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HomeMy WebLinkAbout01 - CorrespondenceAgenda Item #1 October 23. 2012 Rieff, Kim Special Meeting From: City Clerk's Office Sent: Friday, October 19, 2012 11:42 AM To: Rieff, Kim Subject: FW: Use of Tidelands and Lease Fees From: Steve Kent [SMTP:STEVEKENT3to)GMAIL.COM] Sent: Friday, October 19, 2012 11:41:36 AM To: Henn, Michael; Rosansky, Steven; Hill, Rush; Daigle, Leslie; Selich, Edward; Gardner, Nancy; Curry, Keith; Kiff, Dave; City Clerk's Office Subject: Use of Tidelands and Lease Fees Auto forwarded by a Rule Council Members- I am writing to urge you to reconsider the contemplated increase in lease fees to businesses operating in the tidelands areas of Newport Beach. Most businesses operating on the bay (with the possible exception of the Irvine Company) are small businesses already operating at marginal profit levels in a tough economy and facing stiff competition from provders of similar services in other harbors. There is no doubt that any increases in cost will be passed onto consumers and result in the trickle down effect of lost customers to the harbor. Boaters are by definition, a mobile group and would certainly look to places like Long Beach, Dana Point and San Pedro for slips, haul out services and even fuel. I would ask you to remember one of the most famous cases of taxing the 'wealthy', the federal luxury tax that, cost more in other sources of revenue then it ever raised itself. Money spent in the bay is almost entirely descretionary, make it more expensive and a disproportionate number of consumers will simply stop spending or go elsewhere for their services. I am a member of Balboa Yacht Club and we have a long term lease for the adjacent marina with the Irvine Company. The faclity is already less than desirable and unable to accomadate many boats because the water is less than 5' deep in many spots, all of which results in lower occupancy, the cost of which is passed from Irvine Co to BYC to it's members, the majority of whom own boats of less than 20' and worth less than $10,000. The members are not wealthy 'yachtys' and this increase in fees will hit many of them hard. As membership drops, the club must cut expenses elswhere which translates to payroll, and so the spiral continues. I urge you to reconsider any increase in fees on local businesses whir the harbor Steve Kent 714 -679 -9797 http://www.Iinkedin.com/in/stephenkent Agenda Item #1 ilani October 23, 2012 Brown, Le From: Harp, Aaron Sent: Friday, October 19, 2012 10:50 AM To: Torres; Michael; Brown, Leilani Subject: FW: Letter from Duffy Attachments: dully city counsel letter.pdf FYI From: Kerry Peters [ mai Ito: kpetersCcDduffyboats.com] Sent: Friday, October 19, 2012 10:50 AM To: Gardner, Nancy; Curry, Keith; Henn, Michael; Rosansky, Steven; Hill, Rush; Daigle, Leslie; Selich, Edward; Robert Lounsbury; Kiff, Dave; Harp, Aaron; Miller, Chris; Tom Purcell; Michael Curci; Gary Pickett; John Vallely; Wattsnewprq @gmail.com; Robert McCaffrey; Dave Ellis; Dave New; Duffield, Marshall; Dwight Belden; Ferdinand Fam; Gary Hill; Hill Gary; Jack Croul; Jim Parker; Corrough, John; Rodheim, Ralph; Richard R. Luehrs; Robin Lombardo; Beek, Seymour; Ted Robinson; George Jones; Casey Jones Subject: Letter from Duffy Please see attached. Kerry Peters Duffy Electric Boat Company 670 West 17th Street Unit E7 Costa Mesa, CA 92627 (949) 645 -6811 kpeters@duffyboats.com Agenda Item #1 October 23, 2012 Special Meeting Date: October 18, 2012 Subject: City of Newport Beach Council Meeting Dear Fellow Harbor Enthusiast: On October 23, 2012 the Newport Beach City council will be voting on a lease to be put into place for all the harbors marina tideland users. They want to increase the cost of using the public tidelands by a margin of over 800 percent! Yes, that's right 800 percent over what we are being charged now. This will have a huge impact on the commercial harbor users. The increase will have to be passed on to the customer and in most cases will result in loss of business if not outright closing of doors. We have not raised our rental charge for several years however we will be forced to increase the amount by a hefty sum. We have tried to compromise with the city by offering a 300 percent increase but they denied our offer. Why does the city need this new tax is the question we have been asking but get no answers. With a new 160 million dollar city hall almost completed and the high salaries and pensions, we wonder what is going on with our local government representatives. Please help us by sending an e-mail or a written letter to the city council or by showing up at Tuesday's meeting to express you concerns. Imagine your business or the business you work for having to absorb 20% of the annual revenue's at any time let alone these hard economic times. Thank you for your help, "..c� -- Marshall "Duffy" Duffield Duffy duffV(a)duffyboats.com Agenda Item #1 October 23. 2012 Rieff, Kim Special Meeting From: City Clerk's Office Sent: Friday, October 19, 2012 8:36 AM To: Rieff, Kim Subject: FW: The Harbor is life blood of the Newport From: GREGG MOSS[SMTP:GREGG. MOSS (cDME.COMI Sent: Friday, October 19, 2012 8:35:28 AM To: Rosansky, Steven Cc: Kiff, Dave; City Clerk's Office Subject: The Harbor is life blood of the Newport Auto forwarded by a Rule Dear Sirs, As a 20 year resident of the city of Newport Beach and yacht owner, i must express my complete and udder dissatisfaction with the proposed Tideland tax fee increase. In general I am dissatisfied with the cities lack of vision, redevelopment and progress for area surrounding the harbor such as Mariners Mile, Lido Village and the Peninsula. These area represent such opportunity for the city revenues from restaurants and retail shopping districts in the form of sales taxes as well as rehabbing old tired ares. Has no one notices how many harbor visitors in Duffey's or boater on any given summer weekend eating at our restaurants, bars or staying in a hotel. As a boat owner I have complained for years about the lack of resources for boater in Newport Harbor on the water amenities, restaurants, bars and entertainment. The city needs to pay a visit to Long Beach or San Diego. 1 already pay the highest slip rental fees in Southern California from the Irvine Company at $56 per foot plus personal property taxes a comparable slip in San Diego is $18 - $22 per foot with an unlimited amounts of on water services and activities or Long Beach at half the rate. Newport is old and getting older in it's direction it's resoucres it's entertainment and certainly it's lack of vision for it's harbor and it's residences. If you go forward with this Tideland tax increase it's just more of old thinking. Yacht owners, yacht clubs, business owners will not stand for the higher cost of Newport Harbor and just move out along with fuel tax, sales tax, property taxes. People and business are already leaving California in droves, why not Newport! Sincerely, Gregg Moss 10 Pelican Point Drive Newport Coast Agenda Item #1 October 23. 2012 Rieff, Kim Special Meeting From: City Clerk's Office Sent: Friday, October 19, 2012 9:58 AM To: Rieff, Kim Subject: FW: Please consider the Tidelands Tax Increase From: Gary Davidson [SMTP:G DAVIDSON na WEARETAYLOR.COM] Sent: Friday, October 19, 2012 9:57:30 AM To: City Clerk's Office Subject: Please consider the Tidelands Tax Increase Auto forwarded by a Rule Dear City Clerk, Please include this letter in the records regarding the proposed Tidelands Tax Increase. Dear Newport Beach City Council Member, I understand that you and your fellow council members are engaged in a process that will lead to a 20% tax increase on the marina lessees in the harbor. I am a boat owner with a 36' sailboat in a marina in the harbor. I am writing you today to ask that you reconsider this increase for three primary reasons: First, as a boat owner, I thoroughly enjoy having my boat somewhat close to my home in Costa Mesa. But I pay dearly for the privilege. Marinas in Newport Harbor are already ridiculously expensive relative to those in other nearby harbors. I've done the research. I can tell you that if marina owners are forced to pass through additional fees, I and many of my marina neighbors will be forced to relocate our boats to Long Beach or Dana Point. Second, you need to understand that the majority of the boat owners in Newport Harbor are not rich. We are typically upper middle class families that pay taxes, battle to keep our jobs and put our kids through college, and elect to spend a substantial part of our non - substantial discretionary income on boating. Besides our marina slips, we spend that discretionary money on a number of boating related things supporting Newport Beach businesses. We're not just talking about West Marine or the local engine repair guys or the boat bottom cleaners. We typically load up on food at Pavilions, buy gas in Newport Beach, and eat in Newport Beach restaurants on any given boating venture. If we relocate our boats all of this will be lost revenue to city businesses and tax revenue to city coffers. Third, our harbor marina owners are already struggling. They all have vacancies due to economic conditions, and waiting lists for slips are now non - existent. Adding a tax increase to this mix will produce volatile results. While I do support a healthy harbor and want the City to benefit from its tidelands leases, now is not the time to pursue thisincrease. Thanks very much, Gary Davidson 2535 Westminster Ave Costa Mesa, CA 92627 Agenda Item #1 October 23, 2012 Special Meeting Agenda Item #1 October 23, 2012 Special Meeting WA'l'ERFRONT NEWPORT .BEACH, L LC 2901 West Coasi Highway, Suile 200, Newport Beach, CA 92663 Tel: (206) 619 -5332 Far.: (9 49) 258 - 4374 rllourasti!!r.rl'ins r.com October 4, 2012 Mayor Nancy Gardner Mayor Pro Tem ICeith D. Curry Council Member klichael F. Henn Council Member Steven Rosansky Council ;Member Rush N. Hill, II Council Member Leslie Daigle Council Member Edward D. Selich 3300 Newport Boulevard Newport Beach, CA 9266' Commercial Tidelmds Lease/ Lease Template & Appropriate Percentage of Gross Dear Flonorabie Mayor and Honorable Members of the Newport Beach City Council, Per file Council's request, please accept and consider the following documents and comments as part of the public continents regarding above matter.. (Il) Lease Template: Enclosed please find the folio` lig lease, and lease template: (a) Lease dated May 7, 1998, including First Amendment to Lease dated May 7, 1998 between the City of Newport Beach (Lessor) and Bahia Corinthian Yacht Club - BCYC (Lessee) Esh 1 Our first request is that the above lease template in item (l ) be used as the template for the Commercial Tidelands lease. Since DCYC is an existing lease used by the City of Newport Beach For an existing Newport Harbor lessee, we believe the City should have no problem accegating its own existing lease as the template for our oomterFtplated ?ease. This should also minimize /avoid any accusations of favorable/ unequal treatments between one lessee and another. Agenda Item #1 October 23, 2012 Special Meeting Mayor Nancy Gardner, et al October 4, 2012 Page 2 of 5 f2) Apparo7riate ;Percentage of Gross: (al) The BCYC lease above uses a 9% cross perccnta;� in 1998. It is a 35 years lease and therefore is still at 9% in 2012 and even through 203' 3. is a lease between the City of Newport Beach and a Newport Harbor tenant. The City owns the tideland and the tenant owns the uplands. 'Thus BCYC is directly comparable. in almost all respects (especially non joinder) and 9% appears to be fair. (a2} Moreover, here, BCYC is given about a 2:1 ratio in tidelands to uplands water frontage. Specifically, the water frontage of BCYC has 31 slips, but the City gifted BCYC another 32 slips from adjacent uplands to BCYC (thus the roughly 2:1 ratio). Please see attached lease floor plan ( Exh 2) and aerial photo (Exh 3 . Most of the current contemplated lessees have a 1:1 ratio. Thus, compared to the BCYC lease where the ratio is 2:1. at the very least an adjustment to 9 %/2 = 430% of gross should be apnropri ate where the .ratio is 1:1 (3) Percentage of Gross per Cite (19etzer) ADnraisers (al) The Netzer 2006 appraisal proposed a 20% of gross rate based on 13 'comps." However, 11 of the "comps" are not appropriate comps since they all have joinder of tidelands and uplands. The Netzer 2012 re- appraisal uses 9 comps, of which 7 have joinder and only Bayshore and Swales are non joinder (exh 4). It is self- evident that these 11 and 7 joinder comps should not be given a lot of weight because they have joinder and are not comparable to the Newport Harbor where the uplands and tidelands have non - joinder status. (a2) The only 2 Netzer comps that have separate non joinder of tidelands and uplands are the Bayshore and Swales comps. However, the Bayshore property is gifted a 4:1 ratio in tidelands to uplands water frontage (exh 5). Thus, compared to the Bayshore lease where the ratio is 4:1, at the very least an adjustment to 20 %/4 = ;i.00% of moss should be apnropriate where the ratio is 1:1. (0) The last Netzer comp is the Swales comp. The Swales property is gifted a 9:1 ratio in tidelands to uplands water frontage (exh 6). Thus, compared to the Swsks lease where the ratio is 9:1, at the very least an adjustment to 20 %19 = 2.20% of <_*ross should be appropriate where the ratio is 1:1. Furthermore, the above Swales lease has been replaced by a new lease in November 2011 at $6,000 /mo for 50,094 sf of tidelands = $72,000/50,094sf = $1.44/sf. . Agenda Item #1 October 23, 2012 Special Meeting Mayor Nancy Gardner, et al October 4, 2012 Page 3 of 5 (4) Percentaac of Gross per Upland owners' (Jones & Associates) appraisal: (al) On pages 55 - 59 of the Jones appraisal, it lists the following non - joinder lease combs (exh 7): Comp En Nominal Tidelaud/Uplands Adjusted No. City, Year Rate "Gifted" Ratio Rate (i) 'Bahia Corinthiatu Ycht Club 9.00% Bross 2:1.......9 % /2 = 430% Newport Beach, May 1995 (ii) Bnysh0Tc 20% Bross 4:1......20 % /4= 5.0% Neivport Beach, Dec 2004 (iii) �i, vaies ($72,000/50 ;094sf) $1.44/sf 9:.1. sfno adi nec 51.44/sff Newport Beach, Nov 2011 (iv) Suns¢t Aquatic Marina 5.50% gross adjacent to joinder 8.50% Seal Beach, Jan 2000 - Comp iv is State tidelands adjacent to parcels of tidelands and uplands that the tenant leased from the County. (v) Glorie_ta Bay Marina 11.00% gross Has Joinder issues (see below) San Diego, Aug 2012 - Comp v has joinder and I1 % was just a 50/50 allocation of a 22% overall lease of the uplands &- tidelands in joinder On page 62, after detailed analysis, Jones concludes that where there is .no joinder, the Percentaae Rental Rate should be "9.50% of Bross revenues. or $1.20 per square foot of tidelands." Side memo on gifting: In order for the City to claim that Bayshore is a direct comp at 20110, the City is providing direct progf that the County actually "geed" 3 times the Bayshore uplands to Irvine Co. To re-phrase, if ]:I land is the same 20 %, then the other 3:1 of Irvine Co. tidelands is a direct "gift" specifically. forbidden by the State. One ivay to er oid this "gift" is to acknowledge that 4: 1 rate is a lot higher than 1:1 rate (eg. 20% v.s• 5 %). . Similarly, for 2:1 ratio BCYC, if the same 9% is applied to 1:.1 land, then the'other half of B CYC is a direct "gffl" fronn the City specifrcallyforbidden by the State. Perhaps an analogy is that the City is comparing 4 story land to 1 story land. First, it is already unfairly. favoring the 4 story land by bestowing the sweetheart right to build the 4 stories to the privileged Irvine Co. Then, it adds salt to the wound by trying to charge the I story laird the same lease rotes as the 4 story privileged (gifted) land. ie: "Give us 4 times our water fr- ontage, and we will pay the City the 2051o." Agenda Item #1 October 23, 2012 Special Meeting Mayor Nancy Gardner, et al October 4, 2012 Page 4 of 5 (5) Summary Conclusion) of Appropria te. ercentage of Gross: Based on above comparable non joinder leases, the percentage gross rate is in the range of 4.50% to 5.50 %. Since Jones & Associates concluded with 9.50 %_ we are willing to accept 9.50% as a fair appropriate percentage of gross. 