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HomeMy WebLinkAboutReso 71-16 89 89W Lease Site 845 Embarcadero (2)RESOLUTION NO. 71-16 RESOLUTION OF THE CITY COUNCIL OF THE CITY OF MORRO BAY, CALIFORNIA APPROVING AMENDMENT #2 TO THE CURRENT LEASE AGREEMENT, APPROVING A NEW 45-YEAR LEASE AGREEMENT, AND APPROVING AN ASSIGNMENT AND ASSUMPTION OF THE LEASE OWNERSHIP FOR LEASE SITE 89/89W LOCATED AT 845 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, James Edmund Smith and Beverly Elder Smith, Trustees of the Smith Family Trust, and Clifford Branch, Trustee of the Clifford Branch Trust (collectively "Tenants") have been the lessees of Lease Site 89/89W since 2006 and are a tenants in good standing; and WHEREAS, City and Tenant wish to resolve the Tenant's contention the City has incorrectly appraised the value of the Lease Site for minimum rent -setting purposes by approving Amendment #2 to the Lease Agreement; and WHEREAS, City and Tenant wish to resolve issues over a failing portion of the seawall on the Lease Site by approving a new 45-year Lease Agreement for Lease Site 89/89W; and WHEREAS, Tenant wishes to assign their interests in Lease Site 89/89W to the Boatyard LLC, a California limited liability company comprised of the same ownership individuals as the current trust ownerships. NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Morro Bay, California, as follows: 1. The attached Amendment #2 to the Lease Agreement for Lease Site 89/89W is hereby approved. 2. The attached new 45-year Lease Agreement for Lease Site 89/89W is hereby approved. 3. The attached Assignment and Assumption Agreement for Lease Site 89/89W is hereby approved. 4. The Mayor is hereby authorized to execute said Amendment #2, 45-year Lease Agreement and Assignment and Assumption Agreement, PASSED AND ADOPTED by the City Council of the City of Morro Bay at a regular meeting thereof held on the 11th day of October, 2016 on the following vote: AYES: Irons, Headding, Johnson, Smukler NOES: None ABSENT: Makowetski ABSTAIN: None J ie L. Irons, Mayor ATTEST: O� a Swan on, City Clerk AMENDMENT #2 TO THE LEASE AGREEMENT FOR LEASE SITE 89/89W, LOCATED AT 845 EMBARCADERO This Amendment 4fw2 ("this Amendment") is made and entered into as of this 11th day of October, 2016, to the Lease Agreement for Lease Site 89/89W (the "Lease Site"). dated November 19, 2001, as amended by that certain Amendment #1 dated December 12, 2005 (collectively, the "Master Lease") by and among the City of Morro Bay, a municipal corporation of the State of California, hereinafter called 'City," and James Edmund Smith and Beverly E. Smith, Trustees of the Smith Family Trust, dated September 13, 2004, and Clifford Branch, Trustee of the Clifford Branch Trust, dated January 11, 2006, hereinafter collectively called "Tenants," as assignees to Josef Steinmann, pursuant to that certain assignment and assumption agreement dated January 27, 2006. WHEREAS, the Master Lease stipulates Tenant was to pay Percentage Rent pay of 3% of Gross Receipts through June 30, 2013 and then 5% through the remainder of the term of the Master Lease; WHEREAS, on July 1, 2013, Tenant commenced paying the 5%; WHEREAS, the Master Lease also stipulates Tenant's base rent is currently calculated at 8% of the last appraised value of the Lease Site: WHEREAS, Tenants now contend the appraised value of the Lease Site is incorrect because the need to repair the seawall on the Lease Site was not considered as part of that appraised value; WHEREAS, to resolve that contention and without any express or implied admission Tenant's contention is correct, City and Tenants desire to reduce the Minimum Rent retroactively commencing June 1, 2016 through the term of the Master Lease and the Percentage Rent commencing October 1, 2016, until October 1, 2036; and WHEREAS, Tenants desire to assign their interests in the Amended Master Lease (as defined below) to BOATYARD, LLC, a California limited liability company; and WHEREAS, Tenants desire to amend the Master Lease to modify the insurance requirement and to allow for certain modification to the Premises. NOW THEREFORE, Tenants and City agree, as follows: 1. The Master Lease, Amendment #1, and Amendment #2 are herein after collectively referred to as the "Amended Master Lease". 