HomeMy WebLinkAboutSS2 - Balboa Village TheaterCITY OF
NEWPORT BEACH
City Council Staff Report
March 11. 2014
Study Session Agenda Item No. 2.
TO: HONORABLE MAYOR AND MEMBERS OF THE CITY COUNCIL
FROM: Dave Kiff, City Manager — (949) 644 -3002, dkiff @newportbeachca.gov
PREPARED BY: Dave Kiff, City Manager
TITLE: Balboa Village Theater - Lease Amendment, Contribution (4:35 p.m.)
ABSTRACT:
Supporters of the Balboa Village Theater have asked the City to amend its current lease with the City
and have the City participate with up to $2 million to improve the Theater to a level at which it can open.
In exchange, the Theater's Foundation would raise $2 million for tenant improvements, A/V equipment,
and enough resources to begin operations.
RECOMMENDATION:
Discuss and provide direction for a Council action later on the evening of March 11, 2014
FUNDING REQUIREMENTS:
If the Foundation's request is approved, the City would allocate $2 million towards the Theater's
construction and possibly an additional cost for Construction Management.
DISCUSSION:
Brief History. The Balboa Theater is located at 707 East Balboa Boulevard, and operated as a theater
as far back as 1928. The Theater closed in 1992.
In an effort to revitalize the Balboa Village area, the City worked with the then - formed Theater
Foundation to have the City purchase the Theater for $480,000 in October 1998 using Community
Development Block Grant (CDBG) funds. The City entered into a lease with the Balboa Performing
Arts Theater Foundation in November 1998 to manage and operate the Theater. The lease was
amended three times to reduce the insurance requirement and to allow more latitude in the historical
accuracy of the Theater's rehabilitation (current version of the lease provided as Attachment A).
Later, the City contributed $175,000 to assist the Theater Foundation to complete plans for a large -
scale renovation. The estimated cost of the renovation at the time (2011) was $4.8 million. To pay for
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the renovation, the Foundation intended to use $800K from cash on hand as well as $41M in donations
from large donor givers. At the time of a Council presentation about the renovation (September 2011),
the Foundation hoped to begin construction within a few months.
Today, a new Foundation Board has asked the Council consider a new plan and direction - this is:
• An exterior remodeling project that is smaller in scope — that portion (exterior) estimated at $2M and
funded by the City. The project would restore and improve the shell of the building, with some
tenant improvements (seating) as well as theater -ready lighting and sound.
• A 50 -year lease with the City.
• Rent back to the City would be 2.5% of ticket revenue.
• The Foundation would raise and hold on deposit $2M for tenant improvements, the sound /lighting,
enough to cover Year 1 Operations, and "adequate reserves to support the initial years of the
Theater's operations."
• Only when the Foundation's $2M was raised and set aside would the City's $2M be used.
• The Foundation's $2M would be in addition to $400,000 that is in hand today.
• The Foundation would provide a "fully articulated business plan authored by a ... firm that supports to
the City's satisfaction the successful operation of the theater over time."
Foundation notes that the City "would be responsible for funding the design and construction of the
shell so the building is 'tenant ready' ... " It is not certain what this entails, and whether, should the City
hire a construction management firm to do the work, the CM's costs are included in the $2M. Given the
significant CIP program underway at Public Works, it is not likely that the City can manage this project
with existing resources.
For more information about the Foundation's proposal, please see Attachment B. Representatives of
the Foundation, including Mr. Steve Beazley and Mr. Don Hecht, will attend the Study Session to speak
more about this proposal.
ENVIRONMENTAL REVIEW:
CEQA work has been completed on the Theater project, and permits (including a Coastal Development
Permit and a building permit for a previous design) have been issued.
NOTICING:
Noticed according to the Brown Act (at least 72 hours in advance of the meeting).
ATTACHMENTS:
Name:
Attachment A - Current Lease.odf
❑ Letter from Foundation to Mike Henn - 1- 20- 2014.odf
Description:
Attachment A - Current Lease
Attachment B - Letter from Foundation to Mike Henn
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RECORDING REQUESTED AND
WHEN RECORDED RETURN TO:
City Clerk's Office
City of Newport Beach
3300 Newport Boulevard
P.O. Box 1768
Newport Beach, CA 92658 -8915
Space above this line for Recorder's use only.
Exempt Recording Request per Government Code Section 27383
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AMENDED AND RESTATED LEASE BY AND BETWEEN
THE CITY OF NEWPORT BEACH AND THE BALBOA PERFORMING ARTS
THEATER FOUNDATION
This Amended and Restated Lease ( "Lease "), entered into as of September _
2011 ( "Effective Date ")•by and between the City of Newport Beach, a charter city and
municipal corporation ( "Lessor ") and the Balboa Performing Arts Theater Foundation, a
California non - profit public benefit corporation ( "Lessee "), is made with reference to the
following:
RECITALS
A. Lessor is the owner of the property, structures and improvements,
commonly known as the Balboa Theater located at 707 East Balboa Blvd
in the City of Newport Beach ( "Property") as depicted in the attached
Exhibit "A ", which is incorporated herein by reference.
B. Lessor purchased the Property with Community Development Block Grant
( "CDBG ") funds ( "Federal Funds ") from the United States Department of
Housing and Urban Development. The Federal Funds were granted
pursuant to Title 1 of the Housing and Community Development Act of
1974 (42 U.S.C. 5301 et. seq.) as amended ( "Act ") and the Regulations of
24 C.F.R. Section 570 et. seq. ( "Regulations ").
C. The Federal Funds were granted to Lessor, in part, to benefit low income
residents and households in the vicinity of the Property and to revitalize
the economy in the primary commercial area that serves these residents.
D. Lessee is a non - profit corporation organized pursuant to and in
compliance with the provisions of California law and is presently in good
standing. Lessee was organized by, and its members include, individuals
who reside in an around the Property and the area to be benefited by the
use of the Federal Funds.
E. The City Council of the City of Newport Beach ( "City Council') has
determined that this Lease and the use of the Property as a theater is
consistent with the City Charter, the Newport Beach General Plan and
Zoning Ordinance and all other applicable Federal, State and local laws.
F. The City Council has also determined that this Lease will benefit, and
serve the interests of, the low income residents and business owners in
the area for which the Federal Funds were granted.
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G. An original Lease was entered into as of November 23, 1998, and was
amended on September 27, 1999, December 13, 1999, and December
12, 2000, and as amended and restated on September 14, 2004
(collectively "Original Lease').
H. This Lease replaces the Original Lease, and represents the parties' full
agreement with regard to the Property.
NOW, THEREFORE, in consideration of the terms, covenants and conditions in
this Lease, Lessor and Lessee hereby agree as follows:
ARTICLE 1 SUBJECT OF LEASE
1.1 Purpose of the Lease
The purpose of this Lease is to require Lessee to renovate and rehabilitate the
Property and, subsequent to renovation, require Lessee to operate a first class
community multi -use theater as contemplated in Section 7.1. The renovation and
operation of the theater is intended to serve the needs and interests of the
residents and business owners in the area to be benefited through the use of the
Federal Funds.
1.2 The Propert y
The term "Property' includes the land described in Exhibit A and depicted in
Exhibit B as well as the structure(s), any improvements, and personal property
thereto.
1.3 Lessor
Lessor is the City of Newport Beach, a Charter City and municipal corporation.
The principal office of Lessor is located at City Hall, 3300 Newport Boulevard,
Newport Beach, California 92658 -8915. For the purposes of this Lease, the.term
"Lessor" shall include all officers, employees, agents or representatives of
Lessor.
1.4 Lessee
Lessee is the Balboa Performing Arts Theater Foundation. Lessee is a California
non - profit public benefit corporation organized for the purpose of renovating,
operating and maintaining the Theater and engaging in activities that will, among
other things, serve the interests of, and benefit, the area commonly known as
Central Balboa or Balboa Village.
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1.5 Termination of Original Lease
The Original Lease shall terminate and be of no further affect upon the execution
of this Lease by the parties.
ARTICLE 2 LEASE OF PROPERTY
2.1 Lease of Property
Lessor leases the Property to Lessee, and Lessee leases the Property from
Lessor for the Term (as defined in Section 4.1 below) and pursuant to the terms,
provisions, covenants and conditions of this Lease. Lessor reserves all rights to
substances below the surface of the Property and the right to produce or take
any of those substances so long as the activities do not impair or interfere with
the purpose of this Lease.
2.2 Condition of Title
The Property is leased subject to the permitted exceptions (Exhibit C) and other
matters affecting title which do not inhibit, prevent or impair the purpose of this
Lease.