6) Comt%romise Fr000sad It appears, for whatever reason, that the COHC wishes to use the 20% of gross number regardless of whether the non joinder comps support .it or not. The COT-IC's 2012 Netzer review suggest 20% or S 1.45 /sf, but basically with zero comps to support it per above. The COIIC's Rasmussen suggests 17% or 51.40 to $1.50 /s'Calso with no better non- joinder comps. In the spirit of compromise, we-would respectfully propose the following "tweet in the middle" compromise. We propose that we "better than average" the current $03611 fee with the COHC's 17% and settle ©n the Jones & Associates' 9.50% as the appropriate pereentage of gross, which is well supported by the Citv's own, non - joinder 9.0% lease with BCYC. This is despite the fact that BCYC actually has a2:1 tidelands to uplands "gifted" ratio and the 9.0% should be adjusted to 4.50% when used as a comp for 1:1 ratio properties. It has been pointed out that the City has the right to charge "whatever it wants to" and the upland owners have "to tale it or leave it" since they have already spent a lot of resources, time; effort, blood, sweat and tears over the decades to build the docks, access, parking, other supporting facilities, and the ongoing businesses that created the "gross" income. Furthermore, we actually heard and understand the COH.C's point that the City owiis the tidelands; and the uplands owners have been undercharged all these years. However, that is not as straightforward as it sounds. e.g. In WNB's case, we bought the building 11 years ago paying frill price for the tidelands where we were repeatedly told that all wa had to pay was Utc annual tideland fees. Now, we are asked to pay for the same tidelands a second time. Obviously, had the leases been correctly done 11 years ago, we would have negotiated for a lower purchase price and not have to pay for the same tidelands use twice. There are many other uplands owners who have spent resources to buy uplands, or to build docks and improvements only to be retroactively told that they now have to pay a 20% of gross lease. Agenda Item #1 October 23, 2012 Special Meeting Mayor Nancy Gardner, et al October 4, 2012 Page 5 of 5 In short, we understand the COkIC's points but we also request that the City feel compassion; and appreciate that it is not entirely the upland owners fault that the City undercharged for years [many of us over -paid our sellers for the difference already based on this oversight}. Nevertheless, we agree that the rates are low and we are offering a compromise that is consistent with our own appraisal's better supported numbers. We hope this compromise offer (at 9.50% of gross) will truly be given sonic consideration in our continued effort to seek a peaceful settlement of the issue. Thank you all for your time and consideration. Very truly }ours, R6bort Lourisbury Nancy Gardner: Keith D. Curry: Michael F. I°ienn: Steven Rosansky: Rush N. Hill, I1: Leslie Daigle: Edward D. Selich: NCiardner ctNcwuorti3�echCa.��u: currvkiu°pfin.ronn M1_irimia +Aew urtBertchCa.tov SRusansl :r���'e++'uurtl3eachCa.«uv 12hilh�i�Nc+vpi:rtl3each�a_ -w' Ic lieidaiulei[uaol.COm EdSeIich:a1road Lin ner.cont DaveKiff: CityivIanager dkill�_iine+vomtbcachca.aov Aaron C..Ilarp: City Attorney ahaga 5, new•nortbeachca.eov Claris Miller: harbor Resources Manager c nillerrw.ne++uonbeachra. Agenda Item #1 October 23, 2012 Special Meeting The following Commercial Tidelands Stakeholders (and Private Dock Owners) support the contents of this letter and urge the City Council to consider approval of the compromise offer presented. Duffy Boat Company CityF�I�Tev rt Beach l ;tarbor Commissioner ARilphA01c, Presic Ba]boa Rentals oa:� c.> y< s Chairman of the City, of Newport Beach Harbor Conui7)ssio)y r !� Ted Robinson Owner, Larson's Shipyard, 'Marina and Offices 't Dave New :T1A --trJ _ kiP:LteJC �Ca� C IinC�£ I �FaS ��vAt SC (�7GlC 1�. oA r1 ���„ Agenda Item #1 October 23, 2012 Special Meeting C L SIOI�w� : �Qinl OY� �,,,,nwa2 J a4/h, MN44trefv PclJ —QBycd OG P / /4T iNE 6,,,xL,—k Cam, r1. 5f-q� (2, ;tl�S a c Agenda Item #1 October 23, 2012 Special Meeting ` �N J2�G� �f�US�Nt53 (SWn1L/�l 69-� 'I Z17- C( Z7 0 3 `� i Agenda Item #1 October 23, 2012 Special Meeting Pro. 11 wo -a — �SS�i ate an ale r �M� Aj T _ rka�-eK- ,7�;79 , / e wP1L: "% 1zGs / � ;��,41ydk Agenda Item #1 October 23, 2012 Special Meeting \f10AE 1,1e �Bn� NPrCij C�Gmbc'1 D7 CA✓)7i�le GC -4 Letter to City Council (10-4 -12) Agenda Item #1 October 23, 2012 Special Meeting Doug Salisbury <doug @pelican1,net> Tue, Oct 16, 2012 at 11:12 AM Reply -To: doug @pelicanl.net To: Robin A Lombardo <robinlombardol 1 @gmail.com> Cc: Janey Horvath <laney @pelicandev.net >, David Salisbury <das4mymail @gmail.com> Robin, Thank you for sending over the lease template and the letter to the city Council. Please add my name to the signatures (sample signature below) using "Newport Landing Manna Development." THANK YOU! i From: Robin Lombardo [mailto:robinlombardoll @gmail.com] Sent: Monday, October 15, 2012 12:43 PM Tot doug @pelicanl.net Subject: Re: Tidelands Dock Tax Hi Doug: I have attached the letter for your review. Most of the people supporting it just reply to me saying please accept this email as a signature of support in favor of this letter. Thank you, Robin On Mon, Oct 15, 2012 at 11:13 AM, Doug Salisbury <doug Cupelicanl .net> wrote: Robin, 0 Re: Tidelands letter regarding Commercial Dock Lease Robin Lombardo <robinlombardo11 @gmail.com> To: Ridgeway Development <tridgeway @sbcglobal.net> Thank you very much Tod for your signature of support. Every signature helps!!! Robin Agenda Item #1 October 23, 2012 Special Meeting Fri, Oct 12, 2012 at 3:20 PM On Fri, Oct 12, 2012 at 3:09 PM, Ridgeway Development <tridgeway @sbcglobal.net> wrote: You may use my name as a signatory of the letter. Tod W. Ridgeway Ridgeway Development Company 2804 Lafayette Ave Newport Beach, CA 92663 (949) 723 -5854 Fax (949) 723 -5204 From: Robin Lombardo [ mailto :robinlombardoll @gmail.com] Sent: Friday, October 12, 2012 10:59 AM To: Tod Ridgeway Subject: Tidelands letter regarding Commercial Dock Lease Hi Todd, Thanks for calling. This is the letter that was already hand delivered to the City Mayor and all Council members. What we are doing is continuing to collect signatures by replying to my email authorizing me to print your email reply as a show of support for the letter and we will later on forward all the ones that keep coming in to the City. Thank you, i Agenda Item #1 October 23, 2012 Special Meeting RE: pwr: CNB Commercial Tidelands Lease Template e BCYC a Converted & Adjusted 121010c.docx rluehrs@newportbeach.com <rluehrs @newportbeach.com> Fri, Oct 12, 2012 at 10:58 AM To: robinlombardoll @gmail.com Hi Robin: Although the Newport Beach Chamber of Commerce does not have a financial stake in the issue, we do have a position in support of the affected small business owners and did testify at the last City Council meeting. I have attached my signature as the Official representative of the Newport Beach Chamber of Commerce foryour use and attachment to the correspondence to the City. Thanks Richard Richard R. Luehrs President /Chief Executive Officer 100 i .�'--,wPo7rii MACH Cila!:atrit Uf U:)1t etC nC( Newport Beach Chamber of Commerce The Business and Community Resource 1470 Jamboree Rd. Newport Beach, CA 92660 p,] , a 1 G Agenda Item #1 October 23, 2012 Special Meeting Re: Commercial Tidelands Lease/ Lease Template & Appropriate percentage of Gross Leeson Goodin <lee @cynb.com> Fri, Oct 12, 2012 at 10:07 AM To: Robin Lombardo <robinlombardoll @gmail.com> Robin, Please print a response for Norman C. Goodin regarding the signature of support. On Tue, Oct 9, 2012 at 5:08 PM, Robin Lombardo <robinlombardol I @gmail.com> wrote: Dear Tidelands Stakeholders or whom this may concern: I have been asked to forward you these attachments as we need as many signatures as we can get. If you like you can sign it and fax it back to me at 949 - 2584374 or even just reply to this email saying it is okay to print your response to attach it as a signature. We would like to have the signatures no later than Friday October 12th. If you have any questions, please let me know. And thanks to all the people this morning that already signed it!!! Thank you, Robin Lombardo Property Manager Waterfront Newport Beach, LLC 2901 W. Coast Hwy. Suite # 200 Newport Beach, CA. 92663 Off : 949.258.4370 Fax: 949.258.4374 Cell: 949.293.9239 - -- Forwarded message -- - -- From: Robert Lounsbury <RLLounsbury@msn.com> Date: Tue, Oct 9, 2012 at 4:28 PM Subject: Fwd: Commercial Tidelands Lease/ Lease Template & Appropriate Percentage of Gross To: Robinlombardoll @ gmail.com Sent from my iPhone Begin forwarded message: From: Robin Lombardo <robinlombardol I @gmail.com> Date: October 9, 2012, 2:37:00 PM PDT To: David Ellis <david.ellis3358 @ gmail.com>, Davd Ellis <dle @delta - partners.com> 0 Agenda Item #1 October 23, 2012 Special Meeting RE: Commercial Tidelands Lease/ Lease Template & Appropriate Percentage of Gross Pat Werner <pat @balboaboatyard.com> To: Robin Lombardo <robinlombardo1l @gmail.com> Please attach this as my signature. Pat Werner From: Robin Lombardo [ mailto :robinlombardoll @gmail.com] Fri, Oct 12, 2012 at 10:06 AM Sent: Tuesday, October 09, 2012 5:09 PM To: boseyachts @mac.com; dlugo @nhnm.org; doug @pelicanl.net; george @ghj- inc.com; jbhoch @pacbell.net; jeff.gordon @messengerco.com; johnl @curcicompanies.com; johnmmorehart @sbcglobal.net; judigorski @verizon.net; klorton @hornblower.com; Nicole .lorenby @SoleTechnology.com; pat @balboaboatyard.com; rstenlund @nhnm.org; sam @etcohomes.com; schockboats @att.net; schocl<boats @sbcglobal.net; scsyinc @yahoo.com; seaspray226 @aol.com; tompollackl @gmaiLcom; tridgeway @sbcglobal.net; wattsnewprg@ gmaiLcom; woodysnewport @yahoo.com; wpearson @pacbell.net; wperson @pacbell.net; Afshin Etebar; Bill Young / Lido Park Place HOA; Bob Black; Bob McCaffrey; Bob Sullivan; Brad Avery; Brian and Sherry White; Brian Cleugh; Casey Jones; Chandler Bell; Christian Bakewell; Craig Borison; Dan Ardell; Dan Gribble; Dave Geoffroy; Dave New; Dave Salisbury; David Beek; David Ellis; Dick Bessire; Don Funk; Duffy Duffield; Elio Amato; Ferdinand Fam; Fran Ursini; Gary Hill; Gary P Hill; Gary Pickett; Greg Sinks; Heather Goodman; Ira Beer / Lido Park Place HOA; Jack Croul; Jerry A. Kng; Jim Parker; John Corrough; John Gueola; John Vallely; Kristine Thargard; Lee Goodin; Lido Park Place Marina; Linda Guinther; Megan Delaney; Michael Curci; Mickey Harding; Norm Goodin; Paul Gurst; Rich Russell; Richard R. Luehrs; Richard Russell; Robert Lounsbury; Robin A Lombardo; Rochelle McReynolds; Ron Salisbury; Russ Fluter; Scott Schock; Seymour Beek; Steven James; Ted Robinson; Terri Remley; Tom Purcell; Warren Wimer Subject: Fwd: Commercial Tidelands Lease/ Lease Template & Appropriate Percentage of Gross Dear Tidelands Stakeholders or whom this may concern: I have been asked to forward you these attachments as we need as many signatures as we can get. If you like you can sign it and fax it back to me at 949 - 258 -4374 or even just reply to this email saying it is okay to print your response to attach it as a signature. We would like to have the signatures no later than Friday October 12th. If you have any questions, please let me know. And thanks to all the people this morning that already signed it!!! . , if G,i rtfi'411r Agenda Item #1 October 23, 2012 Special Meeting RE: Commercial Tidelands Lease/ Lease Template & appropriate Percentage of Gross Russ Fluter <cannery@earthlink.net> Wed, Oct 10, 2012 at 9:45 AM Reply -To: cannery@earthlink, net To: Robin Lombardo <robinlombardol 1 @gmail.com> This is my approval to print my response to attach it as a signature. Sincerely, RUSS FLUTER 2025 W BALBOA BLVD NEWPORT BEACH, CA 92663 T. 949.673.3777 F. 949.673-3451 From: Robin Lombardo [mailto :robinlombardoll @gmail.com] Sent: Tuesday, October 09, 2012 5:09 PM To: boseyachts @mac.com; dlugo @nhnm.org; doug @pelicanl.net; george @ghj- inc.com; jbhoch @pacbell.net; jeff.gordon @messengerco.com; johnl @curcicompanies.com; johnmmorehart @sbcglobal.net; judigorski @verizon.net; klorton @hornblower.com; Nicole .Jorenby @SoleTechnology.com; pat @balboaboatyard.com; rstenlund @nhnm.org; sam @etcohomes.com; schockboats @att.net; schockboats @sbcglobal.net; scsyinc @yahoo.com; seaspray226 @aol.com; tompollackl @gmail.com; tridgeway @sbcglobal.net; wattsnewprg @gmail.com; woodysnewport@yahoo.com; wpearson @pacbell.net; wperson @pacbell.net; Afshin Etebar; Bill Young /Lido Park Place HOA; Bob Black; Bob McCaffrey; Bob Sullivan; Brad Avery; Brian and Sherry White; Brian Cleugh; Casey Jones; Chandler Bell; Christian Bakewell; Craig Borison; Dan Ardell; Dan Gribble; Dave Geoffroy; Dave New; Dave Salisbury; David Beek; David Ellis; Dick Bessire; Don Funk; Duffy Duffield; Elio Amato; Ferdinand Fam; Fran Ursini; Gary Hill; Gary P Hill; Gary Pickett; Greg Sinks; Heather Goodman; Ira Beer / Lido Park Place HOA; Jack Croul; Jerry A. King; Jim Parker; John Corrough; John GM, -�-'.i Agenda Item #1 October 23, 2012 Special Meeting Re: Commercial Tidelands Lease/ Lease Template & Appropriate Percentage of Gross garyphill @sbcglobal.net <garyphill @sbcglobal.net> To: Robin Lombardo <robinlombardo1l @gmail.com> You ha\e my permission to put my name on it. Gary Hill Sent from my iTUG On Oct 9, 2012, at 5:08 PM, Robin Lombardo <robinlombardo1l @gmail.com> wrote: Dear Tidelands Stakeholders or whom this may concern: Tue, Oct 9, 2012 at 6:34 PM I have been asked to forward you these attachments as we need as many signatures as we can get. If you like you can sign it and fax it back to me at 949 - 258 -4374 or even just reply to this email saying it is okay to print your response to attach it as a signature. We would like to ha\e the signatures no later than Friday October 12th. If you have any questions, please let me know. And thanks to all the people this morning that already signed it!!! <330.gif> Thank you, Robin Lombardo Property Manager Waterfront Newport Beach, LLC 2901 W. Coast Hwy. Suite # 200 Newport Beach, CA, 92663 Off : 949.258.4370 Fax: 949.258.4374 Cell: 949.293.9239 - - -- Forwarded message - - - -- From: Robert Lounsbury <RLLounsbury@msn.com> Date: Tue, Oct 9, 2012 at 4:28 PM Subject: Fwd: Commercial Tidelands Lease/ Lease Template & Appropriate Percentage of Gross To: Robinlombardo11 @gmail.com Sent from my iPhone Agenda Item #1 October 23, 2012 Special Meeting Re: CNB Commercial Tidelands Lease Template m BCYC e Converted & Adjusted 121010c.docx Steven James <stevenjames33 @yahoo.com> Reply -To: Steven James <stevenjames33 @yahoo.com> To: Robin A Lombardo <robinlombardol 1 @gmail.com> Fri, Oct 12, 2012 at 8:12 AM Yes, please accept this as my signature for supporting this letter addressed to the City. Regards, Steven James From: Robin A Lombardo <robinlombardol 1 @gmail.com> To: John Vallely <johnvallely @me.com> Cc: Dave New <davel @basinmarine.com >; "boseyachts @mac.com" <boseyachts @mac.com >; "dlugo @nhnm.org" <dlugo @nhnm.org >; "doug @pelicanl. net" <doug @pelican1.net >; "george @ghj- ine.com" <george @ghj- inc.com >; "jbhoch @pacbell.net" <jbhoch @pacbell.net >; "jeff.gordon @messengerco.com" <jeff.gordon @messengerco.com >; "johnl @curcicompanies.com" <johnl @curcicompanies.com >; "johnmmorehart@sbcglobal. net" <johnmmorehart@sbcglobal .net >; "judigorski @verizon.net" <judigorski @verizon.net >; "klorton @homblower.com" <klorton @hornblower.com >; "Nicole.Jorenby@ SoleTechnology.com" < Nicole .Jorenby @SoleTechnology.corn>; "pat @balboaboatyard.com" <pat @balboaboatyard.com >; "rstenlund @nhnm.org" <rstenlund @nhnm.org >; "sam @etcohomes.com" <sam @etcohomes.com >; "s chock boats @att.net" <s chock boats @att.net >; "schockboats @sbcglobal. net" <schockboats @sbcglobal.net >; "scsyinc @yahoo. corn " <scsyinc @yahoo. corn>; "seas pray226 @aol. corn " <seaspray226 @aol.com >; "tompollackl @gmail.com" <tompollackl @gmail.com >; "tridgeway @sbcglobal. net" < tridgeway @sbcglobal .net >; "watts newprg @g mail. corn" <wattsnewprg @gmai1.corn>; "woodysnewport@yahoo.com" <woodysnewport@yahoo.com >; "wpearson @pacbell. net" <wpearson @pacbell.net >; "wperson @pacbell. net" <wperson @pac bell. net >; AfshinEtebar <afshine @etcohomes.com >; Bill Young / Lido Park Place FICA <byoung27 @aol.com >; Bob Black <bob @catalinainfo.com >; Bob McCaffrey <rtmccaffrey @yahoo.com >; Bob Sullivan < bob .sullivan.b83A @statefarm.com >; Brad Avery <brad @occsailing.com >; Brian and Sherry White <thegallery cafe @gm ail. corn>; Brian Cleugh <bcleugh @murrel.com >; CaseyJones <casey @ghj- inc.com >; Chandler Bell <cbell @hornblower.com >; Christian Bakewell <christianbakewell @gmail.com >; Craig Borison <cb @dominorealty.com >; Dan Ardell <dan @mhshennan.com >; Dan Gribble <dgdbble @boatswains locker. corn >; Dave Geoffroy <dave @scma.com >; DaveSalisbury <dave @harborside- pam lion. corn >; David Beek <davidbeek @earthlink.net >; David Ellis <dle @delta- partners.com >; DickBessire <canneryvillage @gmaiI.com >; Don Funk <dflidoresort@gmail.com >; Duffy Duffield <duffy @duffy boats. corn >; Elio Amato <elio @bayviewrmg.com >; Ferdinand Fam <fdfam @yahoo.com >; Fran Ursini <fran.ursini @hotmail.com >; Gary Hill <gary@hillsfueldock.corn>; Gary P Hill <garyphill @sbcglobal. net >; Gary Pickett <gary@mhsherman.com >; Greg Sinks <gsinks @ir6necompany.com >; Heather Goodman <HeatherG @electracruises.com >; Ira Beer/ Lido Park Place FICA <ibeer &62000.corn>; Jack Croul <jack @croul. corn >; Jerry A. King Agenda Item #1 October 23, 2012 Special Meeting 6 I- Re: CNB Commercial Tidelands Lease Template e BCYC m Converted & Adjusted 121010c.docx John Corrough <marinaconsultant @aol.com> To: mbinlombardoll @gmail.com Fri, Oct 12, 2012 at 10:30 AM Robin: Please utilize this email as an electronic signature equivalent for the lease letter. Sincerely John C. Corrough, President THE CORROUGH CONSULTING GROUP 1004 South Bayfront, Balboa Island Newport Beach, CA,92662 -1131, USA T. (1)(949) 673 -8077 (direct/voice mail) C: (1)(949) 466 -2909 (text /voice mail) F: (1)(949) 673 -8027 (fax) marinaconsultant@aol.com waterfrontcnslt@aol.com www.rnarina-consultants.com - -- Original Message-- - From: Robin Lombardo <robinlombardolI @ gmail.com> To: John Vallely <johmallely @me.com> Cc: Dave New <davel @basinmarine.com >; boseyachts <boseyachts @rnac.com >; dlugo <dlugo @nhnm.org >; doug <doug @pelican1.net >; george <george @ghj- inc.com >; jbhoch <jbhoch @pacbell. net >; jeff.gordon <jeff.gordon @messengerco.com >; johnl <johnl @curcicompanies.com >; johnmmorehart <johnmmorehart @sbcglobal.net >; judigorski <judigorski @verizon.net >; klorton <klorton @hcrnblower.com >; Nicole.Jorenby <Nicole.Jorenby @soletechnology.com >; pat < pat @balboaboatyard.com >; rstenlund <rstenlund @nhnm.org >; sam <sam @etcohomes.com >; schockboats <s chock boats @att.net >; schockboats <schockboats @sbcglobal.net >; scsyinc <scsyinc @yahoo.com >; seaspray226 <seaspray226 @aol.com >; tompollackl <tompollackl @gmaiLcom >; tridgeway <tridgeway @sbcglobal.net >; wattsnewprg <wattsnewprg @gmail.corn>; woodysnewport <woodysnewport@yahoo.com >; wpearson <wpearson @pacbell.net >; wperson <wperson @pac bell. net >; Afshin Etebar <afshine @etcohomes.com >; Bill Young / Lido Park Place HOA <byoung27 @aol.com >; Bob Black <bob @catalinainfo.com >; Bob McCaffrey <rtmccaffrey @yahoo.com >; Bob Sullivan < bob .sullivan.b83A @statefarm.com >; Brad Avery <brad @occsailing.com >; Brian and Sherry White <thegallery cafe @gm ail. corn >; Brian Cleugh <bcleugh @murrel.com >; Casey Jones <casey @ghj- inc.com >; Chandler Bell <cbell @homblower.com >; Christian Bakewell <christianbakewell @ gmail.com>; Craig Borison <cb @dominorealty.com >; Dan Ardell <dan @mhsherman.com >; Dan Gribble <dgdbble @boatswainslocker.com >; Dave Geoffroy <dave @scma.com >; Dave Salisbury <dave @harborside- pavilion.com >; David Beek <davidbeek @eart hl ink. net >; David Ellis <dle @delta- partners.com >; Dick Bessire <canneryvillage @gmail.com >; Don Funk <dflidoresort@gmail.com >; Duffy Duffield <duffy @duffy boats. corn >; Elio Amato <elio @bayviewrmg.com >; Ferdinand Fam <fdfam @yahoo.com >; Fran Ursini <fran.ursini @hotmail.com >; Gary Hill <gary@hillsfueldock.com >; Gary P Hill <garyphill @sbcglobal.net >; Gary Pickett <gary@mhsherman.com >; Greg Sinks <gs inks @iNnecompany. corn >; Heather Goodman <HeatherG @electracruises.com >; Ira Beer / Lido Park Place HOA <i1beer @an2000.com >; Jack Croul <jack @croul.com >; Jerry A. King <JAKingAssoc @gmaiLcom >; Jim Parker <portcalypso @aol.corn>; John Corrough <marinaconsultant @aol.com >; John Gueola <Jgueola @pacificavalon.com >; Kristine Thargard Agenda Item #1 October 23, 2012 Special Meeting Ike: WNB Docks Tidelands Lease template and appropriate percentage of gross le... MickeyHarding @aol.com <MickeyHartling @aol.com> Sat, Oct 13, 2012 at 1:07 PM To: robinlombardoll @gmail.com Dear Robin, Please utilize this e-mail as an electronic signature equivalent for the Lease Letter. Sincerely, Mickey Harding Realtor In a message dated 10/12/2012 11:19:36 A.M. Pacific Daylight Time, robinlombardoll @gmail.com writes: Hi Mickey, Per your request I have attached the letter addressing the Commercial Dock Tidelands Lease that was hand delivered to the City Mayor and all Council Members. We are continuing to collect signatures that we will deliver to the City showing support of the letter that was delivered previously. If you support this letter you can reply to this email as you showing that you support it. Thank you, Robin Lombardo Property Manager Waterfront Newport Beach, LLC 2901 W. Coast Hwy. Suite # 200 Newport Beach, CA. 92663 Off : 949.258.4370 Fax: 949.258.4374 Cell: 949.293.9239 Agenda Item #1 October 23, 2012 Special Meeting FIRST AMENDMENT TO LEASE THIS FIRST AMENDMENT TO LEASE (this "Amendment "), made this day of 2012 by and between the City of Newport Beach, a municipal corporation ("Lessor"), and n„ t,:.. ( "Lessee "), is made with reference to the following recitals: RECITALS A. Lessor and Lessee have entered into, or concurrently herewith are entering into; that certain Lease dated 499 2012 (the "Lease ").. B. Lessor and Lessee desire to supplement and amend the Lease as hereinafter set forth. NOW, THEREFORE, Lessor and Lessee agree that the Lease is supplemented and amended as follows: 2. Add the phrase "Except as contemplated by Section 22 of this Lease," to the beginning of Section 18 of the Lease. 3. Add a new Section 22 to the Lease as follows: 22. PROVISIONS RELATING TO LEASEHOLD MORTGAGES A. Right of Leasehold Mortgagees. (1) Definitions (a) The term "Leasehold Mortgage" as used herein shall include a mortgage, a deed of trust, a deed to secure debt, or other security instrument by which Lessee's interest under this Lease and the leasehold estate created thereby is mortgaged, encumbered, conveyed, assigned, or otherwise transferred, to secure a debt or other obligation, and any and all amendments, modifications; supplements, extensions and renewals thereof. (b) The term "Leasehold Mortgagee" as used therein shall refer to a holder of a Leasehold Mortgage in respect to which the notice provided for by Section 22A(3) has been given. (2) Leasehold Mortgage Authorized. On one or more occasions, without Lessor's prior consent, Lessee may mortgage or otherwise encumber Lessee's Leasehold Agenda Item #1 October 23, 2012 Special Meeting Estate, under one or more Leasehold Mortgages and assign this Lease as security for such Leasehold Mortgage or Mortgages. (3) Notice to Lessor. (a) If the holder of a Leasehold Mortgage shall provide Lessor with notice of such Leasehold Mortgage together with a true copy of such Leasehold Mortgage and the name and address of the Leasehold Mortgagee, Lessor and Lessee agree that, following receipt of such notice by Lessor, the provisions of this Section 22 shall apply in respect to such Leasehold Mortgage and Leasehold Mortgagee. In the event of any assignment of a Leasehold Mortgage or in the event of a change of address of a Leasehold Mortgagee or of an assignee of such Leasehold Mortgagee, notice of the new name and address shall be provided to Lessor. (4) Notices to Leasehold Mortgagees. Lessor, upon providing Lessee with any notice of: (i) default under this Lease, or (ii) a termination of this Lease, or (iii) a matter on which Lessor may predicate or claim such a default or termination, shall at the same time provide a copy of such notice to any Leasehold Mortgagee. No such notice by Lessor to Lessee shall be deemed to have been duly given unless and until a copy thereof has been so provided to any Leasehold Mortgagee. From and after the date such notice has been given to Lessee and any Leasehold Mortgagee, any Leasehold Mortgagee shall have the right to remedy, commence remedying or cause to be remedied any default or acts or omissions which are the subject matter of such notice, within the same cure period as is given Lessee, plus in each instance, the additional periods of time specified in this Section 22. Lessee authorizes each Leasehold Mortgagee to take any such action at such Leasehold Mortgagee's option and does hereby authorize entry upon the Premises by the Leasehold Mortgagee for such purpose. (5) Leasehold - Mortgagee's Election to Cure. Anything contained in this Lease to the contrary notwithstanding, if any breach or default shall occur and remain uncured, Lessor shall have no right to tenninate this Lease or exercise any other remedy unless, following the expiration of the period of time given Lessee to cure such breach or default, or the act or omission which gave rise to such breach or default, Lessor shall first notify any Leasehold Mortgagee of Lessor's intent to so exercise such remedy, such notice to be given at least thirty (30) days in advance of the proposed effective date of such exercise if such default is capable of being cured by the payment of money, and at least sixty (60) days in advance of the proposed effective date of such exercise if such default is not capable of being cured by the payment of money. 'rhe provisions of Section 22A(6) shall apply if during such thirty (30) or sixty (60) day period, any Leasehold Mortgagee shall notify Lessor of such Leasehold Mortgagee's desire to exercise its rights to perform under Section 22A(6) and shall: (a) pay or cause to be paid all rent, and other payments -then due and in arrears as specified in such notice and which may become due during such thirty (30) or sixty (60) day period; and Agenda Item #1 October 23, 2012 Special Meeting (b) comply or in good faith, with reasonable diligence and continuity, commence to comply with all non - monetary requirements of this Lease then in default and reasonably susceptible of being complied with by such Leasehold Mortgagee. (6) Procedure on Default. (a) If any Leasehold Mortgagee shall have proceeded in the manner provided Section 22A(5), the period specified in Section 22A(5) during which Lessor may not terminate this Lease or exercise any other remedy shall be extended for a period of six (6) additional months, provided that such Leasehold Mortgagee shall, during such additional six (6) month period: (i) pay or cause to be paid all rent, and other monetary obligations of Lessee under this Lease as the same become due, and continue its good faith efforts to perform all of Lessee's other obligations under this Lease, excepting non - monetary obligations not reasonably susceptible of being cured or performed by such Leasehold Mortgagee; and (ii) if not enjoined or stayed, take steps to acquire or sell Lessee's interest in this Lease by foreclosure of the Leasehold Mortgage or other appropriate means and prosecute the same to completion with reasonable diligence. (b) If at the end of such additional six (6) month period such Leasehold Mortgagee is complying with Section 22A(6)(a), this Lease shall not then terminate, and the time for completion by such Leasehold Mortgagee of its proceedings shall continue so long as such Leasehold Mortgagee is enjoined or stayed and thereafter for so long as such Leasehold Mortgagee proceeds to complete steps to acquire or sell Lessee's interest in this Lease by foreclosure of the Leasehold Mortgage or by other appropriate means with reasonable diligence and continuity. Nothing in this Section 22A(6)(b), however, shall be construed to extend this Lease beyond the original term hereof as extended by any exercised options; nor to require a Leasehold Mortgagee to continue such foreclosure proceedings after a breach or default has been cured. If the Lessee's breach or default is cured and the Leasehold Mortgagee discontinues such foreclosure proceedings, this Lease shall continue in full force and effect as if no breach or default under this Lease has occurred. (c) The making of a Leasehold Mortgage shall not impose personal liability or any Leasehold Mortgagee for the performance of any of the terms, covenants or conditions on the part of the Lessee to be performed hereunder. Nothing contained herein shall require a Leasehold Mortgagee to commence any cure or performance on behalf of Lessee or, once having commenced such a cure or performance, to continue or complete such cure or performance or require a Leasehold Mortgagee to commence any remedy or exercise any right under its Leasehold Mortgage or once having commenced such remedy or exercise to continue or complete such remedy or exercise. (d) The purchaser at any sale of this Lease and of the leasehold estate hereby created in any proceedings for the foreclosure of or trustee's sale under any Leasehold Mortgage, or pursuant to any deed in lieu of foreclosure, shall be deemed to be an Agenda Item #1 October 23, 2012 Special Meeting assignee or transferee of this Lease, and shall be deemed to have agreed to perform all of the terms, covenants and conditions on the part of the Lessee to be performed hereunder, but only from and after the date of such purchase and assignment, and only for so long as such purchaser or assignee is the owner of the leasehold estate created hereby. Any such purchaser or assignee shall not have any personal liability for any obligations of the Lessee accruing either before or after such purchaser's period of ownership. (e) Notwithstanding any other provision of this Lease, any sale ol'this Lease and o the leasehold estate hereby created in any proceedings for the foreclosure of or Trustee's sale under any Leasehold Mortgage, or the assignment or transfer of this Lease and of the leasehold estate hereby created in lieu of the foreclosure of any Leasehold Mortgage, shall be deemed to be a permitted sale, transfer or assigmment of this Lease and of the leasehold estate hereby created, not requiring any consent or approval of Lessor. B. Termination and New Lease. (1) New Lease. In the event this Lease is terminated by reason of the happening of any breach or default under this Lease which is not cured by Lessee or a Leasehold Mortgagee under the provisions and within the time limits set forth above, or in the event of rejection or disaffirmance of this Lease pursuant to bankruptcy or insolvency law or other law affecting creditors rights, Lessor shall give prompt notice thereof to any Leasehold Mortgagee. Lessor shall, on written request of any Leasehold Mortgagee, made at any time within sixty (60) days after the giving of such notice by Lessor, enter into a new lease of the Premises with such Leasehold Mortgagee within thirty (30) days after receipt of such request, which new lease shall be effective as of the date of such termination of this Lease for the remainder of the term of this Lease, at the rent provided for herein, and upon the same terms, covenants, conditions and agreements as are herein contained; provided that such Leasehold Mortgagee shall: (a) pay to Lessor at the time of the execution and delivery of said new lease any and all unpaid sums for rent and other charges payable by Lessee hereunder to and including the date thereof, less the net amount of all sums received by Lessor from any. subtenants in occupancy of any part or parts of the Premises or improvements thereon up to the date of commencement of such new lease; and (b) on or prior to the execution and delivery of said new lease, agree in writing that promptly following the delivery of such new lease, such Leasehold Mortgagee will perform or cause to be performed all of the other covenants and agreements herein contained on Lessee's part to be performed to the extent that Lessee shall have failed to perform the same to the date of delivery of such new lease except such covenants and agreements which are not reasonably