HomeMy WebLinkAbout14 - Balboa Yacht Club Lease Agreement•
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ITEM 14
TO: Members of the Newport Beach City Council
FROM: Dave Kiff, Assistant to the City Manager
SUBJECT: Lease Agreement with the Balboa Yacht Club
RECOMMENDED
ACIION:
Authorize the Mayor to execute proposed lease with the Balboa Yacht Club on
behalf of the City.
BACKGROUND The City currently leases a small triangle of land located at 1801 Bayside Drive in
Corona del Mar to the Balboa Yacht Club. The Club has operated a yacht club at
the site since April of 1941. A portion of the BYC sits on property held in trust by
the County (county tidelands) and the triangle of property owned by the City.
Leasing separate properties from two lessors requires the Club to enter into two
separate leases -one with the County and one with the City. Here is a summary
of the two current leases:
Summaries of currmt leues . BYC/County Lease Entered into in August 1984
In 1996, extended to August 2029
50,344 square feet under lease
Rent = $1.09 /sf /year ($54,874 annually)
Set by = Appraisal in 1996
Inflator = CPI /AUC /LA- Ana -Riv every 3 years
• BYC/City Lease Entered into August 1988
Expires August 28,1999
4,012 square feet under lease
Rent = $0.65/sf /year ($2,610 annually)
Inflator = CPI /AUC /LA- LB -Anah every 3 years
UseofCountgAWraisd When the County extended the BYCs lease in 1996, it completed a detailed
appraisal of the BYC premises and arrived at the rental rate noted above. It also
extended the lease term to 2029 and required the BYC to provide 275 hours of
community educational programs each year (up from 200 hours per year).
The City has traditionally attempted to align the lease of our property with the
County's lease of its property. The terms can be aligned relatively easily. Given
the value of the 1996 appraisal, I have proposed a rental rate ($1.13 /sf /year or
$4,533 annually) that reflects the 1996 County appraisal as inflated by the change
in the Consumer Price Index (3.65 %) since the time of the County lease. The
proposed lease similarly has an inflator equal to the change in the Consumer
Price Index over each of the tri- annual intervals that require an inflation
adjustment.
Newport Beach City Council
Page 2
In rase of Charter As the City Council is aware, the City Charter prohibits the sale of waterfront
Amendment and latersale property except to the State or to the County for use as a public park ( §1402).
of City Prrperty ... The City's voters have amended this section of the Charter six times in order to
allow the sale of specific properties.
COMPARLSON-
CURRENCC[IY/BYC
LEASEANDPROPOSED
CCIY/BYCLFASE
Because the Club has expressed an interest in purchasing the property leased to
it by the City (the property is not tidelands), the proposed lease also contains a
clause that allows the City and the Club to cancel the lease with three months'
notice to either party in the event that the City's voters approve the sale of the
property via a charter amendment.
In mid -June, the Club's members reviewed the proposed lease and agreed to its
terms after offering a few amendments that the Assistant City Attorney and the
City Manager's office deemed acceptable.
Comparing the Cunent and Proposed City/BYC Leases
ATTAC UVE NM Attachment A: Depiction of Lease Premises
Attachment B: Proposed Lease Agreement
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Term
Rent
Insurance
Lease
Premises
11 years
$2,610 per year, inflated once
GL = $500K
Current
4,012 sf at
(expires in
every three yew by the
PI = $1 MN
Lease
1801 Bayside Drive
August 1999)
change in CPI /A0 Urban
Consumers /LA -LBAnaheim
$4,533 per year, inflated once
$2MN combined single
bodily injury,
Proposed
4,012 sf at
30 years to
every three yew by the
pe sonal in d
(g'
Lease
1801 Bayside Drive
August 2029
change N CPI /AII Urban
property damage. 90%
(opt out if voters OK
Consumers LA -Riv -OC
/
fire
fire coverage +hold
We of property)
harmless provision.