2. Unless expressly stated herein, words used in this Amendment #2 shall have the same meaning as stated in the Amended Master Lease, except to the extent the context requires otherwise. 3. Section 2.03 of the Master Lease is hereby amended so that, commencing on June 1, 2016) and for the remainder of the term of the Master Lease, the Minimum Rent shall be calculated at the greater of 6% of the appraised value of the Lease Site, based on the 2004 appraisal the City had prepared for the Lease Site, or 65% of the average of the total yearly Rent payable during the previous five-year period, as set out in paragraph C. of Section 2.03. 01181.0024/314553.2 Page 1 of 3 r 4. Section 2.04 of the Master Lease is hereby amended so that, commencing on October 1, 2016, the Percentage Rent shall be 3% of Gross Receipts until October 1, 2036, 5. City and Tenants agree the Master Lease shall be assigned to and assumed by Boatyard, LLC, a California limited liability company ("Assignee"), pursuant to an assignment and assumption agreement substantially in conformance to Exhibit "A hereof. 6. Notwithstanding anything to the contrary in the Master Lease, Tenants shall, as soon as possible, meet the obligations of Section 7.04 of the Agreement with regard to the insurance of the seawall/revetment; provided, that City shall not hold Tenants in breach and/or default of the Agreement if Lessees are unable to procure such insurance prior to or within sixty (60) days after Completion. 7. Subject to obtaining all required entitlements and permits, City governmental -approvals and other agency governmental -approvals, City, as landlord, agrees Tenants may, pursuant to the Master Lease, make the following tenant improvements to the Premises: (i) install a double exterior door at the west end of Unit C of the Premises, currently occupied by Best Kept Secret, and an exterior door near the front north side of Unit C on the Premises, (ii) install a stone veneer on the building on the Premises and to replace the round windows in front of Unit C and Unit G with square or rectangular windows and (iii) repaint the exterior of the Premises in a medium grey body color and white trim. 8. In addition, one of the two existing unisex public restrooms on the Premises shall be unlocked and open at all times and available to the public during normal business hours of the tenants located on the Premises. The other existing unisex public restroom on the Premises Site shall be open at all times to only the tenants on the Premises, their staff and customers, and each tenant shall have a key to the restroom, which shall be available at the front counter of all the retail stores in the complex. 9. In partial consideration for this Amendment #2, Tenants, on behalf of themselves, their heirs, assigns and successors -in -interest, hereby fully release City and each of its officers, employees and agents from any and all liability, damages, claims, judgements, costs and attorney's fees arising and/or related solely from Tenant's claims for overpayment of rent and assessments filed with the City for alleged inaccurate appraisals. 10. The Amended Master Lease shall automatically terminate, without notice, on the Commencement Date, as defined in that certain new master lease agreement bet�veen City and Boatyard, LLC approved concurrently with this Amendment #2. 11. Except as expressly stated herein, all provisions of the Master Lease shall remain in full force and effect. 12. The effective date of this Amendment #2 is the date first written above. 01181.0024l314553.2 Page 2 of 3 IN WITNESS WHEREOF, the parties hereto have executed this Amendment as of the date written above. CITY OF MORRO BAY By: z• mie L. Irons, M yor APPROVED AS TO FORM: ATTEST: TENANT Smith Family Trust, dated September 13, 2004 Edmund Smith, Trustee one, 6ity Attorney Beverly E. Smith, Trustee �� 11n..