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HomeMy WebLinkAbout06 - Lido Isle Community Association Lease AgreementsITEM 6 TO: Members of the Newport Beach City Council FROM: Dave Kiff, Deputy City Manager SUBJECT: Lease Agreements with the Lido Isle Community Association (LICA) for Antibes Marina and Bayfront Lettered Lots RECOMMENDED ACTION: Authorize Mayor Noyes to execute the Antibes Marina Lease and the Bayfront Lettered Lot Lease on behalf of the City. SUMMARY: There are 13 parcels on Lido Isle that are owned by the City and leased to the Lido Isle Community Association (LICA). The parcels include street end parks, beaches, dry boat storage areas, and a marina. The lease for these parcels - first entered into in 1975 - expires on April 15, 2000. On April 12,1999, the City Council approved two lease proposals with LICA that divided the premises described in the 1975 Lease into two separate leases. The Council approved these leases unanimously. Subsequently, both City staff and representatives of LICA have agreed that the two leases deserved further refinement - some of which are significant. The significant changes include: • Removal of two tidelands parcels (Parcels B and C) from the Bayfront Lettered Lots Lease. These parcels would remain under City administration. • Authorization for the City Manager to direct the adjustment of signs in the Lido Isle Street End Parks that direct visitors away from the landscaped portion of the parks. There are NO changes proposed to the Leases' terms (25 years), the rental rates, the insurance and hold harmless requirements, base rent inflator, or other substantive components of the leases as agreed to by Council on April 12,1999. The rental rate was (and remains): • Antibes Marina Lease -- 30% of the annual gross receipts from the rental of the wet slips in the Antibes Marina OR $20,000 per year "base rent, whichever is higher." Base rent goes up by 10% every 5 years. • Bayfront Lettered Lots Lease - No rent in exchange for maintaining the lots at the current high level of maintenance. For additional information about these Leases, the Staff Report from the Council's April 12,1999 meeting is attached as Attachment C. The Leases as proposed to be adopted are Attachments A (Antibes Marina) and B (Bayfront Lettered Lots). Newport Beach City Council Attachment A LEASE Antibes Marina THIS LEASE ( "Lease'), entered into this _day of , 2000, ( "Execution Date "), by and between the CITY OF NEWPORT BEACH, a charter city and municipal corporation ( "Lessor "), and the LIDO ISLE COMMUNITY ASSOCIATION, a California non - profit corporation ( "Lessee ") RECITALS A. The City of Newport Beach has, since September 1928, held title to certain lots and parcels of real property located on Lido Isle that have been leased to Lessee. Parcel E ( "Premises "), which is the subject of this Lease, was first leased to Lessee by an amendment dated March 22,1954. The Premises is described in Exhibit A and depicted on Exhibit B. B. Lessee and Lessor have entered into numerous long -term leases of City owned property on Lido Isle including the current lease, which was approved in April 1975 and expires on April 14, 2000 ( "1975 Lease'). C. Lessor and Lessee intend to enter into two leases that comprise all of the property subject to the 1975 Lease with the exception of Parcel B (which is the fifty [50] foot strip between the bayward boundary of private property and the bulkhead line bayward of Lot I) and Parcel C (which is a strip between the bayward boundary of private property and the bulkhead line between Lot 19 and Lot 26). This Lease covers Parcel E and the other Lease covers the Bayfront Lettered Lots. D. The Parties acknowledge that this Lease is in the best interests of the citizens of Newport Beach, ensures a fair rent to the City given the location and current condition of the Premises and will ensure that the Premises is maintained in good condition and repair throughout the term of this Lease. NOW, THEREFORE, IN CONSIDERATION OF THE MUTUAL COVENANTS in this Lease, the Parties agree as follows: 1. DESCRIPTION OF LEASED PREMISES Lessor hereby leases and Lessee does hereby accept the lease of the Premises as described in Exhibit A and depicted on Exhibit B, subject to the terms and conditions in this Lease. 2. TERM The term of this Lease shall be for a period of twenty -five (25) years, commencing on the 15th day of April, 2000 ( "Effective Date ") and expiring at the end of the day on April 14, 2025 unless sooner terminated as provided in this Lease. 3. CONSIDERATION The consideration for this Lease shall be the rent described in Section 4 of this Lease and the Lessee's agreement to maintain the Premises in good condition and repair during the term of the Lease. 