ARTICLE 3 POSSESSION OF PROPERTY
3.1 Quiet Enioyment
Lessee shall be entitled to peaceably and quietly use and enjoy the Property for
the Term, without .hindrance or interruption by Lessor, except for the exercise of
Lessor's rights pursuant to this Lease. Lessor shall not be liable in damages or
otherwise, because of the interruption or termination of any service provided by
Lessor (such as, water or sewer service), or a termination, interruption or
disturbance of any service attributable to any act or omission of Lessee.
3.2 Condition of Property
Lessee has investigated and researched all physical conditions :of the Property
that could affect Lessee's use, enjoyment and improvement of the Property
including soil conditions, the condition of structures, and the condition of utilities.
By execution of this Lease, Lessee shall be deemed to have accepted the
Property in an "AS IS" condition. Lessor has provided Lessee with a report that
confirms the presence of lead -based paint on the Property and .Lessee
acknowledges that substantial improvements, including seismic retrofit and
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remediation of the lead -based paint, will be necessary before the Property can be
operated as a first -class community theater as required by this Lease.
3.3 Ownership of Improvements
During the Term of this Lease, Lessee shall hold title to the improvements and
personal property necessary or convenient to the operation or maintenance of
the theater, such as fixtures, machinery, rigging, lighting, staging, merchandise,
trade fixtures (collectively, "Equipment ") that have been constructed or placed on
the Property. Title to the Equipment shall automatically pass to the Lessor at the
expiration or termination of this Lease as provided in Section 3.4.
3.4 Surrender of Property
3.4.1 On expiration of the Term or termination of this Lease, Lessee shall
peaceably and quietly leave and surrender the Property and
Equipment to Lessor, in good order, condition and repair,
reasonable wear and tear and obsolescence excepted. Lessee
shall deliver to Lessor all contracts, agreements, books, records,
and other documents related to the operation, maintenance or use
of the Property.
3.4.2 Upon the expiration of the Term or termination of this Lease and
within ten (10) days of a written request by Lessor, Lessee shall
immediately deliver to Lessor the following:
(i) Documents reasonably necessary for Lessor's ownership of the
Property and Equipment to be clearly reflected of record.
(ii) Title insurance, surety bond, or other assurances reasonably
acceptable to Lessor insuring Lessor against all claims and liens
against the Property other than those incurred by Lessor or
accepted by Lessor in writing.
(iii) All plans, surveys, permits and other documents relating to the
Property as may be in the possession of Lessee at the time.
3.4.3 All documents and instruments to be delivered pursuant to this
subsection shall be in a form satisfactory to Lessor.
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ARTICLE 4 TERWOPTION TO PURCHASE
4.1 Duration and Commencement
The Term of this Lease shall commence on the Effective Date and shall expire
on the fiftieth (50th) anniversary subject to early termination or Lessee's exercise
of the option to purchase as provided in Section 4.3.
4.2 Option to Extend
Any extension of this Lease, and the terms and conditions of the extension, shall
be at Lessor's option, in its sole and absolute discretion.
4.3 Option to Purchase
Lessee shall have the option to purchase the Property subject to satisfaction of
the following:
4.3.1 Lessee shall have completed the Required Improvements (as
defined in Section 8.1); and
4.3.2 Lessee shall have operated the theater in full compliance with the
provisions of Article 7 for a period of five (5) years; and
4.3.3 Lessee has given Lessor thirty (30) days written notice of its
intention (notice of intent) to exercise the option to purchase; and
4.3.4 Lessee is not in default in any of the terms of this Lease when the
notice of intent is served and /or at close of escrow: and
4.3.5 Lessee, within fifteen (15) days after service of the notice of intent,
opens an escrow for the purchase of the Property and deposits ten
percent (10 %) of the purchase price into escrow.
4.3.6 Lessee may only use the Property for the permitted uses
contemplated in Section 7.1. At the time of transfer Lessee shall
record a deed restriction against the Property limiting its use to the
permitted uses in Section 7.1. The deed restriction shall include a
reversion clause providing that if Lessee uses or attempts to use
the Property for any use not contemplated in Section 7.1 the
Property shall automatically revert to the Lessor, without any
consideration due to Lessee.
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4.4 Option - Purchase Price
The purchase price of the Property shall be the sum of (1) the price paid by
Lessor ($480,000) and (2) an amount equal to $480,000 multiplied by the
cumulative percentage increase in the Consumer Price Index (All Urban
Consumers — Los Angeles, Anaheim Riverside — All Items) from the Effective
Date of the Original Lease (November 23, 1998) to the date of the Notice of
Intent. For example, if Lessee exercises the option nine (9) years after the
Effective Date of the Original Lease and the increase in the CPI during that
period is thirty percent (30 %), the purchase price would be $624,000. ($480,000
plus $144,000)
4.5 Right of First Refusal
Lessee shall have the right of first refusal to purchase the Property prior to the
sale to any third party. Lessor shall give Lessee sixty (60) days written notice of
its intent to sell the Property and Lessee's right to purchase during that period.
Lessee shall exercise the option by serving Lessor with written Notice of Intent to
purchase within sixty (60) days after receipt of the notice of intent to sell and
complying with Subsection 4.3.5. The purchase price for the Property shall be as
specified in Section 4.4.
For purposes of clarity, if the Property is sold at any time during the Term to a
third party, the option to purchase the Property (on the terms set forth in Sections
4.3 and 4.4) shall remain in full force and effect, shall not be affected by such
sale, and shall be binding upon such purchaser. If requested by Lessee, Lessor
agrees to execute, acknowledge, and deliver a Memorandum of Lease, in form
mutually acceptable to Lessor and Lessee, which shall include, among other
provisions, disclosure of Lessee's option to purchase the Property and its right of
first refusal.
ARTICLE 5 RENTICONSIDERATION
5.1 No Money Payable by Lessee
Lessee shall not pay money as rent to Lessor.
5.2 Other Consideration
In consideration for this Lease, Lessee covenants that, during the Term, it will:
5.2.1 Operate and maintain a first class community multi -use
Theater on the Property in full compliance with the terms and
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conditions of this Lease and at no cost to Lessor.
5.2.2 Maintain its non - profit status.
5.23 Construct the Required Improvements in accordance with the
provisions of Article 8 and maintain the Property in accordance with
this Lease at no cost to Lessor.
5.2.4 Defend, indemnify and hold Lessor harmless with
respect to the renovation, use, maintenance and operation of the
Property.
5.2.5 Use any excess revenue or funds for purposes related to the
operation of the theater or the revitalization of Central
Balboa /Balboa Village. The term "excess revenue or funds" means
any revenue or funds (other than the principal and interest of the
Capital Campaign Fund) in excess of the amount projected in
Lessee's then current Budget and which, in Lessee's reasonable
determination, are not needed for Lessee's reserve account(s).
ARTICLE 6 LONG RANGE PLAN, BUDGET AND RECORDS
6.1 Long Range Plan
Lessee shall prepare, and submit to Lessor, a plan which projects fundraising,
renovation, marketing and operational expectations and financial needs including
active operations of the theater ( "Long Range Plan "). The initial Long Range
Plan shall be adopted within sixty (60) days after the Effective Date. The Long
Range Plan shall be reviewed and updated /revised from time -to -time, not more
frequently than once per year, to reflect changes to renovation plans, fundraising
strategies and goals, active operations including performances /events, and
marketing programs. The Long Range Plan shall comply with, and provide
information relevant to, the provisions of Articles 7 and 8, and specify in
reasonable detail (as appropriate given the status of the project). the following: (i)
fundraising needs and efforts, including a report on fundraising efforts for the
prior year; (ii) schedule for completion of Required Improvements; (iii) proposed
number of performances and /or events; and (iv) marketing plan for the theater
including programs for attracting attendees and efforts to integrate the operation
of the theater into efforts to revitalize the local economy.
6.2 Annual Budget
Lessee shall prepare and submit to Lessor an annual budget ( "Budget "), which
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shall be based on the Long Range Plan and indicate more specifically the
expectations and financial needs and sources for the current fiscal year. The
Budget shall specify in reasonable detail (as appropriate given the status of
renovation) (i) the balance in all funds and accounts maintained by Lessee; (ii) all
projected revenues and sources of funds for the fiscal year; (iii) the expenditures
proposed to be made by Lessee in fulfilling its obligations pursuant to this Lease;
and (iv) all other proposed expenditures of Lessee. Lessee has prepared
Budgets as required by the Original Lease. Subsequent Budgets, and material
modifications. or revisions to the Budget, shall be submitted within forty five (45)
days after adoption by Lessee.
6.3 Year End Financial Statement
Within. ninety (90) days -after the last day of Lessee's fiscal year, June 30`h,
Lessee shall submit to Lessor a financial statement including a profit and loss
statement itemizing all of its revenues and expenditures for that fiscal year, a
balance sheet and statement of cash flow, all prepared in accordance with
generally accepted accounting standards.