ATTAC UVE NM Attachment A: Depiction of Lease Premises
Attachment B: Proposed Lease Agreement
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Attachment A
Depiction of Lease Premises
BALBOA YACHT CLUB
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K
June 28, 1999
LEASE Agenda Item No. 14
SUPPLEMENTAL REPORT
Balboa Yacht Club
This Balboa Yacht Club Lease ( "Lease') is made and entered into this 28th Day of June,
1999, by and between the CITY OF NEWPORT BEACH, a chartered municipal
corporation ( "Lessor"), and the BALBOA YACHT CLUB, a California non - profit
corporation ("Lessee").
RECITALS
A. The City of Newport Beach holds in trust certain real property located at 1801
Bayside Drive in Corona Del Mar as shown on Exhibit "A" which is attached
hereto and incorporated herein by reference.
B. Lessee is a non - profit corporation organized for the purposes of operating a
yacht club and has done so at the site since April of 1941.
C. In 1984, a lease agreement between the County of Orange ("County") and Lessee
authorized the County to rent certain County tidelands as shown on Exhibit B to
Lessee for a specified sum ("County Lease").
D. In 1988, Lessor and Lessee entered into a separate lease agreement affecting the
real property owned by Lessor yet occupied by Lessee. This lease expires on
August 28,1999.
E. In October 1996, Lessee and County agreed to the 1st Amendment to the County
Lease which directed Lessee to provide not less than 275 hours of marine-
oriented educational and recreational programs for non - member youth,
community service programs, and the general public.
F. The 1st Amendment to the County Lease also changed the rental value and
extended the term of the lease. The County Lease expires on August 28, 2029.
NOW, THEREFORE, IN CONSIDERATION OF THE MUTUAL COVENANTS
hereinafter set forth, it is agreed as follows:
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1. DESCRIPTION OF LEASED PREMISES
Lessor hereby leases, and Lessee does hereby accept a Lease of the Premises legally
described as:
That portion of the City-held tide and submerged land in Newport
Bay, Orange County, California adjacent to a line between US
Bulkhead Stations 104 and 104 -A, as shown on a Map of US Harbor
Lines in Newport Bay Harbor, California approved on February 15,
1951, and being particularly described as follows:
Beginning at US Bulkhead Station 104 and running thence South 40° 00'
East at a distance of 135.83 feet; thence S79 °00'24" West 67.70 feet;
thence N10 006'59" West 118.80 feet to the point of beginning.
2. TERM
The term of this Lease shall be for a period of thirty (30) years, commencing on the 291h
day of August, 1999 and terminating on August 31, 2029. If at any time during the term
of this Lease, the voters of the people of Newport Beach vote to amend the City Charter
to allow the sale of the Premises to Lessee, Lessee or Lessor may cancel this lease with
three (3) months notice to the other party. In the event of an early termination pursuant
to this section, Lessee shall remit to Lessor a prorated share of the rent reflecting the
period in which this Lease is operative.
3. CONSIDERATION
Partial, non -rent consideration for this Lease shall be Lessee's agreement to maintain
and operate of the Premises in good condition and repair for the term of the Lease at no
cost to Lessor.
4. RENT
As rental payment, Lessee shall remit to the City $4,533 per year. This amount shall be
adjusted once every three years by the cumulative change over the previous three years
in the Consumer Price Index for All Urban Consumers, Los Angeles, Riverside, Orange
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County region (or equivalent). At the effective date of this lease, the CPI /All Urban
Consumers for this region was 164.6, with 1982 -84 = 100.00.
5. USE
Lessee shall use the Premises, to manage and operate yacht club as the primary
business activity on the Premises. Acceptable accessory uses to the yacht club include,
but are not limited to, a restaurant, bar, and /or sundries or gift shop, provided that
these accessory uses always accompany Lessee's operation of a yacht club. Lessee shall
operate and manage the Club in a manner that does not violate State or Federal
discrimination laws.. Lessee shall comply with all City zoning and land use regulations
in using the Premises.