-S�►� Dana Swanson, City Clerk Clifford �r�nch Trust, dated January 11, 2006 By: Clifford Branch, Trustee 01181.0024/314553.2 ge3of3 This document is recorded for the benefit of the City of Morro Bay and is exempt from recording fees, pursuant to Government Code Sections 6103 and 27383. RECORDING REQUESTED BY: City of Morro Bay WHEN RECORDED MAIL TO: City of Morro Bay City Attorney 595 Harbor Street Morro Bay, CA 93442 Space above reserved for use of County Recorder ASSIGNMENT AND ASSUMPTION AGREEMENT This Assignment and Assumption Agreement is made and entered into as of the 11 th day of October, 2016, by and among James Edmund Smith and Beverly Elder Smith, Trustees of the Smith Family Trust, dated September 13, 2004 ("Smith Trust"), Clifford Branch, Trustee of the Clifford Branch Trust dated January 11, 2006 ("Branch Trust") (hereinafter referred to as "Assignors") and BOATYARD, LLC, a California limited liability company (hereinafter referred to as "Assignee"). 1. Assignee acknowledges: (i) the City of Morro Bay (the "City") had leased certain premises, known as Morro Bay Lease Site 89/89W, (as further described in Exhibit A) to Josef Steinmann ("Steinmann") under a Lease that commenced on December 1, 2001 (the "Master Lease"), (ii) the Master Lease was amended effective December 12, 2005, by that certain Amendment #1 signed by City and Steinmann ("Amendment #1" ), (iii) the Master Lease and Amendment #1 were assigned by Steinmann to Smith Trust and Branch Trust effective January 1, 2006, and (iv) the Amended Master Lease was further amended effective October 12, 2016, by that certain Amendment #2 signed by City, Smith Trust and Branch Trust ("Amendment #2") (the Master Lease, Amendment #1 and Amendment #2 are hereinafter referred to as the "Current Master Lease"). 2. Assignee acknowledges any assignment of the Current Master Lease is subject to prior approval by the City's City Council and is also subject to prior execution of this Agreement between Assignors and Assignee. 3. On the Effective Date (defined below), Assignee agrees (i) to comply with all the terms and conditions of the Current Master Lease, (ii) to assume all liabilities required under the Current Master Lease and any amendments, (iii) to defend, indemnify and hold harmless the City and its officers, employees and representatives 01181.0024/314554.4 1 Of 3 X from and against, any and all claims, lawsuits, costs and expenses, including reasonable attorney's fees and court costs arising from, or in any way related to the Current Master Lease, in accordance with the terms set forth in the Current Master Lease, and (iv) to maintain liability insurance in the manner, form and amount required by Current Master Lease and any amendments, thereto, with the City, its officers, employees and representatives, included as an additional insureds without offset against the City's insurance. 4. Assignors hereby assign to Assignee all rights, title and interest Assignors has in the Current Master Lease, effective on the Effective Date. The "Effective Date" is the date this instrument is recorded in the Office of the San Luis Obispo County Recorder, if it has been signed on behalf the City, Assignors and Assignee. 5. Assignors confirm to the City Assignors has no actual knowledge or reasonable cause to believe any release of hazardous substance has come to be located on/or beneath the real property during the term of Assignors' occupation of the leased premises that has not been reported pursuant to Health & Safety Code Section 2535978 6. This instrument may be executed in counterparts, each of which shall constitute an original and both of which shall constitute a single instrument. Dated: , 2016 Dated: , 2016 Smith Trust By: By: James Edmund Smith, Trustee Beverly E. Smith, Trustee Branch Trust By: Cliff branch, Trustee 01181.0024/314554.4 2 of 3 The undersigned consents to and accepts, on and after the Effective Date, assignment & assumption of the payment of rent, including all percentage of gross sales rent, and performance of all duties and obligations of tenant as set forth in the Current Master Lease. Dated: 2016 BOATYARD, LLC, a California limited liability company By: Its The City, Lessor named in the Current Master Lease, consents to this Assignment upon the conditions set forth above. The City also consents to the agreement by Assignee to assume, on and after the Effective Date, the payment of rent, including all percentage of gross sales rent, and