susceptible of performance by such Leasehold Mortgagee. (2) New Lease Priority. Any new lease made pursuant to Section 2213(1) and any renewal Lease entered into with a Leasehold Mortgagee pursuant to this Lease shall be prior to any mortgage or other lien, charge or encumbrance on the fee interest in the Agenda Item #1 October 23, 2012 Special Meeting Premises and the tenant under such new lease shall have the same right, title and interest in and to the Premises and the improvements located thereon as Lessee had under this Lease. (3) Liability of New Lessee. The tenant under any such new lease shall be liable to perform the obligations imposed on the tenant by such new lease only during the period such person has ownership of the leasehold estate created thereby, subject to the possibility of exculpation noted in Section 2213(1). (4) Subleases and Rents. After the tennination of this Lease and during the period thereafter during which any Leasehold Mortgagee shall be entitled to enter into a new lease of the Premises, Lessor shall not terminate any sublease or the rights of the subtenant thereunder unless such subtenant shall be in default under such sublease. During such period Lessor shall receive all rent and other payments due from subtenants, including subtenants whose attornment Lessor shall have agreed to accept, as agent of such Leasehold Mortgagee and shall deposit such rents and payments in a separate and segregated account in trust for the Premises, but may withdraw such sums, from time to time, to pay necessary operating expenses and carrying charges of the Premises; and, upon the execution and delivery of such new lease, shall account to the tenant under the said new lease for the balance, if any, (after application as aforesaid) of the basic rent, additional rents and other payments made under said subleases, and said tenant shall thereupon assign the basic rent, additional rents and other payments due under said subleases to any Leasehold Mortgagees of the new lease in the same manner as such rentals and other payments had been assigned to the Leasehold Mortgagees under this Lease. The collection of rent by the Lessor acting as an agent pursuant to this subparagraph shall not be deemed an acceptance by Lessor for its own account of the attornment of any subtenant unless Lessor shall have agreed in writing with such subtenant that its tenancy shall be continued following the expiration of any period during which a Leasehold Mortgagee may be granted a new lease in which case such attornment shall take place upon such expiration but not before. C. Miscellaneous Provisions for Leasehold Mortgagees. (1) Leasehold Mortgagee Need Not Cure Specified Defaults. Nothing herein contained shall require any Leasehold Mortgagee, as a condition to the exercise of any of its rights hereunder, to cure any breach or default of Lessee not reasonably susceptible of being cured by such Leasehold Mortgagee, including without limitation any breach or default under Sections 19(a)(iii), (iv) and (v). (2) Consent of Leasehold Mortgagee Required. No cancellation, termination, surrender or modification of this Lease shall be effective as to any Leasehold Mortgagee unless either consented to in writing by such Leasehold Mortgagee or made pursuant to and in compliance with this Section 22. (3) Eminent Domain. So long as any Leasehold Mortgagee shall exist, the proceeds arising from a condemnation shall be disposed of as provided for in such Leasehold Mortgage. (4) Casualty Lose. A standard Lender's Loss Payable endorsement naming each Leasehold Mortgagee may be added to any and all insurance policies required to be Agenda Item #1 October 23, 2012 Special Meeting carried by Lessee hereunder. Nevertheless, the provisions in any Leasehold Mortgage for the application of insurance proceeds shall be subject to the provisions of this Lease with respect thereto and, in the event of any conflict between the provisions of this Lease and the provisions of any Leasehold Mortgage with respect thereto, the provisions of this Lease shall control. (5) Arbitration and Legal Proceedings. Lessor shall give any Leasehold mortgagee prompt notice of any arbitration or legal proceedings between Lessor and Lessee involving obligations under this Lease. Any Leasehold Mortgagee shall have the right to intervene in any such proceedings and be made a party to such proceedings, and the parties hereto do hereby consent to such intervention. Lessor shall also give any Leasehold Mortgagee notice of, and a copy of, any award or decision made in any such proceedings. Anything contained in this Lease to the contrary notwithstanding, in the event Lessee shall fail to appoint an arbitrator under circumstances where Tenant is required or authorized to do so, a Leasehold Mortgagee shall have an additional period of thirty (30) days, after notice by Lessor that Lessee has failed to appoint such arbitrator, to make such appointment, and the arbitrator so appointed shall thereupon be recognized in all respects as if he had been appointed by Lessee. (6) Notices. No notice to be given by Lessor to any Leasehold Mortgagee or by any Leasehold Mortgagee to Lessor shall be effective unless in writing and, if to any Leasehold Mortgagee, sent by registered mail to the most recent address furnished Lessor pursuant to Section 22A(2), and if to Lessor, sent by registered mail to the address set forth in Section 21(c). (7) Erroneous Pam. A Leasehold Mortgagee making any payment to Lessor in error or pursuant to Lessor's wrongful, improper or mistaken notice or demand shall be entitled to the return of any such payment or portion thereof. I£ after any such payment by a .Leasehold Mortgagee, the Lessee pays the same or any part thereof to Lessor, Lessor shall promptly refund said payment or portion thereof to such Leasehold Mortgagee. (8) Limitation on Lessor's Right to Encumber Fee. Any mortgage now or hereafter placed on Lessor's fee interest in the Premises shall be subject to this Lease, to any new lease created pursuant to Section 22B, to any mortgage now in existence on the leasehold estate as permitted by this Lease or such new lease, and to Lessee's right, as permitted by this Lease or such new lease, subsequently to encumber the leasehold estate created hereby or thereby. (9) No Rights to Encumber Fee of Lessor. The provisions of this Section do not give to any person whatsoever the right to mortgage, hypothecate or otherwise to encumber or to cause any liens to be placed against the freehold estate of Lessor, nor shall said provisions be construed as resulting in a subordination in whole or in part of the freehold estate of Lessor to any indebtedness of Lessee. (10) Performance by Leasehold Mortgagee. Any Leasehold Mortgagee shall have the right, but not the obligation, to make any payment, perform or cause to be performed any act, or otherwise comply or cause compliance with any and all terns, covenants and provisions of this Lease to be complied with by Lessee, and Lessor shall accept any such Agenda Item #1 October 23, 2012 Special Meeting payment, performance or compliance by any Leasehold Mortgagee as if such payment, performance or compliance had been made by Lessee. (11) Rights of Leasehold Mortgagees. The exercise by any Leasehold Mortgagee of its rights to obtain possession of the Premises, including without limitation the right to commence an action against the Lessee for the appointment of a receiver, shall not constitute a breach or default under this Lease. (12) Non - Merger. So long as any Leasehold Mortgage is in existence, unless the Leasehold Mortgagee thereof shall otherwise expressly consent in writing, the fee title to the Premises and the leasehold estate therein created by this Lease shall not merge but shall remain separate and distinct, notwithstanding the acquisition of both said fee title and said leasehold estate by Lessor, Lessee or by a third party, by purchase or otherwise. (13) Estoppel Certificate. Lessor shall, without charge, at any time and from time to time within ten (10) days after written request of Lessee or any Leasehold Mortgagee to do so, certify by written instrument duly executed and acknowledged to any Leasehold Mortgagee or purchaser, or proposed Leasehold Mortgagee or purchaser, or any other person, firm or corporation specified in such request: (a) as to whether this Lease has been modified, supplemented, amended, extended or renewed and if so, the substance and manner of such modification, supplement, amendment, extension or renewal; (b) as to the validity and force and effect of this Lease in accordance with its provisions; (c) as to the existence of any breach or default hereunder or any circumstance which, with the giving of notice or the passage of time, or both, would constitute a breach or default hereunder; (d) as to the existence of any offsets, counterclaims or defenses to the enforcement of this Lease on the part of either Lessor or Lessee; (e) as to the commencement and expiration dates of the tern of this Lease; and (f) as to any other matters as may be reasonably so requested. Any such certificate may be relied upon by Lessee and any other person, firm or corporation to whom the same may be exhibited or delivered, and the contents of such certificate shall be binding upon Lessor. 14) Survival. The provisions of this Section 22 shall survive the termination, rejection or disaffirmance of this Lease and shall continue in full force and effect thereafter to the same extent as if this Section 22 was a separate and independent contract made by Lessor and any Leasehold Mortgagee and, from the effective date of such termination, rejection or disaffrrmance of this Lease to the date of execution and delivery of any new lease pursuant to Section 2213, such Leasehold Mortgagee may use and enjoy the Premises without hindrance by Lessor or any person claiming by, through or under Lessor so long as such Leasehold Mortgagee or any person claiming by, through or under such Leasehold Mortgagee complies with the terms of this Lease except as otherwise provided in Section 22C(1). 4. Except as expressly set forth herein, the Lease remains unmodified and in full force and effect. Agenda Item #1 October 23, 2012 Special Meeting IN WITNESS WHEREOF, the parties have executed this Amendment effective as of the date first written above. LESSOR City of Newport Beach Attest: Mayor By: City Clerk Approved as to form: Asst. City Attorney LESSEE Agenda Item #1 October 23, 2012 Special Meeting LEASE THIS LEASE, made this �k day of M", 49-9 2012 by and between the City of Newport, a municipal corporation, and hereinafter, "Lessor" and 4w44ahia hereinafter, "Lessee ", is made with reference to the following recitals: RECITALS A. Under the provisions of the Beacon Bay Bill (Chapter 740 of the Statues of 1978), Lessor is the grantee of certain harbor tidelands, located in the City of Newport Beach, County of Orange, ( "Tidelands Grant "); B. Lessee currently operates a marina in and over a portion of those tidelands under Harbor Permit ni na ions i C. Harbor Permit ^' ^� � 883 is issued to °' F ° R omw`i- ° a' ` ' - �, the owner of the upland property adjacent to the tidelands; D. Lessee has acquired the upland property adjacent to the tidelands; E. The parties desire to enter into a long -term lease in lieu of a City Harbor Permit, and F. The Marina use to be made of these tidelands, and the terms and conditions in this lease are consistent with the provisions of the City Charter and Ordinances of Lessor, and are consistent with the provisions of the Tideland's Grant.=, ai4d NOW THEREFORE, THE PARTIES AGREE: 1. LEASED PREMISES In consideration of the rent to be paid and the covenants and conditions to be observed and performed by Lessee, Lessor leases to the Lessee those tidelands described in Exhibit "A" and depicted on the map attached, as Exhibit "B" (the "Premises' 1. Lessor reserves all oil, oil rights, gas, minerals, mineral rights, natural gas rights and other hydrocarbon substances in and under the Premises and the right to grant and transfer the same, together with all necessary and .. - - - NOW THEREFORE, THE PARTIES AGREE: 1. LEASED PREMISES In consideration of the rent to be paid and the covenants and conditions to be observed and performed by Lessee, Lessor leases to the Lessee those tidelands described in Exhibit "A" and depicted on the map attached, as Exhibit "B" (the "Premises' 1. Lessor reserves all oil, oil rights, gas, minerals, mineral rights, natural gas rights and other hydrocarbon substances in and under the Premises and the right to grant and transfer the same, together with all necessary and Agenda Item #1 October 23, 2012 Special Meeting convenient rights to explore for, develop, produce and extract and take the same, subject to the express limitation that any and all operations for the exploration, development production; extraction and taking of any such substance shall be carried on at levels below the depth of five hundred feet (500') from the surface of the land by means of wells, derricks and other equipment from surface locations on adjoining or neighboring land, and subject further to all restrictions and regulations concerning the drilling for, and production of, oil, gas, minerals, petroleum and other hydrocarbon substances specified in the Newport Beach City Charter or the Newport Beach Municipal Code. 2. TERM The Term shall commence on the date first written above, and shall expire upon the ( )anniversary thereof (the "Expiration Date "), unless sooner terminated as provided in this Agreement. QUIET POSSESSION So long as no default by Lessee has occurred under this Lease, Lessee shall peaceably and quietly use and enjoy the Premises for the Term, without hindrance or interruption by Lessor or any other person or persons claiming by, through or under Lessor. Lessor shall in no event be liable in damages or otherwise, nor shall Lessee be released from any obligations hereunder, because of the interruption or termination of any service provided by the Lessor (such as, water or sewer service), or a termination, interruption or disturbance of any service attributable to any act or neglect of Lessor or its servants, agents, employees, licensees, business invitees, or any person claiming by, through or under Lessee. 4. IMPROVEMENTS TO LEASED PREMISES Lessor and Lessee 'acknowledge that Lessee has constructed major improvements on and adjacent to the Premises. These improvements include, but are not necessarily limited to, bulkheads, piers, docks, floats and related improvements which comprise a marina consisting of —504 linea'p _square feet of tidelands for docking of boats, (collectively, the "Marina improvements ") as shown on Exhibit "B." Of the �- ,- lineal nfeet _square feet of tidelands for docking boats, 'ift°at feet of such _square feet of tidelands are located on State Tidelands, which are the subject of this Lease and shall serve as the basis for calculating rent herein below. 5. RENT Upon execution of this lease Lessee shall pay to Lessor the sum of , , in twelve (12) equal monthly installments of b ) payable on the first of each month, and every year thereafter. Lessee shall pay rent which sum is equal equivalent to nine and a half percent (94 9.5% ) of the annual gross receipts from slip rentals generated by lineal feet ,.r.....,nn °lip° _square feet of tidelands at a rental rate of ) per lima gal feet square feet, the ( "rental rate ") or such Agenda Item #1 October 23, 2012 Special Meeting rental rate as maybe adjusted as provided in Paragraph 6 below. The 9.5% equivalent rate is to be converted to a rate per square foot basis, and ramped up from existing rate (Per exhibit B to be attached). 