HomeMy WebLinkAboutC-3216 - Lease for Tidelands Associated with Lido Marina Village0 • (v)
CITY OF NEWPORT BEACH
COMMUNITY AND ECONOMIC DEVP]
Memorandum
TO:
Honorable Mayor and City Council
FROM:
Sharon Wood, Assistant City Manager{ f)
SUBJECT:
Lido Marina Village Tidelands Lease
a -3a-�k4
�I2 *_:
June 23, 199 v'e
In preparation for your meeting on this subject tomorrow afternoon, I am enclosing Richard
Fuller's appraisal report on the Lido Marina Village Tidelands, as well as the appraisal prepared
for the Bahia Corinthian Yacht Club, which was one of the sources Mr. Fuller used.
Robin Clauson and I are continuing to work with UR Lido Partnership to provide the additional
information requested by the City Council, and expect to deliver that to you by fax this evening.
Both of us will be available throughout the day Wednesday should you have additional questions
for us.
Cc: Kevin Murphy, City Manager
Robin Clauson, Assistant City Attorney
June 24, 1998
Agenda Item 1
LIDO MARINA VILLAGE TIDELANDS
LEASE WITH LJR LIDO PARTNERSHIP L.P.
Questions and Answers
1. What property is included in the proposed lease?
The property includes two tidelands (water) areas, and no uplands (land). The first area is
adjacent to Lido Marina Village, where LJR will control the vast majority of upland
parcels. The proposed lease term for this area is 50 years. The second area is adjacent to
the Travelmax building and the Lido Investments property. The slips in this area are
leased to the Lido Marina Village property owner. The term in the proposed lease for this
area is 25 years, consistent with the slip lease between the private parties. The leases
between the private parties are unaffected by the proposed lease, as it provides for
reduction in the area covered when the private leases expires in 2023. All the tidelands
area is currently subject to a single annual Harbor Permit issued by the City.
2. What rights does the proposed lease give?
The lease allows the tidelands to be used for the operation of a marina, limited to the
rental of boat slips, dock lockers, dry storage and related uses consistent with the City
Charter and Ordinances and the provisions of the Tidelands Grant. The proposed lease
includes no approval of future development or land use of the uplands. Any such
development will require compliance with the City's General Plan and Zoning Ordinance.
3. How will City revenue be affected by the proposed tease?
Annual Harbor Permit fees from the premises are now $30,500. The minimum rent
specified in the proposed lease is $35,000. Beginning March 1, 1999, the City will
receive additional rent to bring the total revenue to 9% of annual gross receipts from the
leased premises. Based on current gross receipts from the boat slips of $600,000, the
City's rent would be $54,000. If gross receipts increase, the City's revenue will increase
commensurately. Gross receipts are defined in the proposed lease to include revenue
generated from slip leases, charter boats and boat sales.
Harbor Permit fees are increased according to the CPI. The proposed lease provides for
an annual increase of 2% in the minimum rent, and for a reappraisal of fair market rental
value after 25 years. The percent used to calculate additional rent may not fall below 8%
or rise above 12% of annual gross receipts.
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4. Does the rent reflect fair market value?
An appraisal of fair market rental value was prepared by Richard Fuller, MAI. He
determined the base rent to be $14 per linear foot per year, and the percentage rent to be
9 %. Fuller's report and a 1993 appraisal for the Bahia Corinthian Yacht Club have been
provided to the City Council. Fuller used the Yacht Club appraisal, updated information
from the City's Fire and Marine Department, and other information relative to Lido
Marina Village in preparing his report
The minimum rent was determined by applying $14 to the approximately 2,500 linear feet
of owned slips.
5. Why is the City considering a 50 -year lease?
Both the City and the partnership have a goal of redeveloping Lido Marina Village so that
it contributes more to the community in terms of resident convenience, quality of
development and municipal revenue. The lender for the acquisition and redevelopment
planning effort requires a long -term lease as assurance of a long -term revenue stream to
support the debt.
The proposed lease includes the following required milestones in the redevelopment
process, to help ensure that the property will be improved in a timely manner. Failure to
meet any of these milestones constitutes a default, and the City may terminate the lease.
a. Provide evidence of financing for redevelopment plan preparation and entitlement
processing on commencement date.
b. Expand community outreach program no later than commencement date.
C. Submit conceptual plan of redevelopment project within two years of
commencement date. Conceptual plan will mean proposed uses and their location
and building area; the general configuration and size of the project; a general
description of the various elements, functions and layout of the proposed
improvements; a preliminary site plan showing improvements, access and
circulation; and conceptual elevations for all improvements, features and elements
to be developed.
d. Submit complete applications for land use entitlement within four years of
commencement date.
e. Submit complete applications for building permits within two years of City
entitlement approvals.
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6. Who is LJR Lido Partnership L.P?
This is a limited partnership, with three general partners who are the development team
and the lender. Fundamentally, the two partners are Lehman Brothers Holdings and
James Ratkovich Associates and related entities. Members of the development team have
worked with James Rouse, the Ratkovich Company and the Morgan Stanley Real Estate
Group on the development of millions of square feet of retail, office and industrial space.
The .lender is an investment and merchant banking firm based on Wall Street.
Representatives of the partnership will provide additional details to the City Council.
7. What assurance do we have that the partnership is committed to the project?
To date, LJR has acquired two buildings in the area of Lido Marina Village, which are
intended to complement redevelopment in the Village. The partnership has spent over
$200,000 to date on due diligence and the employment of consultants and legal counsel.
8. What constitutes a default under the Lease?
Events of default include:
• Failure to pay rent;
• Failure to comply with development schedule;
• Dissolution of partnership or assignment of lease without prior notice and
consent of City;
• Insolvency or bankruptcy proceedings of partnership;
• Failure to provide insurance or comply with any other term or condition of
the lease.
9. What opportunities does the Lessee have to cure a default?
The Lessee has 30 days to cure any failure to pay rent or pay any other money required
under the lease and 30 days to commence a cure and diligently pursue to completion any
non - monetary default not capable of cure within 30 days.
10. What rights does the lender have to cure a default?
The procedures for a default by the Lessee and the rights of any lender are the same as the
Council recently approved in the First Amendment to the Bahia Corinthian Yacht Club
Lease. The lender has the ability to step in and cure any default, with the same period to
cure as the Lessee plus 6 months to begin foreclosure proceedings if the lender brings all
rent current and otherwise takes required steps to cure any other defaults. The lender
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must continue to comply with lease terms during foreclosure proceedings. Additional
time in excess of 6 months is available, if necessary, to complete foreclosure proceedings
if the lender is fully complying with the Lease.
11. What if the Lessee defaults and fails to cure and the lender fails to cure?
The City may terminate the Lease. The lender has the option to enter into a new lease
with the City if it complies with certain conditions.
12. Is the insurance coverage adequate?
The Partnership has agreed to increase insurance coverage to $3 million, with a carrier
rated not less than A -. The City's current standard for leases is $1 million in most cases.
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Agenda Item
No.:
Staff Persons:
REPORT TO THE MAYOR AND CITY COUNCIL
PROJECT: Lease with LJR Lido Partnership L.P. for Tidelands
Associated with Lido Marina Village
SUGGESTED
ACTION: Approve and Authorize Mayor to Execute Lease
Background
June 22, 1998
S35
Sharon Z. Wood
Robin Clauson
The City Council reviewed and approved an outline of proposed terms for a long term lease of
the tidelands associated with Lido Marina Village on June 8, and directed the City Attorney to
prepare the lease agreement and return for City Council action. The report for that meeting and
the approved outline are attached to this report.
Lease Provisions
The lease agreement with LJR Lido Partnership L.P. (LJR) presented for the Council's
consideration is consistent with the terms in the outline, and includes significantly more detail.
Paragraph 1, Leased Premises
The property subject to the lease is the tidelands associated with the upland property known as
Lido Marina Village, as well as additional slips associated with the two properties to the
southeast, which are leased to the owners of Lido Marina Village. An aerial photograph showing
the property is attached to this report, and Exhibits B and C of the lease are a description and
map of the property.
Paragraph 2, Term
The lease commences on recordation of the Grant Deed transferring title of the Lido Marina
Village uplands to LJR, which should occur shortly after the close of escrow scheduled for June
30. The term of the City lease is fifty years for the Lido Marina Village tidelands. For the leased
slips, the term is twenty -five years, the term of the private lease, unless LJR acquires that
property.
Paragraph 5, Rent
Since the City Council meeting of June 8, staff has received an appraisal report prepared by
Richard Fuller, MAI, which has been used to negotiate the rent. Fuller has determined the fair
CITY OF NEWPORT BEACH
COMMUNITY AND ECONOMIC
_
'^
V
DEVELOPMENT
_
PLANNING DEPARTMENT
3300 NEWPORT BOULEVARD
NEWPORT BEACH, CA 92658
(714) 644 -3200; FAX (714) 644 -3250
Agenda Item
No.:
Staff Persons:
REPORT TO THE MAYOR AND CITY COUNCIL
PROJECT: Lease with LJR Lido Partnership L.P. for Tidelands
Associated with Lido Marina Village
SUGGESTED
ACTION: Approve and Authorize Mayor to Execute Lease
Background
June 22, 1998
S35
Sharon Z. Wood
Robin Clauson
The City Council reviewed and approved an outline of proposed terms for a long term lease of
the tidelands associated with Lido Marina Village on June 8, and directed the City Attorney to
prepare the lease agreement and return for City Council action. The report for that meeting and
the approved outline are attached to this report.
Lease Provisions
The lease agreement with LJR Lido Partnership L.P. (LJR) presented for the Council's
consideration is consistent with the terms in the outline, and includes significantly more detail.
Paragraph 1, Leased Premises
The property subject to the lease is the tidelands associated with the upland property known as
Lido Marina Village, as well as additional slips associated with the two properties to the
southeast, which are leased to the owners of Lido Marina Village. An aerial photograph showing
the property is attached to this report, and Exhibits B and C of the lease are a description and
map of the property.
Paragraph 2, Term
The lease commences on recordation of the Grant Deed transferring title of the Lido Marina
Village uplands to LJR, which should occur shortly after the close of escrow scheduled for June
30. The term of the City lease is fifty years for the Lido Marina Village tidelands. For the leased
slips, the term is twenty -five years, the term of the private lease, unless LJR acquires that
property.
Paragraph 5, Rent
Since the City Council meeting of June 8, staff has received an appraisal report prepared by
Richard Fuller, MAI, which has been used to negotiate the rent. Fuller has determined the fair
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market base rent to be $14 per linear foot of slip per year, and the percentage rent to be 9% of
gross receipts. The proposed lease agreement makes provision for minimum rent and additional
rent. Minimum rent was determined to be $35,000, by applying $14 to the approximately 2,500
linear feet of slips associated with the Lido Marina Village uplands. Beginning March 1, 1999,
there will be additional rent to bring the total rent paid to the City equal to 9% of the gross
receipts generated by the leased premises, including slip rentals and fees from charter boat
operations and boat sales. The City has the right to audit LJR's records; if an underpayment of
greater than $1,000 is discovered, UR will pay the cost of the City's audit. The minimum rent
will increase by 2% per year, and there will be a revaluation of the fair market rental value of the
property after 25 years, with the per cent used to calculate additional rent limited to a range
between 8% and 12 %.
Paragraph 6, Alterations
This paragraph addresses both alterations to the slips and redevelopment of the upland property.
The slips are to be reconfigured in conjunction with redevelopment of the upland property, to
provide increased water views. The City must approve any reduction in slip facilities, and all
work on slips must be in accordance with City ordinances and policies. Minimum rent will be
abated for up to six months if the slips cannot be used for more than a month during
redevelopment.
Redevelopment of the upland property is defined as in the approved outline: the replacement of
no less than 38,000 square feet of leasable floor area and substantial rehabilitation of the
remainder of the property owned by UR. A development schedule is included as Exhibit F to
the lease. It is consistent with the outline approved by the City Council, with the one exception
that a program for expanded community outreach is to be provided to the City within thirty days
of the commencement date, rather than being completed by the commencement date. The lease
also provides that the City will provide written notice to UR if a milestone of the development
schedule is not met, and UR will have thirty days to cure the breach. The time to cure the breach
may be extended up to two years with City Council approval. If the development schedule is not
met, the City may terminate the lease.
Paragraph 14, Insurance
LJR is required to maintain the following insurance: comprehensive general liability of
$2,000,000 (with periodic adjustment as determined by the City), construction, property, and
worker's compensation. The Risk Manager and Assistant City Attorney have approved this level
of general liability coverage, which is two times the amount the City requires in all agreements
other than for extraordinary projects such as the Arches interchange.
Paragraph 17, Assignment, Subletting and nd Hypothecation
The boat slips and other manna improvements may be sublet to other parties. Assignment or
transfer of the lease requires the City's consent, and UR may not transfer or assign its ownership
of the associated upland property separately from the tidelands included in the lease. Provisions
are made for the lease interest to be assigned or mortgaged for financing purposes. The leasehold
mortgagee will have the right to the same period as UR to cure any default, plus an extension of
at least six months to foreclose on the mortgage should UR fail to cure a lease default. This
extension will be available only if the leasehold mortgagee cures any default and complies with
the terms and conditions of the lease during foreclosure proceedings.
Page 2 W
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Paragranh 18. Defaults and Remedies
Defaults include failure to pay rent, failure to meet the development schedule, failure to maintain
the size of slip facilities, failure to perform any other term or condition of the lease, insolvency or
bankruptcy of UR, permitting the premises to become vacant for more than thirty days, and the
appointment of a trustee or receiver to take possession of LJR's assets. The City's remedies are
to repossess the premises, terminate the lease, maintain the lease and recover rent, and any other
remedy provided in the law.
Analysis
In negotiating the proposed lease, staff has followed City Council Policy F -7, Income Property, to
the maximum extent feasible and applicable to this particular property. As indicated earlier, an
appraisal of fair market rental value was prepared by Richard Fuller, MAI, and was the basis for
the rent provisions of the proposed lease. Therefore, staff believes that the City will receive
revenue equivalent to the open market value of the highest and best use, as specified in the
policy. An open bid process was not conducted to select the lessee, because the highest and best
use of the upland and tideland properties can be achieved if they are held jointly, and LJR is in
escrow for purchase of the upland property. A fifty -year term has been requested for the lease to
allow for financing that will facilitate redevelopment of the upland property. The proposed lease
includes provisions for annual increases in the minimum rent and revaluation of the fair market
rental value of the property after twenty -five years. These provisions are intended to protect the
City's economic interest as market conditions may change over the term of the lease. Finally, the
proposed lease includes provisions for audits of LJR's records throughout the term of the lease.
As indicated in the report for June 8, staff believes that UR's acquisition of the Lido Marina
Village and adjacent properties provides the City with an opportunity for revitalization of an
important site that is not performing at its potential level. The proposed lease requires
redevelopment of the upland property and reconfiguration of the slips, with a development
schedule and substantial community outreach program. These requirements provide the City
with assurance that the long -term lease of the tidelands will facilitate a well planned,
comprehensive revitalization program in the near future.
SHARON Z. WOOD
Assistant City Manager
Attachments
ROBIN CLAUSON
<s stant City.Attomey
Page 3 f�
CITY OF SPORT BEACH
Heanng Date:
June 8, 1998
d COMMUNITY AND ECONOMIC
Agenda Item
= DEVELOPMENT
No.:
i
• ••- PLANNING DEPARTMENT
Staff Person:
Sharon Z. Wor
3300 NEWPORT BOULEVARD
(714) 644 -322..
NEWPORT BEACH, CA 92658
(714) 644-3200; FAX (714) 644 -3250
REPORT TO THE MAYOR AND CITY COUNCIL
PROJECT: Outline of Lease with James RatkoAch & Associates for
Tidelands Associated with Lido Marina Village
SUGGESTED
ACTION: Review and approve the outline of proposed terms for a long
term lease, and instruct the City Attorney to prepare the lease
agreement and return for City Council action
James Ratkovich & Associates (JRA) is in escrow to purchase the property known as Lido
Marina Village, with close of escrow scheduled for the end of June. They already have closed
escrow on two properties on Via Lido, the former Bank of America building near the comer of
Newport Boulevard, and the Lido Building between Via Lido and Via Malaga. All of the
properties are shown on the attached aerial photograph and survey map. JRA intends to
undertake a coordinated redevelopment project involving these properties. As a condition of
financing for the acquisitions and redevelopment, JRA and their lender have requested a long-
term lease on the tidelands owned by the City, to demonstrate the potential for continuous cash
flow from the property.
The City's past practice for tidelands properties has been to issue annual Commercial Pier
Permits, at a rate of $.28 per square foot per year. For the property in question, the annual fees
are approximately $30,500. In the recent Bahia Corinthian Yacht Club transaction, the City used
a long -term lease to provide greater security to the lessee and the City, and a greater rate of return
to the City. The proposed structure for a lease agreement with JRA, which is attached, is similar
to this recent example.
The rent is proposed to be a percent of annual gross receipts from JRA's slip rentals, with a
minimum rent guaranteed to the City, based on a fair market valuation by an appraiser acceptable
to the City. Fuller & Hansen has been retained by JRA for this purpose. Using the Bahia
Corinthian lease terms for estimating purposes, the proposed Lido Marina Village tidelands lease
would generate approximately $57,000 for the City annually. The minimum rent will be adjusted
periodically based on actual rents received during the period, and the fair market rental rate will
be reappraised at the midpoint of the lease term. JRA will maintain slip rental rates current with
market conditions to insure the City receives a reasonable total rent.
The lease term being requested for financing purposes is fifty years, which is a long -term
commitment for the City. Staff believes that this would be a reasonable commitment, if the City
is assured that the upland property will be redeveloped in a way that contributes to revitalization Q
of the Balboa Peninsula and other goals of the City. Therefore, staff has worked with JRA on 4'
commitments regarding the redevelopment of the slips and the upland property. In this respect,
the proposed lease terms are similar to the Balboa Bay Club lease agreement.
The slips are to be reconfigured with a goal of increasing views of the water. However, any
reduction in slip facilities must be approved by the City as a means of protecting our rent
potential. The redevelopment goal for the upland property is the replacement of at least 38,000
square feet of leasable area, and substantial rehabilitation of the remaining building area.
Achieving this goal would result in replacement of approximately 90% of the buildings between
the former Warehouse Restaurant and the Travel Max building. There is a performance schedule
for redevelopment of the upland property, which requires evidence of financing for plan
preparation and entitlement processing, and an expanded community outreach program, on the
lease commencement date. A conceptual plan must be submitted within two years of the
commencement date, applications for land use entitlement must be submitted within four years,
and building permits must be obtained within two years of entitlement approval.
IRA has indicated that the preliminary loan agreements include financing for plan preparation
and entitlement processing. In addition, they already have begun community outreach on a
limited basis by meeting with Lido Isle residents and surrounding property owners to begin
discussing the type of project that would be supported by the community. This effort will be
expanded substantially upon approval of the tidelands lease and close of escrow, including use of
a firm to gather ideas, goals and sensitivities from the community as the first step in the planning
process (similar to the City's outreach program for the Parking Management Plan).
Staff believes that JRA's involvement in the Lido Marina Village area presents the City with an
opportunity for revitalization of an important area of the Balboa Peninsula that recently has not
been performing at its potential level. Members of the JRA team have experience in projects of
this type, having worked with James Rouse, the Ratkovich Company and the Morgan Stanley
Real Estate Group on the development of millions of square feet of retail, office and industrial
space. Since its formation several years ago, JRA has focused on the acquisition of assets for
redevelopment. The planning and architectural firms being considered by JRA have been
involved with well -known and successful waterfront projects throughout the United States, and
use a consensus planning process. Staff expects that the Lido Marina Village project will be of
high quality. JRA already has made a significant financial commitment to the area, and is
prepared to strengthen that commitment with closing on the property in the near term, and
redeveloping and rehabilitating it shortly thereafter. Their financial commitment is backed by a
substantial investment and merchant banking firm based on Wall Street, whose representatives
have been actively involved in discussing the tidelands lease and the redevelopment project. For
these reasons, staff believes the fifty -year lease is a reasonable commitment for the City to make
to assist in revitalization of the area. The City's interests will be protected through the
performance schedule for redevelopment, and the City's return on lease of the tidelands will be
higher than it is with the current annual permits.
SHARON Z. WOOD
Assistant City Manager
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Pag9Z
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LIDO MARINA VILLAGE TIDELANDS LEASE
PROPOSED TERMS
PROPERTY DESCRIPTION
TERM
RENT
Shown on attached aerial photograph and survey map.
Commences upon close of escrow on upland property.
50 years.
Negotiated percentage of annual gross receipts, with minimum rent guaranteed to City,
based on fair market valuation by appraiser acceptable to City.
Minimum rent to be adjusted periodically based on mutually agreeable formula.
Lessee agrees to maintain slip rental rates consistent with other competing marinas.
IMPROVEMENTS AND ALTERATIONS TO SLIPS
Existing improvements may remain and must be maintained in good condition (to be
defined by comparison with other slips in Newport Bay) by Lessee until redevelopment of
upland property.
No later than redevelopment of upland property, slips attached to upland property owned
by Lessee will be reconfigured, with a goal of providing increased view of water from
upland property owned by Lessee, subject to City approval of any reduction in slip
facilities.
Minimum rent will be abated during reconstruction of slips, up to a maximum of six
months.
All improvements and alterations to conform to City's Harbor Permit Policies.
S.
REDEVELOPMENT OF UPLAND PROPERTY
Lessee will undertake redevelopment of the upland property, in accordance with the
following performance schedule. The redevelopment goal will be replacement of no less
than 38,000 square feet of leasable floor area, and substantial rehabilitation of the
remainder of building area owned by Lessee. Deadlines may be extended for a maximum
of two years with City Council approval, which shall not be withheld unreasonably while
Lessee is making a good faith effort to meet the performance schedule. Failure to meet
performance schedule will be cause for termination of lease. City will provide Lessee
with notice of default for failure to meet performance schedule, and time to cure. City
will cooperate with Lessee in efforts to obtain land use entitlements and required permits,
without diminution in City's rights to review and approve or disapprove applications.
1. Provide evidence of financing for redevelopment plan preparation and entitlement
processing on commencement date.
2. Expand community outreach program no later than commencement date.
3. Submit conceptual plan of redevelopment project within two years of
commencement date. Conceptual plan will mean proposed uses and their location
and building area; the general configuration and size of the project; a general
description of the various elements, functions and layout of the proposed
improvements; a preliminary site plan showing improvements, access and
circulation; and conceptual elevations for all improvements, features and elements
to be developed.
4. Submit complete applications for land use entitlement within four years of
commencement date.
5. Submit complete applications for building permits within two years of City
entitlement approvals.
INSURANCE
$2 million comprehensive general liability, with periodic adjustments to limits to keep
them current.
Builders risk.
Workers compensation per State law.
ASSIGNMENT
Lease shall not be transferred without City approval, which shall not be withheld
unreasonably, and shall not be granted separately from interests in upland property.
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MORTGAGE
Leasehold interest only.
DEFAULTS AND REMEDIES
Failure to meet performance schedule.
Failure to pay rent.
Failure to maintain size of slip facilities, without City approval.
Failure to comply with terms of lease.
CITY REVIEW OF RECORDS
City will have right to regular audits of records.
6 -5 -98
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LEASE
THIS LEASE ( "Lease "), made for reference purposes only on this day of
June, 1998, by and between the CITY OF NEWPORT BEACH, a municipal corporation and
Charter City, hereinafter, "Lessor" and LJR LIDO PARTNERS L.P., a Delaware limited
partnership, hereinafter, "Lessee ", is made with reference to the following recitals:
RECITALS
A. Under the provisions of the Beacon Bay Bill (Chapter 740 of the Statutes
of 1978 ), Lessor is the grantee of certain harbor tidelands, located in the City of Newport Beach,
County of Orange, State of California ( "Tidelands Grant "); and
B. Lessee is concurrently herewith acquiring all right, title and interest of
Marvin Engineering, Inc., a California corporation ( "Seller") in and to:
(i) that certain real property adjacent to the tidelands, whether owned by
Seller in fee simple or as ground lessee, more particularly described in Exhibit A ( "Real
Property ") attached hereto and by this reference made a part hereof, and
(ii) all of the boat slips appurtenant to and adjoining the Real Property (the
"Owned Slips ") situate over the tidelands described as Parcel 1 in Exhibits B and C, and
(iii) all of the boat slips currently leased by Seller from Olen Properties Corp.
and Lido Investment Co., LLC owners of the littoral or riparian land adjoining said slips
(the "Leased Slips ") situate over the tidelands described as Parcels 2 and 3, respectively,
in Exhibits B and C, and
(iv) that certain Harbor Permit CP12434001 which entitles Seller to operate a
marina in and over those tidelands described in Exhibit B and depicted on the map set
forth in Exhibit C, both attached hereto and incorporated herein by this reference
underlying the Owned Slips and the Leased Slips (the Owned Slips and the Leased Slips
are collectively referred to as the "Boat Slips "); and
C. The Marina use to be made of these tidelands, and the terms and
conditions in this Lease are consistent with the provisions of the City Charter and Ordinances of
the City of Newport Beach, and are consistent with the provisions of the Tideland's Grant;
D. Harbor Permit CP12434001 is issued to Seller, the current owner of the
Real Property and the Boat Slips; and
E. The parties desire to enter into a long -term lease in lieu of a City Harbor
Permit.
NOW THEREFORE, THE PARTIES AGREE:
uDVIS931oa
LEASED PREMISES
(a) In consideration of the rent to be paid and the covenants and conditions to be
observed and performed by Lessee, Lessor hereby demises and leases to Lessee as of the
Commencement Date, and Lessee hereby takes from Lessor, those tidelands described in
Exhibit B and depicted on the map set forth in Exhibit C, both attached hereto and incorporated
herein by this reference (the "Tidelands "), together with all rights, privileges, easements and
appurtenances belonging or in any way pertaining to the Tidelands (collectively, the "Premises "),
for the Term (as hereinafter defined), at the rental and upon the covenants and conditions set
forth in this Lease.
(b) Lessor hereby reserves all oil, oil rights, gas, minerals, mineral rights, natural gas
rights and other hydrocarbon substances in and under the Premises and the right to grant and
transfer the same, together with all necessary and convenient rights to explore for, develop,
produce and extract and take the same, subject to the express limitation that any and all
operations for the exploration, development, production, extraction and taking of any such
substance shall be carried on at levels below the depth of five hundred feet (500') from the
surface of the land by means of wells, derricks and other equipment from surface locations on
adjoining or neighboring land, and subject further to all restrictions and regulations concerning
the drilling for, and production of, oil, gas, minerals, petroleum and other hydrocarbon
substances specified in the Newport Beach City Charter or the Newport Beach Municipal Code.
This reservation does not include the right of entry from the Premises or any rights that may be
inconsistent with the use of the Premises by Lessee as reasonably contemplated by this Lease.
2. TERM
(a) The term of this Lease shall commence on the date of recording of the Grant Deed
transferring the Real Property from Seller to Lessee in the Official Records of Orange County,
California a copy of which is attached hereto as Exhibit D ( "Commencement Date "), and shall
expire upon the fiftieth (50th) anniversary thereof (the "Expiration Date "), unless sooner
terminated as provided in this Lease (the "Term ").
(b) Notwithstanding the provisions of Section 2(a), the Term of this Lease applicable
to the Leased Slips shall expire on May 29, 2023 (the "Lease Slips Expiration Date "), unless said
Leased Slips have been acquired by Lessee hereunder and written notice of such acquisition is
given to Lessor.
3. QUIET POSSESSION
(a) So long as no default by Lessee has occurred under this Lease, Lessee shall
peaceably and quietly use and enjoy the Premises for the Term, without hindrance or interruption
by Lessor or any other person or persons claiming by, through or under Lessor.
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y (b) Lessor shall in no event be liable in damages or otherwise, nor shall Lessee be
}f released from any obligations hereunder, because of the interruption or termination of any service
provided by Lessor (such as, water or sewer service), or a termination, interruption or disturbance
of any service attributable to any act or neglect (other than gross negligence or willful
misconduct) of Lessor or its servants, agents, employees, licensees, business invitees, or any
person claiming by, through or under Lessee.
4. IMPROVEMENTS TO LEASED PREMISES
Lessor and Lessee acknowledge that Lessee (or Seller or Seller's predecessors or
lessors) has constructed major improvements on and adjacent to the Premises. These
improvements include, but are not necessarily limited to, bulkheads, piers, docks, floats and
related improvements which comprise a marina consisting of approximately 3,925 lineal feet of
slips for docking of boats (collectively, the "Marina Improvements ") as shown on Exhibit C.
5. RENT
(a) Lessee shall pay to Lessor as "Minimum Rent" the sum of Thirty -Five Thousand
Dollars ($35,000.00) per annum (the "Minimum Rent "), due and payable in equal monthly
installments of Two Thousand Nine Hundred Sixteen Dollars and Sixty -Seven Cents ($2,916.67)
in advance on the first day of each month, except that the first month's Minimum Rent shall be
due and payable upon the execution hereof. Minimum Rent for any partial calendar month
during which the Lease Term commences or terminates shall be prorated based on the actual
number of days in such month.
(b) Beginning on March 1, 1999, and continuing on each March I of every year of the
Term thereafter, Lessee shall pay the "Additional Rent" equal to the excess of (i) nine percent
(9 %) of the annual gross receipts generated by the Premises for the previous calendar year, over
(ii) the Minimum Rent paid during such calendar year. Additional Rent for any partial calendar
year during which the Lease Term commences or terminates shall be prorated based on the actual
number of days in such year. For purposes of calculating the Additional Rent, "gross receipts"
shall mean all revenue received by Lessee and generated from the Premises, including, without
limitation, rental income from the Boat Slips and revenue received from charter boats and boat
sales, but shall not include any reimbursement of Lessee for utilities and taxes. Subject to the
provisions of Sections 6(b) and 6(d) hereof and the removal of the Leased Slips as provided in
Section 2(b) hereof, Lessee agrees to maintain and operate the existing lineal feet of Boat Slips as
of the date hereof, unless Lessor has given its' prior written consent, which consent shall not be
unreasonably withheld, conditioned or delayed. Lessee further agrees to maintain slip rental
rates at the fair market rental rate.
(c) Lessor, at any time within ninety (90) days after receipt of Lessee's statement of
gross receipts and upon not less than fifteen (15) days' prior notice to Lessee, may cause an audit
to be made of Lessee's gross receipts and all of Lessee's books and records reasonably necessary
to audit the same. Lessee shall make all such books and records available for the audit at the
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Premises or at Lessee's office. If the audit discloses an underpayment of Additional Rent, Lessee
shall pay to Lessor the amount of the underpayment, and if the underpayment shall equal $1,000
or more as revealed by the audit, then Lessee shall also reimburse Lessor for Lessor's actual costs
in performance of the audit, each to be paid, if applicable, within thirty (30) days after written
demand by Lessor. If the audit discloses an overpayment of Additional Rent, Lessor shall pay to
Lessee the amount of the overpayment within thirty (30) days after the audit is completed.
(d) During any period of redevelopment, in whole or in part, of the Marina
Improvements that by its nature require that slips cannot be used for a period in excess of one
month, then Minimum Rent shall abate during such redevelopment period; provided, however,
such rent abatement shall not extend beyond six (6) months. In the case of any partial
renovation, the foregoing rental abatement shall be proportionate to the lineal feet then being
renovated.
(e) The Minimum Rent, for each calendar year, commencing on January 1, 2000, and
continuing thereafter on the 1st of January for each successive year, shall be increased by two
percent (2 %)per annum (the "Annual Adjustment "), provided, however, that the Minimum Rent
and the Additional Rent shall be adjusted to the fair market rental value commencing on January
1, 2024, and thereafter the Annual Adjustment shall resume with respect to the Minimum Rent
on the following January 1. For the purposes of this Section 5(e), the "fair market rental value"
shall mean the rental rate per lineal foot of slips in the comparable marinas, as determined by an
indypendent appraiser selected by Lessee and approved by Lessor, except that the percentage
S�te used to calculate Additional Rent shall never exceed twelve percent (12 %) or be less than
eight percent (8 %).
6. ALTERATIONS
(a) Lessee shall have the right to make, at its sole expense, such nonstructural
changes, alterations, improvements and additions in and to the Marina Improvements without the
necessity of obtaining Lessor's approval, provided such changes shall conform to the then current
City Ordinances and Harbor Permit Policies approved by the City Council of Newport Beach (the
"Harbor Policies "). Structural changes shall not be made to any Marina Improvement without
first submitting written plans and specifications of the proposed change, alteration or addition to
Lessor and obtaining Lessor's written approval, which approval shall not be unreasonably
withheld, conditioned or delayed. Any and all such changes, structural or nonstructural, shall
conform to the Harbor Policies. Lessee shall make, at its expense, such changes, alterations or
additions in and to structures on the Premises that may be required by any public law ordinance
from time to time, applicable to Lessee's use and occupancy of the Premises.
(b) Lessee will undertake redevelopment of the Real Property and certain other land
owned by Lessee commonly known as the "Lido Marina Village," including, without limitation,
the replacement of no less than 38,000 square feet of leasable floor area, and substantial
rehabilitation of the remainder of the Lido Marina Village owned by Lessee (the "Redevelopment
Plan"), in accordance with the development schedule attached hereto as Exhibit E and
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incorporated herein by this reference (the "Development Schedule "), subject to delay by reason
of Force Majeure as described below. In the event Lessor finds that Lessee has not met the
milestones set forth in the Development Schedule, Lessor shall provide a written notice to Lessee
setting forth the alleged breach and the specific provision to which its relates. Lessee shall have
a period of thirty (30) days after such written notice within which to cure such breach; provided,
however, that if such breach cannot reasonably be cured within such thirty (30) days and if
Lessee commences promptly and within such thirty (30) days to cure such breach, the thirty (30)
day period shall be extended as long as Lessee diligently continues its efforts to cure such breach,
provided, however, that the time for performance under the Development Schedule can only be
extended for a maximum of two (2) years with City Council approval, which approval shall not
be unreasonably withheld, conditioned or delayed while Lessee is making a good faith effort to
meet the Development Schedule. A failure to cure such breach or to commence to cure such
breach within such prescribed period as aforesaid shall be deemed an event of default hereunder,
which shall entitle Lessor to exercise its remedies pursuant to Section 18(c) of this Lease.
(c) If Lessee's performance of any act required under the Redevelopment Plan is
delayed, hindered or prevented by reason of lock -outs, labor troubles, shortages of labor or
materials, riots, insurrection, war, unavailability of any governmental entitlements, judicial
orders, fire or other casualty, unusually adverse weather conditions, flooding, acts of God, an
event of default by Lessor, or other reasons of any kind, description or nature beyond the
reasonable control of Lessee, then performance of such act shall be excused for the period of the
delay and the period for the performance of any such act shall be extended for a period equivalent
to the period of such delay. The period of excused delay shall be referred to herein as a "Force
Majeure."
(d) In connection with Lessee's performance pursuant to the Redevelopment Plan,
Lessee shall reconfigure the Boat Slips to increase the view of water from the Real Property,
subject to Lessor's approval of any reduction in slip facilities. Such reconfiguration shall be
undertaken by Lessee in accordance with the procedures set forth in this Section 6 and the
Development Schedule (as extended pursuant to the terms hereof).
(e) 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, alteration 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 undertaken by Lessee, 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 paragraph 6(e), 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
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against the same and shall pay and satisfy any adverse judgment that may be rendered thereon,
before the enforcement thereof against Lessor or the Premises upon the condition that if Lessor
shall require, Lessee shall furnish to Lessor security satisfactory to Lessor in an amount equal to
such contested lien, claim or demand indemnify Lessor against liability for the same and holding
the Premises free from the effect of such lien or claim.
7. MARINA MAINTENANCE
(a) Lessee at its sole cost and expense, shall keep and maintain all Marina
Improvements and related fixtures and personal property in first class order, condition and repair
consistent with similar manna improvements in the Newport Bay. Maintenance dredging
bayward of the property line, between the bulkhead line and the pierhead line, shall be the
responsibility of Lessee for the zone delineated by bayward prolongations of upland side property
lines out to the U.S. project line.
(b) Lessee agrees that Lessor may, after reasonable advance notice to Lessee, go
upon the Premises and make any necessary repairs to the Premises, and perform any work
therein:
(i) Which may be necessary to comply with any laws, ordinances, rules or
regulations of any public entity;
(ii) That Lessor is obligated to make, under the terms of this Lease; or
(iii) That Lessor may deem necessary to prevent waste or deterioration of the
Premises, if Lessee does not make or cause such work to be performed promptly and diligently
after receipt of written demand therefor from Lessor.
Nothing herein contained shall imply any duty on the part of Lessor to do any work which Lessee
may be required to do, nor shall it constitute a waiver of Lessee's default. No
exercise by Lessor of any rights reserved, shall entitle Lessee to any damage for any injury or
inconvenience occasioned thereby, or to any abatement of Minimum Rent or Additional Rent,
however, such repairs once commenced, shall be completed in a timely manner.
(c) In the event that Lessor makes, or causes to be made, any repairs, within the Term
of this Lease that is Lessee's obligation to make, Lessee shall upon demand, pay to Lessor the
cost of such repairs, which amounts shall be due and payable upon demand and shall bear interest
from the date of demand, until totally paid, at the rate of [ nine ] percent ( [ 9 ] %) per annum.
8. USE OF THE PREMISES
(a) During the term of this Lease, Lessee shall use and occupy the Premises,
principally for the operation of a marina. The manna use shall be limited to the rental of boat
slips, dock lockers, dry storage and related uses consistent with the provisions of the City Charter
and Ordinances of the City of Newport Beach, and the provisions of the Tidelands Grant.
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(b) Lessee shall not commit or permit the commission by others of any waste on the
Premises. Lessee shall not maintain any nuisance, as defined in Section 3479 of the California
Civil Code, on the Premises. Lessee shall not unreasonably interfere with the rights of other
harbor permittees or nearby residents, and Lessee shall not use or permit the use of the Premises
for any unlawful purpose, or in violation of any provision of law.
9. UTILITIES
Lessee shall be solely responsible for obtaining and shall promptly pay for all
water, power, sewer, and other utility services provided to the Premises.
10. RIGHT TO ENTER PREMISES
Lessor expressly reserves the right, after reasonable advance notice to Lessee, to enter the
Premises and all improvements, including a right of reasonable access to the Premises across
Lessee owned or occupied lands adjacent to the Premises, for any purpose associated with this
Lease or for carrying out any function required by law, or the rules, regulations or management
policies of the City of Newport Beach.
11. RULES, REGULATIONS AND TAXES
(a) Lessee shall comply with and be bound by all presently existing or subsequently
enacted policies, regulations, statutes or ordinances of the City of Newport Beach, including, but
not limited to, rules and regulations prescribed under Council Policy H -1 (Harbor Permit
Policies), or any other government agency or entity having lawful authority and jurisdiction.
(b) Lessee shall obtain and maintain all permits or other entitlements necessary for
the occupancy and use of the Premises and the Marina Improvements..
(c) During the term of this lease, Lessee shall pay, prior to delinquency, any and all
taxes assessed against Lessee's possessory interest under this Lease and all other taxes,
assessments, user fees or service charges imposed on or associated with the leasehold interest, or
personal property or improvements on the Premises, and such payment shall not reduce
Minimum Rent or Additional Rent due Lessor under this Lease, and Lessor shall have no liability
for such payment.
12. ENVIRONMENTAL REQUIREMENTS
(a) Lessee shall practice conservation of water, energy, and other natural resources
and shall prevent pollution and harm to the environment. Lessee shall not violate any law,or
regulation whose purpose is to conserve resources or to protect the environment.
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(b) Lessee shall not use, nor permit the use of, any hazardous wastes or materials in
the construction, reconstruction or renovations of or use of the marina improvements in violation
of any applicable law, regulation, code or ordinance. Lessee shall, at its expense, comply, and
cause each of its members, licensees and/or concessionaires of space in the marina or elsewhere
adjacent to the Premises to comply with all applicable laws, regulations, codes and ordinances
relating to any hazardous regulated material, including obtaining and filing all applicable notices,
permits, licenses and similar authorizations. Lessee shall be fully responsible to clean up any
hazardous wastes, substances or materials as may be required under federal, state or local law,
regulation, or ordinance that are manufactured, generated, used, placed, disposed, stored, or
transported on the Premises by Lessee, its members, licensees and concessionaires during the
Term and shall comply with and be bound by all applicable provisions of such federal, state or
local law, regulation or ordinance dealing with such wastes, substances or materials. Lessee shall
notify Lessor and the appropriate governmental emergency response agency(ies) immediately in
the event of any release or threatened release of any such wastes, substances or materials.
13. INDEMNITY
(a) Lessee agrees to defend, indemnify, protect and hold Lessor harmless from and
against any and all liability, claims, damages, penalties, actions, demands or expenses of any kind
or nature, including damage to any property and injury (including death) to any person
(collectively, "Claims "), arising from Lessee's use or occupancy of the Premises, or from any
activity, work or things done, permitted or suffered by Lessee or any omission of Lessee on or
about the Premises or from any litigation concerning any of the foregoing in which Lessor is
made a party defendant. Lessee shall not be required hereunder to defend, indemnify or hold
Lessor or any other person or entity indemnified under this Section harmless from or against any
of the Claims to the extent such Claim arises solely out of the negligence or willful misconduct
of Lessor. This obligation to indemnify shall include reasonable attorneys' fees and investigation
costs and all other reasonable costs, expenses and liabilities incurred by Lessor or its counsel
from the first notice that any claim or demand is to be made or may be made.
(b) Upon receiving knowledge of any Claim that Lessor believes is covered by this
indemnity, Lessor shall give Lessee notice of the matter and an opportunity to defend it, at
Lessee's sole cost and expense, with legal counsel satisfactory to Lessor in its sole and absolute
discretion. Lessor may also require Lessee to so defend the matter. So long as Lessee shall be
defending any such Claim, Lessor shall not settle such claim without the consent
of Lessee.
