HomeMy WebLinkAboutReso 58-18 Amend 2 845 Embarcadero 89-89WRESOLUTION NO. 58-18
RESOLUTION OF THE CITY COUNCIL
OF THE CITY OF MORRO BAY, CALIFORNIA,
APPROVING AMENDMENT NO. 2 TO THE
NEW MASTER LEASE AGREEMENT
FOR LEASE SITE 89/89W, LOCATED AT 845 EMBARCADERO
THE CITY COUNCIL
City of Morro Bay, California
WHEREAS, the City of Morro Bay ("City") is the lessor of certain properties on the Morro Bay
Waterfront described as City Tidelands leases and properties; and
WHEREAS, Boatyard LLC ("Tenant") has been the lessee of Lease Site 89/89W since 2006
and is a tenant in good standing; and
WHEREAS, on October 11, 2016, Tenant and City entered into that certain new master lease
agreement for the Lease Site (the "New Master Lease Agreement"); and
WHEREAS, City and Tenant wish to resolve issues over a failing portion of the seawall on the
Lease Site and modify various provisions of the New Master Lease Agreement, including the
contingency provisions, by approving Amendment No. 2 of the New Master Lease Agreement for the
Lease Site,
NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Morro Bay,
California, as follows:
1. The attached Amendment No. 2 to the New Master Lease Agreement for Lease Site
89/89vv is hereby approved.
2. The Mayor is hereby authorized to execute said Amendment No. 2.
PASSED AND ADOPTED by the City Council of the City of Morro Bay at a regular
meeting thereof held on the 10th day of JUIy, 2018 on the following vote:
AYES: Irons, Davis, Makowetski, McPherson
NOES: None
ABSENT: Headding
ATTEST \
IN
na Swanson, City Clerk
LEASE SITE • • LOCATED
i` AT 845 a,,) i}
This Amendment ("Amendment #2") is made and entered into as %J this day of
2018, by and among the City of Morro Bay, a municipal corporation of the
State of California, hereinafter called "City," and Boatyard, LLC, a California limited
liability company, hereinafter called "Tenant." (Collectively, City and Tenant are
sometimes referred to herein as the "Parties.")
WHEREAS, this Amendment #2 is to that certain Lease, which was signed on behalf of
the Parties and is effective as of October 11, 2016 (the "Master Lease") and that
certain Amendment #1 dated December 12, 2017;
WHEREAS, the California Coastal Commission has indicated that as part of the
approval process of the Rehabilitation Project, they will likely require a two (2) foot
expansion in the width of a section of the Harbor Walk on Premises (the "CCC
Additional Condition");
WHEREAS, due solely to the CCC Additional Condition, without waiving any rights or
contingencies, the parties do not believe that all Permits can reasonably be obtained
without material design and/or structural change required to the Rehabilitation Project
on or before October 31, 2018;
WHEREAS, Tenant and Joseph Steinmann ("Steinmann") and Jaime Parker ("J.
Parker") entered into escrows for Tenant to purchase the Otter Rock Cafe and the
Otter Rock Cafe leasehold interest for Lease Site 90/90W;
WHEREAS, Tenant and Steinmann and J. Parker are negotiating an extension of the
closing date of both the Otter Rock Cafe and the Otter Rock Cafe leasehold interest far
Lease Site 90/90W to on or before October 31, 2018;
WHEREAS, Tenant and Willow Market, LLC a California limited liability company
("Willow Market"), are in negotiations to enter into a sublease with an option to
purchase the lease for Lease Site 90 (does not include Lease Site 90W), if and when
Tenant closes the Otter Rock Cafe escrow and the Otter Rock Cafe leasehold interest
with Steinmann and J. Parker;
WHEREAS, before Willow Market will enter into any sublease with Tenant, Willow
Market is requiring as a condition precedent that all necessary governmental permits
will be obtained for the Rehabilitation Project(s);
WHEREAS, City and Tenant agree the CCC Additional Condition allows Tenant, at
Tenant's option, to terminate the Master Lease, but rather than exercise that right of
termination, Tenant has proposed changes to the Master Lease; and
WHEREAS, the Parties desire to amend the Master Lease so the Rehabilitation Project
will proceed.
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1. Unless expressly stated herein, words used in this Amendment 42. shall have
the same meaning as stated in the Master Lease and Amendment #1, except
to the extent the context requires otherwise.
2. The foregoing recitals are incorporated into this Amendment #2 as true and
correct.
3. The Parties acknowledge and agree the Current Lease Agreement and all of
the terms and conditions of the Current Lease Agreement are in full force and
effect, including but not limited to the tolling period to bring any claim or action
until the Commencement Date of the Master Lease.
