HomeMy WebLinkAboutStanley M. Bloom - 1990-01-01 REGAII.EST FOR CITY COL-,CIS./
REDEVELOPMENT AGENCY ACTION RH 91-12
March 18, 1991
Date
Honorable Mayor/Chairman & City Council/Redevelopment Agency Members
Submitted to:
Michael T. Uberuaga, City Administrator/Chief Executive Officer'
Submitted by: �'-
Barbara A. Kaiser, Deputy City Administrator/Economic Development�
Prepared by: TRANSFER OF CITY PROPERTY (PIERSIDE RESTAURANTS LEASE SITE) TO
THE REDEVELOPMENT AGENCY AND FIRST AMENDED PIERSIDE LEASE
BETWEEN AGENCY & STANLEY M. BLOOM FOR PIERSIDE RESTAURANTS
Subject: PROJECT -MAIN-PIER'PROJECT AREA Xw 4 6 A a y
Consistent with Council Policy? yes [ ] New Policy or Exception p _, ,
Statement of Issue, Recommendation,Analysis, Funding Source,Alternative Actions,Attachments: _
STATEMENT OF ISSUE:
At the direction of the Redevelopment Agency, staff has been negotiating an amended
Pierside Lease for the proposed Pierside Restaurant project. The proposed lease
outlines the terms of a ground lease by the Redevelopment Agency to the developer,
allowing for the development of restaurants, plazas, promenades, and parking facilities.
Transfer of the site from the City to the Agency is required to complete the
transaction. The Planning Comission approved the conformance of the conveyance with
the General Plan at their November 6, 1990 meeting.
In addition, on or about August 19, 1985, a Disposition and Development Agreement was
entered into for the development of the site located at Pacific Coast Highway and Main
Street. On November 20, 1986, the Pierside Lease was executed. On February 20, 1990,
the Agency approved a conceptual plan for development of the "Pierside Restaurants"
(see attached). A First Amended Pierside Lease for the development of 48,522 square -�
feet of restaurant and beach related retail uses with 611 parking spaces is proposed.
The Planning Commission approved Environmental Impact Report 90-2, Conditional Use
Permit 90-17, and Coastal Development Permit 90-18 at its meeting of November 6,
1990. On November 19, 1990 the Council/Agency deferred actions relating to the First
Amended Pierside Lease.
RECOMMENDATION:
1) Conduct a public hearing.
2) Approve City Resolution No. 6225 and Agency Resolution No. 207 authorizing the
execution of an agreement for the purchase and sale of property between the City
of Huntington Beach and The Redevelopment Agency of the City of Huntington
Beach, subject to a vote of the people, if determined necessary by the City
Attorney. JJ�
3) Direct staff to prepare a report on the process of a public vote for the purchase and
sale of property between the City of Huntington Beach and the Redevelopment
Agency of the City of Huntington Beach.
a3A1311,8 � �
4) Approve City Council Resolution No. 6224 and Redevelopment Agency Resolution
No. 206 authorizing the execution of the First Amended Pierside Lease between the
Redevelopment Agency and Stanley M. Bloom for the Pierside Restaurants Project,
contingent upon an affirmative vote of the people, and subject to appropriation of
sufficient funds to implement the project.
5) Direct staff to prepare a report on alternatives for funding the First Amended
Pierside Lease.
Altemative
a54ns=
1) Deny Resolutions No. 6225 and No. 207; therefore deferring any transfer of said
city property to the Redevelopment Agency indefinitely.
2) Deny Resolutions No. 6224 and No. 206, authorizing the execution of the First
Amended Pierside Lease between the Redevelopment Agency and Stanley M. Bloom
for the Pierside Restaurants Project.
3) Terminate the existing Pierside Lease Disposition and Development Agreement and
any related agreements with all parties related to development of the site.
ANAL
Transfer of City Property —
DeveIopment of the 3.5 acre site located at Main Street and Pacific Coast Highway
south of the pier, requires the transfer of the site from the City to the Agency.
Lease negotiations have been concluded with the developer, Stanley M. Bloom and
the Pierside Lease has been executed by the developer and filed with the City Clerk
In anticipation of the public hearing.
The Agency is required to acquire the subject parcel from the City of Huntington
Beach at a price equal to the current fair market value at the highest and best use
allowed by the zoning codes and General Plan of the City, as well as the Downtown
Specific Plan District 10. The value of this property is $5,860,000. The Agency
will acquire the property, subject to a 35 year Note from the City, bearing interest
at 10% per annum, and make payments in accordance with the attached schedule.
The City Attorney has stated that Measure C, as passed last November, "probably"
applies to the Pierside property in question. Therefore, in order to transfer the
Pierside property Measure C requires a majority of votes approving the
transfer/sale by both the City Council and the electorate. 1f a majority of the City
Council does approve transfer of this parcel to the Redevelopment Agency, staff
will then prepare a report outlining the process for a public vote, the timing and
costs involved with Implementation.
First Ame-nded_Pierside-,ease—
Project Description
The proposed Pierside Lease provides for the development of a multi—level restaurant
project located within the footprint of the asphalt parking lot, consisting of 3.5 acres
2
of land immediately south of the Huntington Beach Pier, on the ocean side of the
Pacific Coast Highway. Currently, the site is improved with a 17,900 square foot
commercial structure with miscellaneous retail on the first level, "Maxwell's"
restaurant on the second level, a freestanding structure containing "Dwight's"
concession stand, and a public parking lot with 239 spaces.
The proposed development for the site is a 48,522 square foot restaurant complex
contained within three restaurant pads. The restaurants will be built with 611
structured parking spaces including 250 subterranean public parking spaces.. Public
access to the beach will be provided by two central staircases, two smaller stairways
and three handicapped accessible elevators for a total of seven accessways leading to
the beach. The proposed project will also provide two major public plazas on the upper
level and a series of plazas and promenades on the lower level (78,258 square feet or
49% of net site area). Relocation of Maxwell's Restaurant to the south will allow for
the development of Pier Plaza, a project proposed by the City to complete the new pier
development.
Agency Obligations
The Agency responsibilities can be summarized as follows:
1) The Agency is obligated to purchase the subject site from the City of Huntington
Beach. The Agency must acquire the subject parcel from the City at a price equal
to the current fair market value at the highest and best use allowed by zoning codes
and the general plan. The value of this property is $5.86 million. The Agency will
acquire the property subject to a note from the City, bearing interest at 10% per
annum and make regular payments to the City. Payments to the City on this loan
will replace current general fund receipts from Maxwell's rent payment
(approximately$330,000 annually).
2) The Agency is obligated to provide the site in a reasonable time period free and
clear of all recorded encumbrances to the developer. In order to prepare the site
for the proposed development, the Agency has agreed to allocate a maximum of
$1.0 million upfront for various costs including relocation of existing tenants,
potential legal expenses (maximum $50,000), potential toxic clean-up costs
(maximum $50,000) and adequate utilities available to the site.
3) The Agency is obligated to reimburse the developer the total construction cost of
250 parking spaces being built to replace the existing 239 public beach parking
spaces plus an additional 11 new spaces. In addition, the Agency would finance the
difference in construction costs between the structured parking and surface parking
for the remaining 361 parking spaces.
The Agency parking costs consist of two components:
a. An upfront payment of $4.0 million to cover the total construction cost for the
250 replacement public parking spaces ($16,000 per space).
b. An upfront payment of $1.0 million, plus thirty annual payments of $325,500
(total amortized costs of $3.96 million present value) to amortize the
difference in construction costs between structured parking and surface
parking for the 361 spaces serving the private development. The rationale for
3
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this payment is that in a typical ground lease where the lessor is receiving 2.00% to
3.25% of gross sales as rent, the lessor has provided enough land to allow for the
building improvements and surface parking. In the proposed Lease Agreement, the
Agency has not provided enough land to develop a sufficient amount of surface parking
and, thus, must make up the difference in parking costs to justify the lease terms. In
addition, a Keyser Marston Associates, Inc. (KMA) report concludes that Agency
development of the project and a subsequent ground lease at 8% is comparable to the
proposed lease.
DeveloperYObligations
The developer's responsibilities are as follows:
1) The developer will ground lease the site from the Agency for an original term
of 55 years with an option to extend to a maximum of 80 years, subject to
major renovation.
The Plerside Lease Agreement is structured so that the amount of ground rent
paid is directly related to the project's performance. The ground rent schedule
is as follows:
Percent of Total Sales
Gross Restaurant Sales Applied to Ground Lease
$0 —35 million 2.00%
$35 —$55 million 2.50%
$55 — 100 million 3.00%
$100 million+ 3.25%
In no event can the percentage of gross sales applied to the ground lease
payment decrease from year to year. In addition, over the term of the lease,
provisions are made to reevaluate the base rent to a higher percentage. Over
the original term, KMA has estimated that the lease will generate nearly $124
million in revenues (present value of $8.07 million). The property will revert to
the Agency at the termination of the lease. The reversionary value is
projected at nearly$145 million (present value of $764,000).
Currently, the City is receiving net parking revenues after expenses of
$110,000 from the site annually. The developer must guarantee this parking
Income, with upward adjustments commensurate with increases in other City
parking revenues, over the life of the lease. This provides total revenues of
$21.03 million (present value of $1.75 million). The developer is obligated to
pay all costs for operating and maintaining the parking structure.
2) The developer is obligated to finance all offsite improvement costs except as
indicated above.
3) The developer is obligated to construct a 48,522 square foot restaurant
complex contained within three restaurant pads consisting of accommodations
for the relocation of the existing Maxwell's Restaurant ( 15,000 sq. ft.); the
development of two new restaurant pads (25,000 total sq. ft.); development of
casual restaurant space including Dwight's (8,250 sq. ft.); and development of
250 public beach parking spaces and 361 private restaurant spaces (611 total).
4
4) The developer is obligated to provide increased public beach access from the
project through the development of public plaza and promenade space, new
stairways and three elevators.
Project-Financb
Exhibit I as attached outlines the Agency costs and revenues for the Pierside
Restaurants project. Immediate Agency costs are $6 million for public parking spaces,
construction differential for subterranean parking and other site related costs. It is
currently estimated that the proposed project will have an assessed value of $14.19
million upon completion. When this is reduced by the current assessed value of $1.06
million, the incremental value is approximately $13.13 million.
Assuming a first year tax rate of 1.077% and set-asides equal to 20%, this results in
property tax increment of f$113,000 in the first full year of operation. Assuming the
assessed value increases at 2% annually, and the project area ends in 2018, the project
should produce tax increments of approximately$4.04 million over the remaining life of
the project area. (present value is $1.20 million).
Benefits 10 City
The Pierside Lease was negotiated on the premise that the City's general fund must
continue to receive its current revenue (increasing with inflation) from the public beach
parking spaces and Maxwell's ground lease. This amounts to approximately $440,000
annually. The developer is obligated to pay a m1n1rium of $110,000 in lease payments
for the parking spaces. The Agency is obligated to repay,the land purchase price of
$5.96 million using tax increment resources and ground lease payments. If the project
does well, an accelerated payment plan to the City will be implemented. Typically,
repayment of the Agency loan would not occur until later in the redevelopment process.
A KMA analysts was also completed comparing the City's current revenue stream to the
projected revenue stream for the proposed Pierside Restaurant project. It concluded
that the City would receive $2.3 million to $3.2 million more in present value terms
than is expected from the existing conditions scenario.
The history of the original Pierside development plan, commonly known as Pierside
.Village dates as far back as 1984 and consisted of construction of an 97,500 square foot
specialty/retail center, with a gross leaseable area of a minimum of 75,000 square feet
(excluding Maxwell's). In addition, a multiple-tiered parking structure with not less
than 600 spaces was to be developed.
The following is a chronological outline of the actions taken with regard to the
entitlements and lease for the original Pierside Village Project.
September 16. 1986 - The Planning Commission approved Pierside Village
entitlements Conditional Use Permit 86-43 and Conditional Development Permit
86-27 with conditions.
S
cto cr 10. _19H - The City Council/Redevelopment Agency approved the First
Amended Disposition and Development Agreement and Pierside Lease between
Huntington Pacifica i/Pierside Development and the Huntington Beach
Redevelopment Agency.
9ctO cr 13. 19$6 - The City Council approved the Pierside Village entitlements on
appeal.
April 21=24, 1987 - The California Coastal Commission reviewed the Pierside
Village entitlements on appeal and approved the project with modified conditions.
Through 1987, planning efforts continued and a change of direction began to emerge
with respect to downtown redevelopment efforts. The 3/DI Plan previously
approved in concept began to evolve into what has become the "village concept."
This changing direction was finalized in March of 1988, with conceptual approval by
the Agency of the Pierside Pavilion entertainment complex in lieu of the previously
proposed hotel, and Agency approval of the "village concept" in April of 1988.
With this shift in direction, the Agency and staff began to re-think the need for a
specialty/retail center as previously envisioned. Throughout this period of time,
the economics of this project were continually evaluated. Ultimately, a point was
reached where the viability not only from a Iand use but an economic standpoint
concluded that the Pierside Village concept should be modified to achieve a more
desirable land use with regard to public amenities (eg. increased opportunities,
Increased beach accessibility, open plaza and promenades). Thus, the Agency
decided to proceed with a "cluster of restaurants" rather then to attempt a
specialty/retail center that would be in direct competition with the revitalized
Main Street retail core.
Following this new direction the Council/Agency took the following actions:
- The City Council/Redevelopment Agency directed staff to
prepare an amended Pierside Village plan utilizing the "cluster of restaurants"
concept eliminating all other specialty uses.
September 1B. 1989 - The City Council adopted a "Pier Plaza" concept that called
for the development of a 2.1 acre "Pier Plaza" to be located between the base of
the Pier and Pacific Coast Highway. This concept required Maxwell's to be
relocated in order to provide the proposed 2.1 acre "Pier Plaza" footprint.
Fgbruary 20. 1990 - The Redevelopment Agency approved the conceptual plan for
the development of the "Pierside Restaurants" which includes:
o The development of two new restaurant pads- (25,000 S.F.);
o Accommodations for the relocation of the existing Maxwell's Restaurant -
(15,000 sq. f t.);
6
o The development of a parking structure, including surface and subsurface
parking for both beachgoers and restaurant patrons;
o The development of beach-related concessions, including approximately 6,000
sq. ft. of casual dining space;
o Authorize staff and the developer of Pierside to negotiate for the relocation
and integration of Maxwell's into the Pierside plan; and
o Authorize staff to negotiate an amended Pierside Lease
with Stanley M. Bloom.
The developer submitted his plans for entitlements in April of this year.
Subsequently, it was determined that Environmental Impact Report (EIR 90-2)
would need to be conducted as a supplemental (EIR to EIR 82-2). At their meeting
on November 6, 1990 the Planning Commission approved the Pierside Restaurants
entitlements including Environmental Impact Report 90-2, Conditional Use Permit
90-17, and Coastal Development Permit 90-18.
MNDING SOURCE:
The Main-Pier Redevelopment Project Area has no funds available after meeting
current FY 1990/91 obligations. The City has issued Certificates of Participation
(COPS) to construct a proposed parking structure north of the Pier, and approximately
$8.7 million of these proceeds are remaining. $6.0 million of that balance could be
allocated to fund the Pierside Restaurant project. Staff will prepare a report outlining
alternative recommendations for funding if the Pierside Lease is approved.
AnACE MENTS:
1) Site Map (Plaza Level & Beach Access Level).
2) Exhibit I- Agency Costs and Revenues.
3) Summary 33433 Report.
4) City Attorney Legal Opinion.
5) February 20, 1990, Approval of Conceptual Plan.
6) Pierside Restaurants Lease.
7) City Council Resolution Nos. 6224 & 6225, & Agency Resolution Nos. 206 & 207.
8) Site Plan and Legal Description.
9) Purchase and Sale Agreement.
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EXHIBIT I
PIERSIDE RESTAURANT COMPLEX LEASE AGREEMENT
HJNTINGTON BEACH, CALIFORNIA
TOTAL PRESENT
DOLLARS VALUE
A;,ENCY COSTS
SITE PREPARATION S1,000,000 S1,000,000
PARKING COSTS
UPFRONT COSTS (REPLACEMENT SPACES) $4,000,000 $4,000,000
AMORTIZED COSTS $10,765.000 $3,959,000
LAND PAYMENT TO CITY $37,840.000 S5,854,000
TOTAL AGENCY COSTS $53.605,000 S14,818,000
AGENCY REVENUES
GROUND LEASE PAYMENTS $123,748.000 S8,069.000
REVERSIONARY VALUE OF LAND $144,426,000 $764,000
GUARANTEED PARKING PAYMENT $21,028,000 S1,749,000
TAX INCREMENT $4,039,000 $1,201,000
TOTAL AGENCY REVENUE $293,241,000 S11,783,000
iiifiiiiiiii
AI AGENCY REVENUES / (COSTS) t234.636.000 (53,035,000)
TABLE 1'
CITY REVENUES COMPARISON
PIERSIDE RESTAURANT COMPLEX
NUNTINGTON BEACH, CALIFORNIA
.........RESTAURANT COMPLEX.........
EXISTING OPTIMISTIC
COND171ONS BASF CASE CASE
NET PRESENT VALUE REVENUES
RETL'Rk ON LAND (1) S5,748,000 $5,673,000 $5,520,000
SALES TAX REVENUES 646,OD0 3,062,000 4,082,040
NET PARKING REVENUES 1,749,000 0 0
PRCFERTY TAX REVENUES 31,000 57,000 57,000
REHABILITATION EXPENSE (1,721,000) 0 0
TOTAL CITY REVENUES 56,453,000 $8,792,000 S9,659,000
(1) CONSISTS OF GROUND LEASE PAYMENTS UNDER EXISTING CONDITIONS SCENARIO;
CONSISTS OF LAND PURCHASE BY ACENCY UNDER RESTAURANT COMPLEX SCENARIO.
SOURCE: KEYSER MARSTON ASSOCIATES, INC.
SEPTEMBER, 1990: FILE 1PIERRES
SUMMARY REPORT PURSUANT TO
SECTION 33433
of the
CALIFORNIA COMMUNITY REDEVELOPMENT LAW
on a
LEASE AGREEMENT
by and between the
REDEVELOPMENT AGENCY OF THE CITY OF HUNTINGTON BEACH
and
STANLEY M. BLOOM, AN INDIVIDUAL
I. INTRODUCTION
The California Health and Safety Code, Section 33433, provides that
if a redevelopment agency wishes to sell or lease property to which
it holds title and if that property was acquired in whole or in
part with tax increment funds, the agency must first secure ap-
proval of the proposed sale or lease agreement from its local
legislative body (City Council) after a public hearing A copy of
the proposed sale or lease agreement and a summary report that
describes and contains specific financing elements of the proposed
transaction shall be available for public inspection prior to the
public hearing As contained in the Code, the following informa-
tion shall be included in the summary report
1 The cost of the agreement to the agency, including land
acquisition= costs, clearance costs, relocation costs, the
costs of any improvements to be provided by the agency,
plus the expected interest on any loans or bonds to
finance the agreements,
2 The estimated value of the interest to be conveyed or
leased, determined at the highest uses permitted under
the plan, and
1
3. The purchase price or sum of the lease payments which the
lessee will be required to make during the term of the
lease. If the sale price or total rental amount is less
than the fair market value of the interest to be conveyed
or leased, determined at the highest and best use consis-
tent with the redevelopment plan, then the agency shall
provide as part of the summary an explanation of the
reasons for the difference.
This report outlines the salient parts of the Pierside Lease Agree-
ment (the "Agreement" ) which provides for the leasing of property
owned by the Redevelopment Agency of the City of Huntington Beach
( "Agency" ) to Stanley 11. Bloom ( "Developer" ) for the purpose of
constructing a restaurant development.
This report is based upon information contained in a proposed Lease
Agreement and is organized into the following four sections:
1 . Descriptiono the Pro2osed Agreement - This section in-
cludes a description of the site and interests to be
leased, the proposed development and the major respon-
sibilities of the Agency and the Developer.
2 . Cost of the Agreement to the Agency - This section out-
lines the cost of the Agreement to the Agency. In addi-
tion, it discusses the ground lease payments to be paid
by the Developer to the Agency, provides a projection of
tax increment revenues resulting from the new development
and sets forth the net cost of the Agreement to the
Agency. The net cost to the Agency equals Agency expen-
ditures minus the present value of the lease payments and
the value of the tax increment generated by the new
development, plus any other resources pledged to the pay-
ment of related expenses.
2
3, Estimated Value of the Interes&g to be Leased - This
section summarizes the Agency appraisal of the value of
the parcel to be leased to the Developer.
4. Purghase Price and Reasons Therefore - This section
describes the purchase price, which is equal to the
present value of the anticipated lease payments, to be
paid by the Developer to the Agency. It also contains a
comparison of the purchase price (lease value) and the
fair market value at the highest and best use consistent
with the Downtown Specific Plan 10 for the interests con-
veyed.
II. DESCRIPTION OF THE PROPOSED AGREEMENT
A. Site and Interest to be ,Leased
The site consists of 3 .5 acres of land immediately south of the
Huntington Beach Pier, on the ocean side of the Pacific Coast High-
way. Currently, the site is improved with a 17, 800 square foot
commercial structure with miscellaneous retail on the first level,
"Maxwell's" Restaurant on the second level, a freestanding struc-
ture containing "Dwight's" hamburger stand, and a public parking
lot.
B. The Proposed Develop rent
The proposed development for the site is a 48,500 square foot res-
taurant complex. The restaurants will be built on an elevated deck
with 611 structured parking spaces provided. Public access to the
beach will be provided by two central staircases leading to the
beach level.
3
C. Aaency-Besponsibilities
The Agency responsibilities can be summarized as follows:
1. Purchase the subject site from the City of Huntington
Beach.
2. Provide the site in a reasonable time period free and
clear of all recorded encumbrances , assessments ,
leases/subleases, possesory rights, franchises, license
and taxes, except as set forth in the Agreement.
3. Reimburse to the developer the total construction cost of
250 parking spaces being built to replace the existing
public parking plus an additional 11 spaces.
4. Finance the difference in construction costs between the
structured parking and surface parking for the remaining
361 parking spaces. The Agency will amortize the cost
differential in 30 annual payments.
D. peveloper's.Responsibilities
The developer's responsibilities are as follows :
1. Ground lease the site from the Agency for an original
term of 55 years.
2. Finance all off-site costs, except as specifically set
forth in the agreement.
4
3. Construct a 48,500 square foot restaurant complex on a
raised deck at the quality level implied in the eleva-
tions and developer pro forma.
4. Develop 611 on-site structured parking spaces.
5. Provide public beach access from the project.
III, COST OF THE AGREEMENT TO THE AGENCY
The total cost of the Lease Agreement to the Agency, and the net
costs of the project after consideration of project revenues are
presented herein. Both the total and net costs of the Lease Agree-
ment are presented in terms of absolute dollar amounts generated
over the 55-year lease and in terms of the present value (PV) of
expenditures and receipts resulting from implementation of the
Lease Agreement. The PV of expenditures and receipts has been com-
puted using an assumed discount rate of 10%. The difference be-
tween the PV of expenditures and the PV of receipts constitutes the
net present value cost of the Lease Agreement to the Agency. This
net cost can be either an actual cost (where expenditures exceed
receipts) or a net gain (where revenues created by implementation
_. _of the Lease Agreement exceed expenditures) .
A. Total Costs to the Agency_
Table 1 contains a listing of the Agency's estimated expenditures,
by major category, relating to its obligations under the Lease
Agreement. Per Table 1, total implementation expenditures by the
Agency over the 55 year original term of the lease are estimated at
approximately $53 . 61 million, which equates to $14 .82 million in
present value terms. The basis of this estimate is presented
below.
5
1 Site Acquisition Costs
The Agency must acquire the sub3ect parcel from the City
of Huntington Beach at a price equal to the current fair
market value at the highest and best use allowed by the
zoning codes and general plan of the City as well as the
Downtown Specific Plan District 10 The value of this
property is estimated at $5 86 million The Agency will
acquire the property sub3ect to a note from the City
bearing interest at 10% per annum
2 Site Preparation/Relocation Expense
In order to prepare the site for the proposed develop-
ment the existing tenants must be relocated at the ex-
pense of the Agency there could be legal expenses as-
sociated with any potential condemnation actions taken
the Agency is responsible for $50 000 of toxic clean-up
costs and the Agency must ensure adequate utilities are
available to the site These costs have been capped in
the Lease Agreement at $1 0 million
3 Parking Costs
The Agency parking costs consist of two components
a In upfront payment of $4 0 million to cover the to-
tal construction cost for the 250 replacement public
parking spaces
b An upfront payment of $1 0 million plus thirty an-
nual payments of $325 500 to amortize the difference
in construction costs between structured parking and
surface parking for the 361 spaces serving the
6
private development. The rationale for this payment
is that in a typical ground lease where the lessor
is receiving 2.00% to 3.25% of gross sales as rent,
the lessor has provided enough land to allow for the
building improvements and surface parking. In the
proposed Lease Agreement the Agency has not provided
enough land to develop a sufficient amount of sur-
face parking and, thus, must make up the difference
in parking costs to justify the lease terms. These
parking payments total nearly $10.76 million, with a
present value of $3.96 million.
B. Agency Revenues
Table 2 shows the nominal and present values of the Agency revenues
created as a result of implementation of the lease.
1. Ground Lease Payments
The Pierside Lease Agreement is structured so that the
amount of ground rent paid is directly related to the
project's performance. The ground rent schedule is as
follows :
Percent of Total Sales
gross Restaurant Sales Applied to Ground Lease
$0 - 35 million 2.00%
$35 - $55 million 2.50%
$55 - 100 million 3.00%
$100 million + 3.25%
7
In no event can the percentage of gross sales applied to
the ground lease payment decrease from year to year. Ad-
ditionally, in Years 30, 40 and 50, a base rent equal to
75% of the average of the preceding 3 years of lease pay-
ments will be applied. After Year 30, through the ter-
mination of the lease, in no event can the annual lease
payment decrease from year to year. Over the original
term, Keyser Marston Associates, Inc. has estimated that
the lease will generate nearly $124 million in revenues,
with a present value of $8.07 million when discounted at
10% annually. In addition, the property will revert to
the Agency at the termination of the lease. The revers-
ionary value is projected at nearly $145 million. This
equates to $764,000 in present value terms.
2. Guaranteed Parking Payment
Currently, the City is receiving net revenues after ex-
penses of $110,000 from the site annually. The developer
must guarantee this parking income, with upward adjust-
ments commensurate with increases in other City parking
revenues, over the life of the lease. This provides to-
tal revenues of $21 .03 million, which have a present
value of _$1.75 million.
3. Tax Increment Revenue
It is currently estimated that the proposed project will
have an assessed value of $14 . 19 million upon completion.
When this is reduced by the current assessed value of
$1 .06 million, the incremental value is approximately
$13. 13 million. Assuming a first year tax rate of 1 .077%
and set-asides equal to 20%, this results in property
tax increment of ±$113, 000 in the first full year of
8
operation. Assuming the assessed value increases at 2%
annually, and the project area ends in 2018, the project
should produce tax increments of approximately $4. 04 mil-
lion over the remaining life of the project area. The
present value of the tax increments generated by the
project is $1 .20 million.
A summary of anticipated revenues is shown in Table 2.
C. Comparison of Expenditures and Revenues
A comparison of the present value of the expenditures and revenues
discussed above results in the following tabulation:
Total Dollars Present Value
Over a 55-year Over a 55-year
Lease Lease
-------------- --------------
Total Agency Revenues $293,241, 000 $11,783, 000
Less: Agency Costs (53, 605, 000) ( 14, 818, 000)
----------- ----------
Net Gain (loss) $239, 636, 000 ($3,035,000)
The analysis above indicates that as a result of implementation of
the Lease, the Agency can expect to realize a gain over the lease
period of almost $240 million in actual dollars . On a present
value basis, project costs exceed project revenues by approximately
$3.04 million.
9
IV. ESTIMATED VALUE OF INTEREST TO BE LEASED
The value of the interest to be leased has been computed at its
highest and best use allowable under the zoning codes and general
plan of the City, as well as the Downtown Specific Plan District
10. Under these constraints, Keyser Marston Associates, Inc. has
estimated that the proposed use is the highest and best use. Thus,
the present value of the ground lease and parking revenues to the
Agency, less the present value of the amortized parking costs, is
the estimated value of the site. The amortized parking payments
are subtracted to reflect the extraordinary site costs that must be
borne by the lessor in order to make the site developable at the
proposed intensity. The present value of the ground lease and
parking revenues has been estimated to be $9 .82 million and the
present value of the amortized parking costs is $3 .96 million,
therefore, the estimated value of the site is $5.86 million.
V. LEASE PAYMENTS AND REASONS THEREFOR
Based upon an analysis of the ground lease payments to the Agency
conducted by Keyser Marston Associates, the present value of the
developer's ground lease payments is $5.86 million. This amount is
estimated to .be the market value of the property and, thus, the
Agency is receiving the fair market value for the site.
10
TABLE 1
ESTIMATED AGENCY COSTS
PIERSIDE RESTAURANT COMPLEX LEASE AGREEMENI
HUNTINGTON BEACH, CALIFORNIA
TOTAL PRESENT
DOLLARS VALUE
SITE PREPARATION 51,000,000 S1,000,000
PARKING COSTS
UPFRONT COSTS (REPLACEMENT SPACES) S4,000,000 S4,000,000
AMORTIZED COSTS S10,765,000 $3,959,000
LAND PAYMENT TO CITY S37,840,000 $5,859,000
TOTAL AGENCY COSTS S53,605,000 S14,818,000
TABLE 2
ESTIMATED AGENCY REVENUES
PIERSIDE RESTAURANT COMPLEX LEASE AGREEMENT
HUNTINGTON BEACH, CALIFORNIA
70TAL PRESENT
DOLLARS VALUE
............. ............
GROUND LEASE PAYMENTS $123,748,000 $8,069,000
REVERSIONARY VALUE OF LANs $144.426,000 S764,000
GUARANTEED PARKING PAYMENT $21.028,000 $1,749,000
TAX INCREMENT S4,039,000 $1.201.000
•............
TOTAL AGENCY REVENUE S293,24T.000 S11,783,000
�1 CITY OF HUNTINGTON BEACH
ZD
INTER-DEPARTMENT C0MMUNICATION
"ur4t1.e70#+6W14
To Michael Uberuaga From Gail Hutton
City Ad.minist:ator City Attorney
Subject ?ierside - After Date November 13 , 1990
Measure C
Measure C passed with a vote of 73 . 6%. we will here address issues
raised by the impact of Measure C on Pierside .
Facts
Measure C precludes various projects on any park or beach without
majority votes of both the Council and the electorate. The city
acquired sur4ace rights- to the -Pierside property by- an easement in
1932 for public, park, recreational and playground purposes . Later
it acquired the underlying fee simple interest by deed after the
condemnation action was filed in 1986. The Redevelopment Agency is
perfecting the title and soon will have a judgment vesting any
remaining interest in it. Thus, the city now owns the bulk of the
property. There is a dispute as to the nature of uses the city can
place on the property, and, in particular, whether additional
restaurants may be placed thereon.
In 1986, the city entered into a lease with Pier Side Development
for a "visitor-oriented specialty shopping center . " The Agency was
obligated to provide clear title, and the lessee was to construe
the improvements .
Measure C has an exception where services were being performed at
the same location on January 1, 1989 . That exception does not apply
'to the 1986 lease, since those uses were not being provided in 1989 .
The pierside property is uplands and has for many years contained
buildings and a paved parking lot. It does not appear to be a
"beach, " but an argument may be made that it is "parklands ." It is
unclear whether acquisition of fee title merges with the 1932
easement for public purposes .
Let us focus on specific issues .
1. Q. Does Measure C apply to the pierside property?
A. Probably. while this land may not be a beach, it is
arguably parkland. The definition of park is "land set
aside for public use. " The "service" exception in Measure
C does not apply to the current development proposal .
Michael Uberuaga
November 13 , 1990
Page 2
2. Q. Does Measure C apply to the Redevelopment Agency?
A. No. It only restricts activities of the city.
3 . Q. Does Measure C bar a conveyance of the Pierside property to
the Redevelopment Agency without a popular vote?
A. yes . Once Measure C is effective, a vote of the electorate
will be needed. It will be effective when the charter
amendment is filed with the Secretary of State, which is
after the election results are certified. That will be
after about November 21.
Other requirements also apply to a conveyance -of the property.
One is a finding by the Planning Commission of conformance to
the general plan; this was done on November 6. Another is a
requirement for 4/5 vote, since this is arguably waterfront
property'(Govgrnme " Code § 37351) . '
4 . Q. Is Measure C constitutionally valid?
A. Probably. An argument might be made that Measure C
improperly deprives the Council of essential governmental
powers . We have not: found any cases that would support
invalidation of the measure.
There are various cases that hold certain actions like
referenda invalid when they purport to challenge
administrative, as opposed to legislative, action. But
none is persuasive on the issues raised by Measure C.
5. Q. Does the 1986 lease create vested rights to develop the
restaurant project currently proposed?
A. Probably not. The 1986 lease was fairly project specific.
While the Agency still has not fully performed its
obligation to provide clear title, the facts as presently
known to us do not compel a conclusion that the developer
has a vested right to proceed with development. For this
reason, it does not make any difference whether the lease
currently under consideration is an "amended" lease or a
new lease. It would be preferable, however, to obtain
surrenders from the lessees and formally terminate the 1986
lease.
The bottom line is that unless title to the Pierside property is
transferred to the Redevelopment Agency prior to the effective date
of Measure C, the city will probably need a vote of the electorate
to proceed with any lease of the property.
�,.,► Gail Hutton
City Attorney
CC: Barbara :%aiser
REQUEST FOW REDEVELOPMENT YGENCY ACTION
RH 90-11
February 20, 1990
Date
Suulluttirtl to: Hcn)orable chairman andR0WVelggrcnt Agency Marbers
Submitted by: Paul E. gook, Executive Director
•l.
Prepared by: Keith B. Bch--, Redeveloptient Specia.list5?g9r—
Subject: AP1'ruvAL 4F caimpm, mvF.wwwr Pm Tm PiER=
Consistent with Council Policy? [ Yes [ ) New Policy or Exception
Statement of Issue, Recommendation, Anplysis, Funding Source, Alternative Actions, Attachments:
SMTRIIMW QF-LSSLTE'
On January 17, 1989, the Agency directed staff to..prepa= an a.7c xied Pierside
Village plan to eliminate the specialty/retail rises while retaining the
restaurant uses (staff report attached) . Additionally, staff was authorized
to negotiate with its operators for the rehabilitation of Maxwell's Restaurant.
CRl:
Approve the conceptual plan for development of the "Pierside Restaurants"
which includes:
. The develgrmt of two new restaurant pads - (25,000 sq.ft.) ;
. Acatx;tinrdations for the relocation of the existing 1vcvcwell's
Restaurant - (15,000 sq.ft.) ;
. The developmesnt of a parking-structure, including surface and
subsurface parking for both beachgoers and restaurant patrons;
. The development of beach-related conoessiorLs., including
approximately 6,000 sq.ft. of casual dining space; and
. Authorize staff and the developer of Pierside to negotiate for the r
relocation and integration of 1".axw+ellIs into the Pierside plan.
T y—
On September 181 1988, the City Council adopted a a "Pier Plaza" ooncept that
calls for the development of a 2.1 acre "Pier Plaza" to be located between the
base of the Pier and Pacific Coast Highway. Apprcxintiately cne-half of
Maxwell's Restaurant as it exists today lies within the adopted 2.1•acre
footprint of this plan. As a result, the mcxgotiations for the rehabilitation
S
of Maxwell's has shifted to negotiations for the demolition and relocation of
a new Maxwell's within the proposed Pierside Restaurant development.
The history of the Pierside project dates back to 1984 and is more
specifically outlined in the analysis of the attached staff report dated
January 17, 1989. Briefly, the originally approved "Pierside Village" plan
called for an 87,500 sq.ft. specialty/retail complex to be located on the
ocean side of Pacific coast Highway between the existing Maxwell's Restaurant
and the Lifeguard Headquarters. Ultimately, the plan received all necessary
approvals, including the California coastal ccmrLission.
However, as the Main-Pier Redevelopment Plan further evolved and approved
development heights and densities were scaled down, staff re-analyzed the need
for a specialty/retail ccnplex of the scope and magnitude originally
envisioned for Pierside Village. As planning efforts continued, potential
conflicts between the Pierside Village concept and the retail activity along
Main Street began to be a source of concern.
Ultimately, it was concluded that the Pierside Village concept should be
downsraled and directed away from a focus on retail activity and more towards
food services. The currently proposed plans are the result of that shift in
focus and reflect a refinement of that concept.
FUNDING SOURCE:
None as a result of this action.
ALTERNATIW ACPIONS.
1) Deny approval of the Pierside Restaurants conceptual development plan, and
direct staff accordingly.
A3'1'ACI*E iI'S.
1) Staff report of January 17, 1989.
2) Conceptual Plan.
PEC/KBB:lp
0139h
a �.
A� &` CITY OF HUNTINGTON BEACH
INTER-DEPARTMENT COMMUNICATION
IIUNTINGtON MACH
To MICHAEL T. UBERUAGA From ROBERT J. FRANZ
City Administrator Deputy City Administrator
Subject REQUEST FOR APPROPRIATION Date NOVEMBER T, 1990
TO FINANCE REDEVELOPMENT
PROJECTS, FIS 90-45
This fiscal impact statement has been prepared to determine the impact of approving
funding for three development projects in the Main/Pier area. Unless existing projects are
cancelled and commitments to fund those projects are modified, there is not any identifiable
funding available for the three projects. Our most recent analysis of Main/Pier
Redevelopment funds indicates that for the current year (fiscal year 1990191) that there are
commitments that will utilize all of the available funding. Current commitments will have
to be cancelled or modified prior to making additional funding commitments (such as the
Pierside Restaurants Project, Third Block West Condominimum Development and design of
the Pier PIaza) I
ROBERT J. IR Z
Deputy City dministrator
RJ F:sd
5535j
FIRST AMENDED
PIER SIDE LEASE
By and Between
THE REDEVELOPMENT AGENCY OF THE CITY OF HUNTINGTON BEACH
and
STANLEY BLOOM
V �
TABLE OF CONTENTS
Page
1. RECITALS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
2. PREMISES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
3. INGRESS AND EGRESS. . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
4. TERM. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
5. REQUIRED SERVICES AND USES - LIMITATION
ONUSE. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ... . . . . 3
6. DEVELOPMENT OF THE PREMISES AND ADJACENT AREAS 4
a. Scope of Development and Cost of
Construction. . . . . . . . . . . . . . . . . . . . . . . . . . . 4
b. Construction Schedule.. . . . . . . . . . . . . . . . . . . . . 4
c. Certificate of Completion. . . . . . . . . . . . . . . . . 4
7. RENT. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
a. Percentage Rental. . . . . . . . . . . . . . . . . . . . . . . . . 5
b. Parking Payment. . . . . . . . . . . . . . . . . . . . . . . . . . . 8
c. Subordination. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
d. Public Parking . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
e. Rent Credit. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
f. Appraisal Procedure . . . . . . . . . . . . . . . . . . . . . . 10
g. Lessor Expenditure Maximum. . . . . . . . . . . . . . . . 12
S. SECURITY DEPOSIT. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
9. CONDITION OF TITLE, COVENANT OF QUIT
-ENJOYMENT. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
20. NOTICES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
11. THIRD PARTY BENEFICIARY. . . . . . . . . . . . . . . . . . . . . . . 15
12. EXHIBITS - INCORPORATION INTO LEASE. . . . . . . . . . . 15
. -i-
EXHIBITS
A Legal Description of Premises
B General Conditions
C Conditions to Commencement
D Scope of Development
E Schedule of Performance
£ Certificate of Commencement Date
-ii- ,
FIRST AMENDED PIER SIDE LEASE
This FIRST AMENDED PIER SIDE LEASE (the "Lease") is entered
into this day of , 1990 (the "Effective Date") ,
by and between the REDEVELOPMENT AGENCY OF THE CITY OF
HUNTINGTON BEACH, a public body, corporate and politic
("LESSOR") , and STANLEY M. BLOOM, an un•narried man ("LESSEE"),
who agree as follows:
1. RECITALS: This Lease is made with reference to the
following facts, objectives and covenants:
a. On or about August 19, 1985, LESSOR, HUNTINGTON
PACIFICA DEVELOPMENT GROUP; and the City of
Huntington Beach, a municipal corporation (the
"City") , entered into a Disposition and
Development Agreement, which agreement was
modified on or about February 18, 1986 (the
"DDA" ) . The DDA provided for the disposition and
development of two parcels located in the City of
Huntington Beach, California, one of which
parcels encompassed the Premises described herein
(and other adjacent property that has been
deleted from the Premises) . LESSEE hereunder is
a shareholder in Randall Foods, Inc. , which was
the parent of Pacific Heritage Land and Holding
Company, which in turn was the parent of Pacific
Heritage- Corporation, one of the general partners
in HUNTINGTON PACIFICA DEVELOPMENT GROUP, and
LESSEE thereby had a substantial interest in the
DDA.
b. On or about November 20, 2986, LESSOR and PIER
SIDE DEVELOPMENT, the successor-in-interest to
' HUNTINGTON PACIFICA DEVELOPMENT GROUP, entered
into a lease (the "Pier Side Lease") . The Pier
Side Lease provided for the disposition and
development of the parcel described in the DDA
that encompassed the Premises described herein.
Huntington Pacifica Development Group was a
general partner in PIER SIDE DEVELOPMENT, and
LESSEE thereby had a substantial interest in the
Pier Side Lease.
C. LESSOR and LESSEE, as the successor-in-interest
to PIER SIDE DEVELOPMENT, desire to amend and
restate the Pier Side Lease on the terms and
conditions set forth herein. LESSOR and LESSEE
agree that the DDA, including without limitation
the Guarantees set forth as Attachments 7-10
thereto, is of no further force and effect, and
that the Pier Side Lease, including without
limitation the Guarantees set forth as Exhibits
F, G, and H, thereto is superseded and amended by
this Lease and shall be of no further force or
Effect on the Effective Date.
d. The City is currently the owner of that parcel of
real property located in the City of Huntington
Beach, State of California, described in Exhibit
"A" hereto and incorporated herein by this
reference (the "Premises") . Subject to the
satisfaction or waiver of all of the "Conditions
to Commencement" (Exhibit "C" hereto) , LESSOR
shall acquire the Premises from the City on or
before the "Commencement Date" of the Lease term,
as that date is defined in-paragraph 4 below.
e. on , 1990, by Resolution
No. LESSOR approved and authorized its
Chairman to execute this Lease.
f. This Lease is entered into for the redevelopment
of property consistent with the public purposes
of the Main-Pier Redevelopment Plan, as
previously adopted by the City Council of the
City, and not for the purpose of speculation in
unimproved land.
g. The development of the Premises pursuant to the
terms of this Lease shall improve public access
to the public beach and recreational access and
use of the Premises by creating amenities
designed for year-round use and enjoyment by the
public at the Premises as well as improving and
facilitating vehicular, pedestrian, cycling and
handicapped access to and through the Premises.
2. PREMISES: LESSOR agrees to lease to LESSEE and LESSEE
agrees to lease from LESSOR the Premises, as described in
Exhibit "A", upon the terms and conditions expressed herein.
3. INGRESS AND EGRESS: LESSEE shall have access, as
approved by the City and Caltrans, pursuant to the approved
building plans for the development proposed herein, to all
portions of the Premises at all times during the entire Lease
term, including without limitation, access from the nearest
public streets (Pacific Coast Highway and Lake Street) to the
Premises, pedestrian access from all adjacent public spaces and
ways (which include but are not limited to the municipal pier
and beach) to the Premises, and limited access from the access
road/bike trail in accordance with Paragraph 7 of the Scope of
Development (Exhibit "D" ) . Access points shall be limited as
provided on the plans and permits to be approved by the City,
20/21/90
1712u/2460/04 -2-
as referenced in Paragraph 1 of the Conditions to Commencement
(Exhibit "C" ) , as the same may be revised from time to time.
LESSEE shall provide full public access to all of the promenade
and plaza portions of the Premises consistent with security and
safety regulations promulgated by any governmental authority
with jurisdiction. LESSEE shall further provide access to the
public parking facilities to be located on the Premises at a
minimum in accordance with applicable governmental regulation
or from at least 6:00 A.M. to twelve midnight each day on a
year-round basis.
4. TERM: The term of this Lease shall be fifty-five (55)
years, subject to extension pursuant to Paragraph 7(a) (ii )
below, commencing on the date (herein the "Commencement Date" )
that all of the conditions to the com:•nencement of the Lease
term described in Exhibit "C" hereto ("CONDITIONS TO
COMMENCEMENT") are satisfied or their performance is waived by
the appropriate party. Upon the Commencement Date, LESSOR and
LESSEE each agree, upon the request of the other party, to
execute and record in the Official Records of Orange County an
appropriate memorandum certifying the actual Commencement Date
in the form attached hereto as Exhibit "E" .
5. REQUIRED SERVICES AND USES LIMITATION ON USE:
LESSOR' s primary purpose for entering into this Lease are to
provide for improved accessibility and use of the Premises by
the public through the development of facilities and services
needed by the public as part of the implementation of the
Redevelopment Plan for the Main-Pier Redevelopment Project (the
"Redevelopment Plan") .• In furtherance of that purpose, LESSEE
shall during the Lease term use the Premises for the purpose of
constructing and operating thereon restaurant and food and
beverage facilities, beach-related concessions, retail shops,
and a parking structure designed to accommodate such uses and
public beach parking, all in accordance with the Scope of
Development (Exhibit "D" ) and the Conditional Use Permit,
Coastal Development Permit, and final building plans and
specifications to be approved for the project referenced
therein, as such matters may be amended or changed as provided
herein. Provided that LESSEE obtains all permits and approvals
which may be required by the City and any other governmental
agency with jurisdiction, LESSOR agrees that the permitted uses
on the Premises shall also include outdoor dining, the serving
of alcoholic beverages in conjunction with the restaurant and
food and beverage facilities, entertainment, and the staging of
special outdoor events on the Premises including, but not
limited to, art exhibitions, musical performances and retail
merchandising activities. LESSEE shall not use or suffer the
Premises to be used for any other purpose without the prior
written consent of LESSOR.
10/21/90
1712u/2460/04 -3-
6. DEVELOPMENT OF THE PREMISES AND ADJACENT AREAS:
a. _Scope of__Development and Cost of Construction:
LESSEE shall construct or cause to be constructed
at no expense to LESSOR the "Improvements" on the
Premises as set forth in Section I of the Scope
of Development (Exhibit "D") . The cost of the
public parking spaces constructed or caused to be
constructed on the Premises by Lessee shall be
paid for in full by Lessor pursuant to Paragraph
7(d) of this Lease. The additional debt cost to
LESSEE of multi-level parking as compared to at
grade parking shall be credited against the
rental payments otherwise due from LESSEE to
LESSOR pursuant to Paragraph 7(e) of this Lease.
b. Construction Schedule: Subject to the other
terms and conditions set forth herein, including
without limitation Paragraph 30 of the General
Conditions (Exhibit "B") , LESSEE shall begin and
complete all construction required of it within
the times specified in the Schedule of
Performance (Exhibit "E" ) . The Schedule of
Performance may be modified by approval of LESSEE
and the LESSOR' s Executive Director. LESSOR
agrees that any and all construction plan
checking and field inspections related to the
construction of the Improvements may be submitted
to deputy or independent plan checkers or field
inspectors hired by LESSEE but certified by
LESSOR and/or City. LESSOR further agrees that
the approval or certification of such deputy or
independent inspectors will not be unreasonably
withheld or conditioned.
C. Certificate of Completion: Promptly after
LESSEE s completion of construction of all the
Improvements, but excluding normal and customary
tenant improvement items, LESSOR shall furnish
LESSEE with a Certificate of Completion upon
written request therefor by LESSEE. LESSOR shall
also furnish partial Certificates of Completion
for individual buildings or portions of buildings
on the Premises. LESSOR shall not unreasonably
withhold any such Certificate of Completion.
Such Certificate of Completion shall be a
conclusive determination of satisfactory
completion of the construction required by this
Lease as to which the Certificate relates and the
Certificate of Completion shall so state. After
recordation of such Certificate of Completion,
any party then owning or thereafter purchasing
the improvements, leasing the Premises, or
10/21/90
1712u/2460/04 -4-
otherwise acquiring any interest in the Premises
or improvements covered by the Certificate of
Completion shall not (because of such ownership,
purchase, lease or acquisition) , incur any
obligation or liability under this Lease with
respect to LESSEE' s initial construction
obligations hereunder.
Each Certificate of Completion of
construction shall be in such form as to permit
it to be recorded in the Recorder' s Office of
Orange County.
If LESSOR refuses or fails to furnish a
Certificate of Completion after written request
from LESSEE, LESSOR shall, . within thirty (30)
days of written request therefor, provide LESSEE
with a written statement of the reasons LESSOR
refused or failed to furnish a Certificate of
Completion. The statement shall also contain
LESSOR' s statement of the actions LESSEE must
take to obtain a Certificate of Completion. If
the reason for such refusal is confined to the
immediate availability of specific items of
materials for landscaping, LESSOR will issue its
Certificate of Completion upon the posting of a
bond, letter of credit, or cash deposit by LESSEE
with LESSOR in an amount representing the fair
value of the work not yet completed as determined
by the Executive Director of the LESSOR.
Such Certificate of Completion shall not
constitute evidence of compliance with or
satisfaction of any obligation of LESSEE to any
holder of any mortgage, or any insurer of a
mortgage securing money loaned to finance the
improvements, or any part thereof. Such
Certificate of Completion is not a notice of
completion as referred to in the California Civil
Code, Section 3093.
7. RENT: Subject to subparagraph (e) below and all of
the other terms and conditions set forth in this Lease,
including without limitation Paragraphs 7-9 of Exhibit "B",
LESSEE shall pay to LESSOR rent and LESSOR shall pay LESSEE to
construct the beach public parking as follows:
a. Percentage Rental :
(i) Basic Percentage. Beginning with the
date which is the first anniversary of the
Commencement Date, and continuing thereafter
LESSEE shall pay to LESSOR a Percentage Rent
10/21/90
1712u/2460/04 •5-
of the Gross Sales Receipts generated from
the Premises during each calendar quarter or
partial calendar quarter during such period
according to the following schedule:
Gross Sales Percentage
Receipts Threshhold Rent Rate
{* in millions of dollars)
less than 35* 2%
less than 55 2-1/2%
less than 100 3%
100 and above 3-1/4%
Quarterly rent payments shall be determined
by multiplying the Gross Sales Receipts
generated for such quarter by the Percentage
Rent Rate used in the previous calendar
year. Once a Gross Sales Receipts
Threshhold is achieved, the Percentage Rent
Rate shall not be reduced below such
Percentage Rent Rate and as each new Gross
Sales Receipts Threshhold is achieved, the
new Percentage Rent Rate shall be
established and not subsequently lowered
notwithstanding that Gross Sales Receipts in
a subsequent calendar year may fall below a
previously achieved threshhold. In the
event that the annual Gross Sales Receipts
reconciliation pursuant to Paragraph 9 of
Exhibit "B" reveals that a higher Gross
Sales Receipts Threshhold had been reached
in such preceeding calendar year, LESSEE
shall pay to LESSOR within thirty (30) days
after such determination an amount equal to
the Gross Sales Receipts for such calendar
year multiplied by the difference between
the prior Percentage Rent Rate and the new
Percentage Rent Rate for the higher Gross
Sales Receipts Threshhold.
(ii) Option to Rehabilitate. Beginning with
the thirty-first (31st) year of the term of
this Lease and during the succeeding two ten
(10) year periods thereafter, LESSEE shall
have the option of extending the term of the
Lease an additional twenty-five (25) years
in return for undertaking a major renovation
of the Premises, which, for the purpose of
this provision shall be an expenditure by
LESSEE and its subtenants, within a
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twenty-four (24) month period, as approved
by LESSOR (which approval shall not be
unreasonably withheld or conditioned) , in an
amount equal to or greater in value than
fifty percent (50g1) of the total replacement
cost of the Improvements not including the
parking facilities and not including
twenty-five percent (25%) of the Furniture,
Fixtures and Equipment installed on the
Premises at the commencement of the
twenty-four (24) month renovation period.
In the event LESSEE elects to exercise the
option provided in this Subparagraph (ii) ,
in the fifty-fifth (55th) year after the
Commencement Date, the Premises shall be
appraised according to the method set out in
Paragraph 7(f) below and the Rent shall
convert in the fifty-sixth (56th) year after
the Commencement Date to the then "market
value" (as established by the appraisal
pursuant to Paragraph 7(f), below) of the
existing use (the "Option Rent") . The
Option Rent shall increase at the beginning
of each successive five (5) year period
(i.e. : years 61, 66, 71 and 76 from the
Commencement Date) through the expiration of
the option period by the multiple of the
Index, as defined below, however the
application of such Index shall result in a
minimum increase of three percent and
maximum increase of seven percent (7%) on a
per year basis even if the actual Index
would dictate a greater or lesser multiplier.
• (iii) Base Percentage Rental. In the event
at year thirty-one (31) of this Lease,
• LESSEE elects not to exercise the option
provided in paragraph (ii) above, then a
base rent shall be established (the "Base
Rent" ) by taking seventy-five percent (75%)
of the average of the Gross Sales Receipts
for years 28, 29 and 30. This Base Rent
shall be in force until year 41 at which
point it shall be reset until year 51 by
applying the same multiple to the average
Gross Sales Receipts for years 38, 39 and
40. The process shall repeat in year 51 and
be based on the average Gross Sales Receipts
for years 48, 49 and 50. However, in no
event shall the Base Percentage Rent fall
below a prior set base. If in any year a
site specific occurrence or a general
economic downturn results in the application
of the above Base Rent being a grossly
unfair burden cn the LESSEE, the LESSEE has
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the right to appeal the application of the
Base Rent as to a specific calendar year and
LESSOR may allow an abatement of all or a
portion of the Base Rent requirement for a
given year. In the event that the parties
hereto cannot reach an accord on an appeal
of Base Rent, then LESSEE may appeal the
application of Base Rent by LESSOR to the
judge provided for in Paragraph 31 of
Exhibit "B" hereto. In such appeal, the
judge shall analyze the shortfall in Gross
Sales Receipts to determine if it is the
result of site specific or general market
conditions and not reasonably attributable
to the operational performance of LESSEE or
its subtenants. If the judge finds (i) that
site specific or general market conditions
are the cause of the shortfall and,
(ii) that such an application would be
"grossly unfair" burden on the LESSEE, then
she shall have the authority to abate the
Base Rent in an amount that is fair and
equitable to the interests of both parties
hereto.
b. Parking Payment: LESSEE shall pay to LESSOR
a quarterly payment of Twenty-seven Thousand
Five Hundred Dollars ($27,500) (the "Parking
Payment" ) to be annually adjusted by the
Consumer Price Index (the "Index") capped
annually at seven percent (7%) in
consideration of the right to charge parking
fees for use .by the public of the parking
structure. The "Index", as used in this
• Lease shall be deemed to mean The United
States Department of Labor, Bureau of Labor
Statistics Consumer Price Index for All
Urban Consumers, Los Angeles-Anaheim-
Riverside Area (1982-84=100) . If at any
time the Index shall cease to exist in the
format recited herein, LESSOR shall
substitute any official index published by
the Bureau of Labor Statistics or successor
or similar governmental agency as may then
be in existence that shall, in LESSOR' s
reasonable opinion, be most nearly
equivalent thereto. Fees charged by LESSEE
for use of a parking space may be the
greater of the amount of Five Dollars
($5.00) per day, to be annually adjusted by
the Index capped annually at seven percent
(7%) or an amount equal to one hundred and
twenty percent (120%) of the maximum per day
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rate charged by the City or LESSOR in a City
or LESSOR-owned parking structure. In the
event that the City determines to allow a
City parking permit to be used in lieu of
paying a per day fee in all other City or
LESSOR owned beach parking facilities, the
LESSEE shall allow the use of such a permit
and waive a parking charge. In the event
LESSEE provides evidence to LESSOR that the
permit usage is preventing the LESSEE from
obtaining an equitable rate of return in
operating the parking facility, adjustments
may be made to the Parking Payment as
reasonably approved by LESSOR.
C. Subordination: LESSOR agrees to execute
appropriate documents required to
subordinate its right to receive rent
pursuant to this Lease for an amount not to
exceed Fourteen Million Five Hundred
Thousand Dollars ($14,500,000) to financing
approved by LESSOR in accordance with
Paragraph 16.A of Exhibit "B. "
d. Public Parking-Construction Payment. LESSEE
shall construct a parking structure
sufficient to park both the spaces required
by the uses to be conducted on the Premises
and 250 public parking spaces. LESSOR shall
pay to LESSEE an amount equal to Four
Million Dollars ($4,000,000) as compensation
for the cost of constructing the 250 public
parking spaces at the time provided in the
Schedule of Performance (Exhibit "E" ) .
LESSEE shall either pay prevailing wages
according to state law for at least that
portion of the parking structure which shall
provide the public parking spaces or shall
indemnify, defend and hold harmless LESSOR
and/or City from any claim or action arising
out of LESSEE' s failure to pay prevailing
wages and/or LESSOR' s failure to make such
payment mandatory in this Lease. The form
of the bid package for the parking structure
shall be submitted to the City Attorney' s
office for review and approval. The
submission shall be deemed approved thirty
(30) days from the date of submittal unless
a written statement itemizing objections is
received by LESSEE prior to the expiration
of such thirty (30) day period.
e. Rent Credit: Notwithstanding any other
provision of this Lease to the contrary,
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LESSEE shall be entitled to a credit against
the first rental payments otherwise due in
an amount equal to the difference between
LESSEE' S amortized debt on the approved cost
of construction of the spaces required to
park the commercial uses of the multi-level
parking structure to be constructed on the
Premises (assuming a 30-year loan at 11%
interest) and what the amortized debt for
the cost of the construction of a single
level at grade parking facility would have
been (assuming a 30 year loan at 11%
interest) . The parties agree for purposes
of this paragraph that the difference in
cost of the amortized debt for a single
level at grade parking facility and the
structured parking as proposed in the Scope
of Development (Exhibit "D" ) is equal to a
One Million Dollar ($1,000,000) up-front
payment followed by 30 annual payments of
Three Hundred and Twenty-Five Thousand
Dollars ($325,000) (the "Differential
Cost") . The annual payments (or rent
credits) were caluclated based on interest
at the rate of eleven percent (21%) per
annum compounded annually, commencing as
LESSEE incurs costs for such portion of the
Improvements and continuing thereafter until
the rent credit has been fully applied.
Notwithstanding the above, LESSOR shall have
the right to prepay the amount of the
Differential Cost without penalty and with
only such interest as has already accrued.
f. Appraisal.-Procedure. In the event that
this Lease is extended pursuant to
Subparagraph (fi ) of Paragraph 7(a) above,
the Premises shall be appraised in the 55th
year after the Commencement Date at the then
current fair market value of the Premises
determined in accordance with the then
current and actual use being made of the
Premises as permitted by this Lease and
without assuming any change of use whether
or not permitted by the terms of the Lease
and without regard to any residual value for
any future or potential use. The appraisal
shall not include the value of the existing
Improvements on the Premises and shall only
consider the existing Improvements on the
Premises for the purpose of determining the
then current and actual use being made of
the Premises. The appraisal procedure shall
be conducted as follows:
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(i) Such appraisal shall be conducted and
made by three (3) appraisers, each of whom
shall be a member of the American Institute
of Real Estate Appraisers, qualified for the
purpose of appraising the Premises. The
appraisal by each appraiser shall be made in
accordance with the then standard practices
of the American Institute of Real Estate
Appraisers or any successor organization.
(ii) Either LESSOR or LESSEE shall appoint
in writing an appraiser and give written
notice thereof to the other, and within
fifteen (15) days after service by such
party on the other of such notice, the other
party shall, in a like manner, appoint an
appraiser and give written notice thereof to
the other party. In case of failure of
either party to appoint an appraiser, the
other party shall have the right to apply to
the president of the local. Chapter of the
American Institute of Real Estate Appraisers
in the County in which the premises are
situated to appoint an appraiser to
represent the defaulting party. In the
event the president of such Chapter declines
to appoint an appraiser, the executive
committee of said Chapter may appoint an
appraiser for the defaulting party. In the
event that the executive committee of said
Chapter declines to appoint an appraiser,
the party having appointed an appraiser
shall have the right to appoint a second
appraiser to act on behalf of the party
• failing to appoint an appraiser. The two
appraisers thus appointed, in either manner,
shall select and appoint in writing a third
appraiser and give written notice thereof to
LESSOR and LESSEE, of if within ten (10)
days after the appointment of the second
appraiser the two appraisers so appointed
shall fail to appoint a third appraiser,
then either party hereto may apply the
default methodology for the selection of an
appraiser outlined above.
(iii) The three (3) appraisers so appointed
(in either manner) shall promptly fix a time
for completion of the appraisal, which time
shall be no later than ninety (90) days from
the date of the appointment of the last
appraiser. The appraisers shall notify
LESSOR and LESSEE as to the said date fixed
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for such completion. On that date the three
(3) appraisers shall submit their appraisals
in writing in the then usual form to LESSOR
and LESSEE. The parties agree that for the
purpose of calculating the value to be
determined by appraisal the appraised value
shall be deemed to be that amount which is
determined by taking the average of the two
(2) appraisal figures which are closest to
each other. each of the parties hereto
shall pay for the services of its appointee
(whether or not said appraiser is selected
by default) and one-half (1/2) of the costs
of the services for the third appointee.
g. Lessor Expenditure Maximum. The total
amounts of costs or expenditures to the
LESSOR separate and apart from the Public
Parking Construction Payment in Paragraph
7(d) and the Rent Credit in Paragraph 7(e)
above, prior to the issuance of the
Certificate of Completion for the
Improvements, shall not exceed One Million
Dollars ($1,000,000) . This cap on
expenditures includes, but is not limited
to, all costs incurred or to be incurred due
to litigation, hazardous waste remediation,
relocation of existing tenants and provision
of utilities to the Premises. Any such
costs incurred as a result of the
construction of the Improvements pursuant to
this Lease which in aggregate exceed One
Million Dollars shall become the obligation
of the Lessee. Costs incurred, after the
issuance of the Certificates of Completion
shall be allocated between the parties as
provided in this Lease.
s. SECURITY DEPOSIT: Within ten (10) days after the
Commencement Date, LESSEE shall deposit with LESSOR the sum of
Fifty Thousand Dollars ($50,000) (in the form of a certificate
of deposit in the name of LESSOR, or an irrevocable and
unconditional letter of credit, for two hundred seventy (270)
days which shall be sight draft, of a term, in a form, and by a
bank all acceptable to LESSOR in its reasonable discretion) as
a security deposit for the performance by LESSEE of the
provisions of this Lease required to be performed by LESSEE
prior to LESSOR's issuance of its final Certificate of
Completion for the Improvements. If the security deposit is a
certificate of deposit, interest shall be credited to LESSEE
10/21/90
1712u/2460/04 -12-
and withdrawn and paid to LESSEE quarterly. If it is a letter
of credit, the letter of credit shall authorize the LESSOR to
draw funds from the letter of credit by presenting a sight
draft and certification for payment in the event of a default
as defined in Exhibit "B" Paragraph 18 of this Lease by
LESSEE. It shall be a condition of the letter of credit that
it shall be deemed automatically extended without amendment for
two hundred seventy (270) days from its current or future
expiry date unless, not less than thirty (30) days prior to
such expiry date, the issuer shall notify the LESSOR by
registered mail that the issuer has elected not to renew the
letter of credit for any additional period of time. In that
event, LESSEE shall immediately extend or replace the letter of
credit. If LESSEE has failed to extend or replace the letter
of credit ten (10) days prior to its expiry date, the LESSOR
may draw against the letter of credit by 'presenting LESSOR' s
sight draft. Provided, however, that if the LESSOR draws down
on the letter of credit pursuant to this Paragraph 8, the
LESSOR shall return such funds to LESSEE within ten (10) days
of LESSEE' s providing a new letter of credit consistent with
the provisions of this Paragraph 8.
During the period that LESSOR is entitled to hold the
Security Deposit, if LESSEE is in default, and such default is
not cured and is not being cured in accordance with paragraph
18 of Exhibit "B, " LESSOR can use the security deposit, or any
portion of it, to cure the default or compensate LESSOR for all
damages sustained by LESSOR resulting from LESSEE' s default and
LESSEE shall immediately on demand pay to LESSOR a sum equal to
the portion of the security deposit expended or applied by
LESSOR as provided in this paragraph so as to maintain the
security deposit in the sum initially deposited with LESSOR.
The security deposit (or such remaining portion thereof that
has not been used by LESSOR to cure LESSEE' s default or to
compensate LESSOR for damages sustained by LESSOR resulting
from LESSEE' s default) shall be refunded promptly after the
earlier of the following: (i) the date upon which LESSEE has
completed the Improvements (excluding tenant improvements) and
LESSOR is obligated to issue its final Certificate of
Completion, or (ii) the expiration or termination of this
Lease. LESSOR' s obligations with respect to the security
deposit are those of a debtor and not a trustee. LESSOR shall
be permitted to maintain the security deposit separate and
apart from LESSOR' s other funds or can co-mingle the security
deposit with LESSOR' s funds.
9. CONDITION OF TITLE; COVENANT OF QUIET ENJOYMENT:
Subject to LESSEE' s satisfaction or LESSOR' s waiver of all of
the Conditions to Commencement (Exhibit "C" hereto) to be
satisfied by LESSEE, and subject to the exceptions in
Exhibit "C" hereto, LESSOR covenants to convey to LESSEE the
leasehold estate to the Premises in the "Approved Title
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Condition" referenced therein. LESSOR further covenants that,
at the Commencement Date, LESSOR shall cause First American
Title Insurance Company, or such other title company as may be
mutually approved by LESSOR and LESSEE, (the" Title Company") ,
to deliver to LESSEE- an ALTA Survey and ALTA Extended Coverage
(Fora B) policy or policies of title insurance issued by the
Title Company insuring that the leasehold estate is vested in
LESSEE in such condition. The Title Company shall provide
LESSOR with a copy of the title policy. The total amount of
title insurance coverage for the Premises shall be the sum of
Five Million One Hundred Thousand Dollars ($5, 100,000) .