(c) Lessee shall notify Lessor immediately in case of any accident, injury or casualty
on the Premises.
14. INSURANCE
(a) Lessee shall obtain and maintain in full force and effect during the term of this
lease, comprehensive general liability insurance and property damage insurance, with such
coverage and limits as may be reasonably requested by Lessor from time to time, but in no event
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for less than the sum(s) specified below, insuring Lessee and Lessor against any and all claims or
liability arising out of the ownership, use, occupancy, condition or maintenance of the Premises
and all improvements.
(i) Comprehensive General Liability Insurance. Lessee shall maintain
Comprehensive General Liability Insurance with a combined single limit for bodily injury and
property damages of Two Million Dollars ($2,000,000) (which amount shall be subject to
periodic adjustment as may be reasonably determined by Lessor upon 180 days prior notice).
The limits of liability of the insurance coverage specified in this paragraph may be provided by
any combination of primary and excess liability insurance policies.
(ii) Property Insurance- Construction. During construction of any
improvements on the Premises, Lessee shall maintain builder's risk insurance against "all risk"
of physical loss, including without limitation the perils of flood, collapse and transit, with
deductibles acceptable to Lessor, covering the total cost of work performed, equipment, supplies
and materials furnished on a replacement cost basis. Lessee shall be permitted to obtain and
maintain flood insurance in such amounts and forms as are available, from time to time, under
the National Flood Insurance Program.
(iii) Property Insurance. Lessee shall obtain insurance on the marina
improvements and shall maintain insurance continuously during the Term, against "all risk"
perils of physical loss, including, but not limited to, flood, fire, lightning, riot and civil
commotion, vandalism and malicious mischief. Such insurance shall be in amounts not less than
the then full replacement cost of the Marina Improvements, without deduction for depreciation.
Such policies of insurance shall contain the "Replacement Cost Endorsement." Such full
replacement cost shall pertain to the Marina Improvements and be determined not less often than
each two (2) years during the Term.
(iv) Worker's Compensation. Lessee shall obtain and maintain workers
compensation insurance with respect to any employees of Lessee, as required by any
governmental authority or legal requirement.
(b) Insurance carriers shall be licensed and approved to do business in California
having a general policyholders' rating of not less than B+ and financial rating of not less than
"VII" in the most current Best's Key Rating Guide.
(c) The insurance policy or policies shall name Lessor, its officers, and employees as
additional insureds. Lessee shall provide Lessor with a certificate of such insurance and shall
keep such certificate current. The policy (or endorsement) must provide that the insurer will not
cancel Lessee's coverage without thirty (30) days prior written notice to Lessor. Lessor will not
be responsible for any premiums or other assessments on the policy. The coverage provided by
Lessee shall be primary and non - contributing.
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(d) The insurance coverage specified in this Lease shall be in effect at all times during
the Term and subsequently until all of the Premises have been either accepted as improved, by
Lessor, or restored by Lessee.
(e) Lessee shall not commit or permit the commission of any acts on the Premises
that would cause the cancellation of any liability or other insurance policy, insuring either the
Premises or the Marina Improvements on the Premises. Lessee shall, at its own cost and
expense, comply with any and all requirements imposed by insurance companies that carry the
policies described above.
(f) Each policy of insurance procured pursuant to this Section shall contain, either
(i) a waiver by the insurer of the right of subrogation against either party hereto for negligence of
such party; or (ii) a statement that the insurance shall not be invalidated should any insured waive
in writing prior to a loss any or all right of recovery against any party for loss described in the
insurance policy. Lessor and Lessee each hereby waives any and all rights of recovery against
the other, and against it shareholders, officers, directors, employees, subsidiaries, partners,
servants, agents and representatives, for loss or damage arising from any cause insured against
under the form of insurance policies required to be carried pursuant to this Section or under any
other policy of insurance carried by either Lessor or Lessee. Lessee and Lessor each agrees to
use reasonable efforts to obtain its liability insurance carriers' permission as to the waiver of
subrogation described above in this Section.
(g) Lessee shall at all times observe and comply with the requirements of all policies
of insurance in force with respect to the Premises or any part thereof, and Lessee shall so perform
and satisfy the requirements of the companies writing such policies so that, at all times,
companies of good standing reasonably satisfactory to Lessor shall be willing to write or to
continue such insurance. Lessee shall, if any member, licensee, concessionaire or other user of
any portion of the Premises engages in any activity in violation of the requirements of all policies
of insurance in force with respect to the Premises, or any party thereof, take steps, immediately
upon knowledge of such activity, to remedy or prevent the same, as the case may be.
15. CASUALTY
Lessee shall promptly cause the Marina Improvements, or any part, thereof, which
are damaged or destroyed, to be repaired and restored to its original condition whether or not
required to be insured against, at Lessee's sole cost and expense. Such repair and restoration
shall be commenced in good faith and with all reasonable diligence within a reasonable period of
time following casualty and shall be completed with due diligence.
16. NO ABATEMENT OF RENT
Throughout the Term, no direct or indirect destruction of or damage to the Marina
Improvements or any other personal property on the Premises or any part thereof or elsewhere by
fire or other casualty whatsoever, whether such damage or destruction be partial or total, shall
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permit Lessee to surrender or terminate the Lease or relieve Lessee from its obligation to pay in
full the Minimum Rent, Additional Rent and other sums and charges payable by Lessee
hereunder or from any other obligation under the Lease, except as otherwise expressly set forth
herein.
17. ASSIGNMENT. SUBLETTING AND HYPOTHECATION
(a) Except as expressly provided herein, Lessee shall not either voluntarily or by
operation of law, assign, transfer, mortgage, pledge, hypothecate or encumber this Lease and
shall not sublet the Premises, in whole or in part, or allow any person other than Lessee's
employees, members, agents, servants and invitees to occupy or use all or any portion of the
Premises without the prior written consent of Lessor which consent shall not be unreasonably
withheld.
(b) The following shall be deemed to be an assignment or transfer within the meaning
of this Lease:
(i) If Lessee is a corporation, any dissolution, merger, consolidation or other
reorganization of Lessee or sale or other transfer of a percentage of capital stock of Lessee which
results in a change of controlling persons, or the sale or other transfer of substantially all the
assets of Lessee.
(ii) If Lessee is a partnership, a transfer of any interest of a general partner, a
withdrawal of any general partner from the partnership, or the dissolution of the partnership.
(c) Assignment. This Lease is appurtenant to the adjoining littoral or riparian land
and/or uplands more particularly described herein and defined above as the "Real Property."
Lessee shall not transfer or assign its ownership interest or use rights in such Real Property
adjoining the Premises separately from the leasehold rights granted by this Lease. In connection
with the sale of all or a portion of the Real Property, Lessee shall have the right to assign or
otherwise transfer Lessee's interest in this Lease and the estate created by this Lease to any
successor of Lessee's interest in all or any part of such adjoining Real Property, provided
Lessor's prior approval has been obtained, which approval shall not be unreasonably withheld,
conditioned or delayed. The following conditions are applicable to Lessee's right of assignment:
(i) Lessee shall give Lessor reasonable advance notice of the proposed
assignment with appropriate documentation as to the financial and operational responsibility and
appropriateness of the proposed assignee. Lessee agrees to provide Lessor with such other or
additional information and/or documentation as may be reasonably requested by Lessor.
(ii) Except as otherwise provided in this Lease for a permitted Leasehold
Mortgagee, the proposed assignee shall, in recordable form, expressly assume all the covenants
and conditions of this Lease.
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(iii) In the event the proposed assignee is acquiring only a portion of the
adjoining Real Property, the rights and obligations of Lessee and the proposed assignee shall be
ratably adjusted.
(iv) On any assignment made in accordance with the provisions and conditions
of this Lease, Lessee shall have no further obligation under this Lease with respect to the that
portion of the Lease so assigned, and, as between Lessor and Lessee, shall be considered to have
assigned to assignee all claims against Lessor arising under this Lease. Nothing herein contained
shall be construed to release Lessee from any liability or obligation arising before the effective
date of the assignment.
(d) Subletting. Lessee shall have the absolute right to sublet the Boat Slips and other
Marina Improvements located on the Premises, and to assign, encumber, extend, or renew any
sublease, provided the following provisions are complied with:
(i) Each sublease shall contain a provision, satisfactory to Lessor and to each
Leasehold Mortgagee having an interest at the time the sublease is executed, requiring sublessee
to attom to Lessor or, in the event of any proceeding to foreclose any Leasehold Mortgage, to the
Leasehold Mortgagee, or any person designated in a notice from Leasehold Mortgagee, if Lessee
defaults under this Lease and if the sublessee is notified of Lessee's default and instructed to
make sublessee's rental payments to the Leasehold Mortgagee or designated person as in this
Section 17(d)(i).
(ii) Lessee shall, promptly after request from Lessor, provide Lessor with the
name and mailing address of each sublessee and shall, on demand, permit Lessor to examine and
copy each such sublease.
(e) Hypothecation. Notwithstanding any other provision contained in this Lease, for
the purpose of financing the acquisition of the Premises, the Real Property, the Boat Slips, the
fixtures and equipment located thereon, and the construction or reconstruction thereof, or
refinancing any such financing, Lessee shall have the right to encumber or assign its interest in
this Lease or assign its interest in any sublease hereunder.
(i) Definitions.
(a) The term "Leasehold Mortgage "as used herein shall include
a mortgage, a deed of trust, a deed to secure debt, or other security instrument by which Lessee's
interest under this Lease and the leasehold estate created thereby is mortgaged, encumbered,
conveyed, assigned, or otherwise transferred, to secure a debt or other obligation, and any and all
amendments, modifications, supplements, extensions and renewals thereof.
(b) The term "Leasehold Mortgagee" or "any Leasehold
Mortgagee" as used herein shall refer to a holder of a Leasehold Mortgage in respect to which the
notice provided for by Section 17(e)(iii) has been given.
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(ii) Leasehold Mortgage Authorized. On one or more occasions, without
Lessor's prior consent, lessee may mortgage or otherwise encumber Lessee's Leasehold Estate,
under one or more Leasehold Mortgages and assign this lease as security for such Leasehold
Estate under one or more Leasehold Mortgages and assign this lease as security for such
Leasehold Mortgage or Mortgages.
(iii) Notice to Lessor. If the holder of a Leasehold Mortgage shall provide
Lessor with notice of such Leasehold Mortgage together with a true copy of such Leasehold
Mortgage and the name and address of the Leasehold Mortgagee, Lessor and Lessee agree that,
following receipt of such notice by Lessor, the provisions of this Section 17 shall apply in respect
to such Leasehold Mortgage and Leasehold Mortgagee. In the event of any assignment of a
Leasehold Mortgage or in the event of a change of address of a Leasehold Mortgagee or of an
assignee of such Leasehold Mortgagee, Leasehold Mortgagee shall cause notice of the new name
and address to be provided to Lessor.
(iv) Notices to Leasehold Mortgagees. Lessor, upon providing Lessee with
any notice of : (A) default under this Lease, or (B) a termination of this Lease, or (C) a
matter on which Lessor may predicate or claim such a default or termination, shall at the same
time provide a copy of such notice to any Leasehold Mortgagee. No such notice by Lessor to
Lessee shall be deemed to have been duly given unless and until a copy thereof has been so
provided to any Leasehold Mortgagee. From and after the date such notice has been given to
Lessee and any Leasehold Mortgagee, any Leasehold Mortgagee shall have the right to remedy,
commence remedying or cause to be remedied any default or acts or omissions which are the
subject matter of such notice, within the same cure period as is given Lessee, plus in each
instance, the additional periods of time specified in this Section 17. Lessee authorizes each
Leasehold Mortgagee to take any such action at such Leasehold Mortgagee's option and does
hereby authorize entry upon the Premises by the Leasehold Mortgagee for such purpose.
(v) Leasehold Mortgagee's Election to Cure. Anything contained in this
Lease to the contrary notwithstanding, if any breach or default under this Lease shall occur and
remain uncured, Lessor shall have no right to terminate this Lease or exercise any other remedy
unless, following the expiration of the period of time given Lessee to cure such breach or default,
or the act or omission which gave rise to such breach or default, Lessor shall first notify any
Leasehold Mortgagee of Lessor's intent to so exercise such remedy, such notice to be given at
least thirty (30) days in advance of the proposed effective date of such exercise if such default is
capable of being cured by the payment of money, and at least sixty (60) days in advance of the
proposed effective date of such exercise if such default is not capable of being cured by the
payment of money. The provisions of Section 17(e)(vi) shall apply if, during such thirty (30) or
sixty (60) day period, any Leasehold Mortgagee shall notify Lessor of such Leasehold
Mortgagee's desire to exercise its rights to perform under Section 17(e)(vi) and shall:
(A) pay or cause to be paid all rent, and other payments then due and in
arrears as specified in such notice and which may become due during such thirty (30) or sixty
(60) day period; and
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(B) comply or in good faith, with reasonable diligence and continuity,
commence to comply with all non - monetary requirements of this Lease then in default and
reasonably susceptible of compliance.
(vi) Procedure on Default.
(A) If any Leasehold Mortgagee shall have proceeded in the manner
provided in Section 17(e)(v), the period specified in Section 17(e)(v) during which Lessor may
not terminate this Lease or exercise any other remedy shall be extended for a period of six (6)
additional months, provided that such Leasehold Mortgagee shall, during such additional six (6)
month period:
(1) pay or cause to be paid all rent, and other monetary
obligations of Lessee under this Lease as the same become due, and continue its good
faith efforts to perform all of Lessee's other obligations under this lease, excepting non -
monetary obligations not reasonably susceptible of being cured or performed; and
(2) if not enjoined or stayed, take steps to acquire or sell
Lessee's interest in this Lease by foreclosure of the Leasehold Mortgage or other
appropriate means and prosecute the same to completion with reasonable diligence.
(B) If at the end of such additional six (6) month period such
Leasehold Mortgage is complying with Section 17(e)(vi)(A), this Lease shall not then terminate,
and the time for completion by such Leasehold Mortgagee of its proceedings shall continue so
long as such Leasehold Mortgagee is enjoined or stayed and thereafter for so long as such
Leasehold Mortgagee proceeds to complete steps to acquire or sell Lessee's interest in this Lease
by foreclosure of the Leasehold Mortgage or by other appropriate means with reasonable
diligence and continuity. Nothing in this Section 17(e)(vi) (B), however, shall be construed to
extend this Lease beyond the Term hereof; nor to require a Leasehold Mortgagee to continue
such foreclosure proceedings after a breach or default has been cured. If Lessee's breach or
default is cured and the Leasehold Mortgagee discontinues such foreclosure proceedings, this
Lease shall continue in full force and effect as if no breach or default under this Lease has
occurred.
(C) The making of a Leasehold Mortgage shall not impose personal
liability on any Leasehold Mortgagee for the performance of any of the terms covenants or
conditions on the part of Lessee to be performed hereunder. Nothing contained herein shall
require a Leasehold Mortgagee to commence any cure or performance on behalf of Lessee or,
once having commenced such a cure or performance, to continue or complete such cure or
performance, or require a Leasehold Mortgagee to commence any remedy or exercise any right
under its Leasehold Mortgage or once having commenced such remedy or exercise to continue or
complete such remedy or exercise.
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(D) The purchaser at any sale of this Lease and of the leasehold estate
hereby created in any proceedings for the foreclosure of or trustee's sale under any Leasehold
Mortgage, or pursuant to any deed in lieu of foreclosure, shall be deemed to be an assignee or
transferee of this Lease, and shall be deemed to be have agreed to perform all of the terms;
covenants and conditions on the part of Lessee to be performed hereunder but only from and after
the date of such purchase and assignment, and only for so long as such purchaser or assignee is
the owner of the leasehold estate created hereby. Any such purchaser or assignee shall not have
any personal liability for any obligations of Lessee accruing either before or after such
purchaser's period of ownership.
(E) Notwithstanding any other provision of this Lease, any sale of this
Lease and of the leasehold estate hereby created in any proceedings for the foreclosure of or
Trustee's sale under any Leasehold Mortgage, shall be deemed to be a permitted sale, transfer or
assignment of this Lease and of the leasehold estate hereby created, not requiring any consent or
approval of Lessor.
(vii) Termination and New Lease.
(A) New Lease. In the event this Lease is terminated by reason of the
happening of any breach or default under this Lease which is not cured by Lessee or a Leasehold
Mortgagee under the provisions and within the time limits set forth above, or in the event of
rejection or disaffirmance of this Lease pursuant to bankruptcy or insolvency law or other law
affecting creditors rights, Lessor shall give prompt notice thereof to any Leasehold Mortgagee.
Lessor shall, on written request of any Leasehold Mortgagee, made at any time within sixty (60)
days after the giving of such notice by Lessor, enter into a new lease of the Premises with such
Leasehold Mortgagee within thirty (30) days after receipt of such request, which new lease shall
be effective as of the date of such termination of this Lease for the remainder of the term of this
Lease, at the rent provided for herein, and upon the same terms, covenants, conditions and
agreements as are herein contained; provided that such Leasehold Mortgagee shall:
w+nswias
(1) pay to Lessor at the time of execution and delivery of said
new lease any and all unpaid sums for rent and other charges payable by lessee hereunder
to and including the date thereof, less the net amount of all sums received by Lessor from
any subtenants in occupancy of any part or parts of the Premises or improvements thereon
up to the date of commencement of such new lease; and
(2) on or prior to the execution and delivery of said new lease,
agree in writing that promptly following the delivery of such new lease, such Leasehold
Mortgagee will perform or cause to be performed all of the other covenants and
agreements herein contained on Lessee's part to be performed to the extent that Lessee
shall have failed to perform the same to the date of delivery of such new lease except
such covenants and agreements which are not reasonably susceptible of performance.
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(B) New Lease Priority. Any new lease made pursuant to Section
17(e)(vii) and any renewal Lease entered into with a Leasehold Mortgagee pursuant to this Lease
shall be prior to any mortgage or other lien, charge or encumbrance on the fee interest in the
Premises and the tenant under such new lease shall have the same right, title and interest in and
to the Premises and the improvements located thereon as Lessee had under this Lease.
(C) Liability of New Lessee. The tenant under any such new lease
shall be liable to perform the obligations imposed on the tenant by such new lease only during
the period such person has ownership of the leasehold estate created thereby, subject to the
possibility of exculpation noted in Section 17(e)(vii)(1).
(D) Subleases and Rents. After the termination of this Lease and
during the period thereafter during which any Leasehold Mortgagee shall be entitled to enter into
a new lease of the Premises, Lessor shall not terminate any sublease or the rights of the subtenant
thereunder unless such subtenant shall be in default under such sublease. During such period
Lessor shall receive all rent and other payments due from subtenants, including subtenants whose
attomment Lessor shall have agreed to accept, as agent of such Leasehold Mortgagee and shall
deposit such rents and payments in a separate and segregated account in trust for the Premises,
but may withdraw such sums, from time to time, to pay necessary operating expenses and
carrying charges of the Premises; and, upon the execution and delivery of such new lease, shall
account to the tenant under the said new lease for the balance, if any, (after application as
aforesaid) of the minimum rent, additional rents and other payments made under said subleases,
and said tenant shall thereupon assign the minimum rent, additional rents and other payments due
under said subleases to any Leasehold Mortgagees of the new lease in the same manner as such
rentals and other payments had been assigned to the Leasehold Mortgagee under this Lease. The
collection of rent by Lessor acting as an agent pursuant to this subparagraph shall not be deemed
an acceptance by Lessor for its own account of the attomment of any subtenant unless Lessor
shall have agreed in writing with such subtenant that its tenancy shall be continued following the
expiration of any period during which a Leasehold Mortgagee may be granted a new lease in
which case such attomment shall take place upon such expiration but not before.
(viii) Miscellaneous Provisions for Leasehold Mortgagees.
(A) Leasehold Mortgagee Need Not Cure Specified Defaults.
Nothing herein contained shall require any Leasehold Mortgagee, as a condition to the
exercise of any of its right hereunder, to cure any breach or default of Lessee not reasonably
susceptible of being cured, including without limitation any breach or default under Sections
18(a) (v), (vi) and (vii).
(b) Consent of Leasehold Mortgagee Required. No cancellation,
termination, surrender or modification of this Lease shall be effective as to any Leasehold
Mortgagee unless either consented to in writing by such Leasehold Mortgagee or made pursuant
to and in compliance with this Section 17.
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(c) Eminent Domain. So long as any Leasehold Mortgagee shall exist,
the proceeds arising from a condemnation in whole or in part of the leasehold interest and/or the
Marina Improvements shall be disposed of as provided for in such Leasehold Mortgage.
(ix) Casualty Loss. A standard Lender's Loss Payable endorsement naming
each Leasehold Mortgagee may be added to any and all insurance policies required to be carried
by Lessee hereunder. Nevertheless, the provisions in any Leasehold Mortgage for the application
of insurance proceeds shall be subject to the provisions of this Lease with respect thereto and, in
the event of any conflict between the provisions of this Lease and the provisions of any
Leasehold Mortgage with respect thereto, the provisions of this Lease shall control.
(x) Arbitration and Legal Proceedings. Lessor shall give any Leasehold
Mortgagee prompt notice of any arbitration or legal proceedings between Lessor and Lessee
involving obligations under this Lease. Any Leasehold Mortgagee shall have the right to
intervene in any such proceedings and be made a party to such proceedings, and the parties
hereto do hereby consent to such intervention. Lessor shall also give any Leasehold Mortgagee
notice of, and a copy of, any award or decision made in any such proceedings. Anything
contained in this Lease to the contrary notwithstanding, in the event lessee shall fail to appoint an
arbitrator under circumstances where Tenant is required or authorized to do so, a Leasehold
Mortgagee shall have an additional period of thirty (30) days, after notice by Lessor that Lessee
has failed to appoint such arbitrator, to make such appointment, and the arbitrator so appointed
shall thereupon be recognized in all respects as if he had been appointed by Lessee.
(xi) Notices. No notice to be given by Lessor to any Leasehold Mortgagee or
by any Leasehold Mortgagee to Lessor shall be effective unless in writing and, if to any
Leasehold Mortgagee, sent by registered mail to the most recent address furnished Lessor
pursuant to Section 17(e)(iii) and if to Lessor, sent by registered mail to the address set forth in
Section 20(c)(i).
(xii) Erroneous Payments. A Leasehold Mortgagee making any payment to
Lessor in error or pursuant to Lessor's wrongful, improper or mistaken notice or demand shall be
entitled to the return of any such payment or portion thereof. If, after any such payment by a
Leasehold Mortgagee, Lessee pays the same or any part thereof to Lessor, Lessor shall promptly
refund said payment or portion thereof to such Leasehold Mortgagee.
(xiii) Limitation on Lessor's Right to Encumber Fee. Any mortgage now or
hereafter placed on Lessor's fee interest in the Premises shall be subject to this Lease, to any new
lease created pursuant to Section 17(e)(vii), to any mortgage now in existence on the leasehold
estate as permitted by this Lease or such new lease, and to Lessee's right, as permitted by this
Lease or such new lease, subsequently to encumber the leasehold estate created hereby or
thereby.
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(xiv) No Rights to Encumber Fee of Lessor. The provisions of this Section do
not give to any person whatsoever the right to mortgage, hypothecate or otherwise to encumber
or to cause any liens to be placed against the freehold estate of Lessor, nor shall said provisions
be construed as resulting in a subordination in whole or in part of the freehold estate of Lessee.
(xv) Performance by Leasehold Mortgagee. Any Leasehold Mortgagee shall
have the right, but not the obligation, to make any payment, perform or cause to be performed
any act, or otherwise comply or cause compliance with any and all terms, covenants and
provision of this Lease to be complied with by Lessee, and Lessor shall accept any such payment,
performance or compliance by any Leasehold Mortgagee as if such payment, performance or
compliance had been made by Lessee.
(xvi) Rights of Leasehold Mortgagees. The exercise by any Leasehold
Mortgagee of its rights to obtain possession of the Premises, including without limitation the
right to commence an action against Lessee for the appointment of a receiver, shall not constitute
a breach or default under this Lease.
(xvii) Non - Merger. So long as any Leasehold Mortgage is in existence, unless
the Leasehold Mortgagee thereof shall otherwise expressly consent in writing, the fee title to the
Premises and leasehold estate created by this Lease shall not merge but shall remain separate and
distinct, notwithstanding the acquisition of both said fee title and said leasehold estate by Lessor,
Lessee or by a third party, by purchase or otherwise.
(xviii) Estoppel Certificate. Lessor shall, without charge, at any time and from
time to time within ten (10) business days after written request of Lessee or any Leasehold
Mortgagee to do so, certify by written instrument duly executed and acknowledged to any
Leasehold Mortgagee or purchaser, or proposed Leasehold Mortgagee or purchaser, or any other
person, firm or corporation specified in such request: (A) as to whether this Lease has been
modified, supplemented, amended, extended or renewed and if so, the substance and manner of
such modification, supplement, amendment, extended or renewed; (B) as to the validity and
force and effect of this Lease in accordance with its provisions; (C) as to the existence of any
breach or default hereunder of any circumstance which, with the giving of notice or the passage
of time, or both, would constitute a breach or default hereunder; (D) as to the existence of an
offsets, counterclaims or defenses to the enforcement of this lease on the part of either Lessor or
Lessee; and (E) as to the commencement and expiration dates of the term of this Lease. Any
such certificate may be relied upon by Lessee and any other person, firm or corporation to whom
the same may be exhibited or delivered, and the contents of such certificate shall be binding upon
Lessor.
(xix) Survival. The provisions of this Section 17 shall serve the termination,
rejection or disaffirmance of this Lease and shall continue in full force and effect thereafter to the
same extent as if this Section 17 was a separate and independent contract made by Lessor and
any Leasehold Mortgagee and, from the effective date of such termination, rejection or
disaffrrmance of this Lease to the date of execution and delivery of any new lease pursuant to
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1 Section 17(e)(vii), such Leasehold Mortgagee may use and enjoy the Premises without hindrance
by Lessor or any person claiming by, through or under Lessor so long as such Leasehold
Mortgagee or any person claiming by, through or under such Leasehold Mortgagee complies with
the terms of this Lease except as otherwise provided herein.
180 DEFAULT AND REMEDIES
(a) The occurrence of any one or more of the following shall constitute a default by
Lessee:
(i) Failure of Lessee to pay Minimum Rent or Additional Rent due hereunder
within thirty (30) days after written notice from Landlord; or
(ii) Failure of Lessee to meet the milestones set forth in the Development
Schedule (as the same may be extended pursuant to the terms hereof).
(iii) Failure of Lessee to maintain the size of slip facilities as presently
configured (except where a change has been reviewed and approved by Lessor).
(iv) Any failure by Lessee to perform any of the other terms, conditions or
covenants of this Lease to be observed or performed by Lessee after thirty { 30) days written
notice from Landlord.
(v) Lessee becoming insolvent or filing any debtor proceedings, or should any
adjudications in bankruptcy be rendered against Lessee, or should Lessee take or have taken
against it, in any court pursuant to any statute either of the United States or of any State, a
petition in bankruptcy or insolvency or for reorganization or for the appointment of a receiver or
trustee of all or a portion of Lessee's property, and should the same not be discharged within one
hundred twenty (120) days thereafter; or
(vi) Lessee permitting the Premises to become vacant or unoccupied for thirty
(30) consecutive days after written notice to Lessee (except for vacancies caused by any Force
Majeure or by remodeling, reconstruction, alterations or repairs permitted under this Lease); or
(vii) The appointment of a trustee or receiver to take possession of substantially
all of the assets of Lessee located at the Premises or Tenant's interest in this Lease or the
Premises, where possession is not restored within thirty (30) days.
(b) Except for the payment of Minimum Rent and Additional Rent, if the nature of
Lessee's default or breach under this paragraph is such that more than thirty (30) days are
reasonably required for its cure, then Lessee shall not be deemed to be in default or breach if
Lessee commences such cure within such thirty (30) day period and diligently proceeds with such
cure to completion.
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(c) Remedies
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In the event of a default or breach by Lessee and Lessee's failure to cure such
default or breach, Lessor may (subject to the rights of the Leasehold Mortgagee) at any time and
with or without notice do any one or more of the following:
(i) Re -enter the Premises, remove all persons and property, and repossess and
enjoy such Premises.
(ii) Terminate this Lease and Lessee's right of possession of the Premises.
Such termination shall be effective upon Lessor's giving written notice and upon receipt of such
notice, Lessee shall immediately surrender possession of the Premises to Lessor.
(iii) Maintain this Lease in full force and effect and recover any rental, royalty,
or other consideration as it becomes due, without terminating Lessee's right of possession,
regardless of whether Lessee shall have abandoned the Premises.
(iv) Exercise any other right or remedy which Lessor may have at law or in
equity.
190 RESTORATION OF PREMISES
(a) Upon expiration or sooner termination of this Lease, Lessor upon written notice,
may take title to any or all Marina Improvements, including fills, or Lessor may require Lessee to
remove all or any such Marina Improvements at its sole expense and risk; or Lessor may itself
remove or have removed all or any portion of such Marina Improvements at Lessee's sole
expense. Lessee shall deliver to Lessor such documentation as may be necessary to convey title
to such improvements to Lessor, free and clear of any liens, mortgages, loans or any other
encumbrances, subject to the reversionary interest of lessors, if any, of any (i) Leased Slips or
(ii) Owned Slips adjacent to ground ]eased Rea] Property.
(b) In removing any such Marina Improvements, Lessee shall restore the Premises as
nearly as possible to the conditions existing prior to their installation or construction.
(c) All plans for and subsequent removal and restoration shall be to the satisfaction of
Lessor and shall be completed within ninety (90) days after the expiration or sooner termination
of this Lease.
(d) In removing any or all the Marina Improvements, Lessee shall be required to
obtain any permits or other governmental approvals as may then be required by lawful authority.
200 CONDEMNATION
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(a) As used in this Lease, the term "Condemnation" means a permanent taking of the
Premises through (a) the exercise of any government power (by legal proceedings or otherwise),
by any public or quasi- public authority or by any other party having the right of eminent domain
( "Condemnor ") or (b) a voluntary sale or transfer by Lessor to any Condemnor, either under
threat of exercise of eminent domain by a Condemnor or while legal proceedings for
condemnation are pending.
(b) Lessor shall notify Lessee in writing of any Condemnation within thirty (30) days
after the later of (a) the filing of a complaint by Condemnor or (b) the final agreement and
determination by Lessor and Condemnor of the extent of the taking ( "Condemnation Notice ").
(c) If the Premises are totally taken by Condemnation, this Lease shall terminate as of
the date on which Condemnor takes possession of the Premises that are subject to the
Condemnation ( "Termination Date "). If twenty -five percent (25 %) or more of the lineal feet of
the Premises are taken through Condemnation, Lessee shall have the option to terminate this
Lease by providing thirty (30) days' written notice to Lessor. Lessee's notice must be given
within thirty (30) days after Lessee's receipt of the Condemnation Notice required by section
20(b). If this Lease is terminated under this Article 20, the termination shall be effective on the
Termination Date, and Lessor shall prorate Rent to that date. Lessee shall be obligated to pay
Rent for the period up to, but not including, the Termination Date as prorated by Lessor. Lessor
shall return to Lessee prepaid Rent allocable to any period on or after the Termination Date.
(d) If any part of the Premises is taken by Condemnation and this Lease is not
terminated, Rent shall be proportionately reduced based on the lineal feet of the Premises taken.
Lessor and Lessee agree to enter into an amendment to this Lease within thirty (30) days after the
partial taking, confirming the reduction in lineal feet and the reduction in Rent.
(e) If a temporary taking of part of the Premises occurs through (a) the exercise of any
government power (by legal proceedings or otherwise) by Condemnor or (b) a voluntary sale or
transfer by Landlord to any Condemnor, either under threat of exercise of eminent domain by a
Condemnor or while legal proceedings for condemnation are pending, Minimum Rent and
Additional Rent shall abate during the time of such taking in proportion to the portion of the
Premises taken.
210 ADDITIONAL PROVISIONS
(a) Waiver.
(i) No term, covenant, or condition of this Lease and no default or breach of
any such term, covenant or condition shall be deemed to have been waived by Lessor's
acceptance of a late or nonconforming performance or otherwise, unless such a waiver is
expressly acknowledged by Lessor in writing.
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(ii) Any such waiver shall not be deemed to be a waiver of any other term,
covenant or condition of this Lease.
(b) Time. Time is of the essence of this Lease and each and all of its terms, covenants
or conditions in which performance is a factor.
(c) Notice.
(i) All notices required to be given under this Lease shall be given in writing,
sent by U.S. Mail with postage prepaid, to Lessor at the offices of the City of Newport Beach,
Attn: City Manager, and to Lessee and Leasehold Mortgage (if any) at the addresses specified in
this Lease. Lessee and Leasehold Mortgagee may give Lessor notice of any change in its name
or address.
(ii) Until such notice of change, all notices to Lessee shall be sent to: LJR
LIDO PARTNERS, L.P., c/o James Ratkovich & Associates, Inc., 1224 East Green Street, Suite
101, Pasadena, California 91106, Attn: James Ratkovich.
(iii) Until such notice of change, all notices to Leasehold Mortgagee shall be
sent to: LEHMAN BROTHERS HOLDINGS, INC., doing business as Lehman Capital, a
division of Lehman Brothers Holdings, Inc., a Delaware corporation, Three World Financial
Center, Twelfth Floor, New York, New York 10285, Attn: Xavier L. Sheid,11.
(d) Recordation of Memorandum. Lessor and Lessee hereby covenant and agree to
execute concurrently herewith a Memorandum of Lease in the form of Exhibit F and Lessee shall
record such Memorandum within three (3) business days after the Commencement Date. Lessee
shall pay all fees, costs, taxes and expenses in any way related to such Memorandum or its
recordation.
(e) Consent. Where Lessor's consent is required under this Lease, its consent for one
transaction or event shall not be deemed to be a consent to any subsequent occurrence of the
same or any other transaction or event, provided, however, that Lessor's consent shall not be
unreasonably withheld, conditioned or delayed.
(f) Changes. This Lease may be terminated and its term, covenants and conditions
amended, revised or supplemented only by mutual written agreement of the parties.
(g) Successors. The terms, covenants and conditions of this Lease shall extend to and
be binding upon and inure to the benefit of the heirs, successors, and assigns of the respective
parties.
(h) Captions. The captions of this Lease are not controlling and shall have no effect
upon its construction or interpretation.
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(i) Severability. If any term, covenant or condition of this Lease is determined by a
court of competent jurisdiction to be invalid, it shall be considered deleted and shall not
invalidate any of the remaining terms, covenants and conditions.
IN WITNESS WHEREOF, THE PARTIES HAVE EXECUTED THIS
AGREEMENT EFFECTIVE AS OF THE DATE HEREIN PROVIDED.
LESSOR LESSEE
For City of Newport Beach LJR LIDO PARTNERS L.P., a Delaware limited
partnership
Attest:
By: LJR LIDO MANAGERS L.P.,
Mayor a Delaware limited partnership
Its General Partner
City Clerk
Approved As To Form:
Assistant City Attorney
WOW=
6►Acim
By: JRA PARTNER I, LLC,
a California limited liability
company, Its General Partner
By: James Ratkovich &
Associates, Inc., a California
corporation
By:
Name: James Ratkovich
Title: President
By: LB LIDO I INC.,
a Delaware corporation
Its General Partner
By: _
Name:
Title:
3�
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PARCEL D:
EXHIBIT A
(REAL PROPERTY DESCRIPTION)
PARCEL 1, IN THE CITY OF NEWPORT BEACH, COUNTY OF ORANGE, STATE OF
CALIFORNIA, AS SHOWN ON A MAP FILED IN BOOK 60, PAGE 43 OF PARCEL MAPS,
IN THE OFFICE OF THE COUNTY RECORDER OF SAID COUNTY.
PARCEL G:
That certain Lease Agreement dated November 9, 1973, by and between June Johnson, an
individual, as lessor, and Donald M. Koll, a married man, as his sole and separate property, as
lessee, as amended by that certain Addendum to Lease Agreement dated November 9, 1973 and
by that certain Agreement dated April 30, 1987, and evidenced by that certain Lease (Short Form
- Memorandum), recorded on December 18, 1973 in Book 11031, Page 23 in the Official
Records of Orange County, California, the lessee's interest having been assigned to Marvin
Engineering Co., Inc., a California corporation ( "MEC ") pursuant to an instrument recorded on
May 23, 1990, in the Official Records of Orange County, California, as Instrument No. 90-
277172, and subsequently assigned by MEC to LJR LIDO PARTNERS L.P., a Delaware limited
partnership pursuant to an instrument dated affecting the following described
real property:
PARCEL 1, IN THE CITY OF NEWPORT BEACH, COUNTY OF ORANGE, STATE OF
CALIFORNIA, AS SHOWN ON A MAP FILED IN BOOK 63, PAGE 11 OF PARCEL MAPS,
IN THE OFFICE OF THE COUNTY RECORDER OF SAID COUNTY.
PARCEL H:
That certain Ground Lease dated January 2, 1966, by and between Calvin G. Rohrs and Arlene L.
Rohrs, husband and wife, as lessor, and James W. Berkshire and Pauline F. Berkshire, husband
and wife, as lessee, as evidenced by that certain Lease (Short Form - Memorandum) recorded on
January 4, 1966 in the Official Records of Orange County, California, in Book 7797, Page 653,
and assigned to David M. Koll pursuant to an instrument recorded on December 31, 1973 in the
Official Records of Orange County, California, in Book 11046, Page 865, and later assigned to
Marvin Engineering Co., Inc., a California corporation ( "MEC ") pursuant to an instrument
recorded on May 23, 1990, in the Official Records of Orange County, California, as Instrument
No. 90- 277172, and subsequently assigned by MEC to LIR LIDO PARTNERS L.P., a Delaware
limited partnership pursuant to an instrument dated affecting the following
described real property:
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LOTS 1121 AND 1122 OF TRACT NO. 907, AND THAT PORTION OF LOT 1123 OF SAID
TRACT NO. 907, IN THE CITY OF NEWPORT BEACH, COUNTY OF ORANGE, STATE
OF CALIFORNIA, AS PER MAP RECORDED IN BOOK 28, PAGES 25 TO 36 INCLUSIVE
OF MISCELLANEOUS MAPS, IN THE OFFICE OF THE COUNTY RECORDER OF SAID
COUNTY, DESCRIBED AS FOLLOWS:
BEGINNING AT THE MOST EASTERLY CORNER OF LOT 1123; THENCE
NORTHWESTERLY 26.05 FEET ALONG THE NORTHEASTERLY LINE THEREOF TO A
POINT 120.00 FEET MEASURED THEREON FROM THE MOST EASTERLY CORNER OF
SAID LOT 1121; THENCE SOUTHWESTERLY 40 00 FEET PARALLEL WITH THE
SOUTHEASTERLY LINE OF SAID LOT 1 121; THENCE SOUTHWESTERLY ALONG A
STRAIGHT LINE TO A POINT ON THE SOUTHWESTERLY LINE OF SAID LOT 1123,
DISTANT 92.50 FEET, MEASURED ALONG THE SOUTHWESTERLY LINES OF SAID
LOTS 1121, 1122 AND 1123 FROM THE MOST SOUTHERLY CORNER OF SAID LOT
1121, THENCE SOUTHEASTERLY ALONG THE SOUTHWESTERLY LINE THEREOF TO
THE MOST SOUTHERLY CORNER OF SAID LOT 1123; THENCE NORTHEASTERLY
99.54 FEET ALONG THE SOUTHEASTERLY LINE OF SAID LOT 1123, TO THE POINT
OF BEGINNING.
EXCEPT THAT PORTION OF SAID LOT 1123 DESCRIBED AS FOLLOWS:
BEGINNING AT THE MOST WESTERLY CORNER OF THE LAND DESCRIBED IN A
DEED RECORDED JULY 17, 1952 IN BOOK 2357, PAGE 565, OFFICIAL RECORDS, SAID
MOST WESTERLY CORNER BEING NORTHWESTERLY 92.50 FEET, MEASURED
ALONG THE SOUTHWESTERLY LINES OF LOTS 1121, 1122 AND 1123, FROM THE
MOST SOUTHERLY CORNER OF SAID LOT 1121; THENCE NORTH 37° 47' 26" EAST,
69.93 FEET ALONG THE NORTHWESTERLY LINE OF SAID DEED TO AN ANGLE
POINT IN SAID LINE; THENCE CONTINUING ALONG SAID LINE NORTH 62'30' EAST
15.12 FEET; THENCE SOUTH 42° 07'53 " WEST, 83.51 FEET TO THE POINT OF
BEGINNING.
PARCEL K:
That certain Lease Agreement dated December 1, 1971, by and between Harry M. Kelso, an
individual, as lessor, and Donald M. Koll, a married man, as his sole and separate property, as
lessee, as evidenced by that certain Lease (Short Form - Memorandum) recorded on December
10, 1971 in the Official Records of Orange County, California, in Book 9921, Page 859, and
assigned to Marvin Engineering Co., Inc., a California corporation ( "MEC ") pursuant to an
instrument recorded on May 23, 1990, in the Official Records of Orange County, California, as
Instrument No. 90- 277172, and subsequently assigned by MEC to LJR LIDO PARTNERS L.P.,
a Delaware limited partnership pursuant to an instrument dated , affecting the
following described real property:
LOT 24 AND THE NORTHWESTERLY ONE -HALF OF LOT 23 OF TRACT NO. 1622, IN
THE CITY OF NEWPORT BEACH, COUNTY OF ORANGE, STATE OF CALIFORNIA, AS
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PER MAP RECORDED IN BOOK 47, PAGE 39 OF MISCELLANEOUS MAPS, IN THE
OFFICE OF THE COUNTY RECORDER OF SAID COUNTY.
