HomeMy WebLinkAboutC-519(D) - West Coast Highway, 1221 (Balboa Bay Resort) - Memorandum of Understanding 1985050385
MEMORANDUM OF UNDERSTANDING
This Memorandum of Understanding ("h1OU") is entered
into on June 10, 1985, by and between the City of Newport
Beach ("City") and International Bay Clubs, Incorporated
("Club"), with reference to the following facts
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A. In March, 1948, Club's predecessors in interest
leased from City certain City tidelands and adjoining
City -owned uplands generally referred to as the Balboa Bay
Club property and facilities ("BBC Site") for a period of
fifty (50) years ("Lease") .
B. Under the terms of the Lease, Club is required to
pay City a percentage of the gross operating revenues.
Club is also obligated to expend funds for repairs and
maintenance of the facilities during the last ten (10)
years of the Lease in an amount equal to the average
expenditures for repairs and maintenance made during the
twentieth (20th) through fortieth (40th) years of the
Lease.
C. Club has in the past and desires to continue in
the future to spend significant funds for upgrading, main-
tenance, and repair of the facilities. Club cannot, how-
ever, justify such expenditures so long as the future of
the BBC Site remains uncertain and if such expenditures
could unfairly be used against the Club to increase its
obligation for maintenance and repairs of the BBC Site
during the last ten (10) years of the Lease.
D. Club and.City deem it desirable for Club to
continue to spend significant funds for maintenance and
improvements in order to both enhance the BBC Site and
increase the amount of rent paid to City.
E. The increased level of maintenance and improve-
ment expenditures combined with a shortening Lease term
have imposed economic and planning restrictions on the
Club. This has led to the Club's request that the City
Council appoint an Ad Hoc Committee to study the need for
a Lease extension.
F. The City Council has appointed such a committee
and representatives of the City and Club have met from time
to time to review a possible Lease extension under terms
which would be in the mutual best interests of the City and
Club.
G. City and Club desire to reach an understanding
regarding the terms and conditions under which the City
would approve such Lease extension.
THEREFORE, the following sets forth the understanding
between the parties regarding the extension of the Lease
between Club and City for the BBC Site.
1. During the period of this MOU and prior to
execution of a Lease extension by City as provided herein,
City shall conduct economic and other studies to determine
the fair market rental income to be paid to the City for
any Lease extension of the BBC site as well as other con-
ditions to be included in a Lease extension.
2. During the period of this MOU and prior to execu-
tion of a Lease extension, Club agrees to continue the
existing level of maintenance and repair of the BBC Site
regardless of any limitations on those expenditures as may
be.provided in the existing Lease and pay City a guaranteed
minimum percentage rent equal to no less than the average
percentage rent payments made by Club to City during the
calendar year of 1984.
3. At such time as the City and Club mutually agree
upon the terms and conditions of a Lease extension, City
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and Club shall execute an appropriate instrument approving
an extension to the term of the existing Lease totaling a
period of twenty-five (25) years and incorporating therein
a new rental rate and any other provisions as mutually
agreed to. Said Lease extension shall be reviewed by the
State Lands Commission.
4. Upon execution of the Lease extension as provided
in this MOU, City and Club shall cooperate and work
together on a comprehensive plan for redevelopment of the
BBC Site. As part of that comprehensive plan of redevelop-
ment, Club shall:
a. Prepare a master plan consistent with the
City's General Plan and Land Use Element;
b. Conduct the necessary environmental studies
for development of the BBC Site in accordance with the
master plan and in compliance with the California Environ-
mental Quality Act;
C. Participate in appropriate public hearings
for the purpose of gaining community input and consensus
relative to approval of the master plan concept and spe-
cific land use; and
d. Review the master plan with the California
Coastal Commission and obtain approval in concept of the
master plan from that Commission.
5. It is acknowledged that implementation of a
comprehesive plan of redevelopment of the BBC Site may
extend over a significant period of time. It is further
acknowledged that such implementation may necessitate
substantial immediate and long-term financial commitments
by the Club requiring amortizing the return on capital
investment over a period beyond twenty-five (25) years. It
is, therefore, understood that when the Club complies with
conditions (a) through (d) of Paragraph 4 of this MOU, a
further Lease extension may be sought by the Club consis-
tent with the financing requirements associated with
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implementation of the BBC master redevelopment plan and the
Charter of the City of Newport Beach. City agrees to con-
sider such further Lease extension under terms and condi-
tions to be mutually agreed upon at that time.
IN WITNESS WHEREOF, the undersigned have executed this
Memorandum of Understanding as of the day and year first
above written.
ATTEST TO:
City Clerk
CIT 'O ,NEWPORT BEACH
B
Mayor
INTERNATIONAL BAY CLUBS,
INCORPORATED
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HISTORICAL DATA SHEET
1.
Lease Duration:
50 years from September 1, 1948 to August
31, 1998.
2.
Source of City's Title:
Grant Deed from The Irvine Company, and
tidelands granted in trust to the City of
Newport Beach.
3.
Approximate Area:
14.15 acres with 1,574.84 feet of water
frontage and 1,672.0 feet of street
frontage.
4.
Purpose of Lease:
Any purpose not prohibited by law other
than industrial purposes.
5.
Rental or Compensation:
5% of gross operating revenues of the first
$750,000; 4% of the gross operating revenues
between $750,000 and $1 million; 3% of
gross operating revenues in excess of
$1 million plus a percentage as mutually
agreed upon for all sub -rentals. The per-
centage rental is payable on or before 60
days following the expiration of each calendar
year.
6.
Actual Compensation:
Year
Gross City Paymemt
1978
$ 7,472,332 $ 246,847
1979
8,812,229 286,931,
1980
9,841,569 318,759
1981
11,079,481 349,347
1982
12,070,200 379,606
1983
12,342,728 398,236
1984
13,756,716 442,513
Historical Data Sheet - Continued (Page 2)
The payment made to the City in 1981
represents 3.158% of the gross income
and in 1982, 3.145% of the gross income
These sums do not include the transient
occupancy tax revenue to the City (amounting
to $110,000 annually at 6%). They reflect
only the lease rental obligations.
7. Renewal: Lessee is to yield possession of premises
and structures to the City immediately
upon expiration or termination of lease
or pay $5,000 per month liquidated damages
for such time as possession is withheld.
8. Taxes: Lessee is to pay all taxes and assessments
of the City, County and State.
9. Insurance: No provisions.