6.4 Records
Lessee shall keep and maintain complete, accurate and customary records and
books of account on all sales, whether for cash or on credit, all business
transactions made with respect to the Property during each fiscal year, and the
principal and income of the Capital Campaign Fund. These records shall be
retained intact for a period of not less than three (3) years after the end of each
fiscal year to which the records and books of account pertain. Lessor and
representatives of the United States Government shall be entitled, upon
reasonable notice and during business hours, to inspect and make copies of any
and all of the records and books of account.
6.5 Audit
Lessor and /or the United States Government shall, once per fiscal year, be
entitled to conduct an audit of all records and books of account that Lessee is
required to maintain. Lessee shall submit to Lessor a copy of any audit prepared
at the request of Lessee or any other party.
ARTICLE 7 USE OF PROPERTY
7.1 Permitted Use
The Property shall be used primarily for the operation of a first class community
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multi -use theater open to the general public. Lessee shall operate the theater in
accordance with the standards specified in this Lease and the relevant
Operations Plan. Lessee may, in conjunction with performances, events and
fund - raising activities, conduct incidental operations such as food service or
catering, on premises sale of alcoholic beverages (provided Lessee obtains all
required governmental permits and approvals), concessions, and retail sales
directly related to performances or fund raising events ( "Permitted Uses').
Lessee may conduct benefits, fund - raising events, previews, receptions, and
similar activities where admission is restricted subject only to compliance with
this Lease.. Lessee may allow community and other organizations to periodically
use the theater for fund raising, education, community events and business
meetings in accordance with this Lease and the Operations Plan. Lessee may
conduct fund- raising and similar events on the Property before completion of
Required Improvements subject to issuance of a Special Events Permit by
Lessor.
7.2 Performances /Frequency
Lessee shall operate the' theater in a prudent and businesslike manner
reasonably calculated to assist in the efforts of Lessor and others to revitalize the
local economy and in full compliance with the Operations Plan. Operation of the
theater is the fundamental consideration for this Lease and Lessee shall ensure
and promote the maximum reasonable use of the theater by performers, artists,
and entertainers and other permitted users likely to attract patrons. The theater
shall be operated consistent with the standards, practices and procedures
utilized by first class multi -use community theaters in other jurisdictions.
7.3 Program Standards
Lessee shall operate the theater in a manner reasonably calculated to achieve
the following objectives:
7.3.1 Provide frequent and.high quality performances and cultural events
to attract patrons to the theater and Central Balboa /Balboa Village.
7.3.2 To. serve as a catalyst to the revitalization of the economy of the
area to be benefited by use of the Federal Funds.
7.3.3 To make the theater accessible to, and enjoyable by, as wide a
potential audience as possible including the low income residents
of the area to be benefited by the use of Federal Funds;
7.3.4 To utilize the skill, ability and energy of members of the community
in combination with a capable and experienced professional staff to
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fund and complete the renovation as well as operate and maintain
a first class community multi -use theater.
7.4 Change of Use
Lessee shall not use, or conduct any activities on, the Property except the
Permitted Uses without the prior written consent of Lessor, which consent may
be withheld at Lessors sole discretion.
7.5 Compliance with Laws
Lessee shall not use the Property in a manner liable to create a public or private
nuisance or liable to cause structural injury to the theater. Lessee shall not
conduct any operation that would invalidate any insurance coverage required of
Lessee. Lessee shall not violate any local, state or federal law in the renovation,
maintenance, or operation of the Property or theater. Lessee shall obtain any
required permit(s) from the City and approval from the Department of Alcohol
Beverage Control prior to any sale of alcoholic beverages on or from the
Property.
7.6 Zoning and Planning
Lessor acknowledges that the use of the Property as a theater is a legal non-
conforming use as that term is defined in Title 20 of the Newport Beach Municipal
Code (Zoning Code). Lessee shall be entitled to repair, alter, and modify the
structures and improvements on the Property in accordance with the provisions
of the Zoning Code provided Lessee complies with the provisions of this Lease.
Approvals granted by Lessor pursuant to Article 8 of this Lease shall not
substitute for land use and development approvals and permits required by the
Newport Beach Municipal Code.
7.7 Nondiscrimination
7.7.1 Lessee shall not discriminate against any person or group of
persons, on account of race, color, creed, religion, sex, marital
status, national origin, or ancestry, in the renovation, operation,
enjoyment or occupancy of the Property.
7.7.2 Lessee shall not discriminate against any employee or applicant for
employment because of race, color, religion, sex, national origin,
age or handicap. Lessee shall take positive steps to ensure that
applicants are employed, and that employees are treated during
employment, without regard to their race, color, religion, sex,
national origin, age or handicap. Lessee shall post in conspicuous
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places, available to employees and applicants for employment,
notices specifying the non - discrimination provisions of this Lease.
Lessee shall, in all solicitations or advertisements for employees
placed by or on behalf of Lessee, state that all qualified applicants
will receive consideration for employment without regard to race,
color, religion, sex, national origin, age or handicap. Lessee shall
not discriminate on the basis of age in violation of any provision of
the Age Discrimination Act of 1975. Lessee shall not discriminate
against, or with respect to, any otherwise qualified handicapped
individual as provided in Section 504 of the Rehabilitation Act of
1973.
7.7.3 Lessee agrees not to discriminate on the basis of sex, marital
status, race, color, religion, creed, ancestry or national origin of any
person with respect to any agreement, license, or contract related
to the renovation, operation, use or occupancy of the Property. All
such contracts, licenses, agreements shall contain non-
discrimination provisions substantially similar to this Lease.
ARTICLE 8 REQUIRED IMPROVEMENTS
8.1 Lessee's Obligations
The Property requires substantial renovation and rehabilitation to be used as, or
considered, a first class community multi -use theater. Lessee shall design,
obtain building permits for, and then construct the improvements specified in this
Article ( "Required Improvements) at Lessee's cost and expense. However,
Lessor shall waive all building permit and plan fees associated with the Required
Improvements.
8.2 Intentionally omitted
8.3 Conceptual Design Plans and Use Permit
Lessee obtained Use Permit #2004 -003 (PA2004 -032) from City Planning
Department on September 23, 2004. Lessee prepared, and submitted to Lessor
for approval, proposed Conceptual Design Plans for the design and construction
of the Property for use as a first class community multi -use theater ( "Conceptual
Design Plans "). The Conceptual Design Plans were be prepared by a licensed
architect. The Conceptual Design Plans generally described those elements
typically included in preliminary Conceptual Design Plans for the renovation and
rehabilitation of a theater constructed in the 1920's. The Conceptual Design
Plans included, (1) seating layout; (2) stage and dressing room layout (3) lobby
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and concession area layout; (4) public area layout; and (5). exterior elevations.
Lessor approved the Conceptual Design Plans on April 19, 2005 (Approval -in-
Concept No. 0976 -2005) in connection with Lessee's Coastal Development
Permit application.
8.4 Design Development Plans
Subsequent to approval of the Conceptual Design Plan, Lessee completed
Design Development Plans on April 19, 2011 The Design Development Plans
were based on, consistent with and amplified the information provided in the
Conceptual Design Plans. The Design Development Plans included (1) exterior
lighting plans and design; (2) color, material, treatment and design of all exterior
elements; (3) sound and projection systems; (4) design and treatment of interior
spaces. The Design Development Plans were incorporated into the Plan Check
Plan set and submitted to the City on June 15 2011 with the application for a
building permit.
8.5 Building Permits
Lessee applied for all necessary building permits from Lessor on June 15, 2011
and is currently awaiting approval Lessee shall diligently process any corrections
and changes to the submittals that are necessary to comply with State and local
law and to ensure consistency with approved Design Development Plans.
Lessee shall also obtain all permits or approvals required of any other
governmental entity having jurisdiction over the Property or any modification to
the Property. In the event that another governmental agency with jurisdiction
over the Property requires modification of the Design Development Plans, the
modifications shall be submitted to Lessor for review and approval. Lessor shall
not unreasonably withhold or delay the issuance of building permits. Lessor shall
waive all building permit fees, planning fees and other fees and charges normally
imposed on similar projects.
8.6 Final Design Plans
Subsequent to approval of Design Development Plans, Lessee shall submit Final
Design Plans to Lessor for approval. Final Design Plans shall be based on,
consistent with and amplify on the information provided in the Development
Design Plans. The Final Design Plans shall include all interior design treatments,
colors and materials. Lessor's right of approval, which shall not be unreasonably
withheld, shall be limited to a determination that the Final Design Plans are
based on and consistent with the approved Design Development Plans. Lessor
shall specify with particularity those components of the Final Design Plans
disapproved, the reasons for disapproval and the altemative(s) Lessor would
approve. The parties shall agree on Final Design Plans within sixty (60) days
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after submittal.