4. RENT A. For each year (from April 15t" to April 14kh) during the term of this Lease, Lessee shall pay to City the greater of the following; 1. Base Rent of $20,000 per year (increased to $22,000 in 2005, to $24,200 in 2010, to $26,620 in 2015, to $29,282 in 2020; OR 2. Percentage Rent in an amount equal to 30% of the Annual Gross Receipts during the prior calendar year (including calendar year 1999) from the wet slips and side ties on the Premises. B. The term Annual Gross Receipts means the total amount of revenue received by Lessee from the wet slips and the side ties on the Premises during the calendar year preceding each April 15th during the term of this Lease. The term Annual Gross Receipts shall not include any revenue or receipts from the dry boat storage upland of `A the bulkhead on the Premises. C. Lessee shall, for the first year during the term of this Lease, pay rent in the sum of $14,817.93 on or before April 15, 2000. The rent due on or before April 15, 2000 has been calculated on the basis of thirty percent (30 %) of the Annual Gross Receipts of $75,393.10 received by Lessee during calendar year 1999 ($22,617.93) less rent prepaid pursuant to the 1975 Lease ($7,800.00). D. Lessee shall use its best efforts to maximize Annual Gross Receipts by maintaining full occupancy of the wet slips and side ties on the Premises and renting the wet slips and side ties at fair market rates given the unique location, size and condition of the Premises. Lessee shall, at least once every twelve (12) months during the term of this Lease, advise Lessor of the rates charged and Lessor shall, within thirty (30) days after receipt of rate information, advise Lessee if, in the opinion of Lessor, the rates are below fair market given the unique location, size and condition of the Premises, the wet slips and the side ties. 5. USE Lessee shall use the Premises to manage and operate a marina including, without limitation the rental of "wet slips' and side ties bayward of the bulkhead and dry boat storage upland of the bulkhead. Lessee shall operate and manage the marina in a mariner that does not violate State or Federal laws including any law that prohibits discrimination. 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 approvals that may be required by Lessor acting in its governmental capacity. C. Lessee shall indemnify, defend and hold Lessor harmless from any and all claims for labor or materials in connection with the construction, repair, alteration or installation 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 lien, or claim for damage that is in any way related to any construction, repair, restoration, replacement or improvement on the Premises. Lessee shall pay any lien, claim or demand related to any construction, repair 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 any 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 or claim. D. Lessee shall give Lessor five (5) days prior written notice of any construction or improvement on the Premises that is estimated to cost more than $5,000.00. Lessee shall coordinate the scheduling of any work with any project of Lessor to minimize inconvenience and cost. E. Lessee acknowledges that it may be required to construct or install certain improvements that may be necessary to comply with State or federal laws if it elects or is required to upgrade, alter or repair any improvement on the Premises. Lessee agrees to fully comply with all applicable law relative to the premises in the event it elects or is required to upgrade, alter or repair any improvement and that it will do so at Lessee's sole cost and expense. 7. BUSINESS ACTIVITIES With the exception of Lessee's right to operate a marina on the Premises and rent or lease wet slips, side ties and dry boat storage facilities, Lessee shall not grant any concession, license, permit or privilege for the conduct of any business or 4 other operation for profit on the Premises without the prior approval of the City Manager. 8. UTILITIES AND TAXES Lessee shall promptly pay all 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. Lessee acknowledges that this Lease may create a possessory interest subject to property taxation and that Lessee may be subject to the payment of property taxes levied on such interest. Tenant shall pay, before delinquency all taxes, assessments, license fees and other charges ( "Taxes ") that are, during the term that are levied or assessed against Lessee's interest in the Premises or any personal property installed on the Premises. Satisfactory evidence of such payments shall be delivered to Lessor within seventy- two (72) hours of Lessor's written request for such information. 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 5 Category Class VII (or larger) in accordance with the latest edition of Bests Key Rating Guide unless otherwise approved by the Lessor's Risk Manager; C. Lessee shall provide Worker's compensation insurance covering all 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 $1 million 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 worker's 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 prompt and timely notice of claim made or suit instituted arising out of Lessee's activities pursuant to this Lease or on the Premises 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 grants to Lessor, on behalf of any insurer providing comprehensive general and automotive liability insurance to either Lessee or Lessor with respect to the activities of Lessee pursuant to this Lease, a waiver of any right of subrogation which any insurer of 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 acts or omissions of Lessee, its employees, agents or subcontractors in the use and maintenance of the Premises pursuant to this Lease. Lessee's obligations pursuant to this Section do not apply in the case of the sole negligence, fraud, or wilfull misconduct of Lessor and /or its officers, employees or agents. 