HomeMy WebLinkAboutReso 13-15RESOLUTION NO. 13-15
RESOLUTION OF THE CITY COUNCIL
OF THE CITY OF MORRO BAY, CALIFORNIA
APPROVING AMENDMENT #5 TO LEASE AGREEMENT FOR
LEASE SITE 124-128/124W-128W & 113W BETWEEN THE CITY OF MORRO
BAY AND MMBS, LLC, LOCATED AT 1215 EMBARCADERO
THE CITY COUNCIL
City of Morro Bay, California
WHEREAS, the City of Morro Bay is the lessor of certain properties on the
Morro Bay Waterfront described as City Tidelands leases and properties; and
WHEREAS, MMBS, LLC/Robert Fowler ("Tenant") is the lessee of Lease Site
124-128/124W-128W & 113W and is a tenant in good standing; and
WHEREAS, Tenant has redevelopment commitments and deadlines pursuant to
the lease of the property; and
WHEREAS, restructuring of the original lease and lease extension for the
completion of land and water improvements to ensure those improvements are completed
tw is in the best interest of the City and has benefits to the City.
NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of
Mono Bay, California, as follows:
Section 1. The attached Amendment #5 to the Lease Agreement for Lease
Site 124-128/124W-128W & 113W is hereby approved.
Section 2. The Mayor is hereby authorized to execute the Amendment to the
Lease Agreement.
PASSED AND ADOPTED by the City Council of the City of Morro Bay at a
regular meeting thereof held on the 14th day of April, 2015 on the following vote:
AYES: Irons, Headding, Johnson, Makowetski, Smukler
NOES: None
ABSENT: None
Jam' L. Irons, May
ATTEST:
Dana Swanson, City Clerk
AMMENDMENT #5 TO LEASE AGREEMENT FOR
LEASE SITE 124-128/124W-128W AND 113W
This Amendment is made and entered into as of this 14th day of April, 2015 by and between the City of
Morro Bay a municipal corporation of the State of California (hereinafter "CITY") and MMBS, LLC, a California
limited liability company (hereinafter 'TENANT") to amend that certain lease agreement for Lease Site 124-
128/124W-128W and 113W (hereinafter "Lease") between CITY and TENANT dated October 19, 2010.
WHEREAS, TENANT is the successor -in -interest to the Lease;
WHEREAS, TENANT has completed construction of the first phase of dock improvements on Lease Sites
124W-128W per CUP #UPO-058; and,
WHEREAS, the Lease and its amendments provide, upon completion of the second phase of dock
improvements on Lease Site 113W and the landside building improvements per CUP #UPO-058, TENANT shall
have the option to renew the Lease for an additional period of twenty (20) years; and,
WHEREAS, due to increased time and costs in planning, permitting and building said improvements,
TENANT is requesting to amend the Lease to restructure the next phases of construction to provide for an optional
fifteen -year extension at the successful completion of the second phase of dock construction on Lease Site 113W,
and an optional second fifteen -year extension at the successful completion of the landside improvements, all as
outlined in CUP #UPO-058; and,
WHEREAS, in additional consideration of restructuring the Lease, TENANT agrees to pay additional Annual
Minimum Rent, and to allow CITY to take over a portion of Lease Site 128 at CITY's option as described in this
amendment; and,
WHEREAS, CITY and TENANT have agreed to this amendment of the Lease in order to coordinate
improvements on the Lease Sites.
NOW THEREFORE, CITY and TENANT mutually agree to amend the Lease as follows:
SECTION 1. Section 2.01 of the Lease is amended by adding the following to the end of the first paragraph:
"As additional consideration for the additional lease term, as described in Sections 13.02, TENANT agrees,
upon completion of the second phase dock improvements on Lease Site 113W the Annual Minimum Rent
shall be increased to one hundred and five percent (105%) of the amount normally due under the terms
and conditions of the Lease as set forth in Sections 2.01, 2.02 and 2.03 for the term of this Lease
Agreement."
SECTION 2. Section 13.02 of the Lease shall be restated in its entirety to read as follows:
Section 13.02 Conditional Options to Renew Lease for Two — Fifteen -Year Terms for Construction of Waterside
and Landside Improvements
TENANT shall have an option to renew this Lease Agreement for an additional period of fifteen (15) years
potentially resulting in a thirty -five-year lease; provided, that TENANT completes all of the second phase
dock improvements on Lease Site 113W as outlined in CUP #UPO-058 by July 1, 2019 (the "Second Phase
Improvements"). That option shall only be valid if the Improvements for the docks on Lease Site 113W are
completed and final building inspections and a certificate of occupancy, as needed, are obtained by July 1,
2019. The Second Phase Improvements shall be valued at a minimum of $400,000.00 of actual
01181.0024/248458.1 1 of/#, 1�p'Y
construction costs (the "2"d Minimum Construction Costs"), and proof of expenses, as evidenced by copies
of invoices by the proscribed timeline shall be provided to CITY. Failure to timely complete the Second
Phase Improvements and provide invoices evidencing the 2"d Minimum Construction Costs shall be a
material default of this section and void the option for TENANT to exercise the first fifteen -year extension
for completion of the Second Phase Improvements.