6. RENT ADJUSTMENT /MINIMUM RENT Every year, on the anniversary date of the Lease, the rental rate shall be adjusted upwards or downwards in direct proportion to the weighted average increase or decrease in the rate per lineal foot of slips in the "comparable marinas" described below, but in no event shall the rent adjust below the then prevailing commercial harbor permit fee paid by other commercial users within lower Newport Harbor. The weighted average rate per lineal foot of slips shall be determined by the following "comparable marinas. ": . (To be determined, per exhibit C) From the list of "comparable marinas" the following size categories shall be excluded from the weighted average calculations: ; eight (To be determined, per exhibit C) If the method of determining rental rates in the comparable marinas should change, Lessor agrees to consult with Lessee to establish a comparable method to determine the future rental rates. ALTERATIONS Lessee shall have the right to make, at its sole expense, such nonstructural changes, alterations, improvements and additions in and to the marina improvements, but such changes shall conform to the City's Harbor Permit Policies and Exhibit "B'. Structural changes shall not be made to any marina improvement without first submitting written plans and specifications of the proposed change, alteration or addition to the Lessor and obtaining Lessor's written approval. Lessee shall make, at its expense, such changes, alterations or additions in and to structures on the Premises that may be required by any public law ordinance from time to time, applicable to Lessee's use and occupancy of the Premises. 8. MARINA MAINTENANCE Lessee at its sole cost and expense; shall keep and maintain all marina improvements and related fixtures and personal property n �i,nn first class order, condition and repair. Lessee shall maintain and operate not less than 2Vt9'inea'�p? _square feet of tidelands available for rent. Maintenance dredging bayward of the property line, between the bulkhead line and the pierhead line, shall be the responsibility of the Lessee for the zone delineated by bayward prolongations of upland side property lines out to the U.S. project line. The Lessee agrees that the Lessor may go upon the leased Premises and make any necessary repairs to the Premises, and perform any work therein: (i) Which may be necessary to comply with any laws, ordinances, rules or regulations of any public entity; (ii) That Lessor is obligated to make, under the terms of this Lease; or Agenda Item #1 October 23, 2012 Special Meeting (iii) That the Lessor may deem necessary to prevent waste or deterioration of the Premises, if the Lessee does not make or cause such work to be performed promptly and diligently after receipt of written demand, therefore from the Lessor. Nothing herein contained shall apply any duty on the part of the Lessor to do any work which the Lessee may be required to do, nor shall it constitute a waiver of Lessee's default. No exercise by the Lessor of any rights reserved, shall entitle the Lessee to any damage for any injury or inconvenience occasioned thereby, or to any abatement of rent, however, such repairs once commenced, shall be completed in a timely manner. In the event that Lessor makes, or causes to be made, any repairs, within the Term of this Lease that is Lessee's obligation to make, Lessee shall upon demand, pay to the Lessor the cost of such repairs, which amounts shall be due and payable upon demand and shall bear interest from the date of demand, until totally paid at the rate of nine percent (9 %) per annum. 9. USE OF THE PREMISES During the Term of this Lease, Lessee shall use and occupy the Premises, principally for the operation of a manna. The marina use shall be limited to the rental of boat slips, dock lockers, dry storage and related uses. Lessee shall not commit or permit the commission by others of any waste on the Premises. Lessee shall not maintain any nuisance, as defined in Section 3479 of the California Civil Code on the leased Premises. Lessee shall not unreasonably interfere with the rights of other harbor permittees or nearby residents, and Lessee shah not use or permit the use of the Premises for any unlawful purpose, or in violation of any provision of law. 10. UTILITIES Lessee shall be solely responsible for obtaining and shall promptly pay for all water, power, sewer, and other utility services provided to the Premises. 11. RIGHT TO ENTER Lessor expressly reserves the right to enter the Premises and all improvements for any purpose associated with this Lease or for carrying out any function required by law, or the rules, regulations or management policies of Lessor. Lessor shall have a right of reasonable access to the Premises across Lessee owned or occupied lands adjacent to the Premises for any purpose associated with this Lease. 12. RULES. REGULATIONS AND TAXES (a) Lessee shall comply with and be bound by all presently existing or subsequently enacted policies, regulations, statutes or ordinances of Lessor, including, but not limited to, rules and regulations prescribed under Council Policy H -1 (Harbor Permit Policies), or any other government agency or entity having lawful authority and jurisdiction. Agenda Item #1 October 23, 2012 Special Meeting (b) Lessee understands and agrees that a necessary condition for the granting and continued existence of this Lease is that Lessee obtain and maintain all permits or other entitlements. (c) During the Term of this lease, Lessee shall pay, prior to delinquency, any and all taxes assessed against Lessee's possessory interest under this Lease and all other taxes, assessments, user fees or service charges imposed on or associated with the leasehold interest, or personal property or improvements on the Premises, and such payment shall not reduce rent due Lessor under this Lease, and Lessor shall have no liability for such payment. 13. ENVIRONMENTAL REQUIREMENTS (a) Lessee shall practice conservation of water, energy, and other natural resources and shall prevent pollution and hann to the environment. Lessee shall not violate any law or regulation whose purpose is to conserve resources or to protect the environment. (b) Lessee shall not use, nor permit the use of any hazardous wastes or materials in the construction, reconstruction or renovations of or use of the marina improvements in violation of any applicable law, regulation, code or ordinance. Lessee shall, at its expense, comply, and cause each of its members, licensees and /or concessionaires of space in the marina or elsewhere adjacent to the Premises to comply with all applicable laws, regulations, codes and ordinances relating to any hazardous regulated material, including obtaining and filing all applicable notices, permits, licenses and similar authorizations. Lessee shall be frilly responsible to clean up any hazardous wastes, substances or materials as may be required under Federal, State or local law, regulation, code or ordinance that are manufactured, generated, used, placed, disposed, stored, or transported on the Premises by Lessee, its members, licensees and concessionaires during the Lease Tenn and shall comply with and be bound by all applicable provisions of such Federal, State or local law, regulation, code or ordinance dealing with such wastes, substances or materials. Lessee shall notify Lessor and the appropriate governmental emergency response agency(ies) immediately in the event of any release or threatened release of any such wastes, substances or materials. 14. INDEMNITY (a) Lessee agrees to defend, indemnify, protect and hold Lessor harmless from and against any and all liability, claims, damages, penalties, actions, demands or expenses of any kind or nature, including damage to any property and injury (including death) to any person (collectively, "Claims "), arising from Lessee's use or occupation of the Premises of from any activity, work or things done, permitted or suffered by Lessee, or from any activity, work or things done, permitted or suffered by Lessee or any omission of Lessee on or about the Premises or from any litigation concerning any of the foregoing in which Lessor is made a party Defendant. Lessee shall not be required hereunder to defend, indemnify or hold Landlord or any other person or entity indemnified under this Section harmless from or against any of the Claims to the extent such Claim arises solely out of the negligence or willful misconduct of Lessor. This obligation to indemnify shall include reasonable. attorneys' fees and investigation costs and all other reasonable costs, expenses and liabilities incurred by Lessor or its counsel from the first notice that any claim or demand is to be made or may be made. Agenda Item #1 October 23, 2012 Special Meeting (b) Upon receiving knowledge of any Claim that Lessor believes is covered by this indemnity, Lessor shall give Lessee notice of the matter and an opportunity to defend it, at Lessee's sole cost and expense, with legal counsel satisfactory to Lessor in its sole and absolute discretion. Lessor may also require Lessee to so defend the matter. So long as Lessee shall be defending any such Claim, Lessor shall not settle such clam without the consent of Lessee, (c) Lessee shall notify Lessor immediately in case of any accident, injury or casualty on the Premises. 15. INSURANCE (a) Lessee shall obtain and maintain in full force and effect during the Term of this Lease, comprehensive general liability insurance and property damage insurance, with such coverage and limits as may be reasonably requested by the Lessor from time to time, but in no event for less than the sum(s) specified below, insuring Lessee and Lessor against any and all claims or liability arising out of the ownership, use, occupancy, condition or maintenance of the Premises and all improvements. (i) Comprehensive General Liability Insurance. Lessee shall maintain Comprehensive General Liability Insurance with a combined single limit for bodily injury and property damages of Two Million Dollars ($2,000,000), (which amount shall be subject to periodic adjustment as may be determined by Lessor upon one hundred eighty days (180) prior notice. The limits of liability of the insurance coverage specified in this paragraph may be provided by any combination of primary and excess liability insurance policies. (ii) Property Insurance- Construction. During construction of any improvements on the Premises, Lessee shall maintain builder's risk insurance against "all risk" or physical loss, including without limitation the perils of flood, collapse and transit, with deductibles acceptable to Lessor, covering the total cost of work performed, equipment, supplies and materials furnished on a replacement cost basis. Lessee shall be permitted to obtain and maintain flood insurance in such amounts and forms as are available, from time to time, under National Flood Insurance Program. (iii) Property Insurance. Lessee shall obtain insurance on the marina improvements and shall maintain insurance continuously during the Term, against "all risk" perils of physical loss, including, but not limited to,flood, fire, lightning, riot and civil commotion, vandalism and malicious mischief. Such insurance shall be in amounts not less than the then full replacement cost of the marina improvements, without deduction for depreciation. Such policies of insurance shall Agenda Item #1 October 23, 2012 Special Meeting contain the "Replacement Cost Endorsement." Such full replacement cost shall pertain to the Project and Furnishings and be determined not less often than each two (2) years during the Term. (b) Insurance carriers shall be licensed and approved to do business in California having a general policyholders' rating of not less than B+ and financial rating or not less than 'VII" in the most current Best's Key Rating Guide. (c) The insurance policy or policies shall name the Lessor, its officers, agents and employees as additional insureds. Lessee shall provide Lessor with a certificate of such insurance and shall keep such certificate current. The policy (or endorsement) must provide that the insurer will not cancel the Lessee's coverage without thirty (30) days prior written notice to the Lessor. The Lessor will not be responsible for any premiums or other assessments on the policy. The coverage provided by the Lessee shall be primary and non - contributing. (d) The insurance coverage specified in this Lease shall be in effect at all times during the Lease Term and subsequently until all of the Premises have been either accepted as improved, by Lessor, or restored by Lessee. (e) Lessee shall not commit or permit the commission of any acts on the Premises that would cause the cancellation of any liability or other insurance policy, insuring either the Premises or the improvements on the Premises. Lessee shall, at its own cost and expense, comply with any and all requirements imposed by insurance companies that carry the policies described above. (f) Each policy of insurance procured pursuant to the Section shall contain, either. (i) A waiver by the insurer of the right of subrogation against either party hereto 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 described in the insurance policy. Lessor and Lessee each hereby waives any and all rights of recovery against the other, and against it shareholders, officers, directors, employees, subsidiaries, partners, servants, agents and representatives, for loss or damage arising from any cause insured against under the form of insurance policies required to be carried pursuant to this Section or under any other policy of insurance carried by either Lessor or Lessee. Lessee and Lessor each agrees to use reasonable efforts to obtain its liability insurance carriers' permission as to the waiver of subrogation described above in this Section. (g) Lessee shall at all times observe and comply with the requirements of all policies of insurance in force with respect to the Premises or any part thereof, and Lessee shall so perform and satisfy the requirements of the companies writing such policies so that, at all times, companies of good standing reasonably satisfactory to Lessor shall be willing to write or to continue such insurance. Lessee shall, if any member, licensee, concessionaire or other user of Agenda Item #1 October 23, 2012 Special Meeting any portion of the Premises engages in any activity in violation of the requirements of all policies Of insurance in force with respect to the Premises, or any party thereof, take steps, immediately upon knowledge of such activity, to remedy or prevent the same, as the case may be. 16. CASUALTY Lessee shall promptly cause the marina improvements, or any part, thereof, which is damaged or destroyed, to be repaired and restored to its original condition whether or not required to be insured against, at Lessee's sole cost and expense. Such repair and restoration shall be commenced in good faith and with all reasonable diligence within a reasonable diligence within a reasonable period of time following casualty and shall be completed with due diligence. 17. NO ABATEMENT OF RENT Throughout the Term, no direct or indirect destruction of or damage to the marina improvements or any other personal property on the Premises or any part thereof or elsewhere by fire or other casualty whatsoever, whether such damage or destruction be partial or total, shall permit Lessee to surrender or tenninate the Lease or relieve Lessee from its obligation to pay in full the rent and other sums and charges payable by Lessee hereunder or from any other obligation under the Lease, except as otherwise expressly set forth herein. 