in conjunction with re -letting, less the proceeds of any re -letting or attornment. No act by or on behalf of Lessor under BALBOA ANGLING CLUB Page 14 13-20 this provision shall constitute a termination of this Lease unless Lessor gives Lessee specific written notice of termination. 18.2.2 Termination. Lessor may terminate this Lease by giving Lessee written notice of termination with a specified termination date. 18.2.3 Lessor's Right to Cure Lessee's Default. Upon continuance of any Lessee Default beyond applicable notice and cure periods, Lessor may, but is not obligated to, cure such Lessee Default at Lessee's cost. If Lessor pays any money or performs any act required of, but not paid or performed by, Lessee after notice, the payment and/or the reasonable cost of performance shall be due as Additional Rent not later than ten (10) days after service of a written demand accompanied by supporting documentation upon Lessee. No such payment or act shall constitute a Lessor waiver of such Lessee Default or of any remedy for such Lessee Default or render Lessor liable for any loss or damage resulting from such Lessor performance. 18.2.4 Use of Lessee's Personal Property. In the event of Lessee Default past applicable notice and cure periods, subject to the right of lien holders and the owners of boats then on the Premises to each remove such lien items and boats, as applicable, Lessor may use Lessee's personal property and trade fixtures in which Lessee has an ownership interest located on the Premises and subject also to the rights of any Lessee lien holder with a non -disturbance agreement with Lessor regarding Lessee personal property, or any of such property and fixtures without compensation or liability to Lessee for use or damage. In the alternative Lessor may store the property and fixtures at the cost of Lessee. Lessor shall not operate, or allow any other person or entity to operate under the same or similar trade name as the Lessee. 18.3 Surrender of Possession upon Expiration or Termination. Lessee covenants and agrees that upon the expiration or sooner termination of this Lease, the Lessee will peaceably surrender the Premises with all buildings and improvements, in the same condition as when received or constructed, excepting reasonable use and wear thereof or the ordinary effects of the elements. Any improvements built, constructed or placed upon the Premises by the Lessee (excluding Lessee's fixtures, equipment, furniture, and moveable decorations), or anyone holding by, under, or through it, shall remain on the Premises and become the property of the Lessor without any cost to Lessor upon the expiration or termination of this Lease, whether by lapse of time or by reason of default, unless, at its sole and absolute discretion, Lessor requires Lessee to remove some or all improvements on the Premises within sixty (60) days following the expiration or termination of this Lease. The provisions of this section shall be effective upon expiration or termination of this Lease regardless of whether Lessee holds over under the provisions of Section 2.4. BALBOA ANGLING CLUB Page 15 13-21 18.4 Remedies Cumulative. The rights, powers, elections and remedies of the Lessor contained in this Lease shall be construed as cumulative and no one of them shall be considered exclusive of the other or exclusive of any rights or remedies allowed by law, and the exercise of one or more rights, powers, elections or remedies shall not impair or be deemed a waiver of Lessor's right to exercise any other. 18.5 Waiver of Rights. Lessee waives any right of redemption or relief from forfeiture under California Code of Civil Procedure Sections 1174 or 1179, or under any other present or future law, in the event Lessee is evicted or Lessor takes possession of the Premises by reason of any Lessee Default. 19. EMINENT DOMAIN 19.1 In the event the whole or part of the Premises is condemned by a public entity in the lawful exercise of the power of eminent domain, this Lease shall cease as to the part condemned upon the date possession of that part is taken by the public entity. 19.2 If only a part is condemned and the taking of that part does not substantially impair the capacity of the remainder to be used for the purposes required in this Lease, Lessee shall continue to be bound by the terms, covenants and conditions of this Lease with respect to the remainder of the Premises. 19.3 If only a part is condemned and the taking of that part substantially impairs the capacity of the remainder to be used for the purposes required in this Lease, Lessee may terminate the Lease and be absolved of obligations hereunder which have not accrued as the date possession is taken by the public entity. If Lessee fails to give notice of its intent to terminate hereunder, within thirty (30) days of the date possession of the part is taken by the public entity, then Lessee shall continue to occupy the remainder of the Premises and remain bound by the terms, covenants and conditions of this Lease. 