6. CAPITAL IMPROVEMENTS
A. All improvements constructed during the term of this Lease shall become the
property of Lessor upon expiration of the Lease.
B. Lessee shall be required to obtain, prior to commencing the construction of any
improvements, all permits, licenses or reasonable approvals that may be required
by Lessor acting in its governmental capacity.
C. Lessee shall obtain the written approval of Lessor prior to the construction or
installation of any improvements with an estimated cost of twenty five thousand
dollars ($25,000.00) or more. Lessor reserves the right to require Lessee to obtain
performance and /or labor and materials bonds for improvements with an
estimated cost of twenty-five thousand dollars ($25,000.00) or more.
D. Lessee shall indemnify, defend and hold Lessor harmless from any and all claims
for labor or materials in connection with the construction, repair, restoration,
replacement, alteration, installation or improvement of any structure, capital
improvement, equipment or facilities on the Premises and from the costs of
defending such claims, including reasonable attorney's fees. Lessee shall not
suffer or permit to be enforced against all or a portion of the Premises any
mechanic's, materialmen's, contractor's or subcontractor's liens, or claim for
damage that is in any way related to any construction, repair, restoration,
replace, alteration, installation or improvement on the Premises. Lessee shall pay
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any lien, or post a bond for such lien, claim or demand related to any
construction, repair, restoration, replace, alteration, installation or improvement
of the Premises that is imposed or recorded on the Premises before any action is
brought to enforce the same against the Premises. However, the provisions of
this Subsection shall not prevent Lessee from contesting the validity of such lien,
claim or demand, provided that in such event, Lessee shall, at its expense, defend
itself and Lessor against the same and shall pay and satisfy any adverse
judgment that may be rendered before enforcement against Lessor or the
Premises. Lessor shall have the right, in its sole discretion, to require Lessee to
furnish a surety bond satisfactory to Lessor to fully protect the Premises and
Lessor from the effect or enforcement of any lien, claim or demand.
E. Lessee shall give Lessor five (5) days prior written notice of any construction,
repair, restoration, replace, alteration, installation or improvement on the
Premises that is estimated to cost more than twenty-five thousand dollars
($25,000.00). Lessee shall coordinate the scheduling of any work with any project
of Lessor to minimize inconvenience and cost.
7. BUSINESS ACTIVITIES
Lessee shall not grant any concession, license, permit or privilege for the conduct of any
business or other operation for profit on the Premises without the prior amendment of
this Lease as approved by the City Council. This section shall not prohibit the Club
from operating a private yacht club as its primary business activity. Acceptable
accessory uses to the yacht club include a restaurant, bar, and /or sundries/ gift shop on
the Premises, provided that these accessory uses always accompany Lessor's operation
of a yacht club.
8. UTILITIES AND TAXES
Lessee shall promptly pay all reasonable charges for water, sewer, electricity, refuse
collection and other municipal or utility services provided to the Premises. Lessee shall
also pay, prior to delinquency, any general and special taxes or assessments or other
governmental charges, if any, which may be levied on the Premises, improvements,
Lessee's use of the Premises or any possessory interest created by this Lease.
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Satisfactory evidence of such payments shall be delivered to Lessor within seventy-two
(72) hours of a written request for such information.
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9. INSURANCE
In addition to Lessee's obligations pursuant to Section 10, Lessee shall provide and
maintain, at its own expense, policies of liability insurance as follows:
A. All required policies shall be signed by a person authorized by that insurer to
bind coverage on its behalf and must be filed with Lessor prior to execution of
this Lease. Current certification of coverage shall be provided throughout the
term of this Lease. Except for workers'compensation, all insurance policies shall
include Lessor and its elected officials, officers, agents, representatives and
employees as additional insureds.
B. All insurance policies shall be issued by an insurance company currently
authorized by the Insurance Commissioner to transact business of insurance in
the State of California, with an assigned policyholders' Rating of A (or higher)
and Financial Size Category Class VII (or larger) in accordance with the latest
edition of Bests Key Rating Guide unless otherwise approved by the City's Risk
Manager.