11. MAINTENANCE OF IMPROVEMENTS A. 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. If, in the 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 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 the legal rate. If, in the judgment of the Lessor, the disrepair or lack of maintenance constitutes an emergency, the notice shall be a 24 -hour notice to remedy; in all other cases it shall be a 5 -day notice. C. 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. Lessee agrees to comply with all rules, regulations, statutes, ordinances and laws of the State of California, County of Orange, 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 Lessee shall not assign, transfer, sublease, mortgage, hypothecate or give any grant of control of this Lease or all or a portion of the Premises, voluntarily or involuntarily, without the express written consent of the Newport Beach City Council. However, Lessee may lease the wet slips on the Premises to the marina tenants and otherwise enter into such agreements as are common to marina operations in Newport Bay without the prior approval of Lessor. 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 approval of the proposed plans and specifications pursuant to this Lease. Any repair, restoration or replacement 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 to Lessor all insurance proceeds relating to the casualty 14. DEFAULT AND TERMINATION OF LEASE A. 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, including: 1. Failure of Lessee to make any payment required by the terms and conditions of this Lease; 2. Failure of Lessee to maintain insurance or comply with the obligations to defend, indemnify and hold Lessor harmless; or 3. Failure to keep the Premises in state of repair and condition required by this Lease. Lessor may, subject to the provisions of Subsection 11(B), 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. B. Lessee shall, upon the expiration or termination of this Lease, peaceably surrender the Premises with all buildings and improvements, in the same condition as when received or constructed, excepting reasonable use and wear. 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. C. 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 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 construed as a waiver. E. 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 of the Premises to be used for the purposes authorized in this Lease, Lessee shall continue to be bound by the terms, covenants and conditions of this Lease. If only a part of the Premises 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 which have not accrued at the date possession is taken by the public entity; or (b) continuing to occupy the remainder of the Premises and remaining bound by the terms, covenants and conditions of this Lease. Lessee shall give notice in writing of his 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 Premises 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 domain. 16. NOTICES Any notice or notices required 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, addressed to: City Manager City of Newport Beach Post Office Box 1768 Newport Beach, California 92659 or at such other address as may be furnished to the Lessee in writing, and if intended for the Lessee, addressed to: 10 Association President Lido Isle Community Association 701 Via Lido Soud Newport Beach, California 92663 or at such other address as may be furnished to the Lessor in writing. In the alternative, notice may be served personally upon any corporate officer of Lessee and that 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 mailed 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: APPROVED AS TO FORM AND CONTENT By: Robert Burnham City Attorney CITY OF NEWPORT BEACH a 11 John E. Noyes Mayor of Newport Beach ATTEST: By: LaVonne Harkless City Clerk LESSEE: Lido Isle Community Association 0 12 John Wortmann LICA President EXHIBIT A Description of Leased Premises ANTIBES MARINA PARCEL "E" All that certain parcel of land in Section 28, Township 6 South, Range 10 West, S.B.B. & M. in the City of Newport Beach, Orange County, California, lying westerly of the U.S. Bulkhead line between Stations 173 -174, as said Bulkhead line and stations are shown on a map entitled "Harbor Lines, Newport Bay, California', approved by the Secretary of the Army, February 15, 1951, and on file in the U.S. District Engineer's Office, Los Angeles, California, and southerly of and adjacent to that certain right -of- way 100 feet in width, described in a deed to the City of Newport Beach recorded in Book 361, Page 110, Official Records of said Orange County and more particularly described as follows: Beginning at the most westerly corner of Lot 885 of Tract 907, recorded in Miscellaneous Maps, Book 28, Pages 25 to 36 inclusive, of said County, said corner also being in the U.S. Bulkhead Line between Stations 173 and 174 as shown upon said map of Harbor Lines; thence southwesterly along the southwesterly prolongation of the northwesterly line of said Lot 885 a distance of 10.0 feet to the true point of beginning, thence continuing along said southwesterly prolongation to an intersection with a line lying 100 feet southerly of and parallel to the southerly line of said 100 feet right -of- way; thence north 75° 09' 40' west and along said parallel line, a distance of 250.00 feet; thence north 30° 09' 40' west, to an intersection with the westerly prolongation of the southerly line of the aforementioned 100 -foot right -of -way line; thence easterly along said westerly prolongation and along said southerly line to an intersection with a line lying 10.0 feet southwesterly of and parallel to the U.S. Bulkhead Line between Stations 173 and 174 as shown upon said map of Harbor Lines; thence southeasterly along said parallel line to the point of beginning. 