8.7 Schedule for Required Improvements
Lessee shall submit plans, diligently pursue their approval, and begin
construction of Required Improvements according to the following schedule.
Complete Building Permit
One hundred eighty (180) days after initial
application
Building Permit application which is
December 15th, 2011
Begin construction
Upon reaching 50% of budget for Required
Improvements, but no later than two (2)
years after issuance of building permits.
Lessee is required to request time
extensions, as provided under Lessor's
Municipal Code, to ensure the building
permit(s) remains valid prior to
construction
Final Design Plans
Upon approval of framing by Lessor's
Building Department
Complete construction
One (1) year and six (6) months after start
of construction.
8.8 General Requirements
8.8.1 The Required Improvements shall be constructed in compliance
with the provisions of this Lease that regulate, or relate to, the
construction, alteration or maintenance of improvements on the
Property. Lessee acknowledges that the reviews and approvals
required by this section, with the exception of the issuance of
building permits, are proprietary activities related to Lessor's
ownership of the Property and separate and distinct from any
review or approval conducted by Lessor in its municipal capacity.
Lessee also acknowledges that any approval given pursuant to this
section, except the issuance of building permits, does, not bind
Lessor when acting in its governmental capacity.
8.8.2 Lessor shall designate an appointed committee of three (3)
members, comprised of the City Manager or his or her designee,
the Community Development Director or his or her designee, and
the City's Building Official or his or her designee to review, and
approve or disapprove, the Conceptual Design Plans, the Design
Development Plans and the Final Design Plans. Lessee may
request City Council review of any decision by the appointed
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committee disapproving submittals by serving. a request for review
within fifteen (15) days after receipt of the notice of disapproval.
8.9 Extensions
Lessee may request., and the City Manager of the City of Newport Beach may
grant, an extension of up to sixty (60) days with respect to any of the deadlines
specified in this Article. The City Council of the City of Newport Beach may,
upon a showing of good cause, grant extensions in excess of sixty (60) days.
The extensions authorized by this Section are in addition to any extension
resulting from force majeure.
ARTICLE 9 REPAIRS AND MAINTENANCE
Lessee recognizes that the theater is a designated local historical landmark and is to be
maintained as such. Lessee shall, at Lessee's expense, perform all routine and
recurring maintenance necessary to keep the theater in first class condition and in
accordance with the standards in this Lease. Lessee shall, at a minimum perform the
following: (i) the maintenance of the exterior surfaces of the theater (including patching
and resurfacing the roof membrane and painting or other protective treatment of the
exterior wall of the theater); (ii) maintenance of the public rest rooms (including_ repairs
or replacements of tile or rest room fixtures); (iii) the maintenance of electrical systems
serving the Property and theater and, the repair and replacement of components; (iv)
maintenance of all pipes and plumbing systems serving the theater and Property; and
the repair and replacement of components; and (v) the maintenance of all building
service equipment (including HVAC equipment, conveyancing systems, and fire, life
safety, and emergency equipment). and the repair and replacement of components. As
soon as reasonably practicable following the completion of Required Improvements,
Lessee shalt prepare and submit to Lessor a schedule for the periodic inspection and
maintenance by Lessee of the theater. Lessee shall revise the schedule for
maintenance from time to time during the Term as necessary to maintain the theater to
the standards . required by this Lease. Lessee shall have the benefit of all warranties
available to Lessor with respect to the theater or any component thereof. Lessee shall
not be responsible for the cost of and repair or maintenance required, because of the
acts or omissions of Lessor. Lessee may terminate this Lease If the cost of repairing or
replacing any of the structural, roof, main electrical, plumbing, building service or fire /life
safety components of the theater would make continued operation of the theater
economically infeasible.
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ARTICLE 10 STATUS AND MANAGEMENT OF LESSEE
10.1 Nonprofit Status
During the Term, Lessee shall maintain its status as a California public benefit
nonprofit corporation in full compliance with the California Nonprofit Corporation
Law (California Corporation Code Section 5000 et seq.). Lessee shall also
maintain its qualification as a tax - exempt organization under 501(c)(3) of the
Internal Revenue Code (or any successor statute).
10.2 By -Laws
During the Term, Lessee shall maintain By -Laws governing the management and
operation of the foundation, and provide Lessor with a current copy of the by-
laws.
ARTICLE 11 ALTERATIONS
11.1 Written Consent
Except as otherwise provided in this Article, Lessee shall- obtain the written
consent of Lessor prior to making any structural or nonstructural alterations to the
Property. All structural and nonstructural alterations to the Property shall
conform to the theater's designation as a local landmark and shall respect the
design of the original front fagade of the theater to the maximum extent feasible.
Lessee shall be solely responsible for all costs and expenses incurred in making
any alteration. All alterations shall be surrendered with the Property when this
Lease expires or terminates.
11.2 Notice of Non - responsibility
Structural and nonstructural alterations shall not be commenced until ten (10)
days after Lessor has received written notice from Lessee stating the date work
is to commence so that Lessor can post and record an appropriate Notice of
Non - Responsibility. Structural alterations shall be made by a licensed contractor.
ARTICLE 12 PAYMENT OF UTILITIES, TAXES, CHARGES AND FEES
12.1 Public and Private Utility Services
Lessee will pay all charges for all public or private utility services and all sprinkler
systems and interior protective services provided to or for the Property. Lessee
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will comply with the terms and conditions of contracts relating to such services.
Lessor shall not be liable for any failure or defect in the supply of any utility.
12.2 Taxes, Assessments, Fees and Charges
Lessee covenants to pay when due all applicable taxes, assessments, fees,
charges, and levies of every type and character, including all interest and
penalties, that are imposed, assessed or levied on the Property, any occupancy
or use of the Property, or any income derived from the Property.
12.3 Proof of Payment
Lessee agrees to furnish to Lessor, upon request, proof of the timely payment of
any tax, assessment, levy, fee or charge or other. Lessee may pay any
assessment or tax in installments if legally permissible to do so. In the event
Lessee elects to pay assessments or taxes in installments, Lessee shall be liable
only for those installments which become due and payable during the Term of
this Lease.
12.4 Payment by Lessor
Lessor shall have the right to pay any assessment, tax, fee or charge before the
due date if Lessor has a reasonable belief that Lessee is unwilling or unable to
make the payment. In such event, Lessee shall fully reimburse Lessor within ten
(10) days of written notice of payment by Lessor.
12.5 Property Taxes not Valid
The obligation of Lessee to pay taxes shall not be construed as evidence that
Lessor or Lessee believe that any tax is legal. This Lease is intended only to
obligate Lessee to pay taxes if legally imposed.
12.6 Notice of Possessory Interest; Payment of Taxes and Assessments on Value of
Entire Lease Premises
In accordance with California Revenue and Taxation Code Section 107.6(a) and
Health and Safety Code Section 33673, Lessor states that by entering into this
Lease, a possessory interest subject to property taxes may be created, and if so,
that Lessee shall pay taxes upon the assessed value of the entire property and
not merely the assessed value of its leasehold interest. Lessee or other party in
whom the possessory interest is vested may be subject to the payment of
property taxes levied on such interest.
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ARTICLE 13 LIENS
13.1. Indemnification
Lessee shall indemnify, defend and hold Lessor and the Property free, clear and
harmless from any claims, liens, demands, charges, encumbrances or litigation
arising directly or indirectly out of (1) Lessee's use, occupancy or operation of the
Property or (2) any work performed on, material furnished to the Property.
Lessee shall pay, prior to delinquency, for all work performed on, and material
furnished to, the Property which may result in a lien on the Property and shall use
its best efforts to keep the Property and theater free and clear of all mechanic's
liens and similar liens.
13.2 Satisfaction of Liens
Lessee shall fully pay and discharge a judgment or lien affecting the Property
upon entry of final judgment in any action contesting any claim of lien (if final
judgment establishes the validity of all or a portion of the lien). Lessee shall also
pay any lien within fifteen (15) days after notice of the filing of any lien that
Lessee does not contest. Lessee shall reimburse Lessor upon. demand for any
and all loss, damage and expense, including reasonable attorneys' fees,, incurred
by Lessor with respect to any judgment or lien resulting from the acts or
omissions of Lessee related to the Property. Lessor shall have the right to satisfy
any judgment or lien if Lessee fails or refuses to do so and Lessee shall fully
reimburse Lessor in such event.
13.3 Notice to Lessor
Lessee shall give Lessor written notice of any claim or lien filed against the
Property and any action or proceeding instituted affecting the title to the Property.
13.4 Notice of Non - Responsibility
Lessor shall have the right to post and maintain on the Property any Notice of
Non - Responsibility authorized by law.