PARCEL L:
LOTS 22 AND 23 OF TRACT NO. 1622, IN THE CITY OF NEWPORT BEACH, COUNTY
OF ORANGE, STATE OF CALIFORNIA, AS PER MAP RECORDED IN BOOK 47, PAGE 39
OF MISCELLANEOUS MAPS, IN THE OFFICE OF THE COUNTY RECORDER OF SAID
COUNTY.
EXCEPT FROM SAID LOT 23, THE NORTHWESTERLY ONE -HALF THEREOF.
PARCEL M:
That certain Ground Lease dated June 1, 1973, by and between Earl G. Sawyer and Eleanor B.
Sawyer, husband and wife, as lessor, and David M. Koll and Dorothy B. Koll, husband and wife,
as lessee, as evidenced by that certain Lease (Short Form - Memoranda) recorded on June 6,
1973 in the Official Records of Orange County, California, in Book 10736, Page 326, and
assigned to Marvin Engineering Co., Inc., a California corporation ( "MEC ") pursuant to an
instrument recorded on May 23, 1990, in the Official Records of Orange County, California, as
Instrument No. 90- 277172, and subsequently assigned by MEC to LJR LIDO PARTNERS L.P.,
a Delaware limited partnership pursuant to an instrument dated affecting the
following described real property:
LOTS 17, 18, 19, 20 AND 21 OF TRACT NO. 1622, IN THE CITY OF NEWPORT BEACH,
COUNTY OF ORANGE, STATE OF CALIFORNIA, AS PER MAP RECORDED IN BOOK
47, PAGE 39 OF MISCELLANEOUS MAPS, IN THE OFFICE OF THE COUNTY
RECORDER OF SAID COUNTY.
EXCEPT FROM SAID LOT 17; THE SOUTHEASTERLY 30.00 FEET THEREOF.
ALSO EXCEPT ALL BUILDINGS AND IMPROVEMENTS OF EVERY KIND AND
NATURE NOW OR HEREAFTER CONSTRUCTED OR LOCATED ON SAID REAL
PROPERTY.
SAID LAND IS SHOWN AS A PORTION OF PARCEL 1 OF PARCEL MAP, IN THE CITY
OF NEWPORT BEACH, COUNTY OF ORANGE, STATE OF CALIFORNIA, AS SHOWN
ON A MAP FILED IN BOOK 59, PAGE 17 OF PARCEL MAPS, IN THE OFFICE OF THE
COUNTY RECORDER OF SAID COUNTY.
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PARCEL N:
ALL BUILDINGS AND IMPROVEMENTS OF EVERY KIND AND NATURE NOW
LOCATED ON THE LAND HEREINAFTER DESCRIBED AT THE DATE HEREOF,
WHICH BUILDINGS AND IMPROVEMENTS ARE, AND SHALL REMAIN, REAL
PROPERTY.
LOTS 17, 18, 19, 20 AND 21 OF TRACT NO. 1622, IN THE CITY OF NEWPORT BEACH,
COUNTY OF ORANGE, STATE OF CALIFORNIA, AS PER MAP RECORDED IN BOOK
47, PAGE 39 OF MISCELLANEOUS MAPS, IN THE OFFICE OF THE COUNTY
RECORDER OF SAID COUNTY.
EXCEPT FROM SAID LOT 17 THE SOUTHEASTERLY 30.00 FEET THEREOF.
PARCEL O:
That certain Ground Lease dated June 1, 1973, by and between Earl G. Sawyer and Eleanor B.
Sawyer, husband and wife, as lessor, and David M. Koll and Dorothy B. Koll, husband and wife,
as lessee, as evidenced by that certain Lease (Short Form - Memoranda) recorded on June 6,
1973 in the Official Records of Orange County, California, in Book 10736, Page 342, and
assigned to Marvin Engineering Co., Inc., a California corporation ( "MEC ") pursuant to an
instrument recorded on May 23, 1990, in the Official Records of Orange County, California, as
Instrument No. 90- 277172, and subsequently assigned by MEC to LJR LIDO PARTNERS L.P.,
a Delaware limited partnership pursuant to an instrument dated affecting the
following described real property:
LOTS 15 AND 16 AND THE SOUTHEASTERLY 30.00 FEET OF LOT 17 OF TRACT NO.
1622, IN THE CITY OF NEWPORT BEACH, COUNTY OF ORANGE, STATE OF
CALIFORNIA, AS PER MAP RECORDED IN BOOK 47, PAGE 39 OF MISCELLANEOUS
MAPS, IN THE OFFICE OF THE COUNTY RECORDER OF SAID COUNTY.
EXCEPT FROM SAID LOT 15, THE SOUTHEASTERLY 40.00 FEET THEREOF.
ALSO EXCEPT ALL BUILDINGS AND IMPROVEMENTS OF EVERY KIND AND
NATURE NOW OR HEREAFTER CONSTRUCTED OR LOCATED ON SAID REAL
PROPERTY.
SAID LAND IS SHOWN AS A PORTION OF PARCEL 1 OF PARCEL MAPS, IN THE CITY
OF NEWPORT BEACH, COUNTY OF ORANGE, STATE OF CALIFORNIA, AS SHOWN
ON A MAP FILED IN BOOK 59, PAGE 17 OF PARCEL MAPS, IN THE OFFICE OF THE
COUNTY RECORDER OF SAID COUNTY.
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PARCEL P:
1.
ALL BUILDINGS AND IMPROVEMENTS OF EVERY KIND AND NATURE OR
HEREAFTER LOCATED ON THE LAND HEREAFTER DESCRIBED AT THE DATE .
HEREOF, WHICH IMPROVEMENTS ARE AND SHALL REMAIN, REAL PROPERTY.
LOTS 15 AND 16 OF THE SOUTHEASTERLY 30.00 FEET OF LOT 17 OF TRACT NO.
1622, IN THE CITY OF NEWPORT BEACH, COUNTY OF ORANGE, STATE OF
CALIFORNIA, AS PER MAP RECORDED IN BOOK 47, PAGE 39 OF MISCELLANEOUS
MAPS, IN THE OFFICE OF THE COUNTY RECORDER OF SAID COUNTY.
EXCEPT FROM SAID LOT 15, THE SOUTHEASTERLY 40.00 FEET THEREOF.
PARCEL Q:
AN EASEMENT AS TO PARCEL 2, IN THE CITY OF NEWPORT BEACH, COUNTY OF
ORANGE, STATE OF CALIFORNIA, AS SHOWN ON A MAP FILED IN BOOK 60, PAGE
43 OF PARCEL MAPS, IN THE OFFICE OF THE COUNTY RECORDER OF SAID
COUNTY, SAID EASEMENT BEING RECORDED IN BOOK 11140, PAGE 1394, OFFICIAL
RECORDS OF ORANGE COUNTY ON MAY 10, 1974.
PARCELS:
A USE EASEMENT FOR PARKING AND OTHER PURPOSES, AS PROVIDED FOR AND
UPON THE TERMS, COVENANTS AND CONDITIONS SET FORTH IN THAT CERTAIN
AGREEMENT DATED JANUARY 3, 1974, ENTITLED "JOINT USE AGREEMENT ",
RECORDED IN BOOK 11140, PAGE 1356, OFFICIAL RECORDS OF ORANGE COUNTY,
AND AFFECTING THE FOLLOWING DESCRIBED PROPERTY:
PARCEL 2, IN THE CITY OF NEWPORT BEACH, COUNTY OF ORANGE, STATE OF
CALIFORNIA, AS SHOWN ON A MAP FILED IN BOOK 60, PAGE 43 OF PARCEL MAPS,
IN THE OFFICE OF THE COUNTY RECORDER OF SAID COUNTY.
PARCEL T:
AN EASEMENT FOR INGRESS AND EGRESS OVER THE NORTHWESTERLY 25 FEET
OF LOT 4 AND ALL OF LOTS 5, 6 AND 7 OF TRACT NO. 1622, IN THE CITY OF
NEWPORT BEACH, COUNTY OF ORANGE, STATE OF CALIFORNIA, AS PER MAP
RECORDED IN BOOK 47, PAGE 39 OF MISCELLANEOUS MAPS, IN THE OFFICE OF
THE COUNTY RECORDER OF SAID COUNTY, CALIFORNIA.
EXCEPT THE NORTHWESTERLY 20 FEET OF SAID LOT 7, FOR REASONABLE
ACCESS ACROSS THE SAID LAND FROM THE PUBLIC STREET TO THE BOAT SLIPS,
PIERS AND FLOATS ABUTTING SAID LAND, WHICH EASEMENT PROVIDES THAT
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THE LOCATION OF SUCH ACCESS EASEMENT.SHALL BE DESIGNATED BY THE '
OWNER OF SAID LAND AND MAY BE RELOCATED BY SAID OWNER IN THE EVENT
THE OWNER REDEVELOPS THE EXISTING IMPROVEMENTS LOCATED ON SAID
LAND.
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EXHIBIT B
(TIDELANDS DESCRIPTION)
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MOLLENHAUER GROUP
CIVIL ENGINEERING, SURVEYING +MAPPING, LAND DEVELOPMENT
411 West Fifth Street, Fourth Floor, Los Angeles, California 90013
Phone (213) 624 -2661 - Fax (213) 614.1863
May 1, 1998
BOAT SLIPS AT VIA LIDO MARINA
PARCEL 1:
That portion of Newport Bay Harbor as shown on Map of the Department of the Army, File No.
972 -3 dated December 26, 1950 in the City of Newport Beach, County of Orange, State of
California, described as follows:
Beginning at the northwest corner of that certain Parcel Map filed in Book 63, page 11 of Parcel
Maps, in the office of the County Recorder of said County, said point also being Station No. 125 as
shown on said Department of Army Map; thence along the northerly prolongation of the westerly
line of said Parcel Map, North 24 012'37" East 42.77 feet; thence South 81 °23'59" East 82.21
feet, to a point in a line that is parallel with and distant 100.00 feet easterly measured at right
angles to the Bulkhead line as shown on said Department of Army Map; thence along said parallel
line South 27 °29'51" East 719.99 feet to the intersection with the easterly prolongation of the
southerly line of Parcel 1, of that certain Parcel Map filed in Book 60, page 43 of Parcel Maps,
records of said County; thence along said easterly prolongation, South 62 °30'09" West 100.00
feet to a point on said Bulkhead line; thence along said Bulkhead line North 27 029'51" West
741.93 feet to the point of beginning.
PARCEL 2:
That portion of Newport Bay Harbor as shown on Map of the Department of the Army, File No.
972 -3 dated December 26, 1950 in the City of Newport Beach, County of Orange, State of
California, described as follows:
Beginning at the northeast corner of Parcel 2, of that certain Parcel Map filed in Book 60, page 43
of Parcel Maps, records of said County; thence along the easterly prolongation of the northerly line
of said Parcel 2, North 62 030'09" East 100.00 feet; thence parallel with the easterly line of Said
Parcel 2, South 27 °29'51" East 223.27 feet to the intersection with the easterly prolongation of
the southerly line of said Parcel 2; thence along said easterly prolongation, South 62 °30'09" West
100.00 feet to a point in said easterly line of Parcel 2; thence along said easterly line North
27 °29'51" West 223.27 feet to the point of beginning.
PAGE 1 of 2
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PARCEL 3:
That portion of Newport Bay Harbor as shown on Map of the Department of the Army, File No.
972 -3 dated December 26, 1950 in the City of Newport Beach, County of Orange, State of
California, described as follows:
Beginning at the southeast corner of Parcel 2, of that certain Parcel Map filed in Book 60, page 43
of Parcel Maps, records of said County; thence along the easterly prolongation of the southerly line
of said Parcel 2, North 62 030'09" East 100.00 feet; thence parallel with the easterly line of said
Parcel 2, South 27 °29'51' East 124.89 feet to the intersection with the easterly prolongation of
the northerly line of that certain Parcel Map filed in Book 59, page 44 of Parcel Maps, records of
said County; thence along said easterly prolongation South 62 °30'09° West 100.00 feet to the
northeast corner of said Parcel Map filed in Book 59, page 44; ' thence along the northerly
prolongation of the easterly line of said Parcel Map, North 27 °29'51" West 124.89 feet to the point
of beginning.
NOTE: THIS DESCRIPTION WAS PREPARED AS A CONVENIENCE ONLY AND IS NOT FOR
USE IN THE DIVISION AND /OR CONVEYANCE OF LAND IN VIOLATION OF THE
SUBDIVISION MAP ACT OF THE STATE OF CALIFORNIA.
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Kevin R. Hills, P.L.S. 6617
►2 -31 -99
1. No. cs17 f:
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WIA593105
EXHIBrr C
(MAP DEPICTING BOAT SLIPS)
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ALTNACSM LAND TIME SURVEY
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EXHIBIT D
(GRANT DEED)
EXHIBIT E
DEVELOPMENT SCHEDULE
Action Required
Provide evidence of financing for
redevelopment plan preparation and
entitlement processing.
Submit plan for expanded community
outreach program.
Submit conceptual plan of redevelopment
project. Conceptual plan will mean proposed
uses and their location and building area; the
general configuration and size of the project;
a general description of the various elements,
functions and layout of the proposed
improvements; a preliminary site plan
showing improvements, access and
circulation; and conceptual elevations for all
improvements, features and elements to be
developed.
Submit complete applications for land use
entitlements.
Submit complete applications for building
permits.
MIAS 1106
Action to be Completed By
Commencement Date - Completed
Within thirty (30) days of the Commencement
Date
Within two years of the Commencement
Date.
Within four (4) years of the Commencement
Date.
Within two (2) years of City entitlement
approvals.
ILA
LAOlMS9nns
EXH Brr "F'
(MEMORANDUM OF LEASE)
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RECORDING REQUESTED BY AND
WHEN RECORDED RETURN TO:
Morgan, Lewis & Bockius LLP
300 S. Grand Avenue, 22nd Floor
Los Angeles, California 90071
Attn: William D. Ellis, Esq.
space above bm for recorders use
MEMORANDUM OF LEASE
THIS MEMORANDUM OF LEASE is made effective as of
1998, by and among the CITY OF NEWPORT BEACH, a municipal corporation and charter city
( "Landlord "), and LJR LIDO PARTNERS L.P., a Delaware limited partnership ( "Tenant "), who
agree as follows:
(1) Premises. Landlord hereby leases to Tenant and Tenant hereby hires from
Landlord upon and subject to the terms of that certain unrecorded Lease, dated as of June_,
1998 (the "Lease ") Landlord's right, title and interest in and to certain tidelands located in the
City of Newport Beach, County of Orange, State of California, more particularly described in
Exhibit A attached hereto and incorporated herein by reference, commonly known as "Lido
Marina Village. ". The terms and provisions of the Lease are incorporated into this Memorandum
of Lease by this reference as though fully set forth herein.
(2) Term. The term of the Lease will commence on
( "Commencement Date "), and will expire fifty (50) years thereafter.
(3) No Modification. This Memorandum of Lease has been executed for
purposes of recordation only and shall not modify the terms and provisions of the Lease in any
manner.
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IN WITNESS WHEREOF, the parties have executed this Memorandum of Lease
as of the day and year first above written.
LESSOR LESSEE
For City of Newport Beach LJR LIDO PARTNERS L.P., a Delaware limited
partnership
By: LIR LIDO MANAGERS L.P.,
Mayor a Delaware limited partnership
Its General Partner
Attest: By: JRA PARTNER I, LLC,
a California limited liability company, Its
General Partner
City Clerk By: James Ratkovich & Associates, Inc.,
a California corporation
Approved As To Form:
Assistant City Attorney
LAMSM105
Bv:
Name: James Ratkovich
Title: President
By: LB LIDO I INC.,
a Delaware corporation
Its General Partner
By: _
Name:
Title:
1
STATE OF CALIFORNIA )
) ss.
COUNTY OF )
On June _, 1998, before me, a notary public in and
for said State, personally appeared personally known
to me (or 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 signature(s) on the
instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the
instrument.
WITNESS my hand and official seal.
Signature [SEAL]
STATE OF CALIFORNIA )
ss.
COUNTY OF )
On June _, 1998, before me, a notary public in and
for said State, personally appeared personally known
to me (or 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 signature(s) on the
instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the
instrument.
WITNESS my hand and official seal.
Signature
�M593,os
[SEAL]
S�
EXHIBIT A
LEGAL DESCRIPTION OF TIDELANDS
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APPRAISAL REPORT
Appraisal of
Fair Market Rental Value
Tidelands
Lido Marina Village
Newport Beach, California
Date of Value: Submitted To:
June 1, 1998 Mr. James Ratkovich
1224 East Green Street
Pasadena, California 91106
Date of Report: Submitted By:
June 3, 1998 Richard A. Fuller, MAI
Fuller & Hansen
430 32nd Street, Suite 200
Newport Beach, California 92663
0
RICHARD A. FULLER, MAI
MEMBER. APPRAISAL INSTITUTE
Mr. James Ratkovich
1224 East Green Street
Pasadena, California 91106
Dear Mr. Ratkovich:
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REAL ESTATE APPRAISAL OFFICES OF
FULLER @ HANSEN
430 32 +R STREET. SUITE 200
NEWPORT BEACH. CA 92663 -3801
TELEPHONE 19141 675-7600
FACSIMILE (714) 615 -5767
June 3, 1998
WILLIAM R. HANSEN, MAI
MEMBER. APPRAISAL INSTITUTE
RE: Appraisal of the Fair Market Rental Value of
the tidelands within the Lido Marina Village
Newport Beach, California
In accordance with my proposal dated May 29, 1998, and your authorization on May 29,
1998, 1 have made an examination of the above - referenced property for the purpose of
estimating the fair market rental value, of the tidelands within the Lido Marina Village. as of
June 1, 1998.
As a result of this investigation and an analysis of matters pertinent to the property's
value, I have concluded that the fair market rental value, thereof, as of said date, was as
follows:
FAIR MARKET RENTAL VALUE - TIDELANDS
Base Rent: $1411.f. slip /year
Percentage Rent: 9%
APPRAISAL
In conformance with Standard 1 of the Uniform Standards of Professional Appraisal Practice
(USPAP), this appraisal is defined as a limited appraisal wherein the act or process of estimating
value or an estimate of value is performed under and resulting from invoking the departure
provision.
REPORT FORM
In conformance with Standard 7 of the Uniform Standards of Professional Appraisal Practice
(USPAP), this report is defined as a restricted report which limits the level of detail of presentation
and includes a use restriction that limits the reliance on the report to the client and considers
anyone else using the report, as an unintended user.
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REAL ESTATE IDENTIFICATION
For identification purposes the subject property is identified as the tidelands within Lido Marina
Village in the City of Newport Beach, County of Orange, State of California. These tidelands are
further identified as Parcels 1, 2 and 3 of that legal description title "boat slips at Via Lido Marina"
prepared by the Mollenhauer Group and dated May 1, 1998.
Fair Market Rental Value
REAL PROPERTY INTEREST
PURPOSE AND INTENDED USE
The purpose of this appraisal is to express an opinion of the fair market rental value of the
tidelands only. It is the understanding of the appraiser that the intended use of this appraisal is
for the establishment of the base rent of the submerged tidelands, subject to a proposed 50 year
lease.
DEFINITIONS
Fair Market Rental Value:
The most probable rental which a property should bring in a competitive and open market
under all conditions requisite to a fair rental, the lessor and lessee each acting prudently
and knowledgeably, and assuming the rental is not affected by undue stimulus. Implicit in
this definition is the consummation of a rental as of a specified date under conditions
whereby:
1. Lessor and lessee are typically motivated;
2. Both parties are well informed or well advised, and acting in what they consider their
best interests;
3. A reasonable time is allowed for exposure in the open market;
4. Payment is made in terms of cash in United States dollars or in terms of financial
arrangements comparable thereto; and
5. The rental represents the normal consideration for the property leased, unaffected
by special rental concessions granted by anyone associated with the sale.
EFFECTIVE APPRAISAL DATE
The effective appraisal date is June 1, 1998.
REPORT DATE
The date of report is June 3, 1998.
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COLLECTION, CONFIRMATION, AND REPORTING OF DATA
This report was prepared under USPAP provisions for a limited appraisal and a restricted report,
the scope of this assignment has been limited to a physical inspection of the subject property;
limited market data study of the comparable market data; limited analysis of the physical
characteristics of the subject property, comparison of the market data to the subject property; and
the formulation of an opinion as to the fair market rental value, of the subject property.
LIMITING CONDITIONS
This appraisal has been based on the following limiting conditions:
1) That I assume no responsibility for matters legal in character, nor do I render any
opinion as to the title which is assumed to be good. All existing liens, and
encumbrances, securing payment of money, have been disregarded, and the
property is appraised as though free and clear under responsible ownership and
competent management.
2) That information obtained for use in this appraisal is believed to be true and correct
to the best of my ability. However, no responsibility is assumed for errors or
omissions, or for information not disclosed which might otherwise affect the valuation
estimate.
3) That disclosure of the contents of this appraisal report is governed by the Code of
Professional Ethics and the Standards of Professional Practice of the Appraisal
Institute and the Uniform Standards of Professional Appraisal Practice ( USPAP).
4) That neither all, nor any part, of the contents of this report (especially any
conclusions as to value, the identity of the appraiser, or the firm with which he is
connected, or any reference to the Appraisal Institute, or the MAI designation) shall
be disseminated to the public through advertising media, public relations, news
media, sales media, or any other public means of communication without prior
written consent and approval of the undersigned.
5) That this valuation estimate is of the tidelands only, and the valuation of mineral
rights, if any, has been disregarded.
6) That no warranty is made as to the seismic stability of the subject property.
7) That the appraiser, by reason of this appraisal, is not required to give testimony, or
attendance in court with reference to the property appraised, unless arrangements
have been previously made thereof.
8) That the submission of this report constitutes completion of the services authorized.
It is submitted upon the condition that the client will provide the appraiser customary
compensation relating to any subsequent required depositions, conferences,
additional preparation, review, travel or testimony.
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9) That, by specific instructions of the client, this report was not prepared for litigation
purposes. If this matter is adjudicated in any manner, the appraiser reserves the
right to prepare a comprehensive narrative report, at an additional cost, and to
further verify the data upon which this estimate of value is based.
10) That as no current title report was available for review, it is assumed that there are
no easements or conditions of title that would effect the use of the subject property
in accordance with its highest and best use.
11) That maps and exhibits set out in this report are for illustration purposes only and
are to assist the reader in visualizing the property. No survey of the property has
been made and no liability is assumed in connection with such matters.
12) That unless otherwise stated in this report, the existence of hazardous substances,
including without limitation asbestos, urea formaldehyde, foam insulation,
polychlorinated biphenyls, petroleum leakage, or agricultural chemicals, which may
or may not be present on the property, or other environmental conditions, were not
called to the attention of nor did the appraiser become aware of such during the
appraiser's inspection. The value estimated is predicated on the assumption that
there is no such condition on or in the property or in such proximity thereto that it
would cause a loss in value. No responsibility is assumed for any such conditions,
nor for any expertise or engineering knowledge required to discover them.
13) That no valuation has been made of docks, piers, slips or other personal property,
which existed within the subject property, as of the date of value.
14) That all income, expenses, maps, legal descriptions and physical data provided by
the client and the City of Newport Beach are assumed to be correct.
15) That the fair market rental estimate is predicated upon the terms and conditions of
an unexecuted 50 year lease, which provides for a percentage rent which exceeds
the base rent.
16) That, as requested by the client, and defined by USPAP, this is a limited appraisal,
wherein the departure provision has been invoked and the conclusions have been
presented in a restricted appraisal format.
APPRAISAL PROCEDURE
A limited study was made, as to recent leases of tidelands only, in Newport Harbor. Units of
comparison were employed which indicate a base rent and percentage rent for the tidelands within
the Lido Marina Village.
Of significance was the Bahia Corinthian Yacht Club tidelands lease which was executed in 1998
and indicated a tidelands rental of $29,256.51/year or $14.07 I.f. /year for 2,079 11 of slip area.
This compares with the tidelands rentals for 35 -55 I.f. slips within the following marinas: Bayside
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Marina - $16.50 I.f.; Villa Cove Marina - $16.50 I.f.; Balboa Yacht Basin - $14.50 U.; Balboa
Marina - $16.50 to $18.00 I.f.; and Bayshores Marina - $17.50 I.f.
An examination of the Lido Marina Village operating statements indicated a gross slip rental of
$156 I.f. /year. Applying this gross slip rental to the estimated tidelands rental of $14.00 I.f. /year
indicates a percentage rental of 9% ($14 I.f./$156 I.f.)
VALUE CONCLUSION
Base Rent: $14 /I.f. slip /year
Percentage Rent: 9%
SUPPORTING FILE
A supporting file has been prepared which includes all market data, factual data, reasoning,
computations, descriptions, analyses, and discussions, from which, in part, the valuation
conclusion was derived.
Existing marina use.
HIGHEST AND BEST USE
VALUATION APPROACHES
The Market Data Approach was given primary consideration, with respect to the comparison of
the fair market rental value of the Lido Marina Village tidelands, with other tidelands rentals in
the Newport Harbor area. The Cost Approach and Income Capitalization Approach were not
utilized.
USE RESTRICTION
As requested by the client, this appraisal is a limited appraisal as defined by USPAP in that
the following departure provisions were invoked:
1. No consideration was given to the highest and best use of the uplands. The
existing marina use is considered to be the highest and best use of the tidelands.
2. No independent verification was made with respect to the physical characteristics
of the subject property and the market data.
3. No examination was made of an executed lease for the tidelands within the
subject property. A review was made of the proposed lease terms which include
provisions for a 50 year term, base rent, and percentage rent.
4. No examination was made of historical slip rental income for the subject property.
Reliance was placed solely on the client's reported current operating income.
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5. No consideration was given to the rental value of the slips and docks within the
Lido Marina Village tidelands.
6. No attempt was made to research every recent tidelands rental data which may
exist within Newport Harbor and other harbors adjacent to the California coast.
Reliance was based solely on selected market data within Newport Harbor.
Report Form:
As requested by the client, this appraisal report is a restricted appraisal report as defined by
USPAP which limits the reliance on the report to the client and considers anyone else using
the report as an unintended user. All market data, factual data, reasoning, computations,
descriptions, analyses, and discussions, from which, in part, the valuation conclusion was
derived, will be retained in my file.
R pe tfully Lsubmitted,
Richard .Fuller, MAI
Certified General Real Estate Appraiser
License Number AGO03210
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MOLLENHAUER GROUP
CIVIL ENGINEERING, SURVEYING +MAPPING, LAND DEVELOPMENT
411 West Fifth Street, Fourth Floor, Los Angeles, California 90013
Phone 12131624 -2661 - Fax (213) 614-1863
May 1, 1998
BOAT SLIPS AT VIA LIDO MARINA
PARCEL 1:
That portion of Newport Bay Harbor as shown on Map of the Department of the Army, File No.
972 -3 dated December 26, 1950 in the City of Newport Beach, County of Orange, State of
California, described as follows:
Beginning at the northwest corner of that certain Parcel Map filed in Book 63, page 11 of Parcel
Maps, in the office of the County Recorder of said County, said point also being Station No. 125 as
shown on said Department of Army Map; thence along the northerly prolongation of the westerly
line of said Parcel Map, North 24 012'37" East 42.77 feet; thence South 81023'59" East 82.21
feet, to a point in a line that is parallel with and distant 100.00 feet easterly measured at right
angles to the Bulkhead line as shown on said Department of Army Map; thence along said parallel
line South 27 129'51" East 719.99 feet to the intersection with the easterly prolongation of the
southerly line of Parcel 1, of that certain Parcel Map filed in Book 60, page 43 of Parcel Maps,
records of said County; thence along said easterly prolongation, South 62 030'09" West 100.00
feet to a point on said Bulkhead line; thence along said Bulkhead line North 27 029'51" West
741 .93 feet to the point of beginning.
PARCEL 2:
That portion of Newport Bay Harbor as shown on Map of the Department of the Army, File No.
972 -3 dated December 26, 1950 in the City of Newport Beach, County of Orange, State of
California, described as follows:
Beginning at the northeast corner of Parcel 2, of that certain Parcel Map filed in Book 60, page 43
of Parcel Maps, records of said County; thence along the easterly prolongation of the northerly line
of said Parcel 2, North 62 030'09" East 100.00 feet; thence parallel with the easterly line of Said
Parcel 2, South 27 °29'51" East 223.27 feet to the intersection with the easterly prolongation of
the southerly line of said Parcel 2; thence along said easterly prolongation, South 62 030'09" West
100.00 feet to a point in said easterly line of Parcel 2; thence along said easterly line North
27 °29'51" West 223.27 feet to the point of beginning.
PAGE 1 of 2 0
PARCEL 3:
That portion of Newport Bay Harbor as shown on Map of the Department of the Army, File No.
972 -3 dated December 26, 1950 in the City of Newport Beach, County of Orange, State of
California, described as follows:
Beginning at the southeast corner of Parcel 2, of that certain Parcel Map filed in Book 60, page 43
of Parcel Maps, records of said County; thence along the easterly prolongation of the southerly line
of said Parcel 2, North 62 °30'09" East 100.00 feet; thence parallel with the easterly line of said
Parcel 2, South 27 129'51" East 124.89 feet to the intersection with the easterly prolongation of
the northerly line of that certain Parcel Map filed in Book 59, page 44 of Parcel Maps, records of
said County; thence along said easterly prolongation South 62130'09" West 100.00 feet to the
northeast corner of said Parcel Map filed in Book 59, page 44; thence along the northerly
prolongation of the easterly line of said Parcel Map, North 27029'51 " West 124.89 feet to the point
of beginning.
NOTE: THIS DESCRIPTION WAS PREPARED AS A CONVENIENCE ONLY AND IS NOT FOR
USE IN THE DIVISION AND /OR CONVEYANCE OF LAND IN VIOLATION OF THE
SUBDIVISION MAP ACT OF THE STATE OF CALIFORNIA.
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JAMES RATKOMCH di ASSOC. l��RAWN KRH h
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CIVIL ENGINEERING GROUP SLlRWYIN0+MAPPINC
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LA%D DEVELOPMENT
SHEET I OF 1
• •
QUALIFICATIONS
RICHARD A. FULLER, MAI
Real Estate Appraiser and Counselor
43032 nd Street, Suite 200
Newport Beach, CA 92663
(714) 675 -7600 Telephone
(714) 675 -5787 Facsimile
EDUCATION:
University of Southern California, B.S. 1961
University of Southern California, M.B.A. 1963
PROFESSIONAL:
Member, Appraisal Institute 1972 - Present
Member, California Association of Realtors 1984 -1993
Member, National Association of Realtors 1972 -1993
Member, International Right of Way Association 1986 - Present
EXPERT WITNESS:
Superior Court of California, Circuit Court of Oregon, and United States District Court
LICENSES:
State of California Real Estate Broker (License No. 00318180)
State of California General Building Contractor (License No. 264327)
State of California Certified General Real Estate Appraiser (License No. AG003210)
EXPERIENCE:
Real Estate Appraiser: American Savings and Loan Association 1964 -1966
Real Estate Appraiser: George Hamilton Jones, MAI 1966 -1970
Independent Real Estate Appraiser and Counselor 1970 - Present
CIVIC:
Planning Commissioner, City of Newport Beach 1997 - Present
FACULTY:
Instructor: Mira Costa College, Orange Coast College, Lane Community College
Lecturer: University of California at Riverside, Senior Lecturer: University of Southern California
Approved Faculty Member: Appraisal Institute; Lifetime California Community College, Real Estate Credential;
Courses taught incuded Advanced Appraisal, Real Estate Valuation, Real Estate Development, Capitalization
Theory & Techniques, Basic Valuation Procedures, and Real Estate Investments.
SEMINARS:
Chairman: Various litigation seminars, Appraisal Institute; Guest Speaker: Subdivision Analysis;
Discounted Cash Flow Analysis in the Home and Building Industry; Assessing the Impact of
Contamination, Appraising Land in Southern California; Real Estate Capital Markets.
PUBLICATIONS:
'Appraisal of a Proposed Residential Subdivision Development ", Encyclopedia of Real Estate
Appraising, Third Edition, Published in 1978, Prentice Hall, Inc.
PARTIAL LIST OF CLIENTS:
Legal and Accountina Firms:
Anderson. MCPhanm & Conners
Belcher. Henan, & Biggeniahn
Shown. Pistoiw. Hurley& Van Vlear
Burke. Wdliams, & Sorensen
Butler. Husk, Gleirm & Swenngen
Call, Clayton & Jensen
Cadile & McDonough
Cooksey. Howard. Martin & Toolen
Cox. Castle & Nicholson
Daubney, Banche, Patterson
O'Neal, Nam & Reed
Desmond. Miller & Desmond
Downey. Brand. Seymour & Rowher
Doyle. Gartland. Nelson & McCmiry
Drummy. Garrett. King & Heinrich
Ellman. Burke. Hoffman & Johnson
Endeman. Lincoln. Turek & Heater
Emst & Whinny
Fadam & Douglas
Flint & McKay
Gibson, Dunn & CMcher
Hahn & Hahn
Hewitt & McGuire
Higgs, Fletcher & Mack
Hill. Faner & Sumll
Jennings, Ensnand & Hennkson
Johnson, Bannon. Wohlwent & Johnson
Knmmark & Ber ani
Lanak & Hanna
Layman, Jones & Dye
Latham & Watluns
Manoukian. Scarpelle & Ailing, Ltd.
Martin. Bischoff. Templeton, Biggs & Ericsson
McColgan & Vanni
McCormick. Kidman & Behrens
McCutchen. Doyle. Brown, and Enersen
McKdtnck, Jackson. Demarco & Peckenpaugh
Mmihai . Kemutt. Stokes & Co.
Nugent & Newnham
O'Me"ny & Myers
Palmien, Tyler. Wiener. Wilhelm, & Waldron
Peons, Callahan. McHolm & W nton
Penney& Penney
Pohlson. Moorehead & Goethals
Polndealer & Doube
Price Wahmouse & Co.
Roberts. Comtack & Johnson
Roble & MaMai
Robins, Kaplan, Miller & Cirssi
Rogers & Wells
RNan & Tucker
Tully S. Seymour
Saxon. AIL Dean, Mason. Brewer. & Kincannon
Schmiesing. Blied & Mackey
Sedgewick. Deter. Moran & Arnold
BImM & Sheridan
Wallace & Deatherage
Wenke. Burge & Taylor
Wright, Finley & Behrens
1�
Lendina Institutions: • 0
Bank of Amenca
First Interstate Bank
Santa Ana First Fr ieral Savings
Bank of Caldo a
Foothill Capital
and Loan Association
Central Savings It Loan
Great Western Bank
Santa Monica Bank
Charter Savings H Loan
Guild Mortgage Company
Sanwa Bank
Coast Savings 8 Loan
Home Capital Corpombon
Sears Savings Bank
Construction Lending Corporation
Home Savings of America
Security Pacific National Bank
Continental Bank
Imperial Savings 6 Loan Association
Starting Savings E Loan
Continental Mortgage Insurance
Investors Mortgage Insurance
Surety Savings d Loan Association
Crocker National Bank
Mitsui Manufacturers Bank
Toney Pines Bank
Fanners Savings & Loan Association
Mitsui Taiyo Kobe Bank
Union Bank
Financial Federation
Newpda Balboa Savings
Wells Fargo Bank
First Credit Bank
San Diego Lust It Savings
Internal Revenue Service
Insurance Companies:
City of Provo
Resolution Trust Corporation
Chicago Title Company
Hartford Accident S Indemnity Company
State Farm Fire & Casualty Company
Cigna Company
Lawyers Title Company
The Travelers
Dairyland Insurance Company
Pacific Mutual Life Insurance
Tile Insurance 6 Trust Company
Farmers Insurance Company
Prudential Property Insurance
Transamerica Title Insurance Company
General American Insurance Company
Royal Insurance Company
Uniguard Insurance Company
Fireman's Fund
Safeco Title Insurance Company
Corporations:
AMFAC Garden Products
DiGiorgio Corporation
Mobil Od Corporation
Atlantic Richfield Corporator,
Emerson Intemational
Northern Trust Company
Beacon Oil Company
Eugene Sand and Gravel, Inc.
Rebrement Center of America
Best Western Hotels
Gulf and Western Corpoabon
Retlaw Enterprises. Inc
Beckman InsWments
Hercules. Inc.
Roadway Express Inc.
Cataluna Swim"ar
Hughes Aircraft Corporation
Salomon Brothers
Celanese Corporation
Interstate Brands Corporation
Southland Corporation
Chevron U.S A. Inc.
Liggett and Myers Corporation
Standard Oil Company of Caldorma
Chrysler First Business Credit Corparation
Mitsubishi Cement Corpoamon
Stone 6 Youngberg
Cities Service Company
McCullough Oil Corporation
Trust Company of the West
Deutsch Company
McKesson Corporation
U.S. Amada
Mead Instruments
Western Electric Corporation
Non - Drofit Organizations
Beacon Bay Community Association
Laguna Heights Community Association
Sherman Foundation
Father Flanagan 's Boy Home
Mesa Verde Country Club
Spyglass Community Association
Foundation to Assist California Teachers
Seascape Village Community Association
Church of Jesus Christ of Latter Day Saints
Hospitals:
Greater EI Monte Community Hospital
Kaiser Peonanente
South Coast Medical Center
Hoag Memorial Hospital
McKensma- Willamette Hospital
TnrCity Hospital
Sacred Heart General Hospital
Governmental Agencies:
California Department of Conservation
City of Oceanside
Federal Aviation Administration
Carbans
City of Palm Springs
Federal Deposit Insurance Corporahon
City of Anaheim
OM of Pomona
Federal Savings 8 Loan Insurance Corporation
CM of Carlsbad
City of Poway
Internal Revenue Service
City of China Hills
City of Provo
Resolution Trust Corporation
City of Corvalms
CM of Roseburg
State of Oaliforria
Cioly of Del Mar
City of Santa Ana
United States Postal Service
City of Laguna Beach
County of Orange
City of Newport Beach
County of San Bemardmo
Real Estate. Engineering, Investment and Development:
American Diversified Companies
Barl line
Bentall Development
Robert Bein, William Frost
d Associates
aetker- Fredne" Development Company
BSI
Chevron Land and Development Company
Brigham Young University
Eugene School District No 44
Mountain View School Distract
Utilities:
Casts Real Municipal Water District
Eugene Water & Electric Board
APPRAISAL FUNCTIONS INCLUDE:
Caldwell Banker Management Corporation
Daon Corporation
DKS Assonates
Hermosa Homes
Huntington Beach Company
The Irvine Company
Kemper Real Estate Management
The Lusk Company
Manchester Development
Oceanside Unified School District
Palm Springs United School Distract
Pepperdmne University
Mebopolian Water District
Pacific Northwest Bell
Mission Equity
Pacific Investment Management Company
Paragon Hanes
Presley of Southern Caldorma
Standard Pacific L.P.
Signal Landmark, Inc.
Sunwest Asset Management
Techbuik Construction Corporation
William Lyon Company
Saddleback Community College
Scripps College
Solana Beach School District
Ramona Municipal Water District
Southem Califomia Edison Company
AcoueNan, Asbestos. Conhmiraeon, Bankruptcy. Bond Financing. Condemnation, Construction Defect. Disposition. Donation, Eminent Domain. Estate Tax Appeam Exchange. Eecess
Land. Federal GranE. Faradic., Ground Rental Revaluation, Hazardous Waste Contammabon, Income Tax Appeal, Inverse Condemnaooq Litigation. Mortgage Financing Negotiation.
Park in Lieu Fees, Partnership Dissolution. Portfolio Review, Properly Tat Appeal, Redevelopment
1�—
TYPICAL APPRAISAL ASSIGNMA
0
Public:
Airport Edensxxis. Assessment ds1nR Coastal Sage Mitigation Credits. Corporate Yards. Dedicated Strr .Eleo mat Transmissron Rlght4f- Ways,Environmental Coneemmabon Impact
Flood Control Prolecb, Improvement Districts. Ldb ad .Open Space Properties . Park Sites, Pipeline Easements. Preservation Easements, Prisons. Post Office Sees, Proposed Jail Sites,
Public RignHof -Way Dedicabons. Railroad Rlght4f -Ways. Recreabon Centers. Reservoir Sites. Sanitary Land Fills. Sanitation Line RigWof -Ways, Sanaatron Easements. School Sites.
Sawed Line Easements, Sewage Treatment Sites, Storm Drain Easements, Street Widemngs, Temporary Easements. Transportation Centers. Water Line Right46Ways Watershed
ProjMs.
Private:
Agricultural Acreage. Apartment Buildings. Automobile Dealerships, Banks, Bowling Alleys. Bulk Plants. Cement Plants. Church Sites. Commercial Buildings, Condominium Projects,
Equestrian Centers. Historical Buildings. Industrial Buildings. Industrial Subdivisions. Marinas, High Rise Medical Buildings, Mobile Home Parks. Motels, Ocean Fmnt Properties. High
Rise Omce Bindings, Office Condominiums. Parking Lots. Private Beaches. Ranches, Residential Subdivisions. River Front Propemes. Sand and Gravel Lands. Semce Stations Shopping
Centers. Subdivision Acreage, Tennis Clubs. Tidelands. Trucking Facilities Undeveloped Acreage.