13 Exhibit B Depiction (MAP) of Leased Premises ANTIBES MARINA 14 Attachment B LEASE Bayfront Lettered Lots THIS LEASE, made and entered into this day of , 2000 ( "Execution Date'), by and between the CITY OF NEWPORT BEACH, a charter city and municipal corporation ( "Lessor "), and the LIDO ISLE COMMUNITY ASSOCIATION, a California non- profit corporation ( "Lessee'). RECITALS A. The City of Newport Beach has, since September 1928, held title to certain lots and parcels of real property located on Lido Isle (collectively referred to as the "Premises ") that are described on Exhibit A and depicted on Exhibit B. The individual lots and parcels are sometimes identified in this Lease by reference to the description in Exhibit A. B. Lessee and Lessor first entered into a long -term lease of the Premises dated March 4, 1929 ( "1929 Lease "). The 1929 Lease was later renegotiated into a series of new leases in December 1938, June 1951, and April 1975 ( "1975 Lease "). The 1975 Lease expires April 14, 2000. C. Lessor and the Lessee intend to enter into two leases that comprise all of the property subject to the 1975 Lease except Parcel B (which is the fifty foot strip between the bayward boundary of private property and the bulkhead line bayward of Lot I) and Parcel C (which is a strip between the bayward boundary of private property and the bulkhead line between Lot 19 and Lot 26). The Antibes Marina Lease covers Parcel E and this Lease covers the Bayfront Lettered Lots described in Tract 907 that are used as parks, open- space, walkways and dry boat storage areas. D. The Parties intend to require Lessee to continue to use the same high standards of care and maintenance of the Premises that Lessee used on the Effective Date of this Lease to serve Lido Isle residents and visitors. E. The Parties intend that Lessee's performance of the terms and conditions of this Lease is part of the consideration for the Antibes Marina Lease. F.. The Parties intend that Lessee will continue to facilitate public access to the tidelands contiguous to Lido Isle through maintenance and improvement of sidewalks and walkways at the locations specified in Exhibit C ( "Walkways "). G. The Parties intend, through this Lease, to confirm Lessor's right to use any properties held in trust by the Lessor (including tidelands) for the purposes of establishing, maintaining, and operating mitigation bank locations for Eelgrass (zostera marina) or projects that are intended to enhance the water quality or ecosystem of Newport Bay without infringing on or limiting Lido Isle residents' ability to operate and maintain legal and permitted residential piers. NOW, THEREFORE, IN CONSIDERATION OF THE MUTUAL COVENANTS hereinafter set forth, it is agreed as follows: 1. DESCRIPTION OF LEASED PREMISES Lessor hereby leases, and Lessee does hereby accept a lease of the Premises as described in Exhibit A and depicted on Exhibit B subject to the terms, covenants and conditions in this Lease. 2. TERM The term of this Lease shall be for a period of twenty -five (25) years, commencing on April 15, 2000 ( "Effective Date ") and expiring on April 14th, 2025 unless sooner terminated as provided in this Lease. 3 LESSEE DUTIES A. Lessee shall maintain the Premises at substantially the same high standard of care and maintenance that Lessee used as of the Execution Date of this Lease; 2 B. Lessee shall maintain all Walkways in good order, condition and repair and refrain from any action or conduct that restricts public access to the tidelands. 4. RENT The consideration for this Lease is Lessee's performance of its duties and obligations pursuant to the terms, covenants and conditions of this Lease. 5. USE A. Lessee shall use the two one hundred (100') foot by ninety (90') foot portions of Lot A for community recreational facilities and dry boat storage purposes for the benefit of members of Lessee. B. Lessee shall maintain and operate all Walkways in a manner that allows for open public access to the tidelands around Lido Isle. Lessee shall position any signs that limit park access to Lido Isle residents and guests in a manner that does not discourage visitor and public use of any Walkway. Lessor may require Lessee, at Lessee's expense, to relocate any of these signs on any parcel or lot referenced in Exhibit C if the City Manager of Lessor (or his /her designee) determines that relocation is necessary or appropriate to ensure full public use and access. Access to tidelands bayward of the Walkways shall be subject to the same restrictions and limitations applicable to other tidelands granted to the City. C. Lessee shall allow Lessor to use any property owned or held in trust by the Lessor (including tidelands) for the purposes of establishing, maintaining, and operating mitigation bank locations for Eelgrass (zostera marina) or any other project designed and intended to enhance the water quality or ecosystem of Newport Bay. In developing and maintaining any such project, Lessor shall not infringe upon or limit Lido Isle residents' ability to operate and maintain legal and permitted residential piers subject only to the ordinances and policies adopted by Lessor in its governmental capacity and as grantee of the State of California. 