LESSOR shall pay that portion of the cost and expenses of
the premium for the title policy which is equal to what the
premium would have been if the title policy were a CLTA policy,
and LESSEE shall pay the balance of such premium. LESSEE shall
pay the cost of any new survey required in order to obtain the
title policy. LESSEE shall pay the cost for any additional
coverage or endorsements that it may request.
Subject to the exceptions in Exhibit "C" hereto, LESSOR
covenants that LESSEE, after the Commencement Date and upon
performing the covenants in the Lease required to be performed
by LESSEE, may quietly have, hold, and enjoy the Premises
during the term of this Lease without hindrance or interruption
by LESSOR or any party claiming by, through, or under LESSOR.
Not by way of limitation of the foregoing, and except as
specifically set forth in Exhibit "C", in the event any adverse
claim is made or threatened impairing LESSEE' s leasehold title,
other than a claim by -any part claiming by, through, or under
LESSEE, LESSOR, at its sole expense, shall take all required
actions, including filing and diligent prosecution of quiet
title and/or ejectment suits if -necessary, to remove such
adverse claim or cloud on LESSEE' s title.
Subject to the overall limit of expenses by LESSOR in
Paragraph 7(g) above, LESSOR shall pay those costs necessary to
relocate all currently existing LESSEES and subtenants on the
Premises pursuant to Exhibit "D" II .5.
10. NOTICES: Any notice, demand, request, consent,
approval or communication that either party desires or is
required to give to the other party or any other person shall
be in writing and either served personally or sent by prepaid
first class mail to the other party at the address set forth
below:
TO LESSOR:
Redevelopment Agency of the City of Huntington Beach
Attn: Executive Director/City Administrator
2000 Main Street
Huntington Beach, California 9264B
10/21/90
1712u/2460/04 -14-
V �
TO LESSEE:
Stanley M. Bloom
c/o Randall Foods, Inc.
2905 E. 50th Street
Vernon, CA 90058
WITH COPIES TO:
Jonathan Chodos
1559 So. Sepulveda Blvd.
Los Angeles, CA 90025
and any leasehold or subleasehold mortgagee
approved by LESSOR pursuant to Paragraph 16A
of Exhibit "B" that requests in writing
that LESSOR provide such notice.
Either party may change either its designee or its address by
notifying the other party of such change.
11. THIRD PARTY BENEFICIARY: The City (but no other
person or entity) shall be deemed a third party beneficiary of
this Lease.
12 . REPRESENTATIONS BY LESSEE: The LESSEE represents and
warrants to the LESSOR as follows:
1. The LESSEE has full authority from all prior
interested parties, as specified in recital of Paragraph 1 to
this Lease to execute and deliver this Lease and any and all
other agreements and documents required to be executed and
delivered by the LESSEE in order to carry out, give effect to,
and consummate the transactions contemplated by this Lease.
. 2. The LESSEE does not have any material contingent
obligations or any material contractual agreements which could
materially adversely affect the ability of the LESSEE to carry
out its obligations hereunder.
3. There are no material pending or, so far as is
known to the LESSEE, threatened, legal proceedings to which the
LESSEE is or may be made a party or to which any of its
property is or may become subject, which have not been fully
disclosed in the material submitted to the LESSOR which could
materially adversely affect the ability of the LESSEE to carry
out its obligations hereunder.
4. There is no action or proceeding pending or, to
the LESSEE' s best knowledge, threatened, looking toward the
dissolution or liquidation of the LESSEE and there is no action
or proceeding pending or, to the LESSEE' s best knowledge,
10/21/90
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threatened by or against the LESSEE which could affect the
validity and enforceability of the terms of this Lease, or
materially and adversely affect the ability of the LESSEE to
carry out its obligations hereunder, (excepting only the
potential state lands commission claim set out in Exhibit "C"
Paragraph 3) .
Each of the foregoing items 1 to 4, inclusive, shall
be deemed to be an ongoing representation and warranty. The
LESSEE shall advise the Agency in writing if there is any
change pertaining to any matters set forth or referenced in the
foregoing items 1 to 4, inclusive.
13 . EXHIBITS - INCORPORATION INTO LEASE: The following
exhibits referred to in this Lease are attached hereto and by
this reference incorporated herein:
Exhibit "A" Legal Description of Premises
Exhibit "B" General Conditions
Exhibit "C" Conditions to Commencement
Exhibit "D" Scope of Development
Exhibit "E" Schedule of Performance
Exhibit "F" Certificate of Commencement Date
REDEVELOPMENT AGENCY OF THE CITY
OF HUNTINGTON BEACH, a public
body, corporate and politic
1990 By
Chairman
ATTEST:
Agency Secretary
APPROVED AS TO FORM: INITIATED AND APPROVED AS TO
CONTENT:
Agency Special Counsel Deputy City Administrator/
Economic Development
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REVIEWED AND APPROVED APPROVED:
AS TO FORM:
Agency Attorney Executive Director
STANLEY M. BLOOM, an unmarried
many ( "LESSEE")
1990
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EXHIBIT "A"
LEGAL DESCRIPTION
That portion of Huntington Beach, County of Orange, State of
California as shown on a map recorded in Book 3, Page 36 of
Miscellaneous Maps in the office of the County recorder of said
county described as follows:
Beginning at the centerline intersection of
Pacific Coast Highway and Lake Street, shown
as Ocean Avenue and First Street respectively,
on said mentioned map; thence along the
centerline of Pacific Coast Highway south
48021'42" east 37.50 feet to the intersection
with the southwesterly extension of the
southeast right-of-way line of Lake Street;
thence south 41°38' 18" west 50.00 feet to the
true point of beginning; thence north
48°21'42" west 1,020.00 feet; thence south
41038' 18" west 200.00 feet; thence south
4B°21' 42" east 1020.00 feet; thence north
41038' 18" east 200.00 feet to the true point
of beginning.
10/21/90 EXHIBIT "A"
1712u/2460/04
EXHIBIT "B"
GENERAL COIMITIONS
TABLE OF CONTENTS
Paragraph_ # Caption
1. Charge for Late Payment
2. Utilities
3. Construction of Improvements
by LESSEE
4. Signs
S. Destruction
6. Maintenance
7. Gross Rental Receipts
8. Rent Payment Procedure and
Accounting
9. Records, Books of Account,
Accounting Statements and Audits
10. Insurance
11. Indemnity
.22. Taxes and Assessments
23. Unlawful Use
24. Abandoned Personal Property
15. Holding Over
16. Assigning, Subletting and
Encumbering
17. Successors in Interest
18. LESSEE' s Default
19. LESSOR' s Remedies
10/21/90 EXHIBIT "B"
1712u/2460/04 Page 1 of 35
20. LESSOR' s Default
21. Quitclaim of LESSEE' s Interests
Upon Termination
22. Total Taking
23. Partial Taking
24. Eminent Domain Award
25. Amendments
26. Captions
27. California Law
28. Waiver
29. Nondiscrimination
30. Force Majeure
31. Resolution of Disputes
32. Time
33. Non Disturbance and Recognition
34. Estoppel Certificate
35. Hazardous Waste
10/21/90 EXHIBIT "B"
1712u/2460/04 'Page 2 of 35
EXHIBIT "B"
GENERAL CONDITIONS
1. CHARGE FOR LATE PAYMENT: Rent not paid when due shall
accrue interest at the rate of twelve percent (12%) per annum
commencing five days from the date due until paid.
2. UTILITIES: LESSOR agrees to provide, at no expense to
LESSEE, all Utilities (water, sewer, gas, electrical, and
telephone) required for the development, use and maintenance of
the Improvements, with sufficient capacities to adequately
service the Premises, with such Utilities to be located on the
Premises or stubbed no farther away than' 3 feet from the curb
within the Premises along the west side of Pacific Coast
Highway. LESSEE agrees to extend all Utilities from said
locations and to be responsible for tie-ins and metering.
LESSEE shall make all arrangements for and pay for all Utility
services furnished to or used by it, including without
limitation gas, electricity, water, sanitary sewer, cable
television, telephone service, trash collection, and Utilities
used or consumed at public rest rooms to be constructed by
LESSEE on the Premises.
3. CONSTRUCTION OF IMPROVEMENTS BY LESSEE:
a. Statement of Construction Costs and "As Built"
Plans: •Prior to LESSOR s issuance of its final
Certificate of Completion for the Improvements
described in the Scope of Development (Exhibit
"D") , LESSEE shall furnish LESSOR a complete set
of "As-Built" plans and an itemized statement of
the actual construction cost of such
improvements. The statement of cost shall be
signed by LESSEE or its responsible agent and
sworn to under penalty of perjury.
b. Alterations: Subject to obtaining all requisite
governmental permits and authorizations, LESSEE
shall have the right to make non-structural
alterations to the interior of any buildings
located upon the Premises, provided that the same
when complete are of a character which LESSEE
reasonably determines do not adversely affect the
value of the improvements and the rental value
thereof immediately before such alteration.
LESSEE shall not make or permit any significant
structural or exterior alterations, additions or
improvements to be made to or upon the Premises
inconsistent with the approved plans referenced
in the Scope of Development (Exhibit "D" ) as the
20/21/90 EXHIBIT "B"
1712u/2460/04 'Page 3 of 35
same may be revised from time to time, without
first obtaining the written approval of LESSOR,
which approval shall not be unreasonably
withheld, conditioned or delayed.
Notwithstanding the foregoing, changes required
by authorized construction inspectors in order to
comply with applicable governmental requirements
shall be exempt from this approval requirement.
C. Improvements to Become Property of LESSOR:
Subject to subparagraph (d) below, all buildings,
,improvements and facilities, exclusive of Trade
Equipment and personal property constructed or
placed upon the Premises by LESSEE, must, upon
completion, be free and clear of all liens,
claims, or liability for labor and materials
(excepting rights of lenders, approved pursuant
to paragraphs 16.A and C and Equipment LESSORS
referenced in paragraph 16.E herein) , and all
such improvements and facilities, exclusive of
Trade Equipment and personal property, shall
become the property of LESSOR at the expiration
of this Lease, as it may be extended as provided
herein, or upon the earlier termination hereof.
d. Mechanic' s Liens: LESSEE shall at all times
indemnify and save LESSOR harmless from all
claims for labor and materials in connection with
construction, repair, alteration, and
installation of all structures, improvements,
equipment, and facilities upon the Premises, and
from the cost of defending against such claims,
including reasonable attorney' s fees.
In the event of a lien imposed upon the Premises
as a result of such construction, repair,
alteration, or installation, LESSEE shall either:
(1) Record a valid Release of Lien; or
(2) Deposit with LESSOR cash or an irrevocable
letter of credit in form and content
reasonably acceptable to LESSOR' s Executive
Director in an amount equal to 125% of the
amount of the lien and authorize payment to
the extent of said deposit to any subsequent
final judgment holder that may arise as a
matter of public record from litigation with
regard to the lienholder' s claim; or
(3) Procure and record a bond, in accordance
with Section 3143 of the California Civil
Code, which frees the Premises from the
10/21/90 EXHIBIT "B"
1712u/2460/04 Page 4 of 35
claim of the lien and from any action
brought to foreclose the lien.
Should LESSEE fail to accomplish one of the above within
ninety (90) days after the filing of such a lien, but in no
event after final judgment is entered, such failure shall be a
material default under this Lease. If LESSEE deposits cash or
a letter of credit or records a bond, as provided herein,
LESSOR shall promptly return the same (or unused portion
thereof) after the release of lien or satisfaction of judgment
is recorded, or LESSEE delivers other evidence reasonably
satisfactory to LESSOR that the dispute has been finally
resolved.
4. SIGNS: LESSEE, at its cost, shall have the right to
place, construct, and maintain exterior signs on the Premises
and the Improvements to be constructed by LESSEE thereon in
accordance with the plans approved by LESSOR and the City as
the same may be revised from time to time. LESSEE shall not
have the right to place, construct, or maintain on the Premises
any other exterior sign, advertisement, awning, banner or
decoration, except as permitted under the Huntington Beach
Ordinance Code.
5. DESTRUCTION:
a. Destruction Due to Risk Covered by Insurance:
If, during the Lease term, the Improvements are
totally or partially destroyed from a risk
covered by the insurance described in paragraph
10(c) of these GENERAL CONDITIONS, this Lease
shall not terminate and LESSEE shall promptly and
diligently restore or cause to be restored the
Improvements to substantially the same condition
as they were in immediately before such
destruction, whether or not the insurance
proceeds are sufficient to cover the actual cost
of restoration; provided, however, that: (i) if
such destruction occurs during the last ten (10)
years of the term of this Lease, as may be
extended pursuant to Paragraph 7(a) (ii) of the
Lease, LESSEE may elect not to restore the
Premises and to terminate this Lease, and (ii) if
then-existing laws do not permit restoration of
the Improvements to within 95% of the size and
layout existing immediately before such
destruction, then LESSEE may either elect to
restore pursuant to the then-controlling laws and
regulations or LESSEE may elect to terminate this
Lease. If existing laws do not permit the
restoration, LESSEE may elect to terminate this
Lease by giving notice to LESSOR. In the event
this Lease is terminated as to all or any portion
10/21/90 EXHIBIT "B"
1712u/2460/04 Page 5 of 35
of the Premises, LESSOR and LESSEE shall share
any excess insurance proceeds on the basis of
their respective interests in the Improvements
after payment of any outstanding balance due any
leasehold and subleasehold mortgagees. LESSEE' s
election to terminate pursuant to this Paragraph
5(a) shall be made by giving written notice to
LESSOR no later than one hundred twenty (120)
days after the date of the casualty loss.
b. Destruction Due to Risk Not Covered by
Insurance: If, during the Lease term, the
Improvements are totally or partially destroyed
from a risk not covered by the insurance
described in paragraph 10(c) of these GENERAL
CONDITIONS, this Lease shall not terminate except
as expressly provided herein, and LESSEE shall
restore the Improvements to substantially the
same condition they were in immediately before
destruction; provided, however, if such
destruction occurs during the last 10 years of
the term of this Lease as may be extended or the
cost of restoration exceeds twenty percent (20%)
of the replacement value of the Improvements
immediately before their destruction, or if then
existing laws do not permit restoration; LESSEE
may elect not to restore the Premises and to
terminate this Lease, and (ii) if then-existing
laws do not permit restoration of the
Improvements to within 95% of the size and layout
existing immediately before such destruction,
then LESSEE may either elect to restore pursuant
to the then-controlling laws and and regulations,
or LESSEE may elect to terminate this Lease. In
• the event that LESSEE elects to terminate this
Lease he shall give notice of such election to
LESSOR no later than one hundred twenty days
after the date of the casualty loss.
C. No Abatement of Rent: Provided that business
Interruption insurance is available at
commercially reasonable rates to LESSEE in the
insurance market (as referenced in paragraph
10(d) and (e) below) , there shall be no abatement
or reduction of rent in the event of a total or
partial destruction of the Improvements. If,
however, LESSEE suffers such a casualty loss
during a period for which business interruption
insurance is not so available, and this Lease or
portion thereof is not terminated pursuant to
subparagraphs (a) or (b) of this Paragraph 5, the
Percentage Rent shall be abated only as to that
portion of the Imprcvements rendered not
20/21/90 EXHIBIT "B"
1712u/2460/04 Page 6 of 35
reasonably usable by the casualty loss in an
amount equal to the Percentage Rent generated by
that portion of the Improvements during the same
period in the previous year or, if such figures
are not available, in an amount determined by
dividing the square footage of gross leasable
area rendered unusable by the casualty loss by
the total gross leasable area on the Premises
immediately prior to the casualty loss and
multiplying the remainder by the Percentage Rent
payable during the same time period in the
previous year. The period of abatement shall run
from the date of the casualty loss to the earlier
of (i) the date on which LESSEE completes
restoration of the Premises (or portion thereof)
or (ii) the date on which LESSEE, exercising
reasonable diligence, should complete restoration
of the Premises (or portion thereof) .
6. MAINTENANCE:
a. LESSEE' s Obligation: LESSEE, at its cost,
shall keep and maintain the Premises and all
improvements of any kind which may be
constructed, installed or made thereon (including
the public rest rooms designated in the Scope of
Development) in good condition and in substantial
repair. LESSEE expressly agrees to maintain the
Premises (including the designated public rest
rooms) in a safe, clean, wholesome and sanitary
condition and in compliance with all applicable
laws. LESSEE further agrees to provide approved
containers for trash and garbage and keep the
Premises free and clear from accumulations of
rubbish and litter. LESSOR shall have the right
to enter upon and inspect the Premises at any
• time for cleanliness and safety. Such entry and
inspection of exterior areas may occur at any
time without notice to LESSEE; entry and
inspection of interior areas may occur during
normal business hours, with a minimum of
seventy-two (72) hours prior notice (except in
the event of emergency) , and shall be conducted
in a manner so as to minimize interference with
the operation of businesses on the Premises to
the maximum extent feasible consistent with the
legitimate purpose of the inspection. LESSEE
shall designate in writing to LESSOR a
representative who shall be responsible for
day-to-day operation.
10/21/90 EXHIBIT "B"
1712u/2460/04 'Page 7 of 35
b. LESSOR' s Right to Repair: If LESSEE fails to
maintain the Premises or make repairs or
replacements as required herein, LESSOR may
notify LESSEE in writing of said failure. Should
LESSEE fail to correct the situation or commence
to correct the situation within a reasonable time
thereafter, but in no event less than thirty (30)
days (except in those instances where a shorter
time is necessary to protect the public health,
safety, and welfare), and thereafter diligently
proceed to complete such correction, LESSOR may,
but shall not be required to, enter onto the
Premises to make the necessary correction, and in
such event the reasonable cost thereof, including
but not limited to the cost of labor, materials,
equipment, and administration, shall be deemed
additional rent to be paid by LESSEE within
thirty (30) days of receipt of a statement of
said cost from LESSOR. LESSOR may, at its
option, choose other remedies available herein,
or by law.
7. GROSS SALES RECEIPTS:
(a) Except as specifically provided in subparagraph
(b) below, the term "Gross Sales Receipts" as
used herein shall mean the total of all sales
produced on the Premises (or any portion thereof)
and received by any operator and/or sublessee in
the course of their business, including without
limitation, sales of food, beverage or concession
items and the charges for the use or rental of
portions of the Premises or equipment or
supplies, vending machines sales and the sales
price of any furnishings, fixtures and equipment
or capital assets sold which are not replaced.
(b) The following shall be excluded from the
definition of "Gross Sales Receipts" : meals
furnished to employees without charge; tips
retained by employees or service charges in lieu
of tips passed on to employees; bad debts but to
the extent they are subsequently collected the
net recovery shall be added to Gross Sales
Receipts; receipts from customers that are later
rebated and/or refunded; income from parking
services operation; interest or service or other
carrying charges for sales on credit; the amount
of all sales and excise tax receipts which are
accounted for and paid by LESSEE to any
governmental agency; the sales price of any
furnishings, fixtures, and equipment or capital
assets sold by LESSEE; and investment income not
10/21/90 EXHIBIT "B"
1712u/2450/04 'Page 8 of 35
associated with the normal course of operation of
LESSEE' s business on the Premises.
S. RENT PAYMENT PROCEDURE AND ACCOUNTING:
a. Accounting Year: The phrase "accounting year" as
used herein shall be a period of twelve (12)
consecutive full calendar months commencing on
January 1. Any payment period or period which is
less than twelve full calendar months is a
partial accounting year.
b. Payment of Rentals:
(2) Percentage Rent and Parking Payment:
Beginning with the date which is the first
anniversary of the Commencement Date, and
within thirty (30) days after the end of
each calendar quarter during the remainder
of the Lease Term, LESSEE shall pay to
LESSOR an amount determined in accordance
with Section 7(a) and 7(b) of the Lease for
such period. At the end of each accounting
year during the Lease term, promptly after
LESSEE has submitted to LESSOR LESSEE' s
sales tax receipt reports, as provided in
paragraph 9 below, any necessary adjustment
to the Percentage Rent for such year shall
be made in the manner specified in
subparagraph (3) of this Paragraph 8(b) .
(2) Application of Rent Credit: During the
period of tirse that LESSEE' S rent credit is
being applied, in accordance with Paragraphs
7(b) and 7(d) of the Lease, LESSEE shall
provide to LESSOR, at the times that rental
payments would otherwise be due hereunder, a
written statement or statements itemizing
(i) the amount of Percentage Rent otherwise
due at such time, (ii) the amount of the
Rent Credit being applied against such
rental obligation, and (iii) either the
amount of the Rent Payment required to be
made at that time or the remaining balance
of the unapplied Rent Credit (including
accrued interest through that date) .
(3) Place of Payment and Filing: Rent payments,
Parking Payments and rent credit statements
shall be delivered to and accounting
statements shall be filed with the Executive
Director of LESSOR, 2000 Main Street,
Huntington Beach, California 92648. The
10/21/90 EXHIBIT "B"
1712u/2460/04 Page 9 of 35
�l
designated place of payment and filing may
be changed at any time by LESSOR upon
written notice to LESSEE. Rent payments may
be paid by check made payable to The
Redevelopment Agency of the City of
Huntington Beach.
A duplicate copy of all statements and
reports herein required shall also be filed
with the Finance Director of the City of
Huntington Beach.
9. RECORDS, BOOKS OF ACCOUNT, ACCOUNTING STATEMENTS, AND
AUDITS: LESSEE shall keep or cause to be kept at the Premises,
or at LESSEE' s principal place of business in Southern
California, in accordance with generally accepted accounting
principles, full and accurate books of account, records, cash
receipts and other pertinent data showing the Gross Sales
Receipts produced by businesses operating on the Premises.
Such books of account, records, cash receipts and other
pertinent data shall be kept for a period of .four (4) years
after the end of each accounting year and partial accounting
year. The receipt by LESSOR of any statement, or any payment
of percentage rent for any period, shall not bind LESSOR as to
the correctness of the statement or the payment. Subject to
the limitations set forth in the next paragraph LESSOR shall be
entitled at any time within four (4) years after the end of an
accounting year or partial accounting year, upon reasonable
notice to LESSEE but in no event less than 72 hours, to inspect
and examine all LESSEE.' s books of account, records, cash
receipts and other pertinent data relating to such accounting
year or partial accounting year, during normal business hours,
so LESSOR can ascertain the amount of Percentage Rent due
LESSOR. In no event shall LESSOR' s inspection exceed ninety
days: LESSEE shall cooperate fully with LESSOR in making the
inspection.
Within ninety (90) days after the end of each accounting
year or partial accounting year, LESSEE shall at its own
expense submit to LESSOR financial statements including a
balance sheet and income statement prepared by an independent
certified public accountant, which shall specifically include
with respect to the preceding accounting year or partial
accounting year: (i) the amount of Gross Sales Receipts for
each business operating on the Premises; and (ii) the total
Percentage Rent, if any, paid by LESSEE in and for such year.
LESSOR shall also be entitled, no more than once for each
accounting year, to audit LESSEE' s and the Sublessee' s, who
operate businesses on the Premises, books of account, records,
cash receipts and other pertinent data to determine the Gross
Sales Receipts for the entire Premises. The audit shall be
limited to the determination of Gross Sales Receipts and shall
be conducted during usual business hours at the Premises or at
10/21/90 EXHIBIT "B"
1712u/2450/04 Page 10 of 35
the office at which LESSEE (or its Subleasee) maintain(s) its
records within a ninety (90) day period.. If the audit shows
that there is a deficiency in the payment of Percentage Rent,
the deficiency shall come immediately due and payable as
additional rent or as an offset to any rent credit as defined
in Section 7(d) of the Lease then outstanding. The cost of the
audit shall be paid by LESSOR unless the audit shows that
LESSEE understated Gross Sales Receipts by more than five
percent (5%) , in which case LESSEE shall pay all LESSOR' s cost
of the audit. If within six (6) months after receiving the
results of any audited financial statements by LESSEE' s
certified public accountant with respect to any accounting year
or partial accounting year, LESSOR does not deliver a written
notice to LESSEE disputing LESSEE' s calculation or payment of
Percentage Rent for said year, LESSOR shall be conclusively
deemed to have accepted LESSEE's calculation or payment, and
thereafter LESSOR shall neither reinspect or reaudit LESSEE's
records nor demand payment of additional Percentage Rent for
said year. If within thirty (30) days after receiving the
results of its own audit with respect to any accounting year or
partial accounting year, LESSOR does not deliver a written
notice to LESSEE disputing LESSEE'S calculation or payment of
Percentage Rent for said year, LESSOR shall be conclusively
deemed to have accepted LESSEE' s calculation or payment, and
thereafter LESSOR shall neither reinspect or reaudit LESSEE'S
records nor demand payment of additional Percentage Rent for
said year.
10. INSURANCE: LESSEE, at its cost, shall maintain or
cause to be maintained during the entire Lease term the
following policies of insurance:
a. Public liability and property damage insurance
with combined single limits of at least
• $5,000,000, part of which may be provided in the
form of umbrella coverage. LESSOR and City shall
be named as an additional insured and the policy
or policies shall contain cross-liability
endorsements. Coverage shall be primary and not
contributing with any coverage maintained by
LESSOR. The policy shall contain a waiver of
subrogation in favor of LESSOR and City. Not
more frequently than each two (2) years, if, in
the reasonable opinion of LESSOR or of an
insurance broker retained by LESSOR, the amount
of public liability and property damage insurance
coverage at that time is not adequate, LESSEE
shall increase the insurance coverage as required
by either LESSOR or LESSOR' s insurance broker;
provided, that the percentage increase in
coverage shall not be required to exceed the
percentage increase in the All Urban Consumer
Price Index for the Los Angeles-Long
10/21/90 EXHIBIT "B"
1712u/2460/04 Page 11 of 35
`.J1
Beach-Anaheim Area (All Items) (1982-84=100) (the
"Index" ) since the last requested adjustment (or,
in the case of the first requested adjustment,
the percentage increase in the Index since the
commencement of the Lease term) . The insurance
to be provided by LESSEE may provide for
deductibles or self-insured retention up to
Twenty-Five Thousand Dollars ($25,000), adjusted
in accordance with the Index from and after the
Commencement Date, or for amounts in excess of
Twenty-Five Thousand Dollars ($25,000) , adjusted
in accordance with the Index as shall be
acceptable to the Executive Director. In the
event such insurance does provide for deductibles
or self-insured retention, LESSEE agrees that it
will fully protect LESSOR, . its boards, officers,
and employees in the same manner as these
interests would have been protected had the
policy or policies not contained the deductible
or retention provisions.
b. LESSEE' s indemnification obligations under
paragraph 11 shall extend to damage resulting
from risks insurable by garage keepers' legal
liability insurance. The public liability
insurance required in paragraph 10.a. above
shall include garage keepers' legal liability
coverage.
C. A policy of standard fire and extended coverage
insurance to the extent of at least 907, of the
replacement value of the Improvements, Trade
Equipment, and LE$SEE' s personal property, on or
about the Premises. Subject to paragraph 5 of
these GENERAL CONDITIONS, the proceeds from any
such policy shall be used by LESSEE for the
restoration or replacement of the Improvements,
Trade Equipment, and personal property.
d. Business interruption insurance insuring that the
Percentage Rent due and payable to LESSOR (based
on the previous twelve month figures) will be
paid to LESSOR for a period of up to twelve (12)
months if the Premises, or portion thereof, are
destroyed or rendered inaccessible by a casualty
loss or other occurrence normally covered by a
business interruption insurance policy.
e. Notwithstanding any other provision of this
paragraph 10 to the contrary, LESSEE' s
obligations pursuant to parts a, b, c and d of
this paragraph 10 shall be conditioned upon the
reasonable availability of such coverages, terms,
and conditions in the insurance market.
10/22/90 EXHIBIT "B"
1712u/2460/04 'Page 12 of 35
The foregoing insurance policies shall contain endorsements
requiring thirty (30) days written notice from the insurance
company to both parties before cancellation or change in
coverage, scope, or amount of any policy. Each policy or a
certificate of the policy together with evidence of payment of
premium shall be deposited with LESSOR at the commencement of
the Lease term and on renewal of each policy not less than
twenty (20) days before the expiration of the term of the
policy.
The procuring of such required policy or policies of
insurance shall not be construed to limit LESSEE's liability
hereunder nor to fulfill the indemnification provisions and
requirements of paragraph 11. Notwithstanding said policy or
policies of insurance, LESSEE after exhausting all available
insurance proceeds shall be obligated for the full and total
amount of any damage, injury or loss caused by LESSEE' s
negligence or that of its agents, sublessees, concessionaires,
licensees, and their agents and employees in connection with
this Lease or with the use and occupancy of the Premises.
11. INDEM11TY DEFENSE HOLD HARMLESS: LESSEE hereby
agrees to protect, defend, indemnify and hold and save harmless
LESSOR and/or City, its officers, and employees against any and
all liability, claims, judgments, costs and demands, however
caused, including those resulting from death or injury to
LESSEE' s employees and damage to LESSEE' s property, arising
directly or indirectly out of the obligations or operations
herein undertaken by LESSEE, including those arising from the
passive concurrent negligence of LESSOR and/or City, but save
and except those which arise out of the active concurrent
negligence, sole negligence, active concurrent willful
misconduct, or active concurrent or sole willful misconduct of
LESSOR and/or City. LESSEE will conduct all defense at its
sole' cost and expense. LESSOR and/or City shall be reimbursed
by LESSEE for all costs or attorney' s fees incurred by LESSOR
and/or City in enforcing this obligation.
12. TAXES AND ASSESSMENTS: LESSEE recognizes and
understands that this Lease may create a possessory interest
subject to property taxation and that LESSEE may be subject to
the payment of property taxes levied on such interest. LESSEE
shall pay or cause to be paid all taxes and assessments levied
upon the Premises based on the assessed value of the entire
property and not merely the assessed value of LESSEE' s
leasehold interest. LESSEE shall also pay or cause to be paid
any taxes and assessments which may be levied upon any
fixtures, equipment, or other property installed, constructed
or located on the Premises. LESSEE may, at any time, in good -
faith and upon reasonable grounds, dispute or contest the
validity of the whole or any part of any such taxes or
assessments, and during the period of any such dispute shall
not be deemed in default hereof so long as LESSEE does not
subject the Premises to foreclosure or sale and promptly pays
10/21/90 EXHIBIT "B"
1712u/2460/04 Page 13 of 35
�1
the amount finally determined to be due. Notwithstanding the
above, both parties recognize that LESSEE should not be
assessed a possessory interest tax for that portion of the
Premises which is the public parking which is in excess of the
code requirement for the operation of the businesses on the
Premises and Agency agrees to cooperate with LESSEE in the
event of a challenge to such an assessment.
13 . UNLAWFUL USE: LESSEE agrees that no improvements
shall be erected, placed upon, operated, nor maintained upon
the Premises, nor any business conducted or carried on therein
or therefrom, in violation of the terms of this Lease, or of
any regulation, order, law, statute, or ordinance of a
governmental agency having jurisdiction.
14. ABANDONED PERSONAL PROPERTY: If LESSEE abandons the
Premises or is dispossessed thereof by process of law or
otherwise, title to any personal property belonging to LESSEE
and left on the Premises forty-five (45) days after such
abandonment or dispossession shall be deemed to have been
transferred to LESSOR. LESSOR shall have the right to remove
and to dispose of such property without liability therefor to
LESSEE or to any person claiming under LESSEE, and shall have
no need to account therefor. LESSEE hereby designates LESSOR' s
Executive Director as its attorney-in-fact to execute and
deliver such documents as may be reasonably required to dispose
of such abandoned property and transfer title thereto.
25. HOLDING OVER: In the event LESSEE shall continue in
possession of the Premises after the expiration of the Lease
term, such possession shall not be considered a renewal of this
Lease but a tenancy from month to month and shall be governed
by the conditions and covenants contained in this Lease.
26. ASSIGNING, SUBLETTING, AND ENCUMBERING:
A. Assignments
The qualifications and identity of LESSEE are of
particular concern to LESSOR. It is because of those
qualifications and identity that LESSOR has entered into this
Lease with LESSEE. Accordingly, LESSEE shall not, except as
permitted in this paragraph 1.6, assign all or any part of this
Lease or any of LESSEE' s rights hereunder without the prior
written approval of LESSOR. LESSOR agrees that it will not
unreasonably withhold or condition such approval. In this
regard, LESSOR agrees that in the event of a request by LESSEE
to assign LESSEE' s interest in the Lease or the Premises,
LESSOR shall grant such approval after issuance of certificate
of completion provided (i) such assignment is made to a
responsible third party who will undertake LESSEE' s
responsibilities under this Lease to use the Premises, or
portion thereof, in accordance with this Lease; (ii) such third
20/22/90 EXHIBIT "B"
1712u/2460/04 Page 14 of 35
party shall demonstrate sufficient qualifications and
experience to assure the development and operation of the
Improvements thereof, in accordance with this Lease; (iii) such
third party shall demonstrate sufficient financial resources or
commitments equal to or greater than Five Million Dollars
($5,000,000.00) to assure operation of the project, or portion
thereof, in accordance with this Lease; notwithstanding the
foregoing, LESSOR further agrees not to unreasonably disapprove
an assignment to a financially responsible lender which
assignment consists of a mortgage, deed of trust, sale and
lease back, or other form of conveyance for financing, provided
that prior to LESSOR' s issuance of its final Certificate of
Completion, LESSOR shall have no obligation to approve such an
assignment unless LESSOR determines in its reasonable
discretion that such assignment is for the purpose of securing
loans of funds to be used solely for financing the direct and
indirect costs, including without limitation financing costs,
interest, and commissions, of planning, designing,
constructing, developing, leasing, marketing and operating the
improvements to be constructed by LESSEE and/or a Sublessee
with respect to the Premises. Prior to issuance of Certificate
of Completion, approvals of assignments of the Lease shall be
at the sole discretion of the LESSOR with the exception of
approval for transfers to secure financing which shall be
reasonably approved by LESSOR. Approvals by LESSOR under this
Paragraph for assignments for financing purposes shall be made
by LESSOR' s Executive Director.
Notwithstanding any other provision of this Lease
to the contrary, LESSOR approval of an assignment of this Lease
or any interest herein shall not be required in connection with
any of the following:
(i) Any transfer to any entity or entities in
which LESSEE retains a minimum of fifty-one
percent (51%) of the ownership or beneficial
interest and retain management control.
(ii) Transfers resulting from the death or mental
or physical incapacity of an individual.
(III) Transfers or assignments in trust for the
benefit of a spouse, children,
grandchildren, or other family members.
(iv) A transfer of LESSEE' s interest in the
Premises at fcreclosure (or a transfer of
any Sublessee' s interest in the portion of
the Premises leased to such sublessee at
foreclosure or a conveyance thereof in lieu
of a foreclosure) pursuant to a foreclosure
thereof by a lender approved by LESSOR in
accordance with this Paragraph 16.A
Exhibit "B. "
10/21/90 EXHIBIT "B"
1712u/2460/04 'Page 15 of 35
(v) A sale or transfer of some or all of
LESSEE'S ,interest in the Premises or a
transfer of any Sublessee' s interest in the
portion of the Premises leased to such
sublessee at foreclosure to a lender
approved by LESSOR in accordance with this
Paragraph 16.A of Exhibit "B. "
(vi) The conveyance or dedication of any portion
of the Premises to the City or other
appropriate governmental agency, or the
granting of permits to facilitate the
development of the Premises.
(vii) A transfer of stock resulting from or in
connection with a reorganization as
contemplated by the provisions of the
Internal Revenue Code of 1954, as amended or
otherwise, in which the ownership interests
of a corporation are assigned directly or by
operation of law to a person or persons,
firm or corporation which acquires the
control of the voting capital stock of such
corporation or all or substantially all of
the assets of such corporation.
(viii) A transfer of stock in a publicly held
corporation or the transfer of the
beneficial interest in any publicly held
partnership or real estate investment trust.
(ix) Equipment financing pursuant to
Paragraph 15.E of these General Conditions.
• LESSEE shall deliver written notice to LESSOR
requesting approval of any assignment requiring LESSOR approval
hereunder. Such notice shall be accompanied by sufficient
evidence regarding the proposed assignee's qualifications and
experience and its financial commitments and resources to
enable LESSOR to evaluate the proposed assignee pursuant to the
criteria set forth under the first paragraph of this
Paragraph 16A.
Within thirty (30) days after the receipt of
LESSEE'S written notice requesting LESSOR approval of an
assignment, LESSOR shall respond in writing by stating what
further information, if any, LESSOR reasonably requires in
order to determine whether or not to approve the requested
assignment. Upon receipt of such a timely response, LESSEE
shall promptly furnish to LESSOR such further information as
may be reasonably requested.
10/21/90 EXHIBIT "B"
1712u/2460/04 Page 16 of 35
Once LESSEE' S request for approval of an
assignment has been accepted as complete, LESSOR shall not be
entitled to demand additional information or to disapprove the
assignment on the basis that LESSEE has not furnished adequate
or complete information.
LESSOR' s Executive Director shall approve or
disapprove any requested assignment for financing purposes
within fifteen (15) days after LESSEE'S request therefor is
accepted as complete. Any disapproval shall be in writing and
shall specify the reasons for the disapproval and, if
applicable, the conditions required to be satisfied by LESSEE
in order to obtain approval.
LESSEE shall compensate LESSOR for its actual
reasonable expenses (not including personnel or overhead
expenses) incurred in investigating a proposed assignee' s
qualifications as a permitted assignee hereunder.
No assignment of LESSEE'S obligations with
respect to the Premises, whether or not LESSOR approval is
required therefor (but specifically excluding assignments for
financing purposes, and those types of assignments identified
in subparagraphs (iv) , (v) , and (vi) , (vii) , and (ix) ) , shall
be effective unless and until the proposed assignee executes
and delivers to LESSOR an agreement in form reasonably
satisfactory to LESSOR'S attorney assuming the obligations of
LESSEE which have been assigned. Thereafter, the assignor
shall remain responsible to LESSOR for performance of the
obligations assumed by the assignee unless LESSOR releases the
assignor in writing (said release shall not be unreasonably
conditioned or withheld) or unless LESSOR has approved the
assignee on the basis of the criteria set forth under (i) ,
(ii) , and (iii) of the first paragraph of this Paragraph 16.A,
in either of which events the assignor shall be released from,
but only from, those obligations arising subsequent to the
effective date of the assignment.
No consent or approval by LESSOR of any
assignment requiring LESSOR' s approval shall constitute a
consent or approval of any subsequent assignment requiring
LESSOR' s approval pursuant to the provisions of this paragraph.
B. Sublettin
LESSOR'S Executive Director shall have the right
to approve all subleases on the Premises with respect solely to
the proposed use and operator and to ensure the following: (i)
that, subject to temporary interruptions of business due to
circumstances beyond the tenant' s reasonable control, and
occurrences such as casualty losses and periods of
reconstruction and alteration of improvements, and the seasonal
nature of beach related concession businesses, such tenants
10/21/90 EXHIBIT "B"
1712u/2460/04 Page 17 of 35
shall continuously use or cause to be used the Premises and
portions thereof for the uses specified in Paragraph 5 of the
Lease and continuously merchandise the Premises or portions
thereof during all usual business hours and on all such days as
comparable businesses of like nature in the area are open for
business and shall make available verifiable records of gross
sales; (ii) if the Improvements on the Premises are partially
destroyed or condemned and such tenant' s sublease remains in
force, the tenant shall continue or cause to be continued
operation of its business at the Premises to the extent
reasonably practical from the standpoint of good business
judgment during any period of reconstruction; (iii) the tenant
shall exercise reasonable diligence to operate or cause to be
optrated its business on the Premises or portion thereof in a
manner that will produce the highest volume of gross receipts
reported to LESSEE consistent with competitive pricing and
prudent business practices; (iv) with respect to each tenant
who sells alcoholic beverages for on Premises consumption, such
tenant shall maintain public liability and property damage
insurance with dram shop coverage; (v) the non-discrimination
provisions set forth in paragraph 29 below; and (vi) the tenant
shall attorn to LESSOR in the event of any termination of this
Lease, and attorn to any successor or assignee of LESSEE in
accordance with Paragraph 33.B below. LESSEE covenants to
LESSOR to use reasonable diligence to enforce the
aforementioned provisions of subleases and other agreements.
LESSEE further covenants to use reasonable diligence to
sublease the Premises to tenants promptly and in such a manner
as to maximize Gross Sales Receipts, consistent with market
conditions, the mutual desire of LESSOR and LESSEE to encourage
a proper tenant mix, and prudent business practices.
C. Assignments for Financing; Lender Protection
• Subject to obtaining LESSOR' s approval, and the
limitation on the maximum amount of subordination as specified
in paragraph 7(c) of this Lease, LESSEE may transfer and
assign this Lease and the leasehold interest created thereby
("Leasehold Estate") to a lender as security for the repayment
of a loan, in accordance with Paragraph 16.A above. The term
"lender" as used herein shall mean the beneficiary, mortgagor,
secured party, or other holder of a promissory note or other
written obligation which is secured by any deed of trust,
mortgage, or other written security agreement affecting the
Leasehold Estate ("Leasehold Mortgage") . After approval by
LESSOR, LESSEE may perform any and all acts and execute any and
all instruments necessary or proper to consummate any such loan
transaction and perfect the security therefore to be given the
lender on the security of the Leasehold Estate.
With respect to any lender who shall have
delivered to LESSOR a written notice which shall state the
name, address and a general description of the type of lien it
10/21/90 EXHIBIT "B"
1712u/2460/04 'Page 18 of 35
holds on the Leasehold Estate, the following provisions shall
apply:
a. LESSOR shall not agree to any mutual
termination nor accept any surrender of this
Lease, nor shall LESSOR consent to any
amendment or modification of this Lease
which could be reasonably construed to have
an impact on the lender' s Leasehold Mortgage
without the prior written consent of the
lender.
b. Notwithstanding any default by LESSEE in the
performance or observance of any agreement,
covenant or condition of this Lease on the
part of LESSEE to be performed or observed,
LESSOR shall have no right to terminate this
Lease unless a default of this Lease shall
have occurred and be continuing, LESSOR
shall have given the lender written notice
of such default, and the lender shall have
failed to remedy such default or acquire
LESSEE' s estate created hereby or commence
foreclosure or other appropriate proceedings
in the nature thereof, all as set forth in,
and within the times specified by the
provisions of this Lease and its
attachments, as the same may be amended from
time to time.
C. Lender shall have the right, but not the
obligation, at any time prior to termination
of this Lease and without payment of any
penalty, to pay all of the rents due
hereunder, to effect any insurance, to pay
any taxes and assessments, to make any
repairs and improvements, to do any other
act or thing required of LESSEE hereunder,
and to do any act or thing which may be
necessary and proper to be done in the
performance and observance of the
agreements, covenants and conditions hereof
.,to prevent termination of this Lease. All
payments so made and all things so done and
performed by the Lender shall be as
effective to prevent a termination of this
Lease as the sane would have been if made,
done and performed by LESSEE instead of the
Lender.
d. Should any default under this Lease occur,
the lender shall have sixty (60) days after
receipt of notice from LESSOR setting forth
10/21/90 EXHIBIT "B"
1712u/2460/04 'Page 19 of 35
the nature of such default, and, if the
default is such that possession to the
Premises may be reasonably necessary to
remedy the default, a reasonable time after
the expiration of such sixty (60) day period
within which to remedy such default,
provided that (A) the lender shall have
fully cured any default in the payment of
any monetary obligations of LESSEE under
this Lease within such sixty (60) day period
and shall continue to pay currently such
monetary obligations as and when the same
are due and (B) the lender shall have
acquired LESSEE' s estate in the Premises
created hereby or commenced foreclosure or
other appropriate proceedings in the nature
thereof within such period, or prior
thereto, and is diligently prosecuting any
such proceedings. All rights of LESSOR to
terminate this Lease as the result of the
occurrence of any such default shall be
subject to, and conditioned upon, LESSOR
having first given the lender written notice
of such default and the lender having failed
to remedy such default or acquire LESSEE' s
estate in the Premises created hereby or
commence foreclosure or other appropriate
proceedings in the nature thereof as set
forth in and within the tiries specified by
this subparagraph (d) .
e. Any default under this Lease which in the
nature thereof cannot be remedied by the
lender shall be deemed to be remedied if (A)
• within sixty (60) days after receiving
written notice from LESSOR setting forth the
nature of such default,or prior thereto, the
lender shall have acquired LESSEE' s estate
in the Premises created hereby or shall have
commenced foreclosure or other appropriate
proceedings in the nature thereof to acquire
said estate, (B) the lender shall diligently
prosecute any such proceedings to
completion, (C) the lender shall have fully
cured any default in the payment of any .
monetary obligations of LESSEE hereunder
which do not require possession of the
Premises within such sixty (60) day period
and shall thereafter continue to faithfully
perform all such monetary obligations which
do not require possession of the Premises,
and (D) after gaining possession of the
Premises the lender performs all other
10/21/90 EXHIBIT "B"
1712u/2460/04 Page 20 of 35
obligations of LESSEE hereunder as and when
the same are due.
In addition to the rights set forth in
this subparagraph (e) , the lender shall have
the option to be exercised by written notice
to LESSOR given within the aforesaid sixty
(60) day period, to obtain a new lease of
the Premises upon the following terms and
conditions:
(i) Such new Lease shall be
effective as of the date of the termination
of this Lease and shall be for the remainder
of the term of this Lease at the same rental
and with the same terms, covenants and
conditions as are set forth herein.
(ii) In addition to paying all
current rent under the new Lease, the lender
shall pay all unpaid rental (after deducting
any income LESSOR may have received from the
Premises during such period) due pursuant to
Paragraph B of these GENERAL CONDITIONS
which accrued on or after the date which is
thirty (30) days prior to the date on which
the lender first received written
notification of the default by LESSOR and
the lender cures all defaults under this
Lease that reasonably can be cured by the
lender.
In lieu *-of executing a new lease in its
own name, the lender shall have the right to
designate a nominee which shall become a
lessee under the new lease so long as such
assignee or nominee is qualified consistent
with the requirements of this Lease, its
attachments and amendments.
f. If the lender is prohibited by any process
or injunction issued by any court or by
reason of any action by any court having
jurisdiction of any bankruptcy or insolvency
proceeding involving LESSEE from commencing
or prosecuting foreclosure or other
appropriate proceedings in the nature
thereof, the times specified in
subparagraphs (d) and (e) above for
commencing or prosecuting such foreclosure
or other proceedings shall be extended for
the period of such prohibition plus an
additional period of sixty (60) days
20/21/90 EXHIBIT "B"
1712u/2460/04 'Page 21 of 35
thereafter; provided that the lender shall
have fully cured any default in the payment
of any monetary obligations of LESSEE under
this Lease prior to the end of such sixty
(60) day pericd and thereafter shall
continue to pay currently such monetary
obligations as and when the same fall due.
g. LESSOR shall mail or deliver to the lender
duplicate copies of any and all notices
which LESSOR may from time to time give to
or serve upon LESSEE pursuant to the
provisions of this Lease, and such copy
shall be mailed or delivered to the lender
simultaneously with the mailing or delivery
of the same to LESSEE: No notice by LESSOR
to LESSEE hereunder shall be deemed to have
been given insofar as the lender' s rights
under this Paragraph are concerned unless
and until a copy thereof shall have been
mailed or delivered to the lender as herein
set forth.
h. Foreclosure of a Leasehold Mortgage, or any
sale thereunder,whether by judicial
proceedings or by virtue of any power
contained in the Leasehold Mortgage, or any
conveyance of the estate in the Premises
created hereby from LESSEE to the lender
through, or in lieu of, foreclosure or other
appropriate proceedings in the nature
thereof, shall not require the consent of
LESSOR or constitute a breach of any
provision of or a default under this Lease,
and upon such foreclosure, sale or
conveyance, LESSOR shall recognize the
lender,or any other foreclosure sale
purchaser, as lessee hereunder. In the
event lender becomes lessee under this
Lease, lender shall assume the obligations
of LESSEE under this Lease or such new lease
only for the period of time that lender
remains lessee thereunder, and LESSEE shall
be released from any liability therefor,
provided prior defaults by LESSEE have
either been cured or waived. The lender
shall be subject only to those restrictions
applicable to LESSEE as set forth in this
Paragraph. In the event that, consistent
with this Paragraph, the lender subsequently
assigns or transfers its interest under this
Lease after acquiring the same by
foreclosure or deed in lieu of foreclosure,
10/21/90 EXHIBIT "B"
1712u/2460/04 Page 22 of 35
V
1,J
and in connection with any such assignment
or transfer the lender takes back a mortgage
or deed of trust encumbering such leasehold
interest to secure a portion of the purchase
price given to the lender for such
assignment or transfer, then such mortgage
or deed of trust shall be considered a
Leasehold Mortgage as contemplated under
this Paragraph and the lender shall be
entitled to receive the benefit of and
enforce the provisions of this Paragraph and
any other provisions of this Lease intended
for the benefit of the holder of a Leasehold
Mortgage.
In the event the Lender requires any
modifications to the provisions of this Paragraph in order to
secure its loan, LESSOR agrees not to unreasonably withhold
consent to such modifications so long as such modifications do
not reduce the amount of rent or other sums payable to LESSOR
hereunder, or do not otherwise have a materially adverse impact
on any of LESSOR' s interests, rights and remedies hereunder.
D. Sublessees'- Right to Encumber the Sublease
LESSOR recognizes each sublessee' s right to mortgage
or encumber the sublease and/or the subleasehold estate held by
such sublessee in accordance with and subject to the same terms
and conditions as are set forth in this Paragraph 16
subparagraph C above with respect to the sub-leasehold estate
only, and in this regard LESSOR will recognize any and all of
the rights of any subleasehold mortgagee as and to the extent
set forth therein for the leasehold estate.
E. Equipment Leasing
Some of the equipment, fixtures and furniture
(collectively designated herein as "Trade Equipment") installed
and used by LESSEE and sublessees on the Premises may or will
be directly financed by a third-party lender or otherwise be
subjected to a security interest or owned by an equipment
rental company or vendor ("Equipment LESSOR" ) and leased to
LESSEE or such sublessee either directly from the Equipment
LESSOR or by way of equipment sublease or assignment of
equipment lease from an equipment sublessor ("Equipment
Sublessor") , and LESSOR hereby agrees to recognize the rights
therein of any such third-party lender or Equipment LESSOR or
. Sublessor (or their respective assignees) . LESSOR agrees that
all such items of financed or leased Trade Equipment installed
on the Premises shall be and remain personal property and not
real property, notwithstanding the fact that the same may be
nailed or screwed or otherwise attached or affixed to the
Premises or any of LESSEE' s or any sublessee' s buildings or
10/21/90 EXHIBIT "B"
1712u/2460/04 'Page 23 of 35
improvements, and further agrees to recognize the rights
therein of any such Equipment LESSOR or Sublessor (or their
respective assignees) . LESSEE and any sublessee shall have the
right at any time, whether or not LESSEE is in default
hereunder or such sublessee is in default under its sublease,
to remove or replace any or all Trade Equipment, whether or not
financed or leased, regardless of whether attached or affixed
to the Premises, and to the extent of their respective
interests therein such third-party lender or Equipment LESSOR
or Sublessor (or their respective assignees) shall also have
such a right. Any damage to the Premises caused by such a
removal shall be repaired by and at the expense of LESSEE or
other party causing such removal. LESSOR waives the right of
distraint and agrees that it does not have and shall not assert
any right, lien, or claim in or to the financed or leased Trade
Equipment and agrees that any third-party lender or Equipment
LESSOR or Sublessor (or their respective assignees) may remove
and dispose of the same without reference to, and free and
clear of, any demand of LESSOR, and that such disposal or sale
may be made on the Premises.
17. SUCCESSORS IN INTEREST: Unless otherwise provided in
this Lease, the terms, covenants and conditions contained
herein shall apply to and bind the heirs, successors,
executors, administrators, and assigns of all the parties
hereto.
16. LESSEE'S DEFAULT: The occurrence of any of the
following shall constitute a default by LESSEE:
a. Failure to pay rent when due, if the failure
continues for fifteen (15) days after written
notice has been delivered to LESSEE. LESSEE
shall not be excused from its obligation to pay
rent by reason of the inability for any reason to
obtain the full and prompt payment to LESSEE of
all payments due LESSEE by any sublessees or
concessionaires.
b. Failure to perform any of the provisions of this
Lease required to be performed by LESSEE, if the
failure to perform is not cured within thirty
(30) days after written notice has been given to
LESSEE. If the default cannot reasonably be
cured within said thirty (30) days, LESSEE shall
not be deemed to be in default of this Lease if
LESSEE commences to cure the default within the
thirty (30) day period and diligently, and in
good faith, continues to cure the default.
Notices given under this paragraph shall specify the
alleged default and the applicable Lease provision, and shall
demand that LESSEE perform the provisions of the Lease or pay
20/21/90 EXHIBIT "B"
1712u/2460/04 Page 24 of 35
the rent that is in arrears, as the case may be, within the
applicable period of time, or quit the Premises. No such
notice shall be deemed a forfeiture or a termination of this
Lease unless LESSOR so elects in the notice.
19. LESSOR'S REMEDIES: LESSOR shall have the following
remedies if LESSEE commits a default. These remedies are not
exclusive; they are cumulative in addition to any remedies now
or later allowed by law.
LESSOR can continue this Lease in full force and effect,
and the Lease will continue in effect as long as LESSOR does
not terminate LESSEE' s right to possession, and LESSOR shall
have the right to collect rent when due. During the period
LESSEE is in default, LESSOR can enter the Premises subject to
the rights of any subtenants under Paragraph 33 of this
Exhibit "B, " relet them, or any part of them, to third parties
for LESSEE's account; provided, that in such event LESSOR shall
not be excused from any legal obligation it would otherwise
have to act reasonably to mitigate its damages and to exercise
reasonable diligence to relet the Premises of part thereof for
fair market rent. In such event, LESSEE shall be liable
immediately to LESSOR for all reasonable costs LESSOR incurs in
reletting the Premises, if applicable, including, without
limitation, broker' s commissions, reasonable expenses of
remodeling the Premises required by the reletting and supplied
by other landlords under similar circumstances, and like
costs. Reletting can be for a period shorter or longer than
the remaining term of this Lease. LESSEE shall pay to LESSOR
the rent due under this Lease on the dates the rent is due,
(provided LESSOR notifies LESSEE in writing a minimum of thirty
(30) days in advance the amount of Gross Sales Receipts from
which the calculation of rent car. be made) less the rent LESSOR
receives from any reletting. No act by LESSOR allowed by this
paragraph shall terminate this Lease unless LESSOR notifies
LESSEE that LESSOR elects to terminate this Lease. After
LESSEE' s default and for as long as LESSOR does not terminate
LESSEE' s right to possession of the Premises, if LESSEE obtains
LESSOR' s consent, LESSEE shall have the right to assign or
sublet its interests in this Lease, but LESSEE shall not be
released from liability for said default absent a waiver or
release from LESSOR.
No act by LESSOR other than giving notice of such
termination to LESSEE shall terminate this Lease. Acts of
maintenance, efforts to relet the Premises, or the appointment
of a receiver on LESSOR' s initiative to protect LESSOR' s
interests under this Lease shall not constitute a termination
of LESSEE' s right to possession. On termination, LESSOR has
the right to recover from LESSEE:
a. The worth, at the time of the award, of the
unpaid rent that had been earned at the time
of the termination of this Lease;
10/21/90 EXHIBIT "B"
1712u/2460/04 Page 25 of 35
b. The worth, at the time of the award, of the
amount by which the unpaid rent that would
have been earned after the date of
termination of this Lease until the time of
award exceeds the amount of the loss of rent
that LESSEE proves could have been
reasonably avoided;
C. The worth, at the time of the award of the
amount by which the unpaid rent for the
balance of the term after the time of the
award exceeds the amount of the loss of rent
that LESSEE proves could have been
reasonably avoided; and
d. Any other amount and court costs, necessary
to compensate LESSOR for all detriments
proximately caused by LESSEE' s default.
"The worth, at the time of the award, " as used in
subparagraphs (a) and (b above is to be computed by allowing
interest at the rate of 10% per annum. "The worth, at the time
of the award, " as referred to in subparagraph (c) above is to
be computed by discounting the amount at the discount rate of
the Federal Reserve Bank of San Francisco at the time of the
award, plus 1%.
If LESSEE is in default of this Lease and subject to the
rights of any sub-tenants under Paragraph 33 of this
Exhibit "B", LESSOR shall have the right to have a receiver
appointed to collect and conduct LESSEE' s business. Neither
the filing of a petition for the appointment of a receiver nor
the appointment itself shall constitute an election by LESSOR
to terminate this Lease.
LESSOR, at any time after LESSEE con-nits a default, can
cure the default at LESSEE' s cost. If LESSOR at any time, by
reason of LESSEE' s default pays any sum or does any act that
requires the payment of any sum, the sum paid by LESSOR shall
be immediately due from LESSEE to LESSOR at the time the sum is
paid, and if paid at a later date shall bear interest at the
rate of 10% per annum from the date the sum is paid by LESSOR
until LESSOR is reimbursed by LESSEE. The sum, together with
the interest on it, shall be deemed additional rent.
20. LESSOR' S DEFAULT: LESSOR shall be in default of this
Lease if it fails or refuses to perform any provision of this
Lease that it is obligated to perform if the failure to perform
is not cured within thirty (30) days after written notice of
the default has been given by LESSEE to LESSOR. If the default
cannot be reasonably cured within thirty (30) days, LESSOR
shall not be in default of this Lease if LESSOR commences to
cure the default within the thirty (30) day period and
10/21/90 EXHIBIT "B"
1712u/2460/04 'Page 26 of 35
diligently and in good faith continues to cure the default.
LESSEE, at any time after LESSOR commits a default, can cure
the default at LESSOR' s cost. If LESSEE, at any time, by
reason of LESSOR' s default pays any sum or does any act that
requires the payment of any sure, the sum paid by LESSEE shall
be immediately due from LESSOR to LESSEE at the time the sum is
paid, and if paid at a later date shall bear interest at the
rate of 10% per annum from the date the sum is paid by LESSEE
until LESSEE is reimbursed by LESSOR. At LESSEE' s option, such
sum may also be offset against the next installment of rent or
additional rent payable by LESSEE.
21. QUITCLAIM OF LESSEE'S INTERESTS UPON TERMINATION:
Upon termination of this Lease for any reason, including but
not limited to termination because of default by LESSEE, and
subject to the rights of any sub-tenants 'under Paragraph 33 of
this Exhibit "B", LESSEE shall execute, acknowledge and deliver
to LESSOR within thirty (30) days after receipt of written
demand therefor a good and sufficient deed whereby all right,
title and interests of LESSEE in the Premises is quitclaimed to
LESSOR.
22. TOTAL TAKING: If the whole of the Premises, or other
improvements to be made by LESSEE shall be taken by right of
eminent domain or otherwise for any public or quasi-public use,
then, when possession shall be taken thereunder by the
condemnor, or the LESSEE is deprived of its practical use of
the Premises, and other improvements, whichever date is
earlier, this Lease and all rights and obligations of LESSOR
and LESSEE hereunder, -shall terminate as of the date of the
taking and any rent and all other payments required of LESSEE
shall be prorated between the parties as of the date of the
taking.
23. PARTIAL TAKING: In the event of a partial taking, as
a result of which LESSEE reasonably determines that (i) the
remaining portion of the Premises, or other improvements on the
Premises cannot be restored to an economically operable
facility of a comparable kind and quality to the facility
existing prior to the taking with condemnation awards received
by LESSEE, or (ii) the then-existing laws do not permit
restoration of the Improvements to within 95% of the size and
layout existing immediately before such taking, then this Lease
at LESSEE' s option shall terminate as of the time when
possession of the Premises shall be taken by the condemnor or
LESSEE is deprived of its practical use thereof, whichever date
is earlier. LESSEE shall exercise such rights of termination
by giving LESSOR written notice thereof no later than
one-hundred twenty (120) days after the partial taking becomes
effective. If a portion of the Premises or any other
improvements shall be taken by right of eminent domain or
otherwise for any public or quasi-public use and LESSEE
reasonably determines that the remaining portion of the
10/21/90 EXHIBIT "B"
1712u/2460/04 Page 27 of 35
Premises and improvements can be restored by LESSEE to an
economically operable facility of comparable kind and quality
to the facility existing prior to the taking, then this Lease
shall not be affected and LESSEE shall retain the remaining
portion of the Premises. In such event, however, and
notwithstanding Paragraph 5(c) of these GENERAL CONDITIONS,
rent shall be abated with respect to any improvements which are
remaining on the Premises but are not used during a period of
reconstruction or restoration. Rent shall also be prorated in
the manner provided in Paragraph 5(c) above.
24. EMINENT DOMAIN AWARD: If there is a taking by right
of eminent domain, the rights and obligations of the parties
with reference to the award and the distribution thereof shall
be determined in accordance with the provisions of this
Paragraph. The award shall belong to and be paid to LESSOR,
except that LESSEE shall first receive from the award the
following:
a. A sum attributable to the value of LESSEE' s
leasehold estate including improvements,
trade fixtures and personal property that
are taken which sum shall be first applied
toward any outstanding balance due LESSEE' s
lender;
b. A sum attributable to severance damages to
be used solely for the restoration of the
other improvements upon the Premises; and
C. An award (if any) specifically made with
respect to loss of goodwill.
25. AMENDMENTS: This Lease, including the Exhibits
thereto, set forth all of the agreements and understandings of
the parties and any modification must -be in writing executed by
both parties.
26. CAPTIONS: The captions and the table of contents
of this Lease shall have no effect on its interpretation.
27. CALIFORNIA LAW: This Lease shall be construed and
interpreted in accordance with the laws of the State of
California.
28. WAIVER: No delay or omission by either party in the
exercise of any right or remedy on any default by the other
party shall impair such a right or remedy or be construed as a
waiver.
The receipt and acceptance by LESSOR of delinquent rent
shall not constitute a waiver of any other defaults by LESSEE;
it shall constitute only a waiver of timely payment for the
rent payment involved.
10/21/90 EXHIBIT "B"
1712u/2460/04 Page 28 of 35
LESSOR' s consent to or approval of any act by LESSEE
requiring LESSOR' s consent or approval shall not be deemed to
waive or render unnecessary LESSOR' s consent to or approval of
any subsequent act by LESSEE.
Any waiver by either party of any default must be in
writing and shall not be a waiver of any other default
concerning the same or any other provision of this Lease.
29. NONDISCRIMINATION: LESSEE covenants for itself, its
heirs, executors, administrators, and assigns, and all persons
claiming under or through it, that this Lease is made and
accepted upon and subject to the following conditions: That
there shall be no discrimination against or segregation of any
person or group of persons on account of race, color, creed,
religion, sex, martial status, age, national origin or ancestry
in the subleasing of the Premises herein leased, nor shall the
LESSEE establish or permit any such practice or practices of
discrimination or segregation with reference to the selection,
location, number, use or occupancy of lessees of the Premises.
LESSEE shall make its accommodations and services available to
the public on fair and reasonable terms. In the event LESSEE
enters into contracts, subleases, or assignments with respect
to any of its interest herein, LESSEE shall include in such
arrangements a nondiscrimination clause substantially
conforming to the following:
a. In leases: "The lessee herein covenants by
and for himself or herself, his or her
heirs, executors, administrators, and
assigns and all persons claiming under or
through him or her, that this lease is made
and accepted upon and subject to the
following conditions:
"That there shall be no discrimination
against or segregation of any person or
group of persons on account of race, color,
creed, religion, sex, marital status, age,
national origin or ancestry in the
subleasing, transferring, use, occupancy,
tenure or enjoyment of the premises herein
leased, nor shall the lessee himself or
herself, or any person claiming under or
through him or her, establish or permit any
such practice or practices of discrimination
or segregation with reference to the
selection, location, number, use or
occupancy of lessees of the premises. "
b. In contracts: "There shall be no
discrimination against or segregation of any
person or group of persons on account of
10/21/90 EXHIBIT "B"
1712u/2460/04 'Page 29 of 35
race, color, creed, religion, sex, marital•
status, age, national origin or ancestry in
the sublease, transfer, use, occupancy,
tenure or enjoyment of the premises, nor
shall the transferee himself or herself, or
any person claiming under or through him or
her, establish or permit any such practice
or practices of discrimination or
segregation with reference to the selection,
location, number, use or occupancy of the
land. "
30. FORCE MAJEURE. In any case where either party hereto
is required to do any act, delays caused by or resulting from
acts of God, war, civil commotion, fire, flood, earthquake or
other casualty, strikes or other extraordinary labor
difficulties, shortages of labor or materials or equipment in
the ordinary course of trade, government regulations,
litigation (other than litigation arising from the failure to
perform hereunder by the party claiming an extension of time to
perform or from a wrongful act or failure to .act by such party)
or other causes not reasonably within such party' s control and
not due to the fault or neglect of such party shall not be
counted in determining the time during which such act shall be
completed, whether such time be designated by a fixed date, a
fixed time or "a reasonable time", and such time shall be
deemed to be extended by the period of such delay. Financial
inability of either party shall not be considered to be a
circumstance or cause beyond the reasonable control of that
party. Litigation concerning paragraph 3 of Exhibit "C"
commencing on page 2 shall be included as an event which
triggers this force majeure provision. In no event shall the
operation of this Paragraph 30 extend the obligations of the
parties under the Schedule of Performance (Exhibit "E") beyond
ten (10) years from the Effective Date and in the event such
ten (10) years has elapsed it shall constitute grounds for
termination by either party.
31. RESOLUTION OF DISPUTES. Any and all disputes between
the parties hereto regarding the construction, operation or
enforcement of this Lease, and any of the rights or obligations
granted or imposed by this Lease, shall be submitted only to a
retired Judge of the Superior Court in and for the State of
California (hereinafter "Superior Court") in the following
manner:
(a) The parties must agree on the Judge' s identity
within five (5) days after the dispute arises or,
at the end of the fifth day, the parties'
respective counsel shall be authorized to agree
upon the Judge' s identity and bind their
clients. Failure to cooperate in this selection
process waives the uncooperative party's right to
10/21/90 EXHIBIT "B"
1712u/2460/04 Page 30 of 35
participate in the selection process, or object
to the Judge selected.