If the previous option is not voided as provided above, then TENANT shall have another option to renew
this Lease Agreement for a second additional fifteen (15) years potentially resulting in a fifty-year Lease;
provided, that TENANT completes the Second Phase Improvements in addition to completion of the
landside building improvements on Lease Sites 124-128 and 124W-128W, all as outlined in CUP #UPO-058
by July 1, 2019 (the "Third Phase Improvements"). That option shall only be valid if the Third Phase
Improvements are completed and final building inspections and a certificate of occupancy, as needed, are
obtained by July 1, 2019; provided, that the parties understand and agree TENANT is not responsible to for
completing the pocket park portion of the Third Phase Improvements if CITY exercises the CITY'S Option,
described below in Section 13.06. The Third Phase Improvements shall be valued at a minimum of
$1,000,000.00 of actual construction costs (the "3`d Phase Minimum Construction Costs"), and proof of
expenses, as evidenced by copies of invoices by the proscribed timeline shall be provided to CITY. Failure
to timely complete the Third Phase Improvements and provide invoices evidencing the 31 Minimum
Construction Costs shall be a material default of this section and void the option for TENANT to exercise
second fifteen -year extension for completion of the Third Phase Improvements.
TENANT further agrees to obtain Precise Plan approval of CUP #UPO-058 by December 31, 2015, and
within sixty (60) days will submit to the California Coastal Commission for obtaining Coastal Commission
approval of those plans. Within ninety (90) days after the Coastal Commission's approval TENANT shall
submit working drawings and materials to CITY in order to obtain a CITY Building Permit for construction
of Second and Third Phase Improvements.
It is TENANT's obligation to fully investigate the issues and costs in obtaining all the necessary permits.
Failure to obtain any and all required permits and approvals for the Second and Third Phase
Improvements shall not be a reason for failure to comply with this Section. TENANT further acknowledges
CUP #UPO-058 and construction of the Second and Third Phase Improvements may require repair or
replacement of all of portions of the existing buildings, revetments, access ways, sidewalk, drainage
systems and other current improvements on the Premises to the standards of the City Engineer; and
TENANT agrees to meet those standards through review and revision of final Building Plans prior to
issuance of a Building Permit for the construction of the Second and Third Phase Improvements. TENANT
shall follow the general conditions required under Section 13.01,1-5, during all phases of construction.
SECTION 3. Section 13.06 shall be added to the Lease to read as follows:
Section 13.06 City's Option to Take a Portion of the leasehold for Public Facilities
"CITY shall have the option to remove Lease Site 128 from the Premises for the purpose of building a
public restroom and/or shower facility on Lease Site 128 (the "CITY'S Option"). CITY hereby acknowledges
the area of Lease Site 128 is to be modified under the conditions of CUP #UPO-058 and the Coastal
Commission conditions of CDP 3-08-025 to conform to the area of the "pocket park," as shown in the
exhibits to those permits; and CITY shall take such action as is necessary to modify the area of Lease Site
128 to the contemplated dimensions needed for the public restroom and/or shower facility as a condition
precedent to CITY exercising the CITY'S Option.
CITY may exercise the CITY'S Option only after the expiration (December 31, 2017) of the current sublease
with Mark and Bonnie Tognazinni for Tognazzini's Dockside 3 restaurant, or if terminated earlier by
TENANT or Subtenant, and after TENANT has received all necessary permitting and authorizations for the
01181.0024/24sas8.1 2 of,4 3
improvements required by CITY pursuant to CUP #UPO-058 and the Coastal Commission under CDP 3-08-
025.
After issuance of such permits and authorizations, TENANT shall provide CITY with a minimum of 120-
days' written notification of TENANT's intent to proceed with demolition of existing building on the
Premises. Within 60 days after receiving that notice from TENANT, CITY shall, by written notice delivered
to TENANT, declare CITY's intent to exercise the CITY'S Option and remove the reconfigured Lease Site 128
from the Premises. If no such notice is received from CITY within that 60-day time frame, then the CITY's
right to exercise the CITY'S Option shall be cancelled and of no further force or effect.
CITY shall not take any action or make any application to change the approval status of the Lease Site 128
prior to the exercise of the CITY'S Option nor in anyway interfere with the implementation of CUP #UPO-
058 and CDP 3-08-025. TENANT shall retain the right to build and use a trash/recycle enclosure to
accommodate standard size trash and recycle containers/dumpsters on Lease Site 128, and CITY's design
of a public restroom and/or shower facility shall accommodate said trash enclosure.
Upon completion of all of the improvements contemplated under the permits issued under CUP #UPO-058
and CDP 3-08-025, except for the improvements on Lease Site 128 if CITY exercises the CITY'S Option, CITY
shall issue the appropriate certificates of occupancy, as needed, without the improvements on Lease Site
128 being completed. If the CITY'S Option is exercised, then CITY shall pay any and all costs associated
with the modification of the approvals to Lease Site 128, any further reconfiguration of Lease Site 128, and
any other related development costs associated with exercising the CITY'S Option, excepting demolition of
the existing structure and reconfiguration of the roadway/alleyway, which shall be the responsibility of
and costs shall be borne by TENANT.
SECTION 4. Except as modified herein all terms and conditions of the Lease and the amendments to the Lease
Iiliiw shall remain unchanged and in full force and effect.
IN WITNESS WHEREOF, the parties hereto hereby execute this Amendment.
CITY OF MORRO BAY TENANT-M
ngham,-City Manager
ATTEST:
Dana Swanson, City Clerk
APPROVED AS TO FORM:
W*)k-W
, 1"Oj q).- -
Jo ph W. Pannone, City Attorney
01181.0024/248458.1
Robert J. Fa
MMBS, LLC
3 of�'
Member