C. Lessee shall provide workers' compensation insurance covering all eligible
employees of Lessee, per the laws of the State of California.
D. Lessee shall provide commercial general liability insurance covering third party
liability risks, including without limitation, contractual liability, in a minimum
amount of two million dollars ($2,000,000.00) combined single limit per
occurrence for bodily injury, personal injury and property damage. If
commercial general liability insurance or other form with a general aggregate is
used, either the general aggregate shall apply separately to this Lease, or the
general aggregate limit shall be twice the occurrence limit.
E. Lessee shall provide fire and extended coverage for not less than ninety percent
(90 %) of the cost of replacement of all insurable improvements on the Premises.
F. Except for workers' compensation, the policy or policies shall be endorsed to
state that coverage shall not be canceled by either party, except after thirty (30)
days prior notice has been given in writing to Lessor. Lessee shall give Lessor
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prompt and timely notice of claim made or suit instituted arising out of Lessee's
operation hereunder. Lessee shall also procure and maintain, at its own cost and
expense, any additional kinds of insurance, which in its own judgment may be
necessary for its proper protection and prosecution of the work.
G. Lessee agrees that, in the event of loss due to any of the perils for which it has
agreed to provide comprehensive general liability insurance, Lessee shall look
solely to its insurance for recovery. Lessee hereby grants to Lessor, on behalf of
any insurer providing comprehensive general and automotive liability insurance
to either Lessee or Lessor with respect to the services of Lessee herein, a waiver
of any right of subrogation which any such insurer of said Lessee may acquire
against Lessor by virtue of the payment of any loss under such insurance.
10. HOLD HARMLESS
Lessee shall indemnify, defend, save and hold harmless Lessor, its City Council, boards
and commissions, officers and employees from and against any and all loss, damages,
liability, claims, allegations of liability, suits, costs and expenses for damages of any
nature whatsoever, including, but not limited to, bodily injury, death, personal injury,
property damages, or any other claims arising from any and all negligent acts or
omissions of Lessee, its employees, agents or subcontractors in the use and maintenance
of the Premises pursuant to this Lease.
11. MAINTENANCE OF IMPROVEMENTS
A. Maintenance of Improvements. Lessee shall, at its own cost and expense,
maintain the Premises in good order and repair and in clean, orderly, safe and
sanitary condition. Lessee shall be responsible for the repair of any damage to
the Premises or any improvement on the Premises.
B. Lessor May Elect to Repair and Maintain at Expense of Lessee. If, in the
reasonable judgment of the Lessor, the standards of maintenance and repair
required by this Lease are not being maintained, Lessor may elect to correct any
deficiency after written notice thereof to the Lessee and Lessee's failure to cure
the default. Lessee shall pay to the Lessor on demand any and all sums •
expended by Lessor in correcting any such deficiency together with interest at
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the legal rate. If, in the judgment of the Lessor, the disrepair or lack of
maintenance constitutes an emergency, the notice shall be a twenty-four (24)
hour notice to remedy; in all other cases it shall be a ten (10) day notice.
C. Lessor's Right of Inspection. Lessor reserves the right by its authorized agents,
employees or representatives to enter the Premises upon forty-eight (48) hours
advance notice, for purposes of inspection to attend to or protect the Lessor's
interest under this Lease.
D. Compliance with Laws, Ordinances and Regulations. Lessee agrees to comply
with all rules, regulations, statutes, ordinances and laws of the State of
California; County of Orange, and the City of Newport Beach, or any other
governmental body or agency having lawful jurisdiction over the Premises or the
use and operation of the Premises.