PARTIAL LIST OF SPECIAL APPRAISAL ASSIGNMENTS:
Aeeh maps. Tanaka. and Santa Fe Ric ht4f-Wev Permanent and temporary easements for the Metropolitan Water District of Southern California s Inland Pipeline Project in San
Bernardino County (Metropolitan Water District)
Bel Merin Kays Unit V: 1600 acre proposed master planned community including wetlands. bay marsh restoration, open water lagoons, and fresh water marsh adjoining San
Pablo Bay located in Mann County (Eldred, Burke. Hoffman 8 Johnson)
Clona Apartrmni Six 200.500 unit apartment projects located throughout Southern California (The Travelers)
Ceveb Canyon Landfill: Conservabon easement within the San Joaquin Hills Transportation Corridor (San Joaquin Hills Transportation Agency I The Irvine Company)
Covob Nills West 2.92.6 acre residential development located in Fullerton (Chevron Land and Development Company)
Deutsch Ranch: 250 acre ranch located in Oceanside (Deutsch Company)
Easeeltle Pleeline Proiee[ 2 5 miles permanent easements. right-of -way and construction easements located in Riverside County (Metropolitan Water District)
44 Ranch: 634 acre Specific Plan Area located in North San Diego County (Ralphs Family)
Gypsum Canyon: Proposed County Jail Site located on 2.678 acres of undeveloped acreage in Orange County (The Irvine Company)
Highlands Development Multiple phases within residential subdivisions located in Anaheim Hills (Security Pacific National Bank)
Indian Head Ranch: Portion of a 640 acre desert subdivision located in Borrego Springs (The DlGiorgio Corporation)
Ivey Ranch: 750 acre planned unit development located in Oceanside (The Estate of LO Ivey. and Home Federal Savings 8 Loan)
James Musick Facility: 100 acre prison facility with Potential industrial farm use located in El Taro CThe Irvine Company)
John Wayne Tennis Club: Tennis club located in Newport Beach (Ticor)
Laguna Niguel: 4,600 acre planned unit development located in Southern Orange County (Avco Community Developers)
Lake Matteews Watershed Fmiect 14 acre parcels within the Drainage Water Quality Management Plan located in Lake Mathews (Paragon Homes)
Long Beath Airport Business Park' 4 mid to high rise office buildings adjoining Long Beach Airport (Call. Clayton. and Jensen)
Marblehead Coastal: 250 acres of multiple phases within 2 residential subdivisions located in San Clemente (Bank of America)
Wilson Lami It Contamination impact assessment (Latham and Watkins I County of San Bernardino)
Mitsubishi Cement Distributed Terminal: Cement distribubon terminal located in Port of Long Beach (Mitsubishi Cement Corporation)
Montebello Town Career Regional shopping center located in Montebello (Chevron U S A )
Newberry Ranch: 2.260 acre remote desert parcel (Father Flanagan s Boys Home)
New"ft Lido Medical career. 5 and 7 story medical office buildings located in Newport Beach (Mitsui Manufactures Bank)
Nerve HIIIsIWoedleke Development 712 acre residents] development located in Corona (Grant (Owen)
Rancho Santarem 988 acres will a planned unit development in North San Diego County (McCullough Oil Corporation)
Ranehe CelsOnsia PeMelio' Various commercial. industrial. residential. mixed use and master planned communities located in Temecula (Wells Fargo Bank)
Rancho San Ch rvnee: 19 undeveloped commercial and industrial Parcels located in San Clemente (Emerson International)
Resves Ranch: 490 acre residential located in San Clemente (The Church of Jesus Christ of Latter Day Saints)
Retew Ranch: Six ranches totaling 3.605 acres located in Riverside. Los Angeles. and San Diego counties (Redaw Enterprises. Inc.)
San Luis Rev River flood Centel Protest 23 parcels within the San Luis Rey River Ploodway and Floodplain located in Oceanside (City of Oceanside)
Shadew Nldae: 189 acre (Phase I ant 10 residential development located in Vista (Dann Corporation)
499ssWi rmi nt Medical Arts Rul inp: 6 story medical building located in Hollywood (William Farley. Trustee)
Su rSaum 0911eria' 4 story shopping center with freeway airspace located in Sacramento CCaltnins)
Tesh Business veneer. Proposed 67 jot industrial subtlmsion for Mello-Ro rs financing (City of Poway)
INTERESTS APPRAISED:
Fee Simple Estate
Leased Fee Estate
Leasehold Estate
Sandwich Interest
September 1997
�3
0 0
CERTIFICATION
I, the undersigned, do hereby certify that to the best of my knowledge and belief except as
otherwise noted in this report:
1) That the statements of fact contained in this report are true and correct.
2) That the reported analyses, opinions, and conclusions are limited only by the
reported assumptions and limiting conditions, and are our personal, unbiased
professional analyses, opinions, and conclusions.
3) That I have no present or prospective interest in the property or properties that are
the subject of this report, and I have no personal interest or bias with respect to the
parties involved.
4) That my compensation is not contingent upon the reporting of a predetermined value
or direction in value that favors the cause of the client, the amount of the value
estimate, the attainment of a stipulated result, or the occurrence of a subsequent
event.
5) That, to the best of my knowledge and belief, the reported analyses, opinions and
conclusions were developed, and this report has been prepared, in conformity with
the requirements of the Code of Professional Ethics and the Standards of
Professional Practice of the Appraisal Institute and the Uniform Standards of
Professional Appraisal Practice (USPAP).
6) That I have made a personal inspection of the property or properties that are the
subject of this report, on May 29, 1998, and June 2, 1998.
7) That no one provided significant professional assistance to the persons signing this
report.
8) That, the use of this report is subject to the requirements of the Appraisal Institute
relating to review by its duly authorized representatives.
9) That, as of the date of this report, I have completed the requirements of the
continuing education program of the Appraisal Institute.
Respectf lly submitted,
Ri hard A. F er, MAI
e eneral Real Estate Appraiser
License Number AG003210
(February, 1992)
Date of Value:
June 1, 1993
Date of Report:
June 29, 1993
Our Pile Number:
593 -4
APPRAISAL OF
Fair Rental Value
Tidelands for BCYC Marina
Submitted To:
Mr. David Harshbarger, Director
Marine Department
Cite of Newport Beach
P.O. Box 1768
Newport Beach, CA 92658 -8915
Submitted By:
George Hamilton Jones, MAI
Kent llarvey
15
0
GEORGE HAMILTON JONES. INC.
APPRAISAL CONSULTANTS
GEORGE HAMILTON )ONES, MAI 717 LIDO PARK DRIVE, SUM D
%HART D. DuVAU NEWPORT BEAM, GV.IFORNIA 92663
P.EN"r HARVEY
June 29, 1993
Mr. David Harshbarger, Director
Marine Department
City of Newport Beach
P.O. Box 1768
Newport Beach, CA 92658 -8915
Dear Mr. Harshbarger:
TELEPHONE (714)6736733
FAX (714) 673697A
Re: Appraisal of Fair Rental Value
for Tidelands for BCYC Marina
In accordance with your request and authorization on May 20, 1993, we have
examined the Bahia Corinthian Yacht Club marina and considered a proposed long
term lease (30 - 35 years) of the City tidelands used by the marina, for the purpose of
formulating and expressing our opinion of fair rental value comprised of percentage
rental and minimum rental.
The date of value for this appraisal is June 1, 1993.
After investigation of the tidelands parcel and matters pertinent to its valuation,
we have formed the opinion that the fair rental value of the water area required for
the marina pursuant to a long term lease is 9.0% of gross receipts from slip rentals
within the tidelands. In those cases where there is private water area included in the
marina (such as BCYC) adjustment is required to ensure that the 9.0% percentage
rental is based on the gross receipts generated by the public tidelands area.
Minimum rent is concluded to be 75% of average annual rent paid in the
preceding three years.
Fair Rental Value Conclusion:
Water Area Percentage Rent: 9.0% of gross slip rents within tidelands
Minimum Rent: 75% of average annual rent paid for
preceding three year period
J�
Mr. David Harshbarger • •
Page -2'
The purpose of this appraisal is not to judge what BCYC slip rental should be. It
is only to estimate the percentage rental applicable to the slip rents received and a
basis for a minimum rent consistent with general practices within the marina
industry.
Your attention is invited to the following report wherein we have set out
premises and limiting conditions, descriptions, exhibits, factual data, computations,
and other information forming the basis of our fair rental value conclusion. The
_ valuation includes consideration of the unique characteristics of Newport Harbor,
iwherein the publicly owned tideland area must be joined with privately owned
uplands to form an economically feasible commercial usage.
We would welcome the opportunity to orally expand upon or clarify our
analysis to you or other interested persons.
Resnectfiil1V hmitted_
r
/ ertified General Real Estate
k�pXaiser No. AGO05632)
Harvey
(State Certified General state
Appraiser No. AGO06753)
J
i
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1 --
11
TABLE OF CONTENTS
Introductory:
Pam
Letter of Transmittal
1
Table of Contents
3
Appraiser's Certification
5
Limiting Conditions
6
Introduction to the Appraisal Problem
17
Purpose of the Appraisal
8
Definition of Market Value
8
Function of the Appraisal
9
Scope of the Appraisal
9
Introduction to Valuation Methodology
10- —
Descriptions:
Location
12
Surrounding Influences
12
Marinas in Newport Harbor
14
Distribution of Adjacent Upland Uses
15
BCYC Marina
17
Highest and Best Use of Tidelands
19
Valuation:
Methodology
Introduction 21
Fair Market Rental for Land & Water in Joinder for Marina Use 23
Allocation of Rent Between Land & Water 24
Evidence of Tidelands Rents (Separate from Uplands) 25
Rent for Offshore Moorings in Newport Harbor 27
Fair Market Rental - Land & Water Combined
Market Survey 28
Percentage Rent 28
Minimum Rent 29
Residual Analysis - Test of Market Survey Rental Indication 30
Allocation Between Land and Water
Introduction 36
Land and Water Area Requirements 37
Upland Value 38
Effective Slip Rents 39
-3- (��
TABLE OF CONTENTS - continued
Addenda:
Ede
Rental Income Capitalization Rate 39
Influence of Upland Values 41
Valuation and Allocation Computations 46
Criteria and Computations for Marina Value 46
Value Allocation - Before Equalization for Joinder 47
Equalization of Economic Return for Joinder 49
Reconciliation 51
Fair Rental Value Conclusion - Long Term Lease of Water Area 53
Adjustment for Private Water Area 53
Minimum Rental Calculation 55
Appraiser's Qualifications
-4-
'l1
CERTIFICATION
The undersigned hereby certify that;
1.. We have inspected the subject property and surrounding area on various occasions.
For this report inspections were performed on June 10, 1993.
2. To the best of our knowledge and belief, the statements of fact contained in this
report, upon which the analyses, opinions, and conclusions expressed herein are
based, are true and correct.
3. The reported analyses, opinions, and conclusions are limited only by the assumptions
and limiting conditions stated herein, and are the personal, unbiased professional
analyses, opinions, and conclusions of the undersigned. Those limiting conditions
(imposed by the terms of the assignment or by the undersigned) considered to affect
the analyses, opinions, and conclusions are contained in this report.
4. We have no present or prospective interest in the property that is the subject of this
report. We have no personal interest or bias with respect to the subject matter of this
appraisal report or the parties involved.
5. The compensation for this assignment is not contingent upon the reporting of a
predetermined value or direction in value that favors the cause of the client, the
amount of the value estimate, the attainment of a stipulated result, or the occurrence of
a subsequent event.
6. This report is not conditioned upon a requested minimum valuation, a specific
valuation, or the approval of a loan.
7. This report, and the analyses, opinions, and conclusions contained herein, has been
made in conformity with and is subject to the requirements of the Code of
Professional Ethics and Standards of Professional Practice of the Appraisal Institute,
and the Uniform Standards of Professional Appraisal Practice.
8. No one other than the undersigned prepared the analyses, conclusions, and opinions
or provided other significant professional assistance concerning the real property
interests that are the subject of this report.
9. The Appraisal Institute conducts a program of continuing educ ' n for its designated
members. As of the date of this report, Mr. George Hamil ones has completed
the requirements of the continuing education program sisal Institute.
!Geoq e H ones A JMI
K
"
-5-
GEORGE HAMILTON JONES, INC.
I L11i lrMG CONDITIONS
The Code of Professional Ethics and the Standards of Professional Practice
of the Appraisal Institute require that all assumptions and limiting conditions
that affect the analysis to be clearly and accurately set forth. To assist the reader
in interpreting this report, the primary assumptions and limiting conditions
affecting the analysis of the subject property are set forth below. Other
assumptions and conditions may be cited in relevant sections of the following
report.
1. That the date of value to which the conclusions and opinions expressed in this
report apply is June 1, 1993. Further, that the dollar amount of any value
opinion herein rendered is based upon the purchasing power of the American _
dollar existing on that date.
2. That the appraisers assume no responsibility for economic or physical factors
which may affect the opinion herein stated occurring at some date after the
date of value.
3. That the appraisers reserve the right to make such adjustments to the valuation
herein reported, as may be required by consideration of additional data or
more reliable data that may become available.
i4. That no opinion as to title is rendered. Data related to ownership and legal
description was obtained from public records, and is considered reliable.
Title is assumed to be free and clear of all liens and encumbrances, easements
and restrictions, except those specifically discussed in the report The
property is appraised assuming it to be under responsible ownership and
competent management, and available for its highest and best use.
Investigation of the property's history is confined to examination of recent
transactions or changes in title or vesting, if any, and does not include a "use
search" of historical property utilization.
5. That no engineering survey has been made by the appraisers. Except as
specifically stated, data relative to size and area was taken from sources
considered reliable and no encroachment of real property improvements is
considered to exist
i
r]
6. That maps, plats, and exhibits included herein are for illustration only as an
aid in visualizing matters discussed within the report. They should not be
considered as surveys or relied upon for any other purpose, nor should they
be removed from, reproduced, or used apart from this report.
7. As a premise of this report it is assumed that there is full compliance with all —
applicable federal, state, and local environmental regulations and laws unless
noncompliance is stated, defined, and considered in the following analysis.
rFnPr,F HAMII TOM ,If1NFC INC
0
0
LIMITING CONDITIONS - continued
9
However, the undersigned are not qualified by reason of training or experience
to identify the presence of toxic or hazardous wastes or materials. The
valuation premise that there are no toxics or hazardous materials or wastes
within or adjacent to the appraised property should in no circumstances be
interpreted as a judgement by the undersigned.
11. This report is subject to the requirements of the Appraisal Institute relating to
review by its duly authorized representatives.
12. Disclosure of the contents of this appraisal report is govemed by the By -Laws
and Regulations of the Appraisal Institute.
Neither all nor any part of the contents of this report (especially any conclusions
as to value, the identity of the appraisers or the firm with which they are
connected, or any reference to the Appraisal Institute (or to the MAI
designation) shall be disseminated to the public through advertising media,
public relations media, news media, sales media, or any other public means of
communication without the prior written consent and approval of the authors.
-7-
GEORGE HAMILTON JONES. INC.
V
8. That no opinion is intended to be expressed for matters which require legal
expertise or specialized investigation or knowledge beyond that customarily
employed by real estate appraisers. It is assumed that there are no hidden or
unapparent conditions of the property that render it more or less valuable. No
responsibility is assumed for such conditions or for the arranging of studies that
may be required to discover them.
j
iproperty
The function of this report is to provide an opinion of the rental value of the real
as herein defined. Under no circumstances should this report be
considered as providing any service or recommendation commonly performed
by a building inspector, structural engineer, architect, pest control inspector,
etc.
9. That no soil reports or information relating to geologic conditions concerning
subject property were provided for our review. This valuation is based upon
the premise that soil and underlying geologic conditions are adequate to support
standard construction consistent with highest and best use of the land. - —
10. This report is based upon the premise that there exist no hazardous or toxic
wastes within the site. We have no knowledge of any circumstances, including
hazardous or toxic wastes or residues that may exist within or adjacent to the
subject property that would prevent or impair development to highest and best
use or otherwise affect this valuation.
However, the undersigned are not qualified by reason of training or experience
to identify the presence of toxic or hazardous wastes or materials. The
valuation premise that there are no toxics or hazardous materials or wastes
within or adjacent to the appraised property should in no circumstances be
interpreted as a judgement by the undersigned.
11. This report is subject to the requirements of the Appraisal Institute relating to
review by its duly authorized representatives.
12. Disclosure of the contents of this appraisal report is govemed by the By -Laws
and Regulations of the Appraisal Institute.
Neither all nor any part of the contents of this report (especially any conclusions
as to value, the identity of the appraisers or the firm with which they are
connected, or any reference to the Appraisal Institute (or to the MAI
designation) shall be disseminated to the public through advertising media,
public relations media, news media, sales media, or any other public means of
communication without the prior written consent and approval of the authors.
-7-
GEORGE HAMILTON JONES. INC.
V
0 0
INTRODUCTION TO THE APPRAISAL PROBLEM
Purpose of the Appraisal:
It is the purpose of this appraisal to render an opinion of fair market
rental value of certain public submerged tidelands in Newport Harbor,
considering the terms and conditions of a proposed long term (30 -35 year)
lease of such submerged lands by the Bahia Corinthian Yacht Club for
marina purposes. Marina use will include rental of boat slips, dock lockers,
and related use. It does not include additional uses such as charter or tour
boats, commercial sport fishing, sale of petroleum products, ship chandlery
and other uses. For this appraisal, fair rental value is considered to include
the combination of:
1. Minimum rental.
2. Percentage rental.
The lease will have a constant percentage rate over its term but will
provide for periodic adjustments in minimum rental. The purpose of this
appraisal includes rendering an opinion regarding the basis for such
periodic adjustment in minimum rent.
Definition
Fair Market Rental Value:
Fair market rental value is the most probable rental amount that
the property should bring, as of the specified date (i.e., the date of
value), in a competitive and open market reflecting all conditions and
restrictions of the specified lease agreement including term, rental
adjustment and revaluation, permitted use and expense obligations; the
lessee and lessor each acting prudently, knowledgeably, and assuming
the rent is not affected by undue stimulus.
Implicit in this definition is a specific lease agreement considered
as of the particular date under conditions whereby:
1. The lessee and lessor are typically motivated.
2. Both parties are well informed or well advised and each acting in what they
consider their own best interest
3. A reasonable time is allowed for exposure in the open market.
4. Rent payment is made in cash and is expressed as an amount per time period.
-8- 13
INTRODUCTION - coeued
The rental amount reflects the specific terms and condition of the lease
document, however, it's unaffected by other fees, costs or credits that may be
incurred in the transaction.
Tidelands:
For the purpose of this study, tidelands are considered to consist
of that water area extending from the established U.S. Bulkhead Line
to either the Pierhead Line or Project Line, depending on the location
of the existing pier and floats within said area.
Fair Market Value:
The most probable price, as of a specified date, in cash, or in
terms equivalent to cash, for which the property should sell after
reasonable exposure in a competitive market under all conditions
_ requisite to a fair sale, with the buyer and seller each acting prudently,
knowledgeably, and for self - interest, and assuming that neither is
under undue duress.
Function of the Appraisal:
In Newport Harbor operators of commercial marinas currently pay an
annual fee for a permit to use the city tidelands. The amount of the fee is
based upon fair rental value as estimated in 1989, and considers the short
term nature of the permit.
The City and Bahia Corinthian Yacht Club (BCYC) are considering a
long term lease of the tidelands for the BCYC marina. The function of this
appraisal is to provide an independent opinion of market rental value
considering the proposed terms and conditions of the lease, to assist the
parties in developing the rental provisions of the lease.
Scope of the Appraisal:
The scope of the work required to formulate a supportable opinion of
market rental value is extensive. Some of the more significant factors to be
investigated,
include:
Site Analysis:
verified, and/or quantified during the appraisal process
Regional & Local
Area Analysis:
Documentation of the physical characteristics of the harbor
and its surroundings.
Patterns of use, trends in development, nature of existing
and future population, economic influences, etc.
-9- 6k
INTRODumoN - continued
Market Data: Search for slip rents; vacancy and incentive data; land and
water lease data; commercial uplands sales data; minimum
rent and percentage rent data; rates for amortization of
improvements and overall capitalization. Verification of
data.
Valuation Analysis: Comparability analysis of empirical lease and rental data to
provide indications of minimum and percentage rent for land
and water combined for marina use. Residual analysis to
isolate income attributable to land and water as a check on
empirical percentage land rent indications. This requires
estimates of income, expenses, taxes, annual amount
necessary for return on and recapture of improvements, and
profit.
Allocate total land/water rent for marina purposes between
land and water to equalize the return to each,.cousidering the
highest and best use of each.
Introduction to Valuation Methodology:
Our investigation indicates that there is insufficient data on the rental
of water area alone (without supporting uplands) for marina purposes to
provide reliable rental value indications. However, there is ample data on
the rental of water and land combined for marina use. Economic analysis
can be used for allocation of the rent between the land and water.
Therefore, our methodology considers:
1. Estimating fair rental for land and water in joinder for marina
use.
2. Allocating the rent between each component (land and water) based
on an equalized rate of return to each, considering the highest and
best use of each.
The fair rental conclusion for the tidelands can be influenced by
marina configuration and value of adjoining commercial uplands required
for the marina (e.g. parking, restroom and storage requirements).
However, the amount of rental received by the City should not be governed
by special circumstances of the upland owner. Therefore, although the
function of this appraisal involves a specific marina, the analysis is based on
typical marina configuration with market slip rents and typical commercial
upland values.
M
0
L ITRODUCno,V - continued
Rental of Land and Water Combined:
There are sufficient leases of land and water combined for marina
use to provide reliable indications of market percentage rent for land
and water in joinder and dedicated to marina use. Economic or
residual analysis is helpful to test the empirical indications by showing
whether, after paying the indicated land/water rent, there is sufficient
revenue available to cover operating expenses, return on and recapture
of improvements, profit, and property taxes.
Allocation of Rent Between Land and Water.
The technique we have utilized involves allocation of the income
stream generated from marina use considering the respective value
contribution of the tidelands area and the upland area in accordance
with their respective highest and best use. The ultimate goal of the
income allocation is to provide each owner (i.e., private and public)
with an equal rate of return on value contributed.
We have, therefore, first considered land and water with unity of
ownership as if dedicated to marina use. The marina value (land and
water) was apportioned to land area and water area based upon land
value (independent of marina use) and water value (dependent upon
marina use). The resulting value of water area was derived from an
internal apportionment considering common land and water
ownership.
To reflect the requirement of joinder for the tideland area to
achieve its highest and best use (i.e., adjustment for non -unity of
ownership) an additional apportionment is required. This
apportionment has been accomplished by equalizing the rate of
economic return to the land and water components. The total income
to land and water (from marina use) is allocated based upon equal
income to value ratios.
-11-
•
CL
0
�°
mi
DESCRIPTIONS
9 Location:
®
The Bahia Corinthian Yacht Club is located in Newport Harbor on the
bayward side of Bayside Drive at El Paseo Drive, northerly of Yachtman's
Cove, facing the east bayfront of Balboa Island.
Surrounding Influences:
Southern California Region:
The appeal of the Southem Califomia region has historically been
Ieisure
linked to its mild climate, a casual life -style which affords many
opportunities, and a business environment which is both dynamic and
varied.
Long, dry summers and rain from occasional winter storms
characterize the Southern Califomia climate. Annual precipitation
averages 12 inches. Temperatures range from a July mean maximum
of 73° F to a January mean maximum of 56° F. There is a dramatic
distinction between the temperatures of the milder coastal areas and
those of the interior.
The generally mild but diverse local weather conditions which the
region offers allow for wide - ranging leisure activities. The mountains,
sea, and desert are all within easy reach of each other and an extensive
freeway system has, in practical terms, institutionalized the commute
as part of the Southern California lifestyle.
However, the price for this affluence and mobility has been paid
for with one of the worst air quality conditions in the country.
Climatic conditions in which cool sea air is drawn in under hotter
inland air creates a temperature inversion which traps air pollutants
from industry and the large number of automobiles. Sea breezes tend
to minimize this effect. Therefore, the coast is a particularly popular
location for housing and leisure activities. - —
The diversity of the region, which is mirrored in its economic
profile as in other aspects, has historically buffered Southern
California from the severity of economic slowdowns experienced in
other parts of the country. However, this has not been the case with the
current recession. The severe cutbacks in the aerospace industry, a
b
-12-
� p
DESCRIPTIONS - continued
significantly depressed real estate market, as well as business and social
infrastructure problems have left Southern California economically
depressed. In fact, California lost more jobs in 1992 than any other
state. The future closure of military bases threatens the employment of
tens of thousands of more workers.
While the consequences of this have been felt throughout the
society, it is with the middle income earners and the amount of
discretionary income at their disposal that the effects have been most
pronounced. As a result, the restaurant and tourism industries, as well
as those associated with leisure activities, have been hard hit, Marinas
in the region report increased vacancy, particularly in the smaller slips
(less than 30 lineal feet). Many Southern California marinas have
reduced rates and some are currently offering incentives for one year
leases.
Newport Harbor:
Newport Harbor, located within the city of Newport Beach, is on
the south - central portion of the Southern California coastline. The city
of Newport Beach was incorporated in 1906 with a population of 445
people. It has evolved over the years from a small coastal resort town,
heavily dependent on tourism with a seasonally fluctuating population,
to a full service City with a population of 62,556 full time residents in
1980 (1980 census). By 1990 the population had grown to 66,643
(1990 census), reflecting a 6.53% increase for the decade.
The City is known for its high level of affluence, its excellent
coastal climate, and its prestigious environment. Newport Harbor is
one of the largest pleasure boat harbors in the world, with more than
2,200 marina slips, 1,200 moorings, and 1,200 private residential
piers. Tourism remains an important segment of the economy with an
estimated range of daily visitors during the summer months of about
20,000 to 100,000.
Marinas in Newport Harbor have historically enjoyed low
vacancy rates and among the highest slip rentals in Southern
California. However, the current recession has had an impact on
marinas, particularly those with slips smaller than 30 feet. Reported
vacancy rates in Irvine Company marinas for the first quarter of 1993
in the harbor ranged from 5.6 % of revenue (7.2% of lineal footage) at
Bayside Marina to 23.6% of revenue (24.1% of lineal footage) at G
3t
0
DESCRIPTIONS - continued
0
Balboa Marina. Balboa Marina has a higher percentage of small slips,
which have been most vulnerable to vacancy and it is located farther
from the harbor entrance than subject.
Marinas In Newport Harbor:
In 1989 we surveyed all commercially employed tidelands in Newport
Harbor in connection with our study of Commercial Harbor Permit Fees.
A detailed inventory of the commercially employed tidelands parcels and
adjoining upland uses resulting from that survey is retained in our files.
There has been no major reconfiguration of marinas since that time. The
survey data is helpful in development of characteristics of the typical
marina to be used in the valuation analysis.
Summary of Inventory:
Pertinent characteristics of the tidelands parcel inventory may be
summarized as follows:
Number of parcels 71
Total water area 2,175,312 s.f.
Less Water area inland of bulkhead line - $34 $s Lf•
Estimated gross tidelands area 1,640,330 s.f.
Less Exclusions
City leases 260,272 s.f.
County tidelands 158,720 s.f. - 418,992 Lf.
Estimated net area subject to City permit fee
*(estimated area only - subject to change
upon detailed verification)
Range of areas of tidelands parcels
subject to City permit fee
Range of frontage @ Mean High
Tide Line:
Range of Pierhead, Project Line
1,221,338 s.f.
330 s.f. to 214,000 s.f.
30' to 3,350 : _
11' to 126 '
-14- q(
Bahia Corinthian YC
Npt Arches Marina
631
70,000
,
921
333
Sub - totals
331,340
256
CORRELATION OF MARINA SURVEY DATA
36.0
9,198 _
_ 35.9
I YPICAL
45.4
1,666
25.9
=
Balboa Bay Club
1,575
20 BayshoresMarina 1.207
Site
134
TOW water
DcrOring
Ave -age water area
31.2
Toml L. It
Avg. length
Nu. Name
Front ft.
area (sq. ft.)
spaces
per Berth per L.F. Berth
for B. spaces
perspace
63 McLain Development
430
37,840
34
1.113
34.3
1,104
32.5
64 Coves/Shark Islc YC
850
59,500
42
1,417
41.4
1,436
34.2
65 Baysidc Muina/
2 140
234,000
180
1,300
35.2
6,656
37.0
Bahia Corinthian YC
Npt Arches Marina
631
70,000
,
921
333
Sub - totals
331,340
256
1,294
36.0
9,198 _
_ 35.9
IIIGI I DENSITY
45.4
1,666
25.9
19
Balboa Bay Club
1,575
20 BayshoresMarina 1.207
103,920
134
776
24.9
4,181
31.2
21 Swalcs Marina 650
48,750
58
841
23.0
2,120
36.6
22 Lido Marina 1,100
110,000
99
1,111
29.7
3,704
37.4
30 Lido Peninsula 3,350
247,656
278
891
26.7
9,260
33.3
. Yacht Anchorage
1,278
39.3
17,525
32.5
53 American Legion 350
28,000
48
583
21.2
1,320
27.5
Sub - totals
538,326
617
872
26.2
20,585
33.4
SPECIAL CASES - (More than 20% of water area inland of Bulkhead line)
1
Npt Arches Marina
631
70,000
76
921
333
2,1D5
27.7
17
Ardell Marina
700
84,746
72
1,177
45.4
1,666
25.9
19
Balboa Bay Club
1,575
204,187
142
1,438
40.5
5,040
35.5
62
Balboa Yacht Basin
772
241,940
177
1,367
42.0
5,760
32.5
66
Balboa YC
580
88,000
72
1,222
32.0
2,754
38.2
Sub - totals
688,873
539
1,278
39.3
17,525
32.5
Grand totals
1,558,539
1,412
1,104
32.9
47,308
33.5
�k
r 0 •
DESCRIPTIONS - continued
. Survey of Berthing Space Characteristics:
The inventory of marinas with more than 30 slips was expanded
to include number of berthing spaces, average area per space, total
linear feet for berthing spaces, and average length per berthing space.
This data was categorized based on the configuration of the marina as
typical, high density, or special cases (more than 20% of water area
inland of established bulkhead line). A summary of the data, by
category, appears on the facing page. This information is helpful in
evaluating tidelands use potentials and in estimating income
expectancies which are more fully explained in the Valuation section
of this report. The average characteristics of each category is —
summarized below:
Average Average Water Area
Category L.F. /Berth P&rL_F.Berth gB erth
Typical 35.9' 36.0 s.f. 1,294 s.f.
High Density 33.4' 26.2 s.f. 872 s.f.
Special Cases 32.5' 39.3 s.f. 1,278 s.f.
Distribution of Adjacent Upland Uses:
rOwnership Patterns of Land and Water:
Most marinas in Southern California have been developed with
both the water area (tidelands) and uplands in common ownership
vested in a governmental agency, such as a port district, port authority,
city or county. The following is a partial list of these manna
developments and the public agency owners:
Project Owner /Agency
Santa Barbara Harbor City of Santa Barbara
Ventura Marina City of Ventura
Channel Islands Harbor County of Ventura
-15- q -_
• 9
DESCRIPTIONS - continued
Marina del Rey County of Los Angeles
King Harbor City of Redondo Beach
Los Angeles Harbor Port of Los Angeles
Long Beach Marina City of Long Beach
Sunset Aquatic Park -
Huntington harbors County of Orange
Dana Point Harbor County of Orango-
Oceanside Harbor Oceanside Harbor
District
Mission Bay City of San Diego
Harbor Island . Port of San Diego
Shelter Island Port of San Diego
Marriott Marina Port of San Diego
Chula Vista Marina Port of San Diego
In these governmentally developed projects, both upland and
adjacent water mass are under common ownership or trust, and are
either operated by the agency or leased out in joinder to a private
operator. In most cases, the uplands are dedicated to this use by a
project master plan or other means of control.
In lower Newport Harbor, however, a fundamentally different
condition exists. With few exceptions, such as the Harbor Club Marina
(formerly the Arches Marina), Balboa Bay Club, Balboa Yacht Basin,
and the American Legion Marina, the uplands within the subject
inventory are privately owned. These privately owned lands=are not
dedicated to joint use, but actually could function independently of the
tidelands if the owners so desired. Conversely, there is no
economically significant alternative use available to the tideland area.
-16- �3
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J
i
II■
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DESCRIPTIONS - continued
Therefore, in Newport Harbor, full economic utilization of the
tidelands requires joint use with the privately held adjacent uplands.
Alternative (non- marina) use of the uplands is not generally available
in the other harbors, where the main reason for their existence is to
satisfy the requirement for berthing of small craft with the necessary
upland supporting facilities.
Upland Uses in the Newport Survey Area:
Surveys of the upland uses associated with tidelands parcels
indicate that these uses fall generally into the following categories:
1. Restaurants 6. Fuel Sales
2. Shipyards 7. Misc. ( Pavilion, Fun
Zone, etc.)
3. Boat Sales and Rentals
8. Fishing
4. Marina Offices, Parldng,
or Dry Storage 9. Marine Contractors
5. Private Clubs 10. Retail Shops & Offices
The upland areas, which vary considerably in size, are employed
either fully or in part to provide the necessary shore facilities to serve
the adjacent berthing areas.
The ten categories of use listed above are distributed throughout
the survey area and many of the upland parcels support uses in two or
more of the categories; e.g., for retail, restaurant, and/or boat sales.
These examples of diverse uses are important to the subject
analysis as a manifestation of the previously noted unique
characteristics of Newport Harbor, wherein private ownership of the
uplands results in a wide variety of economic uses being available to
the owner of the property, with or without joinder to the tidelands.
BCYC Marina:
The BCYC marina is comprised of 79 berthing spaces for a fotal of
3,017 lineal feet (average slip length 38.2 feet). Parking and restroom
requirements are met on ±21,000 sq. ft. of the ±90,823 square foot
adjoining uplands parcel. 49
17 /
Ot
1l, r
u A
p ;
4Y I _
Ilk
=, tt
X
r
v
f, '41. a,
lut
i
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DESCRIMONS - continued
Manna Improvements - In Water:
The marina originally included 83 berthing spaces in 3,185 lineal
feet. In anticipation of sale of the manna, four slips at the
northwesterly end, comprising 168 lineal feet, have been eliminated to
conform with the pattern of upland littoral rights involved in the sale.
Approximately 18 feet of headwalk will also be removed. Current
configuration includes 52 single slips, 15 side ties and 12 end ties. An
aerial photograph of the manna showing bulkhead line, pierhead line,
and project line is set out on the facing page. The portion of the
manna which is located in the tidelands area is outline in red. The
adjoining uplands parcel is outline in yellow. - —
Some of the manna improvements are located inside the bulkhead
line and are therefore in "private water' area which is not subject to
payment of tidelands rent. Characteristics of berthing spaces in the
tidelands area and the private water area are summarized in the table
facing the following page.
In July 1985, The Irvine Company completed reconstruction of
the Bayside Manna of which BCYC is part at a cost of $3,300,000 for
9,370 lineal feet of berthing. Demolition was included and is allocated
a cost of about $50,000. This indicates a construction cost for the new
improvements of $3,250,000, or about $348 per lineal foot of berthing
space.
Steel piles were used due to subsurface shale conditions which
precluded driving concrete piles. Floatation is concrete on styrofoam
on the headwalk for greater weight and stability. Fingers have hollow
polyurethane floats with tension bars and 2 x 6 decking.
Upland Parcel Improvements:
The ±90,823 square foot uplands parcel was improved for yacht
club purposes in 1970 pursuant to a long term land lease. The first
floor of the main structure contains an area of ±12,424 square feet; the
second floor ±3,008 square feet; and the basement is ±9,448'square
feet. Yard improvements include a swimming pool and spa, extensive
patio and concrete areas, a four -ton boat hoist and asphalt paved
parking and boat storage areas.
-18- J�N
0
U
BCYC ihIARINA - BERTHING SPACE CHARACTERISTICS
Berthing Spaces in City Tidelands:
Single slips:
1
@ 28
1
@ 30
lineal feet —
30
lineal feet
23
@ 35
lineal feet=
805
lineal feet
6
@ 40
lineal feet=
240
lineal feet
12
@ 45
lineal feet =
540
lineal feet
42
spaces
1,615
lineal feet
End Ties:
2
@ 35
lineal feet=
70
lineal feet
4
@ 38
lineal feet —
152
lineal feet
1
@ 40
lineal feet —
40
lineal feet
2
@ 43
lineal feet —
86
lineal feet
3
@ 48
lineal feet —
144
lineal feet
12
spaces
492
lineal feet
Side Ties:
1
@ 87
lineal feet —
87
lineal feet
I
@ 30
lineal feet —
30
lineal feet
8
@ 35
lineal feet —
280
lineal feet
10
spaces
397
lineal feet
Total Tidelands Spaces and Lineal Footage:
64
spaces
2,504
lineal feet
Total Marina Spaces and Lineal Footage:
79
spaces
3,017
lineal feet
Berthing Spaces in Private Water.
Single slips:
1 @ 25 lineal feet —
10 @ 35 lineal feet
11 spaces
End Ties:
1 @ 40 lineal feet —
25 lineal feet
350 lineal feet
375 lineal feet
40 lineal feet
Side Ties:
1
@ 28
lineal feet —
28
lineal feet
1
@ 30
lineal feet —
30
lineal feet
1
@ 40
lineal feet -
40
lineal feet
3
spaces
98
lineal feet
Total Private Water
Spaces and Lineal Footage:
15
spaces
513
lineal feet
M
r •
DESCRIPTIONS - continued
City requirements for marina parking are 3/4 space per slip or
berthing space, therefore 60 spaces are required for the 79 berthing
space manna. Restrooms in the yacht club structure are available for
the manna.
Highest and Best Use of Tidelands:
Fair rental value is based upon the highest and best use of the tidelands,
as if vacant.
Definition - Highest and Best Use:
Highest and best use may be defined as the reasonably probable
and legal use of vacant land or an improved property, which is
physically possible, appropriately supported, financially feasible, and
that results in the highest value. C t1 Appraisal Qf Bcal Estate The Appraisal
Institute, Tenth Edition, 1992, page 275.)
The primary elements of highest and best use include the
following factors:
Legally Permitted:
Zoning must permit the use, or there must be a reasonable
probability of obtaining such zoning. There can be no deed restriction
or other encumbrance preventing the use.
Physically Possible:
The property must be physically adaptable to the proposed use.
The parcel must be of correct size and shape. Topography and soil
characteristics must be compatible to permit development.
Financially Feasible:
A proposed use is considered financially feasible if it produces a
positive financial return.
Results in the Highest Value:
A use which is legally permitted, physically possible, -and
financially feasible must also result in the highest value to the land, if
vacant, or to the property if improved.
-19- q_t/
d
I
DESCRIPTIONS - condnued
Conclusion - Highest and Best Use:
In accordance with the above definition, it is our opinion that
the highest and best use of the subject tidelands is for development
of boat berthing spaces in joinder with adjacent uplands consistent
with applicable laws and regulations. Highest and best use of the
typical uplands parcel is for alternative (non- marina) use.
Without joinder to the adjacent uplands, the tidelands have
only nominal or speculative economic value. Use for offshore
moorings would produce substantially less value and may not be
possible due to area requirements, access, and possible —
infringement of rights accruing to the adjacent upland owner.
l�
-20-
a
C
aIntroduction:
VALUATION METHODOLOGY
Consistent with the purpose of this appraisal, our estimate of fair
rental value considers a long term lease and includes the combination of
minimum rental and percentage rental based on gross receipts from rental
of boat slips, dock lockers, and liveaboard charges, if any. The scope of
this appraisal does not extend to leases which would permit additional
revenue producing uses such as charter or tour boats, commercial sport
fishing, sale of petroleum products, ship chandlery, and other uses.
21 10(
The lease will provide for periodic adjustments in minimumsental
during the 30 - 35 year lease term. This appraisal includes an opinion
regarding the basis for such periodic adjustment in minimum rent.
Although the function of this appraisal involves a specific marina, the
®
analysis is based on typical marina configuration and commercial upland
the
values with locational and slip rental characteristics generally similar to
BCYC marina.
A survey of other harbors in Southern California was made. The
following significant differences in basic physical and economic conditions
between the survey data and lower Newport Harbor were noted:
1. Ownership of Uplands and Tidelands
Newport Harbor: Tidelands are held in public
ownership and the adjacent uplands are
privately owned
Survey Area: With the exception of the Delta region,
both tidelands and uplands are held in
common public ownership.
2. Uplands Use Controls
Newport Harbor. Private owners of the uplands have a
significant number of alternative uses
available as evidenced by the existing
uses and the City Zoning Ordinance and
General Plan.
21 10(
VALUATION iv1ETHOD - continued
Survey Area: The uplands and adjoining tidelands are
operated by the public agency or leased
to private operators who are restricted
by lease agreement or master plan to the
specific marina use.
3. Development and Operational Objectives
Newport Harbor: Development and operation are based
primarily on economic return and/or
specific needs of the developer.
Survey Area: The dedication of the property to
marina use was predicated primarily on
public need rather than to generate
maximum economic return.
4. Berthing Space Rental Rates
Newport Harbor: Berthing space rental rates are set by
supply and demand.
Survey Area: In many cases, berthing space rental rates
are controlled by the managing public
agency.
Recognition of Differences Between Newport Harbor and Survey Area:
Any approach to valuation must recognize and make appropriate
adjustments for the differences noted above between Newport Harbor
and the survey area. In the Valuation section of this report, we have
provided for these differences in accordance with the following:
1. Private uplands ownership and public tidelands ownership:
In our analysis, we have considered the theory of joinder, wherein two
or more adjacent properties (in this case upland parcel and water area parcel)
are combined and dedicated to a single use.
2. Private development of Newport Harbor vs. public development within the
survey area:
From study of marina developments throughout Newport Harbor, we
have derived criteria for marina development These include land area, water
area, slip area, slip size, and lineal footage for a theoretical marina which
conforms with code requirements and represents efficient use of the Tana and
water area.
3. Private development based upon economic return vs. public development in
response to public need.
Alternative land uses are available to the private upland owner as
reflected by land values within the Newport Harbor area. Upland values for I O
-22-
VALUATION METHOD - continued
the public marina can also be estimated by comparison with other income
. generating uses, such as retail centers and restaurants, which are under lease
within the public marinas.
The survey disclosed considerable data on percentage rental for land
and water combined for marina use. The data available on the rental of the
water area separate from the uplands was so limited and subject to special
. circumstances it could not reliably support an opinion of rental value.
Therefore, our methodology considers:
• 1. Fair rental for land and water in joinder for marina use, and
' 2. allocation of the rent between each component (land and water)
based on an equalized rate of return to each, considering the
highest and best use of each.