ARTICLE 1.4 INDEMNIFICATION
14.1 Indemnitv
Lessee shall defend, indemnify and hold harmless Lessor from and against.any
and all legal or administrative proceedings, claims, reasonable attorneys' fees
and costs, expenses, penalties, actual damages, punitive damages and losses,
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including indemnity claims, in any way related to (1) the improvement, use,
maintenance, or operation of the Property (ii) this lease (iii) the use, release,
generation, storage or disposal of Hazardous Materials (as defined in Section
14.6 on the Property or theater, (iv) compliance or non - compliance with any
federal, state or local environmental law, ordinance, rule or regulation, (v) any
accident or injury to, or death of, persons or damage to property occurring on or
about the Property (vi) the removal, clean -up, encapsulation, detoxification or any
other action taken by Lessee or any other party, directly or indirectly arising out
of the presence of Hazardous Materials in, on or around the Property.
14.2 CERCLA Liability
Lessee agrees that this Lease is intended to operate as an indemnification under
Section 9607(e)(1) of the Comprehensive Environmental Response,
Compensation and Liability Act ( "CERCLA "), as amended, and the California
Hazardous Substances Act ( "CHSA "), as amended.
14.3 Expense of Proceedings
The defense of any suit, action, legal or administrative proceeding that may be
threatened, brought or instituted against Lessor that is the subject to the
indemnity provided in this Lease. shall be conducted at Lessee's sole expense by
legal counsel selected and approved by Lessor.
14.4 Release
Lessee waives, releases and forever discharges Lessor from any and all suits,
causes of action, legal or administrative proceedings, claims, demands, liabilities,
losses, costs, interest, attorneys' fees, expenses, penalties, actual damages,
punitive damages and losses, known or unknown, which Lessee ever had, now
has, or may have in the future that are in any way related to (i) the condition,
status, quality, nature, contamination or environmental state of the Property
including Lessee's claims under the CERCLA, the Carpenter - Presley- Tanner
Hazardous Substance Account Act and any other federal, state or local law,
ordinance or regulation, or common law theory of recovery, pertaining to the
presence, release, clean -up or containment of Hazardous Materials on the
Property.
14.5 Waiver of California Civil Code Section 1542
Section 1542 of the California Civil Code states:
A general release does not extend to claims which the
creditor does not know or suspect to exist in his favor
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at the time of executing the release, which, if known
by him, must have materially affected his settlement
with the debtor.
Lessee knowingly and voluntarily waives its rights pursuant to California Civil
Code Section 1542. Lessee fully understands the consequences of this waiver
and has been advised of the consequences by legal counsel. The Parties intend
this Lease will be effective as a bar to Lessee's Claims.
14.6 Definition of Hazardous Materials
The term "Hazardous Materials" means, without limitation, gasoline, petroleum
products, explosives, radioactive materials, hazardous materials, hazardous
wastes, hazardous or toxic substances, polychlorinated biphenyls or related or
similar materials, asbestos or any other substance or material that may be
defined as a hazardous, toxic or dangerous substance, material, waste, pollutant
or contaminant under any federal, state or local environmental law, ordinance,
rule or regulation as now or at any time hereafter in effect, including, without
limitation, (a) CERCLA, (b) the Federal Water Pollution Control Act, (c) the Clean
Air Act (d) the Resource Conservation and Recovery Act, (e) the Toxic
Substances Control Act, (f) the Hazardous Materials Transportation Act, (g) the
Carpenter - Presley- Tanner Hazardous Substance Account Act, (h) Hazardous
Waste Control Law, and the (i) the Porter - Cologne Water Quality Control Act
(California Water Code Sections 13000 et seq).
ARTICLE 15 INSURANCE
15.1 Insurance to be Maintained
Lessee shall take out and maintain, no later than thirty (30) days after the
Effective Date and for the Term of this Lease, at Lessee's sole cost and expense,
the following insurance.
15.1.1 Comprehensive General Liability in an amount not less than
two million dollars ($2,000,000) combined single limit per
occurrence. Lessor and its officials, employees and representatives
shall be covered as additional insureds with respect to liability
arising out of activities by or on behalf of Lessee or in connection
with the use or occupancy of the Property. Coverage shall be in a
form acceptable to Lessor and shall be primary and non-
contributing with any insurance or self- insurance maintained by
Lessor or Lessee. Any third party permitted to use the Property
pursuant to Paragraph 7.1 of this Lease shall provide the same
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insurance, unless this requirement is waived or modified, in writing,
by Lessor's City manager.
15.1.2 Workers' Compensation Insurance as required by the Labor
Code of the State of California.
15.1.3 "All Risk" Property Insurance (Operations) including coverage
against the perils of earthquake, fire, explosion of machinery or
equipment, and vandalism covering the full replacement cost of all
improvements and fixtures on the Property. Lessor shall be added
as insured under the standard loss payable endorsement. Lessee
waives all rights of subrogation against Lessor for any damage to
the improvements or fixtures covered by collectable commercial
insurance. Lessee's obligations to provide insurance under this
paragraph shall apply to all improvements and fixtures on the
Property without regard to the date of construction or installation.
Lessee's obligation to provide this coverage is contingent on the
availability of coverage at commercially reasonable rates.
15.1.4 Property Insurance - Construction. During construction of any
improvements on the Property, Lessee shall maintain Builders Risk
Insurance against "all risk" of physical loss, including the perils of
fire, collapse and transit, with commercially reasonable deductibles,
covering the total cost of work performed, equipment, supplies and
materials furnished_ on a replacement cost basis. Lessee's
obligation to provide this coverage is contingent on the availability
of coverage at commercially reasonable rates.
15.2. Acceptable Terms of Coverage
Acceptable insurance coverage shall be placed with carriers admitted to write
insurance in California, or carriers with a rating of or equivalent to AVIII by A. M.
Best & Company. Any deviation from this standard shall require. the specific
written approval by Lessor. Any deductibles or self- insured retentions must be
declared to and approved by Lessor. At the option of Lessor, Lessee may be
required to reduce or eliminate such deductibles or self- insured retentions or to
procure a bond guaranteeing payment of losses and related expenses and costs.
Coverage under each policy shall not be suspended, avoided or canceled by
either party except after thirty (30) days prior written notice to Lessor. Lessee
shall furnish City and Lessor with certificates. of insurance and with original
endorsements effecting coverage required by this Lease. The certificates and
endorsements for each insurance policy shall be signed by a person authorized
by the insurer to bind coverage on its behalf.
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15.3 Index
The limits of insurance coverage required by this Article shall be adjusted on
each seven (7) year anniversary of the Effective Date. The adjustment shall
reflect the percentage increase for the preceding seven (7) years in the
Consumer Price Index for All Urban Consumers, Los Angel es -An a heim-
.Riverside. All Items (1982 -84 Base), published by the Bureau of Labor Statistics,
Department of Labor. Consumer Price Index.
15.4 Waiver of Subrogation
Each policy of insurance procured pursuant to this Article shall contain, if
feasible, either (i) a waiver by the insurer of the right of subrogation against either
party for negligence of such party, or (ii) a statement that the insurance shall not
be invalidated should any insured waive, in writing prior to a loss, any or all right
of recovery against any party for loss accruing to the property described in the
insurance policy. Lessor and Lessee waive any and all rights.of recovery against
the other for any loss or damage to that Party arising from any cause insured
against under the insurance policies required by this Article.
ARTICLE 16 DAMAGE BY FIRE OR CASUALTY
16.1 Lessee to give Notice
In case of any material damage to or destruction of the Property, Lessee will
promptly give written notice to Lessor generally describing the nature and extent
of the damage or destruction.
16.2 Restoration
Except as provided in Section 17.3, in the event of damage to or destruction of
the Property, Lessee shall repair and restore the Property to its original condition
(subject to changes necessary to comply with then existing laws and any
changes in design approved by Lessor), at Lessee's.sole cost and expense. To
the extent the insurance proceeds are insufficient to cover the cost of such repair
and restoration, Lessee shall make up the deficiency out of Lessee's own funds.
The repair and restoration shall be commenced within a reasonable period of
time following the casualty and shall be completed with due diligence. Lessee
shall have the option to terminate. this Lease and surrender possession of the
Property to Lessor if the event the cost of such repair and restoration exceeds
the sum of (i) the amount of insurance proceeds available to Lessee plus (ii) the
amount of the deductible by an amount which Lessee reasonably determines
renders reconstruction of the-Property economically infeasible. In the event of
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such a termination, Lessee shall pay to Lessor the amount of the deductible and
assign to Lessor any and all rights Lessee may have to the insurance proceeds.
16.3 Casualty Late in Term
Lessee or Lessor shall have the right to terminate this Lease on ninety (90) days
written notice if (i) the Property is damaged or destroyed subsequent to the
fifteenth (15th) year of the Term, (ii) the costs of restoration and repair are
estimated to exceed fifty percent (50 %) of the then full replacement cost of the
Property (excluding land costs /value), and (iii) Lessee elects not to repair or
restore the Property. In such event, Lessor shall have the right to receive and
retain all insurance proceeds paid or payable to Lessee on account of any
damage or destruction to the Property.