4. If the California Coastal Commission requires CCC Additional Condition, then
the parties agree to modify the plans for the Rehabilitation Project, attached as
Exhibit B to Amendment #1 by replacing in its entirety Sheet 3 of the plans for
the Rehabilitation Project with the new Sheet 3 attached hereto as Schedule
"111; and such modification shall be considered minor by City and City's
Community Development Director shall authorize such modification, pursuant
to the authority set forth in the Morro Bay Municipal Code,
5. The first paragraph of Section 1.02 of Amendment #1 is hereby amended and
restated in its entirety to read as follows:
Section 1.02 Lease Contingency.
TENANT shall have the right to give CITY written notice of termination of this
Lease, if, (i) all Permits (as defined in Subdivision 13.03 A.) cannot be
obtained without any material design and/or structural change required to
the Rehabilitation Project (excluding a potential two (2) foot wide expansion
of the Harbor Walk on the Premises) on or before October 31, 2018; and/or
(ii) the seawall/revetment on Lease Site 89/89W has collapsed prior to
TENANT'S contractor's commencement of the Rehabilitation Project for the
repair of the seawall/revetment to the extent a material design and/or
structural change is then required to repair the seawall/revetment; and/or (iii)
TENANT does not close the escrow for the purchase of the Otter Rock Cafe
and/or escrow for the purchase of the leasehold interest for Lease Site
90/90W with Steinmann and J. Parker; and/or (iv) if CITY'S Harbor Director
has not approved Willow Market as the sublessee of the lease for Lease Site
90 (excluding Lease Site 90" within three weeks after CITY'S Harbor
Director has received from TENANT and/or Willow Market:
(a) a completed CITY application
payment of the applicable fee,
(b) a copy of the final version of
for sublease approvalincluding
,
the proposed sublease between
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TENANT and Willow Market,
(c) proof of Willow Market's
by CITY, and
(d) proof of Willow Market'
endorsement naming CITY
additionally insureds,
s
business tax certificate having been issued
general liability insurance, including an
and its officers, employees and agents as
upon the occurrence of any of those contingencies, TENANT may deliver
written notice to CITY of termination of this Lease, and neither Party shall
have any further obligation to the other Party and this Lease shall be null and
void, and the Current Lease Agreement shall continue in full force and effect.
The parties agree, prior to the effective date of this Amendment a timely
application has been filed with City and with the California Coastal
Commission.
6. Section 2.07 Amendment #1 is hereby amended and restated in its entirety to
read as follows:
In partial consideration of completion of the Rehabilitation Project and
Release, established by Section 7.11 and changes made to Section 1.02
and Subdivision 13.03 A. by that certain Amendment #1 to this Lease,
effective December 12, 2017, CITY agrees to credit against each semi-
annual payment of both the Minimum Rent and Percentage Rent, as
reconciled annually and as otherwise due to CITY pursuant to this Lease,
$24,650 for twenty consecutive semi-annual payments due to CITY,
commencing with the first full semi-annual payment due after the
Commencement Date. Notwithstanding anything in this paragraph above, if
the foregoing credit is greater than the total amount of the Minimum Rent
and Percentage Rent that TENANT owes CITY during any annual reconciled
period from July 1st to June 30th, the Parties agree that the excess credit
shall not be refunded or carried over as a credit for any subsequent July 1st
to June 30th period. For illustration purposes only, attached hereto is
Schedule "2" that shows an example of how the semi-annual credits shall be
applied on the City's current Annual Report of Gross Receipts form.
7. If Willow Market and/or Smith Livestock LLC, or any entity owned by Sonny
Smith exercises any option to purchase the lease for Lease Site 907 then City and
Tenant agree to amend the Master Lease to add Lease Site 90W to Lease Site
89/89W as part of the definition of the "Premises,"
8. On or before. January 1, 2020, City agrees to remove or cause to be removed
from the Premises the portion of the Off the Hook deck encroaching on and
across the lot line between the Premises and the Off the Hook.
9. Except as expressly stated herein, all provisions of the Master Lease and
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Amendment #1 shall remain in full force and effect.
10. The effective date of this Amendment #2 is the date first written above.
IN WITNESS WHEREOF, the parties hereto have executed this Amendment #2 as of the
date written above.
CITY OF MORRO BAY
By:
ie L. Irons, Mayor
APPROVED AS TO FORM:
Joseph W. Pannone, City Attorney
ATTEST:
Dana Swanson, City Clerk
BOATYARD, LLC
By:
Cliff Branch, Manager
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