Fair Market Rental for Land and Water In Joinder for Marina Use:
The estimate of fair market rental for land and water in joinder
involves a market survey for empirical evidence. Comparative analysis
considers the pertinent differences between the survey data and the
conditions prevailing in Newport Harbor. The percentage rental indication
for land and water combined, as indicated by the market survey, is tested by
■ residual analysis.
. Market Survey:
A survey was made of rental rates within most of the marinas and
. harbors from Santa Barbara to San Diego. In most cases the combined
upland and water area necessary for the marina use is leased together
without an allocation of rental for the water area. For this reason the
rental rates could not be used for direct comparison with the subject
water area. Limited exceptions where the water area is rented
separately from adjacent uplands are noted in a following subsection
entitled "Evidence of Tidelands Rents (separate from uplands) ".
0
0
r
a
Test by Residual Analysis:
The test by residual analysis is based on the premise that the
indicated percentage rent should return an amount to the land and
water which is essentially equivalent to the residual income to land and
water. That is, the indicated rental percentage should be essentially
-23-
VALUATION METHOD - continued
equivalent to the percentage which residual income bears to effective
gross income.
Residual income to the land and water is that portion of stabilized
gross income which remains after deducting all expenses and charges
required to generate the income, including return on and recapture of
improvements and profit.
Allocation of Rent Between Land and Water:
Consistent with the highest and best use determination, we have _
utilized the theory of joinder in considering the marina use which combines
privately owned uplands with publicly owned tidelands. The value in
joinder is then allocated between the two components, land and water, to
provide a value indication for the tidelands portion. The market derived
percentage rental is allocated in proportion to the value contribution of each
component.
In most instances the theory of joinder involves properties wherein the
value of the properties combined is at least as much as the summation of the
individual property values. In the subject instance, however, the value of
the privately held upland for marina use is less than its value for alternative
uses.
The technique we have utilized involves allocation of the income
stream generated from marina use considering the respective value
contribution of the tidelands area and the upland area in accordance with
their respective highest and best use. The ultimate goal of the income
allocation is to provide each owner (i.e., private and public) with an equal
rate of return on value contributed.
We have, therefore, first considered land and water with unity of
ownership as if dedicated to marina use. The marina value (land and water)
was apportioned to land area and water area based upon land value
(independent of marina use) and water value (dependent upon marina use).
The resulting value of water area was derived from an internal
apportionment considering common land and water ownership.
To reflect the requirement of joinder for the tideland area to achieve
its highest and best use (i.e., adjustment for non -unity of ownership) an
additional apportionment is required. This apportionment has been
accomplished by equalizing the economic return to the land and water 0
-24-
vALUAnON METHOD - continued
components. The total income to land and water (from marina use) is
allocated based upon equal income to value ratios.
The upland and tideland value components form the basis of this
second allocation. The upland value is based upon its highest and best use,
independent of manna use. The water value is based upon its highest and
best use, for marina use in joinder. This technique of "equalization" results
in an allocated income to water, that, when capitalized to value reflects the
actual ownership condition of the subject water (tideland) area.
Evidence of Tidelands Rents (separate from uplands):
The valuation approach described above, which requires allocation of
value to the water area, was necessary since the empirical evidence of rent
or value for water area alone (separate from the adjoining uplands) is too
limited to provide reliable value indications.
The following is a summary of the limited data found in our survey
where the water is used, in joinder with the adjacent uplands, but the water
area is leased separately or an allocation to water is made.
Port of San Diego
The Port District makes a separate allocation of rental to water area
in the Shelter Island area for several parcels wherein rent is based on a
percentage of estimated fee value (rather than on a percentage of gross
income). The water is not leased separately from the upland, which the
District also owns, but an allocation is made. This limits the utility of
the data.
The rents were adjusted effective February 1, 1988, to
$0.22/s.f. /year (9% of $2.49) for water area adjoining
"quasi - industrial" (boat repair) uses, and $0.25 /s.f. /year (9% of $2.80)
for "commercial' (boat sales) uses. These rents are currently under
study for adjustment.
San Joaquin Delta Region
The State of California leases water area for manna use in the Delta
region. Rent is based on a percentage of the gross income from the
manna operation. The percentage charged for most of the marinas
ranges from 5% to 7% of the gross. This is not considered comparable
due to significant differences in location, slip rents and land values.
►I
VALUATION ME -17HOD - continued
County of Orange - Newport Harbor
The County of Orange leases small segments of tidelands under its
jurisdiction to owners of adjoining commercial uplands in lower
Newport Harbor. The rental for these parcels is significantly
influenced by the special circumstances of the upland parcel and there is
little consistency in approach. Therefore, the data is of limited
assistance. Following is a summary of this data
Channel Reef Condominiums:
Rental is $1,266 /month for 0.639 acre of water area
(may include some area above mean high tide). Special—
circumstances surrounded this negotiation.
Swales Manna:
Rental is 20% of gross receipts for 1.15 acres of water
area. This is a month -to -month tenancy pending further
studies. The percentage rental is not based on arms length
negotiations between the parties. The county recently
increased the rental after the operator had substantially
upgraded the improvements under a significantly different
tidelands fee basis. The operator had the choice of paying the
rent or abandoning the improvements.
Reuben E. Lee Restaurant:
Rental is $2,122/month for 0.20 acre of water. This is a
small segment of County tidelands adjacent to privately
owned submerged lands.
Bayshores Manna:
For 2.22 acres of water, the minimum rental is
$18,354/yr. with percentage rent based on the formula:
40% x [AGI - ($66,376.57 + 409/o x AGI + T)), where
AGI = Annual Gross Income; T = Prior year RE takes
The $66,376.57 is understood to have been the original
estimated fair return to the uplands based on 1974 land
values when the lease was written. Undercurrent land values
-26- `11
r—�
LI
VALUATION METHOD - continued
the lease tends to undercompensate the land which results in a
greater return to the water. As a result the current
percentage for the tidelands is reported to exceed 20% of the
gross.
Rhine Channel:
■ Rental is $350 /yr. for 0.14 acre water (3 parcels
combined). This is a month to month holdover from an
outdated agreement. The marina operators have not agreed
to new rental rates set by the County.
Rent for Offshore Moorings in Newport Harbor:
The City and County rent water area for offshore moorings in
Newport Harbor. The mooring equipment is owned and maintained by the
tenant. This data reflects rental income to water area, absent joinder with
uplands.
The City mooring areas involve a total of ±250 acres and the County
area is ±4.6 acres. One acre of water area can accommodate two single
point and four double point moorings. The City charges $18.00 and the
county charges $32.00 per lineal foot per year. With this information the
income per square foot of water area can be calculated as follows:
Fee for Density
Fee Per 40' Boat Moorings Rental Income
FoottYear RBI Yizu PSI Am Bu Am PSr U
City: $18.00 $720 21acre single $1,440 3.34
4/acre double $2,880 6.64
County: $32.00 $1,280 4/acre double $5,120 11.84
Analysis set out in the following valuation sections shows that water
area generates a significantly higher return when joined with uplands for
marina and related uses.
l0
-27-
MARINA NIT -NIM M AND PERCENTAGE RENT SURVEY -1993
Slip
Minimum
Current
Jurisdiction
Rent
Vacancy
Ventura Harbor
757c prior
15% -20%
(805) 642 -8538, Anita Lambie
5 year avg.
overall avg.
Recent review kept slips at 20 %.
75% prior
27%
Channel Islands Harbor
80 7c prior
0%-8%
(805) 385 -8695, Frank Anderson
5 year avg.
declining
Newest leases are mid 1980's on
3 new marinas in 43 acre basin.
King Harbor (Redondo Beach)
75% prior
11% -15%
(310) 318 -0631, Ray Koke
3 year avg.
small SUPS
Generally 1982, except new minimum
new terms
3%-8%
larger slips
Slip
live
Rent
Aboards
20%
2090
21 % -28%
same
newer leases
as
in mid 1989s
slips
are25%
75% prior
27%
27%
Port of Los Angeles 30% return None in new
(213) 519 -3400, Mark Richter on S15 land Cabrillo; 15-18%
Cabrillo 1,200 - 35 +' slips Port runs. and $5 water mostly small slips
Others 5,800 slips on leased land other marinas
San Pedro Marina, 1981 sublease, 98 slips
City of Long Beach - 19811case
(310) 421 -9431 (Parks & Rec)
Vince Abe - City leases 20% of land
and water req'ts for Cerritos Bahia
Huntington Harbor, Sunset Aquatic 75% prior
(714) 568 -4980 (County H, B & P) 3 year avg.
Mike Hansen -1969 lease, extension negotiated
effective 37% of gross based on net formula,
County withdrew and will operate with manager
for 5% of gross when lease expires in 1999.
Newport Harbor (Dunes 1989 lease) S360,000/yr.
Newport Harbor (Harbor Club 1990) S200,0001yr.
25% 25%
34%
30% 30%
(of 20% gross)
Not 25% 25%
monitored
18% 25%
30%
Dana Point 75% prior 4%
(714) 568 -4981 (County H, B & P) 5 year avg.
Barry Permenter - new restaurant 3.25%
combined. Marina leases 1971 & 1975.
25% 25%
Mission Bay (City of San Diego)
67%-80%
Not 25% not
(619) 236-6020 Property Dept
5 year avg.
monitored allowed
Norman Swayne
New tease for Dana Marina.
Port of San Diego
75% prior
South Bay 22.5% on 2/92 22.5%
(619) 291 -3900, Dan Strum 686 -6291
year, then
has high 25% on 2197 25%
Based on lease revised 10/22/92
level 10 yrs.
vacancy
N
1 i
This market information is confirmed with managers, lessors or
operators and is studied and compared to the typical marina in Newport
Harbor. This is done to provide indications of percentage and minimum
rents appropriate to the combined water and land. In the following section
of this report an allocation is made between water and land.
In Southern California most marina developments are constructed on
publicly owned land under the jurisdiction of a governmental entity such as
city, county, or port district. The improvements have typically been built
by lessees pursuant to long term land and water leases. In some cases the
improvements have been built and operated by the government (Downtown
Shoreline Marina and Long Beach Marina, Long Beach; Cabrillo Marina in
Los Angeles Harbor; and Balboa Yacht Basin in Newport Beach).
According to the records of the Department of Navigation and Ocean
Development, less than 10% of the berthing spaces in Southern California
are on privately owned (fee title) land. Most of these privately owned
marinas are in Newport Harbor.
MPercentage Rent:
Marina/Anchorage:
The survey shows that in Southern California percentage rent paid
for land and water for marina use ranges from 20% to 34% of-gross
receipts from slip rents. The predominant rate is 25 %. The most
recently negotiated rate in the survey data (March 1993) was 25% for
the Dana Marina in Mission Bay, however, the average slip rents were
substantially below those prevailing in Newport Harbor. The 34%
rate is somewhat anomalous and is for a sublease in the Ports O'Call
rarea of L.A. Harbor.
-28- `0�
VALUATION
FAIR MARKET RENTAL - LAND AND WATER COMBLNTED
Market Survey:
14
Our methodology includes the empirical or market comparison
approach which involves a survey of leased parcels of water and land
combined for marina purposes. The survey results are summarized on the
facing page, reflecting the most recent leases or adjustments. While some
of the percentages result from recently negotiated leases or amendments,
others are relatively dated.
This market information is confirmed with managers, lessors or
operators and is studied and compared to the typical marina in Newport
Harbor. This is done to provide indications of percentage and minimum
rents appropriate to the combined water and land. In the following section
of this report an allocation is made between water and land.
In Southern California most marina developments are constructed on
publicly owned land under the jurisdiction of a governmental entity such as
city, county, or port district. The improvements have typically been built
by lessees pursuant to long term land and water leases. In some cases the
improvements have been built and operated by the government (Downtown
Shoreline Marina and Long Beach Marina, Long Beach; Cabrillo Marina in
Los Angeles Harbor; and Balboa Yacht Basin in Newport Beach).
According to the records of the Department of Navigation and Ocean
Development, less than 10% of the berthing spaces in Southern California
are on privately owned (fee title) land. Most of these privately owned
marinas are in Newport Harbor.
MPercentage Rent:
Marina/Anchorage:
The survey shows that in Southern California percentage rent paid
for land and water for marina use ranges from 20% to 34% of-gross
receipts from slip rents. The predominant rate is 25 %. The most
recently negotiated rate in the survey data (March 1993) was 25% for
the Dana Marina in Mission Bay, however, the average slip rents were
substantially below those prevailing in Newport Harbor. The 34%
rate is somewhat anomalous and is for a sublease in the Ports O'Call
rarea of L.A. Harbor.
-28- `0�
VALUATION - continued
In Marina del Rey, stepped increases were recently negotiated for
Parcel 18, Dolphin Marina, as follows: 25% to 4/30/95; 28% from
5/1/95 to 6/30/2004; 30% from 7/1/2004 to 6/30/2009; and 32% from
7/1/2009 to 6/30/2014.
The percentage rent which can be supported is significantly
influenced by the level of slip rents. As slip rents and gross receipts
increase, there is a greater percent of the gross available (residual) to
land and water, after satisfying expenses, amortization of
improvements and lessee's profit.
In lower Newport Harbor there are two recent leases of both
upland and water area for marina use. The land and water for the
Harbor Club (formerly Arches Marina) is leased for mixed use
including a marina. The lease was revised in 1989 and the percentage
applicable to boat slip rental is 30% of gross receipts. The rent
provisions were reviewed in 1992 by the county and no changes were
made.
The rental provisions for the Balboa Bay Club lease were revised
in 1986 and the percentage rent for boat slip rents (land and water)
was set at 31 %.
Considering all of the data and the locational and other
differences, the survey data supports a percentage toward the upper
end of the range for the typical Newport Harbor marina, which is
judged to be on the order of 30% of gross receipts for slip rents, dock
box rentals, and related.
Survey Indication of Fair Rental: 30% of gross receipts
Liveaboard Charges:
Where liveaboards are permitted, the universal practice in the
more current leases surveyed is to charge the same percentage for
liveaboard charges as is charged for slip rents.
Minimum Rent:
iThis portion of fair rental value reflects the minimum economic
return to the land and water which an owner may reasonably expect,
considering the terms and conditions of the lease. This component of fair 110
-29-
VALUATION - continued
rental value affords protection to the lessor by identifying a return to the
land which is reasonably assured, while also considering the lessee's ability
to meet the rental obligation during periods of reduced income due to
cyclical downturns, improvement replacement or renovation, or other
causes beyond the lessee's control.
Our survey of other harbors and marinas indicated that most leases
provide for adjustment of minimum rent each adjustment period to a
percentage (from 67% to 80 %) of average actual total rent paid during the
prior three to five years of operation. The minimum rent calculated in this
fashion is then applicable until the next rental adjustment date (typically a
three, five or ten year period). The data is summarized as follows:
Jurisdiction
Ventura Harbor
Channel Islands Harbor
King Harbor
Port of Los Angeles
Sunset Aquatic Park
Dana Point
Mission Bay
Port of San Diego
Minimum Rent
75% of prior 5 year average
80% of prior 3 year average
75% of prior 3 year average
10% return on $10 /s.f. land value
10% return on $5 /s.f. water value
75% of prior 3 year average
75% of prior 5 year average
67% to 80% of prior 5 year average
75% of prior year
' The preponderance of empirical data supports adjusting annual
minimum rent every 3 or 5 years to 75% of the average total rent for the
prior 3 to 5 year period.
' Survey Indication for Minimum Rent: 75% of average annual rent
for prior 3 - 5 year period
Residual Analysis - Test of Market Survey Rental Indication
The percentage rental of 30% indicated by the market survey is
checked by residual analysis. Although this analysis involves calculations
which result in a specific numerical conclusion, the process depends upon
numerous estimates. Therefore, the conclusion is considered moregeneral
than it may appear, and is helpful primarily as a check on the indication by
market survey.
This process is based on the premise that the indicated percentage rent
should return an amount to the land and water which is essentially
-30- \l1
VALUATION - continued
equivalent to the residual income to land and water. Residual income to the
' land and water is that portion of stabilized gross income which remains
after deducting all expenses and charges required to generate the income,
including return on and recapture of improvements and profit.
The stabilized effective gross income is the amount which would be
expected to be produced at market levels by a commercial manna with the
subject's characteristics. Deductions are-then made for all charges and
expenses which are necessary to generate the income, including:
Operating Expenses (before real estate taxes) -
Real Estate Taxes
Amortization of Improvements (return on and recapture)
Profit (consideration for risk and entrepreneurship)
The basis for estimating each of these items is discussed below,
followed by a summary of calculations. The amount left (residual) after
deducting the above charges from effective gross income is the residual
income to land and water, which provides a measure of what the manna
could afford to pay for land and water rent.
Effective Gross Income:
Our market survey, which is discussed in the following section,
indicates an effective range of unadjusted slip rates from $12.25 to
$15.25 per lineal foot. An overall average slip rental of $14.25 per
lineal foot is used in the calculations. The vacancy adjustment is based
on a rate of 7 %, partially offset to 5% by "overhang charges ".
Operating Expenses (Before taxes, tideland fees, and amortization):
iOperating expenses are a significant element in the estimate of fair
rental for a property devoted to marina usage. We have found a rather
wide range of these expenses in Newport Harbor and other harbors. In
our opinion, this is due, at least in part, to the following factors: _
r (a) The Age of the Facility:
On one hand maintenance costs can rise during the last ten
iyears of a thirty -year marina structure life. However, this can be
offset by the operators considering that the floating
improvements will need major repair or replacement and
re- configuration. Therefore, a repair and maintenance program
0
VALUATION - cononued
is not maintained. This is currently apparent within Manna del
Rey. As will be shown later, there is a tendency for newer
marinas, with higher slip rents, to experience greater expenses.
(b) Economic Conditions:
With reducing slip rental rates and increasing slip vacancies
as currently exists, less money is available to meet the demands of
regular maintenance. At the same time, apparently a greater
expense arises in marketing the vacant slips which requires
additional time and money.
(c) Operator's Philosophy:
The improved marina data reflects differences in
management philosophy which affects costs. This is influenced in
part by current economic conditions and status of ownership.
Some may be uncertain as to what the future may bring and
plan accordingly. Others pride themselves in maintaining an
operation which reflects a preventive maintenance schedule,
immediate attention and permanent cure to structural
deficiencies, etc. This has been reflected in The Irvine Company
Marinas, Ardell Manna and Lido Peninsula Marina in Newport
Harbor. It is also evident in the Del Rey Yacht Club, Santa
Monica Yacht Club and other operations at Marina del Rey.
These and other elements may affect the manner in which
empirical data is reviewed and reconciled. However, all data appears
to fall within specific ranges of probable costs. The reconciliation of
this data for valuation purposes must be as consistent as possible and
applicable to the intent or purpose of this appraisal.
Elements of Marina Expense:
Insurance: General liability, operators liability, workman's
compensation, fire -wind structures.damage,
floating and upland improvements.
Utilities: Cost of energy, water and sewer to serve dock
area, parking lot and necessary ancillary
buildings.
-32-
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VALUATION - continued
Repair and
Maintenance: Plumbing, electrical, paint, lumber supplies,
decks, piers, flotation, piles, cleats, bumpers,
storage boxes, black top surfacing, striping,
upland structural maintenance. Included are
contract services of cleaning, rubbish, dock and
utility maintenance.
Reserves for
Replacement: Sums retained to meet replacement of short
lived or damaged items.
Salaries and
Wages: Office staff, dock master, custodians,
maintenance workers, including payroll taxes.
Administration: Cost to administer marina operation, manager's
salary, office costs, legal, auditing, advertising
and promotions, office supplies, employee
medical insurance, personal property taxes.
Management
Fees: Contracted or in house to handle overall
management, bookkeeping, billing, collections,
and associated responsibilities.
On the facing page we have summarized the expense history of
three newer marinas (less than 12 years old) within Newport Harbor
with slip rental at the $13.50 - $14.00 level and average slip size of
31.50 to 38.70 feet. The Balboa Yacht Club expenses are those
estimated by the club in anticipation of possible marina purchase. This
data indicates an annual expense charge of about $35 per lineal foot is
applicable to subject marina (before Real Estate taxes and Tideland
fees).
Real Estate Taxes:
Taxes are calculated by multiplying the tax rate times the taxable
value. The tax rate is based upon a general tax levy of 1 % plus voted
indebtedness.
The taxable value increases at a rate of 2% per year until there is a
sale or other "reassessable event". Upon sale, the assessor reappraises
-33- �3
VALUATION - continued
the possessory interest to current market value. One of the appraisal
approaches employed by the assessor involves capitalization of net
income. Fair market value of the property assumes a sale on the date
of value. To be consistent with that assumption in our residual
analysis, real estate taxes are estimated based on the estimated market
value of the marina on the date of value. This estimate is based on
capitalization of the marina net income. The effective tax rate (general
levy plus indebtedness) is estimated to be 1.1% of the current value.
Amortization of Improvements:
This item accounts for the annual charge necessary for a return
on, and recapture of, the improvements. The marina improvement§
include the piers and floats, paved parking areas, and restrooms. The
replacement cost new of these improvements is amortized over their
anticipated economic life of 30 years. Replacement costs are based on
actual costs incurred for the subject and adjoining marinas and more
recent costs and estimates for construction of other marinas.
Profit:
Definitions of Profit:
1. The amount by which the proceeds of a transaction exceed its
cost.
2. In theoretical economics, the residual share of the product of
enterprise that accrues to the entrepreneur after paying
interest for capital, rent for land, and wages for labor and
management.
clig Diction= Q Be Estate Avnraisal. 2d Edition, American Institute
of Real Estate Appraisers.)
As suggested by definition number 2, above, profit may be
considered as residual after all other necessary components are
satisfied. However, in the land residual technique, profit must be
estimated as one of the components, leaving return to land as the
residual element.
In our analysis, profit is considered as the percentage of effective
gross income which is necessary to attract a potential investor,
recognizing the risk in achieving the projected income from the
-34- (�Lp--
BCYC MARINA RESIDUAL ANALYSIS AS TEST OF MARKET SURVEY
Summary of Assumptions and Conclusions:
Vacancy.
5.0% of PG1
Profit:
15.0% of EGI
Expenses:
535.00 /l.f./yr. (Before R.E. Taxes)
Imp. Amortization Rate:
10.0% /year
Total Lineal Footage:
3,017 I.f.
Average Slip Rent
$14.25 /l.f. /mo.
Amortization of Improvements:
FloaWpiers replacement cost new:
60
5490,112
Effective Gross Income:
Net Residual Income to Land and Water (Land Rent):
5147,992
As percent of Effective Gross Income (EGI):
30.2% _
Potential Gross Slip Rent 425 /mo.
$515,907
� d Loss 5 0%
acY Collection
(525,795)
Effective Gross Income - Slip Rental:
$490,112
Total Effective Gross Income - EGI:
$490,112
Operating expenses rbefore taxes, tidelands fees & amortization:
3,017 L.F.
_ ($105,595)
$35.00 IL.FJyear z
$221,509
Net Marina Income (before taxes, tidelands fees & improvement amortization): $384,517
Property Tax Estimate ( ±1.1% of value):
($73,517)
Cap rate including ±1.1% for taxes: 10.60%
$3 627,516
Capitalized value of marina net income:
Property taxes @ + 1.10%
$39,903 ($39,903)
Net Marina Income - After taxes, before tidelands fees and amortization:
$344,614
Amortization of Improvements:
FloaWpiers replacement cost new:
60
$1,050,000
$55,500
Parking replacement cost new $925 /space x sp.
Amort. factor for 30 years @ 10.0% annual factor
0.10607925
Annual amortization requirement floats/piers & parking:
$117,271
($117,271)
Restroom replace cost new:
Amort. factor for 30 years @ 10.0% annual factor
$55,000
0.10607925
Annual amortization requirement office and restrooms:
$5,834
($5,834)— _
Net Marina Income (after improvements and taxes):
$221,509
($73,517)
Profit: 15.0% of effective gross income:
$147,992
Residual Income to Land and Water.
30.2%
As percent of Effective Gross Income:
VALUATION -continued
. marina operation. Analysis of investor requirements in other real
estate opportunities with similar risk patterns indicates a requirement
of about 15 %.
Summary of Calculations - Residual Analysis:
On the facing page is a summary of the residual analysis
calculations incorporating the elements discussed above. This analysis
shows that after satisfying operational requirements, taxes, profit,
amortization of improvements, there is residual to land and water as
follows:
Effective Gross Income: $490,112
Net Residual Income to Land and Water (Land Rent): $147,992
As percent of Effective Gross Income (EGI): 30.2%
This study supports the market survey indication for percentage
rent of land and water since the residual to land and water (30.2 %) is
essentially equivalent to the market survey indication (30 %).
The following pie chart graphically portrays the allocation of the
effective gross income among the various charges shown on the
residual analysis:
15.0% Profit:
30.2% Land &
Water Rent:
.5% Operating
8.1% Property
Taxes:
25.1% Improvement
Amortization:
-35-
l�$
VALUATION
ALLOCATION BETWEEN LAND AND WATER
Introduction:
In the preceding section we analyzed the market evidence which
indicated a percentage rental of 30% of gross receipts for land and water
combined for the typical Newport Harbor marina. In this section we
allocate the indicated 30% rate between land and water based on the theory
of joinder.
The allocation process requires a determination of the amount of land
area and water area required to support a lineal foot of berthing space in the
typical marina. This forms the basis for determining the contribution to
total value which is made by each component (land and water).
The amount of rent for land and water combined is supported by direct
market evidence. The rent is calculated by multiplying the market derived
percentage (30% estimated in preceding section) times the market derived
gross receipts (slip rents adjusted for vacancy).
The value of the uplands for alternative commercial uses can also be
supported by sales comparison. Given these elements, residual income to
the water can be calculated. However, where the upland values are high due
to demand for alternative uses (as they are in Newport Harbor) there is no
rental income left to the water after providing an 8% to 9% return to the
upland. Therefore, the land must underwrite the marina to some extent.
The theory of joinder requires that both components receive an equal
return on value.
Consequently a two step allocation is required under the theory of
joinder such that both components share in the underwriting of the marina
use. The allocation process requires estimates of the following:
Land and Water Area Requirements (per lineal foot of slip spaceZ_ _
Value of Uplands (at highest and best use)
Slip Rents and Vacancies
Capitalization Rate (for income to land and water combined for
manna use)
\0
VALUATION - continued
Land and Water Area Requirements:
0
The most consistent and equitable means of measuring the economic
contribution of the water mass is to consider the area's ability to generate
income from slip rental with an appropriate berthing layout. In order to
ascertain space requirements for such use, a survey of marinas in Newport
Harbor was made. The data on the marinas with more than 30 slips was
classified as being typical, high density, or special case. A summary of this
data is set forth in the preceding Descriptions section of this report. From
this study, the following criteria was developed:
Water Area Requirements:
The marinas classified as "typical" demonstrated that
approximately 36 square feet of water area is required per lineal foot
of berthing space. The average slip length of approximately 36 lineal
feet results in ±1,295 s.f. of water area required per slip. This includes
area for headwalks, fingers, piers, set backs, fairways, etc.
Effect of Berthing Beyond Pierhead Line or Slip Ends:
Applicable regulations allow moored boats to extend
bayward of the pierhead line a distance equivalent to the width
(beam) of the boat. Typically this allows a greater density of
berthing in two ways: 1) by providing side ties coincident with
and parallel to the pierhead line, and 2) by allowing boats moored
in slips perpendicular to the pierhead line to extend beyond the
end of the slip and bayward of the pierhead line.
The total lineal footage of berthing space in the marinas
which were surveyed to establish the above criteria included side
ties which were coincident with and parallel to the pierhead line.
Therefore, the increase in density resulting from this method of
berthing is already reflected in the criteria and requires no
further adjustment.
The practice of allowing boats to extend beyond the ends of
the slip (and charging berthing fees based on the length of the boat
or the slip, whichever is greater) has the effect of increasing the
potential gross revenue from slip rental. This occurs whether the
extension is inside or bayward of the pierhead line. Our analysis
of aerial photographs in Newport Harbor showed that the
aggregate lineal footage of boats extending beyond slip ends
-37- l ao
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VALUATION - continued
typically amounted to about 2% of the total lineal footage of
berthing space in the marina. The resulting increase in potential
gross income from this factor is considered in the valuation
analysis by offsetting it against vacancy, turnover, and credit loss
in the estimate of effective gross income.
Land Area Requirements:
Marina development requires sufficient upland area to meet
vehicle parking requirements. The City of Newport Beach Harbor
Permit Policies, Section 17, requires 0.75 parking space for each slip,
or for each 25' of available berthing space not classified as a slip, in
commercially operated marinas.
In addition, space is required for restrooms, storage, and other
ancillary structures. Analysis of efficiently constructed marinas
indicates that 350 s.f. of land per car space will provide sufficient area
for all of these uses. The amount of upland required to support a
marina use, therefore, is equivalent to 350 s.f. x 0.75 = 263 s.f. per
slip, or 263 s.f. _ 36 = t73 s.f. of upland per lineal foot of berthing
space.
The following relationships result from the above criteria:
1. For every lineal foot of berthing, 36 s.f. of water area and 7.3 s.f.
of upland are required.
2. Typically, 1,295 s.f. of water and 263 s.f. of upland are required
per slip.
3. Area Ratios:
Land: 7.3 s.f. Land (7.3 s.f. Land + 36 s.f. Water) = 16.9%
Water. 36 s,f. Water (7.3 s.f. Land +36 s.f. Water) = 83.10
Upland Value: - —
An indication of the general level of waterfront commercial land value
is necessary for the allocation analysis. Our search for sales of
commercially zoned land fronting on lower Newport Harbor resulted in the
sales which are summarized on the facing page. Since the waterfront is
substantially developed, the sales all involved properties wherein the buyer
-38-
C
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NEWPORT HARBOR SLIP RENTAL
(Generally comparable to BCYC)
SLIPS LINEAL FT,
Bayside Marina:
46'
- 74'
27
1,709
30'
- 45'
35
1,188
0'
- 20' outside
10
203
0'
- 20' inside
30
499
Villa Cove Marina:
30' - 40'
22'
Balboa Yacht Basin:
All slips and side ties:
Balboa Marina:
0' - 27'
28' - 55'
Bayshores Marina:
0' - 26'
32' - 38'
68'
82'
41
1
61
71
1,416
22
1,463
2,714
I
$15.25
$14.25
$13.00
$10.50
$14.25
$12.00
$12.25
$12.50
$14.25
70
1,641
$12.00
55
1,858
"S 14.25
4
272
$15.25
5
410
$16.50
�a.?7
NMI
VALUATION - continued
intended to demolish existing improvements and redevelop the site.
This data provides a panorama of sales which are helpful to show the
general level of waterfront commercial land values for allocation purposes.
The data ranges generally from S64 to $126 per square foot of gross area
and from $64 to $142 per square foot of net area. Gross area is calculated
to the established U.S. Bulkhead line. Net area is based on location of the
actual bulkhead and existing land area (the difference is the "private" water
area inside the established bulkhead line).
Considering current market conditions and the upward influence of
residential potential on the price paid for Sale No. 1, we have selected$65
to $100 per square foot of net area as generally representative of
commercial upland values for our allocation calculations.
Effective Slip Rents (adjusted for vacancy and "overhang" charges):
Slip rents at good quality marinas similar to BCYC, as reported for
the first quarter of 1993 are summarized on the facing page. The range is
from $10.50 to $16.50 per lineal foot per month. The range is narrowed to
$12.25 to $15.25 by giving less weight to the atypical slips and side ties.
Vacancy rates have ranged from about 5% to 10% of gross income.
These rates are considered partially offset by about 2% for slip "overhang"
charges. These adjusted rates result in effective slip rates of about $12.00 to
$14.00 per lineal foot per month.
Rental Income Capitalization Rate:
Determination of this rate is necessary to compute the capitalized value
of the land and water in joinder, as restricted and dedicated to marina usage.
Capitalization rates are influenced by the anticipated stability and risk
associated with the income stream. Generally, lower risk results in lower
capitalization rate.
The applicable rate is that market yield necessary to attract a buyer to
the investment in a lessor's (landowner) interest under a marina lease with
rental income determined as a percentage of gross slip rental (see
"Economic Rent" above). The income stream which this rental produces is
subject to variations in the slip rental market, vacancy factor, and credit
loss. Variations in operating expenses, however, are eliminated since the
economic rent to land and water is solely a function of effective gross
income. l�
-39-
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VALUATION - continued
Rates may be derived from the market by considering the sales of
similar investment properties and rates on alternative investment
opportunities. Some of the rates on alternative investments are set out on
the facing page. This data was prepared by the Federal Reserve Bank of St.
Louis, with the latest data being for the week ending May 21, 1993. These
rates show the influence of risk and term on rates. For example, in the
following long term securities instruments the rates increase as risk
increases:
Long -Term Treasuries:
6.72%
Corporate Aaa Bonds:
7.46% _
Corporate Baa Bonds:
8.29%
Short term rates are typically lower than long term rates, since
short term investments reduce risk by affording the investor the
opportunity to change position as market conditions change. For
example:
Long -Term Treasuries:
6.72%
5 -Year Treasuries:
5.28%
1 -Year Treasury Bill:
3.25%
3 -Month Treasury Bill:
2.99%
Similar relationships between short term and long term
commitments are found in loans for commercial real estate. A recent
survey by the Appraisal Institute shows the following:
3-5 years 10+ years
Multifamily
8.55%
9.50%
Retail
8,31%
9.45%
Office
8.60%
9.54%
Industrial
8.73%
9.41%
Capitalization rates for real estate investments typically reflect
some degree of inflation protection since the capital value and income
stream from real estate generally change with market conditions;
including inflation. The risk influence will depend on location and
anticipated stability of the income stream.
-40- \
0
VALUATION - condnued
■ The Appraisal Institute Research Department survey of real estate
investments in the first quarter of 1993 (nationwide) found
capitalization rates in the following ranges by property type:
lu
Retail - Regional Centers: 7.0 % -9.0%
9.0 %- 11.0%
Neighborhood Centers:
Industrial - Warehouse: 8.5 %- 11.0%
Office: Suburban: 9.0%- 12.0%
Capitalization rates for improved properties reflect the fact that
the improvements are a wasting asset, subject to risks of deterioration
and obsolescence. Consequently the rate applicable to income _
attributable to land only (non - wasting asset) must be lower.
Considering this data and other pertinent market evidence, it is
r
our opinion that the capitalization rate applicable to the rental income
to land and water ranges from 8.25% to 8.75 %.
Influence of Upland Values:
As noted in the foregoing discussion, the direct residual method
produces a negative or unreasonably low return to the water when upland
values are relatively high based on their availability for alternative uses.
This is demonstrated by a survey of other harbors and examples from
Marina del Rey. An illustrative example using Newport Harbor data is also
used.
Survey Data:
We surveyed both marinas and commercial waterfront uplands
not used for marinas. The data obtained in the survey provides a
factual basis for analyzing the effect on value of alternative uses
available to the upland owner in Newport Harbor. The data shows that
income from marina operations is relatively low compared to that
from the commercial upland uses. However the waterfront
environment, including the marinas, contributes to the high level of
income generated from restaurants, retail centers, hotels, an& other
related commercial uses.
In Newport Harbor, the private upland owner has the alternative
of not developing a marina and using the upland area (otherwise
-a1 -)7,'1
i
1
VALUATION - continued
required for marina support, e.g., parking, restrooms, lockers, etc.)
for a more intense commercial use such as restaurant, office, or retail
sales.
Most of the marinas in Newport Harbor were originally
developed when economic conditions were substantially different. For
example, prior to 1978, upland owners paid essentially no monetary
rental for use of the tidelands area. Landowners considered all net
income produced from marina operation as residual to their land
ownership. Also, the level of land value has increased dramatically in
recent years. Generally slip rentals have increased by about 100% in
the last 10 years, whereas the value of commercial waterfront uplands
suitable for marina development has increased by about 200 9o'.
Therefore, the economic conditions that may have motivated
development of many of the marinas are no longer applicable.
Analysis of the survey data provides an indication of the current
economic factors affecting marina development. As stated previously
in this report, we have developed valuation criteria based upon analysis
of data obtained from Newport Harbor, as well as the survey area.
These criteria are summarized as follows:
Criteria for Efficient Marina Development
Average Slip Length:
Water Area Required
Land Area Required:
36 lineal feet
36 sq. ft./lineal foot of
berthing space.
7.3 sq. ftAineal foot of
berthing space.
Criteria for Land and Water Value - Marina Use:
Economic Rent for
Land and Water.
Capitalization Rate of Net
Income to Land and Water.
3D %n of Gross Income
8.25% to 8.75%
The criteria for efficient marina development are used in the
economic analysis of marina development in Newport Harbor in
accordance with the unique conditions of that location. The criteria
are also helpful for comparison with the survey data, recognizing and
adjusting for differences.
-42- ,a8
0
VALUATION - continued
0
The most current and helpful survey information was available
from Marina Del Rey. This information tends to illuminate the
relationship between land value generated from various upland uses
and the value of land and water combined resulting from marina
usage.
Marina Del Rey:
Substantial data was obtained concerning income derived from
marina operations and from alternative uplands uses including
restaurants, apartments, and retail centers. Generally, the restaurants
produced the highest return to the land based on percentage rents -paid
in 1992.
As rental for the combined water and land area for marina
purposes, marina operators paid the lessor, County of Los Angeles,
20% to 25% of gross receipts from slip rentals in 1992.
Pertinent information regarding three typical marinas is
summarized below (we note that the land to water ratio for marinas is
substantially higher in Marina del Rey than that indicated from
analysis of private marina development in Newport Harbor).
Tradewinds paid 20% and the others paid 25% of gross receipts for
land rent:
Marina
Tradewinds
(157 slips)
Holiday Harbor
(218 slips)
Catalina
(160 slips)
Area (sq.ft.)
lmd
Water
96,136
150,000
112,500
140,395
102,685
138,540
1992 Slip
Land &
Rent
Bent Income
Water Rent
$ /so f -
$625,004
$125,000
$0.51
$569,098
$142,275
$0.56
$428,628
$107,157
$0.44
We have analyzed several waterfront upland uses including retail,
commercial, restaurant, and multiple family residential to derive -an
indication of land values. As noted above, the highest income was
generated from restaurants, which pay land rent based on 3.5% of
gross receipts from food and beverage sales combined. Pertinent
information from three of the restaurants is summarized on the
following page:'
-43- IIA
0
VALUATION - continued
Land Gross Income Land Rent Rent
- Restaurant Area i 4.ft.1 1922 14 un Slsa.ft.
Moose 38,750 sq.ft. $3,073,162 $107,561 $2.78
McGillycuddy's
Warehouse 56,941 sq.ft. $3,930,208 $137,557 $2.42
Shangai Red's 47,300 sq.ft. $2,708,828 $94,809 $1.63
+11,250 water
for guest docks
The landowner's (County) rental income per square foot of land
area generated by Moose McGillycuddy's and the Warehouse was. _
$2.78/s.f. /year and $2.42/s.f. /year, respectively, while Shangai Red's
produced $1.63 /s.fJyear including the water area for guest docks.
The water residual technique has merit as long as the land values
for alternative uses and slip rental rates remain in relative balance.
However, using this technique on income from the Tradewinds Marina
and alternative uplands use value ($2.42/s.fJyr.) from the Warehouse
Restaurant illustrates the shortcomings of this approach when income
from marina use is significantly below income available from
alternative upland uses.
Warehouse Restaurant:
Income to Land:
$137,557 56,941 sq. ft. _
Tradewinds Marina:
Income to Land and Water:
Less. Income to Land
(from alternative use)
$2.42/s.f. x 96,136 sq. ft. _
Residual Income to Water (negative):
$137,557 /year
$2.42 /s.f. /year
$125,000
$232,649
($107,649)
-44- yJ0
VALUATION - continued
Obviously, negative income residual to the water area is an
incorrect value indication. A similar result obtains in Newport
Harbor, where the value of water fronting uplands (for use other than
marina and excluding water rights) is so great in comparison to slip
rates, that negative income results from the residual technique.
Newport Harbor (IllustrativeExample):
Sales of vacant water fronting parcels in Newport Harbor indicate
land values for commercial use ranging from about $65 /sq.ft. to
$100 /sq.fL Effective slip rental rates in marinas comparable to the-
subject generally range from $12 to $14 per lineal foot and
appropriate rent for unimproved land and water combined for marina
use is 30% of gross revenue from slip rentals. For illustrative
purposes only, utilizing the above approach, and selecting values from
roughly the mid points of the indicated ranges, the residual to water
area in Newport Harbor is indicated to be:
Income to land and water (Marina):
$13/l.L x 12 months x 30% =
$46.80111 + 43.3 s.f./l.L =
Income to land (Alternative Commercial Use):
8.5% x $80 /s.L _
Residual to Water Area:
Income to Land and Water.
Less: Income to Land (from alternative use)
7.3 s.f. Land/l.f. x $6.80 =
Residual Income to Water (negative)
$46.80 /l.f. /year
$1.08 /s.f. /year
$6.80 /s.f. /year
$46.80 /l.f. /year
$49.64/111year
($2.84)/I.f. /year
The examples of Marina del Rey and Newport Harbor
demonstrate that if the uplands values are sufficiently high due to
available alternative uses, the water area shows no economic return
unless joined with the land and underwritten to some extent by the
land.
Many of the upland parcels adjoining the tideland parcels are used
for commercial (non- marina) uses mixed with the upland area
required for marina support. In some cases development approval by
1
-45-
i
c
t
i
VALUATION - continued
the city has been conditioned on joint use of parking areas, subject to
some limitation on the upland commercial use, such as hours of
operation. The calculations used for this report, however, are based
upon the standard city requirements for marina development with the
necessary upland area devoted exclusively to marina support.