tenant's performance of all duties and obligations as set forth in the Current Master Lease. This Assignment has been approved by the City's City Council on or prior to the date set forth below. Dated: 01181.0024/314554.4 2016 City of Morro Bay By: Jamie L. Irons, Mayor City of Morro Bay EXHIBIT A LEGAL DESCRIPTION LEASE SITE 89/89W (THE PREMISES IS DELINEATED ON PARCEL MAP OF CITY OF MORRO BAY NO. 68-30, WHICH MAP WAS RECORDED ON OCTOBER 10, 1968, IN BOOK 3, PAGE 10 OF PARCEL MAPS IN THE OFFICE OF THE COUNTY RECORDER, SAN LUIS OBISPO COUNTY, CALIFORNIA. This document is recorded for the benefit of the City of Morro Bay and is exempt from recording fees, pursuant to Government Code Sections 6103 and 27383. RECORDING REQUESTED BY: City of Morro Bay WHEN RECORDED MAIL TO: City of Morro Bay City Attorney 595 Harbor Street Morro Bay. CA 93442 2016054419 Tommy Gong San Luis Obispo - County Clerk -Recorder 10/18/2016 11:49 AM Recorded at the request of: PUBLIC Titles: 1 Pages: 6 Fees: $29.00 Taxes: $$0.00 Total: $29.00 Il��110VAII16NIV11%, I Space above reserved for use of County Recorder ASSIGNMENT AND ASSUMPTION AGREEMENT This Assignment and Assumption Agreement is made and entered into as of the 11`" day of October, 2016, by and among James Edmund Smith and Beverly Elder Smith, Trustees of the Smith Family Trust, dated September 13, 2004 ("Smith Trust"), Clifford Branch, Trustee of the Clifford Branch Trust dated January 11, 2006 ("Branch Trust") (hereinafter referred to as "Assignors") and BOATYARD, LLC, a California limited liability company (hereinafter referred to as "Assignee"). 1. Assignee acknowledges: (i) the City of Morro Bay (the "City") had leased certain premises, known as Morro Bay Lease Site 89/89W, (as further described in Exhibit A) to Josef Steinmaml ("Steinmann") under a Lease that commenced on December 1, 2001 (the "Master Lease"), (ii) the Master Lease was amended effective December 12, 2005, by that certain Amendment # 1 signed by City and Steinmann ("Amendment #1"), (iii) the Master Lease and Amendment #1 were assigned by Steinmann o Smith Trust and Branch Trust effective January 1, 2006, and (iv) the Amended Master Lease was further amended effective October 11, 2016, by that certain Amendment 42 signed by City, Smith Trust and Branch Trust ("Amendment #2") (the Master Lease, Amendment # 1 and Amendment #2 are hereinafter referred to as the "Current Master Lease"). 2. Assignee acknowledges any assignment of the Current Master Lease is subject to prior approval by the City's City Council and is also subject to prior execution of this Agreement between Assignors and Assignee. 3. On the Effective Date (defined below), Assignee agrees (i) to comply with all the terms and conditions of the Current Master Lease, (ii) to assume all liabilities required under the Current Master Lease and any amendments, (iii) to defend, indemnify and hold harmless the City and its officers, employees and representatives 01 181.0024/314554.4 1 of 3 � from and against, any and all claims, lawsuits, costs and expenses, including reasonable attorney's fees and court costs arising from, or in any way related to the Current Master Lease, in accordance with the terms set forth in the Current Master Lease, and (iv) to maintain liability insurance in the manner, form and amount required by Current Master Lease and any amendments, thereto, with the City, its officers, employees and representatives, included as an additional insureds without offset against the City's insurance. 4. Assignors hereby assign to Assignee all rights, title and interest Assignors has in the Current Master Lease. effective on the Effective Date. The "Effective Date" is the date this instrument is recorded in the Office of the San Luis Obispo County Recorder, if it has been signed on behalf the City, Assignors and Assignee. 5. Assignors confirm to the City Assignors has no actual knowledge or reasonable cause to believe any release of hazardous substance has come to be located on/or beneath the real property during the term of Assignors' occupation of the leased premises that has not been reported pursuant to Health & Safety Code Section 253597. 