(b) Disputed matters shall be promptly submitted to
the Judge in a manner determined by him/her
following his/her selection. Once a matter is
submitted to the Judge, s/he is empowered with
the full authority of a judge sitting on the
bench of the Superior Court in and for the State
of California (hereinafter 'Superior Court") , and
may make any ruling consistent with that power.
In order to implement this provision, the
parties, by executing this Lease, agree to
execute and file with the Superior Court, such
papers as are appropriate to procure the
appointment of said Judge as a Judge Pro-Tempore
of the Superior Court.
(c) The Judge may make any order s/he feels is
appropriate regarding which party should bear or
be awarded attorneys' fees and/or costs, and
which party or parties should pay for the fees
and costs of the Judge.
(d) The rights of judicial review granted under this
Paragraph are the only rights of judicial review
that are available to the parties hereto. They
are exclusive of all other rights of relief which
might otherwise be held by them. It is their
intention that all of the disputes arising out
of, or related to, their execution of this Lease,
or the rights or responsibilities granted or
imposed by this Lease, be resolved exclusively in
the manner provided for in this Paragraph and its
subparts. Consistent with this intention, the
parties, by executing this Lease, specifically
acknowledge that the decisions and orders of the
Judge are nonappealable and nonreviewable, and,
therefore, they are waiving their rights to seek
relief in the State or Federal Courts, except for
the purpose of securing and confirming the
authority of the Judge provided for herein, and
to enforce his/her decisions and orders by
confirmation pursuant to the California Code of
Civil Procedure Section 1280 et. seq. , or through
appropriate injunctive relief. In the event that
a party files any action inconsistent with the
terms of this Paragraph, then the party filing
the action will be liable for all fees and costs
actually incurred by the other party in
responding to said action, regardless of its
outcome.
10/21/90 EXHIBIT "B"
1712u/2460/04 'Page 31 of 35
(e) The limitations on actions set forth in this
Paragraph apply only to actions between the
parties hereto. They are not intended to and do
not limit the parties' right to bring an action
against third parties. Furthermore, no third
party shall be entitled to rely on any provision
of this Paragraph in their response or defense to
an action brought against them by a party(s) to
this Lease.
Notwithstanding the foregoing in the event that
this method of dispute resolution is prohibited by law then
both parties shall either agree to submit to binding
arbitration or to the jurisdiction of the appropriate court of
law.
32. TIME: Time is of the essence of this Lease, and of
each and every covenant, term, condition, and provision hereof.
33. NON-DISTURBANCE AND RECOGNITION:
A. Non-Disturbance
So long as any subtenant of any portion of the
Premises is not in default (beyond the period given such
subtenant to cure such default in its .sublease) in the payment
of rent or in the performance of any of the terms, covenants,
or conditions of such sublease, or if the subtenant is in
default but is diligently proceeding to cure such default as
provided in its sublease, and notwithstanding LESSEE' s
termination of this Lease as to all or a portion of the
Premises pursuant to Paragraphs 5 or 22 of these GENERAL
CONDITIONS which termination is .not consented to by such
subtenant: (a) LESSOR will not bring, join, or cooperate in
any action or proceeding to terminate such subtenant' s
Interest, estate, or rights under such sublease, (b) the
subtenant' s possession and rights and privileges under the
sublease shall not be diminished or interfered with by LESSOR,
and (c) LESSOR will continue to recognize the estate of the
subtenant created under the sublease and the subtenant' s
occupancy shall not be disturbed by LESSOR during the term of
the sublease or any extensions or renewals which subtenant may
exercise under the provisions of the sublease. Upon request,
LESSOR shall execute a non-disturbance agreement, in such form
reasonably approved by LESSOR, LESSEE, subtenant and lender(s)
recognizing the subtenant' s rights provided hereunder.
B. Attornment
If the interest of LESSEE in all or any part of the
Premises shall be terminated for any reason, and LESSOR
succeeds to the interest of and assumes all the obligations of
LESSEE under any sublease, each sublessee shall be bound to
10/21/90 EXHIBIT "B"
1712u/2460/04 Page 32 of 35
LESSOR under all of the terms, covenants, and conditions of the
E sublease for the balance of the sublease term and any
extensions of renewals of the sublease which the subtenant may
exercise under the provisions of the sublease. The subtenant
shall attorn to LESSOR, such attornment to be effective and
self-operative without the execution of any further instruments
immediately upon LESSOR succeeding to the interest of LESSEE
under the sublease. The respective rights and obligations of
the subtenant and LESSOR under this attornment shall be the
same as between LESSEE and the subtenant under the sublease;
provided, however, that (i ) the subtenant shall be under no
obligation to pay rental to LESSOR until the subtenant receives
written notice from LESSOR that LESSOR has succeeded to the
interest of LESSEE and assumed all the obligations of LESSEE
under the sublease, and (ii) LESSOR shall not hold the
subtenant responsible for any costs or acts related to any
default or alleged default by LESSEE under this Lease.
C. New Lease
In the event of the termination of this Lease as to
all or a portion of the Premises prior to its stated expiration
date for any reason whatsoever, LESSOR shall notify all
sublessors and subleasehold mortgagees of such termination, and
any sublessee or any subleasehold mortgagee may notify LESSOR
within sixty .(60) days after receipt of such termination notice
of its election to enter into a new lease with LESSOR. During
such sixty (60) day period, the provisions of subparagraph A
herein shall apply. LESSOR, upon receipt of such sublessee' s
or subleasehold mortgagee' s notice, shall immediately enter
into a written agreement with such sublessee or subleasehold
mortgagee containing the same provisions as those in the
sublease, except for any changes that are necessary because of
the substitution of LESSOR in the place of LESSEE. Sublessee
or any subleasehold mortgagee shall have no rights under this
subparagraph (C) if it fails to give notice within the sixty
(60) day period.
34. ESTOPPEL CERTIFICATE: LESSOR and LESSEE will, at any
time and from time to time, within thirty (30) days of the
request of the other party or a leasehold or subleasehold
mortgagee or prospective mortgagee, execute, acknowledge, and
deliver to the other party and such mortgagee, if any, a
certificate certifying:
a. That the Lease or sublease is unmodified and in
full force and effect (or, if there have been
modifications, that the same are in full force
and effect as modified and stating such
modifications);
b. The dates, if any, to which the Percentage Rent
and any additional rent and charges have been
10/21/90 EXHIBIT "B"
1712u/2460/04 Page 33 of 35
paid and the amount of any accumulated rent
credit available to LESSEE;
C. Whether there are any existing defaults by the
other party to the knowledge of the party making
such certification Specifying the nature of such
defaults, if any;
d. Whether the Lease Commencement Date has occurred
and, if so, the date;
e. Whether the leasehold or subleasehold mortgagee
(or prospective mortgagee) is entitled to the
protection afforded under the terms of the
sublease or this Lease; and
f. Such other matters as may be reasonably requested.
Any such certificate may be relied upon by any party to
whom the certificate is directed.
35. HAZARDOUS WASTE INDEMNITY: LESSOR is aware of two
potential sources of contamination on the Premises. One
potential source is a discontinued gasoline station and the
other is the possibility of asbestos in the existing structure
which is the subject of the Maxwell' s Lease. Except for the
aforementioned potential contaminations, LESSOR has no
knowledge of hazardous materials or contamination on the
Premises. Further, to the best of the LESSOR' s knowledge, the
LESSOR has not received any notice or communication from any
government agency having jurisdiction over the Site notifying
the LESSOR of the presence of subsurface zone hazardous
materials, waste, or contamination in, on, or under the Site,
or any portion thereof. LESSOR agrees to notify LESSEE if in
the future it becomes aware of contamination on the Premises.
LESSEE, including any and all of its successors in interest,
and assigns, acknowledges and agrees it shall be responsible
for any release, excavation, or movement of any hazardous
materials, waste, or contamination of the subsurface zone as
may be found to have contaminated the Premises after the
Commencement Date of this Lease, except to the extent such
release, excavation, or movement of any hazardous materials,
waste or contamination is caused by LESSOR or City.
LESSEE and LESSOR shall comply with CERCLA
(Comprehensive Environmental Response, Compensation and
Liability Act of 1980) 42 U.S.C. §9601, et seq. , and California
Health and Safety Code §§ 25100, et seq. , 25300, et sec . , 25280
et seq. Any costs incurred pursuant to this compliance which
are necessary to develop the Premises as contemplated in this
Lease shall be shared as set out in Paragraph 3 of Exhibit "C".
20/21/90 EXHIBIT "B"
1712u/2460/04 Page 34 of 35
LESSEE, including any and all of its successors in
Interest, agrees to and shall indemnify, defend, and hold the
LESSOR and the City and their officers, employees,
representatives and agents harmless from and against all
expenses (including, without limitation, reasonable attorneys`
fees and disbursements) , losses, or liabilities suffered by
LESSOR or City by reason of governmental action or third party
claims arising out of such hazardous materials, waste, or
contamination, exacerbation, movement, release, or additional
contamination of the Premises as may be found to have
contaminated Premises after the Commencement Date of this Lease
unless caused by LESSOR or City. The LESSEE assumes all
responsibility for subsurface zone conditions and soils
conditions in, on or under the Premises, and for any
rehabilitation necessary for the provision of the Improvements;
and the LESSOR makes no other representations or warranties
concerning the Premises, its suitability for the use intended
by the LESSEE, or the surface or subsurface conditions of the
Premises; and if the soil conditions of the Premises are not in
all respects entirely suitable for the use or uses to which the
Premises will be put, then it is the sole responsibility and
obligation of LESSEE to take such action as may be necessary to
place the Premises in a condition entirely suitable for the
development of the Premises. This is expressly agreed between
the Parties to be a material terra of this Lease. Prior to the
Commencement Date LESSEE shall exercise due diligence and
conduct or cause to be conducted an environmental assessment or
audit acceptable to the LESSOR of the Premises to ascertain
whether it is in all respects suitable for the construction and
completion of the Improvements. LESSOR in turn agrees to grant
LESSEE, its agents or experts full access to the Premises for
the purpose of conducting all geotechnical, ecological or other
inspection of the Premises necessary to comply with this Lease
and its attachments or amendments, or to prepare for the
construction of the Improvements.
20/21/90 EXHIBIT "B"
1712u/2460/04 Page 35 of 35
EXHIBIT "C"
CONDITIONS TO COMMENCEMENT
1. Plan A rovals.
LESSEE shall obtain approvals from all applicable
government entities for conditional use permit, coastal
development permit, supplemental environmental impact report
and final plans and specifications with respect to the
Improvements to be located on the Premises. The Conditional
Use Permit and Coastal Development Permit shall be deemed
"final" for purposes of this Paragraph upon the last of the
following three (3) dates (i) as to each- condition on said
permits, on the date on which LESSEE obtains LESSOR approval of
LESSEE' s satisfaction of such items, (ii ) the date on which all
applicable statutes of limitations for challenging such permits
have expired without litigation being filed, or (iii) the date
on which all such litigation is favorably and finally
terminated, whether by judgment, dismissal, settlement
agreement or otherwise. The development of the final plans and
specifications shall be according to the requirements set out
in the scope of Development Exhibit "D" 1.2.
2. Evidence of Financing Commitments.
LESSEE shall obtain and shall submit to LESSOR' s
Executive Director, evidence reasonably satisfactory to
LESSOR' s Executive Director that LESSEE has obtained the
financing necessary for the development of the Improvements on
the Premises in accordance with -.this Lease.
Such evidence of financing shall include the following:
(a) A copy of the commitment or commitments obtained
by LESSEE for the mortgage loan or loans to assist in financing
the construction of the Improvements, certified by LESSEE to be
a true and correct copy or copies thereof. The commitments for
financing shall be in such form and content acceptable to
LESSOR' s Executive Director as reasonably evidences a firm and
enforceable commitment, with only those conditions which are
standard or typical for the lender(s) involved for similar
projects;
(b) Sufficient information (e.g. , an annual report)
regarding the construction lenders to enable LESSOR' s Executive
Director to determine whether or not such lender(s) has (have)
sufficient financial resources to fund the loan(s) ; and
(c) A copy of the contract between LESSEE and the
contractor(s) for the construction of the Improvements,
certified by LESSEE to be a true and correct copy thereof; and
10/21/90 EXHIBIT "C"
1712u/2460/04 Page 1 of 6
(d) A financial statement and/or other documentation
satisfactory to LESSOR' s Executive Director as evidence of
other sources of capital sufficient to demonstrate LESSEE has
adequate funds committed to cover the difference, if any,
between construction and development cost minus financing
authorized by mortgage loans.
Within thirty (30) days after receipt of request for
approval of its evidence of financing, LESSOR' s Executive
Director shall respond in writing by stating what further
information, if any, he or she reasonably requires in order to
determine whether or not to approve such evidence of
financing. Upon receipt of such a timely response, LESSEE
shall promptly furnish to the Executive Director such further
information as may be reasonably requested.
LESSEE' s request for approval of its evidence of
financing shall be deemed complete thirty (30) days after
Executive Director' s receipt thereof, if no timely response
requesting further information is delivered to LESSEE, or, if
such a timely response requesting further information is
received, on the date that LESSEE delivers such additional
information to Executive Director. Once LESSEE' s request for
approval of its evidence of financing has been accepted as or
is deemed complete, Executive Director shall not be entitled to
demand additional information or to disapprove the request on
the basis that LESSEE has not furnished adequate or complete
information.
The Executive Director LESSOR shall approve or
disapprove LESSEE' s evidence of financing within fifteen (15)
days after LESSEE' s request for such approval is accepted as
complete. Approval shall not be unreasonably withheld or
conditioned. If the Executive Director shall disapprove any
such evidence of financing, it shall do so by written notice to
LESSEE stating the reasons for such disapproval.
3. Approved Condition of Title; AcgMisition _of Property
Interests in the Premises To Place Title In Such
Condition.
Except as expressly set forth herein, LESSOR covenants
to convey to LESSEE the leasehold estate in the Premises free
and clear of all monetary liens and all recorded and unrecorded
nonmonetary liens, encumbrances, easements, licenses, leases,
and other defects of title inconsistent with LESSEE' s approved
development plans, including without limitation Exceptions 1-33
set forth in the litigation guarantee issued by First American
Title Insurance Co. (Order No. ) dated January 15,
1986 (the "Approved Title Condition" ) .
Except as expressly set forth herein, LESSOR hereby
represents that the City currently holds the fee title to the
20/21/90 EXHIBIT "C"
1712u/2460/04 Page 2 of 6
Premises in a condition that would enable the City to convey
leasehold title in the Approved Title Condition, excepting only
the "Maxwell' s Lease" and any currently existing subtenants
(that certain lease dated between the City as
landlord and as tenant) . Within the time set forth
in the Schedule of Performance (Exhibit "E") , LESSOR, LESSEE,
and the City shall exercise best efforts to negotiate and enter
into a binding written agreement with the holder of the
Maxwell' s Lease and all subtenant to terminate or amend said
leases on terms acceptable to LESSOR, the City, LESSEE, and the
holder of the Maxwell' s Lease, and all subtenants, no later
than the Commencement Date of this Lease. Subject to LESSEE' s
and Maxwell' s performance of their obligations under such
agreement, LESSOR covenants that on or before the Commencement
Date it shall acquire title to the Premises from the City in
the Approved Title Condition.
Notwithstanding the foregoing, LESSEE acknowledges
that the State of California, through the Office of the
California Attorney General and the State Lands Commission, has
made contentions that the Premises or some portions thereof
have been or may have been impliedly dedicated to the public or
are or may be subject to a public trust and that development
and operation of the Improvements on the Premises would or may
be inconsistent with the rights of the public to public open
space and/or recreational use and/or access to the coastline.
LESSEE assumes all risks regarding any such claims, whether
made by the State of California or any third party. Either
LESSOR or LESSEE shall have the right to file and prosecute a
quiet title action to determine the validity of any such
adverse claims against LESSOR' s and LESSEE' s title to the
Premises. In addition, in the event of any legal challenge
instituted by the State of California or any third party making
any such adverse claim against the title of LESSOR or LESSEE to
the Premises, the parties hereby agree to cooperate in
defending said action as set forth herein.
In the event that either LESSOR or LESSEE determines
to file a quiet title action, the same shall be diligently
prosecuted and the party maintaining the same shall exercise
best efforts to obtain a final and favorable judgment as soon
as practicable after the action is filed. No such action shall
be filed without prior consultation with the other party, which
other party shall have the right to appear independently in the
action to represent its interests.
In the event of litigation instituted by the State of
California or other third party, LESSOR shall have the right,
but not the obligation, to defend such action; provided, that
without LESSEE' s prior written consent, LESSOR shall not allow
any default or judgment to be taken against it and shall not
enter into any settlement or compromise of any claim which has
the effect, directly or indirectly, of prohibiting, preventing,
10/21/90 EXHIBIT "C"
1712u/2460/04 Page 3 of 6
delaying, or further conditioning or impairing LESSEE' s
development, use, or maintenance of any portion of the Premises
or impairing any of LESSEE' s rights hereunder. In addition,
LESSOR shall provide reasonable assistance to LESSEE in
defending any such action, such assistance to include:
(i) making available upon reasonable notice, and at no cost to
LESSEE, LESSOR officials and employees who are or may be
witnesses in such action, and (ii ) provision of other
information within the custody or control of LESSOR and the
City that is relevant to the subject matter of the action.
LESSEE shall have the obligation to defend any such
action filed by the State of California or any third party;
provided, however, that this obligation to defend shall not be
effective if and to the extent that LESSEE determines in his
reasonable discretion that such action is meritorious or that
the interests of the parties justify a compromise or settlement
of such action. In this regard, LESSEE' s obligation and right
to defend shall include the right to hire attorneys and experts
necessary to defend, subject to reasonable approval by LESSOR.
LESSOR must be notified prior to any compromise or settlement
and shall have approval rights on any agreement that has the
potential of adversely affecting LESSOR' s right, title or
interest in the Premises.
LESSOR shall be solely responsible for all of its
costs and expenses incurred in prosecuting or defending any
such action. LESSEE shall be solely responsible for all of its
costs and expenses incurred in prosecuting or defending any
such action and, in addition, to any costs and expenses arising
out of or relating in any manner to the development of the
Premises or this Lease if the action results in an unfavorable
judgment or settlement that prohibits or prevents LESSEE' s
development of the Improvements on the Premises pursuant to
this• Lease. LESSEE shall be entitled to full reimbursement up
to a maximum amount of Fifty Thousand Dollars ($50,000) from
LESSOR from all legal costs and expenses incurred by LESSEE in
prosecuting or defending any such action if the action results
in a favorable judgment or settlement permitting LESSEE to
develop the Improvements as contemplated in this Lease. Such
reimbursement shall include interest accruing on the principal
amount of LESSEE' s expenditures at the rate of eleven percent
(11%) per annu:n from the date expenditures are made until fully
reimbursed. Rent credits shall be allocated first to accrued
interest, then to unpaid principal. LESSEE shall provide to
LESSOR an itemized statement of LESSEE' s costs and expenses in
such detail as LESSOR may reasonably require in order to verify
the amount of LESSEE' s actual and reasonable expenses and the
time such expenses were incurred. LESSEE agrees to act
reasonably to conserve funds subject to this rent credit,
consistent with the parties' mutual objective of having the
action handled by qualified experts and quickly and
successfully concluded.
20/21/90 EXHIBIT "C"
1712u/2460/04 'Page 4 of 6
4. Environmental Testing and Clean Up Costs.
LESSEE shall obtain soils test analysis to be approved
by LESSOR' s Executive Director to determine the suitability of
the Site for the proposed development. In the event the test
evidences a need to remediate contamination of the Premises in
conjunction with development, the LESSOR shall bear the cost
for the first Twenty-Five Thousand Dollars, the LESSEE shall
bear the cost of the second Twenty-Five Thousand and costs
above Fifty Thousand shall be shared equally. If the cost
estimate to remediate contamination exceeds One Hundred
Thousand Dollars ($100,000) then pursuant to Paragraph 6(f)
below, either party may terminate this Lease. Notwithstanding
the above, if LESSEE determines to bear all such costs above
One Hundred Thousand Dollars, then LESSOR shall not have the
ability to terminate this Lease.
5. Miscellaneous Governmental Approval,
In addition to the approvals to be obtained from City
and LESSOR as provided herein, LESSOR and LESSEE shall
cooperate and diligently pursue, within the times set forth in
the Schedule of Performance (Exhibit "E") , the obtainment of
all other governmental approvals required for development and
operation of the Improvements.
6. Failure of Conditions; Termination.
In the event that, prior to the Commencement Date;
(a) LESSEE fails to -submit or is unable, after and
despite its exercise of reasonable diligence, to timely
obtain approval of the final. building plans and
specifications for the Improvements, in accordance with
Paragraph 1 of this Exhibit "C"; or
(b) LESSEE is unable, after and despite its exercise
of reasonable diligence, to timely obtain financing
commitments for the development of the Premises or the
Executive Director' s approval thereof, in accordance with
paragraph 2 of this Exhibit "C"; or
(c) LESSOR, LESSEE, and the City fail to timely enter
into a binding written agreement with the holder of the
Maxwell' s Lease or any other leasehold interest capable of
asserting relocation rights, in accordance with Paragraph 3
of this Exhibit "C"; or
(d) Replacement Parking requirements of any
governmental entity fail to be satisfied by the onsite
parking and no more than fifteen (15) offsite parking
spaces.
20/21/90 EXHIBIT "C"
1712u/2460/04 Page 5 of 6
(e) LESSOR fails to timely tender possession of the
Premises, with the condition of title meeting the
requirements set forth in Paragraph 3 of this Exhibit "C";
or
(f) LESSEE either fails to obtain an approved
environmental study or the cost to clean up contamination
found on or under the Premises exceeds $100,000 unless
LESSEE determines to pay all costs in excess of One Hundred
Thousand Dollars pursuant to Paragraph 4 of this Exhibit
"C" • or
(g) As of the scheduled Commencement Date, LESSOR is
in default of any of its other obligations under this
Lease, and such failure or default is not cured and is not
being cured in accordance with paragraph 20 of Exhibit "B"
to the Lease;
(h) As of the Scheduled Commencement Date, LESSEE is
in default of any obligation under this Lease, and such
failure or default is not cured and is not being cured in
accordance with paragraph 20 of Exhibit "B" to the Lease;
then this Lease shall, at the option of either party, under
paragraph(s) a, b, c, d or f above, be terminated by
written notice thereof to remaining party; or, LESSEE may
terminate under paragraph(s) a or g above; LESSOR may
terminate under (h) above, and thereupon neither LESSOR nor
LESSEE shall have any further rights or obligations with
respect to the Premises or this Lease.
10/21/90 EXHIBIT "C"
1712u/2460/04 'Page 6 of 6
EXHIBIT "D"
SCOPE OF DEVELOPMENT
I . LESSEE'S RESPONSIBILITIES:
1. The Improvements. As used in this Lease, the term
"Improvements shall mean all improvements constructed,
assembled, or placed by 'LESSEE on the Premises. Except as
specifically set forth in Section II below, LESSEE shall be
responsible for demolition and clearance from the Premises of
all existing improvements inconsistent with the construction
thereon of the "Improvements" in accordance with the plans and
permits to be approved by the City, LESSOR, and any other
governmental agency that has jurisdiction, as the same may be
amended from time to time. Additional clarifications of
LESSEE' s responsibilities are set forth below:
(i ) Concept. The Improvements shall consist of
a multi-level restaurant project located within the footprint
of the existing improvements and the asphalt parking lot
located south of the Pier. The lifeguard station and beach
access road/bike path will remain in their present locations.
Emphasis is on small building footprints and silhouettes and
large public spaces, promenades and plazas. Pier, ocean, and
beach view opportunities, both in and through the project, will
be maximized wherever possible. Maxwell' s will have the option
of relocating to a new structure within the project.
New structures on the Plaza or PCH level are
limited to the new Maxwell' s (building "A") and buildings "B"
and "C" on the plans. The buildings shall be consistent with
the development guidelines for District 10 of The Downtown
Specific Plan. New structures on the lower or beach access
level will house food services, beach-related concessions, and
other approved visitor-serving commercial uses.
Structures on both levels shall be set back
so as to create pedestrian promenades along the: entire ocean
side of the project. The upper promenade shall be lower than
the plaza level to improve PCH views of the surf. The lower
promenade or boardwalk shall be above the bike path so as to
separate pedestrians from skateboarders, bicyclists, and roller
skaters.
(ii) Parking. The parking structure shall
contain a sufficient number of parking stalls (including
subterranean stalls on "lifts" ) to satisfy code requirements
for the uses on the Premises, calculated as follows: (1) the
relocated Maxwell' s restaurant: seventy-seven (77) spaces
(based on the number of spaces currently provided pursuant to
the Maxwell' s Lease) ; (2) the two (2) major new PCH-level
10/21/90 EXHIBIT "D"
1712u/2460/04 'Page 1 of 5
buildings, any square footage in the New Maxwell' s in excess of
11,400 square feet and the approximately 4,500 square feet of
new restaurants/cafes on the lower level in excess of 1500
square feet: 1 space per 100 square feet of floor area; and
(3 ) pedestrian-oriented cafe and beach concessions: no
spaces. LESSEE shall not be responsible for providing any
off-Premises parking to replace any existing parking spaces on
or adjacent to the Premises that will or may be eliminated due
to the development of the project, whether required by the
City, the California Coastal Commission, or otherwise. LESSEE
will, in accordance with the provisions of Paragraph 7(d) of
the Lease, cause 240 public parking spaces to be built on the
Premises.
(iii) Access. The project shall be designed so
that pedestrians will be able to enter the project site through
the signalized intersections at Main and Lake Streets.
Elevators, and ramps at all level changes, shall be provided
for full handicap access throughout the project and down to the
beach. Grand staircases from the plaza level to the beach
access level shall also be provided to act as observation and
sitting areas.
The project shall provide automobile entry
to the plaza level south of building "A" and to the lower
parking level at Lake Street. Exiting shall be provided onto
PCH south of the entry and from the lower parking level out to
Lake Street. Two-way ramps shall provide access between the
parking levels. Payment control points shall be located on the
lower level at the base of the ramp and at the Lake Street
entrance/exit. Emergency vehicle access and dedicated fire
lanes shall be provided in accordance with City requirements
and the Fire Code.
• (iv) Construction. Buildings "A, " "B, " and "C"
shall be fully sprinklered and constructed to conform to all
applicable City building ordinances. They shall be erected on
top of a fully sprinklered steel reinforced concrete parking
structure. Surface finishes, design, and roofing shall be
consistent with the Downtown Design Guidelines and direction
from the City of Huntington Beach Design Review Board.
Hardscape shall be a mixture of stone, concrete, and exposed
aggregate surfaces.
(v) Landscaping. Landscaping shall emphasize a
variety of palm trees, flowering vines, shrubbery, and bedding
plants, as well as a variety of coastal grasses. Landscaping
shall be accented by night-time lighting. Landscape plans
shall be as approved by the City.
(vi ) Size of Buildings. The buildings to be
included in the project shall be of approximately the following
sizes (in square feet) :
10/21/90 EXHIBIT "D"
1712u/2460/04 Page 2 of 5
u u
Plaza Level Scraare Footage
Building "A" (Maxwell' s) :
1st Level 11,200
2nd Level 3,800
15,000 15,000
Building "B"
1st Level 8,700
2nd Level 2,300
11,600 11,000
Building "C"
1st Level 8,700
2nd Level 5,400
14, 100 14, 100
Total Plaza Level 40, 100
Beach Access Square Footage
Dwight' s 2,500
Cafe 1,000
Casual Restaurant 6,000
Beach Concession 4,250
Total Beach Access Level 16,700
PROJECT TOTAL 53,750
The size and the distribution of square footage among the
particular buildings and parts of building may vary from the
above, provided, however, the project total square footage
shall be a minimum of 45,000 and shall not exceed 60,000 square
feet without an amendment to this Scope of Development.
(vii) Cost of Construction. The Improvements
shall be constructed at a minimum hard" cost of Ninety Dollars
($90.00) per square foot of gross building floor area for the
three (3) buildings referenced in subparagraph (vi) above (rot
including the parking or Beach Access level facilities),
including without limitation tenant improvements and
furnishings, fixtures, and equipment, site preparation costs,
parking, landscaping, driveways, and other similar items. The
actual cost of construction will be certified and submitted to
LESSOR' s Executive Director at the time specified in the
Schedule of Performance Exhibit "E."
20/21/90 EXHIBIT "D"
1712u/2460/04 Page 3 of 5
2. Approval of Plans, Drawings and Related Documents
6he LESSOR shall receive copies of all plans,
drawings and related documents for the development of the
Premises, including any proposed material changes therein. The
LESSOR shall review such documents to determine consistency
with this Scope of Development (Exhibit "D") .
11 . LESSOR'S RESPONSIBILITIES:
1. Reopening and Maintenance of Municipal Pier.
LESSOR agrees to assist LESSEE in any requests to the City for
maintenance and repair of City owned facilities including
without limitation the municipal Pier and the City Beach the
maintenance and repair of which or lack thereof could
negatively impact the project.
2 . Utilities. Subject to the maximum expenditure cap
in Paragraph 7(g) of the Lease, LESSOR agrees to provide, or
cause to be provided, within the times required in the Schedule
of Performance, all Utilities (water, sewer, gas, electrical,
and telephone) required for the development, use, and
maintenance of the improvements on the Premises, with
sufficient capacities to adequately service the Premises, with
such Utilities to be located on the Premises or stubbed no
further away than 3 feet from the curb within the Premises
along the west side of Pacific Coast Highway. LESSEE shall be
responsible for extending Utilities from said location(s) to
the improvements located on the Premises in accordance with
Paragraph I above.
3. Easements and Permits. LESSOR agrees to cooperate
with LESSEE in connection with the filing and processing of any
and all applications for permits and other approvals required
by the City or any other governmental agency in connection with
the development of the Premises.
4. Access for Service Vehicles. During the entire
term of this Lease, LESSOR agrees to provide, or cause to be
provided, access for service and delivery vehicles to the
businesses on the Premises along the access road/bike trial on
the beach side of the Premises; provided that such access may
be restricted from 10:30 a.m. w 4:00 p.m. on weekdays and from
9:00 a.m. - 4:00 p.m. on weekends.
S. Relocation Assistance. The obligations of LESSOR
and LESSEE with respect to the temporary shutdown of Maxwell' s
and relocation of Maxwell' s and as to other subtenants into the
project to be developed by LESSEE on the Premises shall be as
set forth in the agreement by and among LESSOR, LESSEE, the
10/21/90 EXHIBIT "D"
1712u/2460/04 Page 4 of 5
City, and the holder of the Maxwell' s Lease, and any current
Sublessee as referenced in Paragraph 3 of Exhibit "C" (the
"Conditions to Commencement") . otherwise, LESSOR shall be
solely responsible for payment of relocation expenses and
provision of relocation assistance to any persons or entities
displaced as a result of LESSEE' S development of the Premises,
in accordance with applicable provisions of law.
10/21/90 EXHIBIT "D"
1712u/2460/04 Page 5 of 5
EXHIBIT "E"
SCHEDULE OF PERFORMANCE
Item of Performance Time for Performance
1. LESSEE submits to City and Completed
LESSOR application for
Conditional Use Permit and
Coastal Development Permit
(Exhibit "C, " 111)
2. LESSOR completed review and Within one hundred and
exercises reasonable eighty (180) days
diligence to cause City to after Effective Date
approve Conditional Use
Permit, Coastal Development
Permit, and supplemental
environmental impact report
(Exhibit "C, " 111)
3. LESSOR, LESSEE, and the City Within one hundred and
exercise best efforts to eighty (180) days of the
enter into a binding written date City approves the
agreement with the holder of Conditional Use Permit,
the Maxwell' s Lease, Coastal Development
and any subtenants Permit, and Supplemental
(Exhibit "C, " 113) EIR
4. LESSEE delivers Security On or before the
Deposit (Lease, 118) Commencement Date
S. • LESSEE submits to City and Within one hundred fifty
LESSOR final building plans (1SO) days after the
and specifications for later of the following:
Improvements (Exhibit "C, " (i) the date on which all
11111 and 3) of the permits and
approvals referenced in
paragraph 2 herein become
"final"; or (ii) the date
on which the City, LESSOR,
and LESSEE enter into a
binding written agreements
with the holders of the
Maxwell's Lease and any
subtenants,
10/21/90 EXHIBIT "E"
1712u/2460/04 'Page 1 of 3
6. LESSOR completes review Within thirty (30) days
and exercises reasonable after submittal
diligence to cause City to
complete review of final
building plans and speci-
fications for Improvements
(Exhibit "C, " V1)
7. LESSEE submits evidence Within one hundred twenty
of financing (120) days after City and
(Exhibit "C, " V2) LESSOR approval of final
building plans
S. LESSOR reviews and approves Within 30 days of receipt
(or disapproves) evidence of complete financing
of financing (Exhibit "C, " package
r2)
9. LESSEE delivers evidence Within thirty (30) days
of insurance; Lease term after LESSOR approval
commences; LESSOR causes of evidence of financing
Title Company to deliver (and satisfaction or
title policy to LESSEE; waiver of all of the
LESSEE obtains building other Conditions to
permit(s) and construction Commencement in Exhibit
loan records (Lease, Vs 4 "C")
and 10; Exhibit "B, " V10;
Exhibit "C, " 13)
10. LESSEE commences -construct- Within thirty (30) days
tion of Improvements (Lease, after Commencement Date
V6)
21. LESSOR provides Utilities Prior to LESSEE' s
• to the Premises (Exhibit scheduled date for
"B, " 12; Exhibit "D, " VII.4) commencement of
construction
22. LESSEE completes construction Within twenty-four (24)
of Improvements; Exhibit Months after commence-
"D, " VI . I and 2) ment of construction
13. LESSEE requests Certificate Within thirty (30) days
of Completion (Exhibit "B" after completion of
13.a; Exhibit "D" 1I .1(vii) construction
14. LESSEE furnishes to Prior to issuance of Certi-
LESSOR as-built plans ficate of Completion
and itemized certified
statement of
construction costs
10/21/90 EXHIBIT "E"
1712u/2460/04 'Page 2 of 3
15. LESSOR shall either approve Within 45 days of request
or disapprove Certificate of
Completion (Lease, 716(c) )
It is understood that the foregoing Schedule of
Performance is subject to all of the terms and conditions set
forth in the text of this Lease. The summary of the items of
performance in this Schedule of Performance is not intended to
supersede or modify the more complete description in the text;
in the event of any conflict or inconsistency between this
Schedule of Performance and the text of this Lease, the text
shall govern.
10/21/90 EXHIBIT "E"
1712u/2460/04 Page 3 of 3
-r-
t EXHIBIT "F"
When Recorded
Mail to:
Redevelopment Agency of
the City of Huntington
Beach
Attn: Executive Director/
City Administrator
2000 Main Street
Huntington Beach, CA 92648
CERTIFICATE OF COD21ENCEMENT DATE
This certificate is executed this date 199 by
the Redevelopment Agency of the City of Huntington Beach and
Stanley M. Bloom, respectively Lessor and Lessee under that
certain Lease dated , 1990 (the "Lease" ) . The
purpose of this certificate is to establish a recorded date
i certain as the "Commencement Date" as that term is used and
defined in the Lease.
The parties hereto agree that the Commencement Date shall
be A and authorize this certificate to be
recorded in the Official Records of Orange County.
Stanley M. Bloom Executive Director
(Lessor) Redevelopment Agency of the
City of Huntington Beach
("Lessor" )
10/21/90 EXHIBIT "F"
1712u/2460/04
RESOLUTION NO. '
A RESOLUTION OF THE CITY COUNC OF THE
CITY OF HUNTINGTON BEACH AUTH RIZING
EXECUTION OF AGREEMENT FOR E PURCHASE
AND SALE OF PROPERTY BETWE 1 THE CITY
OF HUNTINGTON BEACH AND T
REDEVELOPMENT AGENCY OF E CITY OF
HUNTINGTON BEACH
WHEREAS, California Health an Safety Code Section 33220
provides authority for the City o aid and cooperate in the
planning, undertaking, construc on or operation of
redevelopment projects by sell ' ig any of its property to a
redevelopment agency; and
WHEREAS, the acquisition of the City's property by the
Agency will facilitate rede elopment within the Main Pier
Project Area; and
WHEREAS, the Agency h s agreed to pay to the City and the
City agrees to accept as ayment the appraisal value of the
property;
NOW, THEREFORE, TH CITY COUNCIL OF THE CITY OF HUNTINGTON
BEACH DOES RESOLVE AS ALLOWS:
Section 1. Th Mayor is authorized to execute the
Agreement for the pur hase and sale of property between the
City of Huntington B ach and the Redevelopment Agency of the
City of Huntington B ach dated , 1990.
Section 2 . he City Administrator is authorized to take
whatever actions ar necessary to fulfill the terms of the
Agreement.
Gection 3. The transfer approved herein is an action to
facilitate the re evelopment pursuant to the Main Pier
Redevelopment Pla and the environmental impact report EIR 82-2
approved in conj nction with that plan remains adequate to
address environm ntal impacts associated with the transfer
between the Cit and the Agency.
PASSED AND DOPTED by the City Council of the City of
Huntington Beac at a regular meeting thereof held on the
day of 1990,
Ir.r
Section 3 . The transfer approved herein is an action to
facilitate the redevelopment pursuant to the Main Pier
Redevelopment Plan and the environmental impact report EIR 82-2
approved in conjunction with that plan remains adequate to
address environmental impacts associated with the transfer
between the City and the Agency.
PASSED AND ADOPTED by the Agency Board of the Redevelopment
Agency of the City of Huntington Beach at a regular meeting
thereof held on the day of , 1990.
THE CITY OF HUNTINGTON BEACH
Chairman
ATTEST:
Secretary
APPROVED AS TO FORM:
Agency Counsel
Special/ genc1y-', C ns Lim r 1
{,41��.VL•7\-L� v1L/i tyw- V j✓r- 3• (�LE���
10/29/90
1828u/2460/000 -2-
RESOLUTION NO. " 0 7
+Lr -
A RESOLUTION OF THE REDEVELOPMENT
AGENCY OF THE CITY OF HUNTINGTON BEACH
AUTHORIZING EXECUTION OF AGREEMENT FOR
THE PURCHASE AND SALE OF PROPERTY
BETWEEN THE CITY OF HUNTINGTON BEACH
AND THE REDEVELOPMENT AGENCY OF THE
CITY OF HUNTINGTON BEACH
WHEREAS, California Health and Safety Code Section 33391
provides authority for the Agency to purchase any real or
personal property or any interest in property and improvements
on it; and
WHEREAS, California Health and Safety Code Section 33220
provides the authority for the City to convey to the Agency any
of its property; and
WHEREAS, the acquisition of a certain property owned by the
City proposed to be conveyed to the Agency in the Agreement for
the Purchase and Sale of Property between the City of
i..� Huntington Beach and the Redevelopment Agency of the City of
Huntington Beach dated November _., 1990 is necessary to
facilitate the redevelopment within the Main Pier Project Area;
and
WHEREAS, the Agency pursuant to that Agreement agrees to
pay to the City and the City agrees to accept as payment the
appraisal value of the property.
NOW, THEREFORE, THE REDEVELOPMENT AGENCY OF THE CITY OF
HUNTINGTON BEACH DOES RESOLVE AS FOLLOWS:
Section 1. The Chairman of the Redevelopment Agency of
the City of Huntington Beach is hereby authorized to execute
the Agreement for the Purchase and Sale of Property between the
City of Huntington Beach and the Redevelopment Agency of the
City of Huntington Beach dated as of November _, 1990 (the
"Agreement") .
Section Z. The Executive Director of the Redevelopment
Agency of the City of Huntington Beach is hereby authorized to
take whatever actions are necessary to comply with the terms of
the Agreement.
i
I
Mayor
ATTEST:
City Clerk
REVIEWED AND APPROVED:
Ci Administrator
APPROVED AS TO FORM:
A - L?�ze
City ttorney/?
/a-31-50
Li
. 10/29/90
1828u/2460/000 -2-
RESOLUTION 00. 6 y
RESOLUTION OF THE CITY COUNCIL OF THE CITY
HUNTINGTON BEACH APPROVING AND AUTHORIZING HE
EXECUTION OF THE FIRST AMENDED PIER SIDE EASE
WITH STANLEY M. BLOOM AND MAKING CERTA
FINDINGS IN CONNECTION THEREWITH.
WHEREAS, the Redevelopment Agency of a City of Huntington
Beach (the "Agency") is carrying out the edevelopment Plan
(the "Redevelopment Plan") for the Main ier Redevelopment
Project, (the "Project") ; and
WHEREAS, the Agency entered int a Lease Agreement dated
November 20, 1986, and is now cons' !ring a First Amended Pier
Side Lease (collectively, the "Le a") with Stanley M. Bloom
(Lessee) providing for the impro !tent of multiple restaurants
on certain real property (the " ite") located within the
boundaries of the Project; and
WHEREAS, pursuant to the ease, the Agency will be
responsible for a portion o the costs of certain public
improvements to be cont
ed and installed in connection with
the development of the ai and
WHEREAS, pursuant to Section 33445 of the Community
Redevelopment Law, the gency is authorized with the consent of
the City Council to be responsible for all or any part of the
value of and the cost of installation and construction of any
building, facility, ructure or other improvement which is
publicly owned eith within or without the Project Area upon a
determination by th City Council that such building, facility,
structure or other improvement is of benefit to the Project
Area or the immed' ate area in which the Project is located and
that no other re onable means of financing such building,
facility, struct re or other improvement is available to the
community; and
WHEREAS, i connection with the approval by the City
Council of th City of Huntington Beach (the "City Council") of
the Redevelop ent Plan, the City caused to be prepared certain
environments impact report No. 82-2 ("EIR") which was approved
and certifi by the City Council on July 18, 1983;
r J�
J
NOW, THEREFORE, BE IT RESOLVED by the Huntington Beach City
Council as follows:
S99tion I. The City Council hereby finds and determines
that the provision of public improvements by the Agency in
connection with the development of the Site in the manner set
forth in the Lease is of benefit to the Project Area and that
no other reasonable means of financing such public improvements
is available to the community, and the Agency is authorized to
participate in the costs for all or part of the land the costs
of installation and construction of such public improvements in
accordance with the Lease.
Section 2. The City Council hereby finds and determines
that EIR No. 82-2 which was certified on July 18, 1983 by the
City Council, remains adequate to describe potential
environmental impacts of the proposed development and that a
supplemental EIR for the development will be prepared for
review in conjunction with the required conditional use permit
for the project.
Section 3 . The City Council hereby approves and
authorizes execution of the First Amended Pier Side Lease and
the Chairman and Secretary of the Agency are hereby authorized
and directed to execute said First Amended Pier Side Lease on
behalf of the Agency after the same has been formally approved
and executed by the Lessee.
1.•+ ADOPTED this day of 1990.
Mayor of the City of
Huntington Beach
ATTEST:
City Clerk
Approved as to Form:
Ci y Attorney j1 Led
10/26/90
2109u/2960/09 - 2 -
I hereby certify that the foregoing Resolution was duly and
regularly adopted by the City Council of the City of Huntington
Beach at a regular meeting thereof held on the day of
1990, by the following vote:
AYES: COUNCIL MEMBERS:
NOES: COUNCIL MEMBERS:
ABSENT: COUNCIL MEMBERS:
ABSTAIN: COUNCIL MEMBERS:
City Clerk of the City of
Huntington Beach
10/26/90
2109u/2460/04 - 3
i
RESOLUTION NO. Q
RESSOLUTION OF THE REDEVELOPMENT AGENCY OF T
CITY OF HUNTINGTON BEACH APPROVING AND
AUTHORIZING THE EXECUTIOtr OF THE FIRST A LADED
PIER SIDE LEASE WITH STAHLEY M. BLOOM D MAKING
CERTAIN FINDINGS IN CONNECTION THEREW H.
WHEREAS, the Redevelopment Agency of t e City of Huntington
Beach (the "Agency") is carrying out the edevelopment Plan
(the "Redevelopment Plan") for the Main ier Redevelopment
Project, (the "Project") ; and
WHEREAS, the Agency entered into a Lease Agreement dated
November 20, 1985, and is now consi Bring a First Amended Pier
Side Lease (collectively, the "Lea a") with Stanley M. Bloom
(Lessee) providing for the improv ent of multiple restaurants
on certain real property (the "S' a") located within the
boundaries of the Project; and
WHEREAS, pursuant to the L ase, the Agency will be
responsible for a portion of he costs of certain public
improvements to be construct d and installed in connection with
' the development of the Site; and
WHEREAS, pursuant to S ction 33995 of the Community
Redevelopment Law, the Ag cy is authorized with the consent of
the City Council to be re ponsible for all or any part of the
value of and the cost of installation and construction of any
building, facility, str .ture or other improvement which is
publicly owned either w thin or without the Project Area upon a
determination by the C' ty Council that such building, facility,
structure or other imp ovement is of benefit to the Project
Area or the immediate area in which the Project is located and
that no other reasona le means of financing such building,
facility, structure r other improvement is available to the
community; and
WHEREAS, in con ection with the approval by the City
Council of the C,t of Huntington Beach (the "City Council") of
the Redevelopment Ian, the City caused to be prepared an
environmental impa t report No. 82-2 ("EIR") which was approved
and certified by a City Council on July 18, 1983;
NOW, THEREFO BE IT RESOLVED by the Redevelopment Agency
of the City of H ntington Beach as follows:
Sec,tion _I. The Agency hereby finds and determines that
k the provision of public improvements by the Agency in
connection with the development of the Site in the manner set
forth in the Lease is of benefit to the Project Area and that
no other reasonable means of financing such public improvements
is available to the community, and the Agency is authorized,
based upon consent of the City Council, to participate in the
costs for all or part of the land the costs of installation and
construction of such public improvements in accordance with the
Lease,
Section_ 2 . The Agency hereby finds and determines that
EIR No. 82-2, which was certified on July 18, 1983 by the City
Council, remains adequate to describe potential environmental
impacts of the proposed development and that a supplemental EIR
for the development will be prepared for review in conjunction
with the required conditional use permit for the project.
Section 3 . The Agency hereby approves and authorizes
execution of the First Amended Pier Side Lease and the Chairman
and Secretary are hereby authorized and directed to execute
said first Amended Pier Side Lease on behalf of the Agency
after the same has been formally approved and executed by the
Lessee.
ADOPTED this day of , 1990 .
THE HUI4TIOGTOII BEACH REDEVELOPMENT
AGENCY
Chairman
ATTEST:
Agency Clerk
Approved as to Form:
Agqency Counsel G'
f
Agency Special E6. s l
� I
10/26/90
2107u/2460/04 - 2 -
I hereby certify that the foregoing Resolution was duly and
regularly adopted by the Huntington Beach Redevelopment Agency
at a regular meeting thereof held on the day of
, 1990, by the following vote:
AYES: COUNCIL MEMBERS:
NOES: COUNCIL MEMBERS:
ABSENT: COUNCIL MEMBERS:
ABSTAIN: COUNCIL MEMBERS:
Agency Clerk
10/26/90
2107u/2460/04 - 3 -
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FELDERMAN
P I E R S I D E REST,4UR ,INT DEVELOPMENT m
CR.CAO*Y
P1
CITY AND AGENCX_AGREEMENT FOR THE
PURCHASE AND SALE OF PROPERTX
THIS AGREEMENT, dated as of , 19_, by and
between the REDEVELOPMENT AGENCY OF THE CITY OF HUNTINGTON
BEACH, a redevelopment agency and public body, corporate and
politic, organized and existing under and by virtue of the laws
of the State of California, (the "Agency") , as purchaser, and
the CITY OF HUNTINGTON BEACH, a municipal corporation of the
State of California (the "City") , as seller;
WHEREAS, the Agency is agreeable to paying to the City the
appraised value of the Property the legal description of which
is in Exhibit A attached hereto and incorporated herein by this
reference; and
WHEREAS, the acquisition of the Property by the Agency will
facilitate the assembly of developable sites within the
Main-Pier Project Area; and
WHEREAS, the Agency agrees to accept conveyance of the
Property;
NOW, THEREFORE, in consideration of the foregoing recitals
and the mutual covenants hereinafter contained the parties
hereby agree as follows:
Sectipn_l. Sale of Property. The City agrees to sell and
the Agency agrees to purchase the Property for the appraised
amount based on the highest and best use of Five Million, Eight
Hundred Sixty Thousand Dollars ($5,860,000) , payable pursuant
to the payment schedule set forth in Exhibit "B" attached
hereto and incorporated herein by reference.
EeCtion Z.
grest_Qn_ Agency Payment—Obligation. The
obligation of the Agency shall bear interest until paid in full
at the rate of ten percent (10%) per annum. This Agreement
constitutes an indebtedness of the Agency incurred in carrying
out the Project and a pledging of the tax allocations from the
Project to repay such indebtedness under the provisions of
Section 19 of Article XIII of the California Constitution and
Sections 33670-33677 of the Health and Safety Code; provided,
however, that such pledge of tax allocations shall always be
subordinate and subject to the right of the Agency to pledge or
commit tax allocations from the Project to repay bonds or other
indebtedness incurred by the Agency in carrying out the Project .
Section 3 . Conveyance shall be
effected by grant deed in the form attached hereto as
Exhibit "C" and incorporated herein by reference. The Agency
assumes the obligation to pay all costs associated with the
conveyance of title.
i
Section A. obligation to Refrain-from Discrimination.
There shall be no discrimination against or segregation of any
person, or group of persons, on account of race, color, creed,
religion, sex, marital status, national origin, or ancestry, in
the sale, lease, sublease, transfer, use, occupancy, tenure, or
enjoyment of the City, nor shall the Agency itself or any
person claiming under or through it establish or permit any
such practice or practices of discrimination or segregation
with reference to the selection, location, number, use of
occupancy of tenants, lessees, subtenants, sublessees, or
vendees of the City or any portion thereof.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed by their respective officers thereunto
duly authorized, all as of the date first above written.
CITY OF HUNTINGTON BEACH
By:
Mayor
SEAL
ATTEST:
City Clerk
APPROVED AS TO FORM:
4;:e
XVAttorney
1a•31-yu REDEVELOPMENT AGENCY OF THE CITY
OF HUNTINGTON BEACH
By:
Chairman
SEAL
ATTEST:
Secretary
(signatures continued on next page)
10/29/90
1654u/2460/000 -2-
(signatures continued from prior page)
APPROVED AS TO FORM:
A ency Counsel AG'
1-
1
Agency b-peciat Counsel
10/29/90
1654u/2460/000 -3-
•0(:T-a:+-1J�k7 fl`7�4Jc 1 _. i .�ril .Y:. TO Fj r.uz)
f ,
muDrr A
Incising ut the centerline intersection of Pacific
Cbamt Hig rany yl IaYo. Strwt, slyjwi as- Ocean Avenue
aryl First Street respectively, on said r entioned map;
t':,r.rar+ along tho centerline of Pacific Coast Hicrrray
ont& "s 21':2" cat 37.50 feet to the intern ction
w:th the smt2rwc-,--tRr1y extension of the southea.mt
right-of-my Zane of Lake Street; the youth
41938118" tit 50.00 feet to the We point of
bagi.nniM; 'thence north 46021142" west 1,020.00
feet; thence youth 4108118" Wank 200.00 feet;
thence youth 48021142" Cast 1020.00 feet; thencoa
north 4103811t3" cast 200.00 feet to the true point
of boUinning.
EXHIBIT "A"
LEGAL DESCRIPTION
Beginning at the centerline intersection of Pacific Coast
Highway and Lake Street, shown as Ocean Avenue and First Street
respectively, on said mentioned map; thence along the
centerline of Pacific Coast Highway south 48021 ,42" east 37 .50
feet to the intersection with the southwesterly extension of
the southeast right-of-way line of Lake Street; thence south
41038118" west 50.00 feet to the true point of beginning;
thence north 48021'42" west 1,020.00 feet; thence south
41*38118" west 200.00 feet; thence south 48021'42" east 1020.00
feet; thence south 48038 ' 18" east 200 .00 feet to the true point
of beginning.
10/29/90
1654u/2460/000 Exhibit A
a''T-2S-iS':0, -e9103 r-i]ii RED.SAT.NB. ._ . O F I READr1:N P.04 .
RZPAYNNY OF CITY LAND VALUC � � EXIIIDIT D ;
PIERSIDE RESTAURANT COMPLEX 1
HURTIRGTCR 6CACH, CALIFORNIA
MARCY PAYPLw1S
TO Ur CITY
1 1991 iS8,260 -
1992 621,019
3 1993 327,120
4 1994 246,748
5 1995 294,138
6 1996 31$1973
r 1997 344,754
s 199s 371,564
9 1949 422,423
10 2000 452,340
11 2001 483,414
1? ?Dp? 515,8f7
13 Z003 540,4u
14 2004 766,164
15 2005 809.831
16 2006 655,244
17 200? 902,474
IS 2008 951,542
IV 2009 1,002,676
26 2010 1,055,803
21 2011 1,111,055
22 2012 1,168.518
23 2013 1,228,27R
24 2014 1,290,42,
25 NIS 1,634,7a7
26 2016 1,713,199
27 2017 1,794.7,;6
Z8 2018 1,879,S56
2110 2019 1.967.759
30 2020 2,059.439
31 ZD21 2,154,888
32 2022 2,579,60E
3' 73?3 2,6EZ,788
34 2024 2,74Q,099
35 2025 196,692
36 2026 0
37 2027 0
Se Z028 0
39 7029 0
40 2030 0
41 2031 0
42 zasz 0
&3 2033 0
LL 2034 0
45 2035 0
414, 203E 0
47 2037 0
48 2038 0
49 2039 0
% 2040 0
51 2041 0
52 2042 0
53 Z043 0
54 2044 0
55 2045 0
PREsm VALUE OF PAY11:k1 5,B59,000
a'. c . --.::..•.,a:._: . �`. :#�d...:.«.::� �-...h.�-._ _ r I���.�-.:r `- -.y. .� T11TE=1.-.F.�i:1 .��.
EXHIBIT "Co
RECORDING REQUESTED BY }
AND WHEN RECORDED MAIL TO: )
}
}
(Space above for Recorder's Use)
This document is exempt from both
the payment of a recording fee
pursuant to Government Code
Section 6103, and from the
documentary transfer tax.
THE CITY OF HUNTINGTON BEACH
By:
Its:
Dated:
RANT DEED
FOR A VALUABLE CONSIDERATION, receipt of which is hereby
acknowledged, THE CITY OF HUNTINGTON BEACH, a municipal
corporation of the State of California, GRANTOR hereby GRANTS to
THE REDEVELOPMENT AGENCY OF THE CITY OF HUNTINGTON BEACH, a
public body corporate and politic, GRANTEE real property in the
City of Huntington Beach, County of Orange, State of California,
more particularly described in Exhibit "A" attached hereto and
incorporated herein by reference.
The interest transferred shall include all right, title, and
interest now owned or hereafter acquired by the City of
Huntington Beach and shall be subject to all limitations and
obligations which affect the City's use and possession of the
subject property.
ATTEST: THE CITY OF HUNTINGTON BEACH
City Clerk Mayor
10/29/90
1654u/2460/000
C-1
APPROVED AS TO FORM:
City Attorney
DEED AUTHORIZhTIQN
This is to certify that the interest in real property
conveyed by the Grant Deed dated 1990
from the CITY OF HUNTINGTON BEACH to the REDEVELOPMENT AGENCY OF
THE CITY OF HUNTINGTON BEACH, a public body corporate and politic,
(the "Agency") , is hereby accepted by the undersigned officer or
agent on behalf of the Agency pursuant to authority conferred by
Resolution No. , 198_ and the Agency as Grantee consents to
recordation thereof by its duly authorized officer.
Dated: 1990 THE REDEVELOPMENT AGENCY OF THE
CITY OF HUNTINGTON BEACH
By
Chairman
ATTEST:
Agency Secretary
10/26/90
1654u/2460/000
C-2
STATE OF CALIFORNIA }
} ss .
COUNTY OF ORANGE )
1
On this day of , 19 , before me
the undersigned, 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 who executed this
instrument as the Mayor of the City of Huntington Beach and
acknowledged to me that the City of Huntington Beach executed
it.
Signature of Notary Public
Name typed or printed
STATE OF CALIFORNIA )
ss.
COUNTY OF ORANGE )
On this day of , 19 , before me
the undersigned, 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 who executed this
instrument as the Chairman of the Redevelopment Agency of the
City of Huntington Beach and acknowledged to me that the
Redevelopment Agency of the City of Huntington Beach executed
it.
Signature of Notary Public
Name typed or printed
10/29/90
1654u/2460/000 C-3
Authorized to Publish Advertisements of all kinds including
public notices by Decree of the §uperior Court of Orange
6unt14 California, Numtwr A-6214, September 29, 1961, and
A-24831 June 11. 1963
STATE OF CALIFORNIA
County of Orange
I am a Citizen of the United States and a
resident of the County aforesaid; I am over the
age of eighteen years, and not a party to or
interested in the below entitled matter. I am a
principal clerk of the ORANGE COAST DAILY
PILOT, a newspaper of general circulation, _--" uBuc NOTICE
printed and published in the City of Costa Mesa, PUBLIC NOTICE
County .1 FRST AMENDED
California, and J
of Orange, State of Californid that NOTICE PUBLIC
PIERS DE LEASE
OINT PUBLIC AGREEMENT
attached Notice is a true and complete co as HEARING OF THE On Monday, March 18,at
P PY CITY COUNCIL/ 7:00 PM, or as soon there-
REDEVELOPMENT after.aslthe matter may be
was printed and published in the Costa Mesa, AGENCY heard, in the city uncil
Newport Beach, Huntington Beach, Fountain MAIN-PIER Chambers, Huntington
REDEVELOPMENT Beach City Hall located at
Valley, Irvine, the South Coast communities and PROJECT AREA 2000 Main Street, Hunting-
Laguna Beach issues of said newspaper to wit ton Beach, California, the
City Council of the City of
Huntington Beach and Re-
the issue(s) of: development Agency
("Agency') of the City of
Huntington Beach,will hold
a joint public hearing- to
consider the lease of cer-
March 1, 11, 1991 tain real-property, located
within the Main-Pier Rede-
velopment Project Area on
the west side of Pacific
Coast Highway, between
First and Main Streets,
(Legal Description on file in
the City Clerk's office), to
Stanley Bloom, pursuant to
a proposed First Amended
Pierside Lease Agreement
and between the Redevel
opment Agency and Stan-
ley M. Bloom. The pro-
`posed Agreement and fi-
nancial report required by
California Health & Safety
Code Section 33433 are
available for public inspec-
tion at the office of the City
Clerk at 2000 Main Street,
Huntington Beach, Calif-
ornia. Further information
concerning this matter may
also be obtained by con-
tacting Keith Bohr, Rede-
1 declare, under penalty of perjury, that the velopment Specialist, at
(714)374-1529.
foregoing is true and Correct. By Connie Brockway,
City Clerk/ Redevelop-
ment Agency Clerk,
March 11 City of Huntington
Executed on , 1 gg 1 Beach
at Costa Mesa Published Orange Coast
, Califomia Daily Pilot March 1, 11,
Isar. FM203
Signature
PROOF OF PUBLICATION
REC ' 'EST FOR CITY COUGIL/ .
REDEVELOPMENT AGENCY ACTIONH 90-36
Data November 19, 1990
Submitted to onorable Mayor/Chairman & City Council/Redevelopment Agency Members
Submitted by iichael T. Uberuaga, City Administrator/Chief Executive Office: � C�
Prepared by:Barbara A. Kaiser, Deputy City Administrator/Economic Development:? °"
TRANSFER OF CITY PROPERTY (PIERSIDE RESTAURANTS LEASE SITE) TO
Subject: THE REDEVELOPMENT AGENCY, MAIN—PIER REDEVELOPMENT PROJECT
Consistent with Council Policy? Yes [ ] New Policy or Exception
'y*zv7
Statement of Issue, Recommendation,Analysis, Funding Source,Alternative Actions,Attachments:
5TAIEMENT OF ISSUE:
At the direction of the Redevelopment Agency, staff has been negotiating an amended
Pierside Lease for the proposed Pierside Restaurant project. The proposed lease
outlines the terms of a ground lease by the Redevelopment Agency to the developer,
allowing for the development of restaurants, plazas, promenades, and parking facilities.
Transfer of the site from the City to the Agency is required to complete the
transaction. The Planning Comission approved the conformance of the conveyance with
the General Plan at their November 6, 1990 meeting.
RECQMMENDATION:
Staff recommends deferral of actions relating to the Agreement for the Purchase and
Sale of Property for the Pierside Restaurants project.
ANALYSIS:
Development of the 3.5 acre site located at Main Street and Pacific Coast Highway
south of the pier, requires the transfer of the site from the City to the Agency. Lease
negotiations have been concluded with the developer, Stanley M. Bloom and the Pierside
Lease has been executed by the developer and filed with the City Clerk in anticipation
of the public hearing.
The Agency is required to acquire the subject parcel from the City of Huntington Beach
at a price equal to the current fair market value at the highest and best use allowed by
the zoning codes and General Plan of the City, as well as the Downtown Specific Plan
District 10. The value of this property is $5,860,000. The Agency will acquire the
property, subject to a 35 year note from the City, bearing interest at 10% per annum
and make payments in accordance with the attached schedule.
The City Attorney's office has provided a legal opinion regarding the impact of the
approval by the voters of Measure C on the Pierside Project. In light of this opinion and
the need to evaluate future downtown development in terms of a "village" concept, staff
recommends deferral of the conveyance of this property until an acceptable project, if
any, can be designed for the site.
RCA/RAA RH 90-36
November 19, 1990
Page two
FUNDING,5O)IRCE:
No funds are required for the proposed action.
ALTERNATIVE ACTIONS:
1) Approve transfer of city property to the Redevelopment Agency.
ATTACHMENTS:
1) Resolutions No. and No.
2) 33433 Report.
3) Site Plan and Legal Description.
4) Purchase and Sale Agreement.
7972r
MTUBAK/KBB:lp
RESOLUTION NO.
A RESOLUTION OF THE REDEVELOPMENT
AGENCY OF THE CITY OF HUNTINGTON BEACH
AUTHORIZING EXECUTION OF AGREEMENT FOR
THE PURCHASE AND SALE OF PROPERTY
BETWEEN THE CITY OF HUNTINGTON BEACH
AND THE REDEVELOPMENT AGENCY OF THE
CITY OF HUNTINGTON BEACH
WHEREAS, California Health and Safety Code Section 33391
provides authority for the Agency to purchase any real or
personal property or any interest in property and improvements
on it; and
WHEREAS, California Health and Safety Code Section 33220
provides the authority for the City to convey to the Agency any
of its property; and
WHEREAS, the acquisition of a certain property owned by the
City proposed to be conveyed to the Agency in the Agreement for
the Purchase and Sale of Property between the City of
Huntington Beach and the Redevelopment Agency of the City of
Huntington Beach dated November _, 1990 is necessary to
facilitate the redevelopment within the Main Pier Project Area;
and
WHEREAS, the Agency pursuant to that Agreement agrees to
pay to the City and the City -agrees to accept as payment the
appraisal, value of the property.
NOW, THEREFORE, THE REDEVELOPMENT AGENCY OF THE CITY OF
HUNTINGTON BEACH DOES RESOLVE AS FOLLOWS;
Section 11. The Chairman of the Redevelopment Agency of
the City of Huntington Beach is hereby authorized to execute
the Agreement for the Purchase and Sale of Property between the
City of Huntington Beach and the Redevelopment Agency of the
City of Huntington Beach dated as of November 1990 (the
"Agreement") .
The Executive Director of the Redevelopment
Agency of the City of Huntington Beach is hereby authorized to
take whatever actions are necessary to comply with the terms of
the Agreement .
Mayor
ATTEST:
City Clerk
REVIEWED AND APPROVED:
City Administrator
1
APPROVED A5 TO FORM:
City ttorney'2r
/a-3l-50
10/29/90
1828u/2460/000 -2-
RESOLUTION 110.
A RESOLUTION OF THE CITY COUNCIL OF THE
CITY OF HUNTINGTON BEACH AUTHORIZING
EXECUTION OF AGREEMENT FOR THE PURCHASE
AND SALE OF PROPERTY BETWEEN THE CITY
OF HUNTINGTON BEACH AND THE
REDEVELOPMENT AGENCY OF THE CITY OF
HUNTINGTON BEACH
WHEREAS, California Health and Safety Code Section 33220
provides authority for the City to aid and cooperate in the
planning, undertaking, construction or operation of
redevelopment projects by selling any of its property to a
redevelopment agency; and
WHEREAS, the acquisition of the City's property by the
Agency will facilitate redevelopment within the Main Pier
Project Area; and
WHEREAS, the Agency has agreed to pay to the City and the
City agrees to accept as payment the appraisal value of the
property;
NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF HUNTINGTON
BEACH DOES RESOLVE AS FOLLOWS:
Section 1. The Mayor is authorized to execute the
Agreement for the purchase and sale of property between the
City of Huntington Beach and the Redevelopment Agency of the
City of Huntington Beach dated , 1990 .
Sactio11._2. The City Administrator is authorized to take
whatever actions are necessary to fulfill the terms of the
Agreement .
aection 3 . The transfer approved herein is an action to
facilitate the redevelopment pursuant to the Main Pier
Redevelopment Plan and the environmental impact report EIR 82-2
approved in conjunction with that plan remains adequate to
address environmental impacts associated with the transfer
between the City and the Agency.
PASSED AND ADOPTED by the City Council of the City of
Huntington Beach at a regular meeting thereof held on the
day of 1990 .
Section The transfer approved herein is an action to
facilitate the redevelopment pursuant to the Main Pier
Redevelopment Plan and the environmental impact report EIR 82-2
approved in conjunction with that plan remains adequate to
address environmental impacts associated with the transfer
between the City and the Agency.