19.4 Lessor shall be entitled to receive and shall receive all compensation for the condemnation of all or any portion of the Premises by exercise of eminent domain. 19.5 Lessee shall be entitled to receive and shall receive all compensation for the condemnation of all or any portion of the improvements constructed by Lessee on the Premises by the exercise of eminent domain. 20. UNLAWFUL USE 20.1 Lessee agrees that no improvement shall be erected, constructed or operated on the Premises, nor any business conducted on the Premises, in violation of the terms of this Lease or of any regulation, order, law, statute, bylaw, charter provision, or ordinance of any governmental agency having jurisdiction. 20.2 Lessee shall not construct, maintain, or allow any sign upon the Premises or Property, or improvements thereon, except as approved in writing by Lessor, and further, such sign must be in compliance with the provisions of the Newport Beach Municipal Code. BALBOA ANGLING CLUB Page 16 13-22 20.3 Lessee shall not discriminate against any person or class of persons by reason of race, religious creed, color, national origin, ancestry, age, physical disability, mental disability, medical condition, including the medical condition of Acquired Immune Deficiency Syndrome (AIDS) or any condition related thereto, marital status, sex, sexual orientation or any other impermissible basis under the law. Lessee shall make all of its services, programs and facilities available to the public on fair and reasonable terms. 20.4 The Premises is accepted "as is, where is" by Lessee, subject to any and all existing easements and encumbrances. Lessor reserves the right to install, lay, construct, maintain, repair and operate such sanitary sewers, drains, storm water sewers, pipelines, manholes and connections; water, oil and gas pipelines; telephone and telegraph power lines and the appliances and appurtenances necessary or convenient in connection therewith in, over, upon, through, across and along the Premises or any part thereof, and to enter the Premises for any and all such purposes. Lessor also reserves the right to grant franchises, easements, rights -of -way and permits in, over, upon, through, across and along any and all portions of the Premises. No right reserved by Lessor in this clause shall be so exercised as to interfere unreasonably with Lessee's operations hereunder or to impair the security of any secured creditor of Lessee. 21. TERMINATION OF EXISTING LEASE Concurrently with execution of this Lease by the Parties, the Existing Lease is hereby terminated. 22. NOTICES All notices pursuant to this Lease shall be deemed given when personally delivered or deposited in the United States mail, first class postage prepaid, and addressed as follows: Lessor: City of Newport Beach Attention: Real Property Administrator 100 Civic Center Drive Newport Beach, CA 92660 Lessee: Balboa Angling Club Attention: President 200 A Street Newport Beach, CA 92661 23. MEMORANDUM OF LEASE A Memorandum of Lease Agreement ("Memorandum"), in a form and content similar to that contained in Exhibit "E," which is attached hereto and incorporated herein by reference, shall be recorded by the parties promptly upon execution of this Lease in the Office of the Orange County Clerk -Recorder, as required by Government Code Section 37393. BALBOA ANGLING CLUB Page 17 13-23 24. COMPLIANCE WITH ALL LAWS Lessee shall at its own cost and expense comply with all statutes, ordinances, regulations and requirements of all governmental entities, including federal, state, county or municipal, whether now in force or hereinafter enacted. In addition, all work prepared by Lessee shall conform to applicable city, county, state and federal laws, rules, regulations and permit requirements and be subject to approval of the City Manager or their designee. 25. WAIVER The waiver by Lessor or Lessee of any breach of this Lease by the other shall not be deemed to be a waiver of any term, covenant, or condition or any subsequent breach. The acceptance of Rent by Lessor shall not be deemed a waiver of any breach by Lessee other than the failure to pay the particular rent accepted. 26. PARTIAL INVALIDITY If any term or provision of this Lease is declared invalid or unenforceable, the remainder of this Lease shall not be affected. 27. GOVERNING LAW The laws of the State of California shall govern this Lease and all matters relating to it and any action brought relating to this Lease shall be adjudicated in a court of competent jurisdiction in the County of Orange, State of California. Neither Lessor's execution of this Lease nor any consent or approval given by the City of Newport Beach in its capacity as landlord shall affect the City of Newport Beach's powers and duties as a governmental body. Any consent or approval Lessee is required to obtain from Lessor pursuant to this Lease is in addition to any permits or approvals Lessee is required to obtain pursuant to law or ordinance. However, Lessor shall attempt to coordinate its procedures for giving contractual and governmental approvals so that Lessee's requests and applications are not unreasonably denied or delayed. 