HomeMy WebLinkAbout03/22/1965 Item #I-1a;3
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TO: CITY COUNCIL
FROM: ACTING CITY MANAGER
SUBJECT: BEACON BAY LEASE AUDIT
MARCH 22, 1965
c _ S a S-
J, I
THE BEACON BAY LEASE ENTERED INTO BY THE CITY AND J. A- BEEK ON
JANUARY I, 1950, TO RUN THROUGH DECEMBER 31, 1987, PROVIDES FOR THE FOLLOWING:
"WESTERLY PORTION" TO BE USED FOR RESIDENTIAL PURPOSES WITH AN
ANNUAL RENTAL OF $600.00 PLUS 5% OF GROSS RECEIPTS FOR THE FIRST 13 YEARS.
"EASTERLY PORTION" FOR INDUSTRIAL USES, CONSTRUCTION AND MAINTENANCE OF WHARVES,
DOCKS AND PIERS WITH AN ANNUAL RENTAL OF $350.00 PLUS 1% OF GROSS RECEIPTS
FOR THE FIRST 13 YEARS. IN ADDITION TO THE ABOVE RENTS, LESSEE WAS TO PAY
$1,000..00 ANNUALLY FOR THE FIRST 13 YEARS. FOR THE LAST 25 YEARS OF THE TERM,
BEGINNING IN 1963, THE CITY IS ENTITLED TO 33 -1/3% OF ALL GROSS RECEIPTS ONLY.
THE SUMMARY OF THE LEASE STATED. ABOVE .SHOULD CLARIFY THE COMPUTATION
OF LEASE RENTAL SCHEDULE SUBMITTED BY THE CITY'S AUDITORS. THE CITY RECEIVED
THE RENT ON BOTH THE WESTERLY AND EASTERLY PORTIONS, THE ADDITIONAL $I,ODO.00,
PLUS THE PERCENTAGE OF GROSS RECEIPTS EVERY YEAR THROUGH 1962. IN 1963 AND
1964 THE CITY RECEIVED 33 -1/3% OF MR. BEEKS'S GROSS RECEIPTS.
THE $1,094.11 BALANCE DUE THE CITY IS A RESULT OF PROPERTY TRANSFER
FEES PAID MR. BEEK BUT NOT REPORTED AS RECEIPTS. MR. BEEK RUNS A CHECK ON
BUYERS TO DETERMINE THEIR DESIRABILITY, AND FOR THIS HE RECEIVED 2% OF THE GROSS
SELLING PRICE OF THE HOME.
IN 1962 A GREAT NUMBER OF SUB LEASES EXPIRED AND SINCE THE FIRST
AND LAST YEARS' RENTS WERE PAID IN ADVANCEjTHIS RESULTED IN ONLY $4,355.00 GROSS
RECEIPTS FOR THAT YEAR.
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CEPIt FIED PUBLIC ACCOUNTANTS
NEWPORT BEACH, CALIFORNIA 92660
TFIEP,,C,IF 613.68 2 Ai EA ::]L5: /n
January 29, 1965
To the Honorable City Council
of Newport Beach, California
Gentlemen:
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We have examined the accompanying Computation of Lease Rental from the
property commonly known as Beacon Bay for the years 1950 through 1964. Our
examination was made to determine the ar,ount of rent receivable by the City for
these years as defined in the lease agreement dated January 9, 1950 between the
City of Newport Beach, lessor, and J, A. Beek, Carroll B. Beek, Barton Beek, and
Joseph Allen Beek, Jr., jointly as lessee. Our examination was made in accord-
ance with generally accepted auditing standards, and accordingly included such
tests of the lessee's accounting records and such other auditing procedures as
we considered necessary in the circumstances.
Rental payments under the terms of the lease are based, in part, upon the
gross receipts to the lessee from the leasel premises. The lease includes a
requirement that any sublease of the devised premises shall contain a provision
providing for periodic readjustment of rentals in accordance with a commodity
index such as the U,S. Bureau of Labor Statistics Cost of Living Index. Our
test of the subleases indicated that they contained such a provision, however,
no adjustment of rentals has been made thereunder.