PASSED AND ADOPTED by the Agency Board of the Redevelopment
Agency of the City of Huntington Beach at a regular meeting
thereof held on the day of , 1990.
THE CITY OF HUNTINGTON BEACH
Chairman
ATTEST:
Secretary
i
APPROVED AS TO FORM:
f
Agency Counsel
t
Special Agency Cq�ns
10/29/90
1828u/2460/000 -2-
SUKMARY REPORT PURSUANT TO
SECTION 33433
of the
CALIFORNIA COMMUNITY REDEVELOPMENT LAW
on a
LEASE AGREEMENT
by and between the
REDEVELOPMENT AGENCY OF THE CITY OF HUNTINGTON BEACH
and
STANLEY M. BLOOM, AN INDIVIDUAL
I . INTRODUCTION
The California Health and Safety Code, Section 33433, provides that
if a redevelopment agency wishes to sell or lease property to which
it holds title and if that property was acquired in whole or in
part with tax increment funds, the agency must first secure ap-
proval of the proposed sale or lease agreement from its local
legislative body (City Council) after a public hearing. A copy of
the proposed sale or lease agreement and a summary report that
describes and contains specific financing elements of the proposed
transaction shall ' be available for public inspection prior to the
public hearing. As contained in the Code, the following informa-
tion shall be included in the summary report:
I . The cost of the agreement to the agency, including land
acquisition costs, clearance costs, relocation costs, the
costs of any improvements to be provided by the agency,
plus the expected interest on any loans or bonds to
finance the agreements;
2 . The estimated value of the interest to be conveyed or
leased, determined at the highest uses permitted under
the plan; and
1
3 . The purchase price or sum of the lease payments which the
lessee will be required to make during the term of the
lease. If the sale price or total rental amount is less
than the fair market value of the interest to be conveyed
or leased, determined at the highest and best use consis-
tent with the redevelopment plan, then the agency shall
provide as part of the summary an explanation of the
reasons for the difference.
This report outlines the salient parts of the Pierside Lease Agree-
ment (the "Agreement" ) which provides for the leasing of property
owned by the Redevelopment Agency of the City of Huntington Beach
( "Agency" ) to Stanley M. Bloom ( "Developer" ) for the purpose of
constructing a restaurant development.
This report is based upon information contained in a proposed Lease
Agreement and is organized into the following four sections :
1 . escri t' on of the Proposed Agreement - This section in-
cludes a description of the site and interests to be
leased, the proposed development and the major respon-
sibilities of the Agency and the Developer.
2 . Cost of the Agreement to the Agency - This section out-
lines the cost of the Agreement to the Agency. In addi-
tion, it discusses the ground lease payments to be paid
by the Developer to the Agency, provides a projection of
tax increment revenues resulting .from the new development
and sets forth the net cost of the Agreement to the
Agency. The net cost to the Agency equals Agency expen-
ditures minus the present value of the lease payments and
the value of the tax increment generated by the new
development, plus any other resources pledged to the pay-
ment of related expenses .
2
3 . Estimated Value of the Interests to be Le sed - This
section summarizes the Agency appraisal of the value of
the parcel to be leased to the Developer.
4 . Purchase Price -and �Reasons _Therefore - This section
describes the purchase price, which is equal to the
present value of the anticipated lease payments, to be
paid by the Developer to the Agency. It also contains a
comparison of the purchase price ( lease value) and the
fair market value at the highest and best use consistent
with the Downtown Specific Plan 10 for the interests con-
veyed.
II . DESCRIPTION OF THE PROPOSED AGREEMENT
A. Site and Interest to be Leased
The site consists of 3 .5 acres of land immediately south of the
Huntington Beach Pier, on the ocean side of the Pacific Coast High-
way. Currently, the site is improved with a 17 , 800 square foot
commercial structure with miscellaneous retail on the first level,
"Maxwell's" Restaurant on the second level, a freestanding struc-
ture containing "Dwight' s" hamburger stand, and a public parking
lot.
B. The Proposed ev e t
The proposed development for the site is a 48, 500 square foot res-
taurant complex. The restaurants will be built on an elevated deck
with 611 structured parking spaces provided. Public access to the
beach will be provided by two central staircases leading to the
beach level .
3
C. Agency Responsibilities
The Agency responsibilities can be summarized as follows:
I . Purchase the subject site from the City of Huntington
Beach.
2 . Provide the site in a reasonable time period free and
clear of all recorded encumbrances , assessments ,
leases/subleases, possesory rights, franchises, license
and taxes, except as set forth in the Agreement.
3 . Reimburse to the developer the total construction cost of
250 parking spaces being built to replace the existing
public parking plus an additional 11 spaces .
4 . Finance the difference in construction costs between the
structured parking and surface parking for the remaining
361 parking spaces . The Agency will amortize the cost
differential in 30 annual payments .
D. Developer's Responsibilities
The developer's responsibilities are as follows :
1 . Ground lease the site from the Agency for an original
term of 55 years.
2 . Finance all off-site costs, except as specifically set
forth in the agreement.
4
3 . Construct a 48, 500 square foot restaurant complex on a
raised deck at the quality level implied in the eleva-
tions and developer pro forma.
4 . Develop 611 on-site structured parking spaces .
5 . Provide public beach access from the project.
III. COST OF THE AGREEMENT TO THE AGENCY
The total cost of the Lease Agreement to the Agency, and the net
costs of the project after consideration of project revenues are
presented herein. Both the total and net costs of the Lease Agree-
ment are presented in terms of absolute dollar amounts generated
over the 55-year lease and in terms of the present value (PV) of
expenditures and receipts resulting from implementation of the
Lease Agreement. The PV of expenditures and receipts has been com-
puted using an assumed discount rate of 10% . The difference be-
tween the PV of expenditures and the PV of receipts constitutes the
net present value cost of the Lease Agreement to the Agency. This
net cost can be either an actual cost (where expenditures exceed
receipts) or a net gain (where revenues created by implementation
of the Lease Agreement exceed expenditures) .
A. Total Costs to the Agency,
Table 1 contains a listing of the Agency's, estimated expenditures,
by major category, relating to its obligations under the Lease
Agreement. Per Table 1, total implementation expenditures by the
Agency over the 55 year original term of the lease are estimated at
approximately $53 . 61 million, which equates to $14 . 82 million in
present value terms . The basis of this estimate is presented
below.
5
� . Site Acquisition Costs
The Agency must acquire the subject parcel from the City
of Huntington Beach at a price equal to the current fair
market value at the highest and best use allowed by the
zoning codes and general plan of the City, as well as the
Downtown Specific Plan District 10 . The value of this
property is estimated at $5. 86 million. The Agency will
acquire the property"subject to a note from the City,
bearing interest at 10% per annum.
2 . Site Preparation/Relocation Expense
In order to prepare the site for the proposed develop-
ment, the existing tenants must be relocated at the ex-
pense of the Agency, there could be legal expenses as-
sociated with any potential condemnation actions taken,
the Agency -is responsible for $50, 000 of toxic clean-up
costs and the Agency must ensure adequate utilities are
available to the site. These costs have been capped in
the Lease Agreement at $1 . 0 million.
3. Parking Costs
The Agency parking costs consist of two components:
a. An upfront payment of $4 . 0 million to cover the to-
tal construction cost for the 250 replacement public
parking spaces .
b. An upfront payment of $1 .0 million, plus thirty an-
nual payments of $325,500 to amortize the difference
in construction costs between structured parking and
surface parking for the 361 spaces serving the
6
private development . The rationale for this payment`
is that in a typical ground lease where the lessor
is receiving 2 . 00% to 3 . 25% of gross sales as rent, -
the lessor has provided enough land to allow for the
building improvements and surface parking. In the
proposed Lease Agreement the Agency has not provided
enough land to develop a sufficient amount of sur-
face parking and, thus , must make up the difference
in parking costs to justify the lease terms . These
parking payments total nearly $10 . 76 million, with a
present value of $3 . 96 million .
B . Agency Revenues
Table 2 shows the nominal and present values of the Agency revenues
created as a result of implementation of the lease .
1 . Ground Lease Payments
The Pierside Lease Agreement is structured so, that the
amount of ground rent paid is directly related to the
project ' s performance . The ground rent schedule' is as
follows :
Percent of Total Sales
Gross Restaurant Sales Applied to Ground Lease
$0 - 35 million 2 . 00%
$35 - $55 million 2 . 50%
$55 - 100 million 3 . 00.E
$100 million + 3 . 25%
x
7
In no event can the percentage of gross sales applied to
the ground lease payment decrease from year to year. Ad-
ditionally, in Years 30 , 40 and 50, a base rent equal to
75% of the average of the preceding 3 years of lease pay-
ments will be applied. After Year 30 , through the ter-
mination of the lease, in no event can the annual lease
payment decrease from year to year . Over the original
n term, Keyser Marston Associates , Inc . has estimated that
the lease will generate nearly $124 million in revenues,
with a present value of $8 . 07 million when discounted at
10% annually. In addition, the property will revert to
the Agency at the termination of the lease . The revers-
ionary value is projected at nearly $145 million . This
equates to $764 , 000 in present value terms .
2 . Guaranteed Parking Payment
Currently, the City is receiving net revenues after ex-
penses of $110 , 000 from the site annually. The developer
must guarantee this parking income, with upward adjust-
ments commensurate with increases in other City parking
revenues , over the life of the lease . This provides to-
tal revenues of $21 . 03 million, which have a present
value of $1 . 75 million.
3 . Tax Increment Revenue
It is currently estimated that the proposed project will
have an assessed value of $14 . 19 million upon completion .
When this is reduced by the current assessed value of
$1 . 06 million, the incremental value is approximately
$13 . 13 million . Assuming a first year tax rate of 1 . 077%
and set-asides equal to 20% , this results in property
tax increment of +$113 , 000 in the first full year of
8
operation . Assuming the assessed value increases at 2%
annually, and the project area ends in 2018 , the project
should produce tax increments of approximately $4 . 04 mil-
lion over the remaining life of the project area . The
present value of the tax increments generated by the
project is $1 . 20 million.
A summary of anticipated revenues is shown in Table 2 .
C. Comparison of Expenditures and Revenues
A comparison of the present value of the expenditures and revenues
discussed above results in. the following tabulation:
Total Dollars Present Value
Over a 55-year Over a 55-year
Lease Lease
-------------- --------------
Total Agency Revenues $293 , 241 , 000 $11 , 783 , 000
Less : Agency Costs (53 , 605, 000 ) ( 14, 818, 000 )
----------- ----------
Net Gain ( loss ) $239 , 636 , 000 ( $3 , 035 , 000 )
The analysis above indicates that as a result of implementation of
the Lease, the Agency can expect to realize a gain over the lease
.period of almost $240 million in actual dollars . On a present
value basis , project costs exceed project revenues by approximately
$3 . 04 million .
9
r
IV. ESTIMATED VALUE OF INTEREST TO BE LEASED
The value of the interest to be leased has been computed at its
highest and best use allowable under the zoning codes and general
plan of the City, as well as the Downtown Specific Plan District
10. Under these constraints, Keyser Marston Associates, Inc. has
estimated that the proposed use is the highest and best use. Thus,
the present value of the ground lease, and parking revenues to the
Agency, less the present value of the amortized parking costs, is
the estimated value of the site . The amortized parking payments
are subtracted to reflect the extraordinary site costs that must be
borne by the lessor in order to make the site developable at the
proposed intensity. The present value of the ground lease and
parking revenues, has been estimated to be $9 . 82 million and the
present value of the amortized parking costs is $3 . 96 million,
therefore, the estimated value of the site is $5 . 86 million.
V. LEASE PAYMENTS AND REASONS THEREFOR
Based upon an analysis of the ground lease payments to the Agency
conducted by Keyser Marston Associates , the present value of the
developer' s ground lease payments is $5 . 86 million. This amount is
estimated to be the market value of the property and, thus, the
Agency is receiving the fair market value for the site.
10
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SYMBOL LEGEND PARKING TABULATION PL.4Z�{ LEVEL
® :u.dfX.Gd ff.N..1•/nr.M r1H119+26L '
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PIERSIDE R : ST,4URflNT DE1l .fL0PME .NT ra
C C.CA04 T
P1
err A
LEGAL DBSC=U
Bcginnirq at the centerline lion of Pacific
Coast Hi9ftray aW Laka Strut, slx� as Ocean Avenue
and First Street respectively, on said wntiona3 mom;
thence along the oentsrline of Pacific Coast Hiclvw
south 48021,'42" east 37.50 feet to the intersection
with the scmthwesterly extension of the southeast
right-of-sway line of La3cee Street; thence south
41038/1811 west 50.00 feet to the true point of
beginning; thence north 4SO2104211 lost 1,020.00
feet; thence south 41038'18" ul t 200.00 feet;
thence south 48021/4211 east 1020.00 feet; the ce
north 41038/1811 east 200.00 feet to the true point
of beginning
EZMZNT FOR THE
PURCHASE AND SALE OF PROPERTY
THIS AGREEMENT, dated as of , 19—, by and
between the REDEVELOPMENT AGENCY OF THE CITY OF HUNTINGTON
BEACH, a redevelopment agency and public body, corporate and
politic, organized and existing under and by virtue of the laws
of the State of California, (the "Agency") , as purchaser, and
the CITY OF HUNTINGTON BEACH, a municipal corporation of the
State of California (the "City") , as seller;
WHEREAS, the Agency is agreeable to paying to the City the
appraised value of the Property the legal description of which
is in Exhibit A attached hereto and incorporated herein by this
reference; and
WHEREAS, the acquisition of the Property by the Agency will
facilitate the assembly of developable sites within the
Main-Pier Project Area; and
WHEREAS, the Agency agrees to accept conveyance of the
Property;
NOW, THEREFORE, in consideration of the foregoing recitals
and the mutual covenants hereinafter contained the parties
hereby agree as follows :
Sale of P_L2pe,rty. The City agrees to sell and
the Agency agrees to purchase the Property for the appraised
amount based on the highest and best use of Five Million, Eight
Hundred Sixty Thousand Dollars ($5, 860, 000) , payable pursuant
to the payment schedule set forth in Exhibit "B" attached
hereto and incorporated herein by reference.
5ection -2 . lnteres_t on Agencv_Payment Obligation. The
obligation of the Agency shall bear interest until paid in full
at the rate of ten percent (10%) per annum. This Agreement
constitutes an indebtedness of the Agency incurred in carrying
out the Project and a pledging of the tax allocations from the
Project to repay such indebtedness under the provisions of
Section 19 of Article XIII of the California Constitution and
Sections 33670-33677 of the Health and Safety Code; provided,
however, that such pledge of tax allocations shall always be
subordinate and subject to the right of the Agency to pledge or
commit tax allocations from the Project to repay bonds or other
indebtedness incurred by the Agency in carrying out the Project .
Section-Z . Titlg_:_ GraBt Deed. Conveyance shall be
effected by grant deed in the form attached hereto as
Exhibit "C" and incorporated herein by reference. The Agency
assumes the obligation to pay all costs associated with the
conveyance of title.
Section A . Obligation-to _Refrain,__ f_rnm_Discrimination.
There shall be no discrimination against or segregation of any
person, or group of persons, on account of race, color, creed,
religion, sex, marital status, national origin, or ancestry, in
the sale, lease, sublease, transfer, use, occupancy, tenure, or
enjoyment of the City, nor shall the Agency itself or any
person claiming under or through it establish or permit any
such practice or practices of discrimination or segregation
with reference to the selection, location, number, use of
occupancy of tenants, lessees, subtenants, sublessees, or
vendees of the City or any portion thereof.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed by their respective officers thereunto
duly authorized, all as of the date first above written.
CITY OF HUNTINGTON BEACH
By:
Mayor
SEAL
ATTEST:
City Clerk
APPROVED AS TO FORM:
City Attorney
REDEVELOPMENT AGENCY OF THE CITY
OF HUNTINGTON BEACH
By:
Chairman
SEAL
ATTEST:
Secretary
(signatures continued on next page)
10/29/90
1654u/2460/000 -2-
(signatures continued from prior page)
APPROVED AS TO FORM;
A e�ncy Cnsel �(C
, �o,u
-
Agency bpecial Counsel
10/29/90
1654u/2460/000 -3-
EXHIBIT "A"
LEGAL DESCRIPTION
Beginning at the centerline intersection of Pacific Coast
Highway and Lake Street, shown as Ocean Avenue and First Street
respectively, on said mentioned map; thence along the
centerline of Pacific Coast Highway south 48021142" east 37.50
feet to the intersection with the southwesterly extension of
the southeast right--of-way line of Lase Street; thence south
41038118" west 50 . 00 feet to the true point of beginning;
thence north 48*21142" west 1, 020.00 feet; thence south
41038116" west 200. 00 feet; thence south 46021142" east 1020 . 00
feet; thence south 48038118" east 200. 00 feet to the true point
of beginning.
10/29/90
1654u/2460/000 Exhibit A
WAYNE117 OF CITY LAND VALUC EXHIBIT B
PIERSIDE RESTAURA91' COMPLEX t
HUNTINOTON BCACH, CALIFORNIA Lr'
AGENCY PAYMENT;
TO THE CITY
....... ..
1 1991 498,260
2 1992 621,019 -
3 1993 327,120
4 1994 246,748
5 1995 294,188
6 1996 318,975
T 1997 344,754
8 1998 371,564
9 1999 42Z,423
10 2000 452,340
11 2001 483,434
12 2002 515,812
13 2003 549,464
14 2004 766,164
15 2005 809,831
16 2006 $55,244
17 2007 902,474
13 20D8 951,592
19 2009 1,002,676
20 2010 1.055,803
21 2011 1.111,055
22 2M 1,168.518
23 2013 1,228,273
24 2014 1,290,42s
25 2315 1,634,737
26 2016 1,713,199
27 2017 1,794,746
28 Zola 1,879,SS6
29 2019 1.967,759
30 2020 2,059,431
31 2021 2,154,888
32 2022 2,s79,6D4
33 2023 2,682,na
34 2024 2,790,099
35 2025 196,692
36 2026 0
37 2027 0
38 2028 0
39 ZC29 0
40 2030 0
41 2031 0
42 2032 0
43 2033 0
64 203, 0
45 2035 0
46 2036 0
47 2037 0
48 2038 0
49 2039 0
5o 2040 0
sl 2041 0
52 2042 0
53 2043 0
54 2044 0
55 2043 0
PRESENT VALUE OF PAYMENT 5,859,000
TOTAL P.04
WI
EXHIBIT "C"
RECORDING REQUESTED BY )
AND WHEN RECORDED MAIL TO: }
(Space above for Recorder' s Use)
This document is exempt from both
the payment of a recording fee
pursuant to Government Code
Section 6103, and from the
documentary transfer tax.
THE CITY OF HUNTINGTON BEACH
By:
Its :
Dated:
GRAN'_ DEED
FOR A VALUABLE CONSIDERATION, receipt of which is hereby
acknowledged, THE CITY OF HUNTINGTON BEACH, a municipal
corporation of the State of California, GRANTOR hereby GRANTS to
THE REDEVELOPMENT AGENCY OF THE CITY OF HUNTINGTON BEACH, a
public body corporate and politic, GRANTEE real property in the
City of Huntington Beach, County of Orange, State of California,
more particularly described in Exhibit "A" attached hereto and
incorporated herein by reference.
The interest transferred shall include all right, title, and
interest now owned or hereafter acquired by the City of
Huntington Beach and shall be subject to all limitations and
obligations which affect the City's use and possession of the
subject property.
ATTEST: THE CITY OF HUNTINGTON BEACH
City Clerk Mayor
10/29/90
1654u/2460/000
C-1
APPROVED AS TO FORM:
. —2-�-
City Attorney
DEED AUTHORIZATIOrd
This is to certify that the interest in real property
conveyed by the Grant Deed dated , 1990
from the CITY OF HUNTINGTON BEACH to the REDEVELOPMENT AGENCY OF
THE CITY OF HUNTINGTON BEACH, a public body corporate and politic,
(the "Agency") , is hereby accepted by the undersigned officer or
agent on behalf of the Agency pursuant to authority conferred by
Resolution No. , 198_ and the Agency as Grantee consents to
recordation thereof by its duly authorized officer.
Dated: 1990 THE REDEVELOPMENT AGENCY OF THE
CITY OF HUNTINGTON BEACH -
By
Chairman
ATTEST:
Agency Secretary
10/26/90
1654u/2460/000
C-2
. V
STATE OF CALIFORNIA }
} ss.
COUNTY OF ORANGE )
On this day of 19 before me
the undersigned, 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 who executed this
instrument as the Mayor of the City of Huntington Beach and
acknowledged to me that the City of Huntington Beach executed
it .
Signature of Notary Public
Name typed or printed
STATE OF CALIFORNIA )
) ss.
COUNTY OF ORANGE }
On this day of 19 , before me
the undersigned, 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 who executed this
instrument as the Chairman of the Redevelopment Agency of the
City of Huntington Beach and acknowledged to me that the
Redevelopment Agency of the City of Huntington Beach executed
it.
Signature of Notary Public
Name typed or printed
10/29/90
1554u/2450/000 C-3
REQ%r-F_ST FOR CITY COU.XIL/ -
REDEVELOPMENT AGENCY ACTION
ED 90--37
Date November 19, 1990
Submitted to: Honorable Mayor/Chairman & City Council/Redevelopment Agency Members
Submitted by: Michael T. URZeruaga, City Administrator/Chief Executive Officer-
Prepared by: Barbara A. Kaiser, Deputy City Administrator/Economic Development
FIRST AMENDED PIERSIDE LEASE BETWEEN REDEVELOPMENT AGENCY
Subject: AND STANLEY M. BLOOM FOR PIERSIDE RESTAURANTS PROJECT -
MAIN-PIR REDE)R PMENT 03ECT AREA d
Consistent with Council Policy? �9 ft �� New Policy or Exception / -✓
- - - -- - - _ _ 6 a.�--
Statement of Issue, Recommendation,Analysis, Funding Source,Altemative Actions,Attachments;
STATEMENT OF ISSUE:
On or about August 19, 1985, a Disposition and Development Agreement was entered
into for the development of the site located at Pacific Coast Highway and Main Street.
On November 20, 1986, the Pierside Lease was executed. On February 20, 1990, the
Agency approved a conceptual plan for development of the "Pierside Restaurants" (see
_attached). A First Amended Pierside Lease for the development of 48,522 square feet
6f restaurant and beach related retail uses with 611 parking spaces is proposed, The
Planning Commission approved Environmental Impact Report 90-2, Conditional Use
Permit 90--17, and Coastal Development Permit 90-18 at its meeting of
November 6, 1990.
RECOMMENDATION:
Staff recommends deferral of actions relating to the First Amended Pierside Lease
between the Redevelopment Agency of the City of Huntington Beach and Stanley N1.
Bloom for the development of the Pierside Restaurants Project and that staff be
directed to develop a process for preparing a specific master plan for the downtown
area.
ANALYSIS:
Recent discussions on downtown projects have indicated a need to evaluate the "village"
concept for future downtown development, revisions to the Downtown Specific Plan to
accommodate projects that implement the "village" concept and associated issues such
as a parking master plan. In light of these issues, as well as the approval by the voters
of Measure C, staff recommends deferral of actions on the Pierside Restaurants Project
until future land uses are determined and an appropriate project, if any, is designed for
the site.
Project Descri lion
The proposed Pierside Lease provides for the development of a multi-level restaurant
project located within the footprint of the asphalt parking lot, consisting of 3.5 acres of
land immediately south of the Huntington Beach Pier, on the ocean side of the Pacific
Coast Highway. Currently, the site is improved with a 17,800 square foot commercial
structure with miscellaneous retail on the first level, "Maxwell's" restaurant on the
second level, a freestanding structure containing "Dwight's" concession stand, and a
public parking Iot with 239 spaces.
P10 4184
r
RCAIRAA ED 90--37
November 19, 1990
Page two
The proposed development for the site is a 49,522 square foot restaurant complex
contained within three restaurant pads. The restaurants will be built with 611
structured parking spaces including 250 subterranean public parking spaces. Public
access to the beach will be provided by two central staircases, two smaller stairways
and three handicapped accessible elevators for a total of seven accessways leading to
the beach. The proposed project will also provide two major public plazas on the upper
level and a series of plazas and promenades on the lower level (78,258 square feet or
48% of net site area). Relocation of Maxwell's Restaurant to the south will allow for
the development of Pier Plaza, a project proposed by the City to complete the new pier
development.
Agency Obligations
The Agency responsibilities can be summarized as follows:
1. The Agency is obligated to purchase the subject site from the City of Huntington
Beach. The Agency must acquire the subject parcel from the City at a price equal
to the current fair market value at the highest and best use allowed by zoning codes
and the general plan.' The value of this property is $5.86 million. The Agency will
acquire the property subject to a note from the City, bearing interest at 10% per
annum and make regular payments to the City. Payments to the City on this loan
will replace current general fund receipts from Maxwell's rent payment
(approximately $330,000 annually).
2. The Agency is obligated to provide the site in a reasonable time period free and
clear of all recorded encumbrances to the developer. In order to prepare the site
for the proposed development, the Agency has agreed to allocate a maximum of
$1.0 million upfront for various costs including relocation of existing tenants,
potential legal expenses (maximum $50,000), potential toxic clean—up costs
(maximum $50,000) and adequate utilities available to the site.
3. The Agency is obligated to reimburse the developer the total construction cost of
250 parking spaces being built to replace the existing 239 public beach parking
spaces plus an additional 11 new spaces. In addition, the Agency would finance the
difference in construction costs between the structured parking and surface parking
for the remaining 361 parking spaces.
The Agency parking costs consist of two components:
a. An upfront payment of $4.0 million to cover the total construction cost for the
250 replacement public parking spaces ($16,000 per space).
b. An upfront payment of $1.0 million, plus thirty annual payments of $325,500
(total amortized costs of $3.96 million present value) to amortize the
difference in construction costs between structured parking and surface
parking for the 361 spaces serving the private development. The rationale for
this payment is that in a typical ground lease where the lessor is receiving
2.00% to 3.25% of gross sales as rent, the lessor has provided enough land to
allow for the building improvements and surface parking. In the proposed
Lease Agreement, the Agency has not provided enough land to develop a
sufficient amount of surface parking and, thus, must make up the difference in
RCAIRAA ED 90--37
November 19, 1990
Page two
structured parking spaces including 250 subterranean public parking spaces. Public
access to the beach will be provided by two central staircases, two smaller stairways
and three handicapped accessible elevators for a total of seven accessways leading to
the beach. The proposed project will also provide two major public plazas on the upper
Ievel and a series of plazas and promenades on the lower level (78,258 square feet or
48% of net site area). Relocation of Maxwell's Restaurant to the south will allow for
the development of Pier Plaza, a project proposed by the City to complete the new pier
development.
Agency Obligations
The Agency responsibilities can be summarized as follows:
I. The Agency is obligated to purchase the subject site from the City of Huntington
Beach. The Agency must acquire the subject parcel from the City at a price equal
to the current fair market value at the highest and best use allowed by zoning codes
and the general plan. The value of this property is $5.86 million. The Agency will
acquire the property subject to a note from the City, bearing interest at 10% per
annum and make regular payments to the City. Payments to the City on this loan
will replace current general fund receipts from Maxwell's rent payment
(approximately $330,000 annually).
2. The Agency is obligated to provide the site in a reasonable time period free and
clear of all recorded encumbrances to the developer. In order to prepare the site
for the proposed development, the Agency has agreed to allocate a maximum of
$1.0 million upfront for various costs including relocation of existing tenants,
potential legal expenses (maximum $50,000), potential toxic clean—up costs
(maximum $50,000) and adequate utilities available to the site.
3. The Agency is obligated to reimburse the developer the total construction cost of
250 parking spaces being built to replace the existing 239 public beach parking
spaces plus an additional 11 new spaces. In addition, the Agency would f inane the
difference in construction costs between the structured parking and surface parking
for the remaining 361 parking spaces.
The Agency parking costs consist of two components:
a. An upfront payment of $4.0 million to cover the total construction cost for the
250 replacement public parking spaces ($16,000 per space).
b. An upfront payment of $1.0 million, plus thirty annual payments of $325,500
(total amortized costs of $3.96 million present value) to amortize the
difference in construction costs between structured parking and surface
parking for the 361 spaces serving the private development. The rationale for
this payment is that in a typical ground lease where the lessor is receiving
2.00% to 3.25% of gross sales as rent, the lessor has provided enough land to
allow for the building improvements and surface parking. In the proposed
Lease Agreement, the Agency has not provided enough land to develop a
sufficient amount of surface parking and, thus, must make up the difference in
RCA/RAA ED 90-37
November 19, 1990
Page three
parking costs to justify the lease terms. In addition, a Keyser Marston Associates, Inc.
(KMA) report concludes that Agency development of the project and a subsequent
ground lease at 8% is comparable to the proposed lease.
Docloper Ob l i i n
The developer's responsibilities are as follows:
1. The developer will ground lease the site from the Agency for an original term
of 55 years with an option to extend to a maximum of 80 years, subject to
major renovation.
The Pierside Lease Agreement is structured so that the amount of ground rent
paid is directly related to the project's performance. The ground rent schedule
is as follows:
Percent of Total Sales
Gross Restaurant Sales APPIied to Ground Lease
$0 — 35 million 2.00%
$35 — $55 million 2.50%
$55 — 100 million 3.00%
$100 million+ 3.25%
In no event can the percentage of gross sales applied to the ground lease
payment decrease from year to year. In addition, over the term of the lease,
provisions are made to reevaluate the base rent to a higher percentage. Over
the original term, KMA has estimated that the lease will generate nearly $124
million in revenues (present value of$8.07 million). The property will revert to
the Agency at the termination of the lease. The reversionary value is
projected at nearly $145 million (present value of $764,000).
Currently, the City is receiving net parking revenues after expenses of
$1I0,000 from the site annually. The developer must guarantee this parking
income, with upward adjustments commensurate with increases in other City
parking revenues, over the life of the lease. This provides total revenues of
$21.03 million (present value of $1.75 million). The developer is obligated to
pay all costs for operating and maintaining the parking structure.
2. The developer is obligated to finance all off—site improvement costs except as
indicated above.
3. The developer is obligated to construct a 48,522 square foot restaurant
complex contained within three restaurant pads consisting of accommodations
for the relocation of the existing Maxwell's Restaurant ( 15,000 sq. ft.); the
development of two new restaurant pads (25,000 total sq. ft.); development of
casual restaurant space including Dwight's (8,250 sq. ft.); and development of
RCA/RAA ED 90-37
November 19, 1990
Page four
250 public beach parking spaces and 361 private restaurant spaces (611 total).
4. The developer is obligated to provide increased public beach access from the
project through the development of public plaza and promenade space, new
stairways and three elevators.
)?roiect Financing
Exhibit I as attached outlines the Agency costs and revenues for the Pierside
Restaurants project. Immediate Agency costs are $6 million for public parking spaces,
construction differential for subterranean parking and other site related costs. It is
currently estimated that the proposed project will have an assessed value of $14.19
million upon completion. When this is reduced by the current assessed value of SI.06
million, the incremental value is approximately $13.13 million.
Assuming a first year tax rate of 1.077% and set-asides equal to 20%, this results in.
property tax increment of t$113,000 in the first full year of operation. Assuming the
assessed value increases at 2% annually, and the project area ends in 2019, the project
should produce tax increments of approximately$4.04 million over the remaining life of
the project area. (present value is $1.20 miIIion).
Benefits to City
The Pierside Lease was negotiated on the premise that the City's general fund must
continue to receive its current revenue (increasing with inflation) from the public beach
parking spaces and Maxwell's ground lease. This amounts to approximately $440,000
annually. The developer is obligated to pay a minimum of $110,000 in lease payments
for the parking spaces. The Agency is obligated to repay the land purchase price of
$5.96 million using tax increment resources and ground lease payments. If the project
does well, an accelerated payment plan to the City will be implemented. Typically,
repayment of the Agency loan would not occur until later in the redevelopment process.
A KMA analysis was also completed comparing the City's current revenue stream to the
projected revenue stream for the proposed Pierside Restaurant project. It concluded
that the City would receive $2.3 million to $3.2 million more in present value terms
than is expected from the existing conditions scenario.
Background:
The history of the original Pierside development plan, commonly known as Pierside
Village dates as far back as 1984 and consisted of construction of an 87,500 square foot
specialty/retail center, with a gross leaseable area of a minimum of 75,000 square feet
(excluding Maxwell's). In addition, a multiple—tiered parking structure with not less
than 600 spaces was to be developed.
The following is a chronological outline of the actions taken with regard to the
entitlements and lease for the original Pierside Village Project.
RCA/RAA ED 90-37
November 19, 1990
Page five
&ptemberr 16. 1986 - The Planning Commission approved Pierside Village
entitlements Conditional Use Permit 86-43 and Conditional Development Permit
86-27 with conditions.
October 10. 1 - The City Council/Redevelopment Agency approved the First
Amended Disposition and Development Agreement and Pierside Lease between
Huntington Pacifica I/Pierside Development and the Huntington Beach
Redevelopment Agency.
October 13, 19$6 - The City Council approved the Pierside Village entitlements on
appeal.
April 2 -24 1 - The California Coastal Commission reviewed the Pierside
Village entitlements on appeal and approved the project with modified conditions.
Through 1987, planning efforts continued and a change of direction began to emerge
with respect to downtown redevelopment efforts. The 3D1 Plan previously approved
in concept began to evolve Into what has become the "Village Concept." This
changing direction was finalized in March of 1988, with conceptual approval by the
Agency of the Pierside Pavilion entertainment complex in lieu of the previously
proposed hotel, and Agency approval of the "Village Concept" in April of 1988.
With this shift in direction, the Agency and staff began to re-think the need for a
specialty/retail center as previously envisioned. Throughout this period of time,
the economics of this project were continually evaluated. Ultimately, a point was
reached where the viability not only from a Iand use but an economic standpoint
concluded that the Pierside Village concept should be modified to achieve a more
desirable land use with regard to public amenities (eg. increased opportunities,
Increased beach accessability, open plaza and promenades). Thus, the Agency
decided to proceed with a "cluster of restaurants" rather then to attempt a
specialty/retail center that would be in direct competition with the revitalized
Main Street retail core.
Following this new direction the Council/Agency took the following actions:
January 17, 1 - The City Council/Redevelopment Agency directed staff to
prepare an amended Pierside Village plan utilizing the "cluster of restaurants"
concept eliminating all other specialty uses.
September 18.,1982 - The City Council adopted a "Pier Plaza" concept that called
for the development of a 2.1 acre "Pier Plaza" to be located between the base of
the Pier and Pacific Coast Highway. This concept required Maxwell's to be
relocated in order to provide the proposed 2.1 acre "Pier Plaza" foot print.
F-ebruary 20. 1990 - The Redevelopment Agency approved the conceptual plan for
the development of the "Pierside Restaurants" which includes:
RCA/RAA ED 90--37
November 19, 1990
Page six
o The development of two new restaurant pads - (25,000 S.F.)
o Accommodations for the relocation of the existing Maxwell's Restaurant -
(15,000 sq. ft.);
o The development of a parking structure, including surface and subsurface
parking for both beachgoers and restaurant patrons;
o The development of beach-related concessions, including approximately
6,000 sq. ft. of casual dining space; and
o Authorize staff and the developer of Pierside to negotiate for the
relocation and integration of Maxwell's into the Pierside plan.
o Authorize staff to negotiate an amended Pierside Lease
with Stanley M. Bloom
The developer submitted his plans for entitlements in April of this year.
Subsequently it was determined that Environmental Impact Report (EIR 90-2)
would need to be conducted as a supplemental (EIR to EIR 82-2). At their
meeting on November 6, 1990 the Planning Commission approved the Pierside
Restaurants entitlements including Environmental Impact Report 90-2,
Conditional Use Permit 90-17, and Coastal Development Permit 90-18.
FUN-DING SOURCE:
The Main-Pier Redevelopment Project Area has no available funds after meeting
current FY 1990-91 obligations. The City has issued Certificates of Participation
(C.O.P.)'s to construct the parking structure north of the Pier and approximately $8.7
million of these proceeds are remaining. If funds of $3 million are allocated to the
Third Block West development, then the balance of approximately $6.0 million ($5.7
million plus interest earnings) could be allocated to the Pierside Restaurants project.
In addition, the following projects require funding which, without new revenue
sources, cannot be completely covered.
Pier $ 2,000,000
Pier Plaza (design & construction) $ 3,350,000
Bluff Top Parking $ 500,000
North of Pier Parking $ 11,500,000
U.S. Post Office Rehabilitation $ 170,000
Celebration Plaza $ 625,000
Art Center Renovation $ 350,000
Main Promenade Parking Offsites $ 500,000
Main-Pier Phase 11 Unknown
Additional project site acquisition Unknown
Block 101 Unknown
RCA/RAA 90/37
November 19, 1990
Page seven
ALTERNATIVE:
1. Consider actions relating to the First Amended Pierside Lease.
ATTACHMENTS:
Site Map (Plaza Level & Beach Access Level)
Exhibit I — Agency Costs and Revenues
Section 33433 Report
Resolutions
February 20, 1990 Approval of Conceptual Plan.
Pierside Restaurants Lease
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EXHIBIT I
PIERSIDE RESTAURANT COMPLEX LEASE AGREEMENT
HUNTINGTON BEACH, CALIFORNIA
TOTAL PRESENT
DOLLARS VALUE
AGENCY COSTS
SITE PREPARATION S1,DOQ,000 S1,DOQ,000
PARKING COSTS
UPFRONT COSTS (REPLACEMENT SPACES) $4,000,000 S4,000,000
AMORTIZED COSTS S10,765,000 S3,959,000
LAND PAYMENT TO CITY S37,640,000 55,859,000
TOTAL AGENCY COSTS S53,605,000 $14,818,000
AGENCY REVENUES
GROUND LEASE PAYMENTS $123,748,000 $8,069,000
REVERSIONARY VALUE OF LAND S144,426,000 $764,000
GUARANTEED PARKING PAYMENT $21,028,000 $1,749,000
TAX INCREMENT $4,039.000 S1,201,000
10TAL AGENCY REVENUE $293,241,000 S11,783,000
NET AGENCY REVENUES / (COSTS) $239,636,000 (S3,035,000)
TABLE 1
CITY REVENUES COMPARISON
PIERSIDE RESTAURANT COMPLEX
RUNTINGTCR B£ACV, CALIFORRIA
.........RESTAURANT COMPLEX.........
EXISTING OPTIMISTIC
CONDITIONS BASE CASE CASE
NET PRESENT VALUE REVENUES
RETURN pN tAND (1) $5,748,000 S5,673,000 $5,520,000
SALES TAX REVENUES "' '000 3,062,000 4,082,000
NET PARKING REVENUES 1,749,000 0 0
PROPERTY TAX REVENUES 31,000 57,000 57,000
REHABILITATION EXPENSE (1,721,0001 0 0
TOTAL CITY REV£11UES S6,453,000 18,792,000 $7,659,000
(1) CONSISTS OF GROUND LEASE PAYMENTS UNDER EXISTING CONDITIONS SCENARIO;
CONSISTS OF LAND PURCHASE BY AGENCY UNDER RESTAURANT COMPLEX SCENARIO.
SOURCE: KEI SER MARSTON ASSOCIATES, IRC.
SEPTEMSER, 1990: FILE 1PIERRES
v
SUMMARY REPORT PURSUANT TO
SECTION 33433
of the
CALIFORNIA COMMUNITY REDEVELOPMENT LAW
on a
LEASE AGREEMENT
by and between the
REDEVELOPMENT AGENCY OF THE CITY OF HUNTINGTON BEACH
and
STANLEY M. BLOOM, AN INDIVIDUAL
I. INTRODUCTION
The California Health and Safety Code, Section 33433, provides that
if a redevelopment agency wishes to sell or lease property to which
it holds title and if that property was acquired in whole or in
part with tax increment funds, the agency must first secure ap-
proval of the proposed sale or lease agreement from its local
legislative body (City Council) after a public hearing. A copy of
the proposed sale or lease agreement and a summary report that
describes and contains specific financing elements of the proposed
transaction shall be available for public inspection prior to the
public hearing. As contained in the Code, the following informa-
tion shall be included in the summary report:
1 . The cost of the agreement -to the agency, including land
acquisition costs, clearance costs, relocation costs, the
costs of any improvements to be provided by the agency,
plus the expected interest on any loans or bonds to
finance the agreements;
2 . The estimated value of the interest to be conveyed or
leased, determined at the highest uses permitted under
the plan; and
1
3 . The purchase price or sum of the lease payments which the
lessee will be required to make during the term of the
lease. If the sale price or total rental amount is less
than the fair market value of the interest to be conveyed
or leased, determined at the highest and best use consis-
tent with the redevelopment plan, then the agency shall
provide as part of the summary an explanation of the
reasons for the difference.
This report outlines the salient parts of the Pierside Lease Agree-
ment (the "Agreement" ) which provides for the leasing of property
owned by the Redevelopment Agency of the City of Huntington Beach
( "Agency" ) to Stanley M. Bloom ( "Developer" ) for the purpose of
constructing a restaurant development.
This report is based upon information contained in a proposed Lease
Agreement and is organized into the following four sections:
1 . Description of t o Eroposed Agreement - This section in-
cludes a description of the site and interests to be
leased, the proposed development and the major respon-
sibilities of the Agency and the Developer.
2 . Cost of the Agreement to the Agency - This section out-
lines the cost of the Agreement to the Agency. In addi-
tion, it discusses the ground lease payments to be paid
by the Developer to the Agency, provides a projection of
tax increment revenues resulting from the new development
and sets forth the net cost of the Agreement to the
Agency. The net cost to the Agency equals Agency expen-
ditures minus the present value of the lease payments and
the value of the tax increment generated by the new
development, plus any other resources pledged to the pay-
ment of related expenses.
2
3 . Estimated Value of the_ In e , eests to be -Leased - This
section summarizes the Agency appraisal of the value of
the parcel to be leased to the Developer.
4 . Purchase_Brice and_Reasons Therefore - This section
describes the purchase price, which is equal to the
present value of the anticipated lease payments, to be
paid by the Developer to the Agency. It also contains a
comparison of the purchase price ( lease value) and the
fair market value at the highest and best use consistent
with the Downtown Specific Plan 10 for the interests con-
veyed.
II. DESCRIPTION OF THE PROPOSED AGREEMENT
A. Site and Interest to be Leased
The site consists of 3 .5 acres of land immediately south of the
Huntington Beach Pier, on the ocean side of the Pacific Coast High-
way. Currently, the site is improved with a 17, 800 square foot
commercial structure with miscellaneous retail on the first level,
"Maxwell's" Restaurant on the second level, a freestanding struc-
ture containing "Dwight's" hamburger stand, and a public parking
lot.
B. The Proposed Development
The proposed development for the site is a 48,500 square foot res-
taurant complex. The restaurants will be built on an elevated deck
with 611 structured parking spaces provided. Public access to the
beach will be provided by two central staircases leading to the
beach level.
3
C. Agency es ons 'b' 'ties
The Agency responsibilities can be summarized as follows:
1 . Purchase the subject site from the City of Huntington
Beach.
2. Provide the site in a reasonable time period free and
clear of all recorded encumbrances , assessments ,
leases/subleases, possesory rights, franchises, license
and taxes, except as set forth in the Agreement.
3 . Reimburse to the developer the total construction cost of
250 parking spaces being built to replace the existing
public parking plus an additional 11 spaces.
4 . Finance the difference in construction costs between the
structured parking and surface parking for the remaining
361 parking spaces . The Agency will amortize the cost
differential in 30 annual payments .
D. Develo er's Regponsibilities
The developer's responsibilities are as follows :
1 . Ground lease the site from the Agency for an original
term of 55 years.
2. Finance all off-site costs, except as specifically set
forth in the agreement.
4
3 . Construct a 48, 500 square foot restaurant complex on a
raised deck at the quality level implied in the eleva-
tions and developer pro forma.
4 . Develop 611 on-site structured parking spaces.
5. Provide public beach access from the project.
III. COST OF THE AGREEMENT TO THE AGENCY
The total cost of the Lease Agreement to the Agency, and the net
costs of the project after consideration of project revenues are
presented herein. Both the total and net costs of the Lease Agree-
ment are presented in terms of absolute dollar amounts generated
over the 55-year lease and in terms of the present value (PV) of
expenditures and receipts resulting from implementation of the
Lease Agreement. The PV of expenditures and receipts has been com-
puted using an assumed discount rate of 10% . The difference be-
tween the PV of expenditures and the PV of receipts constitutes the
net present value cost of the Lease Agreement to the Agency. This
net cost can be either an actual cost (where expenditures exceed
receipts) or a net gain (where revenues created by implementation
of the Lease Agreement exceed expenditures) .
A. Total Costs to ,the:&gency
Table 1 contains a listing of the Agency's estimated expenditures,
by major category, relating to its obligations under the Lease
Agreement. Per Table 1, total implementation expenditures by the
Agency over the 55 year original term of the lease are estimated at
approximately $53 . 61 million, which equates to $14 .82 million in
present value terms . The basis of this estimate is presented
below.
5
1 . Site Acquisition Costs
The Agency must acquire the subject parcel from the City
of Huntington Beach at a price equal to the current fair
market value at the highest and best use allowed by the
zoning codes and general plan of the City, as well as the
Downtown Specific Plan District 10. The value of this
property is estimated at $5. 86 million. The Agency will
acquire the property subject to a note from the City,
bearing interest at 10% per annum.
2 . Site Preparation/Relocation Expense
In order to prepare the site for the proposed develop-
ment, the existing tenants must be relocated at the ex-
pense of the Agency, there could be legal expenses as-
sociated with any potential condemnation actions taken,
the Agency is responsible for $50, 000 of toxic clean-up
costs and the Agency must ensure adequate utilities are
available to the site. These costs have been capped in
the Lease Agreement at $1 .0 million.
3 . Parking Costs
The Agency parking costs consist of two components:
a. An upfront payment of $4 .0 million to cover the to-
tal construction cost for the 250 replacement public
parking spaces.
b. An upfront payment of $1 .0 million, plus thirty an-
nual payments of $325,500 to amortize the difference
in construction costs between structured parking and
surface parking for the 361 spaces serving the
6
private development. The -rationale for this payment
is that in a typical ground lease where the lessor
is receiving 2.00% to 3.25% of gross sales as rent,
the lessor has provided enough land to allow for the
building improvenerts and surface parking. In the
proposed Lease Agreement the Agency has not provided
enough land to develop a sufficient amount of sur-
face parking and, thus, must make up the difference
in parking costs to justify the lease terms. These
parking payments total nearly $10.76 million, with a
present value of $3.96 million.
B. Agency Revenues
Table 2 shows the nominal and present values of the Agency revenues
created as a result of implementation of the lease.
I . Ground Lease Payments -
The Pierside Lease Agreement is structured so that the
amount of ground rent paid is directly related to the
project's performance. The ground rent schedule is as
follows:
Percent of Total Sales
Gross Restaurant Sales, Applied to Ground Lease
$0 - 35 million 2 .00%
$35 - $55 million 2 .50%
$55 - 100 million 3 .00%
$100 million + 3 .25%
7
In no event can the percentage of gross sales applied to
the ground lease payment decrease from year to year. Ad-
ditionally, in Years 30, 40 and 50, a base rent equal to
75% of the average of the preceding 3 years of lease pay-
ments will be applied. After Year 30, through the ter-
mination of the lease, in no event can the annual lease
payment decrease from year to year. Over the original
term, Keyser Marston Associates, Inc. has estimated that
the lease will generate nearly $124 million in revenues,
with a present value of $8. 07 million when discounted at
10% annually. In addition, the property will revert to
the Agency at the termination of the lease. The revers-
ionary value is projected at nearly $145 million. This
equates to $764, 000 in present value terms .
2 . Guaranteed Parking Payment
Currently, the City is receiving net revenues after ex-
penses of $110,000 from the site annually. The developer
must guarantee this parking income, with upward adjust-
ments commensurate with increases in other City parking
revenues, over the life of the lease. This provides to-
tal revenues of $21 . 03 million, which have a present
value of $1.75 million.
3. Tax Increment Revenue
It is currently estimated that the proposed project will
have an assessed value of $14.19 million upon completion.
When this is reduced by the current assessed value of
,$1 .06 million, the incremental value is approximately
$13. 13 million. Assuming a first year tax rate of 1 . 077%
and set-asides equal to 20%, this results in property
tax increment of +$113, 000 in the first full year of
8
operation. Assuming the assessed value increases at 2%
annually, and the project area ends in 2018, the project
should produce tax increments of approximately $4.04 mil-
lion over the remaining life of the project area. The
present value of the tax increments generated by the
project is $1 .20 million.
A summary of anticipated revenues is shown in Table 2.
C. Comparison of Exognd' u es and Revenues
A comparison of the present value of the expenditures and revenues
discussed above results in the following tabulation:
Total Dollars Present Value
Over a 55-year Over a 55-year
Lease Lease
Total Agency Revenues $293,241, 000 $11,783,000
Less: Agency Costs (530605, 000) (14,818, 000)
Net Gain (loss) $239, 636,000 ($3,035,000)
The analysis above indicates that as a result of implementation of
the Lease, the Agency can expect to realize a gain over the lease
period of almost $240 million in actual dollars. On a present
value basis, project costs exceed project revenues by approximately
$3 . 04 million.
9
IV. ESTIMATED VALVE OF INTEREST TO HE LEASED
The value of the interest to be leased has been computed at its
highest and best use allowable under the zoning codes and general
plan of the city, as well as the Downtown Specific Plan District
14. Under these constraints, Keyser Marston Associates, Inc. has
estimated that the proposed use is the highest and best use. Thus,
the present value of the ground lease and parking revenues to the
Agency, less the present value of the amortized parking costs, is
the estimated value of the site. The amortized parking payments
are subtracted to reflect the extraordinary site costs that must be
borne by the lessor in order to make the site developable at the
proposed intensity. The present value of the ground lease and
parking revenues has been estimated to be $9 .82 million and the
present value of the amortized parking costs is $3.96 million,
therefore, the estimated value of the site is $5.86 million.
V. LEASE PAYMENTS AND REASONS THEREFOR
Based upon an analysis of the ground lease payments to the Agency
conducted by Keyser Marston Associates, the present value of the
developer's ground lease payments is $5 .86 million. This amount is
estimated to be the market value of the property and, thus, the
Agency is receiving the fair market value for the site.
14
TABLE 1
ESTIMATED AGENCY COSTS
PIERSIDE RESTAURANT COMPLEX LEASE AGREEMENT
HUNTINGTON BEACH, CALIFORNIA
TOTAL PRESENT
DOLLARS VALUE
SITE PREPARATION S1,000,000 $1,000.000
PARKING COSTS
UPFRONT COSTS (REPLACEMENT SPACES) S4,000,000 $4,000,000
AMORTIZED COSTS $10,765,000 33,959,000
LAND PAYMENT TO CITY S37,840,000 S5,859,000
TOTAL AGENCY COSTS $53.605,000 S14,818,000
TABLE 2
ESTIMATED AGENCY REVENUES
PIERSIDE RESTAURANT COMPLEX LEASE AGREEMENT
HUNTINGTON BEACH, CALIFORNIA
TOTAL PRESENT
DOLLARS VALUE
GROUND LEASE PAYMENTS $123,748,000 $8,069,000
REVERSIONARY VALUE Of LAND S144,426,000 S764,000
GUARANTEED PARXTNG PAYMENT S21,028,000 S1,749,000
TAX INCREMENT 14,039,009 $1,201,000
TOTAL AGENCY REVENUE $293,241.000 SI1,783,000
RESOLUTION NO.
RESOLUTION OF THE CITY COUNCIL OF THE CITY OF
HUNTINGTON BEACH APPROVING AND AUTHORIZING THE
EXECUTION OF THE FIRST AMENDED PIER SIDE LEASE
WITH STANLEY M. BLOOM AND MAKING CERTAIN
FINDINGS IN CONNECTION THEREWITH.
WHEREAS, the Redevelopment Agency of the City of Huntington
Beach (the "Agency" ) is carrying out the Redevelopment Plan
( the "Redevelopment Plan") for the Main-Pier Redevelopment
Project, (the "Project") ; and
WHEREAS, the Agency entered into a Lease Agreement dated
November 20, 1986, and is now considering a First Amended Pier
Side Lease (collectively, the "Lease") with Stanley M. Bloom
(Lessee) providing for the improvement of multiple restaurants
on certain real property (the "Site") located within the
boundaries of the project; and
WHEREAS, pursuant to the Lease, the Agency will be
responsible for a portion of the costs of certain public
improvements to be constructed and installed in connection with
the development of the Site; and
WHEREAS, pursuant to Section. 33445 of the Community
Redevelopment Law, the Agency is authorized with the consent of
the City Council to be responsible for all or any part of the
value of and the cost of installation and construction of any
building, facility, structure or other improvement which is
publicly owned either within or without the Project Area upon a
determination by the City Council that such building, facility,
structure or other improvement is of benefit to the Project
Area or the immediate area in which the Project is located and
that no other reasonable means of financing such building,
facility, structure or other improvement is available to the
community; and
WHEREAS, in connection with the approval by the City
Council of the City of Huntington Beach (the "City Council" ) of
the Redevelopment Plan, the City caused to be prepared certain
environmental impact report No. 82-2 ("EIR") which was approved
and certified by the City Council on July 18 , 1963 ;
J
1
i
NOW, THEREFORE, BE IT RESOLVED by the Huntington Beach City
Council as follows :
Section 1 . The City Council hereby finds and determines
that the provision of public improvements by the Agency in
connection with the development of the Site in the manner set
forth in the Lease is of benefit to the Project Area and that
no other reasonable means of financing such public improvements
is available to the community, and the Agency is authorized to
participate in the costs for all or part of the land the costs
of installation and construction of such public improvements in
accordance with the Lease.
section 2 . The City Council hereby finds and determines
that EIR No. 82-2 which was certified on duly 18, 1983 by the
City Council, remains adequate to describe potential
environmental impacts of the proposed development and that a
supplemental EIR for the development will be prepared for
review in conjunction with the required conditional use permit
for the project .
Section 3 . The City Council hereby approves and
authorizes execution of the First Amended Pier Side Lease and
the Chairman and Secretary of the Agency are hereby authorized
and directed to execute said First Amended Pier Side Lease on
behalf of the Agency after the same has been formally approved
and executed by the Lessee.
ADOPTED this day of 1990 .
Mayor of the City of
Huntington Beach
ATTEST:
City Clerk
Approved as to Form:
City ttorney /� G
10/26/90
2109u/2460/04 - 2 -
I hereby certify that the foregoing Resolution was duly and
regularly adopted by the City Council of the City of Huntington
Beach at a regular meeting thereof held on the day of
1990, by the following vote :
AYES: COUNCIL MEMBERS:
NOES: COUNCIL MEMBERS:
ABSENT: COUNCIL MEMBERS:
ABSTAIN: COUNCIL MEMBERS:
City Clerk of the City of
Huntington Beach
10/26/90
2109u/2460/04 - 3 -
s
RESOLUTION NO.
RESOLUTION OF THE REDEVELOPMENT AGENCY OF THE
CITY OF HUNTINGTON BEACH APPROVING AND
AUTHORIZING THE EXECUTION OF THE FIRST AMENDED
PIER SIDE LEASE WITH STANLEY M. BLOOM AND MAKING
CERTAIN FINDINGS IN CONNECTION THEREWITH .
WHEREAS, the Redevelopment Agency of the City of Huntington
Beach (the "Agency" ) is carrying out the Redevelopment Plan
(the "Redevelopment Plan") for the Main-Pier Redevelopment
Project, (the "Project" ) ; and
WHEREAS, the Agency entered into a Lease Agreement dated
November 20, 1986, and is now considering a First Amended Pier
Side Lease (collectively, the "Lease") with Stanley M. Bloom
(Lessee) providing for the improvement of multiple restaurants
on certain zeal property (the "Site") located within the
boundaries of the Project; and
WHEREAS, pursuant to the Lease, the Agency will be
responsible for a portion of the costs of certain public
improvements to be constructed and installed in connection with
the development of the Site; and
WHEREAS, pursuant to Section 33445 of the Community
Redevelopment Law, the Agency is authorized with the consent of
the City Council to be responsible for all or any part of the
value of and the cost of installation and construction of any
building, facility, structure or other improvement which is
publicly owned either within or without the Project Area upon a
determination by the City Council that such building, facility,
structure or other improvement is of benefit to the Project
Area or the immediate area in which the Project is located and
that no other reasonable means of financing such building,
facility, structure or other improvement is available to the
community; and
WHEREAS, in connection with the approval by the City
Council of the City of Huntington Beach (the "City Council" ) of
the Redevelopment Plan, the City caused to be prepared 'an
environmental impact report No . 62-2 ("EIR") which was approved
and certified by the City Council on July 18, 1983;
NOW, THEREFORE, BE IT RESOLVED by the Redevelopment Agency
of the City of Huntington Beach as follows :
The Agency hereby finds and determines that
the provision of public improvements by the Agency in
r connection with the development of the Site in the manner set
forth in the Lease is of benefit to the Project Area and that
no other reasonable means of financing such public improvements
is available to the community, and the Agency is authorized,
based upon consent of the City Council, to participate in the
` costs for all or part of the land the costs of installation and
construction of Such public improvements in accordance with the
Lease.
Section Z. The Agency hereby finds and determines that
EIR No . 62-2 , which was certified on July 18, 1953 by the City
Council, remains adequate to describe potential environmental
impacts of the proposed development and that a supplemental EIR
for the development will be prepared for review in conjunction
with the required conditional use permit for the project .
Section. 3 . The Agency hereby approves and authorizes
execution of the First Amended Pier Side Lease and the Chairman
and Secretary are hereby authorized and directed to execute
said First Amended Pier Side Lease on behalf of the Agency
after the same has been formally approved and executed, by the
Lessee.
ADOPTED this day of 1990 .
THE HUNTINGTON BEACH REDEVELOPMENT
AGENCY
Chairman
ATTEST:
Agency Clerk
Approved as to Form:
Agency Counsel
' i
Agent S}pecial C6 s 1 s'
10/26/90
2107u/2460/04 - 2 -
I hereby certify that the foregoing Resolution was duly and
regularly adopted by the Huntington Beach Redevelopment Agency
at a regular meeting thereof held on the day of
11 1990, by the following vote:
AYES: COUNCIL MEMBERS:
NOES: COUNCIL MEMBERS:
ABSENT: COUNCIL MEMBERS:
ABSTAIN: COUNCIL MEMBERS:
Agency Clerk
1
i
10/26/90
2107u/2460/04 - 3
REQUEST Mt.,)REDEVELOPMENTS- GEN 'Y ACTION
PH 90-11
February 20, 1990
Date ._.-, �-------- -
Hcmorable llialrnan and Wx1evelyprent Agency M rbers
Submitted by: Paul E. Cook, Executive Director
• �
Preparecl by: Keith B. Bchr, R,edevelcprr_nt Specialist
Subject: APPF4 JVAL OF M KIMM D VEf R01f PLM FpEt PM191M RESMADRAMS
Consistent with Council Policy? ] Yes [ ] New Policy or Exception
Statement of Issue, Recommendation, Anplysis, Funding Source, Alternative Actions, Attachments:
OE LEM:
Cn January 17, 1989, the Agency directed staff to prepare an aTp-r ed Pierside
Village plan to eliminate the specialty/retail uses wt1ile retaining the
restaurant uses (staff report attached) . Additionally, staff was authorized
to negotiate with its operators for the rehabilitation of Maxwell's Restaurant.
YC00MMFN=CN:
Approve the conceptual plan for develop_nt of the "Pierside Restaurants"
which includes:
The development of two new restaurant pads - (25,000 sq.ft.) ;
Acou-, nodations for the relocation of the existing maxvell's
Restaurant - (15,000 sq.ft.) ;
The development of a parking structure, including sarface and
subsurface parking for both beachgoexs and restaurant patrons;
'Ihe develoFmnt of beach-related corraessions, including
approximately 6,000 sq,ft. of casual dining space; and
Authorize staff and the developer of Pierside to negotiate for the
relocation and integration of maxwell's into the Pierside plan.
On Septerl 18, 1988, the City Council adapted a a "Pier Plaza" concept that
calls for the development of a 2.1 acre "Pier Plaza" to be located between the
base of the Pier and Pacific Coast Highway. Approximately one-half of
Mxwell's Restaurant as it exists today lies within the adopted 2.1 acre
footprint of this plan. As a result, the negotiations for the rehabilitation
CITY OF HUNTINGTON BEACH
INTER-DEPARTMENT COMMUNICATION
HUVTINGTON 1WH
To MICHAEL T. UBERUAGA From ROBERT J. FRANZ
City Administrator Deputy City Administrator
Subject REQUEST FOR APPROPRIATION Date NOVEMBER 7, 1990
TO FINANCE REDEVELOPMENT
PROJECTS, FIS 90-45
This fiscal impact statement has been prepared to determine the impact of approving
funding for three development projects in the Main/Pier area. Unless existing projects are
cancelled and commitments to fund those projects are modified, there is not any identifiable
funding available for the three projects. Our most recent analysis of Main/Pier
Redevelopment funds indicates that for the current year (fiscal year 1990/91) that there are
commitments that will utilize all of the available funding. Current commitments will have
to be cancelled or modified prior to making additional funding commitments (such as the
Pierside Restaurants Project, Third Block West Condominimum Development and design of
the Pier Plaza) I
1 '
rl
ROBERT J. t RANZ
Deputy City Administrator
RJF:sd
5535j
FIRST AMENDED
PIER SIDE LEASE
By and Between
THE REDEVELOPMENT AGENCY OF THE CITY OF H'JNTINGTON BEACH
and
STANLEY BLOOM
i
TABLE OF CONTENTS
Page
1 . RECITALS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
2 . PREMISES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
3 . INGRESS AND EGRESS. . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
4. TERM. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
5 . REQUIRED SERVICES AND USES - LIMITATION
ONUSE. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
6. DEVELOPMENT OF THE PREMISES AND ADJACENT AREAS 4
a. Scope of Development and Cost of
Construction. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
b. Construction Schedule. . . . . . . . . . . . . . . . . . . . . 4
c. Certificate of Completion. . . . . . . . . . . . . . . . . 4
7. RENT. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
a. Percentage Rental. . . . . . . . . . . . . . . . . . . . . . . . . 5
b. Parking Payment. . . . . . . . . . . . . . . . . . . . . . . . . . . 8
c. Subordination. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
d. Public Parking . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
e. Rent Credit. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
E. Appraisal Procedure . . . . . . . . . . . . . . . . . . . . . . 10
g. Lesso. Expenditure Maxinum. . . . . . . . . . . . . . . . 12
8. SECURITY DEPOSIT. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
9. CONDITION OF TITLE, COVENANT OF QUIET
•ENJOYMENT. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
10. NOTICES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
11 . THIRD PARTY BENEFICIARY. . . . . . . . . . . . . . . . . . . . . . . 15
12 . EXHIBITS - INCORPORATION INTO LEASE. . . . . . . . . . . 15
' -i-
EXHIBITS
A Legal Description of Premises
B General Conditions
C Conditions to Commencement
D Scope of Development
E Schedule of Performance
F Certificate of Commencement Date
-ii-
FIRST AMENDED PIER SIDE LEASE
This FIRST AMENDED PIER SIDE LEASE (the "Lease") is entered
into this day of , 1990 (the "Effective Date") ,
by and between the REDEVELOPMENT AGENCY OF THE CITY OF
HUNTINGTON BEACH, a public body, corporate and politic
("LESSOR" ) , and STANLEY M. BLOOM, an unmarried man ( "LESSEE") ,
who agree as follows:
1 . RECITALS: This Lease is made with reference to the
following facts, objectives and covenants:
a. On or about August 19, 1985, LESSOR, HUNTINGTON
PACIFICA DEVELOPMENT GROUP; and the City of
Huntington Beach, a municipal corporation (the
"City" ) , entered into a Disposition and
Development Agreement, which agreement was
modified on or about February 18, 1986 (the
"DDA") . The DDA provided for the disposition and
development of two parcels located in the City of
Huntington Beach, California, one of which
parcels encompassed the Premises described herein
(and other adjacent property that has been
deleted from the Premises) . LESSEE hereunder is
a shareholder in Randall Foods, Inc. , which was
the parent of Pacific Heritage Land and Holding
Company, which in turn was the parent of Pacific
Heritage Corporation, one of the general partners
in HUNTINGTON PACIFICA DEVELOPMENT GROUP, and
LESSEE thereby had a substantial interest in the
DDA.
b. On or about November 20, 1986, LESSOR and PIER
SIDE DEVELOPMENT, the successor-in-interest to
HUNTINGTON PACIFICA DEVELOPMENT GROUP, entered
into a lease (the "Pier Side Lease" ) . The Pier
Side Lease provided for the disposition and
development of the parcel described in the DDA
that encompassed the Premises described herein.
Huntington Pacifica Development Group was a
general partner in PIER SIDE DEVELOPMENT, and
LESSEE thereby had a substantial interest in the
Pier Side Lease.
C. LESSOR and LESSEE, as the successor-in-interest
to PIER SIDE DEVELOPMENT, desire to amend and
restate the Pier Side Lease on the terms and
conditions set forth herein. LESSOR and LESSEE
agree that the DDA, including without limitation
the Guarantees set forth as Attachments 7-10
thereto, is of no further force and effect, and
that the Pier Side Lease, including without
limitation the Guarantees set forth as Exhibits
F, G, and H, thereto is superseded and amended by
this Lease and shall be of no further force or
effect on the Effective Date.
d. The City is currently the owner of that parcel of
real property located in the City of Huntington
Beach, State of California, described in Exhibit
"A" hereto and incorporated herein by this
reference (the "Premises" ) . Subject to the
satisfaction or waiver of all of the "Conditions
to Commencement" (Exhibit "C" hereto) , LESSOR
shall acquire the Premises from the City on or
before the "Commencement Date" of the Lease term,
as that date is defined in- paragraph 4 below.
e. On , 1990, by Resolution
No. LESSOR approved and authorized its
Chairman to execute this Lease.
f. This Lease is entered into for the redevelopment
of property consistent with the public purposes
of the Main-Pier Redevelopment Plan, as
previously adopted by the City Council of the
City, and not for the purpose of speculation in
unimproved land.
g. The development of the Premises pursuant to the
terms of this Lease shall improve public access
to the public beach and recreational access and
use of the Premises by creating amenities
designed for year-round use and enjoyment by the
public at the Premises as well as improving and
facilitating vehicular, pedestrian, cycling and
handicapped access to and through the Premises.