28. ENTIRE AGREEMENT; MODIFICATION This Lease contains the entire agreement between the Parties. No oral agreement or implied covenant shall be held to vary the provisions of this Lease. Each Party has relied on its own investigation of the Premises and examination of this Lease, the counsel of its own attorney or other advisors, and has a complete understanding of the overall warranties, representations, and covenants in this Lease. The failure or refusal of either Party to inspect the Premises, to read this Lease or other documents, or to obtain legal or other advice relevant to this transaction shall not be the basis for later claim that all or part of this Lease is not enforceable or was not understood by a Party when this Lease was signed. No provision of this Lease may be amended or varied except by an agreement in writing signed by the Parties or their respective successors. BALBOA ANGLING CLUB Page 18 13-24 29. TIME IS OF THE ESSENCE Time is of the essence with respect to the performance of every provision of this Lease in which time of performance is a factor. All time deadlines are meant to be strictly construed. A "day" as used in this Lease means a calendar day, and any deadline that occurs on a weekend or day when banks are not open in California shall be extended to the next calendar day. 30. SUCCESSORS Subject to the provisions of this Lease on assignment and subletting, each and all of the covenants and conditions of this Lease 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 Lease 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 Lease or any other rule of construction which might otherwise apply. 32. HEADINGS The captions of the various sections of this Lease are for convenience and ease of reference only and do not define, limit augment, or describe the scope, content, or intent of this Lease. 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 Lease, and that no commission, fee or other compensation is owed regarding this Lease 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 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 Lease are incorporated by reference. Any reference to "this Lease" includes matters incorporated by reference. BALBOA ANGLING CLUB Page 19 13-25 36. CITY BUSINESS LICENSE Lessee shall obtain and maintain during the duration of this Lease, a City business license as required by the Newport Beach Municipal Code. 37. NO ATTORNEY'S FEES The prevailing party in any action brought to enforce the terms and conditions of this Lease, or arising out of the performance of this Lease, shall not be entitled to recover its attorney's fees. 38. NONDISCRIMINATION Lessee, for itself and its successors, agrees that in the performance under this Lease, Lessee shall not discriminate against any person because of the marital status or ancestry of that person or any characteristic listed or defined in Section 11135 of the California Government Code. 39. NO THIRD -PARTY BENEFICIARIES City of Newport Beach (both as a Lessor and as the City of Newport Beach) and Lessee do not intend, by any provision of this Lease, to create in any third party, any benefit or right owed by one party, under the terms and conditions of this Lease, to the other party. 40. NO DAMAGES Lessee acknowledges that Lessor would not enter this Lease 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 Lease or any of the matters referred to in this Lease, including, without limitation, any and all plans, permits, licenses or regulatory approvals, and CEQA documents. Accordingly, Lessee covenants and agrees on behalf of itself and its successors and assigns, not to sue the City of Newport Beach (either in its capacity as lessor in this Lease 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 Lease by Lessor or for any dispute, controversy, or issue between Lessor and Lessee arising out of or connected with this Lease or any of the matters referred to in this Lease, including, without limitation, any and all plans, permits, licenses or regulatory approvals, CEQA documents, or any future amendments or enactments thereto, the parties agreeing that declaratory relief, injunctive relief, mandate and specific performance shall be Lessee's sole and exclusive judicial remedies. BALBOA ANGLING CLUB Page 20 13-26 41. GOVERNMENT CLAIMS ACT Lessee and Lessor agree that in addition to any claims filing or notice requirements in this Lease, Lessee shall file any claim that Lessee may have against Lessor in strict conformance with the Government Claims Act (California Government Code sections 900 et seq.), or any successor statute. 42. COUNTERPARTS This Lease may be executed in two (2) or more counterparts, each of which shall be deemed an original and all of which together shall constitute one (1) and the same instrument. [SIGNATURES ON NEXT PAGE] BALBOA ANGLING CLUB Page 21 13-27 IN WITNESS WHEREOF, we have executed this Lease as of the day and year written below. APPROVED AS TO FORM: CITY ATTORNEY'S OFFICE Date: 4id 5 By: — C-.