18. ASSIGNMENT. ENCUMB:RANCING OR SUBLETTING (a) Lessee shall not either voluntarily or by operation of law, assign, transfer, mortgage, pledge, hypothecate or encumber this Lease and shall not sublet the Premises, in whole or in part, or allow any person other than the Lessee's employees, members, agents, servants and invitees to occupy or use all or any portion of the Premises without the prior written consent of Lessor which consent shall not be unreasonably withheld. (b) The following shall be deemed to be an assignment or transfer within the meaning of this Lease: (i) If Lessee is a corporation, any dissolution, merger, consolidation or other reorganization of Lessee or sale or other transfer of a percentage of capital stock of Lessee which results in a change of controlling persons, or the sale or other transfer of substantially all the assets of Lessee. (ii) If Lessee is a partnership, a transfer of any interest of a general partner, a withdrawal of any general partner from the partnership, or the dissolution of the partnership. (c) This Lease is appurtenant to adjoining littoral or riparian land and/or uplands, and Lessee shall not transfer or assign its ownership interest or use rights in such adjoining land separately from the leasehold rights granted by this Agreement without the prior written consent of Lessor. Agenda Item #1 October 23, 2012 Special Meeting 19. DEFAULT AND REMEDIES (a) The occurrence of any one or more of the following shall constitute a default by Lessee: (i) Failure of Lessee to pay rent due hereunder within thirty (30) days after written notice from Lessor, or (ii) Any failure by Lessee to perform any of the other terms, conditions or covenants of this Lease to be observed or performed by Lessee after thirty (30) days written notice from Lessor, or (iii) Lessee becoming insolvent or filing any debtor proceedings, or should any adjudications in bankruptcy be rendered against Lessee, or should Lessee take or have taken against it, in any court pursuant to any statute either of the United States or of any State, a petition in bankruptcy or insolvency or for reorganization or for the appointment of a receiver or trustee of all or a portion of Lessee's property, and should the same not be discharged within one hundred twenty (120) days thereafter; or (iv) Lessee permitting the Premises to become vacant or unoccupied for fifteen (15) consecutive days after written notice to Lessee (except for vacancies caused by any Force Majeure or by remodeling, reconstruction, alterations or repairs permitted under this Lease); or (v) The appointment of a trustee or receiver to take possession of substantially all of the assets of Lessee located at the Premises or Tenant's interest in this Lease or the Premises, where possession is not restored within thirty (30) days. (b) Except for the payment of rent; if the nature of Lessee's default or breach under this paragraph is such that more than thirty (30) days are reasonably required for its cure, then Lessee shall not be deemed to be in default or breach if Lessee commences such cure within such thirty (30) day period and diligently proceeds with such cure to completion. (c) Remedies. In the event of a default or breach by Lessee and Lessee's failure to cure such default or breach, Lessor may at any time and with or without notice do any one or more of the following: (i) Re -enter the Lease Premises, remove all persons and property, and repossess and enjoy such Premises. (ii) Terminate this Lease and Lessee's right of possession of the Lease Premises. Such termination shall be effective upon Lessor's giving written notice and upon receipt of such notice, Lessee shall immediately surrender possession of the Lease Premises to Lessor. Agenda Item #1 October 23, 2012 Special Meeting (iii) Maintain this Lease in full force and effect and recover any rental, royalty, or other consideration as it becomes due, without terminating Lessee's right of possession, regardless of whether Lessee shall have abandoned the Lease Premises. (vi) Exercise any other right or remedy which Lessor may have at law or equity. 20. RESTORATION OR PREMISES (a) Upon expiration or sooner termination of this Lease, Lessor upon written notice, may take title to any or all improvements, including fills, or Lessor may require Lessee to remove all or any such improvements at its sole expense and risk; or Lessor may itself remove or have removed all or any portion of such improvements at Lessee's sole expense. Lessee shall deliver to Lessor such documentation as may be necessary to convey title to such improvements to Lessor, free and dear of any liens, mortgages, loans or any other encumbrances. (b) In removing any such improvements, Lessee shall restore the Premises as nearly as possible to the conditions existing prior to their installation or construction. (c) All plans for and subsequent removal and restoration shall be to the satisfaction of Lessor and shall be completed within ninety (90) days after the expiration or sooner termination of this Lease. (d) In removing any or all the improvernents, Lessee shall be required to obtain any permits or other governmental approvals as may then be required by lawful authority. 21. ADDITIONAL PROVISIONS (a) Waiver (i) No term, covenant, or condition of this Lease and no default or breach of any such tern, or condition shall be deemed to have waived by Lessor's acceptance of late nonconforming performance or otherwise, such a waiver is expressly acknowledged Lessor in writing. (ii) Such waiver shall not be deemed to be a of any other term, covenant or condition this Lease. (b) Time Time is of the essence of this Lease and each and all its terms, covenants or conditions in which is a factor. (c) Notice Agenda Item #1 October 23, 2012 Special Meeting All notices required to be given under this Lease be given in writing, sent by U.S. Mail, to Lessor at: City of Newport Beach 3300 Newport Boulevard Newport Beach, California, 92658 Attention: City Manager and the Lessee at the address specified in this Lease. Lessee shall give Lessor notice of any change in its name, address or telephone number. Until such notice of change, all notices to Lessee shall be sent to: r ...r..�.T.ss..�.�....r. +�.�...r - -- -_ -i .... (d) Consent Where Lessors consent is required under this Lease, its consent for one transaction or event shall not be deemed to be a consent to any subsequent occurrence of the same or any other transaction or event. (e) Changes This Lease may be terminated and Its term, covenants and conditions amended, revised or supplemented only by mutual written agreement of the parties. (t) Successors. The terms, covenants and conditions of this Lease shall extend to and be binding upon and inure to the benefit of the heirs, successors, and assigns of the respective parties. (g) Joint and Several Obligation If more than one Lessee is a party to this Lease, the obligations of the Lessees shall be joint and several. (h) Captions The captions of this Lease are not controlling and shall have no effect upon its construction or interpretation. Agenda Item #1 October 23, 2012 Special Meeting (i) Severability If any term, covenant or condition of this Lease is determined by a court of competent jurisdiction to be invalid, it shall be considered deleted and shall not invalidate any of the remaining terms, covenants and conditions. IN WITNESS WHEREOF, TILE PARTIES HAVE EXECUTED THIS AGREEMENT EFFECTIVE AS OF THE DATE FIRST WRITTEN ABOVE. LESSOR LESSEE CITY OF NEWPORT BEACH Burn �^nr�rmrrr IN 171 G11T Cr��n Mayor ATTEST: City Clerk APPROVED AS TO FORM: Assistant City Attorney Agenda Item #1 October 23, 2012 Special Meeting RECORDING REQUESTED BY AND WHEN RECORDED RETURN TO: MEMORANDUM OF LEASE This is the Memorandum of Lease dated this day of X99& 2012, between the City of Newport Beach, a municipal corporation, and " r 94� (hereinafter "Lessor ") and (hereinafter "Lessee "), concerning those tidelands described in Exhibit "A" and depicted on the map attached hereto as Exhibit "B" and incorporated herein by this reference. For good and adequate consideration, Lessor leases the premises to Lessee, and Lessee hires them from Lessor, under the terms and conditions contained in the Lease ( "Lease ") and First Amendment to Lease ( "Amendment ") which are incorporated in this Memorandum of Lease by this reference. The term is 4�5 ( ) years, commencing on and ending on the date which is ( ) years after such commencement date, if not sooner terminated pursuant to the terms thereof. Agenda Item #1 October 23, 2012 Special Meeting This Memorandum of Lease is not a complete summary of the Lease and Amendment. Provisions in the Memorandum of Lease shall not be used in interpreting the Lease or Amendment provisions. In the event of conflict between the Memorandum of Lease, and the Lease or Amendment, the Lease and Amendment shall control. "Lessor ": CITY OF NEWPORT BEACH, a municipal corporation and Charter City "Lessee ": O AITIA /'VIO iATTiTiAAt VAf�iiT /�T iID LN Its: M Its: Agenda Item #1 October 23, 2012 Special Meeting STATE OF CALIFORNIA SS. COUNTY OF ORANGE On , before me,_ personally appeared , personally known to me to be the person whose name is subscribed to the within instrument and acknowledged to me that he executed the same in his authorized capacity, and that by his signature on the instrument the person, or the entity upon behalf of which the person acted, executed the instrument. WITNESS my hand and official seal. STATE OF CALIFORNIA ) )SS COUNTY OF ORANGE ) On before Notary Public in and for said County and State personally appeared personally known to me (or proved to me on the basis of satisfactory evidence) to be the person whose name is subscribed to the within instrument and acknowledged to me that he executed the same in Agenda Item #1 October 23, 2012 Special Meeting his authorized capacity, and that by his signature on the instrument the person, or the entity upon behalf of which the person acted, executed the instrument. WITNESS my hand and official seal. Notary Public in and for said County and State lWar -l"M LEGAL DESCRIPTION OF THE LAND HARBOR PERMIT BOUNDARIES A. That area of State Tidelands bayward of the upland property between the U.S> Bulkhead Line and U.S. Project Line, as shown on the attached aerial photograph, Exhibit B. MIR- _- ... AMI- '- HARBOR PERMIT BOUNDARIES A. That area of State Tidelands bayward of the upland property between the U.S> Bulkhead Line and U.S. Project Line, as shown on the attached aerial photograph, Exhibit B. _- ... AMI- '- HARBOR PERMIT BOUNDARIES A. That area of State Tidelands bayward of the upland property between the U.S> Bulkhead Line and U.S. Project Line, as shown on the attached aerial photograph, Exhibit B. GROUND LESSOR'S ESTOPPEL CERTIFICATE Re: Lease to Bakia=Q@*6— AWN — Gentlemen: Agenda Item #1 October 23, 2012 Special Meeting The City of Newport Beach, a municipal corporation and Charter City ( "Lessor "), hereby certifies to you ( "Lender ") as follows: The Lessor has entered into that certain Lease, dated as amended by that certain First Amendment to Lease dated a short form of which has been or will be recorded in the Official Records of Orange County, California (collectively the "Lease "), with -� ( "Lessee "). 2. The Lease has been duly authorized, executed and delivered by the Lessor and is in full force and effect. 3. The Lessor has not assigned or agreed to assign its interest under the Lease in whole or in part. The Lessor has received no notice of any prior transfer, assignment or encumbering of the Lessee's interest under the Lease. 4. The Lessor is not in any respect in breach or default under the Lease. There is no fact or condition currently existing which, with notice or time or both, would constitute such a breach or default by the Lessor under the Lease. - - - - -- -_ •• Re: Lease to Bakia=Q@*6— AWN — Gentlemen: Agenda Item #1 October 23, 2012 Special Meeting The City of Newport Beach, a municipal corporation and Charter City ( "Lessor "), hereby certifies to you ( "Lender ") as follows: The Lessor has entered into that certain Lease, dated as amended by that certain First Amendment to Lease dated a short form of which has been or will be recorded in the Official Records of Orange County, California (collectively the "Lease "), with -� ( "Lessee "). 2. The Lease has been duly authorized, executed and delivered by the Lessor and is in full force and effect. 3. The Lessor has not assigned or agreed to assign its interest under the Lease in whole or in part. The Lessor has received no notice of any prior transfer, assignment or encumbering of the Lessee's interest under the Lease. 4. The Lessor is not in any respect in breach or default under the Lease. There is no fact or condition currently existing which, with notice or time or both, would constitute such a breach or default by the Lessor under the Lease. Agenda Item #1 October 23, 2012 Special Meeting 5. To the best of the Lessor's knowledge, the Lessee is not in any respect in breach or default under the Lease. To the best of the Lessor's knowledge, there is no fact or condition currently existing which, with notice or time or both, would constitute such a breach or default by the Lessee under the Lease. 6. The copy of the Lease attached hereto as Exhibit "A" is a true and complete copy of the Lease. The Lease has not been modified, altered or amended in any respect. 7. The Lease contains the entire agreement between the Lessor and Lessee with respect to the leasing of the "Premises" described therein. 8. The Lessor has been advised that the Lender has made or will be making a loan to the Lessee (the "Loan ") to be secured by a "Leasehold Mortgage" (as defined in the Lease). 9. The Lender shall be entitled to all rights and remedies granted to a "Leasehold Mortgagee" pursuant to the Lease and all such rights and remedies are incorporated herein by this reference for the benefit of Lender as though fully set forth. 10. The Lessor confirms that it has received appropriate notice and a true copy of the Lender's Leasehold Mortgage, that the Lender is a Leasehold Mortgagee entitled to the rights and protections afforded to Leasehold Mortgagees under the Lease, and that the Lender's name and address are as set forth above. The undersigned makes the above statements for the benefit and protection of the Lender with full knowledge that the Lender will rely on them in making the Loan to the Lessee. Dated: LESSOR CITY OF NEWPORT BEACH Attest: Mayor City Clerk Agenda Item #1 October 23, 2012 Special Meeting Approved as to form: Assistant City Attorney ®t�A�eeti��p: = =tea Rom W Ly"TWEEFT9 Agenda Item #1 October 23, 2012 Special Meeting .. Agenda Item #1 October 23, 2012 Special Meeting -- _ .: _— ee�ese��. i± �aw���±_±-:! ��st' �s��r_! �.,,, �... w .,��.e��,.�r.�.rr..Eee�±•.!� -__ - -.e. Agenda Item #1 October 23, 2012 Special Meeting OPTION TO LEASE The City of Newport Beach, a municipal Corporation, (hereinafter referred as "City ") hereby grants to (hereinafter referred as "'Y€ "), the option to lease the tidelands area adjacent to the Bi r.._:_` ioR *a@ht Glub premises extending out to the U.S. Project Line (as more specifically set forth on Exhibit "A" attached hereto) for the consideration and upon the recitals, terms and conditions set forth below: RECITALS A. Under the provisions of the Beacon Bay Bill (Chapter 740 of the Statues of 1978), City is the grantee of certain harbor tidelands, located in the City of Newport Beach, County of Orange, ( "Tidelands Grant ") and B ''''-- ° °`=° Qpip`'- - " -' ` currently operates a marina in and over a portion of those tidelands under Harbor Permit ^' ^180 , and nine ions 1 Ga4f.......:.. D,.,,...... +:...., a AL., -gTh- C. Harbor Permit = is issued to , , the owner of the upland property adjacent to the tidelands, and D ThR °_u:_ -° '' -° °--"` ^' has acquired the upland property adjacent to the tidelands from and E. The parties desire to enter into a long -term lease in lieu of a City Harbor Permit. However, 13€x€ desires to postpone entering into a lease until such time as certain seawall repairs and structural reinforcements have been completed. NOW THEREFORE, the Parties agree as follows: 1. Grant of Option. City hereby grants to an exclusive right and option (the "Option ") to lease the Premises for the rent and upon the terms and conditions set forth in the Lease attached hereto as Exhibit B and incorporated herein by this reference (the "Lease "). 2. Consideration. The consideration for the option shall be a one -time fee of 51�, payable upon the execution of this agreement by both parties. The option payment is consideration for the option only and shall not be applicable to the exercise of the lease nor to any rent payable thereunder, and the option payment shall be in addition to the Agenda Item #1 October 23, 2012 Special Meeting annual Harbor permit fee presently in force which shall continue to be imposed and shall continue to pay up until the date of exercise of this option. 3. Option Term. The term of the option shall be for three (3) successive years commencing upon the date of execution of this agreement by City and by and terminating at 5:00 p.m. on the third anniversary date of the execution of this agreement ( "Option Expiration Date "), if it has not been exercised on or prior thereto. 