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LEASE <br />THIS LEASE is made and entered into as of theAA?��' 2003, by and between the CITY OF <br />NEWPORT BEACH, a Charter City and municipal corporation ("Lessor"), and Gerald Nicholas Madigan and <br />Maureen O. Madigan, husband and wife ("Lessee"), regarding the real property commonly referred to as <br />Beacon Bay Lot 56 <br />RECITALS <br />A. The City of Newport Beach, by virtue of a 1978 legislative grant found in Chapter 74 of the <br />Statutes of 1978 (the 'Beacon Bay Bill"), holds the right, title and interest to certain tidelands and uplands <br />commonly known as Beacon Bay and generally described in Exhibit A attached hereto and incorporated <br />by reference. <br />B. The Beacon Bay Bill frees the "Westerly portion" of the filled tidelands from the public trust and <br />specifically authorizes the lease of the property for residential purposes subject to certain express <br />statutory conditions. <br />C. Beacon Bay, including the "Westerly Portion" thereof, has been divided into individual lots, with <br />each lot leased by the City for residential purposes until December 31, 2005. <br />D. On November 3, 1987, a majority of electors of the City approved a measure which authorized the <br />City Council to enter into new leases of residential lots in Beacon Bay for a period not to exceed fifty (50) <br />years. <br />E. On November 3, 1992, a majority of electors of the City approved Measure M which authorized <br />the City Council to lease tidelands and waterfront property consistent with the provisions of state law. <br />F. The City Council, pursuant to the authority conferred by the electors, entered into negotiations <br />with current lessees and the parties have agreed on the terms and conditions of a new lease with a fifty <br />(50) year term, provision for adjustments in lease payments to reflect changes in the value of Beacon Bay <br />leaseholds, and a recalculation of lease payments in the event of a transfer of the Lease by the Current <br />Lessee or any Subsequent Lessee (as defined herein). <br />G. Lessee acknowledges that the terms and conditions of this Lease may result in Lessee paying <br />substantially more or less than another Lessee for similar property depending upon the date this Lease is <br />executed, the date of any subsequent transfer, and the consideration paid for transfers of similarly situated <br />property. <br />H. Lessee acknowledges that accurate and complete reporting to the City of all consideration paid for <br />the transfer of this Lease is vitally important to the City in that failure to fully report all consideration could <br />materially reduce the amount of rent received by the City from other Beacon Bay Lessees. <br />I. Lessor and Lessee acknowledge that the City has agreed to a fifty (50) year term and limited <br />lease payment increases in consideration of provisions which require payment of rent approximating fair <br />market rental value, without regard to any advantage maintained by Current Lessees, upon transfer by <br />Current Lessees and payment of deferred rent in the event the Lease is not signed on or before the <br />Effective Date (as defined herein). <br />J. The California State Lands Commission has reviewed the form of this Lease and determined that <br />it is in conformance with the provisions of relevant statutes, rules and regulations, including, without <br />limitation, the Beacon Bay Bill. <br />K. Lessor has determined that this Lease is consistent with provisions of the Beacon Bay Bill, the <br />Charter, General Plan and Zoning Ordinance of the City of Newport Beach, and of all other applicable <br />state and local laws. <br />NB1-187371.V205/24i94 <br />