—, 4;:!� Aaro . Harp City mey ATTEST: Date: in Leilani 1. Brown City Clerk Attachments: Exhibit A: Exhibit B: Exhibit C: Exhibit D: Exhibit E: LESSOR: CITY OF NEWPORT BEACH, a California municipal corporation Date: By: Grace K. Leung City Manager LESSEE: BALBOA ANGLING CLUB, a California nonprofit corporation Date - By: Jimmy Decker Chief Executive Officer Date: By. - David DuBois Chief Financial Officer [END OF SIGNATURES] Legal Description of Property Depiction of Property Depiction of Premises Insurance Requirements Memorandum of Lease BALBOA ANGLING CLUB Page 22 13-28 IN WITNESS WHEREOF, we have executed this Lease as of the day and year written below. APPROVED AS TO FORM: CITY ATTORNEY'S OFFICE Date:, 5 f By: _ L== 44s� Aaro . Harp Lk s .-Afl� City AVorney ATTEST: Date: By; Leilani I, Brown City Clerk Attachments: Exhibit A; Exhibit B: Exhibit C; Exhibit D: Exhibit E: LESSOR: CITY OF NEWPORT BEACH, a California municipal corporation Date: By: Grace K. Leung City Manager LESSEE: BALBOA ANGLING CLUB, a California nonprofit corporation Date: By' immy r Chief Ex tive Officer Date: By: David DuBois Chief Financial Officer [END OF SIGNATURES] Legal Description of Property Depiction of Property Depiction of Premises Insurance Requirements Memorandum of Lease BALBOA ANGLING CLUB Page 22 13-29 EXHIBIT A LEGAL DESCRIPTION OF PROPERTY All land within the northerly prolongation of A Street, as shown on a map of Balboa Tract, recorded in Map Book 4, Page 11, records of Orange County, California, and lying between the northerly line of Bay Avenue, as shown upon said map and the pierhead line as established by United States Government Engineers. APN 048-133-16 BALBOA ANGLING CLUB Page A-1 13-30 EXHIBIT B DEPICTION OF PROPERTY BALBOA ANGLING CLUB Page B-1 13-31 13-32 EXHIBIT C DEPICTION OF PREMISES BALBOA ANGLING CLUB Page C-1 13-33 13-34 EXHIBIT D INSURANCE REQUIREMENTS Without limiting the Lessee's indemnification of Lessor, Lessee shall procure and maintain in full force and effect 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 Lessor. Lessor reserves the right to modify these requirements, including limits, based on the nature of the risk, prior experience, insurer, coverage, passage of time, or other special circumstances. if the existing policies do not meet the insurance requirements set forth herein, Lessee agrees to amend, supplement, or endorse the policies to do so. 1. Minimum Scope and Limit of Insurance. A. Workers' Compensation insurance with statutory limits and Employer's Liability Insurance with a limit of at least one million dollars ($1,000,000) each accident for bodily injury and each employee for disease. U.S. Longshoremen's and Harbor Workers' Act (USL&H) shall be required for employees performing services covered by said Act. Lessee shall submit to Lessor, along with a certificate of insurance, a waiver of subrogation endorsement in favor of the Lessee, City of Newport Beach, its City Council, boards and commissions, officers, agents, volunteers, employees. B. Commercial General Liability/Marine General Liability at least as broad as Insurance Services Office "occurrence" form CG 00 01 covering land and waterborne exposures including but not limited to coverage for bodily injury and property damage, products and completed operations, contractual liability, personal and advertising injury, independent contractors, and defense costs, in an amount not less than three million dollars ($3,000,000) per occurrence and five million dollars ($5,000,000) general aggregate. Lessee shall procure, maintain, and submit to Lessor evidence of Products - Completed Operations coverage for a period of three (3) years from the time the Agreement is terminated. If Lessee offers programs for children and such programs are operated by Lessee's staff and/or volunteers without parental or guardian attendance or supervision, the policy shall be endorsed to include affirmative coverage for Sexual Abuse/Molestation, or a separate policy shall be obtained with a limit of not less than one million dollars ($1,000,000) per occurrence and three million dollars ($3,000,000) general aggregate. Lessee shall submit to Lessor, along with a certificate of insurance, additional coverage as stated in Section 2. Endorsements. BALBOA ANGLING CLUB Page D-1 13-35 C. Automobile Liability Insurance with coverage at least as broad as Insurance Services Office Form CA 00 01 covering any auto (Code 1), or if Lessee has no owned autos, coverage for hired autos (Code 8) and non -owned autos (Code 9) with limit no less than one million dollars ($1,000,000) each accident for bodily injury and property damage. Lessee shall submit to Lessor, along with a certificate of insurance, additional coverage as stated in Section 2. Endorsements. D. Watercraft Liability including Protection and