6. STRUCTURALIMPROVEMENTS A. All structural improvements with a cost in excess of five thousand ($5,000.00) dollars ( "Capital Improvements') that are constructed during the term of this Lease become the property of Lessor upon expiration of the Lease. B. Lessee shall be required to obtain, prior to commencing the construction of any Capital Improvement, all permits, licenses or approvals that may be required by Lessor in its governmental capacity. C. Lessee shall, at all times, indemnify, defend and hold Lessor harmless from any and all claims, liens, damages or fees in any way related to any construction, repair, alteration or installation of any structure, improvement, equipment or facilities on the Premises. Lessee's obligation extends to the costs of defending such claims, including reasonable attorney's fees. Lessee shall not suffer or permit to be enforced against all or any portion of the Premises, any lien or any claim for damage in any way related to any construction, repair, restoration, replacement or improvement on the Premises. In the event any lien or stop notices imposed or recorded on the Premises as a result of the construction, repair or alteration of the facility by or on behalf of Lessee, Lessee shall pay or cause to be paid all such liens, claims or demands before any action is brought to enforce the same against the Premises. Lessee may, in good faith, contest the validity of such lien, claim or demand. In the event of any contest or litigation, Lessee shall, at its sole expense, defend itself and Lessor and shall pay and satisfy any adverse judgment that may be rendered prior to enforcement against Lessor or the Premises. Lessor may require Lessee to furnish a surety bond satisfactory to Lessor in an amount equal to any contested lien, claim or demand. D. Lessee shall give Lessor advance written notice of any construction on or improvement on the premises. Lessee shall coordinate the scheduling of any work with Lessor to minimize any inconvenience to the public. 4 7. BUSINESS ACTIVITIES Subject to the provisions of this Lease that authorize Lessee to lease or sublease portions of the Premises for the purpose of dry boat storage, 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 written approval of the City Manager. S. UTILITIES AND TAXES Lessee shall promptly pay all utility services furnished to the Premises and shall pay before delinquent any general and special taxes or assessments or other governmental charges, if any, which may be levied on the Premises as well as any related possessory interest in or to the Premises. Satisfactory evidence of such payments shall be delivered to Lessor within seventy-two (72) hours of a written request for such information. Lessee acknowledges that this Lease may create a possessory interest subject to property taxation and that Lessee may be subject to the payment of property taxes levied on such interest. Lessee shall pay, before delinquency all taxes, assessments, license fees and other charges ( "Taxes') that are, during the term, levied or assessed against Lessee's leasehold interest in the Premises or any personal property installed on the Premises. 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 5 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 Worker's compensation insurance covering all 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 $1 million 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. Lessor reserves the right to reasonably increase the minimum coverage specified in this subsection once every five years should the City Manager of Lessor determine that then current coverages do not fully protect Lessor. 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 worker's 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 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 A. 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. B. Lessor shall indemnify, defend, save and hold harmless Lessee, its 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 Lessor, its employees, agents or subcontractors in the use and maintenance of the Premises pursuant to this Lease. 