4. Exercise of Option. The option may be exercised by written notice of exercise signed on behalf of € and delivered to the City Clerk of the City on or before 5 :00 p.m. on the Option Expiration Date. 5. Precondition to Exercise of option -- Engineering Work. As a condition precedent to the exercise of this option by ° ^" shall be required to have then completed all seawall repairs and reinforcements recommended by its structural engineers, to the satisfaction of the city engineer, or in the alternative, it shall post a performance bond acceptable in form, content and amount to the city attorney, assuring that all of such seawall repair and reinforcement so recommended shall be completed within six (6) months of the posting of said performance bond. 6. Further Assurances. Each of the Parties hereto agrees to execute and deliver any and all additional papers and documents, and to do any and all acts reasonably necessary in comiection with the performance of its obligations hereunder to carry out the intent of the Parties hereto. 7. Entire Agreement. This Agreement and the documents expressly incorporated herein shall constitute the entire Agreement between the Parties hereto with respect to the subject matter hereof, and shall supersede all prior and contemporaneous agreements and representations of the Parties concerning the subject matter hereof and the terms applicable thereto. 8. Amendment. This Agreement may not be extended; supplemented, modified or amended in any manner, except by an instrument in writing signed by each of the Parties. 9. Waiver. No waiver of any of the provisions of this Agreement shall be deemed or constitute a waiver of any other provision, whether or not similar, nor shall any waiver constitute a continuing waiver. No waiver shall be binding unless executed in writing by the party making the waiver. 10. Successors and Assigns. All terms and provisions contained herein shall insure to the benefit of and shall be binding upon each of the Parties hereto and their respective directors, officers, shareholders, employees, agents, heirs, representatives, successors and assigns, and each of them. 11. Litigation Costs. If any legal action or other proceeding is brought to enforce this Agreement, or because of an alleged dispute, breach, or misrepresentation in connection with Agenda Item #1 October 23, 2012 Special Meeting APPROVED AS TO FORM: n n r j r n nnn iwrri n err v n ri rj- G1 r n By: Assistant City Attorney C^!1,Ir y� !sn? 6R Agerid IieYn� #'1 "`� Brown, Leilani �O �� From: Harp, Aaron Sent: Thursday, October 18, 2012 2:43 PM To: Brown, Leilani Subject: FW: Commercial Tidelands Lease/ Lease Template & Appropriate Percentage of Gross Attachments: CNB Commercial Tidelands Lease Template - BCYC - Converted & Adjusted 121017d.docx; Letters to City with Signatures- 121018.pdf From: Robert Lounsbury fmailto:rllounsbury@msn.com) Sent: Thursday, October 18, 2012 2:39 PM To: Gardner, Nancy; Curry, Keith; Henn, Michael; Rosansky, Steven; Hill, Rush; Daigle, Leslie; Selich, Edward; Robert Lounsbury Cc: Kiff, Dave; Harp, Aaron; Miller, Chris; Tom Purcell; Michael Curci; Gary Pickett; John Vallely; Wattsnewprg @gmail.com; Robert McCaffrey; Dave Ellis; Dave New; Duffield, Marshall; Dwight Belden; Ferdinand Fam; Gary Hill; Hill Gary; Jack Croul; Jim Parker; Corrough, John; Rodheim, Ralph; Richard R. Luehrs; Robin Lombardo; Beek, Seymour; Ted Robinson; George Jones; Casey Jones Subject: Re: Commercial Tidelands Lease/ Lease Template & Appropriate Percentage of Gross Mayor Nancy Gardner Mayor Pro Tenn Keith D. Curry Council Member Michael F. Henn Council Member Steven Rosansky Council Member Rush N. Hill, II Council Member Leslie J. Daigle Council Member Edward D. Selich Re: Commercial Tidelands Lease /Lease Template & Appropriate Percentage of Gross CNB Commercial Tidelands Lease Template - BCYC - Converted & Adiusted for proposed use Dear Honorable Mayor and Honorable Members of the Newport Beach City Council, In follow up to and per the previous 10/4/12 email below, please accept and consider the enclosed CNB Commercial Tidelands Lease Template - BCYC - Converted & Adjusted and the enclosed previously sent October 4 2012 letter, including an updated /expanded (and rapidly growing) list of Tidelands Stakeholders (and Private Dock Owners) indicating their support as part of the public comments regarding above matter. Thank you. Robert Lounsbury Waterfront Newport Beach, LLC - - - -- Original Message - - - -- From: Robert Lounsbury To: NGardner @NewportBeachCa.gov ; curryk @pfm.com ; MHenn(a )NewportBeachCa.gov ; SRosanskv @NewportBeachCa.gov ; Rhill(an7NewportBeachCa.gov ; leslieidaigleno.aol.com ; EdSelich @roadrunner.com Cc: Kiff, Dave ; aharp @newportbeachca.gov ; Miller, Chris ; Tom Purcell ; Michael Curci ; Gary Pickett ; John Vallely ; Wattsnewprg @omail.com Robert McCaffrey ; Dave Ellis ; Dave New ; Duffy Duffield ; Dwight Belden ; Ferdinand Fam ; Gary Hill ; Hill Gary; Jack Croul ; Jim Parker ; John Corrough ; Ralph Rodheim ; Richard R. Luehrs ; Robert Lounsbury ; Robin Lombardo ; Seymour Beek Ted Robinson ; George Jones ; Casey Jones Sent: Thursday, October 04, 2012 5:51 PM Subject: Re: Commercial Tidelands Lease/ Lease Template & Appropriate Percentage of Gross Mayor Nancy Gardner Mayor Pro Tern Keith D. Curry Council Member Michael F. Henn Council Member Steven Rosansky Council Member Rush N. Hill, II Council Member Leslie 3. Daigle Council Member Edward D. Selich Re: Commercial Tidelands Lease/ Lease Template & Appropriate Percentage of Gross Dear Honorable Mayor and Honorable Members of the Newport Beach City Council, Agenda Item #1 October 23, 2012 Special Meeting Please accept and consider the following summary of negotiations, comments and the attached exhibits, as part of the public comments regarding above matter. Thank you. Robert Lounsbury Waterfront Newport Beach, LLC 2 Agenda Item #1 October 23, 2012 Special Meeting WATERFRONT' NEWPORT BEACH, LLC 2901 (nest Coast Highway, Suite 200, Newporr.Beach, CA 92663 Tel: 006) 619 -5332 Fax: ( 949) 258 -4374 rlloun.rbm c:ums,r.cwn Oetober 4, 2012 Mayor Nancy Gardner Mayor Pro Tem Keith D, Curry Council Member Michael F. Henn Council Member Steven Rosansky Council Member Rush N. Hil1,11 Council Member Leslie Daigle Council Member Edward D. Selich 3300 Newport Boulevard Newport Beach, CA 92663 Re: Commercial Tidelands Lease / Lease Template & Appropriate Percentage of Gross Dear honorable Mayor and Honorable Members of the Newport .Beach City Council, Per the Council's request, please accept and consider the following documents and comments as part of the public comments regarding above matter. (1) Lease Template: Enclosed please find the following lease, and lease template: (a) Lease dated May 7, 1998. including First Amendment to Lease dated May 7, 1998 between the City of Newport Beach (Lessor) and Bahia Corinthian Yacht Club - 13CYC (Lessee) Exh I Our first request is that the above lease template in itetn 0 a) be used as the template to the Commercial Tidelands lease. Since BCYC is an existing lease used by the City of Newport Beach for an existing Newport Harbor lessee, we believe the City should have no problem accepting its own existing lease as the template for our contemplated lease. This should also minimize /avoid any accusations of favorable/ unequal treatments between one lessee and another. Agenda Item #1 October 23, 2012 Special Meeting Mayor Nancv Gardner, et al October 4, 2012 Page 2 oF5 21 Annrontiate Percentage of Gross: (al) The BCYC lease above uses a 9% gross nercenta&ee in 1998. It is a 35 years lease and therefore is still at 9% in 2012 and even through 2033. It is a lease between the City of Newport Beach and a Newport Harbor tenant. The City owns the tideland and the tenant owns the uplands. Thus BCYC is directly comparable-in almost all respects (especially non joinder) and 9% appears to be fair. (a2) Moreover, here, BCYC is given about a 2:1 ratio in tidelands to uplands water frontage, Specifically, the water frontage of BCYC has 31 slips, but the City gifted BCYC another 32 slips from adjacent uplands to BCYC (thus the roughly 2:1 ratio), Please see attached lease floor plan (Exh 2) and aerial photo Most of the current contemplated lessees have a 1:1 ratio. Thus, compared to the BCYC lease where the ratio is 2 :1. at the very least an adjustment to 9%12 = 4.50% of gross should be appropriate where the .ratio is 1:1 3) Percentage of Gross .er City (Netter) ADnraisers: (al) The Netzer 2006 appraisal proposed a 20% of gross rate based on 13 "comps." However, 1 I of the "comps" are not appropriate comps since they all have joinder of tidelands and uplands. The Netter 2012 re- appraisal uses 9 comps, of which 7 have joinder and only Bayshore and Swales are non - joinder (exh 4). It is self- evident that these 11 and 7joinder comps should not be given a lot of weight because they have joinder and are not comparable to the Newport Ilarbor where the uplands and tidelands have non- joinder status. (a2) The only 2 \etzer comps that have separate non joinder of tidelands and uplands are the Bayshore and Swales comps. However, the Bayshore property is .-ifted a 4:1 ratio in tidelands to uplands water frontage (exh 5). Thus, compared to the Bayshore lease whcl-c the ratio is -ALL at the very least an adjustment to 20 0/o/4 = 5.00% of gross should be as riropriate where the ratio is 1:1. (0) The last Netzer comp is the Swales comp. The Swales property is gifted a 9:1 ratio in tidelands to uplands water frontage (e-di 6), Thus, comparedto the Swale$ lease where the ratio is 9 :1, at the very least an adjustment to 20 1/o/9 = 2.20% of Bross should be appropriate cohere the ratio is 1J. Furtberruore, the above Swales lease has been replaced by a new lease in November 2011 at $6,000 /mo for 50,094 sf of tidelands = $72,000/50,094sf = $1.44!57. . Agenda Item #1 October 23, 2012 Special Meeting Mayor Nancy Gardner, et al October 4, 2012 Page') of 5 (4) Percentaae of Gross per Upland owners' (Jones & Associates) annraisak (al) On pages 55 - 59 of the .(ones appraisal, it lists the following non -joinder lease comps (exh 7): Comp Entity Nominal TidelarKLrUplands Adjusted No. City. Year Rate ._ "Gifted" Ratio Rate (i) Bahia Corinthian Ycht Club 9.00% emss 2:1.......9 % /2 = 4-50% Newport Beach, May 1998 (ii) Bayshore 20% gross 4:1......20 % /4= 5.0% Newport Beach, Dec 2004 (iii) Swale- (S72,000/50,094sf) $1.44 /sf 9:1, sf no adi nee 51.44/sf Newpon Beach, Nov 2011 (iv) Sunset Aquatic Marina 8.50% gross adjacent to ioinder 8.50% Seal Beach, .Tan 2000 - Comp iv is State tidelands adjacent to parcels of tidelands and uplands that the tenant leased from the County. (v) Glorietta Day Marina 11.00% gross Has Joinder issues (see below) San Diego, Aug 2012 - Comp v has joinder and I 1 % ,vas just a 50/50 allocation of a 22% overall lease of the uplands R tidelands in joinder On page 62, after detailed analysis, Jones concludes that where there is no ioinder, the Percentage Rental Rate should be "9.50% of gross revenues, or $1.20 per square foot of tidelands." Side memo on gifting: In order for the Cite to claim that Bayshore is a direct comp at 20 %, the City is providing direct proof that the County actually "gifted" 3 times the Bayshore uplands to Irvine Co. To re- phrase, tf 1:1 land is the saute 2091o, then the other 3:1 of Irvine Co. tidelands is a direct "gift ".�pecifrccdlyfnrbidclen by the State. One woy to avoid this "gift" is to acknowledge that 4 :1 rate is a lot higher than 1:1 rate (eg. 20% vs 5%). Similarly, for 2 :1 ratio BCYC, if the same 9% is applied to 1:1 lane,, then the other half of BCYC is a direct "gift "fi -om the City specifically forbidden by the Stare. Perhaps an analogy is that tlu City is comparing 4 story land to 1 story land, First, it is already unfairly favoring the 4 story land by bestowing the sweetheart right to build the 4 stories to the privileged Irvine Co. Then, it adds salt to the wound by trying to charge the I . srory land the same lease rates as the 4 story privileged (gifted) land. ie: "Give us 4 times our water frontage, and we will pay the City the 20 %. " Agenda Item #1 October 23, 2012 Special Meeting Mayor Nancy Gardner, et al October 4, 2012 Page 4 of 5 5) Summary Conclusion of Appropriate Percentage of Gross: Based on above comparable non joinder leases, the percentage gross rate is in the range of 4.50% to 8.50 %. Since Jones & Associates concluded with 9.50 %, we are willing to accept 9.50% as a fair appropriate percentage of gross. 6i) Compromise Proposal It appears, for whatever reason, that the COHC wishes to use the 20% of gross number regardless of whether the non joinder comps support it or not. The C0110s 2012 Netzer review suggest 20% or $1.45lsf, but basically with zero comps to support it per above. The COHC's Rasmussen suggests 17% or $1.40 to $1.50/sf also with no better non- joinder comps. In the spirit of compromise, we would respectfully propose flue following "meet in the middle' compromise, We propose that we "better than average" the current $0.361ft. fee with the COHC's 17% and settle on the Jones & Associates' 9.56% as the appropriate percentage of Gross. which is well supported by the City's own. non - joinder 9.0% lease with BCYC. This is despite the fact that BCYC actually has a 2:1 tidelands to uplands "gifted" ratio and the 9.0% should be adjusted to 4.501/0 when used as a comp for 1 :1 ratio properties. It has been pointed out that the City has the right to charge "whatever it wants to" and the upland owners have "to take it or leave it" since they have already spent a lot of resources, time, effort, blood, sweat and tears over the decades to build the docks, access, parlrin ,, other supporting facilities, and the ongoing businesses that created the "gross" income. Furthermore, we actually heard and understand the COHC's point that the City owns the tidelands, and the uplands owners have been tmdercharged all these years. However, that is not as straightforward as it sounds. e.g. In WNl3's case, we bought the building 1 I years ago paying fill price for the tidelands where we were repeatedly told that all we had to pay was the annual tideland fees. Now, we are asked to pay for the same tidelands a second time. Obviously, had the leases been correctly done l l years ago, we would have negotiated for a lower purchase price and not have to pay for the same tidelands use twice. There are many other uplands owners who have spent resources to buy uplands, or to build docks and improvements only to be retroactively told that they now have to pay a, 20% of gross lease. Agenda Item #1 October 23, 2012 Special Meeting Mayor ;Nancy Gardner, et al October 4, 2012 Pave 5 of 5 In short, we understand the COHC's points but we also request that the City feel compassion, and appreciate that it is not entirely the upland owners fault that the City undercharged for years ,many of as over -paid our sellers for the difference already based on this oversight }. Nevertheless, we agree that the rates are low and we are offering a compromise that is consistent with our own appraisal's better supported numbers. We hope this compromise offer (at 4.50% of gross) will truly be given some consideration in our continued effort to seek a peaceful settlement of the issue. Thank you all for your time and consideration. Very truly yours, obcrt Louusbury H Nancy Gardner: Keith D. Curry: Michael P. Henn: Steven Rosansky: Rush N. Hill, 11: Leslie Daigle: Edward D. Selich: N(iardncr'djNc kpt cachCa-ym curnk:u pfm.cutn M Ile nnLuNei Pori Beach Ca.guv S_Rosansky:u:Ne,AportBeachCa. (Oz Rhifliii'Nev portBeuch.Ca.c4o IesIiejdaigjc,iitaoI.com EJSeIicht&roadrunner.com DaveKiff: City Manager dkitt %'rinewpunbeauhca.tov Aaron C. Harp: City Attorney aharn, unek +portbeac•hea.eoy Chris Miller: Harbor Resources Manager miller'it;newyonbeachca.