Valuation and Allocation Computations:
As noted above in the section entitled Valuation Methodology, the
water area is valued in joinder with the upland for marina use. The marina
value (based on marina income from land and water combined) is then `
allocated to each component (land and water) based on the relative
contribution of each, considering its respective highest and best use. The
highest and best use of the land is for development to non - marina
commercial uses. The highest and best use of the water area is for joinder
with the land for marina development.
The objective is to provide each owner (i.e. private uplands and public
water) with equal return on value contributed. This is accomplished by
allocating the market derived 30% of gross receipts rental rate for land and
water combined between land and water in proportion to the value o
contribution of each component. z
0
b
The computations required to accomplish this valuation and allocation
incorporate and depend upon the following criteria for Newport Harbor I
which were developed and discussed above:
1) the physical criteria for typical marina development, and
2) the economic criteria for value of land and water.
Criteria and Computations for Marina Value:
The criteria and computations required to derive an indicated value
for marina use are summarized below. The economic criteria are
expressed in ranges and are likewise employed as ranges in the -
computations. The following calculations are done on a computer using 17
decimal places, whereas the display shows only two decimal places.
Consequently the indicated result of a calculation may be slightly different
than if it were done based on the displayed numbers.
-46- �3�'
VALUATION continued
LLl
Marina Net Income (to Land + Water Area):
From:
Per Lineal Foot/Month: $3.60
Per Lineal Foot/Year. $43.20
Per Sq.Ft./Year: $1.00
From:
Indicated Capitalized Value: $11.40
To:
$4.20 of Slip Space
$50.40 of Slip Space
$1.16 of Land + Water Area
To:
$14.11 /Sq.FL (Land & Water)
Value Allocation - Before Equalization for Joinder
The above computations result in an indicated range of value per
square foot for land and water combined and dedicated, to marina use. This
value must next be allocated to each component (land and water) based on
the relative economic contribution of each.
This allocation is a two step process, first requiring apportionment
based on indicated values as though both land and water were restricted to
marina use. The second step requires equalization of return for the
economic effect of joinder. This adjusts for the fact that the land
_ — .....cc lmc
-47-
X33
Physical Criteria for Typical Marina Development:
Land Area Requirement: 7.30 Sq.Ft. /L.F. of Slip Space
Water Area Requirement: 36.00 Sq.Ft./L.F. of Slip Space
Total Required: 43.30 Sq.Ft./L.F. of Slip Space
Economic Criteria for Value of Land & Water (Dedicated to Marina Use):
From: To:
Market Slip Rental Rate: $12.00 $14.00 per L.F./Mo.
Economic Rent (Land & Water): 30.00% 30.00 %n of Gross Slip Rent
Economic Capitalization Rate for
Net Rental Income (Land/Water): 8.25% 8.75% for Marina Income
Land Value of Uplands: $65.00 $100.00 /Sq.Ft. of Land Area
Applying the above physical and economic criteria results in an
indication of the value of land and water area presuming; 1) unity of
ownership, and 2) land and water area dedicated to marina use (i.e., no
alternative uses available).
LLl
Marina Net Income (to Land + Water Area):
From:
Per Lineal Foot/Month: $3.60
Per Lineal Foot/Year. $43.20
Per Sq.Ft./Year: $1.00
From:
Indicated Capitalized Value: $11.40
To:
$4.20 of Slip Space
$50.40 of Slip Space
$1.16 of Land + Water Area
To:
$14.11 /Sq.FL (Land & Water)
Value Allocation - Before Equalization for Joinder
The above computations result in an indicated range of value per
square foot for land and water combined and dedicated, to marina use. This
value must next be allocated to each component (land and water) based on
the relative economic contribution of each.
This allocation is a two step process, first requiring apportionment
based on indicated values as though both land and water were restricted to
marina use. The second step requires equalization of return for the
economic effect of joinder. This adjusts for the fact that the land
_ — .....cc lmc
-47-
X33
VALUATION - continued
0
component is not restricted to marina use, and as previously demonstrated,
the unrestricted upland values in Newport Harbor would otherwise result in
a negative residual income to the water component.
The first step involves computing the percentage which the water value
(average unit value of marina applied to water area) bears to the sum of the
water value plus the unrestricted land value. This percentage is then
applied to the estimated marina value to obtain the indicated value of water
area, before equalization for economic effect of joinder, as follows:
Value Allocation - Before Equalization for Joinder.
Basic Land Value of Uplands *:
Land & Water (Marina Use) * *:
Marina Upland Area (Sq.FL):
Marina Water Area (Sq.FQ:
Total Upland + Water (Sq.FL):
From: To:
$65.00 $100.00 /Sq.FL of Land Area
$11.40 $14.11 /Sq.FL (Land & Wafer)
7.30 16.86% of Land & Water Area
36.00 83.14% of Land & Water Area
43.30 100.00%
* Unrestricted value of upland area.
* *Marina use capitalized value before allocation to land and water areas.
M
- ••.•." ,, ""R INC.
k3`k
From:
To:
Indicated Total Value - Marina:
$493.71
$610.91
per L.F. of Slip Space
Value at Highest and Best Use:
Unrestricted Upland Value:
$474.50
$730.00
per L.F. of Slip Space
Water Value (as Marina):
$410.48
$507.92
per L.F. of Slip Space
Sum of Above:
$884.98
$1,237.92
Proportion of Water
From:
To:
Value to Sum:
46.38%
41.03%
From:
To:
Indicated Value of Water Area *:
$229.00
$250.66
per L.F. of Slip Space
Indicated Value of Water Area *:
$6.36
$6.96
/Sq.Ft. of Water Area
Indicated Value of Land Area *:
$264.72
$360.25
per L.F. of Siip-Space
Indicated Value of Land Area *:
$36.26
$49.35
/Sq.Ft. of Upland Area
*Value allocations before equalization for economic effect of joinder.
M
- ••.•." ,, ""R INC.
k3`k
•
VALUATION - continued
The value allocation accomplished in the first step (above) has the
effeet of valuing the land component as if it were restricted to marina use.
If both land and water areas are so restricted, the returns to the land and
water components are equal, as demonstrated by the following
computations:
Equalization of Economic Return for Joinder.
*Presumes upland restricted to Marina Use.
These calculations show equal rates of return of 8.25% to 8.75% to
1 both land and water values only when the land is restricted to manna use.
However, if the income allocated to land ($23.16 to $29.72 per L.F. of slip
space) is applied to the unrestricted upland value ($474.50 to $730.00 per
L.F. of slip space), the indicated return to land is reduced to 4.07% to
4.88 %. Therefore, to reflect the non -unity of ownership and the value
contributions of the upland and tideland components, the following
Iequalization is required.
Equalization of Economic Return for Joinder:
The above allocation provides equal rates of return only if the upland
is considered to be restricted to marina use. However, deducting an
economic return to the unrestricted upland value would result in a negative
residual to the water component. Recognizing that the water component
would have essentially no economic value without joinder to the upland, an
-49
`3
From:
To:
Marina Net Rental Income:
$43.20
$50.40 per L.F. of Slip Space
Allocated to Water Area:
% Allocated to Water.
46.39%
41.03% of Marina Rental Incom
Income to Water Area:
$20.04
$20.68 per L.F. of Slip Space
Allocated to Land Area:
- -
% Allocated to Land:
53.62%
58.97% of Marina Rental Incom
Income to Land:
$23.16
$29.72 per L.F. of Slip Space
Indicated Return on Water Value
Before Effect of Joinder*:
8.75%
8.25%
Indicated Return on Land
Restricted to Marina Use:
8.75%
8.25%
Indicated Return on
Unrestricted Land Value:
4.88%
4.07%
*Presumes upland restricted to Marina Use.
These calculations show equal rates of return of 8.25% to 8.75% to
1 both land and water values only when the land is restricted to manna use.
However, if the income allocated to land ($23.16 to $29.72 per L.F. of slip
space) is applied to the unrestricted upland value ($474.50 to $730.00 per
L.F. of slip space), the indicated return to land is reduced to 4.07% to
4.88 %. Therefore, to reflect the non -unity of ownership and the value
contributions of the upland and tideland components, the following
Iequalization is required.
Equalization of Economic Return for Joinder:
The above allocation provides equal rates of return only if the upland
is considered to be restricted to marina use. However, deducting an
economic return to the unrestricted upland value would result in a negative
residual to the water component. Recognizing that the water component
would have essentially no economic value without joinder to the upland, an
-49
`3
VALUATION - continued
0
additional computation is necessary to further apportion available income
from marina utilization.
The concept of providing an equal rate of return to the unrestricted
land component (i.e. value at highest and best use) and to the water
component at highest and best use (i.e. before adjustment for joinder
requirement) forms the basis of the "equalization" adjustment.
Adjustment to Equalize Return for Economic Effect of Joinder:
Equalized Return = Marina Net Income (Unrestricted Land + Water Values)
Net Income
From: $43.20
To: $50.40
Equalized Return:
From: $43.20
To: $50.40
Equalized Return*:
(Unrestricted Land + Water Value)
$474.50 + $229.00
$730.00 + $250.66
$703.50
$980.66
From: To:
6.14%
5.14%
These equalized rates of return are then applied to the unrestricted
land value and the water value to indicate the equalized annual return to
each:
Return to Land (range): 6.14%
x $474.50 =
$29.14 per L.F. of slip space
5.14%
x $730.00 =
$37.52 per L.F. of slip space
Retum to Water (range): 6.14%
x $229.00 =
$14.06 per L.F. of slip space
5.14%
x $250.66 =
$12.88 per L.F. of slip space
The combined return to land and water ($43.20 to $50.40) is
equivalent to 30% of effective gross marina income. This market derived
rate is allocated between land and water in proportion to the above
equalized returns as follows:
Income to Land & Water.
$43.20
As % of Gross:
30.0%
Income to Land:
$29.14
As % of Gross:
20.2%
Income to Water:
$14.06
As % of Gross:
9.8%
$50.40 per L.F. of Slip Space
30.0% of Gross Slip Rent - -
$37.52 per L.F. of Slip Space
22.3% of Gross Slip Rent
$12.88 per L.F. of Slip Space
7.7% of Gross Slip Rent
-50- `�
0
VALUATION - continued
Reconciliation
•
The foregoing analysis results in indicated fair rental for the water
area devoted to typical marine use ranging from:
7.7% to 9.8% of gross slip rental income.
This range of indicated percentage rental for the water area considers
the typical marina configuration with locational and slip rental
characteristics similar to the BCYC marina. The range of indicated
percentage rental is relatively narrow despite the somewhat broader
economic criteria used in the foregoing computations. This results from
the offsetting characteristics of some of the criteria.
For example, generally higher slip rentals are realized in areas with
higher uplands values. Higher slip fees result in a higher indicated rental
value for the tidelands. However, these value enhancing effects tend to be
offset to some extent by the fact that as the value of uplands increase for
alternative (non - marina) uses (with other factors held constant) the value of
the adjoining water area decreases.
The range of indicated percentage rental ( 7.7% to 9.8 %) is influenced
primarily by three elements:
1) effective slip rental rates ($12.00 to $14.00 /l.fJmo.),
2) capitalization rate applicable to land/water income (8.25% to 8.75 %),
3) upland land value for alternative use ($65 to $100 /s.f.).
The proposed lease freezes the percentage rate for the entire 30 year
term with no provision for adjustment. Therefore, selection of a rate
within the range must consider the effects of probable changes in these
variables.
Effective SIip Rents
Effective slip rental rates (asking rate less vacancy and incentives)
are the most variable. Current rates within the better Newport Harbor
marinas remain relatively high with only moderate softening. Marina
del Rey has experienced significant vacancy (excess of 15% to 20' %) on
slips of less than 30 lineal feet, as has the Balboa Marina in Newport.
-51-
c3�
0
VALUATION - continued
0
Effective rental rates in the smaller slips in Marina del Rey have
also delcined due to incentives and reduced asking rates. However the
facilities are reaching 30 years of age and reflect considerable
obsolescence and deferred maintenance. Notwithstanding these
factors, the 35 foot and larger slips have experienced relatively stable
vacancy and rental rates.
The subject manna used as the basis for this analysis is considered
to be less than 10 years old, well maintained and of efficient
configuration. Within the existing BCYC marina, those slips located
in City tidelands all are 35 ft. and longer except for slip No. 103 (30
ft.), No. 98B (30 ft. side tie) and No. 105 (87 ft. possibly three x-29 ft.
side ties). Therefore, the subject configuration appears appropriate to
minimize the influence of a changing economy on slip rantals over the
30 year term.
The current short term outlook is that rates could have some
softening before the economy regains its strength. However, as it
returns and demand increases some upward movement of the rates can
be expected. This has an upward influence on percentage rents.
Capitalization Rates:
While over the last ten years long term mortgage interest rates
have vaned from 16% to 7.5% overall, capitalization rates on Marinas
have probably ranged from 12% to 9% and land lease capitalization
rates typically have moved between 9.5% and 8 %. Therefore, the
8.25% to 8.75% range is reasonably secure.
Upland Land Values:
Upland land values are also subject to variation. However, the
supply of privately owned bayfront land in limited. Over the years
this category of investment has shown a relatively stable value history
with periodic spurts upward in times of prosperity. Over the long
term their appreciation potential should be superior to most alternative
land investments.
This judgement would lead to a conclusion that the upward —
pressure on manna percentage rent caused by increases in slip rental
rates can be more than offset by rising upland values. This results
from the fact that increased upland values reduce the share of marina
income available to the water.
-52-
VALUATION - condnued
On balance, it is our opinion that anticipated changes in the three
influences tend to be offsetting. However, the long term lease does provide
the lessee an interest in the tidelands not associated with a tidelands permit
(present status).
This should offer greater certainty and security to the investor and
significantly improve the mortgageability of the marina as a whole. In our
opinion these considerations support a conclusion of percentage fair rental
slightly above the mid -point of the 7.7% to 9.8% range.
Fair Rental Value Conclusion - Long Term Lease of Water Area:
As a result of our investigation and analysis, as well as consideration of
other factors pertinent to the appraisal problem including the terms of the
proposed lease, we have formed the opinion that the fair rental value of
those certain water parcels parcels with locational and slip rental
characteristics similar to the subject marina is 9.0% of gross receipts from
slip rentals, locker rentals, and related.
Fair Rental Value Conclusion: 9.0% of gross receipts
Adjustment for Private Water Area:
In many marinas (including BCYC) part of the water area supporting a
marina is inside the established U.S. Bulkhead line and therefore privately
owned and not part of the tidelands for which rent must be paid. The
BCYC marina has 15 berthing spaces in the private water area. Adjustment
for this may be done by the income source method.
Income Source Method:
With this method of adjustment the gross receipts generated by the
15 slips in the private water area is simply deducted or excluded from
total gross receipts. The 9.0% rate is then applied to the remainder
gross receipts (those generated from the slips in the tidelands area).
This method is relatively straightforward and it tends to reflect the
economics of each water segment.
Examples of Percentage Rental at Alternative Effective Slip Rates:
There are 2,504 lineal feet of berthing space in the tidelands. For
illustration only, we have applied effective slip rents (after vacancy) of
-53- 0q
vALUAuON - continued
$11, $12, $13 and $14 per lineal foot per month to show the resulting
percentage rent. The calculations are as follows:
$11 /1.f. /month x 2,5041.f. x
12 months x 9% _ $29,748 per yr.
$12/l.f. /month x 2,504 IS. x
12 months x 9% _ $32,452 per yr.
$13 /l.f. /month x 2,5041.f. x
12 months x 99o' _ $35,156 per yr.
$14 /l.f. /month x 2,5041.f. x
12 months x 9% _ $37,860 per yr.
Alternative Method for Private Water Area Adjustment - Area Ratio:
The area ratio method is offered for consideration by the parties
as a possible alternative to the income source method. This method
involves adjusting the 9% rental rate based on water area ratios. The-
adjusted rate is then multiplied times the gross receipts from the entire
manna. For example, calculations using the water areas in the BCYC
marina result in the following adjusted rental rate (dimensions used in
area calculations include a 100' project line and other dimensions
found on assessors maps or scaled from other maps):
Tidelands area: ±76,550 sq.ft.
Private area: ±10.775 §-q--ft.
Total water area: 87,325 sq.ft.
Percentage of tidelands to total:
±-76,550 sq.ft. _ 87,325 sq.ft. = 87.7%
Tidelands rental rate applicable to total gross receipts:
87.79o' of water area x 9.09o' total rate = 7.899o' adjusted rate
This method may be easier to administer than the income
source method, however, it doesn't fully reflect the economics of
each water segment. For example, due to its shape and location,
the private water area in the BCYC marina has a higher density of
slips (no access aisles required).
-54- �p
• 0
VALUATION - continued
Minimum Rental Calculation:
Our conclusion for minimum rental is 75% of the average preceding
three years actual rental paid for slips within the tidelands, adjusted every
three years. Initial minimum rental may be calculated as 75% of what the
average percentage rent would have been for the preceding three years
based either on actual receipts or on agreement of the parties.
Again, for illustration only, the following are examples of minimum
rentals based on 75% of total percentage rent resulting from average
effective slip rents of $11, $12, $13 and $14 per lineal foot per month:
@ $11 /l.fJmonth:
percentage rent is $29,748 x 75% = $22,311 per yr.
• $12/l.f. /month:
percentage rent is $32,452 x 759o' = $24,339 per yr.
• $13 /1.fJmonth:
percentage rent is $35,156 x 75% = $26,367 per yr.
• $14 /11/month:
percentage rent is $37,860 x 75% = $28,395 per yr.
The purpose of this appraisal is not to judge what BCYC slip rental
should be. It is only to estimate the percentage rental applicable to the rent
received and a basis for a minimum rent consistent with general practices ?
within the marina industry.
z
b
-55- kk
-0. '
During recent weeks, several accusations have been made with regard to our
motives and interest as owners and managers of Via Lido Plaza. We may deal
with these irresponsible and false accusations independently, however, it is
important to me personally that we set the record straight with each and every
member of the Newport Beach City Council.
First, every surrounding property owner who experienced the havoc and
expense attributable to the former Thunderbird along with the well known
adverse impacts from. the Lido Marina Village area is and should be concerned.
Because we are burdened by high parking monitoring and administration costs,
we have repeatedly asked city staff to simply enforce existing conditional use
permits. This is not an extraordinary request. Indeed, we have invested
several million dollars in redeveloping Via Lido Plaza and retaining the
landmark Lido Theatre as one of the few historic single screens operating
anywhere in Southern California. In order to establish the comprehensive
redevelopment of our grocery- retailing element, we have made contractual
commitments to provide adequate and secure parking for Pavilions customers.
We now have a revitalized quality Via Lido Drug Store. We have maintained
quality tenants and have left space vacant before allowing low quality adverse
uses that have become commonplace in many areas on the peninsula. � - ,.
Like every knowledgeable owner and taxpayer, we are interested in seeing
sensible redevelopment on the peninsula. Maintaining the kind of services and
uses at Via Lido Plaza is not easy when prospective tenants review the area
and see the declining commercial elements. On the other hand, we believe that
excellent guidelines have been provided in the BPPAC report regarding the
Balboa Peninsula and we know the Council has taken steps to deal with these
long overdue solutions.
06/24/98 11:52 FAI 9497231141
FR1rZ DITDA CALIF
Q002/005
'
Real Emce Invmm *ddr . Devcloprn
COUNCIL
AGEND
wt 3471 Va ,;a,
Sum W7
CA 91663.7929
(71773
lV 0.
-7100
FAX (714) 773 -1141
One Galk i To
13355 Neel Read, ui 3
Sue: 1315
WIN. TX 752406603
(972) 934.2244
FAX (972) 991 .5164
June 24, 1998
Via Facsimile
-}
City Council Members
CITY OF NEWPORT BEACH
A
3300 N ewport Boulevard
Newport Beach, CA 92663
03
Dear Council Members.-
-0. '
During recent weeks, several accusations have been made with regard to our
motives and interest as owners and managers of Via Lido Plaza. We may deal
with these irresponsible and false accusations independently, however, it is
important to me personally that we set the record straight with each and every
member of the Newport Beach City Council.
First, every surrounding property owner who experienced the havoc and
expense attributable to the former Thunderbird along with the well known
adverse impacts from. the Lido Marina Village area is and should be concerned.
Because we are burdened by high parking monitoring and administration costs,
we have repeatedly asked city staff to simply enforce existing conditional use
permits. This is not an extraordinary request. Indeed, we have invested
several million dollars in redeveloping Via Lido Plaza and retaining the
landmark Lido Theatre as one of the few historic single screens operating
anywhere in Southern California. In order to establish the comprehensive
redevelopment of our grocery- retailing element, we have made contractual
commitments to provide adequate and secure parking for Pavilions customers.
We now have a revitalized quality Via Lido Drug Store. We have maintained
quality tenants and have left space vacant before allowing low quality adverse
uses that have become commonplace in many areas on the peninsula. � - ,.
Like every knowledgeable owner and taxpayer, we are interested in seeing
sensible redevelopment on the peninsula. Maintaining the kind of services and
uses at Via Lido Plaza is not easy when prospective tenants review the area
and see the declining commercial elements. On the other hand, we believe that
excellent guidelines have been provided in the BPPAC report regarding the
Balboa Peninsula and we know the Council has taken steps to deal with these
long overdue solutions.
09/24/98
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11:52 FAX 9497291141
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City Council Members
CITY OF NEWPORT BEACH
June 24, 1998
Page 2
FRITZ DUDA CALIF
11
0005/005
V> ° •a
I do not personally know the owners of Lido Marina Village or their
representatives. Indeed, we are supporters of and encourage quality
redevelopment of this entire area. Having observed several failed plans over
the years, we believe the ultimate solution can be assisted by the City securing
outside planning leadership and a public review process that will assure all
concerned stakeholders that any proposed redevelopment will be consistenif_
with and enhance surrounding uses.
Sincerely,
7'. . 9.'Vlz�
Fritz L. uda
FLD:ab
cc Kevin Murphy, City Manager
Sharon Wood, Asst City Manager
v°
IV, ° N.
PROJECT:
SUGGESTED
ACTION:
Background
Agenda Item
No:
Staff Persons:
C30
June 22, 1998
S35
Sharon Z. Wood
Robin Clauson
REPORT TO THE MAYOR AND CITY COUNCIL
JN22
Lease with LJR Lido Partnership L.P. for Tid
Associated with Lido Marina Village C 3
Approve and Authorize Mayor to Execute Lease
The City Council reviewed and approved an outline of proposed terms for a long term lease of
• the tidelands associated with Lido Marina Village on June 8, and directed the City Attorney to
prepare the lease agreement and return for City Council action. The report for that meeting and
the approved outline are attached to this report.
Lease Provisions
The lease agreement with LJR Lido Partnership L.P. (LJR) presented for the Council's
consideration is consistent with the terms in the outline, and includes significantly more detail.
Paragraph 1, Leased Premises
The property subject to the lease is the tidelands associated with the upland property known as
Lido Marina Village, as well as additional slips associated with the two properties to the
southeast, which are leased to the owners of Lido Marina Village. An aerial photograph showing
the property is attached to this report, and Exhibits B and C of the lease are a description and
map of the property.
Paragraph 2, Term
The lease commences on recordation of the Grant Deed transferring title of the Lido Marina
Village uplands to LJR, which should occur shortly after the close of escrow scheduled for June
30. The term of the City lease is fifty years for the Lido Marina Village tidelands. For the leased
slips, the term is twenty -five years, the term of the private lease, unless LJR acquires that
• property.
Paragraph 5, Rent
Since the City Council meeting of June 8, staff has received an appraisal report prepared by
Richard Fuller, MAI, which has been used to negotiate the rent. Fuller has determined the fair
CITY OF NEIOORT BEACH
o� m
COMMUNITY AND ECONOMIC
U 'i
DEVELOPMENT
' tea"
•
PLANNING DEPARTMENT
3300 NEWPORT BOULEVARD
NEWPORT BEACH, CA 92658
(714) 644 -3200; FAX (714) 644 -3250
PROJECT:
SUGGESTED
ACTION:
Background
Agenda Item
No:
Staff Persons:
C30
June 22, 1998
S35
Sharon Z. Wood
Robin Clauson
REPORT TO THE MAYOR AND CITY COUNCIL
JN22
Lease with LJR Lido Partnership L.P. for Tid
Associated with Lido Marina Village C 3
Approve and Authorize Mayor to Execute Lease
The City Council reviewed and approved an outline of proposed terms for a long term lease of
• the tidelands associated with Lido Marina Village on June 8, and directed the City Attorney to
prepare the lease agreement and return for City Council action. The report for that meeting and
the approved outline are attached to this report.
Lease Provisions
The lease agreement with LJR Lido Partnership L.P. (LJR) presented for the Council's
consideration is consistent with the terms in the outline, and includes significantly more detail.
Paragraph 1, Leased Premises
The property subject to the lease is the tidelands associated with the upland property known as
Lido Marina Village, as well as additional slips associated with the two properties to the
southeast, which are leased to the owners of Lido Marina Village. An aerial photograph showing
the property is attached to this report, and Exhibits B and C of the lease are a description and
map of the property.
Paragraph 2, Term
The lease commences on recordation of the Grant Deed transferring title of the Lido Marina
Village uplands to LJR, which should occur shortly after the close of escrow scheduled for June
30. The term of the City lease is fifty years for the Lido Marina Village tidelands. For the leased
slips, the term is twenty -five years, the term of the private lease, unless LJR acquires that
• property.
Paragraph 5, Rent
Since the City Council meeting of June 8, staff has received an appraisal report prepared by
Richard Fuller, MAI, which has been used to negotiate the rent. Fuller has determined the fair
9 •
Paragraph 5, Rent
Since the City Council meeting of June 8, staff has received an appraisal report prepared by •
Richard Fuller, MAI, which has been used to negotiate the rent. Fuller has determined the fair
market base rent to be $14 per lineal foot of slip per year, and the percentage rent, to be 9% of'
gross receipts. The proposed lease agreement makes provision for minimum rent and additional
rent. Minimum rent was determined to be $35,000, by applying $14 to the approximately 2,500
linear feet of slips associated with the Lido Marina Village uplands. Beginning March 1, 1999,
there will be additional rent to bring the total rent paid to the City equal to 9% of the gross
receipts generated by the leased premises, including slip rentals and fees from charter boat
operations and boat sales. The City has the right to audit LJR's records; if an underpayment of
greater than $1,000 is discovered, LJR will pay the cost of the City's audit. The minimum rent
will increase by 2% per year, and there will be a revaluation of the fair market rental value of the
property after 25 years, with the per cent used to calculate additional rent limited to a range
between 8% and 12 %.
Paragraph 6, Alterations
This paragraph addresses both alterations to the slips and redevelopment of the upland property.
The slips are to be reconfigured in conjunction with redevelopment of the upland property, to
provide increased water views. The City must approve any reduction in slip facilities, and all
work on slips must be in accordance with City ordinances and policies. Minimum rent will be
abated for up to six months if the slips cannot be used for more than a month during
redevelopment.
Redevelopment of the upland property is defined as in the approved outline: the replacement of
no less than 38,000 square feet of leasable floor area and substantial rehabilitation of the
remainder of the property owned by LJR. A development schedule is included as Exhibit F to
the lease. It is consistent with the outline approved by the City Council, with the one exception
that a program for expanded community outreach is to be provided to the City within thirty days
of the commencement date, rather than being completed by the commencement date. The lease
also provides that the City will provide written notice to LJR if a milestone of the development
schedule is not met, and LJR will have thirty days to cure the breach. The time to cure the
breach may be extended up to two years with City Council approval. If the development
schedule is not met, the City may terminate the lease.
Paragraph 14, Insurance
LJR is required to maintain the following insurance: comprehensive general liability of
$2,000,000 (with periodic adjustment as determined by the City), construction, property, and
worker's compensation. The Risk Manager and Assistant City Attorney have approved this level
of general liability coverage, which is two times the amount the City requires in all agreements
other than for extraordinary projects such as the Arches interchange.
Paragraph 17, Assignment, Subletting and Hypothecation
The boat slips and other marina improvements may be sublet to other parties. Assignment or
transfer of the lease requires the City's consent, and LJR may not transfer or assign its ownership •
of the associated upland property separately from the tidelands included in the lease. Provisions
are made for the lease interest to be assigned or mortgaged for financing purposes. The leasehold
Page 2
• Paragraph 18, Defaults and Remedies
Defaults include failure to pay rent, failure to meet the development schedule, failure to maintain
the size of slip facilities, failure to perform any other term or condition of the lease, insolvency or
bankruptcy of LJR, permitting the premises to become vacant for more than thirty days, and the
appointment of a trustee or receiver to take possession of LJR's assets. The City's remedies are
to repossess the premises, terminate the lease, maintain the lease and recover rent, and any other
remedy provided in the law.
•
Analysis
In negotiating the proposed lease, staff has followed City Council Policy F -7, Income Property, to
the maximum extent feasible and applicable to this particular property. As indicated earlier, an
appraisal of fair market rental value was prepared by Richard Fuller, MAI, and was the basis for
the rent provisions of the proposed lease. Therefore, staff believes that the City will receive
revenue equivalent to the open market value of the highest and best use, as specified in the
policy. An open bid process was not conducted to select the lessee, because the highest and best
use of the upland and tideland properties can be achieved if they are held jointly, and LJR is in
escrow for purchase of the upland property. A fifty -year term has been requested for the lease to
allow for financing that will facilitate redevelopment of the upland property. The proposed lease
includes provisions for annual increases in the minimum rent and revaluation of the fair market
rental value of the property after twenty -five years. These provisions are intended to protect the
City's economic interest as market conditions may change over the term of the lease. Finally, the
proposed lease includes provisions for audits of LJR's records throughout the term of the lease.
As indicated in the report for June 8, staff believes that LJR's acquisition of the Lido Marina
Village and adjacent properties provides the City with an opportunity for revitalization of an
important site that is not performing at its potential level. The proposed lease requires
redevelopment of the upland property and reconfiguration of the slips, with a development
schedule and substantial community outreach program. These requirements provide the City
with assurance that the long -term lease of the tidelands will facilitate a well planned,
comprehensive revitalization program in the near future.
SHARON Z. WOOD
Assi t City Manager
Attachments
ROBIN CLAUSON
sistant City Attorney
A2_
Page 3
CITY OF NOOPORT BEACH Hea Date: June 8, 1998
oe COMMUNITY AND ECONOMIC Agenda Item
z DEVELOPMENT NO:
-.,,. PLANNING DEPARTMENT Staff Person: Sharon Z. W°d
3300 NEWPORT BOULEVARD (714) 644 -3229
NEWPORT BEACH, CA 92658
(714) 644 -3200; FAX (714) 644 -3250
REPORT TO THE MAYOR AND CITY COUNCIL
PROJECT: Outline of Lease with James Ratkovich & Associates for
Tidelands Associated with Lido Marina Village
SUGGESTED
ACTION: Review and approve the outline of proposed terms for a long
term lease, and instruct the City Attorney to prepare the lease
agreement and return for City Council action
James Ratkovich & Associates (JRA) is in escrow to purchase the property known as Lido
Marina Village, with close of escrow scheduled for the end of June. They already have closed
escrow on two properties on Via Lido, the former Bank of America building near the comer of
Newport Boulevard, and the Lido Building between Via Lido and Via Malaga. All of the
properties are shown on the attached aerial photograph and survey map. JRA intends to
undertake a coordinated redevelopment project involving these properties. As a condition of
financing for the acquisitions and redevelopment, JRA and their lender have requested a long-
term lease on the tidelands owned by the City, to demonstrate the potential for continuous cash
flow from the property.
The City's past practice for tidelands properties has been to issue annual Commercial Pier
Permits, at a rate of $.28 per square foot per year. For the property in question, the annual fees
are approximately $30,500. In the recent Bahia Corinthian Yacht Club transaction, the City used
a long -term lease to provide greater security to the lessee and the City, and a greater rate of return
to the City. The proposed structure for a lease agreement with JRA, which is attached, is similar
to this recent example.
The rent is proposed to be a percent of annual gross receipts from JRA's slip rentals, with a
minimum rent guaranteed to the City, based on a fair market valuation by an appraiser acceptable
to the City. Fuller & Hansen has been retained by JRA for this purpose. Using the Bahia
Corinthian lease terms for estimating purposes, the proposed Lido Marina Village tidelands lease
would generate approximately $57,000 for the City annually. The minimum rent will be adjusted
periodically based on actual rents received during the period, and the fair market rental rate will
be reappraised at the midpoint of the lease term. JRA will maintain slip rental rates current with
market conditions to insure the City receives a reasonable total rent.
The lease term being requested for financing purposes is fifty years, which is a long -term
commitment for the City. Staff believes that this would be a reasonable commitment, if the City
is assured that the upland property will be redeveloped in a way that contributes to revitalization
of the Balboa Peninsula and other goals of the City. Therefore, staff has worked with JRA on
q
•
is
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11
commitments regarding the redevelopment of the slips and the upland property. In this respect,
the proposed lease terms are similar to the Balboa Bay Club lease agreement.
The slips are to be reconfigured with a goal of increasing views of the water. However, any
reduction in slip facilities must be approved by the City as a means of protecting our rent
potential. The redevelopment goal for the upland property is the replacement of at least 38,000
square feet of leasable area, and substantial rehabilitation of the remaining building area.
Achieving this goal would result in replacement of approximately 90% of the buildings between
the former Warehouse Restaurant and the Travel Max building. There is a performance schedule
for redevelopment of the upland property, which requires evidence of financing for plan
preparation and entitlement processing, and an expanded community outreach program, on the
lease commencement date. A conceptual plan must be submitted within two years of the
commencement date, applications for land use entitlement must be submitted within four years,
and building permits must be obtained within two years of entitlement approval.
JRA has indicated that the preliminary loan agreements include financing for plan preparation
and entitlement processing. In addition, they already have begun community outreach on a
limited basis by meeting with Lido Isle residents and surrounding property owners to begin
discussing the type of project that would be supported by the community. This effort will be
expanded substantially upon approval of the tidelands lease and close of escrow, including use of
a firm to gather ideas, goals and sensitivities from the community as the first step in the planning
process (similar to the City's outreach program for the Parking Management Plan).
Staff believes that JRA's involvement in the Lido Marina Village area presents the City with an
opportunity for revitalization of an important area of the Balboa Peninsula that recently has not
been performing at its potential level. Members of the JRA team have experience in projects of
this type, having worked with James Rouse, the Ratkovich Company and the Morgan Stanley
Real Estate Group on the development of millions of square feet of retail, office and industrial
space. Since its formation several years ago, JRA has focused on the acquisition of assets for
redevelopment. The planning and architectural firms being considered by JRA have been
involved with well -known and successful waterfront projects throughout the United States, and
use a consensus planning process. Staff expects that the Lido Marina Village project will be of
high quality. JRA already has made a significant financial commitment to the area, and is
prepared to strengthen that commitment with closing on the property in the near tetra, and
redeveloping and rehabilitating it shortly thereafter. Their financial commitment is backed by a
substantial investment and merchant banking firm based on Wall Street, whose representatives
have been actively involved in discussing the tidelands lease and the redevelopment project. For
these reasons, staff believes the fifty -year lease is a reasonable commitment for the City to make
to assist in revitalization of the area. The City's interests will be protected through the
performance schedule for redevelopment, and the City's return on lease of the tidelands will be
higher than it is with the current annual permits.
SHARON Z. WOOD
Assistant City Manager
. G
PaggT 5
0
0
LIDO MARINA VILLAGE TIDELANDS LEASE
PROPOSED TERMS •
PROPERTY DESCRIPTION
TERM
RENT
Shown on attached aerial photograph and survey map.
Commences upon close of escrow on upland property.
50 years.
Negotiated percentage of annual gross receipts, with minimum rent guaranteed to City,
based on fair market valuation by appraiser acceptable to City.
Minimum rent to be adjusted periodically based on mutually agreeable formula.
Lessee agrees to maintain slip rental rates consistent with other competing marinas.
IMPROVEMENTS AND ALTERATIONS TO SLIPS
Existing improvements may remain and must be maintained in good condition (to be
defined by comparison with other slips in Newport Bay) by Lessee until redevelopment of
upland property.
No later than redevelopment of upland property, slips attached to upland property owned
by Lessee will be reconfigured, with a goal of providing increased view of water from
upland property owned by Lessee, subject to City approval of any reduction in slip
facilities.
Minimum rent will be abated during reconstruction of slips, up to a maximum of six
months.
All improvements and alterations to conform to City's Harbor Permit Policies.
0
0 0
REDEVELOPMENT OF UPLAND PROPERTY
Lessee will undertake redevelopment of the upland property, in accordance with the
following performance schedule. The redevelopment goal will be replacement of no less
than 38,000 square feet of leasable floor area, and substantial rehabilitation of the
remainder of building area owned by Lessee. Deadlines may be extended for a maximum
of two years with City Council approval, which shall not be withheld unreasonably while
Lessee is making a good faith effort to meet the performance schedule. Failure to meet
performance schedule will be cause for termination of lease. City will provide Lessee
with notice of default for failure to meet performance schedule, and time to cure. City
will cooperate with Lessee in efforts to obtain land use entitlements and required permits,
without diminution in City's rights to review and approve or disapprove applications.
Provide evidence of financing for redevelopment plan preparation and entitlement
processing on commencement date.
2. Expand community outreach program no later than commencement date.
3. Submit conceptual plan of redevelopment project within two years of
commencement date. Conceptual plan will mean proposed uses and their location
and building area; the general configuration and size of the project; a general
description of the various elements, functions and layout of the proposed
improvements; a preliminary site plan showing improvements, access and
circulation; and conceptual elevations for all improvements, features and elements
to be developed.
4. Submit complete applications for land use entitlement within four years of
commencement date.
5. Submit complete applications for building permits within two years of City
entitlement approvals.
INSURANCE
$2 million comprehensive general liability, with periodic adjustments to limits to keep
them current.
Builders risk.
Workers compensation per State law.
ASSIGNMENT
• Lease shall not be transferred without City approval, which shall not be withheld
unreasonably, and shall not be granted separately from interests in upland property.
2 1
0
MORTGAGE
Leasehold interest only.
DEFAULTS AND REMEDIES
Failure to meet performance schedule.
Failure to pay rent.
0
Failure to maintain size of slip facilities, without City approval.
Failure to comply with terms of lease.
CITY REVIEW OF RECORDS
City will have right to regular audits of records.
6 -5 -98 0
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• LEASE
THIS LEASE ( "Lease "), made for reference purposes only on this day of
June, 1998, by and between the CITY OF NEWPORT BEACH, a municipal corporation and
Charter City, hereinafter, "Lessor" and LJR LIDO PARTNERS L.P., a Delaware limited
partnership, hereinafter, "Lessee ", is made with reference to the following recitals:
RECITALS
A. Under the provisions of the Beacon Bay Bill (Chapter 740 of the Statutes
of 1978 ), Lessor is the grantee of certain harbor tidelands, located in the City of Newport Beach,
County of Orange, State of California ( "Tidelands Grant "); and
B. Lessee is concurrently herewith acquiring all right, title and interest of
Marvin Engineering, Inc., a California corporation ( "Seller ") in and to:
(i) that certain real property adjacent to the tidelands, whether owned by
Seller in fee simple or as ground lessee, more particularly described in Exhibit A ( "Real
Property ") attached hereto and by this reference made a part hereof, and
(ii) all of the boat slips appurtenant to and adjoining the Real Property (the
"Owned Slips ") situate over the tidelands described as Parcel 1 in Exhibits B and C, and
(iii) all of the boat slips currently leased by Seller from Olen Properties Corp.
and Lido Investment Co., LLC owners of the littoral or riparian land adjoining said slips
(the "Leased Slips ") situate over the tidelands described as Parcels 2 and 3, respectively,
in Exhibits B and C, and
(iv) that certain Harbor Permit CP12434001 which entitles Seller to operate a
marina in and over those tidelands described in Exhibit B and depicted on the map set
forth in Exhibit C, both attached hereto and incorporated herein by this reference
underlying the Owned Slips and the Leased Slips (the Owned Slips and the Leased Slips
are collectively referred to as the "Boat Slips "); and
C. The Marina use to be made of these tidelands, and the terms and
conditions in this Lease are consistent with the provisions of the City Charter and Ordinances of
the City of Newport Beach, and are consistent with the provisions of the Tideland's Grant;
D. Harbor Permit CP12434001 is issued to Seller, the current owner of the
Real Property and the Boat Slips; and
E. The parties desire to enter into a long -term lease in lieu of a City Harbor
Permit.
. NOW THEREFORE, THE PARTIES AGREE:
LA91115 3105
a
0 0
LEASED PREMISES .
(a) In consideration of the rent to be paid and the covenants and conditions to be
observed and performed by Lessee, Lessor hereby demises and leases to Lessee as of the
Commencement Date, and Lessee hereby takes from Lessor, those tidelands described in
Exhibit B and depicted on the map set forth in Exhibit C, both attached hereto and incorporated
herein by this reference (the "Tidelands "), together with all rights, privileges, easements and
appurtenances belonging or in any way pertaining to the Tidelands (collectively, the "Premises "),
for the Term (as hereinafter defined), at the rental and upon the covenants and conditions set
forth in this Lease.
(b) Lessor hereby reserves all oil, oil rights, gas, minerals, mineral rights, natural gas
rights and other hydrocarbon substances in and under the Premises and the right to grant and
transfer the same, together with all necessary and convenient rights to explore for, develop,
produce and extract and take the same, subject to the express limitation that any and all
operations for the exploration, development, production, extraction and taking of any such
substance shall be carried on at levels below the depth of five hundred feet (500') from the
surface of the land by means of wells, derricks and other equipment from surface locations on
adjoining or neighboring land, and subject further to all restrictions and regulations concerning
the drilling for, and production of, oil, gas, minerals, petroleum and other hydrocarbon
substances specified in the Newport Beach City Charter or the Newport Beach Municipal Code.
This reservation does not include the right of entry from the Premises or any rights that may be
inconsistent with the use of the Premises by Lessee as reasonably contemplated by this Lease.