2 . PREMISES: LESSOR agrees to lease to LESSEE and LESSEE
agrees to lease from LESSOR the Premises, as described in
Exhibit "A", upon the terms and conditions expressed herein.
3 . INGRESS AND EGRESS: LESSEE shall have access, as
approved by the City and Caltrans, pursuant to the approved
building plans for the development proposed herein, to all
portions of the Premises at all times during the entire Lease
term, including without limitation, access from the nearest
public streets (Pacific Coast Highway and Lake Street) to the
Premises, pedestrian access from all adjacent public spaces and
ways (which include but are not limited to the municipal pier
and beach) to the Premises, and limited access from the access
road/bike trail in accordance with Paragraph 7 of the Scope of
Development (Exhibit "D" ) . Access points shall be limited as
provided on the plans and permits to be approved by the City,
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as referenced in Paragraph 1 of the Conditions to Commencement
(Exhibit "C" ) , as the same may be revised from time to tine.
LESSEE shall provide full public access to all of the promenade
and plaza portions of the Premises consistent with security and
safety regulations promulgated by any governmental authority
with jurisdiction. LESSEE shall further provide access to the
public parking facilities to be located on the Premises at a
minimum in accordance with applicable governmental regulation
or from at least 5:00 A.M. to twelve midnight each day on a
year-round basis.
4. TERM: The term of this Lease shall be fifty-five (55)
years, subject to extension pursuant to Paragraph 7(a) (ii )
below, commencing on the date (herein the "Commencement Date" )
that all of the conditions to the commencement of the Lease
term described in Exhibit "C" hereto ( "CONDITIONS TO
COMMENCEMENT" ) are satisfied or their performance is waived by
the appropriate party. Upon the Commencement Date, LESSOR and
LESSEE each agree, upon the request of the other party, to
execute and record in the Official Records of Orange County an
appropriate memorandum certifying the actual Commencement Date
in the form attached hereto as Exhibit "E'" .
5. REQUIRED SERVICES AND USES LIMITATION ON USE:
LESSOR' s primary purpose for entering into this Lease are to
provide for improved accessibility and use of the Premises by
the public through the development of facilities and services
needed by the public as part of the implementation of the
Redevelopment Plan for the Main-Pier Redevelopment Project (the
"Redevelopment Plan" ) .- In furtherance of that purpose, LESSEE
shall during the Lease term use the Premises for the purpose of
constructing and operating thereon restaurant and food and
beverage facilities, beach-related concessions, retail shops,
and a parking structure designed to accommodate such uses and
public beach parking, all in accordance with the Scope of
Development (Exhibit "D" ) and the Conditional Use Permit,
Coastal Development Permit, and final building plans and
specifications to be approved for the project referenced
therein, as such matters may be amended or- changed as provided
herein. Provided that LESSEE obtains all permits and approvals
which may be required by the City and any other governmental
agency with jurisdiction, LESSOR agrees that the permitted uses
on the Premises shall also include outdoor dining, the serving
of alcoholic beverages in conjunction with the restaurant and
food and beverage facilities, entertainment, and the staging of
special outdoor events on the Premises including, but not
limited to, art exhibitions, musical performances and retail
merchandising activities. LESSEE shall not use or suffer the
Premises to be used for any other purpose without the prior
written consent of LESSOR.
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6. DEVELOPMENT OF THE PREMISES AND ADJACENT AREAS:
a. Scope of Development and Cost of Construction:
LESSEE shall construct or cause to be constructed
at no expense to LESSOR the "Improvements" on the
Premises as set forth in Section I of the Scope
of Development (Exhibit "D" ) . The cost of the
public parking spaces constructed or caused to be
constructed on the Premises by Lessee shall be
paid for in full by Lessor pursuant to Paragraph
7(d) of this Lease. The additional debt cost to
LESSEE of multi-level parking as compared to at
grade parking shall be credited against the
rental payments otherwise due from. LESSEE to
LESSOR pursuant to Paragraph 7(e) of this Lease.
b. Construction Schedule: Subject to the other
terms and conditions set forth herein, including
without limitation Paragraph 30 of the General
Conditions (Exhibit "B") , LESSEE shall begin and
complete all construction required of it within
the times specified in the Schedule of
Performance (Exhibit "E" ) . The Schedule of
Performance may be modified by approval of LESSEE
and the LESSOR' s Executive Director. LESSOR
agrees that any and all construction plan
checking and field inspections related to the
construction of the Improvements may be submitted
to deputy or independent plan checkers or field
inspectors hired by LESSEE but certified by
LESSOR and/or City. LESSOR further agrees that
the approval or certification of such deputy or
independent inspectors will not be unreasonably
withheld or conditioned.
C. Certificate of Completion: Promptly after
LESSEE s completion of construction of all the
Improvements, but excluding normal and- customary
tenant improvement items, LESSOR shall furnish
LESSEE with a Certificate of Completion upon
written request therefor by LESSEE. LESSOR shall
also furnish partial Certificates of Completion
for individual buildings or portions of buildings
on the Premises. LESSOR shall not unreasonably
withhold any such Certificate of Completion.
Such Certificate of Completion shall be a
conclusive determination of satisfactory
completion of the construction required by this
Lease as to which the Certificate relates and the
Certificate of Completion shall so state. After
recordation of such Certificate of Completion,
any party then owning or thereafter purchasing
the improvements, leasing the Premises, or
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otherwise acquiring any interest in the Premises
or improvements covered by the Certificate of
Completion shall not (because of such ownership,
purchase, lease or acquisition) , incur any
obligation or liability under this Lease with
respect to LESSEE' s initial construction
obligations hereunder.
Each Certificate of Completion of
construction shall be in such form as to permit
it to be recorded in the Recorder' s Office of
Orange County.
I£ LESSOR refuses or fails to furnish a
Certificate of Completion after written request
from LESSEE, LESSOR shall, . within thirty (30)
days of written request therefor, provide LESSEE
with a written statement of the reasons LESSOR
refused or failed to furnish a Certificate of
Completion. The statement shall also contain
LESSOR' s statement of the actions LESSEE must
take to obtain a Certificate of Completion. If
the reason for such refusal is confined to the
immediate availability of specific items of
materials for landscaping, LESSOR will issue its
Certificate of Completion upon the posting of a
bond, letter of credit, or cash deposit by LESSEE
with LESSOR in an amount representing the fair
value of the work not yet completed as determined
by the Executive Director of the LESSOR.
Such Certificate of Completion shall not
constitute evidence of compliance with or
satisfaction of any obligation of LESSEE to any
holder of any mortgage, or any insurer of a
mortgage securing money loaned to finance the
improvements, or any part thereof. Such
Certificate of Completion is not a notice of
completion as referred to in the California Civil
Code, Section 3093 .
7. RENT: Subject to subparagraph (e) below and all of
the other terms and conditions set forth in this Lease,
including without limitation Paragraphs 7-9 of Exhibit "B",
LESSEE shall pay to LESSOR rent and LESSOR shall pay LESSEE to
construct the beach public parking as follows:
a. Percentage Rental :
(i ) Basic Percentage. Beginning with the
date which is the first anniversary of the
Commencement Date, and continuing thereafter
LESSEE shall pay to LESSOR a Percentage Rent
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of the Gross Sales Receipts generated from
the Premises during each calendar quarter or
partial calendar quarter during such period
according to the following schedule:
Gross Sales Percentage
Receipts Threshhold Rent Rate
{* in millions of dollars)
less than 35* 2%
less than 55 2-1/20
less than 100 3%
100 and above 3-1/40'
Quarterly rent payments shall be determined
by multiplying the Gross Sales Receipts
generated for such quarter by the Percentage
Rent Rate used in the previous calendar
year. Once a Gross Sales Receipts
Threshhold is achieved, the Percentage Rent
Rate shall not be reduced below such
Percentage Rent Rate and as each new Gross
Sales Receipts Threshhold is achieved, the
new Percentage Rent Rate shall be
established and not subsequently lowered
notwithstanding that Gross Sales Receipts in
a subsequent calendar year may fall below a
previously achieved thresh-hold. In the
event that the annual Gross Sales Receipts
reconciliation pursuant to Paragraph 9 of
Exhibit "B" reveals that a higher Gross
Sales Receipts Threshhold had been reached
in such preceeding calendar year, LESSEE
shall pay to LESSOR within thirty (30) days
after such determination an amount equal to
the Gross Sales Receipts for such calendar
year multiplied by the difference between
the prior Percentage Rent Rate and the new
Percentage Rent Pate for the higher Gross
Sales Receipts Threshhold.
(ii ) Option to Rehabilitate. Beginning with
the thirty-first (31st) year of the term of
this Lease and during the succeeding two ten
( 10) year periods thereafter, LESSEE shall
have the option of extending the term of the
Lease an additional twenty-five (25 ) years
in return for undertaking a major renovation
of the Premises, which, for the purpose of
this provision shall be an expenditure by
LESSEE and its subtenants, within a
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twenty-four (24) month period, as approved
by LESSOR (which approval shall not be
unreasonably withheld or conditioned) , in an
amount equal to or greater in value than
fifty percent (50%) of the total replacement
cost of the Improvements not including the
parking facilities and not including
twenty-five percent (25%) of the Furniture,
Fixtures and Equipment installed on the
Premises at the commencement of the
twenty-four (24) month renovation period.
In the event LESSEE elects to exercise the
option provided in this Subparagraph (ii) ,
in the fifty-fifth (55th) year after the
Commencement Date, the Premises shall be
appraised according to the method set out in
Paragraph 7(f) below and the Rent shall
convert in the fifty-sixth (56th) year after
the Commencement Date to the then "market
value" (as established by the appraisal
pursuant to Faragraph 7(f), below) of the
existing use (the "Option Rent" ) . The
Option Rent shall increase at the beginning
of each successive five (5) year period
(i .e. : years 61, 66, 71 and 76 from the
Commencement Date) through the expiration of
the option period by the multiple of the
Index, as defined below, however the
application of .such Index shall result in a
minimum increase of three percent and
maximum increase of seven percent (7%) on a
per year basis even if the actual Index
would dictate a greater or lesser multiplier.
• (iii) Base Percentage Rental. In the event
at year thirty-one (31) of this Lease,
• LESSEE elects not to exercise the option
provided in paragraph (ii) above, then a
base rent shall be established (the "Base
Rent" ) by taking seventy-five percent (75%)
of the average of the Gross Sales Receipts
for years 28, 29 and 30. This Base Rent
shall be in force until year 41 at which
point it shall be reset until year 51 by
applying the same multiple to the average
Gross Sales Receipts for years 38, 39 and
40. The process shall repeat in year 51 and
be based on the average Gross Sales Receipts
for years 48, 49 and 50. However, in no
event shall the Base Percentage Rent fall
below a prior set base. If in any year a
site specific occurrence or a general
economic downturn results in the application
of the above Base Rent being a grossly
unfair burden on the LESSEE, the LESSEE has
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the right to appeal the application of the
Base Rent as to a specific calendar year and
LESSOR may allow an abatement of all or a
portion of the Ease Rent requirement for a
given year. In the event that the parties
hereto cannot reach an accord on an appeal
of Base Rent, then LESSEE may appeal the
application of Base Rent by LESSOR to the
judge provided for in Paragraph 31 of
Exhibit "B" hereto. In such appeal, the
judge shall analyze the shortfall in Gross
Sales Receipts to determine if it is the
result of site specific or general market
conditions and not reasonably attributable
to the operational performance of LESSEE or
its subtenants. If the judge finds (i ) that
site specific or general market conditions
are the cause of the shortfall and,
(ii) that such an application would be
"grossly unfair" burden on the LESSEE, then
she shall have the authority to abate the
Base Rent in an amount that is fair and
equitable to the interests of both parties
hereto.
b. Parking Payment: LESSEE shall pay to LESSOR
a quarterly payment of Twenty-seven Thousand
Five Hundred Dollars ($27,500) (the "Parking
Payment" ) to be annually adjusted by the
Consumer Price Index (the "Index" ) capped
annually at seven percent (7%) in
consideration of the right to charge parking
fees for use .by the public of the parking
structure. The "Index" , as used in this
• Lease shall be deemed to mean The United
States Department of Labor, Bureau of Labor
Statistics Consumer Price Index for All
Urban Consumers, Los Angeles-Anaheim-
Riverside Area (1982-84=100) . If at any
time the Index shall cease to exist in the
format recited herein, LESSOR shall
substitute any official index published by
the Bureau of Labor Statistics or successor
or similar governmental agency as may then
be in existence that shall, in LESSOR' s
reasonable opinion, be most nearly
equivalent thereto. Fees charged by LESSEE
for use of a parking space may be the
greater of the amount of Five Dollars
($5.00) per day, to be annually adjusted by
the Index capped annually at seven percent
(7%) or an amount equal to one hundred and
twenty percent (1207.) of the maximum per day
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rate charged by the City or LESSOR in a City
or LESSOR-owned parking structure. In the
event that the City determines to allow a
City parking permit to be used in lieu of
paying a per day fee in all other City or
LESSOR owned beach parking facilities, the
LESSEE shall allow the use of such a permit
and waive a parking charge. In the event
LESSEE provides evidence to LESSOR that the
permit usage is preventing the LESSEE from
obtaining an equitable rate of return in
operating the parking facility, adjustments
may be made to the Parking Payment as
reasonably approved by LESSOR.
C. Subordination: LESSOR agrees to execute
appropriate documents required to
subordinate its right to receive rent
pursuant to this Lease for an amount not to
exceed Fourteen Million Five Hundred
Thousand Dollars ($14,500,000) to financing
approved by LESSOR in accordance with
Paragraph 16.A of Exhibit "B. "
d. Public Parking Construction Payment. LESSEE
shall construct a parking structure
sufficient to park both the spaces required
by the uses to be conducted on the Premises
and 250 public parking spaces. LESSOR shall
pay to LESSEE an amount equal to Four
Million Dollars ($4,000,000) as compensation
for the cost of constructing the 250 public
parking spaces at the time provided in the
Schedule of Performance (Exhibit "E") .
LESSEE shall either pay prevailing wages
according to state law for at least that
portion of the parking structure which shall
provide the public parking spaces or shall
indemnify, defend and hold harmless LESSOR
and/or City from any claim or action arising
out of LESSEE' s failure to pay prevailing
wages and/or LESSOR' s failure to make such
payment mandatory in this Lease. The form
of the bid package for the parking structure
shall be submitted to the City Attorney' s
office for review and approval . The
submission shall be deemed approved thirty
(30) days from the date of submittal unless
a written statement itemizing objections is
received by LESSEE prior to the expiration
of such thirty (30) day period.
e. Rent Credit: Notwithstanding any other
provision of this Lease to the contrary,
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LESSEE shall be entitled to a credit against
the first rental payments otherwise due in
an amount equal to the difference between
LESSEE' S amortized debt on the approved cost
of construction of the spaces required to
park the commercial uses of the multi-level
parking structure to be constructed on the
Premises (assuming a 30-year loan at 11%
interest) and what the amortized debt for
the cost of the construction of a single
level at grade parking facility would have
been (assuming a 30 year loan at 11%
interest) . The parties agree for purposes
of this paragraph that the difference in
cost of the amortized debt for a single
level at grade parking facility and the
structured parking as proposed in the Scope
of Development (Exhibit "D" ) is equal to a
One Million Collar ($1,000,000) up-front
payment followed by 30 annual payments of
Three Hundred and Twenty-F�ive Thousand
Dollars ($325,000) (the "Differential
Cost" ) . The annual payments (or rent
credits) were caluclated based on interest
at the rate of eleven percent (11%) per
annum compounded annually, commencing as
LESSEE incurs costs for such portion of the
Improvements and continuing thereafter until
the rent credit has been fully applied.
Notwithstanding the above, LESSOR shall have
the right to prepay the amount of the
Differential Cost without penalty and with
only such interest as has already accrued.
f. Appraisal Procedure. In the event that
this Lease is extended pursuant to
Subparagraph (ii) of Paragraph 7(a) above,
the Premises shall be appraised in the 55th
year after the Commencement Date at the then
current fair market value of the Premises
determined in accordance with the then
current and actual use being made of the
Premises as permitted by this Lease and
without assuming any change of use whether
or not permitted by the terms of the Lease
and without regard to any residual value for
any future or potential use. The appraisal
shall not include the value of the existing
Improvements on the Premises and shall only
consider the existing Improvements on the
Premises for the purpose of determining the
then current and actual use being made of
the Premises. The appraisal procedure shall
be conducted as follows:
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L..J LJ
(i) Such appraisal shall be conducted and
made by three (3) appraisers, each of whom
Shall be a member of the American Institute
of Real Estate Appraisers, qualified for the
purpose of appraising the Premises. The
appraisal by each appraiser shall be made in
accordance with the then standard practices
of the American Institute of Real Estate
Appraisers or any successor organization.
(ii ) Either LESSOR or LESSEE shall appoint
in writing an appraiser and give written
notice thereof to the other, and within
fifteen (15) days after service by such
party on the other of such notice, the other
party shall, in a like manner, appoint an
appraiser and give written notice thereof to
the other party. In case of failure of
either party to appoint an appraiser, the
other party shall have the right to apply to
the president of the local. Chapter of the
American Institute of Real Estate Appraisers
in the County in which the premises are
situated to appoint an appraiser to
represent the defaulting party. In the
event the president of such Chapter declines
to appoint an appraiser, the executive
committee of said Chapter may appoint an
appraiser for the defaulting party. In the
event that the executive committee of said
Chapter declines to appoint an appraiser,
the party having appointed an appraiser
shall have the right to appoint a second
appraiser to act on behalf of the party
failing to appoint an appraiser. The two
appraisers thus appointed, in either manner,
shall select and appoint in writing a third
appraiser and give written notice thereof to
LESSOR and LESSEE, of if within ten (10)
days after the appointment of the second
appraiser the two appraisers so appointed
shall fail to appoint a third appraiser,
then either party hereto may apply the
default methodology for the selection of an
appraiser outlined above.
(iii ) The three (3 ) appraisers so appointed
(in either manner) shall promptly fix a time
for completion of the appraisal, which time
shall be no later than ninety (90) days from
the date of the appointment of the last
appraiser. The appraisers shall notify
LESSOR and LESSEE as to the said date fixed
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for such completion. On that date the three
(3 ) appraisers shall submit their appraisals
in writing in the then usual form to LESSOR
and LESSEE. The parties agree that for the
purpose of calculating the value to be
determined by appraisal the appraised value
shall be deemed to be that amount which is
determined by taking the average of the two
(2) appraisal figures which are closest to
each other. each of the parties hereto
shall pay for the services of its appointee
(whether or not said appraiser is selected
by default) and one-half (1/2) of the costs
of the services for the third appointee.
g. Lessor Expenditure Maximum. The total
amounts of costs or expenditures to the
LESSOR separate and apart from the Public
Parking Construction Payment in Paragraph
7(d) and the Rent Credit in Paragraph 7(e)
above, prior to the issuance of the
Certificate of Completion for the
Improvements, shall not exceed One Million
Dollars ($1,000,000) . This cap on
expenditures includes, but is not limited
to, all costs incurred or to be incurred due
to litigation, hazardous waste remediation,
relocation of existing tenants and provision
of utilities to the Premises. Any such
costs incurred as a result of the
construction of the Improvements pursuant to
this Lease which in aggregate exceed One
Million Dollars shall become the obligation
of the Lessee. Costs incurred, after the
issuance of the Certificates of Completion
shall be allocated between the parties as
provided in this Lease.
8. SECURITY DEPOSIT: Within ten (10) days after the
Commencement Date, LESSEE shall deposit with LESSOR the sum of
Fifty Thousand Dollars ($50,000) (in the fora of a certificate
of deposit in the name of LESSOR, or an irrevocable and
unconditional letter of credit, for two hundred seventy (270)
days which shall be sight draft, of a term, in a form, and by a
bank all acceptable to LESSOR in its reasonable discretion) as
a security deposit for the performance by LESSEE of the
provisions of this Lease required to be performed by LESSEE
prior to LESSOR' s issuance of its final Certificate of
Completion for the Improvements. If the security deposit is a
certificate of deposit, interest shall be credited to LESSEE
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and withdrawn and paid to LESSEE quarterly. If it is a letter
of credit, the letter of credit shall authorize the LESSOR to
draw funds from the letter of credit by presenting a sight
draft and certification for payment in the event of a default
as defined in Exhibit "B" Paragraph IS of this Lease by
LESSEE. It shall be a condition of the letter of credit that
it shall be deemed automatically extended without amendment for
two hundred seventy (270) days from its current or future
expiry date unless, not less than thirty (30) days prior to
such expiry date, the issuer shall notify the LESSOR by
registered trail that the issuer has elected not to renew the
letter of credit for any additional period of time. In that
event, LESSEE shall immediately extend or replace the letter of
credit. If LESSEE has failed to extend or replace the letter
of credit ten (10) days prior to its expiry date, the LESSOR
may draw against the letter of credit by 'presenting LESSOR' s
sight draft. Provided, however, that if the LESSOR draws down
on the letter of credit pursuant to this Paragraph 8, the
LESSOR shall return such funds to LESSEE within ten (10) days
of LESSEE' s providing a new letter of credit consistent with
the provisions of this Paragraph S.
During the period that LESSOR is entitled to hold the
Security Deposit, if LESSEE is in default, and such default is
not cured and is not being cured in accordance with paragraph
18 of Exhibit %, " LESSOR can use the security deposit, or any
portion of it, to cure the default or compensate LESSOR for all
damages sustained by LESSOR resulting from LESSEE' s default and
LESSEE shall immediately on demand pay to LESSOR a sun equal to
the portion of the security deposit expended or applied by
LESSOR as provided in this paragraph so as to maintain the
security deposit in the sum initially deposited with LESSOR.
The security deposit (or such remaining portion thereof that
has not been used by LESSOR to cure LESSEE' s default or to
compensate LESSOR for damages sustained by LESSOR resulting
from LESSEE' s default) shall be refunded promptly after the
earlier of the following: (i) the date upon which LESSEE has
completed the Improvements (excluding tenant improvements) and
LESSOR is obligated to issue its final Certificate of
Completion, or (ii) the expiraticn or termination of this
Lease. LESSOR' s obligations with respect to the security
deposit are those of a debtor and not a trustee. LESSOR shall
be permitted to maintain the security deposit separate and
apart from LESSOR' s other funds or can co-mingle the security
deposit with LESSOR' s funds.
9. CONDITION OF TITLE_ COVENANT OF QUIET ENJOYMENT:
Subject to LESSEE' s satisfaction or LESSOR' s waiver of all of
the Conditions to Commencement (Exhibit "C" hereto) to be
satisfied by LESSEE, and subject to the exceptions in
Exhibit "C" hereto, LESSOR covenants to convey to LESSEE the
leasehold estate to the Premises in the "Approved Title
10/21/90
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Condition" referenced therein. LESSOR further covenants that,
at the Commencement Date, LESSOR, shall cause First American
Title Insurance Company, or such other title company as may be
mutually approved by LESSOR and LESSEE, (the ' "Title Company" ) ,
to deliver to LESSEE an ALTA Survey and ALTA Extended Coverage
(Form B) policy or policies of title insurance issued by the
Title Company insuring that the leasehold estate is vested in
LESSEE in such condition. The Title Company shall provide
LESSOR with a copy of the title policy. The total amount of
title insurance coverage for the Premises shall be the sum of
Five Million One Hundred Thousand Dollars ($5, 100,000) .
LESSOR shall pay that portion of the cost and expenses of
the premium for the title policy which is equal to what the
premium would have been if the title policy were a CLTA policy,
and LESSEE shall pay the balance of such premium. LESSEE shall
pay the cost of any new survey required in order to obtain the
title policy. LESSEE shall pay the cost for any additional
coverage or endorsements that it may request.
Subject to the exceptions in Exhibit "C" hereto, LESSOR
covenants that LESSEE, after the Commencement Date and upon
performing the covenants in the Lease required to be performed
by LESSEE, may quietly have, hold, and enjoy the Premises
during the term of this Lease without hindrance or interruption
by LESSOR or any party claiming by, through, or under LESSOR.
Not by way of limitation of the foregoing, and except as
specifically set forth in Exhibit "C", in the event any adverse
claim is made or threatened impairing LESSEE' s leasehold title,
other than a claim by -any part claiming by, through, or under
LESSEE, LESSOR, at its sole expense, shall take all required
actions, including filing and diligent prosecution of quiet
title and/or ejectment suits if -necessary, to remove such
adverse claim or cloud on LESSEE' s title.
Subject to the overall limit of expenses by LESSOR in
Paragraph 7(g) above, LESSOR shall pay those costs necessary to
relocate all currently existing LESSEEs and subtenants on the
Premises pursuant to Exhibit "D" II .5.
10. NOTICES: Any notice, demand, request, consent,
approval or communication that either party desires or is
required to give to the other party or any other person shall
be in writing and either served personally or sent by prepaid
first class mail to the other party at the address set forth
below:
TO LESSOR:
Redevelopment Agency of the City of Huntington Beach
Attn: Executive Director/City Administrator
2000 Main Street
Huntington Beach, California 92646
20/21/90
1712u/2460/04 -14-
TO LESSEE:
Stanley V... Bloom
c/o Randall Foods, Inc.
2905 E. 50th Street
Vernon, CA 90058
WITH COPIES TO:
Jonathan Chodos
1559 So. Sepulveda Blvd.
Los Angeles, CA 90025
and any leasehold or subleasehold mortgagee
approved by LESSOR pursuant to Paragraph 16A
of Exhibit "B" that requests in writing
that LESSOR provide such notice.
Either party may change either its designee or its address by
notifying the other party of such change.
11 . THIRD PARTY BENEFICIARY: The City (but no other
person or entity) shall be deemed a third party beneficiary of
this Lease.
12 . REPRESENTATIONS BY LESSEE: The LESSEE represents and
warrants to the LESSOR as follows:
1 . The LESSEE has full authority from all prior
interested parties, as specified in recital of Paragraph 1 to
this Lease to execute and deliver this Lease and any and all
other agreements and documents required to be executed and
delivered by the LESSEE in order to carry out, give effect to,
and consummate the transactions contemplated by this Lease.
2. The LESSEE does not have any material contingent
obligations or any material contractual agreements which could
materially adversely affect the ability of the LESSEE to carry
out its obligations hereunder.
3 . There are no material pending or, so far as is
known to the LESSEE, threatened, legal proceedings to which the
LESSEE is or may be made a party or to which any of its
property is or may become subject, which have not been fully
disclosed in the material submitted to the LESSOR which could
materially adversely affect the ability of the LESSEE to carry
out its obligations hereunder.
4. There is no action or proceeding pending or, to
the LESSEE' s best knowledge, threatened, looking toward the
dissolution or liquidation of the LESSEE and there is no action
or proceeding pending or, to the LESSEE' s best knowledge,
10/21/90
1712u/2460/04 -15-
threatened by or against the LESSEE which could affect the
validity and enforceability of the terms of this Lease, or
materially and adversely affect the ability of the LESSEE to
carry out its obligations hereunder, (excepting only the
potential state lands commission claim set out in Exhibit "C"
Paragraph 3) .
Each of the foregoing items I to 4, inclusive, shall
be deemed to be an ongoing representation and warranty. The
LESSEE shall advise the Agency in writing if there is any
change pertaining to any matters set forth or referenced in the
foregoing items 1 to 4, inclusive.
13 . EXHIBITS - INCORPORATIO14 INTO LEASE: The following
exhibits referred to in this Lease are attached hereto and by
this reference incorporated herein:
Exhibit "A" Legal Description of Premises
Exhibit "B" General Conditions
Exhibit "C" Conditions to Commencement
Exhibit "D" Scope of Development
Exhibit "E" Schedule of Performance
Exhibit "F" Certificate of Commencement Date
REDEVELOPMENT AGENCY OF THE CITY
OF HUNTINGTON BEACH, a public
body, corporate and politic
1990 By
Chairman
ATTEST:
Agency Secretary
APPROVED AS TO FORM: INITIATED AND APPROVED AS TO
CONTEUT:
Agency Special Counsel Deputy City Administrator/
Economic Development
10/21/90
1712u/2460/04 -16-
REVIEWED AND APPROVED APPROVED:
AS TO FORM:
Agency Attorney Executive Director
STANLEY M. BLOOM, an unmarried
man ( "LESSEE" )
D 1990
10/21/90
1712u/2450/04 -17-
EXHIBIT "A"
LEGAL DESCRIPTION
That portion of Huntington Beach, County of Orange, State of
California as shown on a map recorded in Soak 3, Page 36 of
Miscellaneous Maps in the office of the County recorder of said
county described as follows:
Beginning at the centerline intersection of
Pacific Coast Highway and Lake Street, shown
as Ocean Avenue and First Street respectively,
on said mentioned map; thence along the
centerline of Pacific Coast Highway south
48°21 '42" east 37.50 feet to the intersection
with the southwesterly extension of the
southeast right-of-way line of Lake Street;
thence south 41'38' 18" west 50.00 feet to the
true point of beginning; thence north
48021' 42" west 1,020.00 feet; thence south
41038' 18" west 200.00 feet; thence south
46021'42" east 1020.00 feet; thence north
41°36' 18" east 200.00 feet to the true point
of beginning.
10/21/90 EXHIBIT "A"
1712u/2460/04
EXHIBIT "B"
GENERAL CONDITIONS
TABLE OF CONTENTS
Paragraph # C_ aption
1 . Charge for Late Payment
2. Utilities
3 . Construction of Improvements
by LESSEE
4. Signs
S. Destruction
6. Maintenance
7. Gross Rental Receipts
S. Rent Payment Procedure and
Accounting
9. Records, Books of Account,
Accounting Statements and Audits
10. Insurance
11. Indemnity
12 . Taxes and Assessments
13 . Unlawful Use
14. Abandoned Personal Property
15. Holding Over
16. Assigning, Subletting and
Encumbering
17. Successors in Interest
18. LESSEE' s Default
19. LESSOR' s Remedies
10/21/90 EXHIBIT "B"
1712u/2460/04 Page 1 of 35
2 0. LESSOR' s Default
21. Quitclaim of LESSEE' s Interests
Upcn Termination
22 . Total Taking
23. Partial Taking
24. Eminent Domain Award
25. Amendments
26. Captions
27. California Law
28. Waiver
29. Nondiscrimination
30. Force Majeure
31. Resolution of Disputes
32. Time
33. Nor. Disturbance and Recognition
34. Estoppel Certificate
35. Hazardous Waste
10/21/90 EXHIBIT "B"
1712u/2460/04 'Page 2 of 35
EXHIBIT "B"
GENERAL CONDITIONS
1. CHARGE FOR LATE PAYMENT: Rent not paid when due shall
accrue interest at the rate of twelve percent (12%) per annum
commencing five days from the date due until paid.
2 . UTILITIES: LESSOR agrees to provide, at no expense to
LESSEE, all Utilities (water, sewer, gas, electrical, and
telephone) required for the development, use and maintenance of
the Improvements, with sufficient capacities to adequately
service the Premises, with such Utilities to be located on the
Premises or stubbed no farther away than' 3 feet from the curb
within the Premises along the west side of Pacific Coast
Highway. LESSEE agrees to extend all Utilities from said
locations and to be responsible for tie-ins and metering.
LESSEE shall make all arrangements for and pay for all Utility
services furnished to or used by it, including without
limitation gas, electricity, water, sanitary sewer, cable
television, telephone service, trash collection, and Utilities
used or consumed at public rest rooms to be constructed by
LESSEE on the Premises.
3 . CONSTRUCTION OF IMPROVEMENTS BY LESSEE:
a. Statement of Construction Costs and "As Built"
Plans: •Prior to LESSOR s issuance of its final
Certificate of Completion for the Improvements
described in the Scope of Development (Exhibit
"D" ) , LESSEE shall furnish LESSOR a complete set
of "As-Built" plans and an itemized statement of
the actual construction cost of such
improvements. The statement of cost shall be
signed by LESSEE or its responsible agent and
sworn to under penalty of perjury.
b. Alterations: Subject to obtaining all requisite
governmental permits and authorizations, LESSEE
shall have the right to make non-structural
alterations to the interior of any buildings
located upon the Premises, provided that the same
when complete are of a character which LESSEE
reasonably determines do not adversely affect the
value of the improvements and the rental value
thereof immediately before such alteration.
LESSEE shall not make or permit any significant
structural or exterior alterations, additions or
improvements to be made to or upon the Premises
inconsistent with the approved plans referenced
in the Scope of Development (Exhibit "D" ) as the
10/21/90 EXHIBIT "B"
1712u/2450/04 Page 3 of 35
same may be revised from time to time, without
first obtaining the written approval of LESSOR,
which approval shall not be unreasonably
withheld, conditioned or delayed.
Notwithstanding the foregoing, changes required
by authorized construction inspectors in order to
comply with applicable governmental requirements
shall be exempt from this approval requirement.
C. Imoroyements_ to_ Become Property of LESSOR;
Subject to subparagraph�(d) below, all buildings,
improvements and facilities, exclusive of Trade
Equipment and personal property constructed or
placed upon the Premises by LESSEE, must, upon
completion, be free and clear of all liens,
claims, or liability for labor and materials
(excepting rights of lenders, approved pursuant
to paragraphs 16.h and C and Equipment LESSORS
referenced in paragraph 16.E herein) , and all
such improvements and facilities, exclusive of
Trade Equipment and personal property, shall
become the property of LESSOR at the expiration
of this Lease, as it may be extended as provided
herein, or upon the earlier termination hereof.
d. Mechanic' s Liens: LESSEE shall at all times
indemnify and save LESSOR harmless from all
claims for labor and materials in connection with
construction, repair, alteration, and
installation of all structures, improvements,
equipment, and facilities upon the Premises, and
from the cost of defending against such claims,
including reasonable attorney' s fees.
In the event of a lien imposed upon the Premises
as a result of such construction, repair,
alteration, or installation, LESSEE shall either:
(1 ) Record a valid Release of Lien; or
(2) Deposit with LESSOR cash or an irrevocable
letter of credit in form and content
reasonably acceptable to LESSOR' s Executive
Director in an amount equal to 125% of the
amount of the lien and authorize payment to
the extent of said deposit to any subsequent
final judgment holder that may arise as a
matter of public record from litigation with
regard to the lienholder' s claim; or
(3) Procure and record a bond, in accordance
with Section 3143 of the California Civil
Code, which frees the Premises from the
10/21/90 EXHIBIT "B"
1722u/2460/04 Page 4 of 35
claim of the lien and from any action
brought to foreclose the lien.
Should LESSEE fail to accomplish one of the above within
ninety (90) days after the filing of such a lien, but in no
event after final judgment is entered, such failure shall be a
material default under this Lease. If LESSEE deposits cash or
a letter of credit or records a bond, as provided herein,
LESSOR shall promptly return the same (or unused portion
thereof) after the release of lien or satisfaction of judgment
is recorded, or LESSEE delivers other evidence reasonably
satisfactory to LESSOR that the dispute has been finally
resolved.
4. SIGNS: LESSEE, at its cost, shall have the right to
place, construct, and maintain exterior signs on the Premises
and the Improvements to be constructed by LESSEE thereon in
accordance with the plans approved by LESSOR and the City as
the same may be revised from time to time. LESSEE shall not
have the right to place, construct, or maintain on the Premises
any other exterior sign, advertisement, awning, banner or
decoration, except as permitted under the Huntington Beach
Ordinance Code.
5. DESTRUCTION:
a. Destruction Due to Risk Covered by Insurance_:
If, during the Lease term, the Improvements are
totally or partially destroyed from a risk
covered by the insurance described in paragraph
10(c) of these GENERAL CONDITIONS, this Lease
shall not terminate and LESSEE shall promptly and
diligently restore or cause to be restored the
Improvements to substantially the same condition
as they were in immediately before such
destruction, whether or not the insurance
proceeds are sufficient to cover the actual cost
of restoration; provided, however, that: (i ) if
such destruction occurs during the last ten (20)
years of the tear of this Lease, as may be
extended pursuant to Paragraph 7(a) (ii ) of the
Lease, LESSEE may elect not to restore the
Premises and to terminate this Lease, and (ii ) if
then-existing laws do not permit restoration of
the Improvements to within 95% of the size and
layout existing immediately before such
destruction, then LESSEE may either elect to
restore pursuant to the then-controlling laws and
regulations or LESSEE may elect to terminate this
Lease. If existing laws do not permit the
restoration, LESSEE may elect to terminate this
Lease by giving notice to LESSOR. In the event
this Lease is terminated as to all or any portion
10/21/90 EXHIBIT "B"
1712u/2460/04 Page 5 of 35
of the Premises, LESSOR and LESSEE shall share
any excess insurance proceeds on the basis of
their respective interests in the Improvements
after payment of any outstanding balance due any
leasehold and subleasehold mortgagees. LESSEE' s
election to terminate pursuant to this Paragraph
5(a) shall be made by giving written notice to
LESSOR no later than one hundred twenty (120)
days after the date of the casualty loss.
b. Destruction Due to Risk Not Covered by
Insurance: If, during the Lease term, the
Improvements are totally or partially destroyed
from a risk not covered by the insurance
described in paragraph 10(c) of these GENERAL
CONDITIONS, this Lease shall not terminate except
as expressly provided herein, and LESSEE shall
restore the Improvements to substantially the
same condition they were in immediately before
destruction; provided, however, if such
destruction occurs during the last 10 years of
the term of this Lease as may be extended or the
cost of restoration exceeds twenty percent (20%)
of the replacement value of the Improvements
immediately before their destruction, or if then
existing laws do not permit restoration; LESSEE
may elect not to restore the Premises and to
terminate this Lease, and (ii ) if then-existing
laws do not permit restoration of the.
Improvements to within 957. of the size and layout
existing immediately before such destruction,
then LESSEE may either elect to restore pursuant
to the then-controlling laws and and regulations,
or LESSEE may elect to terminate this Lease. In
the event that LESSEE elects to terminate this
Lease he shall give notice of such election to
LESSOR no later than one hundred twenty days
after the date of the casualty loss.
C. No Abatement of Rent: Provided that business
interruption insurance is available at
commercially reasonable rates to LESSEE in the
insurance market (as referenced in paragraph
10(d) and (e) below) , there shall be no abatement
or reduction of rent in the event of a total or
partial destruction of the Improvements. If,
however, LESSEE suffers such a casualty loss
during a period for which business interruption
insurance is not so available, and this Lease or
portion thereof is not terminated pursuant to
subparagraphs (a) or (b) of this Paragraph 5, the
Percentage Rent shall be abated only as to that
portion of the Improvements rendered not
10/21/90 EXHIBIT "B"
1712u/2460/04 Page 6 of 35
reasonably usable by the casualty loss in an
amount equal to the Percentage Rent generated by
that portion of the Improvements during the same
period in the previous year or, if such figures
are not available, in an amount determined by
dividing the square footage of gross leasable
area rendered unusable by the casualty loss by
the total gross leasable area on the Premises
immediately prior to the casualty loss and
multiplying the remainder by the Percentage Rent
payable during the same time period in the
previous year. The period of abatement shall run
from the date of the casualty loss to the earlier
of (i) the date on which LESSEE completes
restoration of the Premises (or portion thereof)
or (ii) the date on which LESSEE, exercising
reasonable diligence, should complete restoration
of -the Premises (or portion thereof) .
6. MAINTENANCE:
a. LESSEE' s Obligation: LESSEE, at its cost,
shall keep and maintain the Premises and all
improvements of any kind which may be
constructed, installed or made thereon (including
the public rest rooms designated in the Scope of
Development) in good condition and in substantial
repair. LESSEE expressly agrees to maintain the
Premises (including the designated public rest
rooms) in a safe, clean, wholesome and sanitary
condition and in compliance with all applicable
laws. LESSEE further agrees to provide approved
containers for trash and garbage and keep the
Premises free and clear from accumulations of
• rubbish and litter. LESSOR shall have the right
to enter upon and inspect the Premises at any
• time for cleanliness and safety. Such entry and
inspection of exterior areas may occur at any
time without notice to LESSEE; entry and
inspection of Interior areas may occur during
normal business hours, with a minimum of
seventy-two (72) hours prior notice (except in
the event of emergency) , and shall be conducted
in a manner so as to minimize interference with
the operation of businesses on the Premises to
the maximum extent feasible consistent with the
legitimate purpose of the inspection. LESSEE
shall designate in writing to LESSOR a
representative who shall be responsible for
day-to-day operation.
10/21/90 EXHIBIT "B"
1712u/2460/04 -Page 7 of 35
b. LESSOR' s Ri ht to 'Repair: If LESSEE fails to
maintain the Premises or make repairs or
replacements as required herein, LESSOR may
notify LESSEE in writing of said failure. Should
LESSEE fail to correct the situation or commence
to correct the situation within a reasonable time
thereafter, but in no event less than thirty (30)
days (except in those instances where a shorter
time is necessary to protect the public health,
safety, and welfare) , and thereafter diligently
proceed to complete such correction, LESSOR may,
but shall not be required to, enter onto the
Premises to make the necessary correction, and in
such event the reasonable cost thereof, including
but not limited to the cost of labor, materials,
equipment, and administration, shall be deemed
additional rent to be paid by LESSEE within
thirty (30) days of receipt of a statement of
said cost from LESSOR. LESSOR may, at its
option, choose other remedies available herein,
or by law.
7 . GROSS SALES RECEIPTS:
(a) Except as specifically provided in subparagraph
(b) below, the term "Gross Sales Receipts" as
1 used herein shall mean the total of all sales
I produced on the Premises (or any portion thereof)
and received by any operator and/or sublessee in
the course of their business, including without
limitation, sales of food, beverage or concession
items and the charges for the use or rental of
portions of the Premises or equipment or
supplies, vending machines sales and the sales
price of any furnishings, fixtures and equipment
or capital assets sold which are not replaced.
(b) The following shall be excluded from the
definition of "Gross Sales Receipts" : meals
furnished to employees without charge; tips
retained by employees or service charges in lieu
of tips passed on to employees; bad debts but to
the extent they are subsequently collected the
net recovery shall be added to Gross Sales
Receipts; receipts from customers that are later
rebated and/or refunded; income from parking
services operation; interest or service or other
carrying charges for sales on credit; the amount
of all sales and excise tax receipts which are
accounted for and paid by LESSEE to any
governmental agency; the sales price of any
furnishings, fixtures, and equipment or capital
assets sold by LESSEE; and investment income not
10/21/90 EXHIBIT "B"
1712u/2460/04 'Page 8 of 35
associated with the normal course of operation of
LESSEE' s business on the Premises.
8. RENT PAYMENT PROCEDURE AND ACCOUNTING:
a. Accounting Year: The phrase "accounting year" as
used herein shall be a period of twelve (12)
consecutive full calendar months commencing on
January 1. Any payment period or period which is
less than twelve full calendar months is a
partial accounting year.
b. Payment of Rentals:
(1) Percentage Rent and Parking Payment:
Beginning with the date which is the first
anniversary of the Commencement Date, and
within thirty (30) days after the end of
each calends- quarter during the remainder
of the Lease Term, LESSEE shall pay to
LESSOR an amount determined in accordance
with Section 7(a) and 7(b) of the Lease for
such period. At the end of each accounting
year during the Lease term, promptly after
LESSEE has submitted to LESSOR LESSEE' s
sales tax receipt reports, as provided in
paragraph 9 below, any necessary adjustment
to the Percentage Rent for such year shall
be made in the manner specified in
subparagraph (3) of this Paragraph 8(b) .
(2) E2plication of Rent Credit: During the
period of time that LESSEE' S rent credit is
being applied, in accordance with Paragraphs
7(b) and 7(d) of the Lease, LESSEE shall
provide to LESSOR, at the tames that rental
payments would otherwise be due hereunder, a
written statement or statements itemizing
(i ) the amount of Percentage Rent otherwise
due at such time, (ii ) the amount of the
Rent Credit being applied against such
rental obligation, and (iii) either the
amount of the Rent Payment required to be
made at that time or the remaining balance
of the unapplied Rent Credit (including
accrued interest through that date) .
(3) Place of Payment and Filing: Rent payments,
Parking Payments and rent credit statements
shall be delivered to and accounting
statements shall be filed with the Executive
Director of LESSOR, 2000 Main Street,
Huntington Beach, California 92646. The
10/21/90 EXHIBIT "B"
1712u/2460/04 Page 9 of 35
designated place of payment and filing may
be changed at any time by LESSOR upon
written notice to LESSEE. Rent payments may
be paid by check made payable to The
Redevelopment Agency of the City of
Huntington Beach.
A duplicate copy of all statements and
reports herein required shall also be filed
with the Finance Director of the City of
Huntington Beach.
9 . RECORDS, BOOKS OF ACCOUNT, ACCOUNTING STATEMENTS, AND
AUDITS: LESSEE shall keep or cause to be kept at the Premises,
or at LESSEE' s principal place of business in Southern
California, in accordance with generally accepted accounting
principles, full and accurate books of account, records, cash
receipts and other pertinent data showing the Gross Sales
Receipts produced by businesses operating on the Premises.
Such books of account, records, cash receipts and other
pertinent data shall be kept for a period of .four (4) years
after the end of each accounting year and partial accounting
year. The receipt by LESSOR of any statement, or any payment
of percentage rent for any period, shall not bind LESSOR as to
the correctness of the statement or the payment. Subject to
the limitations set forth in the next paragraph LESSOR shall be
entitled at any time within four (4) years after the end of an
accounting year or partial accounting year, upon reasonable
notice to LESSEE but in no event less than 72 hours, to inspect
and examine all LESSEE' s books of account, records, cash
receipts and other pertinent data relating to such accounting
year or partial accounting year, during normal business hours,
so LESSOR can ascertain the amount of Percentage Rent due
LESSOR. In no event shall LESSOR' s inspection exceed ninety
days. LESSEE shall cooperate fully with LESSOR in making the
inspection.
Within ninety (90) days after the end of each accounting
year or partial accounting year, LESSEE shall at its own
expense submit to LESSOR financial statements including a
balance sheet and income statement prepared by an independent
certified public accountant, which shall specifically include
with respect to the preceding accounting year or partial
accounting year: (i) the amount of Gross Sales Receipts for
each business operating on the Premises; and (ii) the total
Percentage Rent, if any, paid by LESSEE in and for such year.
LESSOR shall also be entitled, no more than once for each
accounting year, to audit LESSEE' S and the Sublessee' s, who
operate businesses on the Premises, books of account, records,
cash receipts and other pertinent data to determine the Gross
Sales Receipts for the entire Premises. The audit shall be
limited to the determination of Gross Sales Receipts and shall
be conducted during usual business hours at the Premises or at
10/21/90 EXHIBIT "B"
1712u/2460/04 Page 10 of 35
the office at which LESSEE (or its Subleasee) maintain(s) its
records within a ninety (90) day period.- If the audit shows
that there is a deficiency in the payment of Percentage Rent,
the deficiency shall come immediately due and payable as
additional rent or as an offset to any rent credit as defined
in Section 7(d) of the Lease then outstanding. The cost of the
audit shall be paid by LESSOR unless the audit shows that
LESSEE understated Gross Sales Receipts by more than five
percent (5%) , in which case LESSEE shall pay all LESSOR' s cost
of the audit. If within six (6) months after receiving the
results of any audited financial statements by LESSEE' s
certified public accountant with respect to any accounting year
or partial accounting year, LESSOR does not deliver a written
notice to LESSEE disputing LESSEE' s calculation or payment of
Percentage Rent for said year, LESSOR shall be conclusively
deemed to have accepted LESSEE' s calculation or payment, and
thereafter LESSOR shall neither reinspect or reaudit LESSEE' s
records nor demand payment of additional Percentage Rent for
said year. If within thirty (30) days after receiving the
results of its own audit with respect to any accounting year or
partial accounting year, LESSOR does not deliver a written
notice to LESSEE disputing LESSEE' S calculation or payment of
Percentage Rent for said year, LESSOR shall be conclusively
deemed to have accepted LESSEE' s calculation or payment, and
thereafter LESSOR shall neither reinspect or reaudit LESSEE' S
records nor demand payment of additional Percentage Rent for
said year.
10. INSURANCE: LESSEE, at its cost, shall maintain or
cause to be maintained during the entire Lease term the
following policies of insurance:
a. Public liability and property damage insurance
with combined single limits of at least
• $5,000, 000, part of which may be provided in the
form of umbrella coverage. LESSOR and City shall
be named as an additional insured and the policy
or policies shall contain cross-liability
endorsements. Coverage shall be primary and not
contributing with any coverage maintained by
LESSOR. The policy shall contain a waiver of
subrogation in favor of LESSOR and City. Not
more frequently than each two (2) years, if, in
the reasonable opinion of LESSOR or of an
insurance broker retained by LESSOR, the amount
of public liability and property damage insurance
coverage at that time is not adequate, LESSEE
shall increase the insurance coverage as required
by either LESSOR or LESSOR' s insurance broker;
provided, that the percentage increase in
coverage shall not be required to exceed the
percentage increase in the All Urban Consumer
Price Index for the Los Angeles-Long
10/21/90 EXHIBIT "B"
1712u/2460/04 Page 11 of 35
Beach-Anaheim Area (All Items) (1982-84=100) (the
"Index" ) since the last requested adjustment (or,
in the case of the first requested adjustment,
the percentage increase in the Index since the
commencement of the Lease term) . The insurance
to be provided by LESSEE may provide for
deductibles or self-insured retention up to
Twenty-rive Thousand Dollars ($25,000) , adjusted
in accordance with the Index from and after the
Commencement Date, or for amounts in excess of
Twenty-rive Thousand Dollars ($25,000) , adjusted
in accordance with the Index as shall be
acceptable to the Executive Director. In the
event such insurance does provide for deductibles
or self-insured retention, LESSEE agrees that it
will fully protect LESSOR, its boards, officers,
and employees in the same manner as these
interests would have been protected had the
policy or policies not contained the deductible
or retention provisions.
b. LESSEE' s indemnification obligations under
paragraph 11 shall extend to damage resulting
from risks insurable by garage keepers' legal
liability insurance. The public liability
insurance required in paragraph 10.a. above
shall include garage keepers' legal liability
coverage.
C. A policy of standard fire and extended coverage
insurance to the extent of at least 90% of the
replacement value of the Improvements, Trade
Equipment, and LESSEE' s personal property, on or
about the Premises. Subject to paragraph 5 of
these GENERAL CONDITIONS, the proceeds from any
such policy shall he used by LESSEE for the
restoration or replacement of the Improvements,
Trade Equipment, and personal property.
d. Business interruption insurance insuring that the
Percentage Rent due and payable to LESSOR (based
on the previous twelve month figures) will be
paid to LESSOR for a period of up to twelve ( 12)
months if the Premises, or portion thereof, are
destroyed or rendered inaccessible by a casualty
loss or other occurrence normally covered by a
business interruption insurance policy.
e. Notwithstanding any other provision of this
paragraph 10 to the contrary, LESSEE' s
obligations pursuant to parts a, b, c and d of
this paragraph 10 shall be conditioned upon the
reasonable availability of such coverages, terms,
and conditions in the insurance market.
10/21/90 EXHIBIT "B"
1712u/2460/04 'Page 12 of 35
k..� v
The foregoing insurance policies shall contain endorsements
requiring thirty (30) days written notice from the insurance
company to both parties before cancellation or change in
coverage, scope, or amount of any policy. Each policy or a
certificate of the policy together with evidence of payment of
premium shall be deposited with LESSOR at the commencement of
the Lease term and on renewal of each policy not less than
twenty (20) days before the expiration of the term of the
policy.
The procuring of such required policy or policies of
insurance shall not be construed to limit LESSEE' s liability
hereunder nor to fulfill the indemnification provisions and
requirements of paragraph 11 . Notwithstanding said policy or
policies of insurance, LESSEE after exhausting all available
insurance proceeds shall be obligated for the full and total
amount of any damage, injury or loss caused by LESSEE' s
negligence or that of its agents, sublessees, concessionaires,
licensees, and their agents and employees in connection with
this Lease or with the use and occupancy of the Premises.
11 . INDEMNITY, DEFENSE, HOLD HARMLESS: LESSEE hereby
agrees to protect, defend, indemnify and hold and save harmless
LESSOR and/or City, its officers, and employees against any and
all liability, claims, judgments, costs and demands, however
caused, including those resulting from death or injury to
LESSEE' s employees and damage to LESSEE' s property, arising
directly or indirectly out of the obligations or operations
herein undertaken by LESSEE, including those arising from the
passive concurrent negligence of LESSOR and/or City, but save
and except those which arise out of the active concurrent
negligence, sole negligence, active concurrent willful
misconduct, or active concurrent or sole willful misconduct of
LESSOR and/or City. LESSEE will conduct all defense at its
sole' cost and expense. LESSOR and/cr City shall be reimbursed
by LESSEE for all costs or attorney' s fees incurred by LESSOR
and/or City in enforcing this obligation.
12 . TAXES AND ASSESSMENTS: LESSEE recognizes and
understands that this Lease may create a possessory interest
subject to property taxation and that LESSEE may be subject to
the payment of property taxes levied on such interest. LESSEE
shall pay or cause to be paid all taxes and assessments levied
upon the Premises based on the assessed value of the entire
property and not merely the assessed value of LESSEE' s
leasehold interest. LESSEE shall also pay or cause to be paid
any taxes and assessments which may be levied upon any
fixtures, equipment, or other property installed, constructed
or located on the Premises. LESSEE may, at any time, in good
faith and upon reasonable grounds, dispute or contest the
validity of the whole or any part of any such taxes or
assessments, and during the period of any such dispute shall
not be deemed in default hereof so long as LESSEE does not
subject the Premises to foreclosure or sale and promptly pays
10/21/90 EXHIBIT "B"
1712u/2460/04 .. Page 13 of 35
the amount finally determined to be due. Notwithstanding the
above, both parties recognize that LESSEE should not be
assessed a possessory interest tax for that portion of the
Premises which is the public parking which is in excess of the
code requirement for the operation of the businesses on the
Premises and Agency agrees to cooperate with LESSEE in the
event of a challenge to such an assessment.
13 . UNLAWFUL USE: LESSEE agrees that no improvements
shall be erected, placed upon, operated, nor maintained upon
the Premises, nor any business conducted or carried on therein
or therefrom, in violation of the terms of this Lease, or of
any regulation, order, law, statute, or ordinance of a
governmental agency having jurisdiction.
14. ABANDONED PERSONAL PROPERTY: If LESSEE abandons the
Premises or is dispossessed thereof by process of law or
otherwise, title to any personal property belonging to LESSEE
and left on the Premises forty-five (45) days after such
abandonment or dispossession shall be deemed to have been
transferred to LESSOR. LESSOR shall have the right to remove
and to dispose of such property without liability therefor to
LESSEE or to any person claiming under LESSEE, and shall have
no need to account therefor. LESSEE hereby designates LESSOR' s
Executive Director as its attorney-in-fact to execute and
deliver such documents as may be reasonably required to dispose
of such abandoned property and transfer title thereto.
15. HOLDING OVER: In the event LESSEE shall continue in
possession of the Premises after the expiration of the Lease
term, Such possession shall not be considered a renewal of this
Lease but a tenancy from month to month and shall be governed
by the conditions and covenants ,contained in this Lease.
16. ASSIGNING SUBLETTING FEND ENCUMBERING:
A. Assignments
The qualifications and identity of LESSEE are of
particular concern to LESSOR. It is because of those
qualifications and identity that LESSOR has entered into this
Lease with LESSEE. Accordingly, LESSEE shall not, except as
permitted in this paragraph 16, assign all or any part of this
Lease or- any of LESSEE' s rights hereunder without the prior
written approval of LESSOR. LESSOR agrees that it will not
unreasonably withhold or condition such approval. In this
regard, LESSOR agrees that in the event of a request by LESSEE
to assign LESSEE' s interest in the Lease or the Premises,
LESSOR shall grant such approval after issuance of certificate
of completion provided (i ) such assignment is made to a
responsible third party who will undertake LESSEE' s
responsibilities under this Lease to use the Premises, or
portion thereof, in accordance with this Lease; (ii ) such third
10/21/90 EXHIBIT "B"
1712u/2460/04 Page 14 of 35
party shall demonstrate sufficient qualifications and
experience to assure the develcpment and operation of the
Improvements thereof, in accordance with this Lease; (iii) such
third party shall demonstrate sufficient financial resources or
commitments equal to or greater than Five Million Dollars
($5,000,000.00) to assure operation of the project, or portion
thereof, in accordance with this Lease; notwithstanding the
foregoing, LESSOR further agrees not to unreasonably disapprove
an assignment to a financially responsible lender which
assignment consists of a mortgage, deed of trust, sale and
lease back, or other form of conveyance for financing, provided
that prior to LESSOR' s issuance of its final Certificate of
Completion, LESSOR shall have no obligation to approve such an
assignment unless LESSOR determines in its reasonable
discretion that such assignment is for the purpose of securing
loans of funds to be used solely for financing the direct and
indirect costs, including without limitation financing costs,
interest, and commissions, of planning, designing,
constructing, developing, leasing, marketing and operating the
improvements to be constructed by LESSEE and/or a Sublessee
with respect to the Premises. Prior to issuance of Certificate
of Completion, approvals of assignments of the Lease shall be
at the sole discretion of the LESSOR with the exception of
approval for transfers to secure financing which shall be
reasonably approved by LESSOR. Approvals by LESSOR under this
Paragraph for assignments for financing purposes shall be made
by LESSOR' s Executive Director.
Notwithstanding any other provision of this Lease
to the contrary, LESSOR approval of an assignment of this Lease
or any interest herein shall not be required in connection with
any of the following:
(i) Any transfer to any entity or entities in
which LESSEE retains a minimum of fifty-one
percent (51°Q) of the ownership or beneficial
interest and retain management control.
(ii ) Transfers resulting from the death or mental
or physical incapacity of an individual .
(iii ) Transfers or assignments in trust for the
benefit of a spouse, children,
grandchildren, or other family members.
(iv) A transfer of LESSEE' s interest in the
Premises at foreclosure (or a transfer of
any Sublessee' s interest in the portion of
the Premises leased to such sublessee at
foreclosure or a conveyance thereof in lieu
of a foreclosure) pursuant to a foreclosure
thereof by a lender approved by LESSOR in
accordance with this Paragraph 16.A
Exhibit "B. "
20/21/90 EXHIBIT "B"
1.712u/2460/04 'Page 15 of 35
(v) A sale or transfer of some or all of
LESSEE' S interest in the Premises or a
transfer of any Sublessee' s interest in the
portion of the Premises leased to such
sublessee at foreclosure to a lender
approved by LESSOR in accordance with this
Paragraph 16.A of Exhibit "B."
(vi) The conveyance or dedication of any portion
of the Premises to the City or other
appropriate governmental agency, or the
granting of permits to facilitate the
development of the Premises.
(vii) A transfer of stock resulting from or in
connection with a reorganization as
contemplated by the provisions of the
Internal Revenue Code of 1954, as amended or
otherwise, in which the ownership interests
of a corporation are assigned directly or by
operation of law to a person or persons,
firm or corporation which on
the
control of the voting capital stock of such
corporation or all or substantially all of
the assets of such corporation.
(viii) A transfer of stock in a publicly held
corporation or the transfer of the
beneficial interest in any publicly held
partnership or real estate investment trust.
(ix) Equipment financing pursuant to
Paragraph 15.E of these General Conditions.
LESSEE shall deliver written notice to LESSOR
requesting approval of any assignment requiring LESSOR approval
hereunder. Such notice shall be accompanied by sufficient
evidence regarding the proposed assignee' s qualifications and
experience and its financial commitments and resources to
enable LESSOR to evaluate the proposed assignee pursuant to the
criteria set forth under the first paragraph of this
Paragraph 16A.
Within thirty (30) days after the receipt of
LESSEE' S written notice requesting LESSOR approval of an
assignment, LESSOR shall respond in writing by stating what
further information, if any, LESSOR reasonably requires in
order to determine whether or not to approve the requested
assignment. Upon receipt of such a timely response, LESSEE
shall promptly furnish to LESSOR such further information as
may be reasonably requested.
10/21/90 EXHIBIT "B"
1712u/2460/04 Page 16 of 35
Once LESSEE' S request for approval of an
assignment has been accepted as complete, LESSOR shall not be
entitled to demand additional information or to disapprove the
assignment on the basis that LESSEE has not furnished adequate
or complete information.
LESSOR' s Executive Director shall approve or
disapprove any requested assignment for financing purposes
within fifteen (15) days after LESSEE' S request therefor is
accepted as complete. Any disapproval shall be in writing and
shall specify the reasons for the disapproval and, if
applicable, the conditions required to be satisfied by LESSEE
in order to obtain approval.
LESSEE shall compensate LESSOR for its actual
reasonable expenses (not including personnel or overhead
expenses) incurred in investigating a proposed assignee' s
qualifications as a permitted assignee hereunder.
No assignment of LESSEE' S obligations with
respect to the Premises, whether or not LESSOR approval is
required therefor (but specifically excluding assignments for
financing purposes, and those types of assignments identified
in subparagraphs (iv) , (v) , and (vi) , (vii ) , and (ix) ) , shall
be effective unless and until the proposed assignee executes
and delivers to LESSOR an agreement in form reasonably
satisfactory to LESSOR'S attorney assuming the obligations of
LESSEE which have been assigned. Thereafter, the assignor
shall remain responsible to LESSOR for performance of the
obligations assumed by the assignee unless LESSOR releases the
assignor in writing (said release shall not be unreasonably
conditioned or withheld) or unless LESSOR has approved the
assignee on the basis of the criteria set forth under (i) ,
(ii) , and (iii) of the first paragraph of this Paragraph 16.A,
in either of which events the assignor shall be released from,
but only from, those obligations arising subsequent to the
effective date of the assignment.
No consent or approval by LESSOR of any
assignment requiring LESSOR' s approval shall constitute a
consent or approval of any subsequent assignment requiring
LESSOR' s approval pursuant to the provisions of this paragraph.
B. Subletting
LESSOR' S Executive Director shall have the right
to approve all subleases on the Premises with respect solely to
the proposed use and operator and to ensure the following: (i)
that, subject to temporary interruptions of business due to
circumstances beyond the tenant' s reasonable control, and
occurrences such as casualty losses and periods of
reconstruction and alteration of improvements, and the seasonal
nature of beach related concession businesses, such tenants
10/21/90 EXHIBIT "B"
1712u/2460/04 Page 17 of 35
shall continuously use or cause to be used the Premises and
portions thereof for the uses specified in Paragraph 5 of the
Lease and continuously merchandise the Premises or portions
thereof during all usual business hours and on all such days as
comparable businesses of like nature in the area are open for
business and shall make available verifiable records of gross
sales; (ii ) if the Improvements on the Premises are partially
destroyed or condemned and such tenant' s sublease remains in
force, the tenant shall continue or cause to be continued
operation of its business at the Premises to the extent
reasonably practical from the standpoint of good business
judgment during any period of reconstruction; (iii ) the tenant
shall exercise reasonable diligence to operate or cause to be
operated its business on the Premises or portion thereof in a
manner that will produce the highest volume of gross receipts
reported to LESSEE consistent with competitive pricing and
prudent business practices; (iv) with respect to each tenant
who sells alcoholic beverages for on Premises consumption, such
tenant shall maintain public liability and property damage
insurance with dram shop coverage; (v) the non-discrimination
provisions set forth in paragraph 29 below; and (vi) the tenant
shall attorn to LESSOR in the event of any termination of this
Lease, and attorn to any successor or assignee of LESSEE in
accordance with Paragraph 33.B below. LESSEE covenants to
LESSOR to use reasonable diligence to enforce the
aforementioned provisions of subleases and other agreements.
LESSEE further covenants to use reasonable diligence to
sublease the Premises to tenants promptly and in such a manner
as to maximize Gross Sales Receipts, consistent with market
conditions, the mutual desire of LESSOR and LESSEE to encourage
a proper tenant mix, and prudent business practices.
C. Assignments for Financing; Lender Protection
• Subject to obtaining LESSOR' s approval, and the
limitation on the maximum amount of subordination as specified
in paragraph 7(c) of this Lease, LESSEE may transfer and
assign this Lease and the leasehold interest created thereby
("Leasehold Estate" ) to a lender as security for the repayment
of a loan, in accordance with Paragraph 16.A above. The term
"lender" as used herein shall mean the beneficiary, mortgagor,
secured party, or other holder of a promissory note or other
written obligation which is secured by any deed of trust,
mortgage, or other written security agreement affecting the
Leasehold Estate ( "Leasehold Mortgage" ) . After approval by
LESSOR, LESSEE may perform any and all acts and execute any and
all instruments necessary or proper to consummate any such loan
transaction and perfect the security therefore to be given the
lender on the security of the Leasehold Estate.
With respect to any lender who shall have
delivered to LESSOR a written notice which shall state the
name, address and a general description of the type of lien it
10/21/90 EXHIBIT "B"
1712u/2460/04 Page 18 of 35
holds on the Leasehold Estate, the following provisions shall
apply:
a. LESSOR shall not agree to any mutual
termination nor accept any surrender of this
Lease, nor shall LESSOR consent to any
amendment or modification of this Lease
which could be reasonably construed to have
an impact on the lender' s Leasehold Mortgage
without the prior written consent of the
lender.
b. Notwithstanding any default by LESSEE in the
performance or observance of any agreement,
covenant or condition of this Lease on the
part of LESSEE to be performed or observed,
LESSOR shall have no right to terminate this
Lease unless a default of this Lease shall
have occurred and be continuing, LESSOR
shall have given the lender written notice
of such default, and the lender shall have
failed to remedy such default or acquire
LESSEE' s estate created hereby or commence
foreclosure or other appropriate proceedings
in the nature thereof, all as set forth in,
and within the times specified by the
provisions of this Lease and its
attachments, as the same may be amended from
time to time.