12. ASSIGNMENT
(a) Lessee may not transfer or assign this Lease, or any right or interest hereunder,
or sublet or mortgage or otherwise encumber said Premises, or any part thereof,
until first obtaining prior written consent and approval of Lessor, provided,
Lessor shall not unreasonably withhold such consent. Lessor hereby reserves the
right to condition any such approval upon Lessor's determination that the
assignee or sublessee is as financially responsible as Lessee. No mortgage,
transfer, or assignment, whether voluntary of involuntary, by operation of law
under legal process or proceedings, by receivership, in bankruptcy or otherwise,
and no subletting, shall be valid or effective without Lessor's prior written
consent and approval. Should Lessee attempt to make, or suffer to be made, any
such mortgage, transfer, assignment, or subletting, except as aforesaid, or should
any of Lessee's rights under this Lease be sold of otherwise transferred by or
under court order of legal process or otherwise, or should Lessee be adjudged
insolvent of bankrupt then, and in any of the foregoing, even as Lessor may, at
its option terminate this Lease, forthwith, by written notice thereof to Lessee.
Should Lessor consent to any such transfer, assignment or subletting, such
consent shall not constitute a waiver of any of the restrictions of this Article and
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the same shall apply to each successive mortgage, transfer, assignment or
subletting hereunder, if any.
(b) If Lessee hereunder is a corporation, any unincorporated association of
partnership, the transfer, assignment or hypothecation of any stock or interest in
such corporation, association or partnership, in the aggregate in excess of fifty-
one percent (51 %) shall be deemed an assignment within the meaning and
provisions of this Article; provided, however, a transfer or assignment of any
such stock or interest by a shareholder or member to a spouse, children, or
grandchildren is excepted from the foregoing provision.
13. RESTORATION
If during the term of this Lease, any building or improvement erected by Lessee on the
Premises is damaged or destroyed by fire or other casualty, Lessee shall, at its cost and
expense, repair or restore the same according to the pre - casualty condition or, at
Lessee's option, Lessee may elect to replace the building or improvement. In the event
that Lessee elects to replace the building or improvement, Lessee shall obtain Lessor's
reasonable approval of the proposed plans and specifications pursuant to this Lease.
Any construction, repair, restoration, replace, alteration, installation or improvement
shall be commenced within one hundred and eighty (180) days after the damage or loss
occurs and shall be completed with due diligence, but not longer than one (1) year after
such work is commenced unless delay is caused by events beyond the control of Lessee.
If Lessee elects not to repair or rebuild the improvements, it may terminate this Lease
by giving Lessor written notice of termination and by assigning all insurance proceeds
relating to the casualty to Lessor. If Lessee elects to terminate the. Lease it shall be
obligated to completely clear and restore the premises to its original condition, and all
proceeds from insurance received due to the fire or casualty shall become property of
Lessor.
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14. DEFAULT AND TERMINATION OF LEASE
A. Default. Time and each of the terms, covenants and conditions hereof are
expressly made the essence of this Lease. If the Lessee shall fail to comply with
any of the terms, covenants, or conditions of this Lease or Lessee's lease with the
County of Orange, including, but not limited to:
1. Failure of Lessee to keep the Premises in state of repair and operation
dictated by Section 3 of this Lease ("Consideration') and to keep it in a neat,
clean, orderly, safe and sanitary condition;
2. Failure of Lessee to maintain insurance or comply with the obligations to
defend, indemnify and hold Lessor harmless;
3. Failure to remit the rent required by Section 4.
4. Failure to provide not less than 275 hours of non - member youth and
community service programs, as required by Lessee's lease with the County
of Orange
Subject to the provisions of Section 11(B), Lessor may terminate this Lease if
Lessee fails to remedy any default related to the payment of money within thirty
(30) days after service of a written notice from Lessor to do so, or fails to
commence the cure of any other default within thirty (30) days and diligently
prosecute the same to completion. Lessee may also terminate this Lease if Lessee
abandons or vacates the Premises, except for abandonment or vacation resulting
from the actions or any public agency or force majure.