16.4 Application of Insurance Proceeds
In the event that Lessee is required to restore the Property pursuant to Section
16.2, proceeds from policies of insurance required by Article 15 and which are
received on account of any damage to or destruction of the Property (less the
costs, fees and expenses incurred in the collection), shall be applied as follows:
16.4.1 Lessee shall furnish to Lessor satisfactory evidence to Lessor of
the total cost of Restoration pursuant to Section 16.2. Lessee shall
then furnish to Lessor satisfactory evidence that it has available the
total amount of money which, when added to the insurance
proceeds received, shall be sufficient to pay the cost of such
Restoration.
16.4.2 Assuming satisfaction of the conditions of subsection 16.4.1 net
insurance proceeds shall be paid to Lessee, unless Lessee is in
Default, to fund restoration. Payments from the proceeds of
insurance for restoration shall be made only upon written request of
Lessee accompanied by a certificate of an architect to the effect
that the amount requested has been paid or is then due, is properly
a cost of restoration, and there are no mechanic's or similar liens
for labor or material supplied in connection with the restoration to
date.
16.4.3 Upon completion of restoration and assuming Lessee is not in
default, excess insurance proceeds shall first be paid to Lessor to
the extent of its actual expenses incurred in the restoration, then to
Lessee as working capital
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ARTICLE 17 EMINENT DOMAIN
17.1 Lease Governs
The rights and obligations of the Parties with respect to any Award shall be as
provided in this Article if there is any Taking during the Term of this Lease.
17.2 Termination of Lease
This Lease shall terminate effective on the date of surrender of possession of the
Property to the condemning authority in the event of a Total Taking. Lessee shall
continue to observe and perform all of the terms, covenants and conditions of
this Lease until the date of termination.
17.3 Partial Taking —,Restoration
If there is a Partial Taking, Lessee may, at its sole cost and expense, whether or
not the condemnation award is sufficient for the purpose, promptly commence
and diligently proceed to effect restoration of the Property as nearly as possible
to the condition and character immediately prior to such Taking. -
17.4 Distribution of Award
All awards and damages received on account of any Taking, whether partial or
total, including interest received (Award), shall be paid promptly by the person(s)
receiving the same to an escrow agent mutually acceptable to Lessor and
Lessee to be distributed upon appropriate instruction from the Parties.
17.5 Allocation of Award — Partial Takinq
Any Award in a Partial Taking shall be distributed by escrow in the following
order of priority:
17.5.1 First, to Lessor and Lessee to reimburse all costs and expense
incurred in the collection of the Award, including fees and expenses
incurred in the condemnation proceeding;
17.5.2 Second, to Lessor, as reimbursement for the costs and expenses of
restoration of the Property and as those costs and expenses are
incurred by Lessee;
17.5.3 Third, if Lessor and Lessee are unable to agree upon the allocation
of the balance of the Award, if any, it shall be deposited by escrow
into a court of competent jurisdiction to be equitably allocated by
24
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the court.
17.6 Allocation of Award — Temporary Taking
In the event of a Taking for temporary use or occupancy, this Lease shall
continue in full force and effect and Lessee shall be entitled to claim, recover and
retain any Award made on account of such temporary Taking. However, if the
period of temporary Taking extends beyond the Term, the Award shall be
apportioned between Lessor and Lessee as of the date of expiration.
17.7 Allocation of Award —Total Taking
Any Award in a Total Taking shall be distributed by escrow in the following
priority:
17.7.1 First, to Lessor and Lessee to reimburse for all costs and expenses
incurred by each in the collection of the Award;
17.7.2 Second, if Lessor and Lessee are unable to agree upon the
allocation, the balance of the Award shall be deposited by escrow
into a court of competent jurisdiction to be equitably allocated by
the court. The determination of the value of Lessee's and Lessor's
respective interests in the Property shall be made as if the Lease
were to continue in full force and effect until the Expiration Date.
17.8 Conduct of Proceedings
Lessee and Lessor shall jointly participate in and prosecute /defend any action or
proceeding involving a Taking of the Property by condemnation or under the
power of eminent domain and shall jointly make any compromise or settlement.
17.9 Notices
Any party receiving notice of or becoming aware of any condemnation
proceedings shall promptly give written notice to the other party.
ARTICLE 18 ASSIGNMENT AND SUBLETTING
Lessee may not assign or sublet this Lease or any portion of the Property, without
Lessor's prior written consent which consent may be withheld in Lessor's sole
discretion. However, Lessee may grant such licenses, permits and concessions as are
reasonable, appropriate and customary to promote a Permitted Use and are in
accordance with the Operations Plan. Notwithstanding any provision to the contrary, (i.)
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Lessor may, at any time during the Term and in its sole discretion, assign this Lease or
its interest in the Property to a non - profit entity, and (ii) if the Property is sold,
transferred, or assigned during the Term to a third party, the consent of the successor
lessor to any assignment or subletting of the Lease or any portion of the Property by
Lessee may not be unreasonably withheld, delayed, or conditioned.
ARTICLE 19 LEASEHOLD MORTGAGES
Lessee shall have no right to encumber its interest in this Lease, the Property or the
theater without Lessors prior written consent, which consent may be withheld in
Lessor's sole and absolute discretion.
ARTICLE 20 PERFORMANCE OF LESSEE'S COVENANTS
20.1 Right of Performance
If Lessee fails to pay any tax, fee or other charge in accordance with Article 12
within the time period required or shall fail to pay for or maintain any of the
insurance policies provided for in Article 15 within the time required, or to make
any other payment or perform any other act within the time required by this
Lease, then Lessor may, after 30 days' written notice to Lessee (or without notice
in case of an emergency) and without waiving or releasing Lessee:
20.1.1 Pay the tax, assessment, fee or charge payable by Lessee
pursuant to this Lease; or
20.1.2 Pay for and maintain any insurance policies required by this Lease;
or
20.1.3 Make any other payment or perform any other act that Lessee is
required to pay or perform pursuant to this Lease.
20.2 Reimbursement and Damaqes
Lessee shall reimburse Lessor for all costs and expenses incurred by Lessor in
the exercise of its rights pursuant to Section 20.1.
ARTICLE 21 REPRESENTATIONS
21.1 Lessors Representations
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Lessor represents to Lessee that:
21.1.1 Lessor owns the Property. in fee simple subject only to the
Permitted Exceptions and other matters affecting title that do not
inhibit, prevent or impair the operation, maintenance or use of the
theater.
21.1.2 Lessor has the power and authority to enter into this Lease and
perform all the obligations of Lessor hereunder.
21.2 Lessee's Representations
Lessee represents to Lessor that
21.2.1 Lessee has examined the Property and finds it will be fit for use as
a cultural and performing arts center in accordance.with this Lease
and the Operations - Plan upon completion of Required
Improvements.
21.2.2 Lessor has not made any representations or warranties regarding
- the condition of the Property, or its suitability for the construction of
Required Improvements or the operation and maintenance of a
theater consistent with this Lease and the Operations Plan.
21.2.3 Lessee has the right, power and authority to enter into this Lease
and to perform all the obligations of Lessee.
21.2.4 Lessee is a California public benefit nonprofit corporation in full
compliance with the provision of the California Nonprofit
Corporation Law (California Corporation Code Section 5000 et
seq.), and is a tax exempt organization under 501(c)(3) of the.
Internal Revenue Code.
ARTICLE 22 DEFAULTS, REMEDIES AND TERMINATION
22.1 Legal Actions
22.1.1. Institution of Lec al Actions
In addition to any other rights or remedies, either party may institute
legal action to cure, -correct, or remedy any default, to recover
damages for any default, or to obtain any other remedy consistent
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with the purpose of this Lease. Any legal action shall be filed in the
County of Orange, State of California.
22.1.2 Applicable Law
The laws of the State of California shall govern the interpretation
and enforcement of this Lease, with venue in Orange County.
22.2 Rights and Remedies are Cumulative
Except with respect to rights and remedies expressly declared to be exclusive in
this Lease, the rights and remedies of the parties are cumulative.
22.3 Occurrence of Default
The following acts or omissions shall be considered material breaches of this
Lease if Lessee fails to cure the default within thirty (30) days after written notice
of default from Lessor or, if cure is not feasible within thirty (30) days, Lessee has
failed to commence cure within thirty (30) days or fails to diligently complete the
cure:
22.3.1 The failure of Lessee to comply with the provisions of Article 8
related to the design and construction of Required Improvements.
22.3.2 The failure of Lessee to operate the theater in compliance with the
provisions of Article 7 related to frequency and quality of
performances and events.