Indemnity with minimum limits of five million dollars ($5,000,000) each occurrence and in the aggregate, Jones Act for employees performing services under said Act, and Water Pollution Liability. Water Pollution Liability shall be provided for both sudden and accidental and gradual and continuous pollution events with limits no less than five million dollars ($5,000,000) each loss and in the aggregate. The policy shall not exclude any hazardous materials for which there is exposure. Lessee shall submit to Lessor, along with a certificate of insurance, additional coverage as stated in Section 2. Endorsements. E. Property Insurance coverage shall be maintained on an "All Risk" basis equal to the full replacement cost of Premises, including docks and piers with no coinsurance clause. Lessee shall be solely responsible for the payment of any deductible. Lessee shall submit to Lessor, along with a certificate of insurance, additional coverage as stated in Section 2. Endorsements. F. Builder's Risk Insurance during construction, alteration or any improvements on Premises, Lessee shall maintain Builder's Risk insurance with no coinsurance clause to cover "All Risk" of physical loss including coverage for loss or damage from collapse and all property stored off -site or in transit. The value insured shall cover 100% of the completed contract cost and include Boiler & Machinery and soft costs and shall be maintained until full acceptance of completed work. Lessee shall be solely responsible for the payment of any deductible. G. Excess/Umbrella Liability Insurance shall be "following form" of the underlying policy coverage, terms, conditions, and provisions and shall meet all the insurance requirements stated in this Agreement, including, but not limited to the additional insured, primary & non-contributory and waiver of subrogation insurance requirements stated herein. No insurance policies or self-insurance maintained by the Lessor, whether primary, reinsurance or excess, and which also apply to a loss covered hereunder, shall be called BALBOA ANGLING CLUB Page D-2 13-36 upon to contribute to a loss until Lessee's primary and excess/umbrella liability policies are exhausted. Lessor requires and shall be entitled to Lessee's broader coverage and/or the higher limits if Lessee maintains broader coverage and/or higher limits than the minimums shown above. Any available insurance proceeds excess of the specified minimum limits of insurance and coverage shall be available to the Lessor. 2. Endorsements. Policies shall not comply if they include any limiting provision or endorsement contrary to this Agreement, including but not limited to restricting coverage to the sole liability of Lessee or excluding contractual liability. Policies shall contain or be endorsed to contain the following provisions: A. Additional Insured. The Lessor, City of Newport Beach, its City Council, boards and commissions, officers, agents, volunteers, and employees shall be covered as additional insureds with regard to liability and defense of suits or claims arising out of the activities, work or operations performed by or on behalf of the Lessee including materials, parts or equipment furnished in connection with such work or operations on all liability policies. Additional insured endorsements shall be at least as broad as ISO Form(s) CG 20 10 11 85; or both CG 20 10 or CG 20 26, and CG 20 37. B. Primary and Non -Contributory. All liability policies shall be primary to and will not seek contribution from any other insurance whether primary, excess, umbrella, or contingent insurance, including deductible, or self-insurance available to the Lessor, City of Newport Beach, its City Council, boards and commissions, officers, agents, volunteers, and employees for all liability policies. The primary endorsements shall be at least as broad as ISO CG 20 01 04 13. C. Waiver of Subrogation. All insurance policies shall contain or be endorsed to waive subrogation against Lessor, City of Newport Beach, its City Council, boards and commissions, officers, agents, volunteers, and employees. Lessee hereby waives its own right of recovery against Lessor and shall require similar written express waivers from each of its consultants, contractors, or subcontractors. This provision applies regardless of whether the City has received a waiver of subrogation endorsement from the insurer. D. Loss Payee. Losses payable under the Property and Builder's Risk Insurance policies shall be paid to the Lessor as its interests may appear. 