C. Lender shall have the right, but not the
obligation, at any time prior to termination
of this Lease and without payment of any
penalty, to pay all of the rents due
hereunder, to effect any insurance, to pay
any taxes and assessments, to make any
repairs and improvements, to do any other
act or thing required of LESSEE hereunder,
and to do any act or thing which may be
necessary and proper to be done in the
performance and observance of the
agreements, covenants and conditions hereof
to prevent termination of this Lease. All
payments so made and all things so done and
performed by the Lender shall be as
effective to prevent a termination of this
Lease as the same would have been if made,
done and performed by LESSEE instead of the
Lender.
d. Should any default under this Lease occur,
the lender shall have sixty (60) days after
receipt of notice from LESSOR setting forth
10/21/90 EXHIBIT "B"
1712u/2460/04 Page 19 of 35
the nature of such default, and, if the
default is such that possession to the
Premises may be reasonably necessary to
remedy the default, a reasonable time after
the expiration of such sixty (60) day period
within which to remedy such default,
provided that (A) the lender shall have
fully cured any default in the payment of
any monetary obligations of LESSEE under
this Lease within such sixty (60) day period
and shall continue to pay currently such
monetary obligations as and when the same
are due and (B) the lender shall have
acquired LESSEE' s estate in the Premises
created hereby or commenced foreclosure or
other appropriate proceedings in the nature
thereof within such period, or prior
thereto, and is diligently prosecuting any
such proceedings. All rights of LESSOR to
terminate this Lease as the result of the
occurrence of any such default shall be
subject to, and conditioned upon, LESSOR
having first given the lender written notice
of such default and the lender having failed
to remedy such default or acquire LESSEE' s
estate in the Premises created hereby or
commence foreclosure or other appropriate
proceedings in the nature thereof as set
forth in and within the times specified by
this subparagraph (d) .
e. Any default under this Lease which in the
nature thereof cannot be remedied by the
lender shall be deemed to be remedied if (A)
within sixty (60) days after receiving
written notice from LESSOR setting forth the
nature of such default,or prior thereto, the
lender shall have acquired LESSEE' s estate
in the Premises created hereby or shall have
commenced foreclosure or other appropriate
proceedings in the nature thereof to acquire
said estate, (B) the lender shall diligently
prosecute any such proceedings to
completion, (C) the lender Shall have fully
cured any default in the payment of any
monetary obligations of LESSEE hereunder
which do not require possession of the
Premises within such sixty (60) day period
and shall thereafter continue to faithfully
perform all such monetary obligations which
do not require possession of the Premises,
and (D) after gaining possession of the
Premises the lender performs all other
10/21/90 EXHIBIT "B"
1712u/2460/04 Page 20 of 35
obligations of LESSEE hereunder as and when
the same are due.
In addition to the rights set forth in
this subparagraph (e) , the lender shall have
the option to be exercised by written notice
to LESSOR given within the aforesaid sixty
(60) day period, to obtain a new lease of
the Premises upon the following terms and
conditions:
(i ) Such new Lease shall be
effective as of the date of the termination
of this Lease and shall be for the remainder
of the term of this Lease at the same rental
and with the same terms, covenants and
conditions as are set forth herein.
(ii) In addition to paying all
current rent under the new Lease, the lender
shall pay all unpaid rental (after deducting
any income LESSOR may have received from the
Premises during such period) due pursuant to
Paragraph 8 of these GENERAL CONDITIONS
which accrued on or after the date which is
thirty (30) days prior to the date on which
the lender first received written
notification of the default by LESSOR and
the lender cures all defaults under this
Lease that reasonably can be cured by the
lender.
In lieu •of executing a new lease in its
own name, the lender shall have the right to
designate a nominee which shall become a
lessee under the new lease so long as such
assignee or nominee is qualified consistent
with the requirements of this Lease, its
attachments and amendments.
f. If the lender is prohibited by any process
or injunction issued by any court or by
reason of any action by any court having
jurisdiction of any bankruptcy or insolvency
proceeding involving LESSEE from commencing
or prosecuting foreclosure or other
appropriate proceedings in the nature
thereof, the times specified in
subparagraphs (d) and (e) above for
commencing or prosecuting such foreclosure
or other proceedings shall be extended for
the period of such prohibition plus an
additional period of sixty (60) days
10/21/90 EXHIBIT "B"
1712u/2460/04 'Page 21 of 35
thereafter; provided that the lender shall
have fully cured any default in the payment
of any monetary obligations of LESSEE under
this Lease prior to the end of such sixty
(60) day period and thereafter shall
continue to pay currently such monetary
obligations as and when the same fall due.
g. LESSOR shall mail or deliver to the lender
duplicate copies of any and all notices
which LESSOR may from time to time give to
or serve upon LESSEE pursuant to the
provisions of this Lease, and such copy
shall be mailed or delivered to the lender
simultaneously with the mailing or delivery
of the same to LESSEE: No notice by LESSOR
to LESSEE hereunder shall be deemed to have
been given insofar as the lender' s rights
under this Paragraph are concerned unless
and until a copy thereof shall have been
mailed or delivered to the lender as herein
set forth.
h. Foreclosure of a Leasehold Mortgage, or any
sale thereunder,whether by judicial
proceedings or by virtue of any power
contained in the Leasehold Mortgage, or any
conveyance of the estate in the Premises
created hereby from LESSEE to the lender
through, or in lieu of, foreclosure or other
appropriate proceedings in the nature
thereof, shall not require the consent of
LESSOR or constitute a breach of any
provision of or a default under this Lease,
and upon such foreclosure, sale or
conveyance, LESSOR shall recognize the
lender, or any other foreclosure sale
purchaser, as lessee hereunder. In the
event lender becomes lessee under this
Lease, lender shall assume the obligations
of LESSEE under this Lease or such new lease
only for the period of time that lender
remains lessee thereunder, and LESSEE shall
be released from any liability therefor,
provided prior defaults by LESSEE have
either been cured or waived. The lender
shall be subject only to those restrictions
applicable to LESSEE as set forth in this
Paragraph. In the event that, consistent
with this Paragraph, the lender subsequently
assigns or transfers its interest under this
Lease after acquiring the same by
foreclosure or deed in lieu of foreclosure,
10/21/90 EXHIBIT "B"
1712u/2460/04 Page 22 of 35
and in connection with any such assignment
or transfer the lender takes back a mortgage
or deed of trust encumbering such leasehold
interest to secure a portion of the purchase
price given to the lender for such
assignment or transfer, then such mortgage
or deed of trust shall be considered a
Leasehold Mortgage as contemplated under
this Paragraph and the lender shall be
entitled to receive the benefit of and
enforce the provisions of this Paragraph and
any other provisions of this Lease intended
for the benefit of the holder of a Leasehold
Mortgage.
In the event the Lender requires any
modifications to the provisions of this Paragraph in order to
secure its loan, LESSOR agrees not to unreasonably withhold
consent to such modifications so long as such modifications do
not reduce the amount of rent or other sums payable to LESSOR
hereunder, or do not otherwise have a materially adverse impact
on any of LESSOR' s interests, rights and remedies hereunder.
D. Sublessees' Right to _Encumber the Sublease
LESSOR recognizes each sublessee' s right to mortgage
or encumber the sublease and/or the subleasehold estate held by
such sublessee in accordance with and subject to the same terms
and conditions as are set forth in this Paragraph 16
subparagraph C above with respect to the sub-leasehold estate
only, and in this regard LESSOR will recognize any and all of
the rights of any subleasehold mortgagee as and to the extent
set forth therein for the leasehold estate.
E. Equipment Leasing
Some of the equipment, fixtures and furniture
(collectively designated herein as "Trade Equipment" ) installed
and used by LESSEE and sublessees on the Premises may or will
be directly financed by a third-party lender or otherwise be
subjected to a security interest or owned by an equipment
rental company or vendor ("Equipment LESSOR" ) and leased to
LESSEE or such sublessee either directly from the Equipment
LESSOR or by way of equipment sublease or assignment of
equipment lease from an equipment sublessor ("Equipment
Sublessor" ) , and LESSOR hereby agrees to recognize the rights
therein of any such third-party lender or Equipment LESSOR or
Sublessor (or their respective assignees) . LESSOR agrees that
all such items of financed or leased Trade Equipment installed
on the Premises shall be and remain personal property and not
real property, notwithstanding the fact that the same may be
nailed or screwed or otherwise attached or affixed to the
Premises or any of LESSEE' s or any sublessee' s buildings or
10/21/90 EXHIBIT "B"
1712u/2460/04 'Page 23 of 35
improvements, and further agrees to recognize the rights
therein of any such Equipment LESSOR or Sublessor (or their
respective assignees) . LESSEE and any sublessee shall have the
right at any time, whether or not LESSEE is in default
hereunder or such sublessee is in default under its sublease,
to remove or replace any or all Trade Equipment, whether or not
financed or leased, regardless of whether attached or affixed
to the Premises, and to the extent of their respective
interests therein such third-party lender or Equipment LESSOR
or Sublessor (or their respective assignees) shall also have
such a right. Any damage to the Premises caused by such a
removal shall be repaired by and at the expense of LESSEE or
other party causing such removal . LESSOR waives the right of
distraint and agrees that it does not have and shall not assert
any right, lien, or claim in or to the financed or leased Trade
Equipment and agrees that any third-party lender or Equipment
LESSOR or Sublessor (or their respective assignees) may remove
and dispose of the same without reference to, and free and
clear of, any demand of LESSOR, and that such disposal or sale
may be made on the Premises.
17. SUCCESSORS IN INTEREST: Unless otherwise provided in
this Lease, the terms, covenants and conditions contained
herein shall apply to and bind the heirs, successors,
executors, administrators, and assigns of all the parties
hereto.
18. LESSEE'S DEFAULT: The occurrence of any of the
following shall constitute a default by LESSEE:
a. Failure to pay rent when due, if the failure
continues for fifteen (15) days after written
notice has been delivered to LESSEE. LESSEE
shall not be excused from its obligation to pay
rent by reason of the inability for any reason to
obtain the full and prompt payment to LESSEE of
all payments due LESSEE by any sublessees or
concessionaires.
b. Failure to perform any of the provisions of this
Lease required to be performed by LESSEE, if the
failure to perform is not cured within thirty
(30) days after written notice has been given to
LESSEE. If the default cannot reasonably be
cured within said thirty (30) days, LESSEE shall
not be deemed to be in default of this Lease if
LESSEE commences to cure the default within the
thirty (30) day period and diligently, and in
good faith, continues to cure the default.
Notices given under this paragraph shall specify the
alleged default and the applicable Lease provision, and shall
demand that LESSEE perform the provisions of the Lease or pay
10/21/90 EXHIBIT "B"
1712u/2460/04 Page 24 of 35
the rent that is in arrears, as the case may be, within the
applicable period of time, or quit the Premises. No such
notice shall be deemed a forfeiture or a termination of this
Lease unless LESSOR so elects in the notice.
19. LESSOR' S REMEDIES: LESSOR shall have the following
remedies if LESSEE commits a default. These remedies are not
exclusive; they are cumulative in addition to any remedies now
or later allowed by law.
LESSOR can continue this Lease in full force and effect,
and the Lease will continue in effect as long as LESSOR does
not terminate LESSEE' s right to possession, and LESSOR, shall
have the right to collect rent when due. During the period
LESSEE is in default, LESSOR can enter the Premises subject to
the rights of any subtenants under Paragraph 33 of this
Exhibit "B, " relet them, or any part of them, to third parties
for LESSEE' s account; provided, that in such event LESSOR shall
not be excused from any legal obligation it would otherwise
have to act reasonably to mitigate its damages and to exercise
reasonable diligence to relet the Premises of. part thereof for
fair market rent. In such event, LESSEE shall be liable
Immediately to LESSOR for all reasonable costs LESSOR incurs in
reletting the Premises, if applicable, including, without
limitation, broker' s commissions, reasonable expenses of
remodeling the Premises required by the reletting and supplied
by other landlords under similar circumstances, and like
costs. Reletting can be for a period shorter or longer than
the remaining term of this Lease. LESSEE shall pay to LESSOR
the rent due under this Lease on the dates the rent is due,
(provided LESSOR notifies LESSEE in writing a minimum of thirty
(30) days in advance the amount of Gross Sales Receipts from
which the calculation of - rent can be made) less the rent LESSOR
receives from any reletting. No act by LESSOR allowed by this
paragraph shall terminate this Lease unless LESSOR notifies
LESSEE that LESSOR elects to terminate this Lease. After
LESSEE' s default and for as long as LESSOR does not terminate
LESSEE' s right to possession of the Premises, if LESSEE obtains
LESSOR' s consent, LESSEE shall have the right to assign or
sublet its interests in this Lease, but LESSEE shall not be
released from liability for said default absent a waiver or
release from LESSOR.
No act by LESSOR other than giving notice of such
termination to LESSEE shall terminate this Lease. Acts of
maintenance, efforts to relet the Premises, or the appointment
of a receiver on LESSOR' S initiative to protect LESSOR' s
interests under this Lease shall not constitute a termination
of LESSEE' s right to possession. On termination, LESSOR has
the right to recover from LESSEE:
a. The worth, at the time of the award, of the
unpaid rent that had been earned at the time
of the termination of this Lease;
10/21/90 EXHIBIT "B"
1712u/2460/04 Page 25 of 35
b. The worth, at the time of the award, of the
amount by which the unpaid rent that would
have been earned after the date of
termination of this Lease until the time of
award exceeds the amount of the loss of rent
that LESSEE proves could have been
reasonably avoided;
C. The worth, at the time of the award of the
amount by which the unpaid rent for the
balance of 'the term after the time of the
award exceeds the amount of the loss of rent
that LESSEE proves could have been
reasonably avoided; and
d. Any other amount and court costs, necessary
to compensate LESSOR for all detriments
proximately caused by LESSEE' S default.
"The worth, at the time of the award, " as used in
subparagraphs (a) and (b above is to be computed by allowing
interest at the rate of 10% per annum. "The worth, at the time
of the award, " as referred to in subparagraph (c) above is to
be computed by discounting the amount at the discount rate of
the Federal Reserve Bank of San Francisco at the time of the
award, plus 1%.
If LESSEE is in default of this Lease and subject to the
rights of any sub-tenants under Paragraph 33 of this
Exhibit "B", LESSOR shall have the right to have a receiver
appointed to collect and conduct LESSEE' s business. Neither
the filing of a petition for the appointment of a receiver nor
the appointment itself shall constitute an election by LESSOR
to terminate this Lease.
LESSOR, at any time after LESSEE commits a default, can
cure the default at LESSEE' s cost. If LESSOR at any time, by
reason of LESSEE' s default pays any sum or does any act that
requires the payment of any sum, the sum paid by LESSOR shall
be immediately due from LESSEE to LESSOR at the time the sum is
paid, and if paid at a later date shall bear interest at the
rate of 10% per annum from the date the sum is paid by LESSOR
until LESSOR is reimbursed by LESSEE. The sum, together with
the interest on it, shall be deemed additional rent.
20. LESSOR' S DEFAULT: LESSOR shall be in default of this
Lease if it fails or refuses to perform any provision of this
Lease that it is obligated to perform if the failure to perform
is not cured within thirty (30) days after written notice of
the default has been given by LESSEE to LESSOR. If the default
cannot be reasonably cured within thirty (30) days, LESSOR
shall not be in default of this Lease if LESSOR commences to
cure the default within the thirty (30) day period and
10/21/90 EXHIBIT "B"
1712u/2460/04 Page 26 of 35
diligently and in good faith continues to cure the default.
LESSEE, at any time after LESSOR commits a default, Can cure
the default at LESSOR' s cost. If LESSEE, at any time, by
reason of LESSOR' s default pays any sum or does any act that
requires the payment of any sum, the sum paid by LESSEE shall
be immediately due from LESSOR to LESSEE at the time the sum is
paid, and if paid at a later date shall bear interest at the
rate of 10% per annum from the date the sum is paid by LESSEE
until LESSEE is reimbursed by LESSOR. At LESSEE' s option, such
sum may also be offset against the next installment of rent or
additional rent payable by LESSEE.
21. QUITCLAIM OF LESSEE'S I14TERESTS UPON TERMINATION:
Upon termination of this Lease for any reason, including but
not limited to termination because of default by LESSEE, and
subject to the rights of any sub-tenants under Paragraph 33 of
this Exhibit "B", LESSEE shall execute, acknowledge and deliver
to LESSOR within thirty (30) days after receipt of written
demand therefor a good and sufficient deed whereby all right,
title and interests of LESSEE in the Premises is quitclaimed to
LESSOR.
22 . TOTAL TAKING: If the whole of the Premises, or other
improvements to be made by LESSEE shall be taken by right of
eminent domain or otherwise for any public or quasi-public use,
then, when possession shall be taken thereunder by the
condemnor, or the LESSEE is deprived of its practical use of
the Premises, and other improvements, whichever date is
earlier, this Lease and all rights and obligations of LESSOR
and LESSEE hereunder, -shall terminate as of the datd of the
taking and any rent and all other payments required of LESSEE
shall be prorated between the parties as of the date of the
taking.
23 . PARTIAL TAKING: In the event of a partial taking, as
a result of which LESSEE reasonably determines that (i) the
remaining portion of the Premises, or other improvements on the
Premises cannot be restored to an economically operable
facility of a comparable kind and quality to the facility
existing prior to the taking with condemnation awards received
by LESSEE, or (ii ) the then-existing laws do not permit
restoration of the Improvements to within 95% of the size and
layout existing immediately before such taking, then this Lease
at LESSEE' s option shall terminate as of the time when
possession of the Premises shall be taken by the condemnor or
LESSEE is deprived of its practical use thereof, whichever date
is earlier. LESSEE shall exercise such rights of termination
by giving LESSOR written notice thereof no later than
one-hundred twenty (120) days after the partial taking becomes
effective. If a portion of the Premises or any other
improvements shall be taken by right of eminent domain or
otherwise for any public or quasi-public use and LESSEE
reasonably determines that the remaining portion of the
10/21/90 EXHIBIT •"B"
1712u/2450/04 Page 27 of 35
Premises and improvements can be restored by LESSEE to an
economically operable facility of comparable kind and quality
to the facility existing prior to the taking, then this Lease
shall not be affected and LESSEE shall retain the remaining
portion of the Premises. In such event, however, and
notwithstanding Paragraph 5(c) of these GENERAL CONDITIONS,
rent shall be abated with respect to any improvements which are
remaining -on the Premises but are not used during a period of
reconstruction or restoration. Rent shall also be prorated in
the manner provided in Paragraph 5(c) above.
24. EMINENT DOMAIN AWARD: If there is a taking by right
of eminent domain, the rights and obligations of the parties
with reference to the award and the distribution thereof shall
be determined in accordance with the provisions of this
Paragraph. The award shall belong to and be paid to LESSOR,
except that LESSEE shall first receive from the award the
following:
a. A sum attributable to the value of LESSEE' s
leasehold estate including improvements,
trade fixtures and personal property that
are taken which sum shall be first applied
toward any outstanding balance due LESSEE' s
lender;
b. A sum attributable to severance damages to
be used solely for the restoration of the
other improvements upon the Premises; and
C. An award (if any) specifically made with
respect to loss of goodwill.
25. Ab1ENDMENTS: This Lease, including the Exhibits
thereto, set forth all of the agreements and understandings of
the parties and any modification must be in writing executed by
both parties.
26. CAPTIONS: The captions and the table of contents
of this Lease shall have no effect on its interpretation.
27. CALIFORNIA LAW: This Lease shall be construed and
interpreted in accordance with the laws of the State of
California.
28. WAIVER: No delay or omission by either party in the
exercise of any right or remedy on any default by the other
party shall impair such a right or remedy or be construed as a
waiver.
The receipt and acceptance by LESSOR of delinquent rent
shall not constitute a waiver of any other defaults by LESSEE;
it shall constitute only a waiver of timely payment for the
rent payment involved.
10/21/90 EXHIBIT "B"
1712u/2460/04 Page 28 of 35
LESSOR' S consent to or approval of any act by LESSEE
requiring LESSOR' s consent or approval shall not be deemed to
waive or render unnecessary LESSOR' s consent to or approval of
any subsequent act by LESSEE.
Any waiver by either party of any default must be in
writing and shall not be a waiver of any other default
concerning the same or any other provision of this Lease.
29. NONDISCRIMINATION: LESSEE covenants for itself, its
heirs, executors, administrators, and assigns, and all persons
claiming under or through it, that this Lease is made and
accepted upon and subject to the following conditions: That
there shall be no discrimination against or segregation of any
person or group of persons on account of race, color, creed,
religion, sex, martial status, age, national origin or ancestry
in the subleasing of the Premises herein leased, nor shall the
LESSEE establish or permit any such practice or practices of
discrimination or segregation with reference to the selection,
location, number, use or occupancy of lessees of the Premises.
LESSEE shall make its accommodations and services available to
the public on fair and reasonable terms. In the event LESSEE
enters into contracts, subleases, or assignments with respect
to any of its interest herein, LESSEE shall include in such
arrangements a nondiscrimination clause substantially
conforming to the following:
a. In leases: "The lessee herein covenants by
and for himself or herself, his or her
heirs, executors, administrators, and
assigns and all persons claiming under or
through him or her, that this lease is made
and accepted upon and subject to the
following conditions:
"That there shall be no discrimination
against or segregation of any person or
group of persons on account of race, color,
creed, religion, sex, marital status, age,
national origin or ancestry in the
subleasing, transferring, use, occupancy,
tenure or enjoyment of the premises herein
leased, nor shall the lessee himself or
herself, or any person claiming under or
through him or her, establish or permit any
such practice or practices of discrimination
or segregation with reference to the
selection, location, number, use or
occupancy of lessees of the premises. "
b. In contracts: "There shall be no
discrimination against or segregation of any
person or group of persons on account of
10/21/90 EXHIBIT "B"
1712u/2450/04 -Page 29 of 35
race, color, creed, religion, sex, marital-
status, age, national origin or ancestry in
the sublease, transfer, use, occupancy,
tenure or enjoyment of the premises, nor
shall the transferee himself or herself, or
any person claiming under or through him or
her, establish or permit any such practice
or practices of discrimination or
segregation with reference to the selection,
location, number, use or occupancy of the
land. "
30. FORCE MAJEURE. In any case where either party hereto
is required to do any act, delays caused by or resulting from
acts of God, war, civil commotion, fire, flood, earthquake or
other casualty, strikes or other extraordinary labor
difficulties, shortages of labor or materials or equipment in
the ordinary course of trade, government regulations,
litigation (other than litigation arising from the failure to
perform hereunder by the party claiming an extension of time to
perform or from a wrongful act or failure to .act by such party)
or other causes not reasonably within such party' s control and
not due to the fault or neglect of such party shall not be
counted in determining the time during which such act shall be
completed, whether such time be designated by a fixed date, a
fixed time or "a reasonable time", and such time shall be
deemed to be extended by the period of such delay. Financial
inability of either party shall not be considered to be a
circumstance or cause beyond the reasonable Control of that
party. Litigation concerning paragraph 3 of Exhibit "C"
commencing on page 2 shall be included as an event which
triggers this force majeure provision. In no event shall the
operation of this Paragraph 30 extend the obligations of the
parties under the Schedule of Performance (Exhibit "E" ) beyond
ten ( 10) years from the Effective Date and in the event such
ten (10) years has elapsed it shall constitute grounds for
termination by either party.
31. RESOLUTION OF DISPUTES. Any and all disputes between
the parties hereto regarding the construction, operation or
enforcement of this Lease, and any of the rights or obligations
granted or imposed by this Lease, shall be submitted only to a
retired Judge of the Superior Court in and for the State of
California (hereinafter "Superior Court" ) in the following
manner:
(a) The parties must agree on the Judge' s identity
within five (5) days after the dispute arises or,
at the end of the fifth day, the parties'
respective counsel shall be authorized to agree
upon the Judge' s identity and bind their
clients. Failure to cooperate in this selection
process waives the uncooperative party' s right to
10/21/90 EXHIBIT "B"
1712u/2460/04 Page 30 of 35
participate in the selection process, or object
to the Judge selected.
(b) Disputed matters shall be promptly submitted to
the Judge in a manner determined by him/her
following his/her selection. Once a matter is
submitted to the Judge, s/he is empowered with
the full authority of a judge sitting on the
bench of the Superior Court in and for the State
of California (hereinafter "Superior Court" ) , and
may make any ruling consistent with that power.
In order to implement this provision, the
parties, by executing this Lease, agree to
execute and file with the Superior Court, such
papers as are appropriate to procure the
appointment of said Judge as a Judge Pro-Tempore
of the Superior Court.
(c) The Judge may make any order s/he feels is
appropriate regarding which party should bear or
be awarded attorneys' fees and/or costs, and
which party or parties should pay for the fees
and costs of the Judge.
(d) The rights of judicial review granted under this
Paragraph are the only rights of judicial review
that are available to the parties hereto. They
are exclusive of all other rights of relief which
might otherwise be held by them. It is their
intention that all- of the disputes arising out
of, or related to, their execution of this Lease,
or the rights or responsibilities granted or
imposed by this Lease, be resolved exclusively in
the manner provided for in this Paragraph and its
subparts. Consistent with this intention, the
parties, by executing this Lease, specifically
acknowledge that the decisions and orders of the
Judge are nonappealable and nonreviewable, and,
therefore, they are waiving their rights to seek
relief in the State or Federal Courts, except for
the purpose of securing and confirming the
authority of the Judge provided for herein, and
to enforce his/her decisions and orders by
confirmation pursuant to the California Code of
Civil Procedure Section 1260 et. seq. , or through
appropriate injunctive relief. In the event that
a party files any action inconsistent with the
terms of this Paragraph, then the party filing
the action will be liable for all fees and costs
actually incurred by the other party in
responding to said action, regardless of its
outcome.
10/21/90 EXHIBIT "B"
1712u/2460/04 Page 31 of 35
(e) The limitations on actions set forth in this
Paragraph apply only to actions between the
parties hereto. They are not intended to and do
not linit the parties' right to bring an action
against third parties. Furthermore, no third
party shall be entitled to rely on any provision
of this Paragraph in their response or defense to
an action brought against them by a party(s) to
this Lease.
Notwithstanding the foregoing in the event that
this method of dispute resolution is prohibited by law then
both parties shall either agree to submit to binding
arbitration or to the jurisdiction of the appropriate court of
law.
32 . TIME: Time is of the essence of this Lease, and of
each and every covenant, term, condition, and provision hereof.
33 . NON-DISTURBANCE AND RECOGNITION:
A. Non-Disturbance
So long as any subtenant of any portion of the
Premises is not in default (beyond the period given such
subtenant to cure such default in its .sublease) in the payment
of rent or in the performance of any of the terms, covenants,
or conditions of such sublease, or if the subtenant is in
default but is diligently proceeding to cure such default as
provided in its sublease, and notwithstanding LESSEE' s
termination of this Lease as to all or a portion of the
Premises pursuant to Paragraphs 5 or 22 of these GENERAL
CONDITIONS which termination is .not consented to by such
subtenant: (a) LESSOR will not bring, join, or cooperate in
any action or proceeding to terminate such subtenant' s
interest, estate, or rights under such sublease, (b) the
subtenant' s possession and rights and privileges under the
sublease shall not be diminished or interfered with by LESSOR,
and (c) LESSOR will continue to recognize the estate of the
subtenant created under the sublease and the subtenant' s
occupancy shall not be disturbed by LESSOR during the term of
the sublease or any extensions or renewals which subtenant may
exercise under the provisions of the sublease. Upon request,
LESSOR shall execute a non-disturbance agreement, in such form
reasonably approved by LESSOR, LESSEE, subtenant and lender(s)
recognizing the subtenant' s rights provided hereunder.
B. Attornment
If the interest of LESSEE in all or any part of the
Premises shall be terminated for any reason, and LESSOR
succeeds to the interest of and assumes all the obligations of
LESSEE under any sublease, each sublessee shall be bound to
10/21/90 EXHIBIT "B"
1712u/2460/04 Page 32 of 35
LESSOR under all of the terms, covenants, and conditions of the
sublease for the balance of the sublease term and any
extensions of renewals of the sublease which the subtenant may
exercise under the provisions of the sublease. The subtenant
shall attorn to LESSOR, such attornment to be effective and
self-operative without the execution of any further instruments
immediately upon LESSOR succeeding to the interest of LESSEE
under the sublease. The respective rights and obligations of
the subtenant and LESSOR under this attornment shall be the
same as between LESSEE and the subtenant under the sublease;
provided, however, that (i ) the subtenant shall be under no
obligation to pay rental to LESSOR until the subtenant receives
written notice from LESSOR that LESSOR has succeeded to the
interest of LESSEE and assumed all the obligations of LESSEE
under the sublease, and (ii ) LESSOR shall not hold the
subtenant responsible for any costs or acts related to any
default or alleged default by LESSEE under this Lease.
C. New Lease
In the event of the termination of this Lease as to
all or a portion of the Premises prior to its stated expiration
date for any reason whatsoever, LESSOR shall notify all
sublessors and subleasehold mortgagees of such termination, and
any sublessee or any subleasehold mortgagee May notify LESSOR
within sixty (60) days after receipt of such termination notice
of its election to enter into a new lease with LESSOR. During
such sixty (60) day period, the provisions of subparagraph A
herein shall apply. LESSOR, upon receipt of such sublessee' s
or subleasehold mortgagee' s notice, shall immediately enter
into a written agreement with such sublessee or subleasehold
mortgagee containing the same provisions as those in the
sublease, except for any changea that are necessary because of
the substitution of LESSOR in the place of LESSEE. Sublessee
or any subleasehold mortgagee shall have no rights under this
subparagraph (C) if it fails to give notice within the sixty
(60) day period.
34. ESTOPPEL CERTIFICATE: LESSOR and LESSEE will, at any
time and from time to time, within thirty (30) days of the
request of the other party or a leasehold or subleasehold
mortgagee or prospective mortgagee, execute, acknowledge, and
deliver to the other party and such mortgagee, if any, a
certificate certifying:
a. That the Lease or sublease is unmodified and in
full force and effect (or, if there have been
modifications, that the same are in full force
and effect as modified and stating such
modifications) ;
b. The dates, if any, to which the Percentage Rent
and any additional rent and charges have been
10/21/90 EXHIBIT "a"
1712u/2460/04 Page 33 of 35
paid and the amount of any accumulated rent
credit available to LESSEE;
C. Whether there are any existing defaults by the
other party to the knowledge of the party making
such certification specifying the nature of such
defaults, if any;
d. Whether the Lease Commencement Date has occurred
and, if so, the date;
e. Whether the leasehold or subleasehold mortgagee
(or prospective mortgagee) is entitled to the
protection afforded under the terms of the
sublease or this Lease; and
f. Such other matters as may be reasonably requested.
Any such certificate may be relied upon by any party to
whom the certificate is directed.
35. HAZARDOUS WASTE INDEMNITY: LESSOR is aware of two
potential sources of contamination on the Premises. One
potential source is a discontinued gasoline station and the
other is the possibility of asbestos in the existing structure
which is the subject of the Maxwell ' s Lease. Except for the
aforementioned potential contaminations, LESSOR has no
knowledge of hazardous materials or contamination on the
Premises. Further, to the best of the LESSOR' s knowledge, the
LESSOR has not received any notice or communication from any
government agency having jurisdiction over the Site notifying
the LESSOR of the presence of subsurface zone hazardous
materials, waste, or contamination in, on, or under the Site,
or any portion thereof. LESSOR agrees to notify LESSEE if in
the future it becomes aware of contamination on the Premises.
LESSEE, including any and all of its successors in interest,
and assigns, acknowledges and agrees it shall be responsible
for any release, excavation, or Movement of any hazardous
materials, waste, or contamination of the subsurface zone as
may be found to have contaminated the Premises after the
Commencement Date of this Lease, except to the extent such
release, excavation, or movement of any hazardous materials,
waste or contamination is caused by LESSOR or City.
LESSEE and LESSOR shall comply with CERCLA
(Comprehensive Environmental Response, Compensation and
Liability Act of 1980) 42 U.S.C. §9601, et seq. , and California
Health and Safety Code §§ 25100, et seg. , 25300, et seq. , 25280
et seq. Any costs incurred pursuant to this compliance which
are necessary to develop the Premises as contemplated in this
Lease shall be shared as set out in Paragraph 3 of Exhibit "C" .
10/21/90 EXHIBIT "B"
1712u/2460/04 Page 34 of 35
LESSEE, including any and all of its successors in
interest, agrees to and shall indemnify, defend, and hold the
LESSOR and the City and their officers, employees,
representatives and agents harmless from and against all
expenses (including, without limitation, reasonable attorneys'
fees and disbursements) , losses, or liabilities suffered by
LESSOR or City by reason of governmental action or third party
claims arising out of such hazardous materials, waste, or
contamination, exacerbation, movement, release, or additional
contamination of the Premises as may be found to have
contaminated Premises after the Commencement Date of this Lease
unless caused by LESSOR or City. The LESSEE assumes all
responsibility for subsurface zone conditions and soils
conditions in, on or under the Premises, and for any
rehabilitation necessary for the provision of the Improvements;
and the LESSOR makes no other representations or warranties
concerning the Premises, its suitability for the use intended
by the LESSEE, or the surface or subsurface conditions of the
Premises; and if the soil Conditions of the Premises are not in
all respects entirely suitable for the use or uses to which the
Premises will be put, then it is the sole responsibility and
obligation of LESSEE to take such action as may be necessary to
place the Premises in a condition entirely suitable for the
development of the Premises. This is expressly agreed between
the Parties to be a material tern of this Lease. Prior to the
Commencement Date LESSEE shall exercise due diligence and
conduct or cause to be conducted an environmental assessment or
audit acceptable to the LESSOR of the Premises to ascertain
whether it is in all respects suitable for the construction and
completion of the Improvements. LESSOR in turn agrees to grant
LESSEE, its agents or experts full access to the Premises for
the purpose of conducting all geotechnical, ecological or other
inspection of the Premises necessary to comply with this Lease
and its attachments or amendments, or to prepare for the
construction of the Improvements.
10/21/90 EXHIBIT "B"
1712u/2460/04 Page 35 of 35
EXHIBIT "C"
CONDITIONS TO COMMENCEMENT
1 . Plan Approvals.
LESSEE shall obtain approvals from all applicable
government entities for conditional use permit, coastal
development permit, supplemental environmental impact report
and final plans and specifications with respect to the
Improvements to be located on the Premises. The Conditional
Use Permit and Coastal Development Permit shall be deemed
"final" for purposes of this Paragraph upon the last of the
following three (3 ) dates (i ) as to each- condition on said
permits, on the date on which LESSEE obtains LESSOR approval of
LESSEE' s satisfaction of such items, (ii) the date on which all
applicable statutes of limitations for challenging such permits
have expired without litigation being filed, or (iii ) the date
on which all such litigation is favorably and finally
terminated, whether by judgment, dismissal, settlement
agreement or otherwise. The development of the final plans and
specifications shall be according to the requirements set out
in the scope of Development Exhibit "D" I .2.
2 . Evidence of Financing Commitments.
LESSEE shall obtain and shall submit to LESSOR' s
Executive Director, evidence reasonably satisfactory to
LESSOR' s Executive Director that LESSEE has obtained the
financing necessary for the development of the Improvements on
the Premises in accordance with this Lease.
Such evidence of financing shall include the following:
(a) A copy of the commitment or commitments obtained
by LESSEE for the mortgage loan or loans to assist in financing
the construction of the Improvements, certified by LESSEE to be
a true and correct copy or copies thereof. The commitments for
financing shall be in such form and content acceptable to
LESSOR' s Executive Director as reasonably evidences a firm and
enforceable commitment, with only those conditions which are
standard or typical for the lender( s) involved for similar
projects;
(b) Sufficient information (e.g. , an annual report)
regarding the construction lenders to enable LESSOR' s Executive
Director to determine whether or not such lenders) has (have)
sufficient financial resources to fund the loan(s) ; and
(c) A copy of the contract between LESSEE and the
contractor(s) for the construction of the Improvements,
certified by LESSEE to be a true and correct copy thereof; and
10/21/90 EXHIBIT "C"
1712u/2460/04 'Page 1 of 6
(d) A financial statement and/or other documentation
satisfactory to LESSOR' s Executive Director as evidence of
other sources of capital sufficient to demonstrate LESSEE has
adequate funds committed to cover the difference, if any,
between construction and development cost minus financing
authorized by mortgage loans.
Within thirty (30) days after receipt of request for
approval of its evidence of financing, LESSOR' s Executive
Director shall respond in writing by stating what further
information, if any, he or she reasonably requires in order to
determine whether or not to approve such evidence of
financing. Upon receipt of such a timely response, LESSEE
shall promptly furnish to the Executive Director such further
information as may be reasonably requested.
LESSEE' s request for approval of its evidence of
financing shall be deemed complete thirty (30) days after
Executive Director' s receipt thereof, if no timely response
requesting further information is delivered to LESSEE, or, if
such a timely response requesting further information is
received, on the date that LESSEE delivers such additional
information to Executive Director. Once LESSEE' s request for
approval of its evidence of financing has been accepted as or
is deemed complete, Executive Director shall not be entitled to
demand additional information or to disapprove the request on
the basis that LESSEE has not furnished adequate or complete
information.
The 'Executive Director LESSOR shall approve or
. disapprove LESSEE' s evidence of financing within fifteen (15)
days after LESSEE' s request for such approval is accepted as
complete. Approval shall not be unreasonably withheld or
conditioned. If the Executive Director shall disapprove any
such- evidence of financing, it shall do so by written notice to
LESSEE stating the reasons for such disapproval.
3 . Approved Condition of Title; Acquisition of Property►
Interests in the Premises To Place Title In Such
Condition.
Except as expressly set forth herein, LESSOR covenants
to convey to LESSEE the leasehold estate in the Premises free
and clear of all monetary liens and all recorded and unrecorded
nonmonetary liens, encumbrances, easements, licenses, leases,
and other defects of title inconsistent with LESSEE' s approved
development plans, including without limitation Exceptions 1.33
set forth in the litigation guarantee issued by First American
Title Insurance Co. (Order No. ) dated January 15,
1986 (the "Approved Title Condition ) .
Except as expressly set forth herein, LESSOR hereby
represents that the City currently holds the fee title to the
10/21/90 EXHIBIT "C"
1712u/2460/04 Page 2 of 6
Premises in a condition that would enable the City to convey
leasehold title in the Approved Title Condition, excepting only
the "Maxwell' s Lease" and any currently existing subtenants
(that certain lease dated between the City as
landlord and as tenant) . Within the time set forth
in the Schedule of Performance (Exhibit "E" ) , LESSOR, LESSEE,
and the City shall exercise best efforts to negotiate and enter
into a binding written agreement with the holder of the
Maxwell' s Lease and all subtenant to terminate or amend said
leases on terms acceptable to LESSOR, the City, LESSEE, and the
holder of the Maxwell' s Lease, and all subtenants, no late.-
than the Con encement Date of this Lease. Subject to LESSEE' s
and Maxwell ' s performance of their obligations under such
agreement, LESSOR covenants that on or before the Commencenent
Date it shall acquire title to the Premises from the City in
the Approved Title Condition.
Notwithstanding the foregoing, LESSEE acknowledges
that the State of California, through the Office of the
California Attorney General and the State Lands Commission, has
made contentions that the Premises or some portions thereof
have been or may have been impliedly dedicated to the public or
are or may be subject to a public trust and that development
and operation of the Improvements on the Premises would or may
be inconsistent with the rights of the public to public open
space and/or recreational use and/or access to the coastline.
LESSEE assumes all risks regarding any such claims, whether
made by the State of California or any third party. Either
LESSOR or LESSEE shall have the right to file and prosecute a
quiet title action to determine the validity of any such
adverse claims against LESSOR' s and LESSEE' s title to the
Premises. In addition, in the event of any legal challenge
instituted by the State of California or any third party Braking
any such adverse claim against the title of LESSOR or LESSEE to
the Premises, the parties hereby agree to cooperate in
defending said action as set forth herein.
In the event that either LESSOR or LESSEE determines
to file a quiet title action, the same shall be diligently
prosecuted and the party maintaining the same shall exercise
best efforts to obtain a final and favorable judgment as soon
as practicable after the action is filed. No such action shall
be filed without prior consultation with the other party, which
other party shall have the right to appear independently in the
action to represent its interests.
In the event of litigation instituted by the State of
California or other third party, LESSOR shall have the right,
but not the obligation, to defend such action; provided, that
without LESSEE' s prior written consent, LESSOR shall not allow
any default or judgment to be taken against it and shall not
enter into any settlement or compromise of any claim which has
the effect, directly or indirectly, of prohibiting, preventing,
10/21/90 EXHIBIT "C"
1712u/2460/04 Page 3 of 6
delaying, or further conditioning or impairing LESSEE' s
development, use, or maintenance of any portion of the Premises
or impairing any of LESSEE' s rights hereunder. In addition,
LESSOR shall provide reasonable assistance to LESSEE in
defending any such action, such assistance to include%
(i ) making available upon reasonable notice, and at no cost to
LESSEE, LESSOR officials and employees who are or may be
witnesses in such action, and (ii) provision of other
information within the custody or control of LESSOR and the
City that is relevant to the subject matter of the action.
LESSEE shall have the obligation to defend any such
action filed by the State of California or any third party;
provided, however, that this obligation to defend shall not be
effective if and to the extent that LESSEE determines in his
reasonable discretion that such action is meritorious or that
the interests of the parties justify a compromise or settlement
of such action. In this regard, LESSEE' s obligation and right
to defend shall include the right to hire attorneys and experts
necessary to defend, subject to reasonable approval by LESSOR.
LESSOR Must be notified prior to any compromise or settlement
and shall have approval rights on any agreement that has the
potential of adversely affecting LESSOR' S right, title or
interest in the Premises.
LESSOR shall be solely responsible for all of its
costs and expenses incurred in prosecuting or defending any
such action. LESSEE shall be solely responsible for all of its
costs and expenses incurred in prosecuting or defending any
such action and, in addition, to any costs and expenses arising
out of or relating in any manner to the development of the
Premises or this Lease if the action results in an unfavorable
judgment or settlement that prohibits or prevents LESSEE' s
development of the Improvements on the Premises pursuant to
thirr Lease. LESSEE shall be entitled to full reimbursement up
to a maximum amount of Fifty Thousand Dollars ($50,000) from
LESSOR from all legal costs and expenses incurred by LESSEE in
prosecuting or defending any such action if the action results
in a favorable judgment or settlement permitting LESSEE to
develop the Improvements as contemplated in this Lease. Such
reimbursement shall include interest accruing on the principal
amount of LESSEE' s expenditures at the rate of eleven percent
(11%) per annum from the date expenditures are made until fully
reimbursed. Rent credits shall be allocated first to accrued
interest, then to unpaid principal. LESSEE shall provide to
LESSOR an itemized statement of LESSEE' s costs and expenses in
such detail as LESSOR may reasonably require in order to verify
the amount of LESSEE' s actual and reasonable expenses and the
time such expenses were incurred. LESSEE agrees to act
reasonably to conserve funds subject to this rent credit,
consistent with the parties' mutual objective of having the
action handled by qualified experts and quickly and
successfully concluded.
10/21/90 EXHIBIT "C"
1712u/2460/04 'Page 4 of 6
4. Environmental Testing and Clean Up Costs.
LESSEE shall obtain soils test analysis to be approved
by LESSOR' s Executive Director to determine the suitability of
the Site for the proposed development. In the event the test
evidences a need to remediate contamination of the Premises in
conjunction with development, the LESSOR shall bear the cost
for the first Twenty-Five Thousand Dollars, the LESSEE shall
bear the cost of the second Twenty-Five Thousand and costs
above Fifty Thousand shall be shared equally. If the cost
estimate to remediate contamination exceeds One Hundred
Thousand Dollars ($200, 000) then pursuant to Paragraph 6(f)
below, either party may terminate this Lease. Notwithstanding
the above, if LESSEE determines to bear all such costs above
One Hundred Thousand Dollars, then LESSOR shall not have the
ability to terminate this Lease.
5 . Miscellaneous Governmental Approval.
In addition to the approvals to be obtained from City
and LESSOR as provided herein, LESSOR and LESSEE shall
cooperate and diligently pursue, within the times set forth in
the Schedule of Performance (Exhibit "E" ) , the obtainment of
all other governmental approvals required for development and
operation of the Improvements.
6. Failure of Conditions; Termination.
In the event that, prior to the Commencement Date:
(a) LESSEE fails to submit or is unable, after and
despite its exercise of reasonable diligence, to timely
obtain approval of the final. building plans and
specifications for the Improvements, in accordance with
Paragraph l of this Exhibit "C"; or
(b) LESSEE is unable, after and despite its exercise
of reasonable diligence, to timely obtain financing
commitments for the development of the Premises or the
Executive Director' s approval thereof, in accordance with
paragraph 2 of this Exhibit "C" ; or
(c) LESSOR, LESSEE, and the City fail to timely enter
into a binding written agreement with the holder of the
Maxwell' s Lease or any other leasehold interest capable of
asserting relocation rights, in accordance with Paragraph 3
of this Exhibit "C"; or
(d) Replacement Parking requirements of any
governmental entity fail to be satisfied by the onsite
parking and no more than fifteen (15) offsite parking
spaces.
10/21/90 EXHIBIT "C"
1712u/2460/04 Page 5 of 6
(e) LESSOR fails to timely tender possession of the
Premises, with the condition of title meeting the
requirements set forth in Paragraph 3 of this Exhibit "C";
or
(f) LESSEE either fails to obtain an approved
environmental study or the cost to clean up contamination
found on or under the Premises exceeds $100,000 unless
LESSEE determines to pay all costs in excess of One Hundred
Thousand Dollars pursuant to Paragraph 4 of this Exhibit
"C" or
(g) As of the scheduled Commencement Date, LESSOR is
in default of any of its other obligations under this
Lease, and such failure or default is not cured and is not
being cured in accordance with paragraph 20 of Exhibit "B"
to the Lease;
(h) As of the Scheduled Commencement Date, LESSEE is
in default of any obligation_ under this Lease, and such
failure or default is not cured and is not being cured in
accordance with paragraph 20 of Exhibit "B" to the Lease;
then this Lease shall, at the option of either party, under
paragraph(s) a, b, c, d or f above, be terminated by
written nctice thereof to remaining party; or, LESSEE may
terminate under paragraph(s) a or g above; LESSOR may
terminate under (h) above, and thereupon neither LESSOR nor
LESSEE shall have any further rights or obligations with
respect to the Premises or this Lease.
1.0/21/90 EXHIBIT "C"
1712u/2460/04 'Page 6 of 6
EXHIBIT "D"
SCOPE OF DEVELOPMENT
I . LESSEE'S RESPONSIBILITIES:
1. The Improvements. As used in this Lease, the term
"Improvements" shall mean all improvements constructed,
assembled, or placed by -LESSEE on the Premises. Except as
specifically set forth in Section II below, LESSEE shall be
responsible for demolition and clearance from the Premises of
all existing improvements inconsistent with the construction
thereon of the "Improvements" in accordance with the plans and
permits to be approved by the City, LESSOR, and any other
governmental agency that has jurisdiction, as the same may be
amended from time to time. Additional clarifications of
LESSEE's responsibilities are set forth below:
(i ) Concept. The Improvements shall consist of
a multi-level restaurant project located within the footprint
of the existing improvements and the asphalt parking lot
located south of the Pier. The lifeguard station and beach
access road/bike path will remain in their present locations.
Emphasis is on small building footprints and silhouettes and
large public spaces, promenades and plazas. Pier, ocean, and
beach view opportunities, both in and through the project, will
be maximized wherever possible. Maxwell' s will have the option
of relocating to a new structure within the project.
New structures on the Plaza or PCH level are
limited to the new Maxwell' s (building "A" ) and buildings "B"
and "C" on the plans. The buildings shall be consistent with
the development guidelines for District 10 of The Downtown
Specific Plan. New structures on the lower or beach access
level will house food services, beach-related concessions, and
other approved visitor-serving commercial uses.
Structures on both levels shall be set back
so as to create pedestrian promenades along the entire ocean
side of the project. The upper promenade shall be lower than
the plaza level to improve PCH views of the surf. The lower
promenade or boardwalk shall be above the bike path so as to
separate pedestrians from skateboarders, bicyclists, and roller
skaters.
(ii ) Parking. The parking structure shall
contain a sufficient number of parking stalls (including
subterranean stalls on "lifts" ) to satisfy code requirements
for the uses on the Premises, calculated as follows: (1) the
relocated Maxwell' s restaurant: seventy-seven (77) spaces
(based on the number of spaces currently provided pursuant to
. the Maxwell' s Lease) ; (2) the two (2) major new PCH-level
10/21/90 EXHIBIT "D"
1712u/2460/04 'Page 1 of 5
buildings, any square footage in the New Maxwell ' s in excess of
11,400 square feet and the approximately 4, 500 square feet of
new restaurants/cafes on the lower level in excess of 1500
square feet: 1 space per 100 square feet of floor area; and
(3) pedestrian-oriented cafe and beach concessions: no
spaces. LESSEE shall not be responsible for providing any
off-Premises parking to replace any existing parking spaces on
or adjacent to the Premises that will or may be eliminated due
to the development of the project, whether required by the
City, the California Coastal Commission, or otherwise. LESSEE
will, in accordance with the provisions of Paragraph 7(d) of
the Lease, cause 240 public parking spaces to be built on the
Premises,
(iii ) Access. The project shall be designed so
that pedestrians will be able to enter the project site through
the signalized intersections at Main and Lake Streets.
Elevators, and ramps at all level changes, shall be provided
for full handicap access throughout the project and down to the
beach. Grand staircases from the plaza level to the beach
access level shall also be provided to act as. observation and
sitting areas.
The project shall provide automobile entry
to the plaza level south of building "A" and to the lower
parking level at Lake Street. Exiting shall be provided onto
PCH south of the entry and from the lower parking level out to
Lake Street. Two-way ramps shall provide access between the
parking levels. Payment control points shall be located on the
lower level at the base of the ramp and at the Lake Street
entrance/exit. Emergency vehicle access and dedicated fire
lanes shall be provided in accordance with City requirements
and the Eire Code.
• (iv) Construction. Buildings "A, " "B, " and "C"
shall be fully sprinklered and constructed to conform to all
applicable City building ordinances. They shall be erected on
top of a fully sprinklered steel reinforced concrete parking
structure. Surface finishes, design, and roofing shall be
consistent with the Downtown Design Guidelines and direction
from the City of Huntington Beach Design Review Board.
Handscape shall be a mixture of stone, concrete, and exposed
aggregate surfaces.
(v) Landscaping. Landscaping shall emphasize a
variety of palm trees, flowering vines, shrubbery, and bedding
plants, as well as a variety of coastal grasses. Landscaping
shall be accented by night-time lighting. Landscape plans
shall be as approved by the City.
(vi) Size of Buildings. The buildings to be
included in the project shall be of approximately the following
sizes (in square feet) :
10/21/90 EXHIBIT "D"
1712u/2460/04 Page 2 of 5
Plaza Level Square Footage
Building "A" (Maxwell' s) :
1st Level 11,200
2nd Level 3, 800
15,006 15,000
Building "B"
1st Level 8, 700
2nd Level 2,300
11,000 11,000
Building "C"
1st Level 8, 700
2nd Level _ 5, 400
14, 100 14, 100
Total Plaza Level 40, 100
Beach Access Square Footage
Dwight' s 2,500
Cafe 1,000
Casual Restaurant 6,000
Beach Concession 4,250
Total Beach Access Level 16, 700
PROJECT DOTAL 53,750
The size and the distribution of square footage among the
particular buildings and parts of building may vary from the
above, provided, however, the project total square footage
shall be a minimum of 45,000 and shall not exceed 60,000 square
feet without an amendment to this Scope of Development.
(vii) Cost of Construction. The Improvements
shall be constructed at a mininuir, 'hard" cost of Ninety Dollars
($90.00) per square foot of gross building floor area for the
three (3) buildings referenced in subparagraph (vi ) above (not
including the parking or Beach Access level facilities) ,
including without limitation tenant improvements and
furnishings, fixtures, and equipment, site preparation costs,
parking, landscaping, driveways, and other similar items. The
actual cost of construction will be certified and submitted to
LESSOR' S Executive Director at the time specified in the
Schedule of Performance Exhibit "E. "
10/21/90 EXHIBIT "D"
1712u/2460/04 Page 3 of 5
2 . Approval of Plans, Drawings and Related Documents
6he LESSOR shall receive copies of all plans,
drawings and related documents for the development of the
Premises, including any proposed material changes therein. The
LESSOR shall review such documents to determine consistency
with this Scope of Development (Exhibit "D" ) .
II . LESSOR' S RESPONSIBILITIES:
1 . Reopening and Maintenance of Municipal Pier.
LESSOR agrees to assist LESSEE in any requests to the City for
maintenance and repair of City cwned facilities including
without limitation the municipal Pier and the City Beach the
maintenance and repair of which or lack thereof could
negatively impact the project.
2 . Utilities. Subject to the maximum expenditure cap
in Paragraph 7(g) of the Lease, LESSOR agrees to provide, or
cause to be provided, within the times required in the Schedule
of Performance, all Utilities (water, sewer, gas, electrical,
and telephone) required for the development, use, and
maintenance of the improvements on the Premises, with
sufficient capacities to adequately service the Premises, with
such Utilities to be located on the Premises or stubbed no
further away than 3 feet from the curb within the Premises
along the west side of Pacific Coast Highway. LESSEE shall be
responsible for extending Utilities from said location(s) to
the improvements located on the Premises in accordance with
Paragraph I above.
3 . Easements and Permits. LESSOR agrees to cooperate
with LESSEE in connection with the filing and processing of any
and all applications for permits and other approvals required
by the City or any other governmental agency in connection with
the development of the Premises.
4. Access for Service Vehicles. During the entire
term of this Lease, LESSOR agrees to provide, or cause to be
provided, access for service and delivery vehicles to the
businesses on the Premises along the access road/bike trial on
the beach side of the Premises; provided that such access may
be restricted from 20:30 a.m. - 4:00 p.m. on weekdays and from
9:00 a.m. - 4:00 p.m, on weekends.
5. Relocation Assistance. The obligations of LESSOR
and LESSEE with respect to the temporary shutdown of Maxwell' s
and relocation of Maxwell' s and as to other subtenants into the
project to be developed by LESSEE on the Premises shall be as
set forth in the agreement by and among LESSOR, LESSEE, the
10/21/90 EXHIBIT "D"
1712u/2460/04 'Page 4 of 5
V
City, and the holder of the Maxw•ell' s Lease, and any current
Sublessee as referenced in Paragraph 3 of Exhibit "C" (the
"Conditions to Commencement" ) . Otherwise, LESSOR shall be
solely responsible for payment of relocation expenses and
provision of relocation assistance to any persons or entities
displaced as a result of LESSEE' s development of the Premises,
in accordance with applicable provisions of law.
10/21/90 EXHIBIT "D"
1712u/2460/04 Page 5 of 5
EXHIBIT "E"
SCHEDULE OF PERFORMANCE
Item of Performance Time for Performance
1. LESSEE submits to City and Completed
LESSOR application for
Conditional Use Permit and
Coastal Development Permit
(Exhibit "C, " 11)
2. LESSOR completed review and Within one hundred and
exercises reasonable eighty (180) days
diligence to cause City to after Effective Date
approve Conditional Use
Permit, Coastal Development
Permit, and supplemental
environmental impact report
(Exhibit "C, " ¶1)
3 . LESSOR, LESSEE, and the City Within one hundred and
exercise best efforts to eighty (180) days of the
enter into a binding written date City approves the
agreement with the holder of Conditional Use Permit,
the Maxwell' s Lease, Coastal Development
and any subtenants Permit, and Supplemental
(Exhibit "C,"' 113 ) EIR
4. LESSEE delivers Security On or before the
Deposit (Lease, 18) Commencement Date
S. ' LESSEE submits to City and Within one hundred fifty
LESSOR final building plans (250) days after the
and specifications. for latex of the following:
Improvements (Exhibit "C, " (i ) the date on which all
T11 and 3) of the permits and
approvals referenced in
paragraph 2 herein beccme
"final"; or (ii ) the date
on which the City, LESSOR,
and LESSEE enter into a
binding written agreements
with the holders of the
Maxwell ' s Lease and any
subtenants,
10/21/90 EXHIBIT "E"
1712u/2460/04 Page 1 of 3
6. LESSOR completes review Within thirty (30) days
and exercises reasonable after submittal
diligence to cause City to
complete review of final
building plans and speci-
fications for Improvements
(Exhibit "C, " Iil)
7 . LESSEE submits evidence Within one hundred twenty
of financing (120) days after City and
(Exhibit "C, " T2) LESSOR approval of final
building plans
S. LESSOR reviews and approves Within 30 days of receipt
(or disapproves) evidence of complete financing
of financing (Exhibit "C, " package
52)
9. LESSEE delivers evidence Within thirty (30) days
of insurance; Lease term after LESSOR approval
cortmences; LESSOR causes of evidence of financing
Title Company to deliver (and satisfaction or
title policy to LESSEE; waiver of all of the
LESSEE obtains building other Conditions to
permit(s) and construction Commencement in Exhibit
loan records (Lease, is 4 "C" )
and 10; Exhibit "B, " � 10;
Exhibit "C, " 113)
10. LESSEE commences -construct- Within thirty (30) days
tion of Improvements (Lease, after Commencement Date
T6)
11. LESSOR provides Utilities Prior to LESSEE' s
' to the Premises (Exhibit scheduled date for
"B, " 192; Exhibit "D, " JII .4) commencement of
construction
12. LESSEE completes construction Within twenty-four (24)
of Improvements; Exhibit months after commence-
"D, " 11I . 1 and 2) ment of construction
13. LESSEE requests Certificate Within thirty (30) days
of Completion (Exhibit "B" after completion of
193. a; Exhibit "D" III . 1(vii ) construction
14. LESSEE furnishes to Prior to issuance of Certi-
LESSOR as-built plans ficate of Completion
and itemized certified
statement of
construction costs
10/21/90 EXHIBIT "E"
1712u/2460/04 'Page 2 of 3
15. LESSOR shall either approve Within 45 days of request
or disapprove Certificate of
Completion (Lease, 16(c) )
It is understood that the foregoing Schedule of
Performance is subject to all of the terms and conditions set
forth in the text of this Lease . The summary of the items of
performance in this Schedule of Performance is not intended to
supersede or modify the more complete description in the text;
in the event of any conflict or inconsistency between this
Schedule of Performance and the text of this Lease, the text
shall govern.
10/21/90 EXHIBIT "E"
1712u/2460/04 Page 3 of 3
�+ V
EXHIBIT
When Recorded
Mail to:
Redevelopment Agency of
the City of Huntington
Beach
Attn: Executive Director/
City Administrator
2000 Main Street
Huntington Beach, CA 92648
CERTIFICATE OF COMMENCEMENT DATE
This certificate is executed this date 199 by
the Redevelopment Agency of the City of Huntington Beach and
Stanley M. Bloom, respectively Lessor and Lessee under that
certain Lease dated , 1990 (the "Lease") . The
purpose of this certificate is to establish a recorded date
certain as the "Commencement Date" as that term is used and
defined in the Lease.
The parties hereto agree that the Commencement Date shall
be and authorize this certificate to be
recorded in the Official Records of Orange County.
Stanley M. Bloom Executive Director
(Lessor) Redevelopment Agency of the
City of Huntington Beach
("Lessor" )
10/21/90 EXHIBIT "F"
1712u/2460/04
i
ATTACHMENT 6
CITY ATTORNEYS LEGAL OPINION
1� CITY OF HUNTINGTON BEACH
INTER-DEPARTMEP4T COMMUNICATION
r.u� NGtIY+61AC"
To Michael Uberuaga From Gail Hutton
City ,administrator City Attorney
Subject Pierside - :after Date November 13 , 1990
Measure C
Measure C passed with a vote of 73 . 6% . we will here address issues
raised by the impact of Measure C on Pierside .
Facts :
Measure C precludes various projects on any park or beach without
majority votes of both the Council and the electorate . The city
acquired surface rights to the Pierside property by an easement in
1932 for public, park, recreational and playground purposes . Eater
it acquired the underlying fee simple interest by deed after the
condemnation action was filed in 1986 . The Redevelopment Agency is
perfecting the title and soon will have a judgment vesting any
remaining interest in it . Thus , the city now owns the bulk of the
property. :here is a dispute as to the nature of uses the city can
place on Ube property, and , in particular, whether additional
restaurants may be placed thereon .
In 1986 , the city entered into a lease with Pier Side Development
For a "•visi tor-oriented specialty shopping center . " The Agency was
obligated to provide clear title, and the lessee was to construct
the improvements .
Measure C has an exception where services were being performed at
the same location on January 1 , 1989 . That exception does not apply
to the 1986 'Lease , since those uses were not being provided in 1989 .
The pierside property is uplands and has for many years contained
buildings and a paved parking lot . It does not appear to be a
"beach, " but an argument may be made that it is "parklands . " It is
unclear whether acquisition of fee title merges with the 1932
easement for public purposes .
Let us focus on specific issues ,
1 . Q . Does Measure C apply to the pierside property?
A. Probably. While this land may not be a beach, it is
arguably parkland . The definition of park is " land set
aside for public use . " The "service" exception in Measure
C does not apply to the current development proposal .
.a
5
Michael Uberuaga
November 13 , 1990
Page 2
2 . Q. Does Measure C apply to the Redevelopment Agency?
A. No . It only restricts activities of the city.
3 . Q . Does Measure C bar a conveyance of the Pierside property to
the Redevelopment Agency without a popular vote?
A. Yes . Once Measure C is effective, a vote of the electorate
will be needed . It will be effective when the charter
amendment is filed with the Secretary of State, which is
after the election results are certified . That will be
after about November 21 .
Other requirements also apply to a conveyance of the property.
One is a finding by the Planning Commission of conformance to
the general plan; this was done on November 6 . Another is a
requirement for 4/5 vote, since this is arguably waterfront
property (GQvarnmgntj 37351) .
4 . Q. Is Measure C constitutionally valid?
A. Probably. An argument might be made that Measure C
improperly deprives the Council of essential governmental
powers . We have not found any cases that would support
invalidation of the measure.
There are various cases that hold certain actions like
referenda invalid when they purport to challenge
administrative, as opposed to legislative, action. But
none is persuasive on the issues raised by Measure C.
5 . Q. Does the 1986 lease create vested rights to develop the
f restaurant project currently proposed?
A. Probably not . The 1986 lease was fairly project specific.
While the Agency still has not fully performed its
obligation to provide clear title, the facts as presently
known to us do not compel a conclusion that the developer
has a vested right to proceed with development . For this
reason, it does not make any difference whether the lease
currently under consideration is an " amended" lease or a
new lease . It would be preferable, however, to obtain
surrenders from the lessees and formally terminate the 1986
lease .
The bottom line is that unless title to the Pierside property is
transferred to the Redevelopment Agency prior to the effective date
of Measure C, the city will probably need a vote of the electorate
to proceed with any lease of the property.
Gail Hutton
City Attorney
cc: 3ar5ara Kaizar
Authorized to Publish Advertisements of all kinds including I
public notices by Decree of the Superior Court`of Orange
County, California, Number A-6214, September 29, 1961, and
A-24831 June 11, 1963
STATE OF CALIFORNIA
County of Orange
1 am a Citizen of the United States and a /
resident of the County aforesaid;_!-aiii o er the
age of eighteen years, and not a party to or
interested in the below entitled matter. I am a
principal clerk of the ORANGE COAST DAILY
PILOT, a newspaper of general circulation, OJ
printed and published in the City of Costa Mesa,
County of Orange,'State of California, and that
attached Notice is a true and complete copy as PUBLIC NOTICE I
was printed and published in the Costa Mesa, ;! NOTICE OF
P PUBLICMAIN-PIER HEARING
r f
Newport Beach, Huntington Beach, Fountain fT REDEVELOPMENT
PROJECT Valley, Irvine, the South Coast communities and ' FIRST AMENDED
Laguna Beach issues of said newspaper to wit PIAGR EMENT LEASE
the ISSUe($) Of: On Monday,November 5,
i 1990 a4 7_00 PM,or as soon
thereafter as the matter may
be heard,in the City Council
Chambers, Huntington
Beach City Hall located at
2000 Main Street, Hunt-
he
October 22 29 1990 city Council
f the,City
Of
� r _ City Council of the Crty of
1.
Huntington Beach and �the�
Redevelopment Agency,
("Agency") of the Cityi of
Huntington Beach, will hold
a joint public hearing to cbn-
sider the disposition.of cer-
tain real property located
within. the Main-Pier Re-
development Project Area
on the west side of Pacific
Coast Highway between
First and Main Streets,
(Legal Description on File.in'
the City Clerk's office)from
the City to the'Agency, and
Lease of said real property
to Stanley M. Bloom,
pursuant to a proposed Firstl
Amended Pierside Lease,
Agreement by and between{
the Redevelopment Agency'
I
declare under penalty of perjury, that the and Stanley M. Bloom. The(
P y p J y� financial proposed
Agreement
andi
byl
foregoing Is true and Correct. California Health and Safety
Code'Section 33433 are
0 available for public inspec-
October 29� tion at the office of the City
Executed on , 199— Clerk at 2000 Main Street,
Huntington Beach, Cali-
at Costa Mesa, California. fornia Further information
concerning this matter may
also be obtained by contact-,
ing Keith Bohr,Project Man-'
e^ ag9-2185.