6. This instrument may be executed in counterparts, each of which shall constitute an original and both of which shall constitute a single instrument. Dated: o 12016 Dated: /D � , 2016 01 181.0024/314554.4 Smith Family Trust, dated September 13, 2004 By: J�>�i- s Edmund Smith, Trustee Beverly E. Smith, Trustee Clifford Branch Trust, dated January 11, 2006 By: , Clifford Branch, Trustee The undersigned consents to and accepts, on and after the Effective Date, assignment & assumption of the payment of rent, including all percentage of gross sales rent, and performance of all duties and obligations of tenant as set forth in the Current Master Lease. BOATYAD, LLC, a California limited liability c pany Dated: 140S 2016 By: Its The City, Lessor named in the Current Master Lease,. consents to this Assignment upon the conditions set forth above. The City also consents to the agreement by Assignee to assume, on and after the Effective Date, the payment of rent, including all percentage of gross sales rent, and tenant's performance of all duties and obligations as set forth in the C u r r e n t Master Lease. This Assignment has been approved by the City's City Council on or prior to the date set forth below. Dated: n �' l 01181.0024/314554.4 2016 City of Morro Bay By: �mie L. Irons, Mayor City of Morro Bay EXHIBIT A LEGAL DESCRIPTION LEASE SITE 89/89W (THE PREMISES IS DELINEATED ON PARCEL MAP OF CITY OF MORRO BAY NO. 68-30, WHICH MAP WAS RECORDED ON OCTOBER 10, 1968, IN BOOK 3, PAGE 10 OF PARCEL MAPS IN THE OFFICE OF THE COUNTY RECORDER, SAN LUIS OBISPO COUNTY, CALIFORNIA. A notary public or other officer completing this certificate verifies only the identity of the individual who signed the document to which this certificate is attached, and not the truthfulness, accuracy, or validity of that document. STATE OF CALIFORNIA ) COUNTY OF On /l� �i� , before me, % a4&./ ?�� ��� , a Notary Public, personally appeared%'� j�rrr��l% 7s € 5. f=v�-.�y, , o proved to me on the basis of satisfactory evidence to be the person(s) whose name(s) is/are subscribed to the within instrument, and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument. I certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing paragraph is true and correct. WITNESS my hand and official seal. PAUL B. PARKER Commission � 2082148 -. Notary Public - California San Luis Obispo County My Comm. Expires Oct 16, 2( Notary A notary public or other officer completing this certificate verifies only the identity of the individual who signed the document to which this certificate is attached, and not the truthfulness, accuracy, or validity of that document. State of California County of sG�n I,v�s �5isn� ) On t 1 . Zo t before me, Date personally appeared 1 Here Insert Name and Title ol'the Officer Names) of Signers) who proved to me on the basis of satisfactory evidence to be the person whose name is/�►'e subscribed to the within instrument and acknowledged to me that he/sl 6/thq executed thd same in his/Ver/their authorized capacity(i s), and that by his/her/thgir signature(M on the instrument the person(a), or the entity upon behalf of which the person(4 acted, executed the instrument. I certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing paragraph is true and correct. WITNESS my hand and official seal. Commission #� 2092016 — Notuy Public - CalHornia s;an Luis Obispo County g Signature Mb y� Signature of Notary Public Place Notary Seal Above OPTIONAL Though this section is optional, completing this information can deter alteration of the document or fraudulent reattachment of this form to an unintended document. De scription of Attached Document Title or Type of Document: Number of Pages: Document Date: Signers) Other Than Named Above: Capacity(ies) Claimed by Signers) Signer's Name: ❑ Corporate Officer — Title(s): :]Partner — El Limited El General ❑ Individual El Attorney in Fact ❑ Trustee El Guardian or Conservator ❑ Other: Signer Is Representing: Signer's Name: ❑ Corporate Officer — Title(s): ❑ Partner — ElLimited ❑ General ❑ Individual ❑ Attorney in Fact ❑ Trustee ❑ Guardian or Conservator ❑ Other: Signer Is Representing: ©2014 National Notary Association • www.NationalNotary.org • 1-800-US NOTARY (1-800-876-6827) Item #5907 END OF DOCUMENT