3. Additional Agreements Between the Parties. BALBOA ANGLING CLUB Page D-3 13-37 A. General Obligations. in the event Lessor determines that (i) the Lessee's activities on the Premises creates an increased or decreased risk of loss to the Lessor, (ii) greater insurance coverage is required due to the passage of time, or (iii) changes in the industry require different coverage be obtained, Lessee agrees that the minimum types and limits of any insurance policy required to be obtained by Lessee or Lessee's consultants, contractors, or subcontractors, may be changed accordingly upon receipt of written notice from Lessor. With respect to changes in insurance requirements that are available from Lessee's then -existing insurance carrier, Lessee shall deposit certificates and endorsements evidencing acceptable insurance policies with Lessor 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 Lessee's then existing insurance carrier, Lessee shall deposit certificates evidencing acceptable insurance policies with Lessor, incorporating such changes, within ninety (90) calendar days of receipt of such notice. B. Use of Premises. Lessee 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 coverage for the Premises or adjoining property. Lessee further agrees not to keep on the Premises or permit to be kept, used, or sold thereon, anything prohibited by any insurance policy covering the Premises. Lessee shall, at its sole expense, comply with all reasonable requirements for maintaining the required insurance coverage on the Premises. C. Evidence of Insurance. All policies, endorsements, certificates, and/or binders shall be subject to approval by the Lessor as to form and content. These requirements are subject to amendment or waiver only if approved in writing by the Lessor. The Lessor reserves the right to require complete, certified copies of all required insurance policies, including endorsements required by these specifications, at any time. The certificates and endorsements for each insurance policy shall be signed by a person authorized by that insurer to bind coverage on its behalf. At least fifteen (15) days prior to the expiration of any such policy, evidence of insurance showing that such insurance coverage has been renewed or extended shall be filed with the Lessor. If such coverage is cancelled or reduced, Lessee shall, within ten (10) days after receipt of written notice of such cancellation or reduction of coverage, file with the Lessor evidence of insurance showing that the required insurance has been reinstated or has been provided through another insurance company or companies. D. Acceptability of insurers. Each such policy shall be from a company or companies with a current A.M. Best's rating of no less than A-:VII and authorized to do business in the State of California, or otherwise allowed to place insurance through surplus line brokers under applicable provisions of BALBOA ANGLING CLUB Page D-4 13-38 the California Insurance Code or any federal law or otherwise or approved by the Lessor's Risk Manager. E. Notice of Cancellation. All insurance policies shall contain or be endorsed to provide that the insurance required by this Agreement shall not be suspended, voided, canceled, or reduced in coverage or in limits until thirty (30) days written notice has been served upon the Lessor, except ten (10) days for non-payment of premium. It is Lessee's obligation to ensure that provisions for such notice have been established. F. Self -Insured Retentions. Self -insured retentions (SiR's) must be declared to and approved by Lessor. Lessor may require Lessee to purchase coverage with a lower retention or provide proof of ability to pay losses and related investigations, claim administration, and defense expenses within the SIR. The policy language shall provide, or be endorsed to provide, that the SIR may be satisfied by either the named insured or Lessor. Self - insured retentions shall be the sole responsibility of Lessee, or subcontractor who procured such insurance. Lessor may deduct from any amounts otherwise due Lessee to fund the SiR. The policy must also provide that defense costs, including the allocated loss adjustment expenses, will satisfy the SIR. G. Contractual Liability. The policy shall cover liability assumed under an insured contract, including the tort liability of another assumed in a business contract, with no endorsement or modification limiting the scope of coverage for liability assumed under contract. H. Reporting Requirements. Lessee shall give Lessor prompt and timely notice of any claim made or suit instituted arising out of or resulting from Lessee or Lessee's agents, representatives, consultants, contractors, or subcontractors' performance under this Agreement. I. Subcontractors. Lessee shall be responsible for causing consultants, contractors and/or subcontractors to purchase the same types and limits of insurance in compliance with the terms of this Agreement, including adding the City as an additional insured, providing primary and non-contributory coverage and waiver of subrogation to the subcontractor's policies, and meeting the following requirements: Commercial General Liability/Marine Liability Endorsements. For Commercial General Liability/Marine General Liability coverages, contractors, consultants and/or subcontractors shall provide coverage with a format at least as broad as provided by Insurance Services Office form CG 20 38 04 13. Unless written approval is granted by Lessor, contractors and/or subcontractors shall also BALBOA ANGLING CLUB Page D-5 13-39 provide an additional insured endorsement at least as broad as ISO Form CG 40 12 19. 