In our opinion the accompanying schedule presents fairly the gross receipts
of the lessee from the leased property and the amounts of rent due to the City
of Newport Beach in accordance with the terms of the lease.
C
Yours very truly,
Year
1950
1951
1952
1953
1954
1955
1956
1957
1958
1959
1960
1961
1962
1963
1964
BEACON BAY LEASE
COMPUTATION OF LEASE RENTAL
FOR THE YEARS 1950 THROUGH 1964
Westerly portion Easterly portion
Annual
rent
$600.00
600.00
600.00
600.00
600.00
600,00
600.00
600.00
600.00
600,00
600.00
600.00
600.00
�
Percentage
rent
(See below)
$617.70
378.95
776.65
539.70
793.45
903050
689.95
975.10
574005
626.00
694.00
811.75
217.75
6,800.83
3,921.33
$19,325.71
Annual
rent
$350.00
350.00
350.00
350.00
350.00
350.00
350.00
350.00
350.00
350.00
350.00
350.00
350.00
$4,550.00
Percentage
rent
(See below)
$487.50
450.00
450.00
450.00
450.00
450.00
450.00
450,00
450.00
450.00
450.00
450.00
450.00
2,000.00
2,000.00
$9,887_50
Addi -
tional Total
annual rent
rent due
$1,000.00 $3,055.20
1,000.00 2,778.95
1,000.00 3,176.65
1,000.00 2,939.70
1,000.00 3,193.45
1,000 no 3,308.50
1,000.00 3,089.95
1,000.00 3,375.10
1,000,00 2,974,05
1,000.00 3,026.00
1,000.00 3,094.00
1,000.00 3,211.75
1,000.00 2,617.75
8,800.83
5,921.33
$13,000.00 $541563.21
COMPUTATION OF PERCENTAGE RENT
Westerly portion
Gross 5 33 1/3 7
Year receipts rent rent
1950
1951
1952
1953
1954
1955
1956
1957
1958
1959
1960
1961
1962
1963
1964
$12,353.94
$617.70
received
7,-.78.98
by City
378.95
$3,055.20
1i,�32.99
776.65
6000,00
10,794.00
2,781.24
539.70
$395.41
13,869.00
6,000.00
793.45
3,037.45
18,170.00
156.00
908.50
6,000.00
13,799.00
3,169.10
689.95
(79.15)
19,502.00
6,000.00
975.10
2,979.00
11,481.00
(4.95)
574.05
6,000.00
12,520.00
3,094.00
626.00
13,880.00
6,000.00
694.00
2,451.25
16,235.00
166.50
811.75
4,355.00
5,921.33
217.75
20,402.50
11,764.00
$204,237.41
NOTE - According to
percentage
provisions
Rent
7 1/2 7 33 1/3 7.
received
Balance
by City
due
$3,055.20
6,000.00
2,778.95
6000,00
2,781.24
6,,000.00
$395.41
2,939.70
6,000.00
3,037.45
6,000.00
156.00
2,843.25
6,000.00
465.25
3,169.10
6,000.00
(79.15)
3,380.05
6,000.00
(4.95;
2,979.00
6,000.00
(4.95)
3,026.00
6,000.00
3,094.00
6,000.00
3,211.75
6,000.00
2,451.25
166.50
8,800.83
5,921.33
$53,469.10 $IL094.11
Easterly portion
Gross
7 1/2 7 33 1/3 7.
receipts
rent rent
$6,500.00
$487.50
6,000.00
450.00
6000,00
450.00
6,,000.00
450.00
6,000.00
450.00
6,000.00
450.00
6,000.00
450.00
6,000.00
450.00
6,000.00
450.00
6,000.00
450.00
6,000.00
450.00
6,000.00
450.00
6,000.00
450.00
$6,800.83 6,000.00 $2,000.00
3,921.33 6,000.00 2,000.00
$8,603.55 $10L22.16 $90,_500.00 $51887.50 $4 000.00
the provisions of the lease, commencing in 1963 the
rentals were increased to 33 1/3 percent with no
for minimum rents.