B. Surrender of Possession upon Termination. Lessee shall, upon the expiration or
termination of this Lease, peaceably surrender the Premises with all buildings
and improvements, in similar condition as when received or constructed,
excepting reasonable use and wear and tear thereof, and damage by fire, act of
God, or by the elements. The provisions of this subsection shall be effective upon
expiration or termination of this Lease regardless of whether Lessee holds over
under the provisions of Subsection E.
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C. Remedies Cumulative. The rights, powers, elections and remedies of Lessor are
cumulative and no one of them shall be considered exclusive of the other or
exclusive of any rights or remedies allowed by law. Lessor's exercise of one or
more rights, powers, elections or remedies shall not impair or be deemed a
waiver of Lessor's right to exercise any other.
D. No Waiver. No failure of Lessor to exercise any right or power arising from any
omission, neglect or default of the Lessee shall impair any such right or power or
shall be construed as a waiver.
E. Holding Over. If the Lessee remains in possession after the expiration of this
Lease for any cause, Lessee's possession shall be deemed a tenancy from month -
to -month upon the same terms, conditions, and provisions of this Lease.
15. EMINENT DOMAIN
In the event the whole or part of the Premises is condemned by a public entity in the
lawful exercise of the power or eminent domain, this Lease shall cease as to the part
condemned upon the date possession of that part is taken by the public entity. If only a
part is condemned and the taking of does not substantially impair the capacity of the
remainder to be used for the purposes required in this Lease, Lessee shall continue to be
bound by the terms, covenants and conditions of this Lease. If only a part is
condemned and the taking of that part substantially impairs the capacity of the
remainder to be used for the purposes required in this Lease, Lessee shall have the
election of:
A. Terminating this Lease and being absolved of obligations hereunder which have
not accrued at the date possession is taken by the public entity; or
B. Continuing to occupy the remainder of the property and remaining bound by the
terms, covenants and conditions of this Lease. Lessee shall give notice in writing
of this election hereunder, within thirty (30) days of the date possession of the
part is taken by the public entity. Lessor shall be entitled to receive and shall
receive all compensation for the condemnation of all or any portion of the
property by exercise of eminent domain. Lessee shall be entitled to receive and
shall receive all compensation for the condemnation of all or any portion of the
improvements constructed by Lessee on the Premises by the exercise of eminent
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domain.
. 16. NOTICES
Any notice or notices provided for by this Lease or by law, to be given or served upon
the Lessee, may be given or served by mail, registered or certified, with postage
prepaid, and if intended for the:
City of Newport Beach
City Manager
Post Office Box 1768
Newport Beach, California 92659
or at such other address as may be hereafter furnished to the Lessee in writing, and if
intended for the Lessee, addressed to the:
Balboa Yacht Club Commodore
1801 Bayside Drive
Corona del Mar, California, 92625
or at such other address as may be hereinafter furnished to the Lessor in writing. In the
alternative, notice may be served personally upon any corporate officer of Lessee. Any
notice or notices provided by this Lease or by law to be served upon Lessor may be
served personally upon the Mayor of the City of Newport Beach or the City Clerk of the
City of Newport Beach. Notice pursuant to this section shall be deemed given forty-
eight (48) hours from and after the deposit in the United States mail.
IN WITNESS WHEREOF, the parties hereto have executed this Lease as of the day and
year first above written.
LESSOR:
CITY OF NEWPORT BEACH
am
Dennis D. O'Neil,
Mayor of Newport Beach
Dated:
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LESSEE:
BALBOA YACHT CLUB
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Stanley H. Cochran
Commodore
Dated:
APPROVED AS TO FORM AND CONTENT:
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Robin L. Clauson,
Assistant City Attorney
ATTEST:
M
LaVonne Harkless,
City Clerk
F: \ users\ cat\ shared\ Ag\ BalboaYacht \062899.doc
Dated:
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Exhibit A
Depiction of Leased Premises
BALBOA YACHT CLUB
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Exhibit B
Depiction of Premises of County Lease (approximnate)
BALBOA YACHT CLUB
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