2. TERM
(a) The term of this Lease shall commence on the date of recording of the Grant Deed
transferring the Real Property from Seller to Lessee in the Official Records of Orange County,
California a copy of which is attached hereto as Exhibit D ( "Commencement Date "), and shall
expire upon the fiftieth (50th) anniversary thereof (the "Expiration Date "), unless sooner
terminated as provided in this Lease (the "Term").
(b) Notwithstanding the provisions of Section 2(a), the Term of this Lease applicable
to the Leased Slips shall expire on May 29, 2023 (the "Lease Slips Expiration Date "), unless said
Leased Slips have been acquired by Lessee hereunder and written notice of such acquisition is
given to Lessor.
3. QUIET POSSESSION
(a) So long as no default by Lessee has occurred under this Lease, Lessee shall
peaceably and quietly use and enjoy the Premises for the Term, without hindrance or interruption
by Lessor or any other person or persons claiming by, through or under Lessor.
•
Ml/1593105
_2_
0 0
• (b) Lessor shall in no event be liable in damages or otherwise, nor shall Lessee be
released from any obligations hereunder, because of the interruption or termination of any service
provided by Lessor (such as, water or sewer service), or a termination, interruption or disturbance
of any service attributable to any act or neglect (other than gross negligence or willful
misconduct) of Lessor or its servants, agents, employees, licensees, business invitees, or any
person claiming by, through or under Lessee.
4. IMPROVEMENTS TO LEASED PREMISES
Lessor and Lessee acknowledge that Lessee (or Seller or Seller's predecessors or
lessors) has constructed major improvements on and adjacent to the Premises. These
improvements include, but are not necessarily limited to, bulkheads, piers, docks, floats and
related improvements which comprise a marina consisting of approximately 3,925 lineal feet of
slips for docking of boats (collectively, the "Marina Improvements ") as shown on Exhibit C.
5. RENT
(a) Lessee shall pay to Lessor as "Minimum Rent" the sum of Thirty -Five Thousand
Dollars ($35,000.00) per annum (the "Minimum Rent "), due and payable in equal monthly
installments of Two Thousand Nine Hundred Sixteen Dollars and Sixty -Seven Cents ($2,916.67)
in advance on the first day of each month, except that the first month's Minimum Rent shall be
due and payable upon the execution hereof. Minimum Rent for any partial calendar month
• during which the Lease Term commences or terminates shall be prorated based on the actual
number of days in such month.
(b) Beginning on March 1, 1999, and continuing on each March I of every year of the
Term thereafter, Lessee shall pay the "Additional Rent" equal to the excess of (i) nine percent
(9 %) of the annual gross receipts generated by the Premises for the previous calendar year, over
(ii) the Minimum Rent paid during such calendar year. Additional Rent for any partial calendar
year during which the Lease Term commences or terminates shall be prorated based on the actual
number of days in such year. For purposes of calculating the Additional Rent, "gross receipts"
shall mean all revenue received by Lessee and generated from the Premises, including, without
limitation, rental income from the Boat Slips and revenue received from charter boats and boat
sales, but shall not include any reimbursement of Lessee for utilities and taxes. Subject to the
provisions of Sections 6(b) and 6(d) hereof and the removal of the Leased Slips as provided in
Section 2(b) hereof, Lessee agrees to maintain and operate the existing lineal feet of Boat Slips as
of the date hereof, unless Lessor has given its' prior written consent, which consent shall not be
unreasonably withheld, conditioned or delayed. Lessee further agrees to maintain slip rental
rates at the fair market rental rate.
(c) Lessor, at any time within ninety (90) days after receipt of Lessee's statement of
gross receipts and upon not less than fifteen (15) days' prior notice to Lessee, may cause an audit
to be made of Lessee's gross receipts and all of Lessee's books and records reasonably necessary
• to audit the same. Lessee shall make all such books and records available for the audit at the
LMI/15 aios
N
Premises or at Lessee's office. If the audit discloses an underpayment of Additional Rent, Lessee .
shall pay to Lessor the amount of the underpayment, and if the underpayment shall equal $1,000
or more as revealed by the audit, then Lessee shall also reimburse Lessor for Lessor's actual costs
in performance of the audit, each to be paid, if applicable, within thirty (30) days after written
demand by Lessor. If the audit discloses an overpayment of Additional Rent, Lessor shall pay to
Lessee the amount of the overpayment within thirty (30) days after the audit is completed.
(d) During any period of redevelopment, in whole or in part, of the Marina
Improvements that by its nature require that slips cannot be used for a period in excess of one
month, then Minimum Rent shall abate during such redevelopment period; provided, however,
such rent abatement shall not extend beyond six (6) months. In the case of any partial
renovation, the foregoing rental abatement shall be proportionate to the lineal feet then being
renovated.
(e) The Minimum Rent, for each calendar year, commencing on January 1, 2000, and
continuing thereafter on the 1st of January for each successive year, shall be increased by two
percent (2 %)per annum (the "Annual Adjustment "), provided, however, that the Minimum Rent
and the Additional Rent shall be adjusted to the fair market rental value commencing on January
1, 2024, and thereafter the Annual Adjustment shall resume with respect to the Minimum Rent
on the following January 1. For the purposes of this Section 5(e), the "fair market rental value"
shall mean the rental rate per lineal foot of slips in the comparable marinas, as determined by an
independent appraiser selected by Lessee and approved by Lessor, except that the percentage
reate used to calculate Additional Rent shall never exceed twelve percent (12 %) or be less than
eight percent (8 %).
6. ALTERATIONS
(a) Lessee shall have the right to make, at its sole expense, such nonstructural
changes, alterations, improvements and additions in and to the Marina Improvements without the
necessity of obtaining Lessor's approval, provided such changes shall conform to the then current
City Ordinances and Harbor Permit Policies approved by the City Council of Newport Beach (the
"Harbor Policies "). Structural changes shall not be made to any Marina Improvement without
first submitting written plans and specifications of the proposed change, alteration or addition to
Lessor and obtaining Lessor's written approval, which approval shall not be unreasonably
withheld, conditioned or delayed. Any and all such changes, structural or nonstructural, shall
conform to the Harbor Policies. Lessee shall make, at its expense, such changes, alterations or
additions in and to structures on the Premises that may be required by any public law ordinance
from time to time, applicable to Lessee's use and occupancy of the Premises.
(b) Lessee will undertake redevelopment of the Real Property and certain other land
owned by Lessee commonly known as the "Lido Marina Village," including, without limitation,
the replacement of no less than 38,000 square feet of leasable floor area, and substantial
rehabilitation of the remainder of the Lido Marina Village owned by Lessee (the "Redevelopment
Plan "), in accordance with the development schedule attached hereto as Exhibit E and
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incorporated herein by this reference (the "Development Schedule "), subject to delay by reason
of Force Majeure as described below. In the event Lessor finds that Lessee has not met the
milestones set forth in the Development Schedule, Lessor shall provide a written notice to Lessee
setting forth the alleged breach and the specific provision to which its relates. Lessee shall have
a period of thirty (30) days after such written notice within which to cure such breach; provided,
however, that if such breach cannot reasonably be cured within such thirty (30) days and if
Lessee commences promptly and within such thirty (30) days to cure such breach, the thirty (30)
day period shall be extended as long as Lessee diligently continues its efforts to cure such breach,
provided, however, that the time for performance under the Development Schedule can only be
extended for a maximum of two (2) years with City Council approval, which approval shall not
be unreasonably withheld, conditioned or delayed while Lessee is making a good faith effort to
meet the Development Schedule. A failure to cure such breach or to commence to cure such
breach within such prescribed period as aforesaid shall be deemed an event of default hereunder,
which shall entitle Lessor to exercise its remedies pursuant to Section 18(c) of this Lease.
(c) If Lessee's performance of any act required under the Redevelopment Plan is
delayed, hindered or prevented by reason of lock -outs, labor troubles, shortages of labor or
materials, riots, insurrection, war, unavailability of any governmental entitlements, judicial
orders, fire or other casualty, unusually adverse weather conditions, flooding, acts of God, an
event of default by Lessor, or other reasons of any kind, description or nature beyond the
reasonable control of Lessee, then performance of such act shall be excused for the period of the
delay and the period for the performance of any such act shall be extended for a period equivalent
to the period of such delay. The period of excused delay shall be referred to herein as a "Force
Majeure."
(d) In connection with Lessee's performance pursuant to the Redevelopment Plan,
Lessee shall reconfigure the Boat Slips to increase the view of water from the Real Property,
subject to Lessor's approval of any reduction in slip facilities. Such reconfiguration shall be
undertaken by Lessee in accordance with the procedures set forth in this Section 6 and the
Development Schedule (as extended pursuant to the terms hereof).
(e) 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, alteration 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 undertaken by Lessee, 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 paragraph 6(e), 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
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against the same and shall pay and satisfy any adverse judgment that may be rendered thereon,
before the enforcement thereof against Lessor or the Premises upon the condition that if Lessor
shall require, Lessee shall furnish to Lessor security satisfactory to Lessor in an amount equal to
such contested lien, claim or demand indemnify Lessor against liability for the same and holding
the Premises free from the effect of such lien or claim.
MARINA MAINTENANCE
(a) Lessee at its sole cost and expense, shall keep and maintain all Marina
Improvements and related fixtures and personal property in first class order, condition and repair
consistent with similar marina improvements in the Newport Bay. Maintenance dredging
bayward of the property line, between the bulkhead line and the pierhead line, shall be the
responsibility of Lessee for the zone delineated by bayward prolongations of upland side property
lines out to the U.S. project line.
(b) Lessee agrees that Lessor may, after reasonable advance notice to Lessee, go
upon the Premises and make any necessary repairs to the Premises, and perform any work
therein:
(i) Which may be necessary to comply with any laws, ordinances, rules or
regulations of any public entity;
(ii) That Lessor is obligated to make, under the terms of this Lease; or •
(iii) That Lessor may deem necessary to prevent waste or deterioration of the
Premises, if Lessee does not make or cause such work to be performed promptly and diligently
after receipt of written demand therefor from Lessor.
Nothing herein contained shall imply any duty on the part of Lessor to do any work which Lessee
may be required to do, nor shall it constitute a waiver of Lessee's default. No
exercise by Lessor of any rights reserved, shall entitle Lessee to any damage for any injury or
inconvenience occasioned thereby, or to any abatement of Minimum Rent or Additional Rent,
however, such repairs once commenced, shall be completed in a timely manner.
(c) In the event that Lessor makes, or causes to be made, any repairs, within the Term
of this Lease that is Lessee's obligation to make, Lessee shall upon demand, pay to Lessor the
cost of such repairs, which amounts shall be due and payable upon demand and shall bear interest
from the date of demand, until totally paid, at the rate of [ nine ] percent ( [ 9 ] %) per annum.
8. USE OF THE PREMISES
(a) During the term of this Lease, Lessee shall use and occupy the Premises,
principally for the operation of a marina. The marina use shall be limited to the rental of boat
slips, dock lockers, dry storage and related uses consistent with the provisions of the City Charter
and Ordinances of the City of Newport Beach, and the provisions of the Tidelands Grant. •
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. (b) Lessee shall not commit or permit the commission by others of any waste on the
Premises. Lessee shall not maintain any nuisance, as defined in Section 3479 of the California
Civil Code, on the Premises. Lessee shall not unreasonably interfere with the rights of other
harbor permittees or nearby residents, and Lessee shall not use or permit the use of the Premises
for any unlawful purpose, or in violation of any provision of law.
9. UTILITIES
Lessee shall be solely responsible for obtaining and shall promptly pay for all
water, power, sewer, and other utility services provided to the Premises.
10. RIGHT TO ENTER PREMISES
Lessor expressly reserves the right, after reasonable advance notice to Lessee, to enter the
Premises and all improvements, including a right of reasonable access to the Premises across
Lessee owned or occupied lands adjacent to the Premises, for any purpose associated with this
Lease or for carrying out any function required by law, or the rules, regulations or management
policies of the City of Newport Beach.
11. RULES, REGULATIONS AND TAXES
. (a) Lessee shall comply with and be bound by all presently existing or subsequently
enacted policies, regulations, statutes or ordinances of the City of Newport Beach, including, but
not limited to, rules and regulations prescribed under Council Policy H -1 (Harbor Permit
Policies), or any other government agency or entity having lawful authority and jurisdiction.
(b) Lessee shall obtain and maintain all permits or other entitlements necessary for
the occupancy and use of the Premises and the Marina Improvements..
(c) During the term of this lease, Lessee shall pay, prior to delinquency, any and all
taxes assessed against Lessee's possessory interest under this Lease and all other taxes,
assessments, user fees or service charges imposed on or associated with the leasehold interest, or
personal property or improvements on the Premises, and such payment shall not reduce
Minimum Rent or Additional Rent due Lessor under this Lease, and Lessor shall have no liability
for such payment.
12. ENVIRONMENTAL REQUIREMENTS
(a) Lessee shall practice conservation of water, energy, and other natural resources
and shall prevent pollution and harm to the environment. Lessee shall not violate any law or
regulation whose purpose is to conserve resources or to protect the environment.
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(b) Lessee shall not use, nor permit the use of, any hazardous wastes or materials in •
the construction, reconstruction or renovations of or use of the marina improvements in violation
of any applicable law, regulation, code or ordinance. Lessee shall, at its expense, comply, and
cause each of its members, licensees and/or concessionaires of space in the marina or elsewhere
adjacent to the Premises to comply with all applicable laws, regulations, codes and ordinances
relating to any hazardous regulated material, in
permits, licenses and similar authorizations. U
hazardous wastes, substances or materials as in
regulation, or ordinance that are manufactured,
transported on the Premises by Lessee, its mere
Term and shall comply with and be bound by a
local law, regulation or ordinance dealing with
uding obtaining and filing all applicable notices,
see shall be fully responsible to clean up any
be required under federal, state or local law,
°nerated, used, placed, disposed, stored, or
;rs, licensees and concessionaires during the
applicable provisions of such federal, state or
tch wastes, substances or materials. Lessee shall
notify Lessor and the appropriate governmental I emergency response agency(ies) immediately in
the event of any release or threatened release ofjany such wastes, substances or materials.
13. INDEMNITY
(a) Lessee agrees to defend, indemnify, protect and hold Lessor harmless from and
against any and all liability, claims, damages, penalties, actions, demands or expenses of any kind
or nature, including damage to any property and injury (including death) to any person
(collectively, "Claims "), arising from Lessee's use or occupancy of the Premises, or from any
activity, work or things done, permitted or suffered by Lessee or any omission of Lessee on or
about the Premises or from any litigation concerning any of the foregoing in which Lessor is
made a party defendant. Lessee shall not be required hereunder to defend, indemnify or hold
Lessor or any other person or entity indemnifie under this Section harmless from or against any
of the Claims to the extent such Claim arises so ely out of the negligence or willful misconduct
of Lessor. This obligation to indemnify shall i 'clude reasonable attorneys' fees and investigation
costs and all other reasonable costs, expenses ad liabilities incurred by Lessor or its counsel
from the first notice that any claim or demand i$ to be made or may be made.
(b) Upon receiving knowledge of anly Claim that Lessor believes is covered by this
indemnity, Lessor shall give Lessee notice of the matter and an opportunity to defend it, at
Lessee's sole cost and expense, with legal counsel satisfactory to Lessor in its sole and absolute
discretion. Lessor may also require Lessee to sip defend the matter. So long as Lessee shall be
defending any such Claim, Lessor shall not settle such claim without the consent
of Lessee.
(c) Lessee shall notify Lessor immediately in case of any accident, injury or casualty
on the Premises.
14. INSURANCE
(a) Lessee shall obtain and maintain; in full force and effect during the term of this
lease, comprehensive general liability insurance and property damage insurance, with such
coverage and limits as may be reasonably reque�sted by Lessor from time to time, but in no event
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. for less than the sum(s) specified below, insuring Lessee and Lessor against any and all claims or
liability arising out of the ownership, use, occupancy, condition or maintenance of the Premises
and all improvements.
(i) Comprehensive General Liability Insurance. Lessee shall maintain
Comprehensive General Liability Insurance with a combined single limit for bodily injury and
property damages of Two Million Dollars ($2,000,000) (which amount shall be subject to
periodic adjustment as may be reasonably determined by Lessor upon 180 days prior notice).
The limits of liability of the insurance coverage specified in this paragraph may be provided by
any combination of primary and excess liability insurance policies.
(ii) Property Insurance - Construction. During construction of any
improvements on the Premises, Lessee shall maintain builder's risk insurance against "all risk"
of physical loss, including without limitation the perils of flood, collapse and transit, with
deductibles acceptable to Lessor, covering the total cost of work performed, equipment, supplies
and materials furnished on a replacement cost basis. Lessee shall be permitted to obtain and
maintain flood insurance in such amounts and forms as are available, from time to time, under
the National Flood Insurance Program.
(iii) Property Insurance. Lessee shall obtain insurance on the marina
improvements and shall maintain insurance continuously during the Term, against "all risk"
perils of physical loss, including, but not limited to, flood, fire, lightning, riot and civil
commotion, vandalism and malicious mischief. Such insurance shall be in amounts not less than
the then full replacement cost of the Marina Improvements, without deduction for depreciation.
Such policies of insurance shall contain the "Replacement Cost Endorsement." Such full
replacement cost shall pertain to the Marina Improvements and be determined not less often than
each two (2) years during the Term.
(iv) Worker's Compensation. Lessee shall obtain and maintain worker's
compensation insurance with respect to any employees of Lessee, as required by any
governmental authority or legal requirement.
(b) Insurance carriers shall be licensed and approved to do business in California
having a general policyholders' rating of not less than B+ and financial rating of not less than
"VIP' in the most current Best's Key Rating Guide.
(c) The insurance policy or policies shall name Lessor, its officers, and employees as
additional insureds. Lessee shall provide Lessor with a certificate of such insurance and shall
keep such certificate current. The policy (or endorsement) must provide that the insurer will not
cancel Lessee's coverage without thirty (30) days prior written notice to Lessor. Lessor will not
be responsible for any premiums or other assessments on the policy. The coverage provided by
Lessee shall be primary and non - contributing.
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(d) The insurance coverage specifie4 in this Lease shall be in effect at all times during •
the Term and subsequently until all of the Prem ses have been either accepted as improved, by
Lessor, or restored by Lessee.
(e) Lessee shall not commit or perm t the commission of any acts on the Premises
that would cause the cancellation of any liability or other insurance policy, insuring either the
Premises or the Marina Improvements on the P emises. Lessee shall, at its own cost and
expense, comply with any and all requirements mposed by insurance companies that carry the
policies described above.
(f) Each policy of insurance procur d pursuant to this Section shall contain, either
(i) a waiver by the insurer of the right of subrog tion against either party hereto for negligence of
such party; or (ii) a statement that the insurancejshall not be invalidated should any insured waive
in writing prior to a loss any or all right of recovery against any party for loss described in the
insurance policy. Lessor and Lessee each hereb waives any and all rights of recovery against
the other, and against it shareholders, officers, rectors, employees, subsidiaries, partners,
servants, agents and representatives, for loss or damage arising from any cause insured against
under the form of insurance policies required toi be carried pursuant to this Section or under any
other policy of insurance carried by either Lessor or Lessee. Lessee and Lessor each agrees to
use reasonable efforts to obtain its liability insurance carriers' permission as to the waiver of
subrogation described above in this Section.
(g) Lessee shall at all times observe pnd comply with the requirements of all policies
of insurance in force with respect to the Premiss or any part thereof, and Lessee shall so perform
and satisfy the requirements of the companies % {riting such policies so that, at all times,
companies of good standing reasonably satisfactory to Lessor shall be willing to write or to
continue such insurance. Lessee shall, if any member, licensee, concessionaire or other user of
any portion of the Premises engages in any activity in violation of the requirements of all policies
of insurance in force with respect to the Premiss, or any party thereof, take steps, immediately
upon knowledge of such activity, to remedy or prevent the same, as the case may be.
15. CASUALTY
Lessee shall promptly cause the Marina Improvements, or any part, thereof, which
are damaged or destroyed, to be repaired and restored to its original condition whether or not
required to be insured against, at Lessee's sole Bost and expense. Such repair and restoration
shall be commenced in good faith and with all reasonable diligence within a reasonable period of
time following casualty and shall be completed With due diligence.
16. NO ABATEMENT OF RENT
Throughout the Term, no direct or indirect destruction of or damage to the Marina
Improvements or any other personal property od the Premises or any part thereof or elsewhere by
fire or other casualty whatsoever, whether such damage or destruction be partial or total, shall
LA011159310.5
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permit Lessee to surrender or terminate the Lease or relieve Lessee from its obligation to pay in
full the Minimum Rent, Additional Rent and other sums and charges payable by Lessee
hereunder or from any other obligation under the Lease, except as otherwise expressly set forth
herein.
17. ASSIGNMENT SUBLETTING AND HYPOTHECATION
(a) Except as expressly provided herein, Lessee shall not either voluntarily or by
operation of law, assign, transfer, mortgage, pledge, hypothecate or encumber this Lease and
shall not sublet the Premises, in whole or in part, or allow any person other than Lessee's
employees, members, agents, servants and invitees to occupy or use all or any portion of the
Premises without the prior written consent of Lessor which consent shall not be unreasonably
withheld.
(b) The following shall be deemed to be an assignment or transfer within the meaning
of this Lease:
(i) If Lessee is a corporation, any dissolution, merger, consolidation or other
reorganization of Lessee or sale or other transfer of a percentage of capital stock of Lessee which
results in a change of controlling persons, or the sale or other transfer of substantially all the
assets of Lessee.
• (ii) If Lessee is a partnership, a transfer of any interest of a general partner, a
withdrawal of any general partner from the partnership, or the dissolution of the partnership.
(c) Assignment. This Lease is appurtenant to the adjoining littoral or riparian land
and/or uplands more particularly described herein and defined above as the "Real Property."
Lessee shall not transfer or assign its ownership interest or use rights in such Real Property
adjoining the Premises separately from the leasehold rights granted by this Lease. In connection
with the sale of all or a portion of the Real Property, Lessee shall have the right to assign or
otherwise transfer Lessee's interest in this I-ease and the estate created by this Lease to any
successor of Lessee's interest in all or any part of such adjoining Real Property, provided
Lessor's prior approval has been obtained, which approval shall not be unreasonably withheld,
conditioned or delayed. The following conditions are applicable to Lessee's right of assignment:
(i) Lessee shall give Lessor reasonable advance notice of the proposed
assignment with appropriate documentation as to the financial and operational responsibility and
appropriateness of the proposed assignee. Lessee agrees to provide Lessor with such other or
additional information and/or documentation as may be reasonably requested by Lessor.
(ii) Except as otherwise provided in this Lease for a permitted Leasehold
Mortgagee, the proposed assignee shall, in recordable form, expressly assume all the covenants
and conditions of this Lease.
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(iii) In the event the proposed) assignee is acquiring only a portion of the
adjoining Real Property, the rights and obligations of Lessee and the proposed assignee shall be
ratably adjusted.
(iv) On any assignment made in accordance with the provisions and conditions
of this Lease, Lessee shall have no further oblig ition under this Lease with respect to the that
portion of the Lease so assigned, and, as between Lessor and Lessee, shall be considered to have
assigned to assignee all claims against Lessor wising under this Lease. Nothing herein contained
shall be construed to release Lessee from any li4bility or obligation arising before the effective
date of the assignment.
(d) Subletting. Lessee shall have thq absolute right to sublet the Boat Slips and other
Marina Improvements located on the Premises, and to assign, encumber, extend, or renew any
sublease, provided the following provisions are 'complied with:
(i) Each sublease shall contapn a provision, satisfactory to Lessor and to each
Leasehold Mortgagee having an interest at the time the sublease is executed, requiring sublessee
to attorn to Lessor or, in the event of any proceeding to foreclose any Leasehold Mortgage, to the
Leasehold Mortgagee, or any person designated in a notice from Leasehold Mortgagee, if Lessee
defaults under this Lease and if the sublessee is notified of Lessee's default and instructed to
make sublessee's rental payments to the Leasehold Mortgagee or designated person as in this
Section 17(d)(i).
(ii) Lessee shall, promptly after request from Lessor, provide Lessor with the •
name and mailing address of each sublessee and shall, on demand, permit Lessor to examine and
copy each such sublease.
(e) Hypothecation. Notwithstandin any other provision contained in this Lease, for
the purpose of financing the acquisition of the Premises, the Real Property, the Boat Slips, the
fixtures and equipment located thereon, and the iconstruction or reconstruction thereof, or
refinancing any such financing, Lessee shall ha)ie the right to encumber or assign its interest in
this Lease or assign its interest in any sublease hereunder.
(i) Definitions.
(a) The term "Leasehold Mortgage "as used herein shall include
a mortgage, a deed of trust, a deed to secure debt, or other security instrument by which Lessee's
interest under this Lease and the leasehold estate created thereby is mortgaged, encumbered,
conveyed, assigned, or otherwise transferred, to secure a debt or other obligation, and any and all
amendments, modifications, supplements, extensions and renewals thereof.
(b) The term "Leasehold Mortgagee" or "any Leasehold
Mortgagee" as used herein shall refer to a holder of a Leasehold Mortgage in respect to which the
notice provided for by Section 17(e)(iii) has been given.
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(ii) Leasehold Mortgage Authorized. On one or more occasions, without
Lessor's prior consent, lessee may mortgage or otherwise encumber Lessee's Leasehold Estate,
under one or more Leasehold Mortgages and assign this lease as security for such Leasehold
Estate under one or more Leasehold Mortgages and assign this lease as security for such
Leasehold Mortgage or Mortgages.
(iii) Notice to Lessor. If the holder of a Leasehold Mortgage shall provide
Lessor with notice of such Leasehold Mortgage together with a true copy of such Leasehold
Mortgage and the name and address of the Leasehold Mortgagee, Lessor and Lessee agree that,
following receipt of such notice by Lessor, the provisions of this Section 17 shall apply in respect
to such Leasehold Mortgage and Leasehold Mortgagee. In the event of any assignment of a
Leasehold Mortgage or in the event of a change of address of a Leasehold Mortgagee or of an
assignee of such Leasehold Mortgagee, Leasehold Mortgagee shall cause notice of the new name
and address to be provided to Lessor.
(iv) Notices to Leasehold Mortgagees. Lessor, upon providing Lessee with
any notice of : (A) default under this Lease, or (B) a termination of this Lease, or (C) a
matter on which Lessor may predicate or claim such a default or termination, shall at the same
time provide a copy of such notice to any Leasehold Mortgagee. No such notice by Lessor to
Lessee shall be deemed to have been duly given unless and until a copy thereof has been so
provided to any Leasehold Mortgagee. From and after the date such notice has been given to
Lessee and any Leasehold Mortgagee, any Leasehold Mortgagee shall have the right to remedy,
• commence remedying or cause to be remedied any default or acts or omissions which are the
subject matter of such notice, within the same cure period as is given Lessee, plus in each
instance, the additional periods of time specified in this Section 17. Lessee authorizes each
Leasehold Mortgagee to take any such action at such Leasehold Mortgagee's option and does
hereby authorize entry upon the Premises by the Leasehold Mortgagee for such purpose.
(v) Leasehold Mortgagee's Election to Cure. Anything contained in this
Lease to the contrary notwithstanding, if any breach or default under this Lease shall occur and
remain uncured, Lessor shall have no right to terminate this Lease or exercise any other remedy
unless, following the expiration of the period of time given Lessee to cure such breach or default,
or the act or omission which gave rise to such breach or default, Lessor shall first notify any
Leasehold Mortgagee of Lessor's intent to so exercise such remedy, such notice to be given at
least thirty (30) days in advance of the proposed effective date of such exercise if such default is
capable of being cured by the payment of money, and at least sixty (60) days in advance of the
proposed effective date of such exercise if such default is not capable of being cured by the
payment of money. The provisions of Section 17(e)(vi) shall apply if, during such thirty (30) or
sixty (60) day period, any Leasehold Mortgagee shall notify Lessor of such Leasehold
Mortgagee's desire to exercise its rights to perform under Section 17(e)(vi) and shall:
(A) pay or cause to be paid all rent, and other payments then due and in
arrears as specified in such notice and which may become due during such thirty (30) or sixty
. (60) day period; and
L 1D 5931o.s 13-
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(B) comply or in goo faith, with reasonable diligence and continuity, .
commence to comply with all non - monetary requirements of this Lease then in default and
reasonably susceptible of compliance.
(vi) Procedure on Default.
(A) If any Leasehold Mortgagee shall have proceeded in the manner
provided in Section 17(e)(v), the period specified in Section 17(e)(v) during which Lessor may
not terminate this Lease or exercise any other remedy shall be extended for a period of six (6)
additional months, provided that such Leasehol$ Mortgagee shall, during such additional six (6)
month period:
(1) pay or caupe to be paid all rent, and other monetary
obligations of Lessee under this Lease a$ the same become due, and continue its good
faith efforts to perform all of Lessee's other obligations under this lease, excepting non -
monetary obligations not reasonably susceptible of being cured or performed; and
(2) if not enjoined or stayed, take steps to acquire or sell
Lessee's interest in this Lease by foreclosure of the Leasehold Mortgage or other
appropriate means and prosecute the sarrte to completion with reasonable diligence.
(B) If at the end of such additional six (6) month period such •
Leasehold Mortgage is complying with Section 17(e)(vi)(A), this Lease shall not then terminate,
and the time for completion by such Leasehold Mortgagee of its proceedings shall continue so
long as such Leasehold Mortgagee is enjoined or stayed and thereafter for so long as such
Leasehold Mortgagee proceeds to complete steps to acquire or sell Lessee's interest in this Lease
by foreclosure of the Leasehold Mortgage or by other appropriate means with reasonable
diligence and continuity. Nothing in this Sectioh 17(e)(vi) (B), however, shall be construed to
extend this Lease beyond the Term hereof; nor to require a Leasehold Mortgagee to continue
such foreclosure proceedings after a breach or default has been cured. If Lessee's breach or
default is cured and the Leasehold Mortgagee discontinues such foreclosure proceedings, this
Lease shall continue in full force and effect as if no breach or default under this Lease has
occurred.
(C) The making of a Leasehold Mortgage shall not impose personal
liability on any Leasehold Mortgagee for the performance of any of the terms covenants or
conditions on the part of Lessee to be performed hereunder. Nothing contained herein shall
require a Leasehold Mortgagee to commence any cure or performance on behalf of Lessee or,
once having commenced such a cure or performance, to continue or complete such cure or
performance, or require a Leasehold Mortgagee to commence any remedy or exercise any right
under its Leasehold Mortgage or once having commenced such remedy or exercise to continue or
complete such remedy or exercise.
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(D) The purchaser at any sale of this Lease and of the leasehold estate
hereby created in any proceedings for the foreclosure of or trustee's sale under any Leasehold
Mortgage, or pursuant to any deed in lieu of foreclosure, shall be deemed to be an assignee or
transferee of this Lease, and shall be deemed to be have agreed to perform all of the terms,
covenants and conditions on the part of Lessee to be performed hereunder but only from and after
the date of such purchase and assignment, and only for so long as such purchaser or assignee is
the owner of the leasehold estate created hereby. Any such purchaser or assignee shall not have
any personal liability for any obligations of Lessee accruing either before or after such
purchaser's period of ownership.
(E) Notwithstanding any other provision of this Lease, any sale of this
Lease and of the leasehold estate hereby created in any proceedings for the foreclosure of or
Trustee's sale under any Leasehold Mortgage, shall be deemed to be a permitted sale, transfer or
assignment of this Lease and of the leasehold estate hereby created, not requiring any consent or
approval of Lessor.
(vii) Termination and New Lease.
(A) New Lease. In the event this Lease is terminated by reason of the
happening of any breach or default under this Lease which is not cured by Lessee or a Leasehold
Mortgagee under the provisions and within the time limits set forth above, or in the event of
rejection or disaffirmance of this Lease pursuant to bankruptcy or insolvency law or other law
• affecting creditors rights, Lessor shall give prompt notice thereof to any Leasehold Mortgagee.
Lessor shall, on written request of any Leasehold Mortgagee, made at any time within sixty (60)
days after the giving of such notice by Lessor, enter into a new lease of the Premises with such
Leasehold Mortgagee within thirty (30) days after receipt of such request, which new lease shall
be effective as of the date of such termination of this Lease for the remainder of the term of this
Lease, at the rent provided for herein, and upon the same terms, covenants, conditions and
agreements as are herein contained; provided that such Leasehold Mortgagee shall:
0 mltl 31oz
(1) pay to Lessor at the time of execution and delivery of said
new lease any and all unpaid sums for rent and other charges payable by lessee hereunder
to and including the date thereof, less the net amount of all sums received by Lessor from
any subtenants in occupancy of any part or parts of the Premises or improvements thereon
up to the date of commencement of such new lease; and
(2) on or prior to the execution and delivery of said new lease,
agree in writing that promptly following the delivery of such new lease, such Leasehold
Mortgagee will perform or cause to be performed all of the other covenants and
agreements herein contained on Lessee's part to be performed to the extent that Lessee
shall have failed to perform the same to the date of delivery of such new lease except
such covenants and agreements which are not reasonably susceptible of performance.
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(B) New Lease Priority. Any new lease made pursuant to Section
17(e)(vii) and any renewal Lease entered into with a Leasehold Mortgagee pursuant to this Lease
shall be prior to any mortgage or other lien, charge or encumbrance on the fee interest in the
Premises and the tenant under such new lease shall have the same right, title and interest in and
to the Premises and the improvements located thereon as Lessee had under this Lease.
(C) Liability of New Lessee. The tenant under any such new lease
shall be liable to perform the obligations imposed on the tenant by such new lease only during
the period such person has ownership of the leasehold estate created thereby, subject to the
possibility of exculpation noted in Section 17(e)(vii)(1).
(D) Subleases and Rents. After the termination of this Lease and
during the period thereafter during which any Leasehold Mortgagee shall be entitled to enter into
a new lease of the Premises, Lessor shall not terminate any sublease or the rights of the subtenant
thereunder unless such subtenant shall be in default under such sublease. During such period
Lessor shall receive all rent and other payments due from subtenants, including subtenants whose
attomment Lessor shall have agreed to accept, as agent of such Leasehold Mortgagee and shall
deposit such rents and payments in a separate and segregated account in trust for the Premises,
but may withdraw such sums, from time to time, to pay necessary operating expenses and
carrying charges of the Premises; and, upon the execution and delivery of such new lease, shall
account to the tenant under the said new lease for the balance, if any, (after application as
aforesaid) of the minimum rent, additional rents and other payments made under said subleases, .
and said tenant shall thereupon assign the minimum rent, additional rents and other payments due
under said subleases to any Leasehold Mortgagees of the new lease in the same manner as such
rentals and other payments had been assigned to the Leasehold Mortgagee under this Lease. The
collection of rent by Lessor acting as an agent pursuant to this subparagraph shall not be deemed
an acceptance by Lessor for its own account of the attomment of any subtenant unless Lessor
shall have agreed in writing with such subtenant that its tenancy shall be continued following the
expiration of any period during which a Leasehold Mortgagee may be granted a new lease in
which case such attomment shall take place upon such expiration but not before.
(viii) Miscellaneous Provisions for Leasehold Mortgagees.
(A) Leasehold Mortgagee Need Not Cure Specified Defaults.
Nothing herein contained shall require any Leasehold Mortgagee, as a condition to the
exercise of any of its right hereunder, to cure any breach or default of Lessee not reasonably
susceptible of being cured, including without limitation any breach or default under Sections
18(a) (v), (vi) and (vii).
(b) Consent of Leasehold Mortgagee Required. No cancellation,
termination, surrender or modification of this Lease shall be effective as to any Leasehold
Mortgagee unless either consented to in writing by such Leasehold Mortgagee or made pursuant
to and in compliance with this Section 17. •
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(c) Eminent Domain. So long as any Leasehold Mortgagee shall exist,
the proceeds arising from a condemnation in whole or in part of the leasehold interest and/or the
Marina Improvements shall be disposed of as provided for in such Leasehold Mortgage.
(ix) Casualty Loss. A standard Lender's Loss Payable endorsement naming
each Leasehold Mortgagee may be added to any and all insurance policies required to be carried
by Lessee hereunder. Nevertheless, the provisions in any Leasehold Mortgage for the application
of insurance proceeds shall be subject to the provisions of this Lease with respect thereto and, in
the event of any conflict between the provisions of this Lease and the provisions of any
Leasehold Mortgage with respect thereto, the provisions of this Lease shall control.
(x) Arbitration and Legal Proceedings. Lessor shall give any Leasehold
Mortgagee prompt notice of any arbitration or legal proceedings between Lessor and Lessee
involving obligations under this Lease. Any Leasehold Mortgagee shall have the right to
intervene in any such proceedings and be made a party to such proceedings, and the parties
hereto do hereby consent to such intervention. Lessor shall also give any Leasehold Mortgagee
notice of, and a copy of, any award or decision made in any such proceedings. Anything
contained in this Lease to the contrary notwithstanding, in the event lessee shall fail to appoint an
arbitrator under circumstances where Tenant is required or authorized to do so, a Leasehold
Mortgagee shall have an additional period of thirty (30) days, after notice by Lessor that Lessee
has failed to appoint such arbitrator, to make such appointment, and the arbitrator so appointed
shall thereupon be recognized in all respects as if he had been appointed by Lessee.
(xi) Notices. No notice to be given by Lessor to any Leasehold Mortgagee or
by any Leasehold Mortgagee to Lessor shall be effective unless in writing and, if to any
Leasehold Mortgagee, sent by registered mail to the most recent address furnished Lessor
pursuant to Section 17(e)(iii) and if to Lessor, sent by registered mail to the address set forth in
Section 20(c)(i).
(xii) Erroneous Payments. A Leasehold Mortgagee making any payment to
Lessor in error or pursuant to Lessor's wrongful, improper or mistaken notice or demand shall be
entitled to the return of any such payment or portion thereof. If, after any such payment by a
Leasehold Mortgagee, Lessee pays the same or any part thereof to Lessor, Lessor shall promptly
refund said payment or portion thereof to such Leasehold Mortgagee.
(xiii) Limitation on Lessor's Right to Encumber Fee. Any mortgage now or
hereafter placed on Lessor's fee interest in the Premises shall be subject to this Lease, to any new
lease created pursuant to Section 17(e)(vii), to any mortgage now in existence on the leasehold
estate as permitted by this Lease or such new lease, and to Lessee's right, as permitted by this
Lease or such new lease, subsequently to encumber the leasehold estate created hereby or
thereby.
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(xiv) No Rights to Encumber Fee of Lessor. The provisions of this Section do
not give to any person whatsoever the right to mortgage, hypothecate or otherwise to encumber
or to cause any liens to be placed against the freehold estate of Lessor, nor shall said provisions
be construed as resulting in a subordination in whole or in part of the freehold estate of Lessee.
(xv) Performance by Leasehold Mortgagee. Any Leasehold Mortgagee shall
have the right, but not the obligation, to make any payment, perform or cause to be performed
any act, or otherwise comply or cause compliance with any and all terms, covenants and
provision of this Lease to be complied with by Lessee, and Lessor shall accept any such payment,
performance or compliance by any Leasehold Mortgagee as if such payment, performance or
compliance had been made by Lessee.
(xvi) Rights of Leasehold Mortgagees. The exercise by any Leasehold
Mortgagee of its rights to obtain possession of the Premises, including without limitation the
right to commence an action against Lessee for the appointment of a receiver, shall not constitute
a breach or default under this Lease.
(xvii) Non - Merger. So long as any Leasehold Mortgage is in existence, unless
the Leasehold Mortgagee thereof shall otherwise expressly consent in writing, the fee title to the
Premises and leasehold estate created by this Lease shall not merge but shall remain separate and
distinct, notwithstanding the acquisition of both said fee title and said leasehold estate by Lessor,
Lessee or by a third party, by purchase or otherwise.
(xviii) Estoppel Certificate. Lessor shall, without charge, at any time and from
time to time within ten (10) business days after written request of Lessee or any Leasehold
Mortgagee to do so, certify by written instrument duly executed and acknowledged to any
Leasehold Mortgagee or purchaser, or proposed Leasehold Mortgagee or purchaser, or any other
person, firm or corporation specified in such request: (A) as to whether this Lease has been
modified, supplemented, amended, extended or renewed and if so, the substance and manner of
such modification, supplement, amendment, extended or renewed; (B) as to the validity and
force and effect of this Lease in accordance with its provisions; (C) as to the existence of any
breach or default hereunder of any circumstance which, with the giving of notice or the passage
of time, or both, would constitute a breach or default hereunder; (D) as to the existence of an
offsets, counterclaims or defenses to the enforcement of this lease on the part of either Lessor or
Lessee; and (E) as to the commencement and expiration dates of the term of this Lease. Any
such certificate may be relied upon by Lessee and any other person, firm or corporation to whom
the same may be exhibited or delivered, and the contents of such certificate shall be binding upon
Lessor.
(xix) Survival. The provisions of this Section 17 shall serve the termination,
rejection or disaffirmance of this Lease and shall continue in full force and effect thereafter to the
same extent as if this Section 17 was a separate and independent contract made by Lessor and
any Leasehold Mortgagee and, from the effective date of such termination, rejection or
disafftrmance of this Lease to the date of execution and delivery of anv new lease pursuant to
LA0111593105
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Section 17(e)(vii), such Leasehold Mortgagee may use and enjoy the Premises without hindrance
by Lessor or any person claiming by, through or under Lessor so long as such Leasehold
Mortgagee or any person claiming by, through or under such Leasehold Mortgagee complies with
the terms of this Lease except as otherwise provided herein.
180 DEFAULT AND REMEDIES
(a) The occurrence of any one or more of the following shall constitute a default by
Lessee:
(i) Failure of Lessee to pay Minimum Rent or Additional Rent due hereunder
within thirty (30) days after written notice from Landlord; or
(ii) Failure of Lessee to meet the milestones set forth in the Development
Schedule (as the same may be extended pursuant to the terms hereof).