By:,Connie
ie Brockway,
Signature City Clerk, City of Hunt-
Ington Beach
Published Orange Coast
* 1,-3 Daily Pilot October-22, 29,
1990
_ M239
PROOF OF PUBLICATION
- .. .., ,., - ��uriczl.lAgency;Agenda (3)
D-1. _LS ty CounA /Redc_v_clonment lflency)_ PUt3LYC _11EAR1NG_-_FIRaT
TENDED -PIER IDE LEASE A REEMX-14T AND TRAN F •R OF CITY PR PERTy
600 . 30 (PIER SIDE _RESTAURANT LEASE, _SITE) TO REDMLQPM hT A_QENCY --
MATN-P ER REPEVELQPMTNT ROJEtCT-AREA
CANT. Joint public hearing to consider the disposition of certain
QP N real property located within the Main-Pier Redevelopment
FR A7 Project Area on the west side of Pacific Coast Highway between
1115/90 First and Main Streets from the City to the Agency and Lease
of said real property to Stanley M . Bloom, pursuant to a
proposed First Amended Pierside Lease Agreement by and between
the Redevelopment Agency and Stanley M. Bloom.
Transfer of City Pr_Qpar - A 3 . 5 acre site located at. Main
Street and Pacific Coast Highway, south of the Pier , from City
to Agency, relative to a proposed First Amended Pierside Lease
between the Redevelopment Agency and Stanley M. Bloom for
rierside Restaurant- Project .
First Amend -Pierside LUZc Ag m n • - For the development
of 48, 522 square feet of restaurant and beach related retail
uses with 611 parking spaces on the site located aL Pacific
Coast Highway and Main Street .
IZCC -NDED AQ2:1Qi
h ari.nrg: defer action on the FirsL Amended
Pierside Lease between the RedevclopmenL Agency of
the City of Huntington Beach and Stanley M . Bloom for
Lhe development of the Pierside ResUlUrant project .
(2) Defer action relating Lo [-.he Agree:innnt for Purchaso
and Sale of Property for the Pierside Restaurants �
Project .
(3) Direct staff to develop a process [or prc-paring a
specific masLer Dian for Lhe downtown area .
4 rO vrd el")
1G.0 nk Lul�Li � j W h4rl-n e-y 'S 4 t C Y� r[1i rr�, r� Cols!-rrG
(11/19/9D) ;3)
FIRST AMENDED
PIER SIDE LEASE
By and Between
THE REDEVELOPMENT AGENCY OF THE CITY OF HUNTINGTON BEACH
and
STANLEY N. BLOOM
TABLE OF CONTENTS
• Pa e
1. RECITALS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
2. PREMISES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
3. INGRESS AND EGRESS. . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
4. TERM. . . . . . . . . . . . . . . . . . . . . .�. . . . . . . . . . . . . . . . . . . . 3
5. REQUIRED SERVICES AND USES - LIMITATION
ONUSE. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
6. DEVELOPMENT OF THE PREMISES AND ADJACENT AREAS 4
a. Scope of Development and Cost of
Construction. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
b. Construction Schedule. . . . . . . . . . . . . . . . . . . . . 4
c. Certificate of Completion. . . . . . . . . . . . . . . . . 4
7. RENT. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
a. Percentage Rental. . . . . . . . . . . . . . . . . . . . . . . . . 5
b. Parking Payment. . . . . . . . . . . . . . . . . . . . . . . . . . . 6
C. Subordination. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
d. Public Parking . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
e. Rent Credit. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
f. Appraisal. Procedure . . . . . . . . . . . . . . . . . . . . . . 10
g. Lessor Expenditure Maximum. . . . . . . . . . . . . . . . 12
8. SECURITY DEPOSIT. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
9. CONDITION OF TITLE, COVENANT OF QUIET
ENJOYMENT. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
10. NOTICES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
11. THIRD PARTY BENEFICIARY. . . . . . . . . . . . . . . . . . . . . . . 15
12. EXHIBITS - INCORPORATION INTO LEASE. . . . . . . . . . . 15
EXHIBITS
A Legal Description of Premises
B General Conditions
C Conditions to Commencement
D Scope of Development
E Schedule of Performance
F Certificate of Commencement Date
-ii-
FIRST AMENDED PIER SIDE LEASE
This FIRST AMENDED PIER SIDE LEASE (the "Lease" ) is entered
into this day of , 1990 (the "Effective Date" ) ,
by and between the REDEVELOPMENT AGENCY OF THE CITY OF
HUNTINGTON BEACH, a public body, corporate and politic
("LESSOR" ) , and STANLEY M. BLOOM, an unmarried man ( "LESSEE" ) ,
who agree as follows:
1 . RECITALS: This Lease is made with reference to the
following facts, objectives and covenants:
a. On or about August 19, 1985, LESSOR, HUNTINGTON
PACIFICA DEVELOPMENT GROUP; and the City of
Huntington Beach, a municipal corporation (the
"City" ) , entered into a Disposition and
Development Agreement, which agreement was
modified on or about February 18, 1986 (the
"DDA" ) . The DDA provided for the disposition and
development of two parcels located in the City of
Huntington Beach, California, one of which
parcels encompassed the Premises described herein
(and other adjacent property that has been
deleted from the Premises) . LESSEE hereunder is
a shareholder in Randall Foods, Inc. , which was
the parent of Pacific Heritage Land and Holding
Company, which in turn was the parent of Pacific
Heritage- Corporation, one of the general partners
in HUNTINGTON PACIFICA DEVELOPMENT GROUP, and
LESSEE thereby had a substantial interest in the
DDA,
b. On or about November 20, 1986, LESSOR and PIER
SIDE DEVELOPMENT, the successor-in-interest to
. HUNTINGTON PACIFICA DEVELOPMENT GROUP, entered
into a lease (the "Pier Side Lease" ) . The Pier
Side Lease provided for the disposition and
development of the parcel described in the DDA
that encompassed the Premises described herein.
Huntington Pacifica Development Group was a
general partner in PIER SIDE DEVELOPMENT, and
LESSEE thereby had a substantial interest in the
Pier Side Lease.
C. LESSOR and LESSEE, as the successor-in-interest
to PIER SIDE DEVELOPMENT, desire to amend and
restate the Pier Side Lease on the terms and
conditions set forth herein. LESSOR and LESSEE
agree that the DDA, including without limitation
the Guarantees set forth as Attachments 7-10
thereto, is of no further force and effect, and
that the Pier Side Lease, including without
limitation the Guarantees set forth as Exhibits
F, G, and H, thereto is superseded and amended by
this Lease and shall be of no further force or
effect on the Effective Date.
d. The City is currently the owner of that parcel of
real property located in the City of Huntington
Beach, State of California, described in Exhibit
"A" hereto and incorporated herein by this
reference (the "Premises" ) . Subject to the
satisfaction or 'iiaiver of all of the "Conditions
to Commencement" (Exhibit "C" hereto) , LESSOR
shall acquire the Premises from the City on or
before the "Commencement Date" of the Lease term,
as that date is defined in-paragraph 4 below.
e. On , 1990, by Resolution
No. LESSOR approved and authorized its
Chairman to execute this Lease.
f. This Lease is entered into for the redevelopment
of property consistent with the public purposes
of the Main-Pier Redevelopment Plan, as
previously adopted by the City Council of the
City, and not for the purpose of speculation in
unimproved land.
g. The development of the Premises pursuant to the
terms of. this Lease shall improve public access
to the public beach and recreational access and
use of the Premises by creating amenities
designed for year-round use and enjoyment by the
public at the Premises as well as improving and
facilitating vehicular, pedestrian, cycling and
handicapped access to and through the Premises.
2 . PREMISES: LESSOR agrees to lease to LESSEE and LESSEE
agrees to lease from LESSOR the Premises, as described in
Exhibit "A", upon the terms and conditions expressed herein.
3 . INGRESS AND EGRESS: LESSEE shall have access, as
approved by the City and Caltrans, pursuant to the approved
building plans for the development proposed herein, to all
portions of the Premises at all times during the entire Lease
term, including without limitation, access from the nearest
public streets (Pacific Coast Highway and Lake Street) to the
Premises, pedestrian access from all adjacent public spaces and
ways (which include but are not limited to the municipal pier
and beach) to the Premises, and limited access from the access
road/bike trail in accordance with Paragraph 7 of the Scope of
Development (Exhibit "D") . Access points shall be limited as
provided on the plans and permits to be approved by the City,
10/21/90
1712u/2460/04 -2-
as referenced in Paragraph 1 of the Conditions to Cortnencement
(Exhibit "C" ) , as the same may be revised from time to time.
LESSEE shall provide full public access to all of the promenade
and plaza portions of the Premises consistent with security and
safety regulations promulgated by any governmental authority
with jurisdiction. LESSEE shall further provide access to the
public parking facilities to be located on the Premises at a
minimum in accordance with applicable governmental regulation
or from at least 6:00 A.M. to twelve midnight each day on a
year-round basis.
4. TERM: The term of this Lease shall be fifty-five (55)
years, subject to extension pursuant to Paragraph 7(a) (ii )
below, commencing on the date (herein the "Commencement Date")
that all of the conditions to the commencement of the Lease
term described in Exhibit "C" hereto ( "CONDITIONS TO
COMMENCEMENT" ) are satisfied or their performance is waived by
the appropriate party. Upon the Commencement Date, LESSOR and
LESSEE each agree, upon the request of the other party, to
execute and record in the Official Records of Orange County an
appropriate r.►emorandum certifying the actual Commencement Date
in the form attached hereto as Exhibit "F" .
5. REQUIRED SERVICES AND USES LIMITATION ON USE:
LESSOR' s primary purpose for entering into this Lease are to
provide for improved accessibility and use of the Premises by
the public through the development of facilities and services
needed by the public as part of the implementation of the
Redevelopment Plan for the Main-Pier Redevelopment Project (the
"Redevelopment Plan" } .- In furtherance of that purpose, LESSEE
shall during the Lease term use the Premises for the purpose of
constructing and operating thereon restaurant and food and
beverage facilities, beach-related concessions, retail shops,
and a parking structure designed to accommodate such uses and
public beach parking, all in accordance with the Scope of
Development (Exhibit "D" ) and the Conditional Use Permit,
Coastal Development Permit, and final- building plans and
specifications to be approved for the project referenced
therein, as such matters may be amended or changed as provided
herein. Provided that LESSEE obtains all permits and approvals
which may be required by the City and any other governmental
agency with jurisdiction, LESSOR agrees that the permitted uses
on the Premises shall also include outdoor dining, the serving
of alcoholic beverages in conjunction with the restaurant and
food and beverage facilities, entertainment, and the staging of
special outdoor events on the Premises including, but not
limited to, art exhibitions, musical performances and retail
merchandising activities. LESSEE shall not use or suffer the
Premises to be used for any other purpose without the prior
written consent of LESSOR.
10/21/90
1712u/2460/04 -3-
6. DEVELOPMENT OF THE PREMISES AND ADJACENT AREAS:
a. Scope of Development and Cost of Construction:
LESSEE shall construct or cause to be constructed
at no expense to LESSOR the "Improvements" on the
Premises as set forth in Section I of the Scope
of Development (Exhibit "D" ) . The cost of the
public parking spaces constructed or caused to be
constructed on the Premises by Lessee shall be
paid for in full by Lessor pursuant to Paragraph
7(d) of this Lease. The additional debt cost to
LESSEE of multi-level parking as compared to at
grade parking shall be credited against the
rental payments otherwise due from LESSEE to
LESSOR pursuant to Paragraph 7(e) of this Lease.
b. Construction Schedule: Subject to the other
terms and conditions set forth herein, including
without limitation Paragraph 30 of the General
Conditions (Exhibit "B" ) , LESSEE shall begin and
complete all construction required of it within
the times specified in the Schedule of
Performance (Exhibit "E") . The Schedule of
Performance may be modified by approval of LESSEE
and the LESSOR' s Executive Director. LESSOR
agrees that any and all construction plan
checking and field inspections related to the
construction of the Improvements may be submitted
to deputy or independent plan checkers or field
inspectors hired by LESSEE but certified by
LESSOR and/or City. LESSOR further agrees that
the approval or certification of such deputy or
independent inspectors will not be unreasonably
withheld or conditioned.
C. Certificate of Completion: Promptly after
LESSEE s completion of construction of all the
Improvements, but excluding normal and customary
tenant improvement items, LESSOR shall furnish
LESSEE with a Certificate of Completion upon
written request therefor by LESSEE. LESSOR shall
also furnish partial Certificates of Completion
for individual buildings or portions of buildings
on the Premises. LESSOR shall not unreasonably
withhold any such Certificate of Completion.
Such Certificate of Completion shall be a
conclusive determination of satisfactory
completion of the construction required by this
Lease as to which the Certificate relates and the
Certificate of Completion shall so state. After
recordation of such Certificate of Completion,
any party then owning or thereafter purchasing
the improvements, leasing the Premises, or
10/21/90
1712u/2460/04 -4-
otherwise acquiring any interest in the Premises
or improvements covered by the Certificate of
Completion shall not (because of such ownership,
purchase, lease or acquisition) , incur any
obligation or liability under this Lease with
respect to LESSEE' s initial construction
obligations hereunder.
Each Certificate of Completion of
construction shall be in such form as to permit
it to be recorded in the Recorder' s Office of
Orange County.
If LESSOR refuses or fails to furnish a
Certificate of Conpletion after written request
from LESSEE, LESSOR shall, . within thirty (30)
days of written request therefor, provide LESSEE
with a written statement of the reasons LESSOR
refused or failed to furnish a Certificate of
Completion. The statement shall also contain
LESSOR' s statement of the actions LESSEE must
take to obtain a Certificate of Completion. If
the reason for such refusal is confined to the
immediate availability of specific items of
materials for landscaping, LESSOR will issue its
Certificate of Completion upon the posting of a
bond, letter of credit, or cash deposit by LESSEE
with LESSOR in an amount representing the fair
value of the work not yet completed as determined
by the Executive Director of the LESSOR.
Such Certificate of Completion shall not
constitute evidence of compliance with or
satisfaction of any obligation of LESSEE to any
holder of any mortgage, or any insurer of a
mortgage securing money loaned to finance the
improvements, or any part thereof. Such
Certificate of Completion is not a notice of
completion as referred to in the California Civil
Code, Section 3093 .
7. RENT: Subject to subparagraph (e) below and all of
the other terms and conditions set forth in this Lease,
including without limitation Paragraphs 7-9 of Exhibit "E",
LESSEE shall pay to LESSOR rent and LESSOR shall pay LESSEE to
construct the beach public parking as follows:
a. Percentage Rental:
(i ) Basic Percentage. Beginning with the
date which is the first anniversary of the
Commencement Date, and continuing thereafter
LESSEE shall pay to LESSOR a Percentage Rent
10/21/90
1712u/2460/04 -5-
of the Gross Sales Receipts generated from
the Premises during each calendar quarter or
partial calendar quarter during such period
according to the following schedule:
Gross Sales Percentage
Receipts Threshhold Rent Rate
(* in millions of dollars)
less than 35* 2%
less than '55 2-1/2%
less than 100 3%
100 and above 3-1/4%
Quarterly rent payments shall be determined
by multiplying the Gross Sales Receipts
generated for such quarter by the Percentage
Rent Rate used in the previous calendar
year. Once a Cross Sales Receipts
Threshhold is achieved, the Percentage Rent
Rate shall not be reduced below such
Percentage Rent Rate and as each new Cross
Sales Receipts Threshhold is achieved, the
new Percentage Rent Rate shall be
established and not subsequently lowered
notwithstanding that Gross Sales Receipts in
a subsequent calendar year may fall below a
previously achieved threshhold. In the
event that the annual Gross Sales Receipts
reconciliation pursuant to Paragraph 9 of
Exhibit "B" reveals that a higher Gross
Sales Receipts Threshhold had been reached
in such preceeding calendar year, LESSEE
shall pay to LESSOR within thirty (30) days
after such determination an amount equal to
the Gross Sales Receipts for such calendar
year multiplied by the difference between
the prior Percentage Rent Rate and the new
Percentage Rent Rate for the higher Gross
Sales Receipts Threshhold.
(ii ) Option to Rehabilitate. Beginning with
the thirty-first (31st) year of the term of
this Lease and during the succeeding two ten
(10) year periods thereafter, LESSEE shall
have the option of extending the term of the
Lease an additional twenty-five (25) years
in return for undertaking a major renovation
of the Premises, which, for the purpose of
this provision shall be an expenditure by
LESSEE and its subtenants, within a
10/21/90
1712u/2460/04 -6-
twenty-four (24) month period, as approved
by LESSOR (which approval shall not be
unreasonably withheld or conditioned) , in an
amount equal to or greater in value than
fifty percent (50%) of the total replacement
cost of the Improvements not including the
parking facilities and not including
twenty-five percent (25%) of the Furniture,
Fixtures and Equipment installed on the
Premises at the commencement of the
twenty-four._(24) month renovation period.
In the event LESSEE elects to exercise the
option provided in this Subparagraph (ii) ,
in the fifty-fifth (55th) year after the
Commencement Date, the Premises shall be
appraised according to the method set out in
Paragraph 7(f) below and the Rent shall
convert in the fifty-sixth (56th) year after
the Commencement Date to the then "market
value" (as established by the appraisal
pursuant to Paragraph 7(f) below) of the
existing use (the "Option Rent" ) . The
Option Rent shall increase at the beginning
of each successive five (5) year period
(i .e. : years 61, 66, 71 and 76 from the
Commencement Date) through the expiration of
the option period by the multiple of the
Index, as defined below, however the
application of such Index shall result in a
minimum increase of three percent and
maximum increase of seven percent (7*/.) on a
per year basis even if the actual Index
would dictate a greater or lesser multiplier.
• (iii) Base Percentage_ Rental . In the event
at year thirty-one (31) of this Lease,
LESSEE elects not to exercise the option
provided in paragraph (ii) above, then a
base rent shall be established (the "Base
Rent" ) by taking seventy-five percent (75%)
of the average of the Gross Sales Receipts
for years 28, 29 and 30. This Base Rent
shall be in force until year 41 at which
point it shall be reset until year 51 by
applying the same multiple to the average
Gross Sales Receipts for years 38, 39 and
40. The process shall repeat in year 51 and
be based on the average Gross Sales Receipts
for years 48, 49 and 50. However, in no
event shall the Base Percentage Rent fall
below a prior set base. If in any year a
site specific occurrence or a general
economic downturn results in the application
of the above Base Rent being a grossly
unfair burden on the LESSEE, the LESSEE has
10/21/90
1712u/2460/04 -7-
the right to appeal the application of the
Base Rent as to a specific calendar year and
LESSOR may allow an abatement of all or a
portion of the Base Rent requirement for a
given year. In the event that the parties
hereto cannot reach an accord on an appeal
of Base Rent, then LESSEE may appeal the
application of Base Rent by LESSOR to the
judge provided for in Paragraph 31 of
Exhibit "B" hereto. In such appeal, the
judge shall analyze the shortfall in Gross
Sales Receipts to determine if it is the
result of site specific or general market
conditions and not reasonably attributable
to the operational performance of LESSEE or
its subtenants. If the judge finds (i ) that
site specific or general market conditions
are the cause of the shortfall and,
(ii) that such an application would be
"grossly unfair" burden on the LESSEE, then
she shall have the authority to abate the
Base Rent in an amount that is fair and
equitable to the interests of both parties
hereto.
b. Parking Payment: LESSEE shall pay to LESSOR
a quarterly payment of Twenty-seven Thousand
Five Hundred Dollars ($27, 500) (the "Parking
Payment") to be annually adjusted by the
Consumer Price Index (the "Index" ) capped
annually at seven percent (7%) in
consideration of the right to charge parking
fees for use -by the public of the parking
structure. The "Index" , as used in this
• Lease shall be deemed to mean The United
States Department of Labor, Bureau of Labor
Statistics Consumer Price Index for All
Urban Consumers, Los Angeles-Anaheim-
Riverside Area (1982-84=100) . If at any
time the Index shall cease to exist in the
format recited herein, LESSOR shall
substitute any official index published by
the Bureau of Labor Statistics or successor
or similar governmental agency as may then
be in existence that shall, in LESSOR' s
reasonable opinion, be most nearly
equivalent thereto. Fees charged by LESSEE
for use of a parking space may be the
greater of the amount of Five Dollars
($5.00) per day, to be annually adjusted by
the Index capped annually at seven percent
(7%) or an amount equal to one hundred and
twenty percent (1207.) of the maximum per day
10/21/90
1712u/2460/04 -8-
rate charged by the City or LESSOR in a City
or LESSOR-owned parking structure. In the
event that the City determines to allow a
City parking permit to be used in lieu of
paying a per day fee in all other City or
LESSOR owned beach parking facilities, the
LESSEE shall allow the use of such a permit
and waive a parking charge. In the event
LESSEE provides evidence to LESSOR that the
permit usage is preventing the LESSEE from
obtaining an -equitable rate of return in
operating the parking facility, adjustments
may be made to the Parking Payment as
reasonably approved by LESSOR.
C. Subordination: LESSOR agrees to execute
appropriate documents required to
subordinate its right to receive rent
pursuant to this Lease for an amount not to
exceed Fourteen Million Five Hundred
Thousand Dollars ($14, 500,000) to financing
approved by LESSOR in accordance with
Paragraph 16.A of Exhibit "B. "
d. Public Parking Construction Payment. LESSEE
shall construct a parking structure
sufficient to park both the spaces required
by the uses to be conducted on the Premises
and 250 public parking spaces. LESSOR shall
pay to LESSEE an amount equal to Four
Million Dollars ($4, 000,000) as compensation
for the cost of constructing the 250 public
parking spaces at the time provided in the
Schedule of Performance (Exhibit "E") .
LESSEE shall either pay prevailing wages
according to state law for at least that
portion of the parking structure which shall
provide the public parking spaces or shall
indemnify, defend and hold harmless LESSOR
and/or City from any claim or action arising
out of LESSEE' s failure to pay prevailing
wages and/or LESSOR' s failure to make such
payment mandatory in this Lease. The form
of the bid package for the parking structure
shall be submitted to the City Attorney' s
office for review and approval . The
submission shall be deemed approved thirty
(30) days from the date of submittal unless
a written statement itemizing objections is
received by LESSEE prior to the expiration
of such thirty (30) day period.
e. Rent Credit: Notwithstanding any other
provision of this Lease to the contrary,
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LESSEE shall be entitled to a credit against
the first rental payments otherwise due in
an amount equal to the difference between
LESSEE' S amortized debt on the approved cost
of construction of the spaces required to
park the commercial uses of the multi-level
parking structure to be constructed on the
Premises (assuming a 30-year loan at 111%
interest) and what the amortized debt for
the cost of the construction of a single
level at grade parking facility would have
been (assuming a 30 year loan at 11%
interest) . The parties agree for purposes
of this paragraph that the difference in
cost of the amortized debt for a single
level at grade parking facility and the
structured parking as proposed in the Scope
of Development (Exhibit "D" ) is equal to a
One Million Dollar ($1,000,000) up-front
payment followed by 30 annual payments of
Three Hundred and Twenty-F.ive Thousand
Dollars ($325,000) (the "Differential
Cost" ) . The annual payments (or rent
credits) were caluclated based on interest
at the rate of eleven percent (11%) per
annum compounded annually, commencing as
LESSEE incurs costs for such portion of the
Improvements and continuing thereafter until
the rent credit has been fully applied.
Notwithstanding the above, LESSOR shall have
the right to prepay the amount of the
Differential Cost without penalty and with
only such interest as has already accrued.
f. Ap2raisal Procedure. In the event that
this Lease is extended pursuant to
Subparagraph (ii) of Paragraph 7(a) above,
the Premises shall be appraised in the 55th
year after the Commencement Date at the then
current fair market value of the Premises
determined in accordance with the then
current and actual use being made of the
Premises as permitted by this Lease and
without assuming any change of use whether
or not permitted by the terms of the Lease
and without regard to any residual value for
any future or potential use. The appraisal
shall not include the value of the existing
Improvements on the Premises and shall only
consider the existing Improvements on the
Premises for the purpose of determining the
then current and actual use being made of
the Premises. The appraisal procedure shall
be conducted as follows:
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V
(i) Such appraisal shall be conducted and
made by three (3) appraisers, each of whom
shall be a member of the American Institute
of Real Estate Appraisers, qualified for the
purpose of appraising the Premises. The
appraisal by each appraiser shall be made in
accordance with the then standard practices
of the American Institute of Real Estate
Appraisers or any successor organization.
(ii ) Either LESSOR or LESSEE shall appoint
in writing an appraiser and gave written
notice thereof to the other, and within
fifteen (15) days after service by such
party on the other of such notice, the other
party shall, in a like manner, appoint an
appraiser and give written notice thereof to
the other party. In case of failure of
either party to appoint an appraiser, the
other party shall have the right to apply to
the president of the local_ Chapter of the
American Institute of Real Estate Appraisers
in the County in which the premises are
situated to appoint an appraiser to
represent the defaulting party. In the
event the president of such Chapter declines
to appoint an appraiser, the executive
committee of said Chapter may appoint an
appraiser for the defaulting party. In the
event that the executive committee of said
Chapter declines to appoint an appraiser,
the party having appointed an appraiser
shall have the right to appoint a second
appraiser to act on behalf of the party
• failing to appoint an appraiser. The two
appraisers thus appointed, in either manner,
shall select and appoint in writing a third
appraiser and give written notice thereof to
LESSOR and LESSEE, of if within ten (10)
days after the appointment of the second
appraiser the two appraisers so appointed
shall fail to appoint a third appraiser,
then either party hereto may apply the
default methcdology for the selection of an
appraiser outlined above.
(iii ) The three (3) appraisers so appointed
(in either manner) shall promptly fix a time
for completicn of the appraisal, which time
shall be no later than ninety (90) days from
the date of the appointment of the last
appraiser. The appraisers shall notify
LESSOR and LESSEE as to the said date fixed
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1712u/2460/04 -11-
for such completion. On that date the three
(3 ) appraisers shall submit their appraisals
in writing in the then usual form to LESSOR
and LESSEE. The parties agree that' for the
purpose of calculating the value to be
determined by appraisal the appraised value
shall be deemed to be that amount which is
determined by taking the average of the two
(2) appraisal figures which are closest to
each other. each of the parties hereto
shall pay for the services of its appointee
(whether or not said appraiser is selected
by default) and one-half (1/2) of the costs
of the services for the third appointee.
g. Lessor Expenditure Maximum. The total
amounts of costs or expenditures to the
LESSOR separate and apart from the Public
Parking Construction Payment in Paragraph
7(d) and the Rent Credit in Paragraph 7(e)
above, prior to the issuance of the
Certificate of Completion for the
Improvements, shall not exceed One Million
Dollars ($1,000,000) . This cap on
expenditures includes, but is not limited
to, all costs incurred or to be incurred due
to litigation, hazardous waste remediation,
relocation of existing tenants and provision
of utilities to the Premises. Any such
costs incurred as a result of the
construction of the Improvements pursuant to
this Lease which in aggregate exceed One
Million Dollars shall become the obligation
of the Lessee. Costs incurred, after the
issuance of the Certificates of Completion
shall be allocated between the parties as
provided in this Lease.
8. SECURITY DEPOSIT: Within ten (10) days after the
Commencement Date, LESSEE shall deposit with LESSOR the sum of
Fifty Thousand Dollars ($50,000) (in the form of a certificate
of deposit in the name of LESSOR, or an irrevocable and
unconditional letter of credit, for two hundred seventy (270)
days which shall be sight draft, of a term, in a form, and by a
bank all acceptable to LESSOR in its reasonable discretion) as
a security deposit for the performance by LESSEE of the
provisions of this Lease required to be performed by LESSEE
prior to LESSOR' s issuance of its final Certificate of
Completion for the Improvements. If the security deposit is a
certificate of deposit, interest shall be credited to LESSEE
10/21/90
1712u/2460/04 -12-
and withdrawn and paid to LESSEE quarterly. If it is a letter
of credit, the letter of credit shall authorize the LESSOR to
draw funds from the letter of credit by presenting a sight
draft and certification for payment in the event of a default
as defined in Exhibit "B" Paragraph 18 of this Lease by
LESSEE. It shall be a condition of the letter of credit that
it shall be deemed automatically extended without amendment for
two hundred seventy (270) days from its current or future
expiry date unless, not less than thirty (30) days prior to
such expiry date, the issuer shall notify the LESSOR by
registered mail that the issuer -has elected not to renew the
letter of credit for any additional period of time. In that
event, LESSEE shall immediately extend or replace the letter of
credit. If LESSEE has failed to extend or replace the letter
of credit ten (10) days prior to its expiry date, the LESSOR
may draw against the letter of credit by 'presenting LESSOR' s
sight draft. Provided, however, that if the LESSOR draws down
on the letter of credit pursuant to this Paragraph 8, the
LESSOR shall return such funds to LESSEE within ten (10) days
of LESSEE' s providing a new letter of credit consistent with
the provisions of this Paragraph S.
During the period that LESSOR is entitled to hold the
Security Deposit, if LESSEE is in default, and such default is
not cured and is not being cured in accordance with paragraph
16 of Exhibit "B, " LESSOR can use the security deposit, or any
portion of it, to cure the default or compensate LESSOR for all
damages sustained by LESSOR resulting from LESSEE' s default and
LESSEE shall immediately on demand pay to LESSOR a sum equal to
the portion of the security deposit expended or applied by
LESSOR as provided in this paragraph so as to maintain the
security deposit in the sum initially deposited with LESSOR.
The security deposit (or such remaining portion thereof that
has not been used by LESSOR to cure LESSEE' s default or to
compensate LESSOR for damages sustained by LESSOR resulting
from LESSEE' s default) shall be refunded promptly after the
earlier of the following: (i ) the date upon which LESSEE has
completed the Improvements (excluding tenant improvements) and
LESSOR is obligated to issue its final Certificate of
Completion, or (ii ) the expiration or termination of this
Lease. LESSOR' s obligations with respect to the security
deposit are those of a debtor and not a trustee. LESSOR shall
be permitted to maintain the security deposit separate and
apart from LESSOR' s other funds or can co-mingle the security
deposit with LESSOR' s funds.
9 . CONDITION OF TITLE; COVENANT OF QUIET ENJOYMENT:
Subject to LESSEE' s satisfaction or LESSOR' s waiver of all of
the Conditions to Commencement (Exhibit "C" hereto) to be
satisfied by LESSEE, and subject to the exceptions in
Exhibit "C" hereto, LESSOR covenants to convey to LESSEE the
leasehold estate to the Premises in the "Approved Title
10/21/90
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Condition" referenced therein. LESSOR further covenants that,
at the Commencement Date, LESSOR shall cause First American
Title Insurance Company, or such other title company as may be
mutually approved by LESSOR and LESSEE, (the "Title Company" ) ,
to deliver to LESSEE an ALTA Survey and ALTA Extended Coverage
(Form B) policy or policies of title insurance issued by the
Title Company insuring that the leasehold estate is vested in
LESSEE in such condition. The Title Company shall provide
LESSOR with a copy of the title policy. The total amount of
title insurance coverage for the Premises shall be the sum of
Five Million One Hundred Thousand Dollars ($5, 100,000) .
LESSOR shall pay that portion of the cost and expenses of
the premium for the title policy which is equal to what the
premium would have been if the title policy were a CLTA policy,
and LESSEE shall pay the balance of such premium. LESSEE shall
pay the cost of any new survey required in order to obtain the
title policy. LESSEE shall pay the cost for any additional
coverage or endorsements that it may request.
Subject to the exceptions in Exhibit "C" hereto, LESSOR
covenants that LESSEE, after the Commencement Date and upon
performing the covenants in the Lease required to be performed
by LESSEE, may quietly have, hold, and enjoy the Premises
during the term of this Lease without hindrance or interruption
by LESSOR or any party claiming by, through, or under LESSOR.
Not by way of limitation of the foregoing, and except as
specifically set forth in Exhibit "C" , in the event any adverse
claim is made or threatened impairing LESSEE' s leasehold title,
other than a claim by •any part claiming by, through, or under
LESSEE, LESSOR, at its sole expense, shall take all required
actions, including filing and diligent prosecution of quiet
title and/or ejectment suits if •necessary, to remove such
adverse claim or cloud on LESSEE' s title.
Subject to the overall limit of expenses by LESSOR in
Paragraph 7(g) above, LESSOR shall pay those costs necessary to
relocate all currently existing LESSEES and subtenants on the
Premises pursuant to Exhibit "D" 11 .5.
10. NOTICES: Any notice, demand, request, consent,
approval or communication that either party desires or is
required to give to the other party or any other person shall
be in writing and either served personally or sent by prepaid
first class mail to the other party at the address set forth
below:
TO LESSOR:
Redevelopment Agency of the City of Huntington Beach
Attn: Executive Director/City Administrator
2000 Main Street
Huntington Beach, California 92648
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1712u/2460/04 -14-
TO LESSEE•
Stanley M. Bloom
c/o Randall Foods, Inc.
2905 E. 50th Street
Vernon, CA 90058
WITH COPIES TO:
Jonathan Chodos
1559 So. Sepulveda Blvd. r
Los Angeles, CA 90025
and any leasehold or subleasehold mortgagee
approved by LESSOR pursuant to Paragraph 16A
of Exhibit "B" that requests in writing
that LESSOR provide such notice.
Either party may change either its designee or its address by
notifying the other party of such change.
11 . THIRD PARTY BENEFICIARY: The City (but no other
person or entity) shall be deemed a third party beneficiary of
this Lease.
12 . REPRESENTATIONS BY LESSEE: The LESSEE represents and
warrants to the LESSOR as follows:
1. The LESSEE has full authority from all prior
interested parties, as specified in recital of Paragraph 1 to
this Lease to execute and deliver this Lease and any and all
other agreements and documents required to be executed and
delivered by the LESSEE in order to carry out, give effect to,
and consummate the transactions contemplated by this Lease.
2 . The LESSEE does not have any material contingent
obligations or any material contractual agreements which could
materially adversely affect the ability of the LESSEE to carry
out its obligations hereunder.
3 . There are no material pending or, so far as is
known to the LESSEE, threatened, legal proceedings to which the
LESSEE is or may be made a party or to which any of its
property is or may become subject, which have not been fully
disclosed in the material submitted to the LESSOR which could
materially adversely affect the ability of the LESSEE to carry
out its obligations hereunder.
4. There is no action or proceeding pending or, to
the LESSEE' s best knowledge, threatened, looking toward the
dissolution or liquidation of the LESSEE and there is no action
or proceeding pending or, to the LESSEE' s best knowledge,
10/21/90
1712u/2460/04 -15-
threatened by or against the LESSEE which could affect the
validity and enforceability of the terms of this Lease, or
materially and adversely affect the ability of the LESSEE to
carry out its obligations hereunder, (excepting only the
potential state lands commission claim set out in Exhibit "C"
Paragraph 3 ) .
Each of the foregoing items 1 to 4, inclusive, shall
be deemed to be an ongoing representation and warranty. The
LESSEE shall advise the Agency in writing if there is any
change pertaining to any matters set forth or referenced in the
foregoing items 1 to 4, inclusive.
13 . EXHIBITS -- INCORPORATION INTO LEASE: The following
exhibits referred to in this Lease are attached hereto and by
this reference incorporated herein:
Exhibit "A" Legal Description of Premises
Exhibit "B" General Conditions
Exhibit "C" Conditions tc Commencement
Exhibit "D" Scope of Development
Exhibit "E" Schedule of Performance
Exhibit "F" Certificate of Commencement Date
REDEVELOPMENT AGENCY OF THE CITY
OF HUNTINGTON BEACH, a public
body, corporate and politic
1990 By
Chairman
ATTEST:
Agency Secretary
APPROVED AS TO FORM: INITIATED AND APPROVED AS TO
CONTENT:
Agency Special Counsel Deputy City Administrator/
Economic Development
10/21/90
1712u/2460/04 -16-
REVIEWED AND APPROVED APPROVED:
AS TO FORM:
Agency Attorney Executive Director
STANLEY M. BLOOM, an unmarried
man ( "LESSEE" )
bi CID I�
1990
10/21/90
1712u/2460/04 -17-
EXHIBIT "Fti"
LEGAL DESCRIPTION
That portion of Huntington Beach, County of Orange, State of
California as shown on a map recorded in Book 3, Page 36 of
Miscellaneous Maps in the office of the County recorder of said
county described as follows:
Beginning at the centerline intersection of
Pacific Coast Highway and Lake Street, shown
as Ocean Avenue and First Street respectively,
on said mentioned map; thence along the
centerline of Pacific Coast Highway south
48°21'42" east 37.50 feet to the intersection
with the southwesterly extension of the
southeast right-of-way line of Lake Street;
thence south 41038' 18" west 50.00 feet to the
true point of beginning; thence north
48°21 '42" west 1,020.00 feet; thence south
41°36' 18" west 200.00 feet; thence south
48021 ' 42" east 1020.00 feet; thence north
41°3e ' 16" east 200.00 feet to the true point
of beginning.
10/21/90 EXHIBIT "A"
1712u/2460/04
EXHIBIT "B"
GENERAL CONDITIONS
TABLE OF CONTENTS
Paragraph # Ca t�ion
1. Charge for Late Payment
2 . Utilities
3. Construction of Improvements
by LESSEE
4. Signs
5. Destruction
6. Maintenance
7. Gross Rental Receipts
S. Rent Payment Procedure and
Accounting
9. Records, Books of Account,
Accounting Statements and Audits
10. Insurance
11. Indemnity
112 . Taxes and Assessments
13 . Unlawful Use
14. Abandoned Personal Property
15. Holding Over
16. Assigning, Subletting and
Encumbering
17. Successors in Interest
18. LESSEE' s Default
19. LESSOR' s Remedies
10/21/90 EXHIBIT "B"
1712u/2460/04 Page 1 of 35
1
20. LESSOR' s Default
21. Quitclaim of LESSEE' s Interests
Upon Termination
22. Total Taking
23 . Partial Taking
24. Eminent Domain Award
25. Amendments
26. Captions
27. California Law
28 Waiver
29. Nondiscrimination
30. Force Ma3eure
31 . Resolution of Disputes
32. Time
33 . Non Disturbance and Recognition
34. Estoppel Certificate
35. Hazardous Waste
10/21/90 EXHIBIT "B"
1712u/2460/04 Page 2 of 35
EXHIBIT "B"
GENERAL CONDITIONS
1. CHARGE FOR LATE PAYMENT: Rent not paid when due shall
accrue interest at the rate of twelve percent (12%) per annum
commencing five days from the date due until paid.
2. UTILITIES: LESSOR agrees to provide, at no expense to
LESSEE, all Utilities (water, sewer, gas, electrical, and
telephone) required for the development, use and maintenance of
the Improvements, with sufficient capacities to adequately
service the Premises, with such Utilities to be located on the
Premises or stubbed no farther away than- 3 feet from the curb
within the Premises along the west side of Pacific Coast
Highway. LESSEE agrees to extend all Utilities from said
locations and to be responsible for tie-ins and metering.
LESSEE shall make all arrangements for and pay for all Utility
services furnished to or used by it, including without
limitation gas, electricity, water, sanitary sewer, cable
television, telephone service, trash collection, and Utilities
used or consumed at public rest rooms to be constructed by
LESSEE on the Premises.
3 . CONSTRUCTION OF IMPROVEMENTS BY LESSEE:
a. Statement of Construction Costs and "As Built"
Plans: -Prior to LESSOR s issuance of its final
Certificate of Completion for the Improvements
described in the Scope of Development (Exhibit
"D" ) , LESSEE shall furnish LESSOR a complete set
of "As-Built" plans and an itemized statement of
the actual construction cost of such
improvements. The statement of cost shall be
signed by LESSEE or its responsible agent and
sworn to under penalty of perjury.
b. Alterations: Subject to obtaining all requisite
governmental permits and authorizations, LESSEE
shall have the right to make non-structural
alterations to the interior of any buildings
located upon the Premises, provided that the same
when complete are of a character which LESSEE
reasonably determines do not adversely affect the
value of the improvements and the rental value
thereof immediately before such alteration.
LESSEE shall not make or permit any significant
structural or exterior alterations, additions or
improvements to be made to or upon the Premises
inconsistent with the approved plans referenced
in the Scope of Development (Exhibit "D" ) as the
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1712u/2460/04 Page 3 of 35
same may be revised from time to time, without
first obtaining the written approval of LESSOR,
which approval shall not be unreasonably
withheld, conditioned or delayed.
Notwithstanding the foregoing, changes required
by authorized construction inspectors in order to
comply with applicable governmental requirements
shall be exempt from this approval requirement.
C. Improvements to Become Property of LESSOR:
Subject to subparagraph (d) below, all buildings,
improvements and facilities, exclusive of Trade
Equipment and personal property constructed or
placed upon the Premises by LESSEE, must, upon
completion, be free and clear of all liens,
claims, or liability for labor and materials
(excepting rights of lenders, approved pursuant
to paragraphs 16.A and C and Equipment LESSORs
referenced in paragraph 16.E herein) , and all
such improvements and facilities, exclusive of
Trade Equipment and, personal property, shall
become the property of LESSOR at the expiration
of this Lease, as it may be extended as provided
herein, or upon the earlier termination hereof.
d. Mechanic' s Liens: LESSEE shall at all times
indemnify and save LESSOR harmless from all
claims for labor and materials in connection with
construction, repair, alteration, and
installation of all structures, improvements,
equipment, and facilities upon the Premises, and
from the cost of defending against such claims,
including reasonable attorney' s fees.
' In the event of a lien imposed upon the Premises
as a result of such construction, repair,
alteration, or installation, LESSEE shall either:
(1) Record a valid Release of Lien; or
(2) Deposit with LESSOR cash or an irrevocable
letter of credit in form and content
reasonably acceptable to LESSOR' s Executive
Director in an amount equal to 125% of the
amount of the lien and authorize payment to
the extent of said deposit to any subsequent
final judgment holder that may arise as a
matter of public record from litigation with
regard to the lienholder' s claim; or
(3) Procure and record a bond, in accordance
with Section 3143 of the California Civil
Code, which frees the Premises from the
10/21/90 EXHIBIT "B"
1712u/2460/04 Page 4 of 35
claim of the lien and from any action
brought to foreclose the lien.
Should LESSEE fail to accomplish one of the above within
ninety (90) days after the filing of such a lien, but in no
event after final judgment is entered, such failure shall be a
material default under this Lease. If LESSEE deposits cash or
a letter of credit or records a bond, as provided herein,
LESSOR shall promptly return the same (or unused portion
thereof) after the release of lien or satisfaction of judgment
is recorded, or LESSEE delivers other evidence reasonably
satisfactory to LESSOR that the dispute has been finally
resolved.
4. SIGNS: LESSEE, at its cost, shall have the right to
place, construct, and maintain exterior signs on the Premises
and the Improvements to be constructed by LESSEE thereon in
accordance with the plans approved by LESSOR and the City as
the same may be revised from time to time. LESSEE shall not
have the right to place, construct, or maintain on the Premises
any other exterior sign, advertisement, awning, banner or
decoration, except as permitted under the Huntington Beach
Ordinance Code.
5 . DESTRUCTION:
a. Destruction Due tc Risk Covered by Insurance:
If, during the Lease term, the Improvements are
totally or partially destroyed from a risk
covered by the insurance described in paragraph
10(c) of these GENERAL CONDITIONS, this Lease
shall not terminate and LESSEE shall promptly and
diligently restore or cause to be restored the
Improvements to substantially the same condition
as they were in immediately before such
destruction, whether or not the insurance
proceeds are sufficient to cover the actual cost
of restoration; provided, however, that: (i) if
such destruction occurs during the last ten (10)
years of the term of this Lease, as may be
extended pursuant to Paragraph 7(a) (ii) of the
Lease, LESSEE may elect not to restore the
Premises and to terminate this Lease, and (ii ) if
then-existing laws do not permit restoration of
the Improvements to within 95% of the size and
layout existing immediately before such
destruction, then LESSEE may either elect to
restore pursuant to the then-controlling laws and
regulations or LESSEE may elect to terminate this
Lease. If existing laws do not permit the
restoration, LESSEE may elect to terminate this
Lease by giving notice to LESSOR. In the event
this Lease is terminated as to all or any portion
10/21/90 EXHIBIT "B"
1712u/2460/04 Page 5 of 35
of the Premises, LESSOR and LESSEE shall share
any excess insurance proceeds on the basis of
their respective interests in the Improvements
after payment of any outstanding balance"due any
leasehold and subleasehold mortgagees. LESSEE' s
election to terminate pursuant to this Paragraph
5(a) shall be made by giving written notice to
LESSOR no later than one hundred twenty (120)
days after the date of the casualty loss.
b. Destruction Due to Risk Not Covered by
Insurance: If, during the Lease term, the
Improvements are totally or partially destroyed
from a risk not covered by the insurance
described in paragraph 10(c) of these GENERAL
CONDITIONS, this Lease shall not terminate except
as expressly provided herein, and LESSEE shall
restore the Improvements to substantially the
same condition they were in immediately before
destruction; provided, however, if such
destruction occurs during the last 10 years of
the term of this Lease as may be extended or the
cost of restoration exceeds twenty percent (20%)
of the replacement value of the Improvements
immediately before their destruction, or if then
existing laws do not permit restoration; LESSEE
may elect not to restore the Premises and to
terminate this Lease, and (ii ) if then-existing
laws do not permit restoration of the
Improvements to within 95% of the size and layout
existing immediately before such destruction,
then LESSEE may either elect to restore pursuant
to the then-controlling laws and and regulations,
or LESSEE may elect to terminate this Lease. In
• the event that LESSEE elects to terminate this
Lease he shall give notice of such election to
LESSOR no later than one hundred twenty days
after the date of the casualty loss.
C. No Abatement of Rent: Provided that business
interruption insurance is available at
commercially reasonable rates to LESSEE in the
insurance market (as referenced in paragraph
10(d) and (e) below) , there shall be no abatement
or reduction of rent in the event of a total or
partial destruction of the Improvements. If,
however_ , LESSEE suffers such a casualty loss
during a period for which business interruption
insurance is not so available, and this Lease or
portion thereof is not terminated pursuant to
subparagraphs (a) or (b) of this Paragraph 5, the
Percentage Rent shall be abated only as to that
portion of the Improvements rendered not
10/21/90 EXHIBIT "B"
1712u/2460/04 Page 6 of 35
reasonably usable by the casualty loss in an
amount equal to the Percentage Rent generated by
that portion of the Improvements during the same
period in the previous year or, if such figures
are not available, in an amount determined by
dividing the square footage of gross leasable
area rendered unusable by the casualty loss by
the total gross leasable area on the Premises
immediately prior to the casualty loss and
multiplying the remainder by the Percentage Rent
payable during the same time period in the
previous year. •The period of abatement shall run
from the date of the casualty loss to the earlier
of (i ) the date on which LESSEE completes
restoration of the Premises (or portion thereof)
or (ii ) the date on which LESSEE, exercising
reasonable diligence, should complete restoration
of the Premises (or portion thereof) .
6. MAINTENANCE:
a. LESSEE' s Obligation: LESSEE, at its cost,
shall keep and maintain the Premises and all
improvements of any kind which may be
constructed, installed or made thereon (including
the public rest rooms designated in the Scope of
Development) in good condition and in substantial
repair. LESSEE expressly agrees to maintain the
Premises (including the designated public rest
rooms) in a safe, clean, wholesome and sanitary
condition and in compliance with all applicable
laws. LESSEE further agrees to provide approved
containers for trash and garbage and keep the
Premises free and clear from accumulations of
rubbish and litter. LESSOR shall have the right
to enter upon and inspect the Premises at any
time for cleanliness and safety. Such entry and
inspection of exterior areas may occur at any
time without notice to LESSEE; entry and
inspection of interior areas may occur during
normal business hours, with a minimum of
seventy-two (72) hours prior notice (except in
the event of emergency) , and shall be conducted
in a manner so as to minimize interference with
the operation of businesses on the Premises to
the maximum extent feasible consistent with the
legitimate purpose of the inspection. LESSEE
shall designate in writing to LESSOR a
representative who shall be responsible for
day-to-day operation.
10/21/90 EXHIBIT "B"
1712u/2460/04 'Page 7 of 35
b. LESSOR' s Right to Repair: If LESSEE fails to
maintain the Premises or make repairs or
replacements as required herein, LESSOR may
notify LESSEE in writing of said failure. Should
LESSEE fail to correct the situation or commence
to correct the situation within a reasonable time
thereafter, but in no event less than thirty (30)
days (except in those instances where a shorter
time is necessary to protect the public health,
safety, and welfare) , and thereafter diligently
proceed to complete such correction, LESSOR may,
but shall not be required to, enter onto the
Premises to make the necessary correction, and in
such event the reasonable cost thereof, including
but not limited to the cost of labor, materials,
equipment, and administration, shall be deemed
additional rent to be paid by LESSEE within
thirty (30) days of receipt of a statement of
said cost from LESSOR. LESSOR may, at its
option, choose other remedies available herein,
or by law.
7. GROSS SALES RECEIPTS:
(a) Except as specifically provided in subparagraph
(b) below, the term "Gross Sales Receipts" as
used herein shall mean the total of all sales
produced on the Premises (or any portion thereof)
and received by any operator and/or sublessee in
the course of their business, including without
limitation, sales of food, beverage or concession
items and the charges for the use or rental of
portions of the Premises or equipment or
supplies, vending machines sales and the sales
price of any furnishings, fixtures and equipment
or capital assets sold which are not replaced.
(b) The following shall be excluded from the
definition of "Gross Sales Receipts" : meals
furnished to employees without charge; tips
retained by employees or service charges in lieu
of tips passed on to employees; bad debts but to
the extent they are subsequently collected the
net recovery shall be added to Gross Sales
Receipts; receipts from customers that are later
rebated and/or refunded; income from parking
services operation; interest or service or other
carrying charges for sales on credit; the amount
of all sales and excise tax receipts which are
accounted for and paid by LESSEE to any
governmental agency; the sales price of any
furnishings, fixtures, and equipment or capital
assets sold by LESSEE; and investment income not
10/21/90 EXHIBIT "B"
1712u/2460/04 'Page 8 of 35
associated with the normal course of operation of
LESSEE' s business on the Premises.
S. RENT PAYMENT PROCEDURE AND ACCOUNTING:
a. Accounting Year: The phrase "accounting year" as
used herein shall be a period of twelve (12)
consecutive full calendar months commencing on
January 1 . Any payment period or period which is
less than twelve full calendar months is a
partial accounting year.
b. Payment of Rentals:
(1) Percentage Rent and Parking Payment:
Beginning with the date which is the first
anniversary of the Commencement Date, and
within thirty (30) days after the end of
each calendar quarter during the remainder
of the Lease Term, LESSEE shall pay to
LESSOR an amount determined in accordance
with Section 7(a) and 7(b) of the Lease for
such period. At the end of each accounting
year during the Lease term, promptly after
LESSEE has submitted to LESSOR LESSEE' s
sales tax receipt reports, as provided in
paragraph 9 below, any necessary adjustment
to the Percentage Rent for such year shall
be made in the manner specified in
subparagraph (3) of this Paragraph 8(b) .
(2) Application of Rent Credit: During the
period of time that LESSEE' S rent credit is
being applied, in accordance with Paragraphs
• 7(b) and 7(d) of the Lease, LESSEE shall
provide to LESSOR, at the times that rental
payments would otherwise be due hereunder, a
written statement or statements itemizing
(i) the amount of Percentage Rent otherwise
due at such time, (ii ) the amount of the
Rent Credit being applied against such
rental obligation, and (iii ) either the
amount of the Rent Payment required to be
made at that time or the remaining balance
of the unapplied Rent Credit (including
accrued interest through that date) .
(3) Place of Payment and Filing: Rent payments,
Parking Payments and rent credit statements
shall be delivered to and accounting
statements shall be filed with the Executive
Director of LESSOR, 2000 Main Street,
Huntington Beach, California 92648. The
10/21/90 EXHIBIT "B"
1712u/2460/04 Page 9 of 35
designated place of payment and filing may
be changed at any time by LESSOR upon
written notice to LESSEE. Rent payments may
be paid by check made payable to The
Redevelopment Agency of the City of
Huntington Beach.
A duplicate copy of all statements and
reports herein required shall also be filed
with the Finance Director of the City of
Huntington Beach.
9. RECORDS, BOOKS OF ACCOUNT, ACCOUNTING STATEMENTS, AND
AUDITS: LESSEE shall keep or cause to be kept at the Premises,
or at LESSEE' s principal place of business in Southern
California, in accordance with generally - accepted accounting
principles, full and accurate books of account, records, cash
receipts and other pertinent data showing the Gross Sales
Receipts produced by businesses operating on the Premises.
Such books of account, records, cash receipts and other
pertinent data shall be kept for a period of .four (4) years
after the end of each accounting year and partial accounting
year. The receipt by LESSOR of any statement, or any payment
of percentage rent for any period, shall not bind LESSOR as to
the correctness of the statement or the payment. Subject to
the limitations set forth in the next paragraph LESSOR shall be
entitled at any time within four (4) years after the end of an
accounting year or partial accounting year, upon reasonable
notice to LESSEE but in no event less than 72 hours, to inspect
and examine all LESSEE' s books of account, records, cash
receipts and other pertinent data relating to such accounting
year or partial accounting year, during normal business hours,
so LESSOR can ascertain the amount of Percentage Rent due
LESSOR. In no event shall LESSOR' s inspection exceed ninety
days. LESSEE shall cooperate fully with LESSOR in making the
inspection.
Within ninety (90) days after the end of each accounting
year or partial accounting year, LESSEE shall at its own
expense submit to LESSOR financial statements including a
balance sheet and income statement prepared by an independent
certified public accountant, which shall specifically include
with respect to the preceding accounting year or partial
accounting year; (i ) the amount of Gross Sales Receipts for
each business operating on the Premises; and (ii ) the total
Percentage Rent, if any, paid by LESSEE in and for such year.
LESSOR shall also be entitled, no more than once for each
accounting year, to audit LESSEE' s and the Sublessee' s, who
operate businesses on the Premises, books of account, records,
cash receipts and other pertinent data to determine the Gross
Sales Receipts for the entire Premises. The audit shall be
limited to the determination of Gross Sales Receipts and shall
be conducted during usual business hours at the Premises or at
10/21/90 EXHIBIT "B"
1712u/2460/04 Page 10 of 35
the office at which LESSEE (or its Subleasee) maintain(s) its
records within a ninety (90) day period.• If the audit shows
that there is a deficiency in the payment of Percentage Rent,
the deficiency shall come immediately due and payable as
additional rent or as an offset to any rent credit as defined
in Section 7(d) of the Lease then outstanding. The cost of the
audit shall be paid by LESSOR unless the audit shows that
LESSEE understated Gross Sales Receipts by more than five
percent (5%) , in which case LESSEE shall pay all LESSOR' s cost
of the audit. If within six (6) months after receiving the
results of any audited financial statements by LESSEE' s
certified public accountant with respect to any accounting year
or partial accounting year, LESSOR does not deliver a written
notice to LESSEE disputing LESSEE' s calculation or payment of
Percentage Rent for said year, LESSOR shall be conclusively
deemed to have accepted LESSEE' s calculation or payment, and
thereafter LESSOR shall neither reinspect or reaudit LESSEE' s
records nor demand payment of additional Percentage Rent for
said year. If within thirty (30) days after receiving the
results of its own audit with respect to any accounting year or
partial accounting year, LESSOR does not deliver a written
notice to LESSEE disputing LESSEE'S calculation or payment of
Percentage Rent for said year, LESSOR shall be conclusively
deemed to have accepted LESSEE' S calculation or payment, and
thereafter LESSOR shall neither reinspect or reaudit LESSEE' S
records nor demand payment of additional Percentage Rent for
said year.
10. INSURANCE: LESSEE, at its cost, shall naintain or
cause to be maintained during the entire Lease term the
following policies of insurance:
a. Public liability and property damage insurance
with combined single limits of at least
$5,00O,000, part cf which may be provided in the
form of umbrella coverage. LESSOR and City shall
be named as an additional insured and the policy
or policies shall contain cross-liability
endorsements. Coverage shall be primary and not
contributing with any coverage maintained by
LESSOR. The policy stall contain a waiver of
subrogation in favor of LESSOR and City. Not
more frequently than each two (2) years, if, in
the reasonable opinion. of LESSOR or of an
insurance broker retained by LESSOR, the amount
of public liability and property damage insurance
coverage at that time is not adequate, LESSEE
shall increase the insurance coverage as required
by either LESSOR cr LESSOR' s insurance broker;
provided, that the percentage increase in
coverage shall not be required to exceed the
percentage increase in the All Urban Consumer
Price Index for the Los Angeles-Long
10/21/90 EXHIBIT "B"
1712u/246O/04 Page 11 of 35
Beach-Anaheim Area (All Items) (1982-84=100) (the
"Index" ) since the last requested adjustment (or,
in the case of the first requested adjustment,
the percentage increase in the Index since the
commencement of the Lease term) . The insurance
to be provided by LESSEE may provide for
deductibles or self-insured retention up to
Twenty-Five Thousand Dollars ($25,000) , adjusted
in accordance with the Index from and after the
Commencement Date, or for amounts in excess of
Twenty-Five Thousand Dollars (425,000) , adjusted
in accordance with the Index as shall be
acceptable to the Executive Director. In the
event such insurance does provide for deductibles
or self-insured retention, LESSEE agrees that it
will fully protect LESSOR, - its boards, officers,
and employees in the same manner as these
interests would have been protected had the
policy or policies not contained the deductible
or retention provisions.
b. LESSEE' s indemnification obligations under
paragraph 11 shall extend to damage resulting
from risks insurable by garage keepers' legal
liability insurance. The public liability
insurance required in paragraph 10. a. above
shall include garage keepers' legal liability
coverage.
C. A policy of standard fire and extended coverage
insurance to the extent of at least 90% of the
replacement value of the Improvements, Trade
Equipment, and LESSEE' s personal property, on or
about the Premises. Subject to paragraph 5 of
• these GENERAL CONDITIONS, the proceeds from any
such policy shall be used by LESSEE for the
restoration or replacement of the Improvements,
Trade Equipment, and personal property.
d. Business interruption insurance insuring that the
Percentage Rent due and payable to LESSOR (based
on the previous twelve month figures) will be
paid to LESSOR for a period of up to twelve (12)
months if the Premises, or portion thereof, are
destroyed or rendered inaccessible by a casualty
loss or other occurrence normally covered by a
business interruption insurance policy.
e. Notwithstanding any other provision of this
paragraph 10 to the contrary, LESSEE' s
obligations pursuant to parts a, b, c and d of
this paragraph 10 shall be conditioned upon the
reasonable availability of such coverages, terms,
and conditions in the insurance market.
10/21/90 EXHIBIT "B"
1712u/2460/04 'Page 12 of 35
The foregoing insurance policies shall contain endorsements
requiring thirty (30) days written notice from the insurance
company to both parties before cancellation or change in
coverage, scope, or amount of any policy. Each policy- or a
certificate of the policy together with evidence of payment of
premium shall be deposited with LESSOR at the commencement of
the Lease term and on renewal of each policy not less than
twenty (20) days before the expiration of the term of the
policy.
The procuring of such required policy or policies of
insurance shall not be construed to limit LESSEE' s liability
hereunder nor to fulfill the indemnification provisions and
requirements of paragraph 11. Notwithstanding said policy or
policies of insurance, LESSEE after exhausting all available
insurance proceeds shall be obligated for the full and total
amount of any damage, injury or loss caused by LESSEE' s
negligence or that of its agents, sublessees, concessionaires,
licensees, and their agents and employees in connection with
this Lease or with the use and occupancy of the Premises.
11. INDEMNITY, DEFENSE, HOLD HARMLESS: LESSEE hereby
agrees to protect, defend, indemnify and hold and save harmless
LESSOR and/or City, its officers, and employees against any and
all liability, claims, judgments, costs and demands, however
caused, including those resulting from death or injury to
LESSEE' s employees and damage to LESSEE' s property, arising
directly or indirectly out of the obligations or operations
herein undertaken by LESSEE, including those arising from the
passive concurrent negligence of LESSOR and/or City, but save
and except those which arise out of the active concurrent
negligence, sole negligence, active concurrent willful
misconduct, or active concurrent or sole willful misconduct of
LESSOR and/or City. LESSEE will conduct all defense at its
sole' cost and expense. LESSOR and/or City shall be reimbursed
by LESSEE for all costs or attorney' s fees incurred by LESSOR
and/or City in enforcing this obligation.
12. TAXES AND ASSESSMENTS: LESSEE recognizes and
understands that this Lease may create a possessory interest
subject to property taxation and that LESSEE may be subject to
the payment of property taxes levied on such interest. LESSEE
shall pay or cause to be paid all taxes and assessments levied
upon the Premises based on the assessed value of the entire
property and not merely the assessed value of LESSEE' s
leasehold interest. LESSEE shall also pay or cause to be paid
any taxes and assessments which may be levied upon any
fixtures, equipment, or other property installed, constructed
or located on the Premises. LESSEE may, at any time, in good
faith and upon reasonable grounds, dispute or contest the
validity of the whole or any part of any such taxes or
assessments, and during the period of any such dispute shall
not be deemed in default hereof so long as LESSEE does not
subject the Premises to foreclosure or sale and promptly pays
10/21/90 EXHIBIT "B"
1712u/2460/04 Page 13 of 35
the amount finally determined to be due. Notwithstanding the
above, both parties recognize that LESSEE should not be
assessed a possessory interest tax for that portion of the
Premises which is the public parking which is in excess of the
code requirement for the operation of the businesses on the
Premises and Agency agrees to cooperate with LESSEE in the
event of a challenge to such an assessment.
13 . UNLAWFUL USE: LESSEE agrees that no improvements
shall be erected, placed upon, operated, nor maintained upon
the Premises, nor any business conducted or carried on therein
or therefrom, in violation of the terms of this Lease, or of
any regulation, order, law, statute, or ordinance of a
governmental agency having jurisdiction.
14. ABANDONED PERSONAL PROPERTY: If LESSEE abandons the
Premises or is dispossessed thereof by process of law or
otherwise, title to any personal property belonging to LESSEE
and left on the Premises forty-five (45) days after such
abandonment or dispossession shall be deemed to have been
transferred to LESSOR. LESSOR shall have the right to remove
and to dispose of such property without liability therefor to
LESSEE or to any person claiming under LESSEE, and shall have
no need to account therefor. LESSEE hereby designates LESSOR' s
Executive Director as its attorney-in-fact to execute and
deliver such documents as may be reasonably required to dispose
of- such abandoned property and transfer title thereto.
15. HOLDING OVER: In the event LESSEE shall continue in
possession of the Premises after the expiration of the Lease
term, such possession shall not be considered a renewal of this
Lease but a tenancy from month to month and shall be governed
by the conditions and covenants '•contained in this Lease.
16. ASSIGNING, SUBLETTING, AND ENCUMBERING:
A. Assignments
The qualifications and identity of LESSEE are of
particular concern to LESSOR. It is because of those
qualifications and identity that LESSOR has entered into this
Lease with LESSEE. Accordingly, LESSEE shall not, except as
permitted in this paragraph 16, assign all or any part of this
Lease or any of LESSEE' s rights hereunder without the prior
written approval of LESSOR. LESSOR agrees that it will not
unreasonably withhold or condition such approval . In this
regard, LESSOR agrees that in the event of a request by LESSEE
to assign LESSEE' s interest in the Lease or the Premises,
LESSOR shall grant such approval after issuance of certificate
of completion provided (i ) such assignment is made to a
responsible third party who will undertake LESSEE' s
responsibilities under this Lease to use the Premises, or
portion thereof, in accordance with this Lease; (ii ) such third
10/21/90 EXHIBIT "B"
1712u/2460/04 Page 14 of 35
party shall demonstrate sufficient qualifications and
experience to assure the development and operation of the
Improvements thereof, in accordance with this Lease; (iii) such
third party shall demonstrate sufficient financial resources or
commitments equal to or greater than Five Million Dollars
($5,000,000.00) to assure operation of the project, or portion
thereof, in accordance with this Lease; notwithstanding the
foregoing, LESSOR further agrees not to unreasonably disapprove
an assignment to a financially responsible lender which
assignment consists of a mortgage, deed of trust, sale and
lease back, or other form of conveyance for financing, provided
that prior to LESSOR' s issuance of its final Certificate of
Completion, LESSOR shall have no obligation to approve such an
assignment unless LESSOR determines in its reasonable
discretion that such assignment is for the purpose of securing
loans of funds to be used solely for financing the direct and
indirect costs, including without limitation financing costs,
interest, and commissions, of planning, designing,
constructing, developing, leasing, marketing and operating the
improvements to be constructed by LESSEE and/or a Sublessee
with respect to the Premises. Prior to issuance of Certificate
of Completion, approvals of assignments of the Lease shall be
at the sole discretion of the LESSOR with the exception of
approval for transfers to secure financing which shall be
reasonably approved by LESSOR. Approvals by LESSOR under this
Paragraph for assignments for financing purposes shall be made
by LESSOR' s Executive Director.
Notwithstanding any other provision of this Lease
to the contrary, LESSOR approval of an assignment of this Lease
or any interest herein shall not be required in connection with
any of the following:
(i ) Any transfer to any entity or entities in
which LESSEE retains a minimum of fifty-one
percent (51%) of the ownership or beneficial
interest and retain management control.
(ii ) Transfers resulting from the death or mental
or physical incapacity of an individual.
(iii) Transfers or assignments in trust for the
benefit of a spouse, children,
grandchildren, or other family members.
(iv) A transfer of LESSEE' s interest in the
Premises at foreclosure (or a transfer of
any Sublessee' s interest in the portion of
the Premises leased to such sublessee at
foreclosure or a conveyance thereof in lieu
of a foreclosure) pursuant to a foreclosure
thereof by a lender approved by LESSOR in
accordance with this Paragraph 16.A
Exhibit "B. "
10/21/90 EXHIBIT "B"
1712u/2460/04 Page 15 of 35
(v) A sale or transfer of some or all of
LESSEE' S interest in the Premises or a
transfer of any Sublessee' s interest in the
portion of the Premises leased to such
sublessee at foreclosure to a lender
approved by LESSOR in accordance with this
Paragraph 16.A of Exhibit "B. "
(vi ) The conveyance or dedication of any portion
of the Premises to the City or other
appropriate -governmental agency, or the
granting of permits to facilitate the
development of the Premises.
(vii ) A transfer of stock resulting from or in
connection with a reorganization as
contemplated by the provisions of the
Internal Revenue Code of 1954, as amended or
otherwise, in which the ownership interests
of a corporation are assigned directly or by
operation of law to a person or persons,
firm or corporation which acquires the
control of the voting capital stock of such
corporation or all or substantially all of
the assets of such corporation.