22.3.3 The failure of Lessee to maintain the Property as specified in Article
9.
22.3.4 The failure of Lessee to restore or repair the Property in the event
of damage or destruction
22.3.5 The failure of Lessee to pay any fee, tax, charge, or assessment
when due or the failure to. reimburse Lessor in the event Lessor
pays the fee, tax, charge or assessment.
22.4 Remedies
If Lessee has materially breached this Lease after expiration of all applicable
cure periods then a Default shall be deemed to have occurred, Lessor may give
written termination notice to Lessee, and on the date specified in the notice this
Lease shall terminate. In addition to the right of termination, Lessor shall have
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the following additional rights and remedies:
22.4.1 Lessor shall have the right to terminate this Lease with or without
cause upon ninety (90) days written notice to Lessee and reenter
the Property and /or the theater, take possession of the Property
and /or theater, any and all Equipment, books and records,
contracts and any other property. In the event of termination under
this section Lessor shall owe no compensation to Lessee.
22.4.2 Lessor may, at its option, enforce all of its rights and remedies
under this Lease, including the right to recover the consideration
and all other sums payable as they become due. Lessor shall also
be entitled to recover from Lessee all costs of maintenance and
preservation of the Property and /or the theater, and all costs,
including attorneys' and receiver's fees, incurred in connection with
the appointment of and performance by a receiver to protect the
Property.
22.4.3 Lessor shall be entitled to recover all money payable to Lessee
related to the operation and use of the theater, all bank accounts,
accounts receivable, working capital and cash reserves (if any after
payment of Lessee's debts), and the balance in the Contributions
Fund.
ARTICLE 23 PERMITTED CONTESTS
Lessee, at no cost or expense to Lessor, may contest (after prior written notice to
Lessor), by appropriate legal proceedings conducted with due diligence, the amount or
validity or application, of any Imposition or lien, provided that the proceedings suspend
collection from Lessor and any action against the Property. If Lessee fails to contest the
matter, or fails to protect Lessor and Lessors interest in the Property, Lessor may
contest or settle the matter in its sole discretion and obtain reimbursement from Lessee.
ARTICLE 24 ENTRY BY LESSOR
Lessor may enter the Property at reasonable times for the purpose of inspecting,
servicing or posting notices, protecting the Property and /or the theater, or for any other
lawful purposes, including showing the Property to prospective purchasers or lessees.
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ARTICLE 25 FORCE.MAJEURE
Any prevention, delay, non - performance or stoppage due to any of the following causes
shall be excused: any regulation, order, act, restriction or requirement or limitation
imposed by any Federal, State or municipal government; acts of God; acts or omissions
of Lessor; fire, explosion or floods; strikes, walkouts or inability to obtain materials; war,
riots, sabotage or civil insurrection; or any other causes beyond the reasonable control
of Lessee.
ARTICLE 26 MISCELLANEOUS
26.1 Notices.
All notices and other communications shall be in writing, shall be sent by first
class registered or certified United States mail, postage prepaid, and shall be
deemed to have been given two (2) days after the day of mailing, addressed:
To Lessor;
City Manager
City of Newport Beach
3300 Newport Blvd.
Newport Beach, CA, 92658 -8915
With a copy to:
City Attorney's Office
City of Newport Beach
3300 Newport Blvd.
Newport Beach, CA, 92658 -8915
or at such other addresses as Lessor shall have furnished to Lessee; and
To Lessee;
Executive Director
Balboa Performing Arts Theater Foundation
P.O. Box 752
Balboa, CA 92661
26.2 No Claims Against Lessor
Nothing in this Lease constitutes any consent or request by Lessor for the
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performance of any labor or services or the furnishing of any materials to the
Property
26.3 Integration
This Lease, and the exhibits, are the entire Agreement between the Parties, and
there are no agreements or representations between the Parties except those
specified in this Lease. This Lease supersedes any prior negotiations,
representations, discussions or agreements between the Parties with respect to
the Property and /or the Theater. Except as otherwise provided, no subsequent
change or addition to this Lease shall be binding unless in writing and signed by
the parties.
26.4 No Waiver By Lessor
To the extent permitted by law, no failure by Lessor to insist upon the strict
performance of any term of this Lease, or to exercise any right, power or remedy
upon a Default under this Lease, shall constitute a waiver.
26.5 Severability
If any term of this Lease or any application thereof shall be declared invalid or
unenforceable by a court of competent jurisdiction, the remainder of this Lease
shall not be affected. Unless otherwise expressly provided, any approval or
consent of Lessor required shall not be unreasonably withheld or delayed. This
Lease shall be binding upon and inure to the benefit of and be enforceable by the
respective successors of the parties.
26.6 Holding Over
A tenancy for month -to -month shall result if Lessee remains in possession of the
Property or the theater with the consent of Lessor after the expiration of the
Term. The month -to -month tenancy shall be on the same terms and conditions
as contained in this Lease.
261 No Partnership
This Lease does not cause Lessor to be a partner of Lessee, a joint venturer with
Lessee, or a member of a joint enterprise of Lessee relative to the operation of
the theater or otherwise.
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26.8 Federal Funds Provisions
No Federal appropriated funds shall be paid, by or on behalf of Lessee to any
person for the purpose of influencing or attempting to influence an officer or
employee of any Federal agency, a Member of Congress, an officer or employee
of Congress, or an employee of a Member of Congress in connection with the
awarding of any Federal contract, the making of any Federal grant, the making of
any Federal loan, the entering into of any cooperative agreement, and the
extension, continuation, renewal, amendment, or modification of any Federal
contract, grant, loan, or cooperative agreement. If any funds other than Federal
appropriated funds have been paid or will be paid to any person for influencing or
attempting to influence an officer or employee of any agency, a Member of
Congress, and officer or employee of Congress or an employee of a Member of
Congress in connection with this Federal contract, grant, loan or cooperative
agreement, Lessee shall complete and submit Standard Form -LLL, "Disclosure
Form to Report Lobbying," in accordance with its instructions.
Lessee shall require that the language of this certification be included in the
award documents for all contracts, subcontracts, and agreements.
26.9 Time of the Essence
Time is of the essence relative to all of the terms, provisions, covenants and
conditions of this Lease.
[SIGNATURES ON NEXT PAGE]
32
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FOR LESSOR
CITY OF NEWPORT BEACH
Michael F. Henn
Mayor for City of Newport Beach
FOR LESSEE
BALBOA PERFORMING ARTS
THEATER FOUNDATION
Chairman, Board of Directors.
of Balboa Performing Arts Theater Foundation
APPROVED AS TO FORM
CITY OF NEWPORT BEACH:
A roHarp
City Attorney for City of Newport Beach
ATTEST:
CITY OF NEWPORT BEACH
Leilani Brown
City Clerk for City of Newport Beach.
Exhibit "A "— Property Depiction
Dated
Dated
Dated
Dated
[END OF SIGNATURES]
33
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ATTACHMENT B
"[W RU N% % fib NOR R fNVNDOM
PlUfl(•DPH(f•iHfPIER • fllm • fDV(PlIOH
January 20, 2014
Councilmember Mike Henn
Newport Beach City Council
100 Civic Center Drive
Newport Beach, Ca 92660
Dear Councilmember Henn,
Delivered by e-mail
The Balboa Performing Arts Theater Foundation, as the Balboa Village Theatre, hereby requests consideration
by the City Council of Newport Beach of the proposal set forth below for an amended Lease of the building at
707 E. Balboa Blvd for the purposes of operating a performing arts theatre.
Whereas, the area known as the Balboa Village has been in need of substantial rejuvenation for more than a
decade,and
Whereas, community efforts to build a theatre and spark area rehabilitation have been well intentioned but
unsuccessful thus far, and
Whereas, the building is an empty shell, of four structurally unsound walls, a holed roof open to the sky, with a
sandy floor, ready either for demolition or restoration, and
Whereas, the rehabilitation of Balboa Village cannot succeed without City's active and positive involvement
and leadership, and
Whereas, a revitalized and attractive Balboa Village area with a keystone Theatre will attract visitors,
investment and development, increase the economic viability of the Village and raise neighborhood property
values,
Therefore, the BPATF submits this proposal for City Council consideration and adoption:
1. The City passes a resolution affirming its approval in concept to rehabilitate the current Theatre
property at 707 E. Balboa Blvd which it owns to tenant -ready status, so that it can be occupied and
leased as a community performing arts theatre by BPATF, subject to the conditions outlined below.
2. Our architects and contractor estimate that the all -in cost of this would be approximately $2 million,
subject to confirmation by the City.