(iii) Failure of Lessee to maintain the size of slip facilities as presently
configured (except where a change has been reviewed and approved by Lessor).
(iv) Any failure by Lessee to perform any of the other terms, conditions or
covenants of this Lease to be observed or performed by Lessee after thirty { 30) days written
notice from Landlord.
• (v) Lessee becoming insolvent or filing any debtor proceedings, or should any
adjudications in bankruptcy be rendered against Lessee, or should Lessee take or have taken
against it, in any court pursuant to any statute either of the United States or of any State, a
petition in bankruptcy or insolvency or for reorganization or for the appointment of a receiver or
trustee of all or a portion of Lessee's property, and should the same not be discharged within one
hundred twenty (120) days thereafter; or
(vi) Lessee permitting the Premises to become vacant or unoccupied for thirty
(30) consecutive days after written notice to Lessee (except for vacancies caused by any Force
Majeure or by remodeling, reconstruction, alterations or repairs permitted under this Lease); or
(vii) The appointment of a trustee or receiver to take possession of substantially
all of the assets of Lessee located at the Premises or Tenant's interest in this Lease or the
Premises, where possession is not restored within thirty (30) days.
(b) Except for the payment of Minimum Rent and Additional Rent, if the nature of
Lessee's default or breach under this paragraph is such that more than thirty (30) days are
reasonably required for its cure, then Lessee shall not be deemed to be in default or breach if
Lessee commences such cure within such thirty (30) day period and diligently proceeds with such
cure to completion.
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(c) Remedies 9
In the event of a default or breach by Lessee and Lessee's failure to cure such
default or breach, Lessor may (subject to the rights of the Leasehold Mortgagee) at any time and
with or without notice do any one or more of the following:
(i) Re -enter the Premises, remove all persons and property, and repossess and
enjoy such Premises.
(ii) Terminate this Lease and Lessee's right of possession of the Premises.
Such termination shall be effective upon Lessor's giving written notice and upon receipt of such
notice, Lessee shall immediately surrender possession of the Premises to Lessor.
(iii) Maintain this Lease in full force and effect and recover any rental, royalty,
or other consideration as it becomes due, without terminating Lessee's right of possession,
regardless of whether Lessee shall have abandoned the Premises.
(iv) Exercise any other right or remedy which Lessor may have at law or in
equity.
190 RESTORATION OF PREMISES
(a) Upon expiration or sooner termination of this Lease, Lessor upon written notice, •
may take title to any or all Marina Improvements, including fills, or Lessor may require Lessee to
remove all or any such Marina Improvements at its sole expense and risk; or Lessor may itself
remove or have removed all or any portion of such Marina Improvements at Lessee's sole
expense. Lessee shall deliver to Lessor such documentation as may be necessary to convey title
to such improvements to Lessor, free and clear of any liens, mortgages, loans or any other
encumbrances, subject to the reversionary interest of lessors, if any, of any (i) Leased Slips or
(ii) Owned Slips adjacent to ground leased Real Property.
(b) In removing any such Marina Improvements, Lessee shall restore the Premises as
nearly as possible to the conditions existing prior to their installation or construction.
(c) All plans for and subsequent removal and restoration shall be to the satisfaction of
Lessor and shall be completed within ninety (90) days after the expiration or sooner termination
of this Lease.
(d) In removing any or all the Marina Improvements, Lessee shall be required to
obtain any permits or other governmental approvals as may then be required by lawful authority.
200 CONDEMNATION
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• (a) As used in this Lease, the term "Condemnation" means a permanent taking of the
Premises through (a) the exercise of any government power (by legal proceedings or otherwise),
by any public or quasi - public authority or by any other party having the right of eminent domain
( "Condemnor ") or (b) a voluntary sale or transfer by Lessor to any Condemnor, either under
threat of exercise of eminent domain by a Condemnor or while legal proceedings for
condemnation are pending.
(b) Lessor shall notify Lessee in writing of any Condemnation within thirty (30) days
after the later of (a) the filing of a complaint by Condemnor or (b) the final agreement and
determination by Lessor and Condemnor of the extent of the taking ( "Condemnation Notice ").
(c) If the Premises are totally taken by Condemnation, this Lease shall terminate as of
the date on which Condemnor takes possession of the Premises that are subject to the
Condemnation ( "Termination Date "). If twenty -five percent (25 %) or more of the lineal feet of
the Premises are taken through Condemnation, Lessee shall have the option to terminate this
Lease by providing thirty (30) days' written notice to Lessor. Lessee's notice must be given
within thirty (30) days after Lessee's receipt of the Condemnation Notice required by section
20(b). If this Lease is terminated under this Article 20, the termination shall be effective on the
Termination Date, and Lessor shall prorate Rent to that date. Lessee shall be obligated to pay
Rent for the period up to, but not including, the Termination Date as prorated by Lessor. Lessor
shall return to Lessee prepaid Rent allocable to any period on or after the Termination Date.
(d) If any part of the Premises is taken by Condemnation and this Lease is not
terminated, Rent shall be proportionately reduced based on the lineal feet of the Premises taken.
Lessor and Lessee agree to enter into an amendment to this Lease within thirty (30) days after the
partial taking, confirming the reduction in lineal feet and the reduction in Rent.
(e) If a temporary taking of part of the Premises occurs through (a) the exercise of any
government power (by legal proceedings or otherwise) by Condemnor or (b) a voluntary sale or
transfer by Landlord to any Condemnor, either under threat of exercise of eminent domain by a
Condemnor or while legal proceedings for condemnation are pending, Minimum Rent and
Additional Rent shall abate during the time of such taking in proportion to the portion of the
Premises taken.
210 ADDITIONAL PROVISIONS
(a) Waiver.
(i) No term, covenant, or condition of this Lease and no default or breach of
any such term, covenant or condition shall be deemed to have been waived by Lessor's
acceptance of a late or nonconforming performance or otherwise, unless such a waiver is
expressly acknowledged by Lessor in writing.
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(ii) Any such waiver shall not be deemed to be a waiver of any other term, .
covenant or condition of this Lease.
(b) Time. Time is of the essence of this Lease and each and all of its terns, covenants
or conditions in which performance is a factor.
(e) Notice.
(i) All notices required to be given under this Lease shall be given in writing,
sent by U.S. Mail with postage prepaid, to Lessor at the offices of the City of Newport Beach,
Attn: City Manager, and to Lessee and Leasehold Mortgage (if any) at the addresses specified in
this Lease. Lessee and Leasehold Mortgagee may give Lessor notice of any change in its name
or address.
(ii) Until such notice of change, all notices to Lessee shall be sent to: LJR
LIDO PARTNERS, L.P., c/o James Ratkovich & Associates, Inc., 1224 East Green Street, Suite
101, Pasadena, California 91106, Attn: James Ratkovich.
(iii) Until such notice of change, all notices to Leasehold Mortgagee shall be
sent to: LEHMAN BROTHERS HOLDINGS, INC., doing business as Lehman Capital, a
division of Lehman Brothers Holdings, Inc., a Delaware corporation, Three World Financial
Center, Twelfth Floor, New York, New York 10285, Attn: Xavier L. Sheid, H.
(d) Recordation of Memorandum. Lessor and Lessee hereby covenant and agree to •
execute concurrently herewith a Memorandum of Lease in the form of Exhibit F and Lessee shall
record such Memorandum within three (3) business days after the Commencement Date. Lessee
shall pay all fees, costs, taxes and expenses in any way related to such Memorandum or its
recordation.
(e) Consent. Where Lessor's consent is required under this Lease, its consent for one
transaction or event shall not be deemed to be a consent to any subsequent occurrence of the
same or any other transaction or event, provided, however, that Lessor's consent shall not be
unreasonably withheld, conditioned or delayed.
(f) Changes. This Lease may be terminated and its term, covenants and conditions
amended, revised or supplemented only by mutual written agreement of the parties.
(g) Successors. The terms, covenants and conditions of this Lease shall extend to and
be binding upon and inure to the benefit of the heirs, successors, and assigns of the respective
parties.
(h) Captions. The captions of this Lease are not controlling and shall have no effect
upon its construction or interpretation.
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(i) Severability. If any term, covenant or condition of this Lease is determined by a
court of competent jurisdiction to be invalid, it shall be considered deleted and shall not
invalidate any of the remaining terms, covenants and conditions.
IN WITNESS WHEREOF, THE PARTIES HAVE EXECUTED THIS
AGREEMENT EFFECTIVE AS OF THE DATE HEREIN PROVIDED.
LESSOR LESSEE
For City of Newport Beach LJR LIDO PARTNERS L.P., a Delaware limited
partnership
Attest:
By: LJR LIDO MANAGERS L.P.,
Mayor a Delaware limited partnership
Its General Partner
City Clerk
Approved As To Form:
Assistant City Attorney
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By: JRA PARTNER I, LLC,
a California limited liability
company, Its General Partner
By: James Ratkovich &
Associates, Inc., a California
corporation
By:
Name: James Ratkovich
Title: President
By: LB LIDO I INC.,
a Delaware corporation
Its General Partner
By:
Name:
Title:
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EXHIBIT A
(REAL PROPERTY DESCRIPTION)
PARCEL D:
PARCEL 1, IN THE CITY OF NEWPORT BEACH, COUNTY OF ORANGE, STATE OF
CALIFORNIA, AS SHOWN ON A MAP FILED IN BOOK 60, PAGE 43 OF PARCEL MAPS,
IN THE OFFICE OF THE COUNTY RECORDER OF SAID COUNTY.
PARCEL G:
That certain Lease Agreement dated November 9, 1973, by and between June Johnson, an
individual, as lessor, and Donald M. Koll, a married man, as his sole and separate property, as
lessee, as amended by that certain Addendum to Lease Agreement dated November 9, 1973 and
by that certain Agreement dated April 30, 1987, and evidenced by that certain Lease (Short Form
- Memorandum), recorded on December 18, 1973 in Book 11031, Page 23 in the Official
Records of Orange County, California, the lessee's interest having been assigned to Marvin
Engineering Co., Inc., a California corporation ( "MEC ") pursuant to an instrument recorded on
May 23, 1990, in the Official Records of Orange County, California, as Instrument No. 90-
277172, and subsequently assigned by MEC to LJR LIDO PARTNERS L.P., a Delaware limited
partnership pursuant to an instrument dated affecting the following described
real property:
PARCEL 1, IN THE CITY OF NEWPORT BEACH, COUNTY OF ORANGE, STATE OF
CALIFORNIA, AS SHOWN ON A MAP FILED IN BOOK 63, PAGE 11 OF PARCEL MAPS,
IN THE OFFICE OF THE COUNTY RECORDER OF SAID COUNTY.
PARCEL H:
That certain Ground Lease dated January 2, 1966, by and between Calvin G. Rohrs and Arlene L.
Rohrs, husband and wife, as lessor, and James W. Berkshire and Pauline F. Berkshire, husband
and wife, as lessee, as evidenced by that certain Lease (Short Form - Memorandum) recorded on
January 4, 1966 in the Official Records of Orange County, California, in Book 7797, Page 653,
and assigned to David M. Koll pursuant to an instrument recorded on December 31, 1973 in the
Official Records of Orange County, California, in Book 11046, Page 865, and later assigned to
Marvin Engineering Co., Inc., a California corporation ( "MEC ") pursuant to an instrument
recorded on May 23, 1990, in the Official Records of Orange County, California, as Instrument
No. 90- 277172, and subsequently assigned by MEC to LJR LIDO PARTNERS L.P., a Delaware
limited partnership pursuant to an instrument dated affecting the following
described real property:
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. LOTS 1121 AND 1122 OF TRACT NO. 907, AND THAT PORTION OF LOT 1123 OF SAID
TRACT NO. 907, IN THE CITY OF NEWPORT BEACH, COUNTY OF ORANGE, STATE
OF CALIFORNIA, AS PER MAP RECORDED IN BOOK 28, PAGES 25 TO 36 INCLUSIVE
OF MISCELLANEOUS MAPS, IN THE OFFICE OF THE COUNTY RECORDER OF SAID
COUNTY, DESCRIBED AS FOLLOWS:
BEGINNING AT THE MOST EASTERLY CORNER OF LOT 1123; THENCE
NORTHWESTERLY 26.05 FEET ALONG THE NORTHEASTERLY LINE THEREOF TO A
POINT 120.00 FEET MEASURED THEREON FROM THE MOST EASTERLY CORNER OF
SAID LOT 1121; THENCE SOUTHWESTERLY 40 00 FEET PARALLEL WITH THE
SOUTHEASTERLY LINE OF SAID LOT 1121; THENCE SOUTHWESTERLY ALONG A
STRAIGHT LINE TO A POINT ON THE SOUTHWESTERLY LINE OF SAID LOT 1123,
DISTANT 92.50 FEET, MEASURED ALONG THE SOUTHWESTERLY LINES OF SAID
LOTS 1121, 1122 AND 1123 FROM THE MOST SOUTHERLY CORNER OF SAID LOT
1121, THENCE SOUTHEASTERLY ALONG THE SOUTHWESTERLY LINE THEREOF TO
THE MOST SOUTHERLY CORNER OF SAID LOT 1123; THENCE NORTHEASTERLY
99.54 FEET ALONG THE SOUTHEASTERLY LINE OF SAID LOT 1123, TO THE POINT
OF BEGINNING.
EXCEPT THAT PORTION OF SAID LOT 1123 DESCRIBED AS FOLLOWS:
BEGINNING AT THE MOST WESTERLY CORNER OF THE LAND DESCRIBED IN A
DEED RECORDED JULY 17, 1952 IN BOOK 2357, PAGE 565, OFFICIAL RECORDS, SAID
MOST WESTERLY CORNER BEING NORTHWESTERLY 92.50 FEET, MEASURED
ALONG THE SOUTHWESTERLY LINES OF LOTS 1121, 1122 AND 1123, FROM THE
MOST SOUTHERLY CORNER OF SAID LOT 1121; THENCE NORTH 37'47'26" EAST,
69.93 FEET ALONG THE NORTHWESTERLY LINE OF SAID DEED TO AN ANGLE
POINT IN SAID LINE; THENCE CONTINUING ALONG SAID LINE NORTH 62° 30' EAST
15.12 FEET; THENCE SOUTH 42° 07' S3" WEST, 83.51 FEET TO THE POINT OF
BEGINNING.
PARCEL K:
That certain Lease Agreement dated December 1, 1971, by and between Harry M. Kelso, an
individual, as lessor, and Donald M. Koll, a married man, as his sole and separate property, as
lessee, as evidenced by that certain Lease (Short Form - Memorandum) recorded on December
10, 1971 in the Official Records of Orange County, California, in Book 9921, Page 859, and
assigned to Marvin Engineering Co., Inc., a California corporation ( "MEC ") pursuant to an
instrument recorded on May 23, 1990, in the Official Records of Orange County, California, as
Instrument No. 90- 277172, and subsequently assigned by MEC to LJR LIDO PARTNERS L.P.,
a Delaware limited partnership pursuant to an instrument dated affecting the
following described real property:
LOT 24 AND THE NORTHWESTERLY ONE -HALF OF LOT 23 OF TRACT NO. 1622, IN
• THE CITY OF NEWPORT BEACH, COUNTY OF ORANGE, STATE OF CALIFORNIA, AS
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PER MAP RECORDED IN BOOK 47, PAGE 39 OF MISCELLANEOUS MAPS, IN THE
OFFICE OF THE COUNTY RECORDER OF SAID COUNTY.
PARCEL L:
LOTS 22 AND 23 OF TRACT NO. 1622, IN THE CITY OF NEWPORT BEACH, COUNTY
OF ORANGE, STATE OF CALIFORNIA, AS PER MAP RECORDED IN BOOK 47, PAGE 39
OF MISCELLANEOUS MAPS, IN THE OFFICE OF THE COUNTY RECORDER OF SAID
COUNTY.
EXCEPT FROM SAID LOT 23, THE NORTHWESTERLY ONE -HALF THEREOF.
PARCEL M:
That certain Ground Lease dated June 1, 1973, by and between Earl G. Sawyer and Eleanor B.
Sawyer, husband and wife, as lessor, and David M. Koll and Dorothy B. Koll, husband and wife,
as lessee, as evidenced by that certain Lease (Short Form - Memoranda) recorded on June 6,
1973 in the Official Records of Orange County, California, in Book 10736, Page 326, and
assigned to Marvin Engineering Co., Inc., a California corporation ( "MEC ") pursuant to an
instrument recorded on May 23, 1990, in the Official Records of Orange County, California, as
Instrument No. 90- 277172, and subsequently assigned by MEC to LJR LIDO PARTNERS L.P.,
a Delaware limited partnership pursuant to an instrument dated , affecting the
following described real property: •
LOTS 17, 18, 19, 20 AND 21 OF TRACT NO. 1622, IN THE CITY OF NEWPORT BEACH,
COUNTY OF ORANGE, STATE OF CALIFORNIA, AS PER MAP RECORDED IN BOOK
47, PAGE 39 OF MISCELLANEOUS MAPS, IN THE OFFICE OF THE COUNTY
RECORDER OF SAID COUNTY.
EXCEPT FROM SAID LOT 17; THE SOUTHEASTERLY 30.00 FEET THEREOF.
ALSO EXCEPT ALL BUILDINGS AND IMPROVEMENTS OF EVERY KIND AND
NATURE NOW OR HEREAFTER CONSTRUCTED OR LOCATED ON SAID REAL
PROPERTY.
SAID LAND IS SHOWN AS A PORTION OF PARCEL 1 OF PARCEL MAP, IN THE CITY
OF NEWPORT BEACH, COUNTY OF ORANGE, STATE OF CALIFORNIA, AS SHOWN
ON A MAP FILED IN BOOK 59, PAGE 17 OF PARCEL MAPS, IN THE OFFICE OF THE
COUNTY RECORDER OF SAID COUNTY.
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PARCEL N:
ALL BUILDINGS AND IMPROVEMENTS OF EVERY KIND AND NATURE NOW
LOCATED ON THE LAND HEREINAFTER DESCRIBED AT THE DATE HEREOF,
WHICH BUILDINGS AND IMPROVEMENTS ARE, AND SHALL REMAIN, REAL
PROPERTY.
LOTS 17, 18, 19, 20 AND 21 OF TRACT NO. 1622, IN THE CITY OF NEWPORT BEACH,
COUNTY OF ORANGE, STATE OF CALIFORNIA, AS PER MAP RECORDED IN BOOK
47, PAGE 39 OF MISCELLANEOUS MAPS, IN THE OFFICE OF THE COUNTY
RECORDER OF SAID COUNTY.
EXCEPT FROM SAID LOT 17 THE SOUTHEASTERLY 30.00 FEET THEREOF.
PARCEL O:
That certain Ground Lease dated June 1, 1973, by and between Earl G. Sawyer and Eleanor B.
Sawyer, husband and wife, as lessor, and David M. Koll and Dorothy B. Koll, husband and wife,
as lessee, as evidenced by that certain Lease (Short Form - Memoranda) recorded on June 6,
1973 in the Official Records of Orange County, California, in Book 10736, Page 342, and
assigned to Marvin Engineering Co., Inc., a California corporation ( "AEC ") pursuant to an
instrument recorded on May 23, 1990, in the Official Records of Orange County, California, as
Instrument No. 90- 277172, and subsequently assigned by MEC to LJR LIDO PARTNERS L.P.,
a Delaware limited partnership pursuant to an instrument dated affecting the
following described real property:
LOTS 15 AND 16 AND THE SOUTHEASTERLY 30.00 FEET OF LOT 17 OF TRACT NO.
1622, IN THE CITY OF NEWPORT BEACH, COUNTY OF ORANGE, STATE OF
CALIFORNIA, AS PER MAP RECORDED IN BOOK 47, PAGE 39 OF MISCELLANEOUS
MAPS, IN THE OFFICE OF THE COUNTY RECORDER OF SAID COUNTY.
EXCEPT FROM SAID LOT 15, THE SOUTHEASTERLY 40.00 FEET THEREOF.
ALSO EXCEPT ALL BUILDINGS AND IMPROVEMENTS OF EVERY KIND AND
NATURE NOW OR HEREAFTER CONSTRUCTED OR LOCATED ON SAID REAL
PROPERTY.
SAID LAND IS SHOWN AS A PORTION OF PARCEL 1 OF PARCEL MAPS, IN THE CITY
OF NEWPORT BEACH, COUNTY OF ORANGE, STATE OF CALIFORNIA, AS SHOWN
ON A MAP FILED IN BOOK 59, PAGE 17 OF PARCEL MAPS, IN THE OFFICE OF THE
COUNTY RECORDER OF SAID COUNTY.
• LA011159310.5
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PARCEL P: 0
ALL BUILDINGS AND IMPROVEMENTS OF EVERY KIND AND NATURE OR
HEREAFTER LOCATED ON THE LAND HEREAFTER DESCRIBED AT THE DATE
HEREOF, WHICH IMPROVEMENTS ARE AND SHALL REMAIN, REAL PROPERTY.
LOTS 15 AND 16 OF THE SOUTHEASTERLY 30.00 FEET OF LOT 17 OF TRACT NO.
1622, IN THE CITY OF NEWPORT BEACH, COUNTY OF ORANGE, STATE OF
CALIFORNIA, AS PER MAP RECORDED IN BOOK 47, PAGE 39 OF MISCELLANEOUS
MAPS, IN THE OFFICE OF THE COUNTY RECORDER OF SAID COUNTY.
EXCEPT FROM SAID LOT 15, THE SOUTHEASTERLY 40.00 FEET THEREOF.
PARCEL Q:
AN EASEMENT AS TO PARCEL 2, IN THE CITY OF NEWPORT BEACH, COUNTY OF
ORANGE, STATE OF CALIFORNIA, AS SHOWN ON A MAP FILED IN BOOK 60, PAGE
43 OF PARCEL MAPS, IN THE OFFICE OF THE COUNTY RECORDER OF SAID
COUNTY, SAID EASEMENT BEING RECORDED IN BOOK 11140, PAGE 1394, OFFICIAL
RECORDS OF ORANGE COUNTY ON MAY 10, 1974.
PARCELS:
A USE EASEMENT FOR PARKING AND OTHER PURPOSES, AS PROVIDED FOR AND
UPON THE TERMS, COVENANTS AND CONDITIONS SET FORTH IN THAT CERTAIN
AGREEMENT DATED JANUARY 3, 1974, ENTITLED "JOINT USE AGREEMENT ",
RECORDED IN BOOK 11140, PAGE 1356, OFFICIAL RECORDS OF ORANGE COUNTY,
AND AFFECTING THE FOLLOWING DESCRIBED PROPERTY:
PARCEL 2, IN THE CITY OF NEWPORT BEACH, COUNTY OF ORANGE, STATE OF
CALIFORNIA, AS SHOWN ON A MAP FILED IN BOOK 60, PAGE 43 OF PARCEL MAPS,
IN THE OFFICE OF THE COUNTY RECORDER OF SAID COUNTY.
PARCEL T:
AN EASEMENT FOR INGRESS AND EGRESS OVER THE NORTHWESTERLY 25 FEET
OF LOT 4 AND ALL OF LOTS 5, 6 AND 7 OF TRACT NO. 1622, IN THE CITY OF
NEWPORT BEACH, COUNTY OF ORANGE, STATE OF CALIFORNIA, AS PER MAP
RECORDED IN BOOK 47, PAGE 39 OF MISCELLANEOUS MAPS, IN THE OFFICE OF
THE COUNTY RECORDER OF SAID COUNTY, CALIFORNIA.
EXCEPT THE NORTHWESTERLY 20 FEET OF SAID LOT 7, FOR REASONABLE
ACCESS ACROSS THE SAID LAND FROM THE PUBLIC STREET TO THE BOAT SLIPS,
PIERS AND FLOATS ABUTTING SAID LAND, WHICH EASEMENT PROVIDES THAT
L 111593105 •
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THE LOCATION OF SUCH ACCESS EASEMENT SHALL BE DESIGNATED BY THE
OWNER OF SAID LAND AND MAY BE RELOCATED BY SAID OWNER IN THE EVENT
THE OWNER REDEVELOPS THE EXISTING IMPROVEMENTS LOCATED ON SAID
LAND.
0
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I' • MOLLENHAUER GROUP •
CIVIL ENGINEERING, SURVEYING +MAPPING, LAND DEVELOPMENT
411 West Fifth Street, Fourth Floor, Los Angeles, California 90013
Phone 12131624 -2661 - Fax (2131 614-1863
' May 1, 1998
BOAT SLIPS AT VIA LIDO MARINA
PARCEL 1:
That portion of Newport Bay Harbor as shown on Map of the Department of the Army, File No.
972 -3 dated December 26, 1950 in the City of Newport Beach, County of Orange, State of
California, described as follows:
' Beginning at the northwest corner of that certain Parcel Map filed in Book 63, page 11 of Parcel
Maps, in the office of the County Recorder of said County, said point also being Station No. 125 as
shown on said Department of Army Map; thence along the northerly prolongation of the westerly
line of said Parcel Map, North 24012'37" East 42.77 feet; thence South 81 °23'59" East 82.21
feet, to a point in a line that is parallel with and distant 100.00 feet easterly measured at right
angles to the Bulkhead line as shown on said Department of Army Map; thence along said parallel
line South 27 °29'51" East 719.99 feet to the intersection with the easterly prolongation of the
southerly line of Parcel 1, of that certain Parcel Map filed in Book 60, page 43 of Parcel Maps,
records of said County; thence along said easterly prolongation, South 62 030'09" West 100.00
feet to a point on said Bulkhead line; thence along said Bulkhead line North 27 029'51" West
741.93 feet to the point of beginning.
PARCEL 2:
That portion of Newport Bay Harbor as shown on Map of the Department of the Army, File No.
972 -3 dated December 26, 1950 in the City of Newport Beach, County of Orange, State of
' California, described as follows:
Beginning at the northeast corner of Parcel 2, of that certain Parcel Map filed in Book 60, page 43
of Parcel Maps, records of said County; thence along the easterly prolongation of the northerly line
of said Parcel 2, North 62 030'09" East 100.00 feet; thence parallel with the easterly line of Said
Parcel 2, South 27 °29'51" East 223.27 feet to the intersection with the easterly prolongation of
the southerly line of said Parcel 2; thence along said easterly prolongation, South 62 030'09" West
100.00 feet to a point in said easterly line of Parcel 2; thence along said easterly line North
27 °29'51" West 223.27 feet to the point of beginning.
PAGE 1 of 2
q6
PARCEL 3:
That portion of Newport Bay Harbor as shown on Map of the Department of the Army, File No. •
972 -3 dated December 26, 1950 in the City of Newport Beach, County of Orange, State of
California, described as follows:
Beginning at the southeast corner of Parcel 2, of that certain Parcel Map filed in Book 60, page 43
Of Parcel Maps, records of said County; thence along the easterly prolongation of the southerly line
of said Parcel 2, North 62 °30'09" East 100.00 feet; thence parallel with the easterly line of said
Parcel 2, South 27 129'51" East 124.89 feet to the intersection with the easterly prolongation of
the northerly line of that certain Parcel Map filed in Book 59, page 44 of Parcel Maps, records of
said County; thence along said easterly prolongation South 62 030'09" West 100.00 feet to the
northeast corner of said Parcel Map filed in Book 59, page 44; thence along the northerly
prolongation of the easterly line of said Parcel Map, North 27 °29'51" West 124.89 feet to the point
of beginning.
NOTE: THIS DESCRIPTION WAS PREPARED AS A CONVENIENCE ONLY AND IS NOT FOR
USE IN THE DIVISION AND /OR CONVEYANCE OF LAND IN VIOLATION OF THE
SUBDIVISION MAP ACT OF THE STATE OF CALIFORNIA.
4'% R
Kevin R. Hills, P.L.S. 6617
Q.DATAINPDATAl1998LLEGAMI 71 81.00C PAGE 2 of 2 JOB NO. 17181
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EXHIBIT C
(MAP DEPICTING BOAT SLIPS)
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ALTA/ACSM LAND TITLE SURVEY ;:
PORTION OF NEWPORT BAY I C+ •f �if ,
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EXHIBIT D
(GRANT DEED)
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Action Required
EXHIBIT E
DEVELOPMENT SCHEDULE
Provide evidence of financing for
redevelopment plan preparation and
entitlement processing.
Submit plan for expanded community
outreach program.
Submit conceptual plan of redevelopment
project. Conceptual plan will mean proposed
uses and their location and building area; the
general configuration and size of the project;
a general description of the various elements,
functions and layout of the proposed
improvements; a preliminary site plan
showing improvements, access and
circulation; and conceptual elevations for all
improvements, features and elements to be
developed.
Submit complete applications for land use
entitlements.
Submit complete applications for building
permits.
uoinsvms
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Action to be Completed By
Commencement Date - Completed
Within thirty (30) days of the Commencement
Date
Within two years of the Commencement
Date.
Within four (4) years of the Commencement
Date.
Within two (2) years of City entitlement
approvals.
11
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iEXHIBIT "F"
(MEMORANDUM OF LEASE)
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RECORDING REQUESTED BY AND
WHEN RECORDED RETURN TO:
Morgan, Lewis & Bockius LLP
300 S. Grand Avenue, 22nd Floor
Los Angeles, California 90071
Attn: William D. Ellis, Esq.
space above
MEMORANDUM OF LEASE
THIS MEMORANDUM OF LEASE is made effective as of
1998, by and among the CITY OF NEWPORT BEACH, a municipal corporation and charter city
( "Landlord "), and LJR LIDO PARTNERS L.P., a Delaware limited partnership ( "Tenant "), who
agree as follows:
(1) Premises. Landlord hereby leases to Tenant and Tenant hereby hires from
Landlord upon and subject to the terms of that certain unrecorded Lease, dated as of June_,
1998 (the "Lease ") Landlord's right, title and interest in and to certain tidelands located in the
City of Newport Beach, County of Orange, State of California, more particularly described in
Exhibit A attached hereto and incorporated herein by reference, commonly known as "Lido
Marina Village. ". The terms and provisions of the Lease are incorporated into this Memorandum
of Lease by this reference as though fully set forth herein.
(2) Term. The term of the Lease will commence on
( "Commencement Date "), and will expire fifty (50) years thereafter.
(3) No Modification. This Memorandum of Lease has been executed for
purposes of recordation only and shall not modify the terms and provisions of the Lease in any
manner.
LJ
L.J
Le nsrnos
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IN WITNESS WHEREOF, the parties have executed this Memorandum of Lease
as of the day and year first above written.
LESSOR LESSEE
For City of Newport Beach LJR LIDO PARTNERS L.P., a Delaware limited
partnership
Mayor
Attest:
City Clerk
Approved As To Form:
Assistant City Attorney
LM/15"10.5
By: LJR LIDO MANAGERS L.P.,
a Delaware limited partnership
Its General Partner
By: IRA PARTNER I, LLC,
a California limited liability company, Its
General Partner
By: James Ratkovich & Associates, Inc.,
a California corporation
By:
Name: James Ratkovich
Title: President
By: LB LIDO I INC.,
a Delaware corporation
Its General Partner
By:
Name:
Title:
I-I K
0
STATE OF CALIFORNIA
) ss.
COUNTY OF
0
On June _, 1998, before me, a notary public in and
for said State, personally appeared personally known
to me (or 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 signature(s) on the
instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the
instrument.
WITNESS my hand and official seal.
Signature
STATE OF CALIFORNIA
) ss.
COUNTY OF
[SEAL]
On June _, 1998, before me, a notary public in and
for said State, personally appeared personally known
to me (or 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 signature(s) on the
instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the
instrument.
WITNESS my hand and official seal.
Signature
[SEAL]
9
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EXHIBIT A
LEGAL DESCRIPTION OF TIDELANDS
LI0I115010,5 56
,S 3 -y
PHIL MARTIN & ASSOCIATES
CEQA Consultant • Due Diligence • Project Entitlements
June 22, 1998
Mayor Tom Edwards and City Council
City of Newport Beach
3300 Newport Boulevard
Newport Beach, CA 92658 -8915
RE: Use Permit 3626
Dear Mayor Edwards and City Council:
We are calling your attention to the negative impacts that the operation of the proposed project will have on surrounding
properties by exacerbating the current parking problems in the immediate area. Though the opening of JP's of Newport
Beach will help to economically revitalize Lido Marina Village, it does not bring to light an on -going parking concern
which has existed for years.
There must be an existing parking problem in the Lido Marina Village area or a 41 space parking waiver for the project
would not be necessary. Although the waiver is less than the 91 space waiver for the previous restaurant/night club use, the
fact that a waiver is needed indicates there is a parking problem.
The City Council of Newport Beach must have a comprehensive evaluation of current parking impacts and requirements in
order to make an informed decision regarding parking related to the proposed CUP request. The high quality of Newport
Beach warrants development decisions based on complete up to date information. The Council should not be put in a
position to make decisions with potential long -term impacts without the opportunity to first review information relevant to
the project.
This is the perfect opportunity to adequately evaluate Lido Marina Village with regards to parking and take into account the
parking needs of existing use permits as well as the parking needs associated with future use permit applications in Lido
Marina Village.
Staff did prepare a parking analysis in conjunction with their Report to the Planning Commission for a May 7, 1998
hearing for Use Permit 3626. By staff's own analysis the existing daytime parking needs in Lido Marina Village are not
met. Staff's parking inventory seems to support the need for a current independent parking analysis to adequately
determine whether or not Lido Marina Village has adequate public and private parking to serve current and future
businesses. The parking study could be completed quickly without impacting the City's ability to process future use permit
applications. We feel a parking study would be very beneficial to both staff and the Council when reviewing future use
permit applications for Lido Marina Village.
(Sincerely,
Phil Martin
22672 Baltor • Mission L7ejo, CA 92691 • Telephone (949) 587 -0051 • Fa (949) 586 -6406
w
POQr
CITY OF NEWPORT BEACH
Hearing ate:
June 8, 1998
42p,W
o m
COMMUNITY AND ECONOMIC
Agenda Item
'=
DEVELOPMENT
No.:
S32
PLANNING DEPARTMENT
Staff Person:
Sharon Z. Wood
3300 NEWPORT BOULEVARD
(714) 644 -3222
NEWPORT BEACH, CA 92658
(714) 644 -3200; FAX (714) 644 -3250
REPORT TO THE MAYOR AND CITY COUNCIL:i
PROJECT: Outline of Lease with James Ratkovich & Associates foAPPRCVED
Tidelands Associated with Lido Marina Village
SUGGESTED
ACTION: Review and approve the outline of proposed terms for a long
term lease, and instruct the City Attorney to prepare the lease
agreement and return for City Council action
James Ratkovich & Associates (JRA) is in escrow to purchase the property known as Lido
Marina Village, with close of escrow scheduled for the end of June. They already have closed
escrow on two properties on Via Lido, the former Bank of America building near the comer of
Newport Boulevard, and the Lido Building between Via Lido and Via Malaga. All of the
• properties are shown on the attached aerial photograph and survey map. JRA intends to
undertake a coordinated redevelopment project involving these properties. As a condition of
financing for the acquisitions and redevelopment, JRA and their lender have requested a long-
term lease on the tidelands owned by the City, to demonstrate the potential for continuous cash
flow from the property.
The City's past practice for tidelands properties has been to issue annual Commercial Pier
Permits, at a rate of $.28 per square foot per year. For the property in question, the annual fees
are approximately $30,500. In the recent Bahia Corinthian Yacht Club transaction, the City used
a long -term lease to provide greater security to the lessee and the City, and a greater rate of return
to the City. The proposed structure for a lease agreement with JRA, which is attached, is similar
to this recent example.
The rent is proposed to be a percent of annual gross receipts from JRA's slip rentals, with a
minimum rent guaranteed to the City, based on a fair market valuation by an appraiser acceptable
to the City. Fuller & Hansen has been retained by JRA for this purpose. Using the Bahia
Corinthian lease terms for estimating purposes, the proposed Lido Marina Village tidelands lease
would generate approximately $57,000 for the City annually. The minimum rent will be adjusted
periodically based on actual rents received during the period, and the fair market rental rate will
be reappraised at the midpoint of the lease term. JRA will maintain slip rental rates current with
market conditions to insure the City receives a reasonable total rent.
• The lease term being requested for financing purposes is fifty years, which is a long -term
commitment for the City. Staff believes that this would be a reasonable commitment, if the City
is assured that the upland property will be redeveloped in a way that contributes to revitalization
of the Balboa Peninsula and other goals of the City. Therefore, staff has worked with JRA on
i •
commitments regarding the redevelopment of the slips and the upland property. In this respect,
the proposed lease terms are similar to the Balboa Bay Club lease agreement. 0
The slips are to be reconfigured with a goal of increasing views of the water. However, any
reduction in slip facilities must be approved by the City as a means of protecting our rent
potential. The redevelopment goal for the upland property is the replacement of at least 38,000
square feet of leasable area, and substantial rehabilitation of the remaining building area.
Achieving this goal would result in replacement of approximately 90% of the buildings between
the former Warehouse Restaurant and the Travel Max building. There is a performance schedule
for redevelopment of the upland property, which requires evidence of financing for plan
preparation and entitlement processing, and an expanded community outreach program, on the
lease commencement date. A conceptual plan must be submitted within two years of the
commencement date, applications for land use entitlement must be submitted within four years,
and building permits must be obtained within two years of entitlement approval.
JRA has indicated that the preliminary loan agreements include financing for plan preparation
and entitlement processing. In addition, they already have begun community outreach on a
limited basis by meeting with Lido Isle residents and surrounding property owners to begin
discussing the type of project that would be supported by the community. This effort will be
expanded substantially upon approval of the tidelands lease and close of escrow, including use of
a firm to gather ideas, goals and sensitivities from the community as the first step in the planning
process (similar to the City's outreach program for the Parking Management Plan).
Staff believes that JRA's involvement in the Lido Marina Village area presents the City with an •
opportunity for revitalization of an important area of the Balboa Peninsula that recently has not
been performing at its potential level. Members of the JRA team have experience in projects of
this type, having worked with James Rouse, the Ratkovich Company and the Morgan Stanley
Real Estate Group on the development of millions of square feet of retail, office and industrial
space. Since its formation several years ago, JRA has focused on the acquisition of assets for
redevelopment. The planning and architectural firms being considered by IRA have been
involved with welt -known and successful waterfront projects throughout the United States, and
use a consensus planning process. Staff expects that the Lido Marina Village project will be of
high quality. JRA already has made a significant financial commitment to the area, and is
prepared to strengthen that commitment with closing on the property in the near term, and
redeveloping and rehabilitating it shortly thereafter. Their financial commitment is backed by a
substantial investment and merchant banking firm based on Wall Street, whose representatives
have been actively involved in discussing the tidelands lease and the redevelopment project. For
these reasons, staff believes the fifty -year lease is a reasonable commitment for the City to make
to assist in revitalization of the area. The City's interests will be protected through the
performance schedule for redevelopment, and the City's return on lease of the tidelands will be
higher than it is with the current annual permits.
SHARON Z. WOOD
Assistant City Manager
Page 2
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LIDO MARINA VILLAGE TIDELANDS LEASE
PROPOSED TERMS
PROPERTY DESCRIPTION
TERM
RENT
Shown on attached aerial photograph and survey map.
Commences upon close of escrow on upland property.
50 years.
Negotiated percentage of annual gross receipts, with minimum rent guaranteed to City,
based on fair market valuation by appraiser acceptable to City.
Minimum rent to be adjusted periodically based on mutually agreeable formula.
0 Lessee agrees to maintain slip rental rates consistent with other competing marinas.
IMPROVEMENTS AND ALTERATIONS TO SLIPS
Existing improvements may remain and must be maintained in good condition (to be
defined by comparison with other slips in Newport Bay) by Lessee until redevelopment of
upland property.
No later than redevelopment of upland property, slips attached to upland property owned
by Lessee will be reconfigured, with a goal of providing increased view of water from
upland property owned by Lessee, subject to City approval of any reduction in slip
facilities.
Minimum rent will be abated during reconstruction of slips, up to a maximum of six
months.
All improvements and alterations to conform to City's Harbor Permit Policies.
0
REDEVELOPMENT OF UPLAND PROPERTY
0
Lessee will undertake redevelopment of the upland property, in accordance with the
following performance schedule. The redevelopment goal will be replacement of no less
than 38,000 square feet of leasable floor area, and substantial rehabilitation of the
remainder of building area owned by Lessee. Deadlines may be extended for a maximum
of two years with City Council approval, which shall not be withheld unreasonably while
Lessee is making a good faith effort to meet the performance schedule. Failure to meet
performance schedule will be cause for termination of lease. City will provide Lessee
with notice of default for failure to meet performance schedule, and time to cure. City
will cooperate with Lessee in efforts to obtain land use entitlements and required permits,
without diminution in City's rights to review and approve or disapprove applications.
1. Provide evidence of financing for redevelopment plan preparation and entitlement
processing on commencement date.
2. Expand community outreach program no later than commencement date.
0
3. Submit conceptual plan of redevelopment project within two years of
commencement date. Conceptual plan will mean proposed uses and their location
and building area; the general configuration and size of the project; a general
description of the various elements, functions and layout of the proposed
improvements; a preliminary site plan showing improvements, access and •
circulation; and conceptual elevations for all improvements, features and elements
to be developed.
4. Submit complete applications for land use entitlement within four years of
commencement date.
5. Submit complete applications for building permits within two years of City
entitlement approvals.
INSURANCE
$2 million comprehensive general liability, with periodic adjustments to limits to keep
them current.
Builders risk.
Workers compensation per State law.
ASSIGNMENT
Lease shall not be transferred without City approval, which shall not be withheld
unreasonably, and shall not be granted separately from interests in upland property.
2
0
. MORTGAGE
Leasehold interest only.
DEFAULTS AND REMEDIES
Failure to meet performance schedule.
Failure to pay rent.
Failure to maintain size of slip facilities, without City approval.
Failure to comply with terms of lease.
CITY REVIEW OF RECORDS
City will have right to regular audits of records.
• 6 -5 -98
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