11. MAINTENANCE OF IMPROVEMENTS A. Lessee to Maintain All Improvements Lessee covenants and agrees that during the term of this Lease it will, 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. B. Lessor May Elect to Repair and Maintain at Expense of Lessee If, in the 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 the legal rate. If, in the judgment of the Lessor, the disrepair or lack of maintenance constitutes an emergency, the notice shall be a 24 -hour notice to remedy; in all other cases it shall be a 5 -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, to inspect the same or any part thereof at any time to attend to or protect the Lessor's interest under this Lease. D. Compliance with Laws, Ordinances and Regulations Lessee shall comply with all rules, regulations, statutes, ordinances and laws of the State of California, County of Orange, the City of Newport Beach, or any other governmental body or agency having lawful jurisdiction over the Premises or the business, enterprises, or activities conducted thereon. 12. ASSIGNMENT Lessee shall not assign, transfer, sublease, mortgage, hypothecate or give any grant of control of this Lease or the Premises, or any part hereof, either voluntarily or involuntarily, unless first approved by the City Council. Notwithstanding this Section, Lessee may sublease the dry boat storage areas to tenants wishing to store boats. 13. RESTORATION If during the term hereof any building or improvement erected by Lessee on the Premises, or any part thereof, shall be damaged or destroyed by fire or other casualty, Lessee shall, at its cost and expense, repair or restore the same according to the original plans thereof, or, at Lessee's option, Lessee may elect to replace such building or improvement, provided that if Lessee so elects, Lessee shall obtain the approval of Lessor of the proposed architectural plans. Any such work of repair, restoration or replacement 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 premises to Lessor. If Lessee elects to terminate the Lease it shall be obligated to completely clear and restore the building site to its original condition. 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, including: 1. Failure of Lessee to keep current on all utility payments for the Premises; 2. Failure of Lessee to keep the Premises in state of repair and operation dictated by §3 of this lease ( "Consideration ") and to keep it in a neat, clean, orderly, safe and sanitary condition; 3. Failure to provide certificates of insurance evidencing insurance coverage as required in paragraph 12 of this Lease; Lessor may, subject to the provisions of Subsection 11(B), 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. 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 the same condition as when received or constructed, excepting reasonable use and wear 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. 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. 10 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 that have not accrued at the date possession is taken by the public entity; or (b) continuing to occupy the remainder of the Premises and to be bound by this Lease. Lessee shall give notice in writing of his 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 domain. 11 16. NOTICES Any notice or notices required 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, addressed to the City Manager,P.O. Box 1768, Newport Beach, California 92659, or at such other address as may be furnished to the Lessee in writing, and if intended for the Lessee, addressed to its Association President, 701 Via Lido Soud, Newport Beach, California 92663, or at such other address as may be furnished to the Lessor in writing. In the alternative, notice may be served personally upon any corporate officer of Lessee and that 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 Newport Beach. Notice mailed 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: a um 12 CITY OF NEWPORT BEACH John E. Noyes Mayor of Newport Beach APPROVED AS TO FORM AND CONTENT Robert H. Burnham City Attorney ATTEST: A LaVornle Harkless City Clerk LESSEE: Lido Isle Community Association 0 13 John Wortmann LICA President EXHIBIT A Description of Leased Premises Bayfront Lettered Lots The following lots and parcels comprise the Lease Premises: Lots A, B, C, D, E, F, G, H, I and J of Tract 907 as per the map recorded in Book 28, Pages 25 to 36 of Miscellaneous Maps in the Office of the County Recorder of the County of Orange, State of California. 14 PARCELE LOT A EXHIBIT B Depiction (MAP) of Leased Premises Bayfront Lettered Lots NOTE: MAP shows Parcel B, Parcel C, and Parcel E with Lettered Lots. The Premises for this Bayfront Lettered Lot Lease DOES NOT include Parcel B, Parcel C, or Parcel E. EXHIBIT C Description of Access Points (exhibit includes 2 pages) Bayfront Lettered Lots As stated in Recitals of this Lease and within Section 5 of the Lease, the following points of access must be maintained as points of access throughout the duration of the Lease: Lot A: The easterly four (4) feet of the westerly forty (40) feet of Lot A. Lot B: The westerly four (4) feet of the easterly eight (8) feet of Lot B. Lot D: The westerly four (4) feet of the easterly fifteen (15) feet of Lot D. Lot E: The westerly four (4) feet of the easterly twelve (12) feet of Lot E. Lot G: The westerly four (4) feet of the easterly twenty two (22) feet of Lot G. Lot H: A path four (4) feet in width the centerline of which is described as follows: Commencing at a point on the southerly line of said lot thirty five (35) feet distant from the easterly line of Lot H, then northerly for a distance of seventy eight (78) feet along a line parallel to the easterly line of Lot H, then easterly a distance of seven (7) feet along a line parallel to the southerly line of Lot H, then northerly to the north line of Lot H along a line parallel to the easterly line of IM.l 16 Lot J: A path four (4) feet in width the centerline of which is described as follows: Commencing at a point on the southerly line of Lot J thirty (30) feet distant from the easterly line of Lot J then northerly a distance of sixty three (63) feet along a line parallel to the easterly line of Lot J then westerly a distance of seven (7) feet along a line parallel to the southerly line of Lot J then northerly to the north line of Lot J along a line parallel to the easterly line of Lot J. 17 • • 11 AITPCwMC- Jr L' ITEM _ 6 9 TO: Members of the Newport Beach City Council FROM: Dave Kiff, Assistant to the City Manager SUBJECT: Lease Agreements with the Lido Isle Community Association (LICA) for Street End Parks, Marina, and Beaches on Lido Isle RECOMMENDED ACTION: BRIEF SUMMARY: (1) Approve proposed leases with the Lido Isle Community Association, including one lease for approximately $31,500 per year and one lease where "rent" is LICAN park maintenance obligations; (2) Per Council Policy F -7, find that the City may enter into a lease lower than the projected rental value of an appraisal for a specified reason; and (3) Adopt Resolution 99 -_ relating to the findings and the two lease agreements with LICA. The Lido Isle Community Association (LICA) today pays $7,800 per year to lease 13 parcels (including street end parks, beaches, two dry boat storage areas, and a marina) from the City. This 25 -year lease expires on April 14, 2000. According to a recent appraisal, LICA should pay the City $4706 per year to lease the properties. In a key assumption, the appraisal assumes that the appropriate park maintenance costs for the street end parks and beaches are 50% less than LICA pays today. As a result, the appraisal does not consider about $50,000 per year of LICA's current park maintenance costs. LICA members argue that LICA should not be "punished" for choosing to care for the parks at a high level. In an attempt to forge a compromise, Council Member Ridgeway has met with LICA and has reached concurrence on a new lease structure that would include two leases as described below: . A marina tease with rent set at 30% of the marinas gross receipts OR a $2000 per year "base rent,' whichever is higher. NOTE: Using this formula, the marina lease rent would be about $31,500/year in 1998 -99. • A lease for the street end parks, beaches, and dry storage areas with no rent. In exchange for no rental charge, LICA would have to maintain the parcels at lease at the current high level of maintenance. In effect, this compromise gives LICA additional consideration for what it pays in park maintenance costs. It also reflects an appropriate standard (30% of Gross Receipts) for marina rent payments baywide. Newport Beach City Council Page 2 BACKGROUND: As a part of its income property inventory, the City holds title to the street end parks, beaches, and marina of Lido Isle. These parcels, which total 219,004 • square feet, include: • Walkways (23,062 square feet) • Landscaped 'Street End" Parks (37,344 square feet) • Beach Areas (113,738 square feet) • Marina Area (12,673 square feet) • Dry Boat Storage Areas (32,142 square feet) In April 1975, the City leased these properties to the Lido Isle Community Association (LICA) for $3,700 per year (with an inflation adjustment). The lease payment is now $7,880 per year. The 1975 Lease expires on April 14, 2000. For planning purposes (especially relating to the capital expenses that LICA expects to incur to upgrade the marina), LICA has asked to negotiate a new lease prior to the termination of the current lease. Council Policy F -7 Council Policy. The City Council's Policy F -7 (Income Properties) directs the City to "continually evaluate the potential of all City-owned property to produce revenue. This may include leasing unused land, renting vacant space, establishing concessions in recreation areas or other similar techniques.' The Policy further directs the City that "whenever possible the City shall conduct an open bid or proposal process to insure the highest financial return..." in order to help "...determine the highest and best use of the property." Specific finding required Policy F -7 also states that, 'whenever less than the open market or appraised when appraised value value is received or when an open bid process is not conducted, the City shall • not accepted... make specific findings setting forth the reasons thereof.. Such findings may include but need not be limited to the following: a) The City is prevented by tideland grants, Coastal Commission guidelines or other restrictions from selling the property or converting it to another use. b) Redevelopment of the property would require excessive time, resources and costs which would outweigh other financial benefits. c) Converting the property to another use or changing the manager, concessionaire or lessee of the property would result in excessive vacancy, relocation or severance costs which would outweigh other financial benefits. d) Converting residential property