2. Completed Operations. Lessee shall require and verify that Lessee's construction contractors and subcontractors maintain commercial general liability insurance, including products -completed operations, for a period of at least five (5) years from the time that all work is completed. 3. Design Professionals. Lessee shall require that Lessee's consultants, contractors and/or subcontractors providing any design, engineering, surveying, or architectural services for the Premises maintain professional liability insurance that covers the services to be performed, in the minimum amount of two million dollars ($2,000,000) each claim and four million dollars ($4,000,000) in the aggregate. Any policy inception date, continuity date, or retroactive date and all subsequent insurance shall coincide or be effective on the first Agreement for Lease of Premises. Lessee shall require that Lessee's consultants, contractors and/or subcontractors agree to maintain continuous coverage through a period of no less than five (5) years after completion of the services performed. 4. Failure to Maintain Insurance. If Lessee or Lessee's consultants, contractors or subcontractors fail or refuse to maintain insurance as required in this Agreement, or fail to provide proof of insurance, Lessor has the right to declare this Agreement in default without further notice to Lessee, and Lessor shall be entitled to exercise all available remedies. BALBOA ANGLING CLUB Page D-6 13-40 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 §§ 6103 & 273831 MEMORANDUM OF LEASE AGREEMENT This Memorandum of Lease Agreement ("Memorandum") is dated , 2024, and is made between City of Newport Beach, a California municipal corporation and charter city ("Lessor" or "City") and Balboa Angling Club, a California non-profit corporation ("Lessee"), concerning the premises described and depicted in Exhibit 1," attached hereto and by this reference made a part hereof ("Premises"). For good and adequate consideration, Lessor leases the Premises to Lessee, and Lessee hires them from Lessor, for the term and on the provisions contained in the Lease Agreement dated , 2024 ("Agreement"), including without limitation provisions prohibiting assignment, subleasing, and encumbering said leasehold without the express written consent of Lessor 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 twenty (20) years, beginning 2024, and ending , 2024, and two (2) additional successive "Option Terms" of five (5) years each, on the same terms and conditions contained in the Agreement as it may be amended from time to time. 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 shall control. Execution hereof constitutes execution of the Agreement itself. Assessor's Parcel Number 048-133-16 [Signatures on the next page] BALBOA ANGLING CLUB Page E-1 13-41 LESSOR CITY OF NEWPORT BEACH, a California municipal corporation and charter city Grace K. Leung City Manager ATTEST: Leilani 1. Brown City Clerk APPROVED AS TO FORM: Aaron C. Harp City Attorney LESSEE BALBOA ANGLING CLUB, a California non-profit corporation Jimmy Decker Chief Executive Officer David DuBois Chief Financial Officer Attachment(s): Exhibit 1 — Property Legal Description and Depiction BALBOA ANGLING CLUB Page E-2 13-42 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 hand 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) 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 hand and official seal. Signature (seal) BALBOA ANGLING CLUB Page E-3 13-43 EXHIBIT "1" DESCRIPTION AND DEPICTION OF PREMISES BALBOA ANGLING CLUB Page E-4 13-44 LEGAL DESCRIPTION OF PROPERTY All land within the northerly prolongation of A Street, as shown on a map of Balboa Tract, recorded in Map Book 4, Page 11, records of Orange County, California, and lying between the northerly line of Bay Avenue, as shown upon said map and the pierhead line as established by United States Government Engineers. APN 048-133-16 13-45 Depiction of Premises 13-46 Attachment B Map 13-47 13-48 13-49 Attachment C City Council Policy F-7, Income and Other Property 13-50 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. 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. 13-51 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: 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. 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. 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. 13-52 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 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: 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. History Adopted F-24 — 7-27-1992 Amended F-24 — 1-24-1994 Amended F-7 — 2-27-1995 Amended F-7 — 2-24-1997 Amended F-7 — 5-26-1998 Amended F-7 — 8-11-2009 Amended F-7 — 5-14-2013 Amended F-7 — 2-12-2019 Amended F-7 — 11-14-2023 13-53