(viii) A transfer of stock in a publicly held
corporation or the transfer of the
beneficial interest in any publicly held
partnership or real estate investment trust.
(ix) Equipment financing pursuant to
Paragraph 15.E of these General Conditions.
• LESSEE shall deliver written notice to LESSOR
requesting approval of any assignment requiring LESSOR approval
hereunder. Such notice shall be accompanied by sufficient
evidence regarding the proposed assignee' s qualifications and
experience and its financial commitments and resources to
enable LESSOR to evaluate the proposed assignee pursuant to the
criteria set forth under the first paragraph of this
Paragraph 16A.
Within thirty (30) days after the receipt of
LESSEE' S written notice requesting LESSOR approval of an
assignment, LESSOR shall respond in writing by stating what
further information, if any, LESSOR reasonably requires in
order to determine whether or not to approve the requested
assignment. Upon receipt of such a timely response, LESSEE
shall promptly furnish to LESSOR such further information as
may be reasonably requested.
10/21/90 EXHIBIT "B"
1712u/2460/04 Page 16 of 35
U
Once LESSEE' S request for approval of an
assignment has been accepted as complete, LESSOR shall not be
entitled to demand additional information or to disapprove the
assignment on the basis that LESSEE has not furnished adequate
or complete information.
LESSOR' s Executive Director shall approve or
disapprove any requested assignrr.ent for financing purposes
within fifteen (15) days after LESSEE' S request therefor is
accepted as complete. Any disapproval shall be in writing and
shall specify the reasons for the disapproval and, if
applicable, the conditions required to be satisfied by LESSEE
in order to obtain approval .
LESSEE shall compensate LESSOR for its actual
reasonable expenses (not including personnel or overhead
expenses) incurred in investigating a proposed assignee' s
qualifications as a permitted assignee hereunder.
No assignment of LESSEE' S obligations with
respect to the Premises, whether or not LESSOR approval is
required therefor (but specifically excluding assignments for
financing purposes, and those types of assignments identified
in subparagraphs (iv) , (v) , and (vi ) , (vii) , and (ix) ) , shall
be effective unless and until the proposed assignee executes
and delivers to LESSOR an agreement in form reasonably
satisfactory to LESSOR' S attorney assuming the obligations of
LESSEE which have been assigned. Thereafter, the assignor
shall remain responsible to LESSOR for performance of the
obligations assumed by- the assignee unless LESSOR releases the
assignor in writing (said release shall not be unreasonably
conditioned or withheld) or unless LESSOR has approved the
assignee on the basis of the criteria set forth under (i ) ,
(ii) , and (iii) of the first paragraph of this Paragraph 16.A,
in either of which events the assignor shall be released from,
but only from, those obligations arising subsequent to the
effective date of the assignment.
No consent or approval by LESSOR of any
assignment requiring LESSOR' s approval shall constitute a
consent or approval of any subsequent assignment requiring
LESSOR' s approval pursuant to the provisions of this paragraph.
B. Subletting
LESSOR' S Executive Director shall have the right
to approve all subleases on the Premises with respect solely to
the proposed use and operator and to ensure the following: (i )
that, subject to temporary interruptions of business due to
circumstances beyond the tenant' s reasonable control, and
occurrences such as casualty losses and periods of
reconstruction and alteration of improvements, and the seasonal
nature of beach related concession businesses, such tenants
10/21/90 EXHIBIT "B"
1712u/2460/04 Page 17 of 35
shall continuously use or cause to be used the Premises and
portions thereof for the uses specified in Paragraph 5 of the
Lease and continuously merchandise the Premises or portions
thereof during all usual business hours and on all such days as
comparable businesses of like nature in the area are open for
business and shall make available verifiable records of gross
sales; (ii ) if the Improvements on the Premises are partially
destroyed or condemned and such tenant' s sublease remains in
force, the tenant shall continue or cause to be continued
operation of its business at the Premises to the extent
reasonably practical from the standpoint of good business
judgment during any period of-Teconstruction; (iii) the tenant
shall exercise reasonable diligence to operate or cause to be
op6rated its business on the Premises or portion thereof in a
manner that will produce the highest volume of gross receipts
reported to LESSEE consistent with competitive pricing and
prudent business practices; (iv) with respect to each tenant
who sells alcoholic beverages fcr on Premises consumption, such
tenant shall maintain public liability and property damage
insurance with dram shop coverage; (v) the non-discrimination
provisions set forth in paragraph 29 below; and (vi ) the tenant
shall attorn to LESSOR in the event of any termination of this
Lease, and attorn to any successor or assignee of LESSEE in
accordance with Paragraph 33 .B below. LESSEE covenants to
LESSOR to use reasonable diligence to enforce the
aforementioned provisions of subleases and other agreements.
LESSSE further covenants to use reasonable diligence to
sublease the Premises to tenants promptly and in such a manner
as to maximize Gross Sales Receipts, consistent with market
conditions, the mutual desire of LESSOR and LESSEE to encourage
a proper tenant mix, and prudent business practices.
C. Assignments for Financing;-Lender Protection
• Subject to obtaining LESSOR' s approval, and the
limitation on the maximum amount of subordination as specified
in paragraph 7(c) of this Lease, LESSEE may transfer and
assign this Lease and the leasehold interest created thereby
("Leasehold Estate" ) to a lender as security for the repayment
of a loan, in accordance with Paragraph 16.A above. The term
"lender" as used herein shall mean the beneficiary, mortgagor,
secured party, or other holder of a promissory note or other
written obligation which is secured by any deed of trust,
mortgage, or other written security agreement affecting the
Leasehold Estate ( "Leasehold Mortgage" ) . After approval by
LESSOR, LESSEE may perform any and all acts and execute any and
all instruments necessary or proper to consummate any such loan
transaction and perfect the security therefore to be given the
lender on the security of the Leasehold Estate.
With respect to any lender who shall have
delivered to LESSOR a written notice which shall state the
name, address and a general description of the type of lien it
10/21/90 EXHIBIT "B"
1712u/2460/04 'Page 18 of 35
V
holds on the Leasehold Estate, the following provisions shall
apply:
a. LESSOR shall not agree to any mutual
termination nor accept any surrender of this
Lease, nor shall LESSOR consent to any
amendment or modification of this Lease
which could be reasonably construed to have
an impact on the lender' s Leasehold Mortgage
without the prior written consent of the
lender.
b. Notwithstanding any default by LESSEE in the
performance or observance of any agreement,
covenant or condition of this Lease on the
part of LESSEE to be performed or observed,
LESSOR shall have no right to terminate this
Lease unless a default of this Lease shall
have occurred and be continuing, LESSOR
shall have given the lender written notice
of such default, and the lender shall have
failed to reriedy such default or acquire
LESSEE' s estate created hereby or commence
foreclosure or other appropriate proceedings
in the nature thereof, all as set forth in,
and within the times specified by the
provisions of this Lease and its
attachments, as the same may be amended from
time to time.
C. Lender shall have the right, but not the
obligation, at any time prior to termination
of this Lease and without payment of any
penalty, to pay all of the rents due
` hereunder, to effect any insurance, to pay
any taxes and assessments, to make any
repairs and improvements, to do any other
act or thing required of LESSEE hereunder,
and to do any act or thing which may be
necessary and proper to be done in the
performance and observance of the
agreements, covenants and conditions hereof
to prevent termination of this Lease. All
payments so made and all things so done and
performed by the Lender shall be as
effective to prevent a termination of this
Lease as the same would have been if made,
done and performed by LESSEE instead of the
Lender.
d. Should any default under this Lease occur,
the lender shall have sixty (60) days after
receipt of notice from LESSOR setting forth
10/21/90 EXHIBIT "B"
1712u/2460/04 'Page 19 of 35
the nature of such default, and, if the
default is such that possession to the
Premises may be reasonably necessary to
remedy the default, a reasonable time after
the expiration of such sixty (60) day period
within which to remedy such default,
provided that (A) the lender shall have
fully cured any default in the payment of
any monetary obligations of LESSEE under
this Lease within such sixty (60) day period
and shall continue to pay currently such
monetary obligations as and when the same
are due and (B) the lender shall have
acquired LESSEE' s estate in the Premises
created hereby or commenced foreclosure or
other appropriate proceedings in the nature
thereof within such period, or prior
thereto, and is diligently prosecuting any
such proceedings. All rights of LESSOR to
terminate this Lease as the result of the
occurrence of any such default shall be
subject to, and conditioned upon, LESSOR
having first given the lender written notice
of such default and the lender having failed
to remedy such default or acquire LESSEE' s
estate in the Premises created hereby or
commence foreclosure or other appropriate
proceedings in the nature thereof as set
forth in and within the times specified by
this subparagraph (d) .
e. Any default under this Lease which in the
nature thereof cannot be remedied by the
lender shall be deemed to be remedied if (A)
within sixty (60) days after receiving
written notice from LESSOR setting forth the
nature of such default,or prior thereto, the
lender shall have acquired LESSEE' s estate
in the Premises created hereby or shall have
commenced foreclosure or other appropriate
proceedings in the nature thereof to acquire
said estate, (B) the lender shall diligently
prosecute any such proceedings to
completion, (C) the lender shall have fully
cured any default in the payment of any
monetary obligations of LESSEE hereunder
which do not require possession of the
Premises within such sixty (60) day period
and shall thereafter continue to faithfully
perform all such monetary obligations which
do not require possession of the Premises,
and (D) after gaining possession of the
Premises the lender performs all other
10/21/90 EXHIBIT "B"
1712u/2460/04 Page 20 of 35
� v
obligations of LESSEE hereunder as and when
the same are due.
In addition to the rights set forth in
this subparagraph (e) , the lender shall have
the option to be exercised by written notice
to LESSOR given within the aforesaid sixty
(60) day period, to obtain a new lease of
the Premises upon the following terms and
conditions:
(i ) Such new Lease shall be
effective as of the date of the termination
of this Lease and shall be for the remainder
of the term of this Lease at the same rental
and with the same terms, covenants and
conditions as are set forth herein.
(ii ) In addition to paying all
current rent under the new Lease, the lender
shall pay all unpaid rental (after deducting
any income LESSOR may have received from the
Premises during such period) due pursuant to
Paragraph 8 of these GENERAL CONDITIONS
which accrued on or after the date which is
thirty (30) days prior to the date on which
the lender first received written
notification of the default by LESSOR and
the lender cures all defaults under this
Lease that reasonably can be cured by the
lender.
In lieu •-of executing a new lease in its
own name, the lender shall have the right to
designate a nominee which shall become a
lessee under the new lease so long as such
assignee or nominee is qualified consistent
with the requirements of this Lease, its
attachments and amendments.
f. If the lender is prohibited by any process
or injunction issued by any court or by
reason of any action by any court having
jurisdiction of any bankruptcy or insolvency
proceeding involving LESSEE from commencing
or prosecuting foreclosure or other
appropriate proceedings in the nature
thereof, the times specified in
subparagraphs (d) and (e) above for
commencing or prosecuting such foreclosure
or other proceedings shall be extended for
the period of such prohibition plus an
additional period of sixty (60) days
10/21/90 EXHIBIT "B"
1712u/2460/04 •Page 21 of 35
thereafter; provided that the lender shall
have fully cured any default in the payment
of any monetary obligations of LESSEE under
this Lease prior to the end of such sixty
(60) day period and thereafter shall
continue to pay currently such monetary
obligations as and when the same fall due.
g. LESSOR shall mail or deliver to the lender
duplicate copies of any and all notices
which LESSOR may from time to time give to
or serve upon LESSEE pursuant to the
provisions of this Lease, and such copy
shall be mailed or delivered to the lender
simultaneously with the mailing or delivery
of the same to LESSEE; No notice by LESSOR
to LESSEE hereunder shall be deemed to have
been given insofar as the lender' s rights
under this Paragraph are concerned unless
and until a copy thereof shall have been
mailed or delivered to the, lender as herein
set forth.
h. Foreclosure of a Leasehold Mortgage, or any
sale thereunder,whether by judicial
proceedings or by virtue of any power
contained in the Leasehold Mortgage, or any
conveyance of the estate in the Premises
created hereby from LESSEE to the lender
through, or in lieu of, foreclosure or other
appropriate proceedings in the nature
thereof, shall not require the consent of
LESSOR or constitute a breach of any
provision of or a default under this Lease,
and upon such foreclosure, sale or
conveyance, LESSOR shall recognize the
lender,or any other foreclosure sale
purchaser, as lessee hereunder. In the
event lender becomes lessee under this
Lease, lender shall assume the obligations
of LESSEE under this Lease or such new lease
only for the period of time that lender
remains lessee thereunder, and LESSEE shall
be released from any liability therefor,
provided prior defaults by LESSEE have
either been cured or waived. The lender
shall be subject only to those restrictions
applicable to LESSEE as set forth in this
Paragraph. In the event that, consistent
with this Paragraph, the lender subsequently
assigns or transfers its interest under this
Lease after acquiring the same by
foreclosure or deed in lieu of foreclosure,
10/21/90 EXHIBIT "B"
1712u/2460/04 Page 22 of 35
and in connection with any such assignment
or transfer the lender takes back a mortgage
or deed of trust encumbering such leasehold
interest to secure a portion of the purchase
price given to the lender for such
assignment or transfer, then such mortgage
or deed of trust shall be considered a
Leasehold Mortgage as contemplated under
this Paragraph and the lender shall be
entitled to receive the benefit of and
enforce the provisions of this Paragraph and
any other provisions of this Lease intended
for the benefit of the holder of a Leasehold
Mortgage.
In the event the Lender requires any
modifications to the provisions of this Paragraph in order to
secure its loan, LESSOR agrees not to unreasonably withhold
consent to such modifications so long as such modifications do
not reduce the amount of rent or other sums payable to LESSOR
hereunder, or do not otherwise have a materially adverse impact
on any of LESSOR' s interests, rights and remedies hereunder.
D. Sublessees' -Right to Encumber the Sublease
LESSOR recognizes each sublessee' s right to mortgage
or encumber the sublease and/or the subleasehold estate held by
such sublessee in accordance with and subject to the same terms
and conditions as are set forth in this Paragraph 16
subparagraph C above with respect to the sub-leasehold estate
only, and in this regard LESSOR will recognize any and all of
the rights of any subleasehold mortgagee as and to the extent
set forth therein for the leasehold estate.
E. Equipment Leasing
Some of the equipment, fixtures and furniture
(collectively designated herein as "Trade Equipment" ) installed
and used by LESSEE and sublessees on the Premises may or will
be directly financed by a third-party lender or otherwise be
subjected to a security interest or owned by an equipment
rental company or vendor ( "Equipment LESSOR" ) and leased to
LESSEE or such sublessee either directly from the Equipment
LESSOR or by way of equipment sublease or assignment of
equipment lease from an equipment sublessor ( "Equipment
Sublessor" ) , and LESSOR hereby agrees to recognize the rights
therein of any such third-party lender or Equipment LESSOR or
. Sublessor (or their respective assignees) . LESSOR agrees that
all such items of financed or leased Trade Equipment installed
on the Premises shall be and remain personal property and not
real property, notwithstanding the fact that the same may be
nailed or screwed or otherwise attached or affixed to the
Premises or any of LESSEE' s or any sublessee' s buildings or
10/21/90 EXHIBIT "B"
1712u/2460/04 'Page 23 of 35
improvements, and further agrees to recognize the rights
therein of any such Equipment LESSOR or Sublessor (or their
respective assignees) . LESSEE and any sublessee shall have the
right at any time, whether or not LESSEE is in default'
hereunder or such sublessee is in default under its sublease,
to remove or replace any or all Trade Equipment, whether or not
financed or leased, regardless of whether attached or affixed
to the Premises, and to the extent of their respective
interests therein such third-party lender or Equipment LESSOR
or Sublessor (or their respective assignees) shall also have
such a right. Any damage to the -Premises caused by such a
removal shall be repaired by and at the expense of LESSEE or
other party causing such removal. LESSOR waives the right of
distraint and agrees that it does not have and shall not assert
any right, lien, or claim in or to the financed or leased Trade
Equipment and agrees that any third-party lender or Equipment
LESSOR or Sublessor (or their respective assignees) may remove
and dispose of the same without reference to, and free and
clear of, any demand of LESSOR, and that such disposal or sale
may be made on the Premises.
17. SUCCESSORS IN INTEREST: Unless otherwise provided in
this Lease, the terms, covenants and conditions contained
herein shall apply to and bind the heirs, successors,
executors, administrators, and assigns of all the parties
hereto.
16. LESSEE' S DEFAULT: The occurrence of any of the
following shall constitute a default by LESSEE:
a. Failure to pay rent when due, if the failure
continues for fifteen (15) days after written
notice has been delivered to LESSEE. LESSEE
shall not be excused from its obligation to pay
rent by reason of the inability for any reason to
obtain the full and prompt payment to LESSEE of
all payments due LESSEE by any sublessees or
concessionaires.
b. Failure to perform any of the provisions of this
Lease required to be performed by LESSEE, if the
failure to perform. is not cured within thirty
(30) days after written notice has been given to
LESSEE. If the default cannot reasonably be
cured within said thirty (30) days, LESSEE shall
not be deemed to be in default of this Lease if
LESSEE commences to cure the default within the
thirty (30) day period and diligently, and in
good faith, continues to cure the default.
Notices given under this paragraph shall specify the
alleged default and the applicable Lease provision, and shall
demand that LESSEE perform the provisions of the Lease or pay
10/21/90 MHIBIT "B"
1712u/2460/04 Page 24 of 35
the rent that is in arrears, as the case may be, within the
applicable period of time, or quit the Premises. No such
notice shall be deemed a forfeiture or a termination of this
Lease unless LESSOR so elects in the notice.
19. LESSOR' S REMEDIES: LESSOR shall have the following
remedies if LESSEE commits a default. These remedies are not
exclusive; they are cumulative in addition to any remedies now
or later allowed by law.
LESSOR can continue this Lease in full force and effect,
and the Lease will continue in •-effect as long as LESSOR does
not terminate LESSEE' s right to possession, and LESSOR shall
have the right to collect rent when due. During the period
LESSEE is in default, LESSOR can enter the Premises subject to
the rights of any subtenants under Paragraph 33 of this
Exhibit "B, " relet them, or any part of them, to third parties
for LESSEE' s account; provided, that in such event LESSOR shall
not be excused from any legal obligation it would otherwise
have to act reasonably to mitigate its damages and to exercise
reasonable diligence to relet the Premises of part thereof for
fair market rent. In such event, LESSEE shall be liable
immediately to LESSOR for all reasonable costs LESSOR incurs in
reletting the Premises, if applicable, including, without
limitation, broker' s commissions, reasonable expenses of
remodeling the Premises required by the reletting and supplied
by other landlords under similar circumstances, and like
costs. Reletting can be for a period shorter or longer than
the remaining term of this Lease. LESSEE shall pay to LESSOR
the rent due under this Lease on the dates the rent is due,
(provided LESSOR notifies LESSEE in writing a minimum of thirty
(30) days in advance the amount of Cross Sales Receipts from
which the calculation of rent can be made) less the rent LESSOR
receives from any reletting. No act by LESSOR allowed by this
paragraph shall terminate this Lease unless LESSOR notifies
LESSEE that LESSOR elects to terminate this Lease. After
LESSEE' s default and for as long as LESSOR does not terminate
LESSEE' s right to possession of the Premises, if LESSEE obtains
LESSOR' s consent, LESSEE shall have the right to assign or
sublet its interests in this Lease, but LESSEE shall not be
released from liability for said default absent a waiver or
release from LESSOR.
No act by LESSOR other than giving notice of such
termination to LESSEE shall terminate this Lease. Acts of
maintenance, efforts to relet the Premises, or the appointment
of a receiver on LESSOR' s initiative to protect LESSOR' s
interests under this Lease shall not constitute a termination
of LESSEE' s right to possession. On termination, LESSOR has
the right to recover from LESSEE:
a. The worth, at the time of the award, of the
unpaid rent that had been earned at the time
of the termination of this Lease;
10/21/90 EXHIBIT "B"
1712u/2460/04 Page 25 of 35
b. The worth, at the time of the award, of the
amount by which the unpaid rent that would
have been earned after the date of
termination cf this Lease until the time of
award exceeds the amount of the loss of rent
that LESSEE proves could have been
reasonably avoided;
C. The worth, at the time of the award of the
amount by which the unpaid rent for the
balance of the term after the time of the
award exceeds' the amount of the loss of rent
that LESSEE proves could have been
reasonably avoided; and
d. Any other amount and court costs, necessary
to compensate LESSOR for all detriments
proximately caused by LESSEE' s default.
"The worth, at the time of the award, " as used in
subparagraphs (a) and (b above is to be computed by allowing
interest at the rate of 10% per annum. "The worth, at the time
of the award, " as referred to in subparagraph (c) above is to
be computed by discounting the amount at the discount rate of
the Federal Reserve Bank of San Francisco at the time of the
award, plus 1%.
If LESSEE is in default of this Lease and subject to the
rights of any sub-tenants under Paragraph 33 of this
Exhibit "B", LESSOR shall have the right to have a receiver
appointed to collect and conduct LESSEE' s business. Neither
the filing of a petition for the appointment of a receiver nor
the appointment itself shall constitute an election by LESSOR
to terminate this Lease.
LESSOR, at any time after LESSEE commits a default, can
cure the default at LESSEE' s cost. If LESSOR at any time, by
reason of LESSEE' s default pays any sum or does any act that
requires the payment of any sum, the sum paid by LESSOR shall
be immediately due from LESSEE to LESSOR at the time the su-n is
paid, and if paid at a later date shall bear interest at the
rate of 10% per annum from the date the sum is paid by LESSOR
until LESSOR is reimbursed by LESSEE. The sum, together with
the interest on it, shall be deemed additional rent.
20. LESSOR' S DEFAULT: LESSOR shall be in default of this
Lease if it fails or refuses to perform any provision of this
Lease that it is obligated to perform if the failure to perform
is not cured within thirty (30) days after written notice of
the default has been given by LESSEE to LESSOR. If the default
cannot be reasonably cured within thirty (30) days, LESSOR
shall not be in default of this Lease if LESSOR commences to
cure the default within the thirty (30) day period and
20/21/90 EXHIBIT "B"
1712u/2460/04 Page 26 of 35
diligently and in good faith continues to cure the default.
LESSEE, at any time after LESSOR commits a default, can cure
the default at LESSOR' s cost. If LESSEE, at any time, . by
reason of LESSOR' s default pays any sum or does any act that
requires the payment of any sum, the sum paid by LESSEE shall
be immediately due from LESSOR to LESSEE at the time the sum is
paid, and if paid at a later date shall bear interest at the
rate of 10% per annum from the date the sum is paid by LESSEE
until LESSEE is reimbursed by LESSOR. At LESSEE' s option, such
sum may also be offset against the next installment of rent or
additional rent payable by LESSEE.
21 . QUITCLAIM OF LESSEE' S INTERESTS UPON TERMINATION:
Upon termination of this Lease for any reason, including but
not limited to termination because of default by LESSEE, and
subject to the rights of any sub-tenants under Paragraph 33 of
this Exhibit "B", LESSEE shall execute, acknowledge and deliver
to LESSOR within thirty (30) days after receipt of written
demand therefor a good and sufficient deed whereby all right,
title and interests of LESSEE in the Premises is quitclaimed to
LESSOR.
22 . TOTAL TAKING: If the whole of the Premises, or other
improvements to be made by LESSEE shall be taken by right of
eminent domain or otherwise for any public or quasi-public use,
then, when possession shall be taken thereunder by the
condemnor, or the LESSEE is deprived of its practical use of
the Premises, and other improvements, whichever date is
earlier, this Lease and all rights and obligations of LESSOR
and LESSEE hereunder, -shall terminate as of the date of the
taking and any rent and all other payments required of LESSEE
shall be prorated between the parties as of the date of the
taking.
23 . PARTIAL TAKING: In the event of a partial taking, as
a result of which LESSEE reasonably determines that (i ) the
remaining portion of the Premises, or other improvements on the
Premises cannot be restored to an economically operable
facility of a comparable kind and quality to the facility
existing prior to the taking with condemnation awards received
by LESSEE, or (ii ) the then-existing laws do not permit
restoration of the Improvements to within 95% of the size and
layout existing immediately before such taking, then this Lease
at LESSEE' s option shall terminate as of the time when
possession of the Premises shall be taken by the condemnor or
LESSEE is deprived of its practical use thereof, whichever date
is earlier. LESSEE shall exercise such rights of termination
by giving LESSOR written notice thereof no later than
one-hundred twenty (120) days after the partial taking becomes
effective. If a portion of the Premises or any other
improvements shall be taken by right of eminent domain or
otherwise for any -public or quasi-public use and LESSEE
reasonably determines that the remaining portion of the
10/21/90 EXHIBYA "B"
1712u/2460/04 Page 27 of 35
� v
Premises and improvements can be restored by LESSEE to an
economically operable facility of comparable kind and quality
to the facility existing prior to the taking, then this Lease
shall not be affected and LESSEE shall retain the remaining
portion of the Premises. In such event, however, and
notwithstanding Paragraph 5(c) of these GENERAL CONDITIONS,
rent shall be abated with respect to any improvements which are
remaining on the Premises but are not used during a period of
reconstruction or restoration. Rent shall also be prorated in
the manner provided in Paragraph 5(c) above.
24. EMINENT DOMAIN AWARD:•- -If there is a taking by right
of eminent domain, the rights and obligations of the parties
with reference to the award and the distribution thereof shall
be determined in accordance with the provisions of this
Paragraph. The award shall belong to and be paid to LESSOR,
except that LESSEE shall first receive from the award the
following:
a. A sum attributable to the value of LESSEE' s
leasehold estate including improvements,
trade fixtures and personal property that
are taken which sum shall be first applied
toward any outstanding balance due LESSEE' s
lender;
b. A sum attributable to severance damages to
be used solely for the restoration of the
other improvements upon the Premises; and
C. An award (if any) specifically made with
respect to loss of goodwill.
25. AMENDMENTS: This Lease, including the Exhibits
thereto, set forth all of the agreements and understandings of
the parties and any modification must be in writing executed by
both parties.
26. CAPTIONS: The captions and the table of contents
of this Lease shall have no effect on its interpretation.
27 . CALIFORNIA LAW: This Lease shall be construed and
interpreted in accordance with the laws of the State of
California.
28. WAIVER: No delay or omission by either party in the
exercise of any right or remedy on any default by the other
party shall impair such a right or remedy or be construed as a
waiver.
The receipt and acceptance by LESSOR of delinquent rent
shall not constitute a waiver of any other defaults by LESSEE;
it shall constitute only a waiver of timely payment for the
rent payment involved.
10/21/90 EXHIBIT "B"
1712u/2460/04 Page 28 of 35
LESSOR' s consent to or approval of any act by LESSEE
requiring LESSOR' s consent or approval shall not be deemed to
waive or render unnecessary LESSOR's consent to or approval of
any subsequent act by LESSEE.
Any waiver by either party of any default must be in
writing and shall not be a waiver of any other default
concerning the same or any other provision of this Lease.
29. NONDISCRIMINATION: LESSEE covenants for itself, its
heirs, executors, administrators, and assigns, and all persons
claiming under or through it, -that this Lease is made and
accepted upon and subject to the following conditions: That
there shall be no discrimination against or segregation of any
person or group of persons on account of race, color, creed,
religion, sex, martial status, age, national origin or ancestry
in the subleasing of the Premises herein leased, nor shall the
LESSEE establish or permit any such practice or practices of
discrimination or segregation with reference to the selection,
location, number, use or occupancy of lessees of the Premises.
LESSEE shall make its accommodations and services available to
the public on fair and reasonable terms. In the event LESSEE
enters into contracts, subleases, or assignments with respect
to any of its interest herein, LESSEE shall include in such
arrangements a nondiscrimination clause substantially
conforming to the following:
a. In leases: "The lessee herein covenants by
and for himself or herself, his or her
heirs, executors, administrators, and
assigns and all persons claiming under or
through him or her, that this lease is made
and accepted -upon and subject to the
following conditions:
"That there shall be no discrimination
against or segregation of any person or
group of persons on account of race, color,
creed, religion, sex, marital status, age,
national origin or ancestry in the
subleasing, transferring, use, occupancy,
tenure or enjoyment of the premises herein
leased, nor shall the lessee himself or
herself, or any person claiming under or
through him or her, establish or permit any
such practice or practices of discrimination
or segregation with reference to the
selection, location, number, use or
occupancy of lessees of the premises."
b. In contracts: "There shall be no
discrimination against or segregation of any
person or group of persons on account of
10/21/90 EXHIBIT "B"
1712u/2460/04 -Page 29 of 35
race, color, creed, religion, sex, marital -
status, age, national origin or ancestry in
the sublease, transfer, use, occupancy,
tenure or enjoyment of the premises, nor
shall the transferee himself or herself, or
any person claiming under or through him or
her, establish or permit any such practice
or practices of discrimination or
segregation with reference to the selection,
location, number, use or occupancy of the
land. "
30. FORCE MAJEURE. In any case where either party hereto
is required to do any act, delays caused by or resulting from
acts of God, war, civil commotion, fire, flood, earthquake or
other casualty, strikes or other extraordinary labor
difficulties, shortages of labor or materials or equipment in
the ordinary course of trade, government regulations,
litigation (other than litigation arising from the failure to
perform hereunder by the party claiming an extension of time to
perform or from a wrongful act or failure to ,act by such party)
or other causes not reasonably within such party' s control and
not due to the fault or neglect of such party shall not be
counted in determining the time during which such act shall be
completed, whether such time be designated by a fixed date, a
fixed time or "a reasonable time", and such time shall be
deemed to be extended by the period of such delay. Financial
inability of either party shall not be considered to be a
circumstance or cause beyond the reasonable control of that
party. Litigation concerning paragraph 3 of Exhibit "C"
commencing on page 2 shall be included as an event which
triggers this force majeure provision. In no event shall the
operation of this Paragraph 30 extend the obligations of the
parties under the Schedule of Performance (Exhibit "E") beyond
ten ( 10) years from the Effective Date and in the event such
ten (10) years has elapsed it shall constitute grounds for
termination by either party.
31. RESOLUTION OF DISPUTES. Any and all disputes between
the parties hereto regarding the construction, operation or
enforcement of this Lease, and any of the rights or obligations
granted or imposed by this Lease, shall be submitted only to a
retired Judge of the Superior Court in and for the State of
California (hereinafter "Superior Court" ) in the following
manner:
(a) The parties must agree on the Judge' s identity
within five (5) days after the dispute arises or,
at the end of the fifth day, the parties'
respective counsel shall be authorized to agree
upon the Judge' s identity and bind their
clients. Failure to cooperate in this selection
process waives the uncooperative party' s right to
10/21/90 EXHIBIT "B"
1712u/2460/04 Page 30 of 35
participate in the selection process, or object
to the Judge selected.
(b) Disputed matters shall be promptly submitted to
the Judge in a manner determined by his/her
following his/her selection. Once a matter is
submitted to the Judge, s/he is empowered with
the full authority of a judge sitting on the
bench of the Superior Court in and for the State
of California (hereinafter "Superior Court" ) , and
may make any ruling consistent with that power.
In order to implement this provision, the
parties, by executing this Lease, agree to
execute and file with the Superior Court, such
papers as are appropriate to procure the
appointment of said Judge as a Judge Pro-Tenpore
of the Superior Court.
(c) The Judge may make any order s/he feels is
appropriate regarding which party should bear or
be awarded attorneys' fees and/or costs, and
which party or parties should pay for the fees
and costs of the Judge.
(d) The rights of judicial review granted under this
Paragraph are the only rights of judicial review
that are available to the parties hereto. They
are exclusive of all other rights of relief which
might otherwise be held by them. It is their
intention that all of the disputes arising out
of, or related to, their execution of this Lease,
or the rights or responsibilities granted or
imposed by this Lease, be resolved exclusively in
the manner provided for in this Paragraph and its
subparts. Consistent with this intention, the
parties, by executing this Lease, specifically
acknowledge that the decisions and orders of the
Judge are nonappealable and nonreviewable, and,
therefore, they are waiving their rights to seek
relief in the State or Federal Courts, except for
the purpose of securing and confirming the
authority of the Judge provided for herein, and
to enforce his/her decisions and orders by
confirmation pursuant to the California Code of
Civil Procedure Section 1280 et. sec . , or through
appropriate injunctive relief. In the event that
a party files any action inconsistent with the
terms of this Paragraph, then the party filing
the action will be liable for all fees and costs
actually incurred by the other party in
responding to said action, regardless of its
outcome.
10/21/90 EXHIBIT "B"
1712u/2460/04 `Page 31 of 35
(e) The limitations on actions set forth in this
Paragraph apply only to actions between the
parties hereto. They are not intended to and do
not limit the parties' right to bring an action
against third parties. Furthermore, no third
party shall be entitled to rely on any provision
of this Paragraph in their response or defense to
an action brought against them by a party(s) to
this Lease.
Notwithstanding the foregoing in the event that
this method of dispute resolutfdn is prohibited by law then
both parties shall either agree to submit to binding
arbitration or to the jurisdiction of the appropriate court of
law.
32 . TIME: Time is of the essence of this Lease, and of
each and every covenant, term, condition, and provision hereof.
33 . NON-DISTURBANCE AND RECOGNITION:
A. Non-Disturbance
So long as any subtenant of any portion of the
Premises is not in default (beyond the period given such
subtenant to cure such default in its -sublease) in the payment
of rent or in the performance of any of the terms, covenants,
or conditions of such sublease, or if the subtenant is in
default but is diligently proceeding to cure such default as
provided in its sublease, and notwithstanding LESSEE' s
termination of this Lease as to all or a portion of the
Premises pursuant to Paragraphs 5 or 22 of these GENERAL
CONDITIONS which termination is .not consented to by such
subtenant: (a) LESSOR will not bring, join, or cooperate in
any action or proceeding to terminate such subtenant' s
interest, estate, or rights under such sublease, (b) the
subtenant' s possession and rights and privileges under the
sublease shall not be diminished or interfered with by LESSOR,
and (c) LESSOR will continue to recognize the estate of the
subtenant created under the sublease and the subtenant' s
occupancy shall not be disturbed by LESSOR during the term of
the sublease or any extensions or renewals which subtenant may
exercise under the provisions of the sublease. Upon request,
LESSOR shall execute a non-disturbance agreement, in such form
reasonably approved by LESSOR, LESSEE, subtenant and lender(s)
recognizing the subtenant' s rights provided hereunder.
B. Attornment
If the interest of LESSEE in all or any part of the
Premises shall be terminated for any reason, and LESSOR
succeeds to the interest of and assumes all the obligations of
LESSEE under any sublease, each sublessee shall be bound to
10/21/90 EXHIBIT "B"
1712u/2460/04 Page 32 of 35
LESSOR under all of the terms, covenants, and conditions of the
sublease for the balance of the sublease term and any
extensions of renewals of the sublease which the subtenant may
exercise under the provisions of the sublease. The subtenant
shall attorn to LESSOR, such attornment to be effective and
self-operative without the execution of any further instruments
immediately upon LESSOR succeeding to the interest of LESSEE
under the sublease. The respective rights and obligations of
the subtenant and LESSOR under this attornment shall be the
same as between LESSEE and the subtenant under the sublease;
provided, however, that (i ) the subtenant shall be under no
obligation to pay rental to LESSOR until the subtenant receives
written notice from LESSOR that LESSOR has succeeded to the
interest of LESSEE and assumed all the obligations of LESSEE
under the sublease, and (ii) LESSOR shall not hold the
subtenant responsible for any costs or acts related to any
default or alleged default by LESSEE under this Lease.
C. New Lease
In the event of the termination of this Lease as to
all or a portion of the Premises prior to its stated expiration
date for any reason whatsoever, LESSOR shall notify all
sublessors and subleasehold mortgagees of such termination, and
any sublessee or any subleasehold mortgagee may notify LESSOR
within sixty (60) days after receipt of such termination notice
of its election to enter into a new lease with LESSOR. During
such sixty (60) day period, the provisions of subparagraph A
herein shall apply. LESSOR, upon receipt of such sublessee' s
or subleasehold mortgagee' s notice, shall immediately enter
into a written agreement with such sublessee or subleasehold
mortgagee containing the same provisions as those in the
sublease, except for any change$ that are necessary because of
the substitution of LESSOR in the place of LESSEE. Sublessee
or any subleasehold mortgagee shall have no rights under this
subparagraph (C) if it fails to give notice within the sixty
(60) day period.
34. ESTOPPEL CERTIFICATE: LESSOR and LESSEE will, at any
time and from time to time, within thirty (30) days of the
request of the other party or a leasehold or subleasehold
mortgagee or prospective mortgagee, execute, acknowledge, and
deliver to the other party and su::h mortgagee, if any, a
certificate certifying:
a. That the Lease or sublease is unmodified and in
full force and effect (or, if there have been
modifications, that the same are in full force
and effect as modified and stating such
modifications) ;
b. The dates, if any, to which the Percentage Rent
and any additional rent and charges have been
10/21/90 EXHIBIT "B"
1712u/2460/04 Page 33 of 35
paid and the amount of any accumulated rent
credit available to LESSEE;
C. Whether there are any existing defaults by the
other party to the knowledge of the party making
such certification specifying the nature of such
defaults, if any;
d. Whether the Lease Commencement Date has occurred
and, if so, the date;
e. Whether the leasehold or subleasehold mortgagee
(or prospective mortgagee) is entitled to the
protection afforded under the terms of the
sublease or this Lease; and
f. Such other matters as may be reasonably requested.
Any such certificate may be relied upon by any party to
whom the certificate is directed.
35. HAZARDOUS WASTE INDEMNITY: LESSOR is aware of two
potential sources of contamination on the Premises. One
potential source is a discontinued gasoline station and the
other is the possibility of asbestos in the existing structure
which is the subject of the Maxwell' s Lease. Except for the
aforementioned potential contaminations, LESSOR has no
knowledge of hazardous materials or contamination on the
Premises. Further, to the best of the LESSOR' s knowledge, the
LESSOR has not received any notice or communication from any
government agency having jurisdiction over the Site notifying
the LESSOR of the presence of subsurface zone hazardous
materials, waste, or contamination in, on, or under the Site,
or any portion thereof. LESSOR agrees to notify LESSEE if in
the future it becomes aware of contamination on the Premises.
LESSEE, including any and all of its successors in interest,
and assigns, acknowledges and agrees it shall be responsible
for any release, excavation, or Movement of any hazardous
materials, waste, or contamination of the subsurface zone as
may be found to have contaminated the Premises after the
Commencement Date of this Lease, except to the extent such
release, excavation, or movement of any hazardous materials,
waste or contamination is caused by LESSOR or City.
LESSEE and LESSOR shall comply with CERCLA
(Comprehensive Environmental Response, Compensation and
Liability Act of 1980) 42 U.S.C. §9601, et sec . , and California
Health and Safety Code §§ 25100, et seq. , 25300, et seq. , 25280
et seg. Any costs incurred pursuant to this compliance which
are necessary to develop the Premises as contemplated in this
Lease shall be shared as set out in Paragraph 3 of Exhibit "C" .
10/21/90 EXHIBIT "B"
1712u/2460/04 Page 34 of 35
LESSEE, including any and all of its successors in
interest, agrees to and shall indemnify, defend, and hold the
LESSOR and the City and their officers, employees,
representatives and agents harmless from and against all
expenses (including, without limitation, reasonable attorneys'
fees and disbursements) , losses, or liabilities suffered by
LESSOR or City by reason of governmental action or third party
claims arising out of such hazardous materials, waste, or
contamination, exacerbation, movement, release, or additional
contamination of the Premises as may be found to have
contaminated Premises after the Commencement Date of this Lease
unless caused by LESSOR or City:• - The LESSEE assumes all
responsibility for subsurface zone conditions and soils
conditions in, on or under the Premises, and for any
rehabilitation necessary for the provision of the Improvements;
and the LESSOR makes no other representations or warranties
concerning the Premises, its suitability for the use intended
by the LESSEE, or the surface or subsurface conditions of the
Premises; and if the soil conditions of the Premises are not in
all respects entirely suitable for the use or uses to which the
Premises will be put, then it is the sole responsibility and
obligation of LESSEE to take such action as may be necessary to
place the Premises in a condition entirely suitable for the
development of the Premises. This is expressly agreed between
the Parties to be a material term of this Lease. Prior to the
Commencement Date LESSEE shall exercise due diligence and
conduct or cause to be conducted an environmental assessment or
audit acceptable to the LESSOR of the Premises to ascertain
whether it is in all respects suitable for the construction and
completion of the Improvements. LESSOR in turn agrees to grant
LESSEE, its agents or experts full access to the Premises for
the purpose of conducting all geotechnical, ecological or other
inspection of the Premises necessary to comply with this Lease
and its attachments or amendments, or to prepare for the
construction of the Improvements.
10/21/90 EXHIBIT "B"
1712u/2460/04 Page 35 of 35
EXHIBIT "C"
CONDITIONS TO COMMENCEMENT
1. Plan Approvals.
LESSEE shall obtain approvals from all applicable
government entities for conditional use permit, coastal
development permit, supplemental environmental impact report
and final plans and specifications with respect to the
Improvements to be located on the Premises. The Conditional
Use Permit and Coastal Development Permit shall be deemed
"final" for purposes of this Paragraph upon the last of the
following three (3) dates (i) as to each condition on said
permits, on the date on which LESSEE obtains LESSOR approval of
LESSEE' s satisfaction of such items, (ii ) the date on which all
applicable statutes of limitations for challenging such permits
have expired without litigation being filed, or (iii ) the date
on which all such litigation is favorably and finally
terminated, whether by judgment, dismissal, settlement
agreement or otherwise. The development of the final plans and
specifications shall be according to the requirements set out
in the scope of Development Exhibit "D" 1 .2 .
2. Evidence of Financing Commitments.
LESSEE shall obtain and shall submit to LESSOR' s
Executive Director, evidence reasonably satisfactory to
LESSOR' s Executive Director that LESSEE has obtained the
financing necessary for the development of the Improvements on
the Premises in accordance with this Lease.
Such evidence of financing shall include the following:
(a) A copy of the commitment or commitments obtained
by LESSEE for the mortgage loan or loans to assist in financing
the construction of the Improvements, certified by LESSEE to be
a true and correct copy or copies thereof. The commitments for
financing shall be in such form and content acceptable to
LESSOR' s Executive Director as reasonably evidences a firm and
enforceable commitment, with only those conditions which are
standard or typical for the lender(s) involved for similar
projects;
(b) Sufficient information (e.g. , an annual report)
regarding the construction lenders to enable LESSOR' s Executive
Director to determine whether or not such lender( s) has (have)
sufficient financial resources to fund the loan(s) ; and
(c) A copy of the contract between LESSEE and the
contractor(s) for the construction of the Improvements,
certified by LESSEE to be a true and correct copy thereof; and
10/21/90 EXHIBIT "C"
1712u/2460/04 'Page 1 of 6
U
(d) A financial statement and/or other documentation
satisfactory to LESSOR' s Executive Director as evidence of
other sources of capital sufficient to demonstrate LESSEE has
adequate funds cormnitted to cover the difference, if any,
between construction and development cost minus financing
authorized by mortgage loans.
Within thirty (30) days after receipt of request for
approval of its evidence of financing, LESSOR' s Executive
Director shall respond in writing by stating what further
information, if any, he or she reasonably requires in order to
determine whether or not to approve such evidence of
financing. Upon receipt of such a timely response, LESSEE
shall promptly furnish to the Executive Director such further
information as may be reasonably requested.
LESSEE' s request for approval of its evidence of
financing shall be deemed complete thirty (30) days after
Executive Director' s receipt thereof, if no timely response
requesting further information is delivered to LESSEE, or, if
such a timely response requesting further information is
received, on the date that LESSEE delivers such additional
information to Executive Director. Once LESSEE' s request for
approval of its evidence of financing has been accepted as or
is deemed complete, Executive Director shall not be entitled to
demand additional information or to disapprove the request on
the basis that LESSEE has not furnished adequate or complete
information.
The Executive Director LESSOR shall approve or
disapprove LESSEE' s evidence of financing within fifteen (15)
days after LESSEE' s request for such approval is accepted as
complete. Approval shall not be unreasonably withheld or
conditioned. If the Executive Director shall disapprove any
such evidence of financing, it shall do so by written notice to
LESSEE stating the reasons for such disapproval.
3. Approved Condition of Title; Acquisition of Property
Interests in the Premises To Place Title In Such
Condition.
Except as expressly set forth herein, LESSOR covenants
to convey to LESSEE the leasehold estate in the Premises free
and clear of all monetary liens and all recorded and unrecorded
nonmonetary liens, encumbrances, easements, licenses, leases,
and other defects of title inconsistent with LESSEE' s approved
development plans, including without limitation Exceptions 1-33
set forth in the litigation guarantee issued by First American
Title Insurance Co. (Order No. ) dated January 15,
1986 (the "Approved Title Condition } .
Except as expressly set forth herein, LESSOR hereby
represents that the City currently holds the fee title to the
10/21/90 EXHIBIT "C"
1712u/2460/04 Page 2 of 6
Premises in a condition that would enable the City to convey
leasehold title in the Approved Title Condition, excepting only
the "Maxwell' s Lease" and any currently existing subtenants
(that certain lease dated between the City as
landlord and as tenant) . Within the time set forth
in the Schedule of Performance (Exhibit "E" ) , LESSOR, LESSEE,
and the City shall exercise best efforts to negotiate and enter
into a binding written agreement with the holder of the
Maxwell ' s Lease and all subtenant to terminate or amend said
leases on terms acceptable to LESSOR, the City, LESSEE, and the
holder of the Maxwell' s Lease, .-and all subtenants, no later
than the Commencement Date of this Lease. Subject to LESSEE' s
and Maxwell' s performance of their obligations under such
agreement, LESSOR covenants that on or before the Commencement
Date it shall acquire title to the Premises from the City in
the Approved Title Condition.
Notwithstanding the foregoing, LESSEE acknowledges
that the State of California, through the Office of the
California Attorney General and the State Lands Commission, has
made contentions that the Premises or some portions thereof
have been or may have been impliedly dedicated to the public or
are or may be subject to a public trust and that development
and operation of the Improvements on the Premises would or may
be inconsistent with the rights of the public to public open
space and/or recreational use and/or access to the coastline.
LESSEE assumes all risks regarding any such claims, whether
made by the State of California or any third party. Either
LESSOR or LESSEE shall have the right to file and prosecute a
quiet title action to determine the validity of any such
adverse claims against LESSOR' s and LESSEE' s title to the
Premises. In addition, in the event of any legal challenge
instituted by the State of California or any third party making
any such adverse claim against the title of LESSOR or LESSEE to
the Premises, the parties hereby agree to cooperate in
defending said action as set forth herein.
In the event that either LESSOR or LESSEE determines
to file a quiet title action, the same shall be diligently
prosecuted and the party maintaining the same shall exercise
best efforts to obtain a final and favorable judgment as soon
as practicable after the action is filed. No such action shall
be filed without prior consultation with the other party, which
other party shall have the right to appear independently in the
action to represent its interests.
In the event of litigation instituted by the State of
California or other third party, LESSOR shall have the right,
but not the obligation, to defend such action; provided, that
without LESSEE' s prior written consent, LESSOR shall not allow
any default or judgment to be taken against it and shall not
enter into any settlement or compromise of any claim which has
the effect, directly or indirectly, of prohibiting, preventing,
10/21/90 EXHIBIT "C"
1712u/2460/04 Page 3 of 6
delaying, or further conditioning or impairing LESSEE' s
development, use, or maintenance of any portion of the Premises
or impairing any of LESSEE' S rights hereunder. In addition,
LESSOR shall provide reasonable assistance to LESSEE in
defending any such action, such assistance to include:
(i) making available upon reasonable notice, and at no cost to
LESSEE, LESSOR officials and employees who are or may be
Witnesses in such action, and (ii) provision of other
information within the custody or control of LESSOR and the
City that is relevant to the subject matter of the action.
LESSEE shall have the' 6bligation to defend any such
action filed by the State of California or any third party;
provided, however, that this obligation to defend shall not be
effective if and to the extent that LESSEE determines in his
reasonable discretion that such action is meritorious or that
the interests of the parties justify a compromise or settlement
of such action. In this regard, LESSEE' s obligation and right
to defend shall include the right to hire attorneys and experts
necessary to defend, subject to reasonable approval by LESSOR.
LESSOR must be notified prior to any compromise or settlement
and shall have approval rights on any agreement that has the
potential of adversely affecting LESSOR' s right, title or
interest in the Premises.
LESSOR shall be solely responsible for all of its
costs and expenses incurred in prosecuting or defending any
such action. LESSEE shall be solely responsible for all of its
costs and expenses incurred in prosecuting or defending any
such action and, in addition, to any costs and expenses arising
out of or relating in any manner to the development of the
Premises or this Lease if the action results in an unfavorable
judgment or settlement that prohibits or prevents LESSEE' s
development of the Improvements on the Premises pursuant to
this- Lease. LESSEE shall be entitled to full reimbursement up
to a maximum amount of Fifty Thousand Dollars ($50,000) from
LESSOR from all legal costs and expenses incurred by LESSEE in
prosecuting or defending any such action if the action results
in a favorable judgment or settlement permitting LESSEE to
develop the Improvements as contemplated in this Lease. Such
reimbursement shall include interest accruing on the principal
amount of LESSEE' s expenditures at the rate of eleven percent
(11%) per annum from the date expenditures are made until fully
reimbursed. Rent credits shall be allocated first to accrued
interest, then to unpaid principal. LESSEE shall provide to
LESSOR an itemized statement of LESSEE' s costs and expenses in
such detail as LESSOR may reasonably require in order to verify
the amount of LESSEE' s actual and reasonable expenses and the
time such expenses were incurred. LESSEE agrees to act
reasonably to conserve funds subject to this rent credit,
consistent with the parties' mutual objective of having the
action handled by qualified experts and quickly and
successfully concluded.
10/21/90 EXHIBIT "C"
1712u/2460/04 'Page 4 of 6
4. Environmental Testin and Clean U2 Costs.
LESSEE shall obtain soils test analysis to be approved
by LESSOR' s Executive Director to determine the suitability of
the Site for the proposed development. In the event the test
evidences a need to remediate contamination of the Premises in
conjunction with development, the LESSOR shall bear the cost
for the first Twenty-Five Thousand Dollars, the LESSEE shall
bear the cost of the second Twenty-Five Thousand and costs
above Fifty Thousand shall be shared equally. If the cost
estimate to remediate contamination exceeds One Hundred
Thousand Dollars ($100,000) then pursuant to Paragraph 6(f)
below, either party may terminate this Lease. Notwithstanding
the above, if LESSEE determines to bear all such costs above
One Hundred Thousand Dollars, then LESSOR shall not have the
ability to terminate this Lease.
5. Miscellaneous Governmental Approval.
In addition to the approvals to be obtained from City
and LESSOR as provided herein, LESSOR and LESSEE shall
cooperate and diligently pursue, within the times set forth in
the Schedule of Performance (Ex'hibit "E" ) , the obtainment of
all other governmental approvals required for development and
operation of the Improvements.
6. Failure of Conditions• Termination.
In the event that, prior to the Commencement Date:
(a) LESSEE fails to submit or is unable, after and
despite its exercise of reasonable diligence, to timely
obtain approval of the final building plans and
specifications for the Improvements, in accordance with
taragraph 1 of this Exhibit "C"; or
(b) LESSEE is unable, after and despite its exercise
of reasonable diligence, to timely obtain financing
commitments for the development of the Premises or the
Executive Director' s approval thereof, in accordance with
paragraph 2 of this Exhibit "C"; or
(c) LESSOR, LESSEE, and the City fail to timely enter
into a binding written agreement with the holder of the
Maxwell' s Lease or any other leasehold interest capable of
asserting relocation rights, in accordance with Paragraph 3
of this Exhibit "C"; or
(d) Replacement Parking requirements of any
governmental entity fail to be satisfied by the onsite
parking and no more than fifteen (15) offsite parking
spaces.
10/21/90 EXHIBIT "C"
1712u/2460/04 Page 5 of 6
(e) LESSOR fails to timely tender possession of the
Premises, with the Condition of title meeting the
requirements set forth in Paragraph 3 of this Exhibit "C";
or
(f) LESSEE either fails to obtain an approved
environmental study or the cost to clean up contamination
found on or under the Premises exceeds $100,000 unless
LESSEE determines to pay all costs in excess of One Hundred
Thousand Dollars pursuant to Paragraph 4 of this Exhibit
"C" or
(g) As of the scheduled Commencement Date, LESSOR is
in default of any of its other obligations under this
Lease, and such failure or default is not cured and is not
being cured in accordance with paragraph 20 of Exhibit "B"
to the Lease;
(h) As of the Scheduled Commencement Date, LESSEE is
in default of any obligation under this Lease, and such
failure or default is not cured and is not being cured in
accordance with paragraph 20 of Exhibit "B" to the Lease;
then this Lease shall, at the option of either party, under
paragraph(s) a, b, c, d or f above, be terminated by
written notice thereof to remaining party; or, LESSEE may
terminate under paragraph(s) a or g above; LESSOR may
terminate under (h) above, and thereupon neither LESSOR nor
LESSEE shall have any further rights or obligations with
respect to the Premises or this Lease.
10/21/90 EXHIBIT "C"
1712u/2460/04 'Page 6 of 6
EXHIBIT "D"
SCOPE OF DEVELOPMENT
I . LESSEE' S RESPONSIBILITIES:
1. The Improvements. As used in this Lease, the term
"Improvements shall mean all improvements constructed,
assembled, or placed by 'LESSEE en the Premises. Except as
specifically set forth in Section II below, LESSEE shall be
responsible for demolition and clearance from the Premises of
all existing improvements inconsistent with the construction
thereon of the "Improvements" in accordance with the plans and
permits to be approved by the City, LESSOR, and any other
governmental agency that has jurisdiction, as the same may be
amended from time to time. Additional clarifications of
LESSEE' s responsibilities are set forth below:
(i ) Concept. The Improvements shall consist of
a multi-level restaurant project located within the footprint
of the existing improvements and the asphalt parking lot
located south of the Pier. The lifeguard station and beach
access road/bike path will remain in their present locations.
Emphasis is on small building footprints and silhouettes and
large public spaces, promenades and plazas. Pier, ocean, and
beach view opportunities, both in and through the project, will
be maximized wherever possible. Maxwell ' s will have the option
of relocating to a new structure within the project.
New structures on the Plaza or PCH level are
limited to the new Maxwell' s (building "A" ) and buildings "B"
and "C" on the plans. The buildings shall be consistent with
the development guidelines for District 10 of The Downtown
Specific Plan. New structures on the lower or beach access
level will house food services, beach-related concessions, and
other approved visitor-serving commercial uses.
Structures on both levels shall be set back
so as to create pedestrian promenades along the entire ocean
side of the project. The upper promenade shall be lower than
the plaza level to improve PCH views of the surf. The lower
promenade or boardwalk shall be above the bike path so as to
separate pedestrians from skateboarders, bicyclists, and roller
skaters.
(ii ) Parking. The parking structure shall
contain a sufficient number of parking stalls (including
subterranean stalls on "lifts" ) to satisfy code requirements
for the uses on the Premises, calculated as follows: (1) the
relocated Maxwell' s restaurant: seventy-seven (77) spaces
(based on the number of spaces currently provided pursuant to
the Maxwell' s Lease) ; (2) the two (2) major new PCH-level
10/21/90 EXHIBIT "D"
1712u/2460/04 Page 1 of 5
buildings, any square footage in the New Maxwell' s in excess of
11,400 square feet and the approximately 4,500 square feet of
new restaurants/cafes on the lower level in excess of 1500
square feet: 1 space per 100 square feet of floor area; and
(3 ) pedestrian-oriented cafe and beach concessions: no
spaces. LESSEE shall not be responsible for providing any
off-Premises parking to replace any existing parking spaces on
or adjacent to the Premises that will or may be eliminated due
to the development of the project, whether required by the
City, the California Coastal Commission, or otherwise. LESSEE
will, in accordance with the provisions of Paragraph 7(d) of
the Lease, cause 240 public parking spaces to be built on the
Premises.
(iii ) Access. The project shall be designed so
that pedestrians will be able to enter the project site through
the signalized intersections at Main and Lake Streets.
Elevators, and ramps at all level changes, shall be provided
for full handicap access throughout the project and down to the
beach. Grand staircases from the plaza level to the beach
access level shall also be provided to act as, observation and
sitting areas.
The project shall provide automobile entry
to the plaza level south of building "A" and to the lower
parking level at Lake Street. Exiting shall be provided onto
PCH south of the entry and from the lower parking level out to
Lake Street. Two-way ramps shall provide access between the
parking levels. Payment control points shall be located on the
lower level at the base of the ramp and at the Lake Street
entrance/exit. Emergency vehicle access and dedicated fire
lanes shall be provided in accordance with City requirements
and the Fire Code.
(iv) Construction. Buildings "A, " "B, " and "C"
shall be fully sprinklered and constructed to conform to all
applicable City building ordinances. They shall be erected on
top of a fully sprinklered steel reinforced concrete parking
structure. Surface finishes, design, and roofing shall be
consistent with the Downtown Design Guidelines and direction
from the City of Huntington Beach Design Review Board.
Hardscape shall be a mixture of stone, concrete, and exposed
aggregate surfaces.
(v) Landscaping. Landscaping shall emphasize a
variety of palm trees, flowering vines, shrubbery, and bedding
plants, as well as a variety of coastal grasses. Landscaping
shall be accented by night-time lighting. Landscape plans
shall be as approved by the City.
(vi ) Size of Buildings. The buildings to be
included in the project shall be of approximately the following
sizes (in square feet) :
10/21/90 EXHIBIT "D"
1712u/2460/04 Page 2 of 5
Plaza Level Square Footage
Building "A" (Maxwell ' s) :
1st Level 11,200
2nd Level 3,800
15,000 15,000
Building "B"
1st Level 8,700
2nd Level 2,300
11,000 11,000
Building "C" _ ,
1st Level '8, 700
2nd Level 5,400
14, 100 14, 100
Total Plaza Level 40, 100
Beach Access Square Footage
Dwight' s 2,500
Cafe 1,000
Casual Restaurant 6,000
Beach Concession 4,250
Total Beach Access Level 16,700
PROJECT TOTAL 53,750
The size and the distribution of square footage among the
particular buildings and parts of building may vary from the
above, provided, however, the project total square footage
shall be a minimum of 45,000 and shall not exceed 60,000 square
feet without an amendment to this Scope of Development.
(vii) Cost of Construction. The Improvements
shall be constructed at a minimum 'hard" cost of Ninety Dollars
($90.00) per square foot of gross building floor area for the
three (3) buildings referenced in subparagraph (vi ) above (not
including the parking or Beach Access level facilities) ,
including without limitation tenant improvements and
furnishings, fixtures, and equipment, site preparation costs,
parking, landscaping, driveways, and other similar items. The
actual cost of construction will be certified and submitted to
LESSOR's Executive Director at the time specified in the
Schedule of Performance Exhibit "E. "
10/21/90 EXHIBIT "D"
1712u/2460/04 'Page 3 of 5
2. Approval of Plans, Drawings and Related Docunent_s
6he LESSOR shall receive copies of all plans,
drawings and related documents for the development of the
Premises, including any proposed material changes therein. The
LESSOR shall review such documents to determine consistency
with this Scope of Development (Exhibit "D") .
II . LESSOR' S RESPONSIBILITIES:
1. Reopening and Maintenance of Municipal Pier.
LESSOR agrees to assist LESSEE-in any requests to the City for
maintenance and repair of City owned facilities including
without limitation the municipal Pier and the City Beach the
maintenance and repair of which or lack thereof could
negatively impact the project.
2 . Utilities. Subject to the maximum expenditure cap
in Paragraph 7(g) of the Lease, LESSOR agrees to provide, or
cause to be provided, within the times required in the Schedule
of Performance, all Utilities (water, sewer, gas, electrical,
and telephone) required for the development, use, and
maintenance of the improvements on the Premises, with
sufficient capacities to adequately service the Premises, with
such Utilities to be located on the Premises or stubbed no
further away than 3 feet from the curb within the Premises
along the west side of Pacific Coast Highway. LESSEE shall be
responsible for extending Utilities from said location(s) to
the improvements located on the Premises in accordance with
Paragraph I above.
3. Easements and Permits. LESSOR agrees to cooperate
with LESSEE in connection with the filing and processing of any
and all applications for permits and other approvals required
by the City or any other governmental agency in connection with
the development of the Premises.
4. Access for Service Vehicles. During the entire
term of this Lease, LESSOR agrees to provide, or cause to be
provided, access for service and delivery vehicles to the
businesses on the Premises along the access road/bike trial on
the beach side of the Premises; provided that such access may
be restricted from 10:30 a.m. - 4:00 p.m. on weekdays and from
9:00 a.m. - 4: 00 p.m. on weekends.
5. Relocation Assistance. The obligations of LESSOR
and LESSEE with respect to the temporary shutdown of Maxwell' s
and relocation of Maxwell' s and as to other subtenants into the
project to be developed by LESSEE on the Premises shall be as
set forth in the agreement by and among LESSOR, LESSEE, the
10/21/90 EXHIBIT "D"
1712u/2460/04 'Page 4 of 5
City, and the holder of the Maxwell' s Lease, and any current
Sublessee as referenced in Paragraph 3 of Exhibit "C" (the
"Conditions to Commencements' ) . Otherwise, LESSOR shall be
solely responsible for payment of relocation expenses and
provision of relocation assistance to any persons or entities
displaced as a result of LESSEE' s development of the Premises,
in accordance with applicable provisions of law.
10/21/90 EXHIBIT "D"
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EXHIBIT "E"
SCHEDULE OF PERFORMANCE
Item of Performance Time for Performance
1. LESSEE submits to City and Completed
LESSOR application for
Conditional Use Permit and
Coastal Development Permit
(Exhibit "C, " 11)
2. LESSOR completed review and Within one hundred and
exercises reasonable eighty (180) days
diligence to cause City to after Effective Date
approve Conditional Use
Permit, Coastal Development
Permit, and supplemental
environmental impact report
(Exhibit "C, " 111)
3 . LESSOR, LESSEE, and the City Within one hundred and
exercise best efforts to eighty (180) days of the
enter - into a binding written date City approves the
agreement with the holder of Conditional Use Permit,
the Maxwell' s Lease, Coastal Development
and any subtenants Permit, and Supplemental
(Exhibit "C, " 113 ) EIR
4. LESSEE delivers Security On or before the
Deposit (Lease, V8) Commencement Date
S. • LESSEE submits to City and Within one hundred fifty
LESSOR final building plans (150) days after the
and specifications for later of the following:
Improvements (Exhibit "C, " (i ) the date on which all
VS1 and 3) of the permits and
approvals referenced in
paragraph 2 herein become
"final"; or (ii ) the date
on which the City, LESSOR,
and LESSEE enter into a
binding written agreements
with the holders of the
Maxwell' s Lease and any
subtenants,
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6. LESSOR completes review Within thirty (30) days
and exercises reasonable after submittal
diligence to cause City to
complete review of final
building plans and speci-
fications for Improvements
(Exhibit "C, " Ul)
7. LESSEE submits evidence Within one hundred twenty
of financing (120) days after City and
(Exhibit "C, " 12 ) LESSOR approval of final
building plans
8. LESSOR reviews and approves Within 30 days of receipt
(or disapproves) evidence of complete financing
of financing (Exhibit "C, " package
1{2)
9. LESSEE delivers evidence Within thirty (30) days
of insurance; Lease term after LESSOR approval
commences; LESSOR causes of evidence of financing
Title Company to deliver (and satisfaction or
title policy to LESSEE; waiver of all of the
LESSEE obtains building other Conditions to
permit(s) and construction Commencement in Exhibit
loan records (Lease, is 4 "C" )
and 10; Exhibit "B, " 1i10;
Exhibit "C, " 193)
10. LESSEE commences -construct- Within thirty (30) days
tion of Improvements (Lease, after Commencement Date
T6)
11. LESSOR provides Utilities Prior to LESSEE' s
' to the Premises (Exhibit scheduled date for
"B, " T12; Exhibit "D, " Si I I .4) commencement of
construction
12. LESSEE completes construction Within twenty-four (24)
of Improvements; Exhibit months after commence-
"D, " 11I . 1 and 2) ment "of construction
13. LESSEE requests Certificate Within thirty (30) days
of Completion (Exhibit "B" after completion of
13 .a; Exhibit "D" TI . 1(vii ) construction
14. LESSEE furnishes to Prior to issuance of Certi-
LESSOR as-built plans ficate of Completion
and itemized certified
statement of
construction costs
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15. LESSOR shall either approve Within 45 days of request
or disapprove Certificate of
Completion (Lease, T6(c) )
It is understood that the foregoing Schedule of
Performance is subject to all of the terms and conditions set
forth in the text of this Lease. The summary of the items of
performance in this Schedule of Performance is not intended to
supersede or modify the more complete description in the text;
in the event of any conflict or inconsistency between this
Schedule of Performance and the text of this Lease, the text
shall govern.
10/21/90 EXHIBIT "E"
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EXHIBIT "F"
When Recorded
Mail to:
Redevelopment Agency of
the City of Huntington
Beach
Attn: Executive Director/
City Administrator
2000 Main Street
Huntington Beach, CA 92648
CERTIFICATE OF COMMENCEMENT DATE
This certificate is executed this date 199_ by
the Redevelopment Agency of the City of Huntington Beach and
Stanley M. Bloom, respectively Lessor and Lessee under that
certain Lease dated , 1990 (the "Lease" ) . The
purpose of this certificate is to establish a recorded date
certain as the "Commencement Date" as that term is used and
defined in the Lease.
The parties hereto agree that the Commencement Date shall
be I and authorize this certificate to be
recorded in the Official Records of Orange County.
Stanley M. Bloom Executive Director
(Lessor) Redevelopment Agency of the
City of Huntington Beach
("Lessor" )
10/21/90 EXHIBIT "F"
t 1712u/2460/04