to another use or opening residential leases to competitive bid would create recompensable liabilities and other inequities for long -term residents. e) The property provides an essential or unique service to the community that might not otherwise be provided were full market value of the property be (sic) required. Q The property serves to promote other goals of the City such as affordable housing, preservation of open space or marine related services.' • Page 3 BACKGROUND: Appraisal. In late 1997, the City hired William Hansen to conduct an • (cont'd) appraisal of the value of the Lido Isle street end parks, beaches, and marina. Hansen submitted the completed appraisal in March 1998. In his appraisal, Hansen assigns a yearly rental value of $47,000 to the leased premises. To achieve this valuation, Hansen... Appraisal O Determined the economic land rent (rent associated with an economic activity Methodology like slip and dry storage space rental) by... Estimating the gross income from wet slip rentals: $100,320 Adding the estimated gross income from dry slip rentals: 109,836 Total Effective Gross Taking 25% of the Slip Space effective gross: $ 25480 Taking 20% of the Dry Storage effective gross: 2,9967 Economic Rent for Dry and Wet 9, 2947 • Determined the rental value of passive open space (parks and beaches) by... Valuing passive open space at 30% of value of active open space: $686,305 Assigning an B% rate of return on that value: 54,904 Estimating LICA's annual open space maintenance expenses: $111,500 Assuming that the City would maintain it at half the cost: 55.750 Subtracting $55,750 from $54,904 to get: -0- Indicated rental value of passive open space: -0- A Combined the economic rental value of the premises with the rental value of the passive open space by... Adding (rounded the economic land rental value: $ 47,000 to the indicated rental value of the passive open space: _0- . To get the Annua: Rental Value for the leased premises $ 47'000 Please note that Hansen offers LICA a 50% "credit" for its maintenance costs by arguing that the City, if it were to take over the parks, would maintain them "at a significantly lover level than the historical high level of the Community Association."' This 50% credit may or may not be appropriate - it can be argued that LICA should be afforded a higher credit for its maintenance expenses and should not be "punished" for keeping the parks well - manicured. Modification to the Determining What's "Fair.' Given the subjective nature of the maintenance Appraisal... credit and the large difference between LICA's lease expense today and the proposed lease value assigned by Mr. Hansen, City staff and Council Member Ridgeway have met with LICA representatives to attempt to reach a supportable consensus. As a result, LICA and Council Member Ridgeway have concluded that two separate leases - one that addresses the wet slip marina at Via Antibes and another that covers the street end parks, beaches, and dry storage areas - might be an appropriate compromise. Summaries of the proposed lease agreements follow on the next page. ' ApproW of Fair Market Ren tat Vdue, Lido Isla Community Association, Lam of City Lands, W'lliam 1L Hansen March 18,1998, page79. Page 4 BACKGROUND: * Lease Agreement A (proposed) - Via Antibes Marina (cont'd) TERM: 25 years RENT: $20,000 base rent or 30% of gross rent from wet slips (in 1998, • potential gross rent was $105,600), whichever is higher. INFLATOR: Base rent inflated by 10% every 5 years INSURANCE: General Liability not less than $2 million City to be named as additional insured OTHER: LICA must maintain Antibes marina rent at 90% of market City reserves right to audit marina records at any time ,i Lease Agreement B (proposed) - Street End Parks, Beaches, and Dry Storage areas TERM: 25 years RENT: No rent. In exchange, LICA must maintain parks, beaches, and dry storage areas at "high standard of maintenance" INSURANCE: General Liability not less than $2 million City to be mined as additional insured OTHER: City may use tidelands on Lido Isle's north side for Eelgrass mitigation banking If the City Council chooses to agree to the terms proposed above, the City must adopt findings to satisfy Council Policy F -7. An appropriate finding may include a reference to subsection (e), which reads: "The property provides an essential or unique service to the community that might not otherwise be provided were full market value of the property be (sic) required." ATTACHMENTS: Exhibit A - Lease Summary • Exhibit B - Map of Lido Isle and Lease Pre mises Exhibit C - Chronology of Lido Isle -Lease History pa 1'tWd q Exhibit D - Resolution 99-- 51a.LL ryP6MF 11 0 0 Page 5 Exhibit A - Lease Summary Summary and Comparison of Leases Lease ran PD - $50K- 25 25 years. BI /Death -$250K for Lease Same as A and B combined 219,004 sf Expires in $7,= /yr one Person or April 2000 $500K for two or more persons Greater of $20,000 /yr or 30% Lease Marina at Via Antibes 12,673 sf 25 years of wet slip gross GU$2MN +hold (proposed) receipts. NOTE: harmless approx $31,500 in FY 1998-99 No rent. In Lease B Street End Parks, Beaches, .331 sf 25 years exchange, LICA G1.42 MN +hold (proposed) and Dry Boat Storage Areas must maintain harmless parks at current level.