3. The City's actual approval to proceed with construction would be conditioned on the following: 1)
negotiation of a mutually agreeable minimum 50 year lease that contemplates BPATF to be
responsible for all interior tenant improvements necessary to successfully operate as a theatre; 2) the
SS38
lease will specify rent payable to the City in the amount of 2.5% of ticket revenue to provide the City
the opportunity to recoup its investment; 3) BPATF will raise and have on deposit prior to the
expenditure of any City funds for the project $2 million in unencumbered cash donations for tenant
improvements and resources such as designing and installing first class theatre systems, first year's
start -up costs of operation, and adequate reserves to support the initial years of theater's operations.
The $2 million would be in addition to the net cash reserves on deposit in the Foundation, currently
totaling approximately $400,000, and 4) BPATF will present a fully articulated business plan authored
by a respected performing arts consulting firm that supports to the City's satisfaction the potential for
successful operation of the theatre over time.
4. With the conditional approval in concept in place as described above, BPATF will then move forward
with developing an expanded Board and fund raising through community action in order to fulfill the
$2 million donation commitment.
5. Until the BPATF has the $2 million in a segregated bank account dedicated for tenant improvements
and resources listed above, the City will not lift one shovel of dirt, or expend one penny on the rehab,
and in this way the City has not risked anything, but has demonstrated its commitment to the
community and support of the Balboa Village Theatre revitalization.
Without City support, as outline above, the BPATF will be unable to move with the BVT project.
Attached to this correspondence is a brief project description with a set of rough financial estimates and deal
points expressing the projected investment by the City of Newport Beach and BPATF. Also attached is a set of
schematic design drawings of the building presented as a theatre.
Councilmember Henn, you have been an ardent supporter of the BPATF and revival of the Theatre and of the
Balboa Village area. We are thankful for your concern, consideration and leadership on behalf of your District,
and request you to lead the efforts to gain Council approval and spark the project. We at BPATF stand
shoulder to shoulder with the City, and hope the Council will rise to the opportunity.
In all sincerity, we believe this is the make -or -break moment. Sine qua non.
Sincerely,
For the Balboa Performing Arts Theater Foundation
Dr. Donald Hecht, Chair
Dr. Steven Beazley, President /CEO
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BALBOA
VILLAGE
T
N
E
A
T
R
E
Project Description
Building Remodel at
707 E. Balboa Blvd.
for the
Purpose of Operating as a Theatre
Prepared for:
City of Newport Beach
January 20, 2014
BA H M ORO K PM 1MIN fOQ011O8
AIViI(•DA0(1.1AEAl1A•11IM-[ 0V(AIIA0
Project Description
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Table of Contents
History
Mission
III. City -BPATF Partnership
IV. Facility Design Features
V. Financial Investment Plan
VI. Schematic Design Drawings
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Theatre Histo
The Balboa Village Theatre dates back to 1928, when J. P. Greeley constructed a performing arts facility at 707
E. Balboa Blvd. called the Ritz Theater, a state -of- the -art theatrical facility for vaudeville and small theater
productions. In 1939, the Ritz was renamed the Balboa Theater, and its emphasis turned to film. Many of the
best loved Hollywood movies were screened at the Balboa Theater during the 1940s, 50s, and 60s. By the mid -
1970s, the Theater turned into a popular revival /art film house. The Balboa Theater closed its doors in 1992,
and the venue sat dark and deserted until the Foundation was formed in 1996 with the goal of reviving and
rebuilding the Theater under the new name of the Balboa Village Theatre.
II. Mission
The Balboa Village Theatre's mission is to create and implement a venue for performing arts, film, theatre and
arts education activities to meet the needs of Newport Beach and the surrounding Orange County community.
Under the guidance of its Board of Directors, the Foundation has been working in partnership with the City of
Newport Beach, which purchased the structure in 1998.
The City is leasing the building to the Foundation to operate as a first - class, 300 -seat multi -use theater that will
benefit and enrich the entire community, while meanwhile being self- sustaining.
III. City -BPATF Partnership
The Foundation is proposing that the City of Newport Beach amend the lease to the foundation under the
following terms and conditions:
1. The City grants its approval in concept to rehabilitate the current Theatre property at 707 E. Balboa
Blvd which it owns to tenant -ready condition, so that it can be occupied and leased as a community
performing arts theatre by BPATF.
2. Our architects and contractor estimate that the all -in cost of this would be approximately $2 million,
subject to confirmation by the City.
3. The City's actual approval to proceed with construction would be conditioned on the following: 1)
negotiation of a mutually agreeable minimum 50 year lease that contemplates BTPATF to be
responsible for all interior tenant improvements necessary to successfully operate as a theatre; 2) the
lease will specify rent payable to the City in the amount of 2.5% of ticket revenue to provide the City
the opportunity to recoup its investment; 3) BPATF will raise and have on deposit prior to the
expenditure of any City funds on the project $2 million in unencumbered cash donations for tenant
improvements and resources such as designing and installing first class theatre systems, first year's
start -up costs of operation, and adequate reserves to support the initial years of theater's operations.
The $2 million would be in addition to the net cash reserves on deposit in the Foundation, currently
totaling approximately $400,000; and 4) BPATF will present a fully articulated business plan authored
by a respected performing arts consulting firm that supports to the City's satisfaction the potential for
successful operation of the theatre over time.
4. With the conditional approval in concept in place as described above, BPATF will then move forward
with developing an expanded Board and fund raising through community action in order to fulfill the
$2 million donation commitment.
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5. Until the BPATF has the $2 million in a segregated bank account dedicated for tenant improvements
and resources listed above, the City will not lift one shovel of dirt, or expend one penny on the rehab,
and in this way the City has not risked anything, but has demonstrated its commitment to the
community and support of the Balboa Village Theatre revitalization.
IV. Facilitv Desien Features
The foundation is proposing a remodel design approach to the existing 5,130 square foot building.
This entails keeping the building to a single floor and making improvements to the building to make it
a shell in which theatrical systems and equipment may be installed.
The City of Newport Beach would be responsible for funding the design and construction of the shell
so the building is "tenant ready" for the foundation to design, fund and install the state of the art
production elements that enable the building to operate as a theatre.
Exterior Imorovements
The exterior of the theatre would remain intact with minor modifications including fresh paint in the
existing color scheme, windows installed in their current opening locations, a box office window(s) on
the lower left sided of the building and advertising window boxes on the right hand side of the
theatre entrance doors
A new theatre marquee would be designed in the spirit of the original 1920's marquee. The
foundation would design and fund the marquee.
Interior Imorovements
Improvements to the floor, ceiling, roof and addressing seismic considerations with the walls of the
current structure would be the primary focus. Infrastructure required by code for assembly of 300
persons would be constructed such as restrooms, fire sprinkler, lighting and mechanical, electrical
and plumbing improvements as designed by the City.
This interior shell would facilitate the installation of a catwalk system, theatrical lighting, audio - visual
systems, acoustic drapery, modular staging that can be sized to the performance, modular risers for
seats. A movie screen would be installed which could be rolled up into the catwalks when not used.
A film projector would also be installed in the catwalk system.
The stage will be 24 -36" high theatrical platforms joined to create the size of stage necessary for the
performance.
Seating capacity will be maximum 300 with 143 fixed seats in stadium style built to span over the top
of the restrooms, 157 portable seats able to be added to the stadium configuration, moved to create
a % configuration around a stage, moved to four sides of the stage to create theatre in the round or
removed altogether to create an open floor.
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A backstage green room will include a pre -show staging area as a well as two restrooms. Dressing
rooms, when needed, would be rented hotel rooms from the Balboa Inn, which exists across the 10
foot alley behind the theatre.
All of the theatre systems would be temporary installations and removable should the building ever
be used for purposes other than a theatre. The Foundation would agree to design and fund all
elements of the theatre systems.
The design would allow the foundation to operate in compliance with the Lease issued by the City of
Newport Beach and maintain all the conditions contained in the current coastal permit including
adhering to the operating hours restrictions during the summer months.
V. Financial Investment Plan
A. Total Project Investment: $ 4.000.000
Based on a $2 million dollar investment match of Lessor (City of Newport Beach) and
Lessee(BPATF)
Lessor Investment (City of Newport Beach)
Tenant Ready Building Investment Investment Year
Design /Construction of Building $ 2,000,000 2014 -2015
Lessee Investment (BPATF)
Theatre /Support Investment Investment Year
Theatre Systems Equipment $ 800,000 2014 -2015
Pre - opening Year Operations $ 450,000 2014 -2015
3 Year operations support /reserves $ 750,000 ($250k per year) 2015 -2018
Total $ 2,000,000
B. Rent Structure
1) For each year of lease, Lessee agrees to pay Lessor rent at the rate of 2.5% of ticket revenue,
with the first year rent free
2) Estimated rent per year of lease, subject to adjustment based on the final business plan
financial projections: $40,000
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VI. Schematic Drawings of Balboa Village Theatre
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