�. Agenda Item #1 October 23, 2012 Special Meeting The following Commercial Tidelands Stakeholders (and Private Dock Owners) support the contents of this letter and urge the City Council to consider approval of the compromise offer presented. Duffs• Boat Company / CiiypfNew rt Beach Rarbor Commissioner i Kaiph oYtltetiit � — . Presi eat of Balboa Rentals i `• Chairman of the City of Newport Beach Harbor Con"ssiq,» Ted Robinson Owner, Larson's Shipyard, Marina and offices f Dave New �2.Wg 1 t3 o�4 Y'n C Z. cuva,�, rAA oC x1v� „ iH Wc-k 3oAf9 a � a - IJ Agenda Item #1 October 23, 2012 Special Meeting pr+IJr�� �EN SM1�'L �ONTwA�.79.s /i<- C.f /Oti+/ , f ewAj6t'z, /.1 Ez -5 r r t Al w oar" tWDIVA" bits a� (3,11 >, R T 'rNE 434p k.4, 4, Cu, rJ. f_ Agenda Item #1 October 23, 2012 Special Meeting �e�wz,r 6,2 FFM - Ck- Agenda Item #1 October 23, 2012 Special Meeting Dom.;, A 1-e 6,- /(/r,,/?aA (A6fi r , A <�j , H601 1) now p6sowl Yy-� O aaw �irsr A, r d� 4idll� /17"t f 2�bzdg�-C Agenda Item #1 October 23, 2012 Special Meeting ibNE �J ,t/ecvpof, - lac c � C 12 am 4e4-o k (or o7erct C/ 01 /1 v� 'SrLle vN OLA-11414l GEP-za-sil i Letter to City Council (10-4-12) Agenda Item #1 October 23, 2012 Special Meeting Doug Salisbury <doug @pelicanl.net> Tue, Oct 16, 2012 at 11:12 AM Reply -To: doug @pelicani.net To: Robin A Lombardo <robinlombardoll @gmail.com> Cc: Janey Horvath <janey @pelicandevnet >, Dadd Salisbury <das4mymail@gmail.com> Robin, Thank you for sending over the lease template and the letter to the city Council. Please add my name to the signatures (sample signature below) using "Newport Landing Marina Dewlopment." THANK YOU! Fironc Robin Lombardo [ mailto :robinlombardoll @gmail.com) Sent: Monday, October 15, 2012 12:43 PM To: doug @pelicanl.net Subject: Re: Tidelands Dock Tax Hi Doug I have attached the letter for your review. Most of the people supporting it just reply to me saying please accept this email as a signature of support or favor oftHs letter. Thank you, Robin On Mon, Oct 15, 2012 at 11:13 AM, Doug Salisbury <dougCq)pelicanl .net> wrote: -.. Gmam- Agenda Item #1 October 23, 2012 Special Meeting Re: Tidelands letter regarding Commercial Dock Lease Robin Lombardo <robiniombardol 1 @gmail.com> To: Ridgeway Development <tddgeway@sbcglobal.net> Thank you very much Tod for your signature of support. Every signature helps!!! Robin Fri, Oct 12, 2012 at 3:20 PM On Fri, Oct 12, 2012 at 3:09 PM, Ridgeway Development <tridgeway @sbcglobaLnet> wrote: You may use my name as a signatory of the letter. Tod W. Ridgeway Ridgeway Development Company 2804 Lafayette Ave Newport Beach, CA 92663 (949) 723 -5854 Fax (949) 723 -5204 From Robin Lombardo [ mailto :robinlombardoll @gmail.com] Sent: Friday, October 12, 2012 10:59 AM To: Tod Ridgeway Subject: Tidelands letter regarding Commercial Dock Lease Hi Todd, Thanks for calling. This is the letter that was already hand delivered to the City Mayor and all Council members. What we are doing is continuing to collect signatures by replying to my email authorizing me to print your email reply as a show of support for the letter and we will later on forward all the ones that keep coming in to the City. I Thank you, Agenda Item #1 October 23, 2012 Special Meeting Gin-J."o RE: Fw: CNB Commercial Tidelands Lease Template - BCYC - Converted & Adjusted 121010c.doex rivahrs@newportbeach.com <duehrs@newportbeach.com> Fri, Oct 12, 2012 at 10:58 AM To: robiniombardoll@gmaii.com Hi Robin: Although the Newport Beach Chamber of Commerce does not have a financial stake in the issue, we do have a position in support of the affected small business owners and did testify at the last City Council meeting. I have attached my signature as the official representative of the Newport Beach Chamber of Commerce for your use and attachment to the correspondence to the City. Thanks Richard Richard R. Luehrs President/Chief Executive Officer ; 04 NF,WPORT 8fTC.V---' GFiAMU[kal f()MMfkC'E Newport Beach Chamber of Commerce The Business and Community Resource 1470 Jamboree Rd. Newport Beach, CA 92660 Agenda Item #1 October 23, 2012 Gm � � • Special Meeting Re: Commercial Tidelands Lease/ Lease Template & Appropriate Percentage of Gross Leeson Goodin <lee @cynb.com> Fri, Oct 12, 2012 at 10:07 AM To: Robin Lombardo <robinlombardo11 @gmail.com> Robin, Please print a response for Norman C. Goodin regarding the signature of support. On Tue, Oct 9, 2012 at 5:06 PM, Robin Lombardo <robinlombardoll @gmail.com> wrote: Dear Tidelands Stakeholders or whom this may concem: I have been asked to forward you these attachments as we need as many signatures as we can get. If you like you can sign it and fax it back to me at 949 - 258 -4374 or even just reply to this email saying it is okay to print your response to attach it as a signature. We would like to have the signatures no later than Friday October 12th. If you hake any questions, please let me know. i And thanks to all the people this morning that already signed Rlll Thank you, Robin Lombardo Property Manager Waterfront Newport Beach, LC 2901 W. Coast Hwy. Suite # 200 Newport Beach, CA. 92663 Off : 949.258.4370 Fax: 949.258.4374 Cell: 949.293.9239 — Forwarded message From: Robert Lounsbury <RLLounsbury@msn.com> i Date: Tue, Oct 9, 2012 at 4:28 PM Subject: Fwd: Commercial Tidelands Lease/ Lease Template 8 Appropriate Percentage of Gross To: Robinlombardoll @gmail.com Sent from my (Phone Begin forwarded message: From: Robin Lombardo <robinlombardoll @gmail.com> Date: October 9, 2012, 2:37:00 PM PDT To: Daud Ellis <daud.ellis3358 @gmail.com >, Da\id Ellis <die @delta- partners.com> Agenda Item #1 October 23, 2012 Gds I I Special Meeting art; +.urtC: RE: Commercial Tidelands Lease/ Lease Template & Appropriate Percentage of Gross Pat Werner <pat@balboaboatyard.com> Fri, Oct 12, 2012 at 10:06 AM To: Robin Lombardo <robinlombardoll@gmail.com> Please attach this as my signature. Pat Werner Frone Robin Lombardo [mailto:robinlombardoll @gmail.com] Sent: Tuesday, October 09, 2012 5 :09 PM To: boseyachts @mac.com; dlugo @nhnm.org; doug @pelicani.net; george @ghj- inc.com; jbhoch @pacbell.net; Jeff. gordon @messengerco.com; johnl @curcicompanies.corn; johnmmorehart@sbcgloba1.net; judigorski @verizon. net; klorton @hornblower.com; Nicole .lorenby @SoleTechnology.com; pat @balboaboatyard.com; rstenlund @nhnm.org; sam @etcohomes,com; schockboats @att.net; schockboats@sbcglobal.net; scsyinc @yahoo.com; seaspray226 @aol.com; tompollackl @gmail.com; tridgeway @sbcglobal.net; wattsnewprg @gmail.com; woodysnewport@yahoo.com; wpearson @pacbell.net; wperson @pacbell.net; Afshin Etebar; Bill Young / Lido Park Place HOA; Bob Black; Bob McCaffrey; Bob Sullivan; Brad Avery; Brian and Sherry White; Brian Cleugh; Casey Jones; Chandler Bell; Christian Bakewell; Craig Borison; Dan Ardell; Dan Grlbble; Dave Geoffroy; Dave New; Dave Salisbury; David Beek; David Ellis; Dick Bessire; Don Funk; Duffy Duffield; Elio Amato; Ferdinand Fam; Fran Ursini; Gary Hill; Gary P Hill; Gary Pickett; Greg Sinks; Heather Goodman; Ira Beer / Lido Park Place HOA; Jack Croul; Jerry A. King; Jim Parker; John Corrough; John Gueola; John Vallely; Kristine Thargard; Lee Goodin; Lido Park Place Marina; Linda Guinther; Megan Delaney; Michael Curci; Mickey Harding; Norm Goodin; Paul Gurst; Rich Russell; Richard R. Luehrs; Richard Russell; Robert Lounsbury; Robin A Lombardo; Rochelle McReynolds; Ron Salisbury; Russ Fluter; Scott Schock; Seymour Beek; Steven lames; Ted Robinson; Terri Remley; Tom Purcell; Warren Wimer Subject: Fwd: Commercial Tidelands Lease / Lease Template & Appropriate Percentage of Gross Dear Tidelands Stakeholders or whom this may concern: I have been asked to forward you these attachments as we need as many signatures as we can get. If you like you can sign it and fax it back to me at 949- 25BA374 or even just reply to this email saying it is okay to print your response to attach It as a signature. We would like to have the signatures no later than Friday October 12th. if you haw any questions, please let me know. And thanks to all the people this morning that already signed RIP Agenda Item #1 October 23, 2012 Special Meeting d'r';i0'...,.. % iwi Iiul'i 4�i i i/tyjiruaO. Cori' RE: Commercial Tidelands Lease/ Lease Template & Appropriate Percentage of Gross Russ Fluter <cannery@earthlink.net> Reply -To: cannery@eartHink.net To: Robin Lombardo <robinlombardot 1Ccogmail.com> This is my approval to print my response to attach it as a signature. Sincerely, RUSS FLUTER 2025 W BALBOA BLVD NEWPORT BEACH, CA 92663 T. 949.6733777 R 949.6733451 Wed, Oct 10, 2012 at 9:45 AM Rorm Robin Lombardo [ mailto ;robinlombardoll @gmail.com] Sent: Tuesday, October 09, 2012 S;09 PM To: boseyachts @mac.com; dlugo @nhnm.org; doug @pelicanl.net; george @ghj- inc.com; jbhoch @pacbell.rtet; jeff.gordon @messengerco.com; johnl @curcicompanies.com; johnmmorehart@sbcglobal.net; judigorski @verizon.net; klorton @hornblower.com; Nicole .Jorenby @SoleTechnology.com; pat @balboaboatyard.com; rstenlund @nhnm.org; sam @etcohomes.com; schockboats @attnet; schocld)oats @sbcglobal.net; scsyinc @yahoo.com; seaspray226 @aol.com; tompollackl @gmail.com; tridgeway@sbcglobal.net; wattsnewprg @gmail.com; woodysnewport @yahoo.com; wpearson @pacbell.net; wperson @pacbell.net; Afshin Etebar; Bill Young / Lido Park Place HOA; Bob Black; Bob McCaffrey; Bob Sullivan; Brad Avery; Brian and Sherry White; Brian Cleugh; Casey Jones; Chandler Bell; Christian Bakewell; Craig Borison; Dan Ardell; Dan Gribble; Dave Geoffroy; Dave New; Dave Salisbury; David Beek; David Ellis; Dick Bessire; Don Funk; Duffy Duffield; Elio Amato; Ferdinand Fam; Fran Ursini; Cary Hill; Gary P 411; Gary Pickett; Greg Sinks; Heather Goodman; Ira Beer / Lido Park Place HOA; Jack Croul; Jerry A. IOng; Jim Parker; John Corrough; John Gma-A- h'X'X�gh: Agenda Item #1 October 23, 2012 Special Meeting Re: Commercial Tidelands Lease/ Lease Template & Appropriate Percentage of Gross garyphill@sbcglobal.net <gary phi] I@sbcglobal. net> To: Robin Lombardo <rob!n!ombardol l @gmail.com> You ham my permission to put my name on it. Gary Hill Sent from my iTUG On Oct 9, 2012, at 5:08 PM, Robin Lombardo <robinlombardol l @gmai!.corn> wrote: Dear Tidelands Stakeholders or whom this may concern: Tue, Oct 9, 2012 at 6:34 PM I haoe been asked to forward you these attachments as we need as many signatures as we can get. tt you like you can sign it and fax it back to me at 949 - 258 -4374 or e%en just reply to this email saying it is okay to print your response to attach It as a signature. We would like to hake the signatures no later than Friday October 12th. t( you ha%e any questions, please let me know. And thanks to all the people this morning that already signed it!!! <330.glf> Thank you, Robin Lombardo Property Manager Waterfront Newport Beach, LLC 2901 W. Coast Hwy. Suite # 200 Newport Beach, CA. 92663 Off :949.258.4370 Fax: 949.258.4374 Celt: 949.293.9239 Forwarded message From: Robert Lounsbury <RLLounsbury@msn.com> Date: Tue, Oct 9, 2012 at 4:28 PM Subject: Fwd: Commercial Tidelands Lease/ Lease Template 8 Appropriate Percentage of Grass To: Robinlombardo11 @gmail.com Sent from myiPhone Agenda Item #1 October 23, 2012 Special Meeting Re: CNB Commercial Tidelands Lease Template - BCYC - Converted & Adjusted 12101.0c.docx Steven James <stevenjames33@yahoo.com> Reply -To: Steven James <stevenjames33 @yahoo.com> To: Robin A Lombardo <robinlombardo1l @gmail.com> Fri, Oct 12, 2012 at 8:12 AM Yes, please accept this as my signature for supporting this letter addressed to the City. Regards, Steven James From: Robin A Lombardo <robinlombardoll @gmail.com> To: John Vallely <johnvallely @me.com> Cc: Dave New <davel @basinmarine.com >; "boseyachts @mac.com' <boseyachts @mac.com >; "dlugo @nhnm.org" <dlugo @nhnm.org >; "doug @pelicant.net" <doug @pelicant.net >; "george @ghj- inc.com" <george @ghj- inc.cam >; "jbhoch @pacbell.net' <jbhoch @pacbell.net >; "jeff.gordon @messengerco.com' <Jeff.gordon @rnessengerco.cam >; "Johnl @curcicompanies.com' <johnl@curcicompanies.com >; "johnmmorehart@sbcglobal.net" <johnmmorehart@sbeglobal.net >; "judigorski @verizon.net" <judigorskl @vedzon.net >; "kiorton @homblower.com" <klorton @homblower.com >; "Nicole.Jorenby@ SoleTechnology.com" < Nicole .Jorenby @SoleTechnology.com >; "pat @baiboaboatyard.com" <pat @balboaboatyard.com >; 'rstenlund @nhnm.org" <rstenlund @nhnm.org >; "sam @etcohomes.com" <sam@etcohomes.com>; 'schockboats@att. net' <schockboats@att.net >; "schockboats @sbcglobal.net" <schockboats@sbeglobal.net >; "scsyine@yahoo.com" <scsyinc @yahoo.ccm >; "seaspray226 @aol.com" <seaspray226 @aol.com >; "tompollackl @gmail.com" <tompollackt @gmail.com >; 'tddgeway @sbcglobal.net" <tddgeway @sbcglobal.net >; "wattsnewprg @gmail.com" <wattsnewprg @gmai1.cam >; "woodysnewport@yahoo.com" <woody snewport@yahoo. cam>; "wpearson @pacbell.net" <wpearson @pacbell,net >; "wperson @pacbeli. net' <wperson @pecbell.net >; AfshinEtebar <afshine @etcohomes.com >; Bill Young / Lido Park Place HOA <1byoung27 @aol.com >; Bob Black <bob@catalinainfo.com >; Bob McCaffrey <rtmcca&ey @yahoo.cam >; Bob Sullivan <bob. sullivan.b83A@statefarm. com>; Brad Avery <brad@occsailing.com >; Brian and Sherry White <thegallerycafe @gmail.com>; Brian Cleugh <bcleugh @murrel.com >; CaseyJones <casey @ghiinc.com >; Chandler Bell <cbell @homblower.com >; Christian Bakewell <chdstianbakewell @gmail.com>; Craig Borison <cb @dominorealty.com >; Dan Ardell <dan @mhsherman.com >; Dan Gribble <dgribble @boatswainslocker.com>; Dave Geoffroy <dave @scma.com >; DaveSalisbury <dave @harborside- paml ion. cam >; David Beek <dav+dbeek @earthlink.net >; David Ellis <dle@delta- partners.com >; DickBessire <canneryvillage @gm ail. cam >; Don Funk <dfIidoresort@gmai1.com >; Duffy Duffield <duffy @duffyboats.com >; Elio Amato <etio@bayvlewimg.com >; Ferdinand Fam <fdfam @yahoo.com >; Fran Ursini <fran.ursini @hotmail.com >; Gary Hill <gary@hillsfueldock.com >; Gary P Hill <garyphill @sbcglobal.net >; Gary Pickett <gary@mhsherman.com >; Greg Sinks <gsinks @irvinecompany.com>; Heather Goodman <HeatherG @electracruises.com >; Ira Beer / Lido Park Place HOA <ibeer @ari2000.com >; Jack Croul <jack @croul.com >; Jerry A. King l Agenda Item #1 October 23, 2012 Special Meeting Re: CNB Commercial Tidelands Lease Template - BCYC - Converted & Adjusted 12101.0c.docx Steven James <stevenjames33@yahoo.com> Reply -To: Steven James <stevenjames33 @yahoo.com> To: Robin A Lombardo <robinlombardo1l @gmail.com> Fri, Oct 12, 2012 at 8:12 AM Yes, please accept this as my signature for supporting this letter addressed to the City. Regards, Steven James From: Robin A Lombardo <robinlombardoll @gmail.com> To: John Vallely <johnvallely @me.com> Cc: Dave New <davel @basinmarine.com >; "boseyachts @mac.com' <boseyachts @mac.com >; "dlugo @nhnm.org" <dlugo @nhnm.org >; "doug @pelicant.net" <doug @pelicant.net >; "george @ghj- inc.com" <george @ghj- inc.cam >; "jbhoch @pacbell.net' <jbhoch @pacbell.net >; "jeff.gordon @messengerco.com' <Jeff.gordon @rnessengerco.cam >; "Johnl @curcicompanies.com' <johnl@curcicompanies.com >; "johnmmorehart@sbcglobal.net" <johnmmorehart@sbeglobal.net >; "judigorski @verizon.net" <judigorskl @vedzon.net >; "kiorton @homblower.com" <klorton @homblower.com >; "Nicole.Jorenby@ SoleTechnology.com" < Nicole .Jorenby @SoleTechnology.com >; "pat @baiboaboatyard.com" <pat @balboaboatyard.com >; 'rstenlund @nhnm.org" <rstenlund @nhnm.org >; "sam @etcohomes.com" <sam@etcohomes.com>; 'schockboats@att. net' <schockboats@att.net >; "schockboats @sbcglobal.net" <schockboats@sbeglobal.net >; "scsyine@yahoo.com" <scsyinc @yahoo.ccm >; "seaspray226 @aol.com" <seaspray226 @aol.com >; "tompollackl @gmail.com" <tompollackt @gmail.com >; 'tddgeway @sbcglobal.net" <tddgeway @sbcglobal.net >; "wattsnewprg @gmail.com" <wattsnewprg @gmai1.cam >; "woodysnewport@yahoo.com" <woody snewport@yahoo. cam>; "wpearson @pacbell.net" <wpearson @pacbell,net >; "wperson @pacbeli. net' <wperson @pecbell.net >; AfshinEtebar <afshine @etcohomes.com >; Bill Young / Lido Park Place HOA <1byoung27 @aol.com >; Bob Black <bob@catalinainfo.com >; Bob McCaffrey <rtmcca&ey @yahoo.cam >; Bob Sullivan <bob. sullivan.b83A@statefarm. com>; Brad Avery <brad@occsailing.com >; Brian and Sherry White <thegallerycafe @gmail.com>; Brian Cleugh <bcleugh @murrel.com >; CaseyJones <casey @ghiinc.com >; Chandler Bell <cbell @homblower.com >; Christian Bakewell <chdstianbakewell @gmail.com>; Craig Borison <cb @dominorealty.com >; Dan Ardell <dan @mhsherman.com >; Dan Gribble <dgribble @boatswainslocker.com>; Dave Geoffroy <dave @scma.com >; DaveSalisbury <dave @harborside- paml ion. cam >; David Beek <dav+dbeek @earthlink.net >; David Ellis <dle@delta- partners.com >; DickBessire <canneryvillage @gm ail. cam >; Don Funk <dfIidoresort@gmai1.com >; Duffy Duffield <duffy @duffyboats.com >; Elio Amato <etio@bayvlewimg.com >; Ferdinand Fam <fdfam @yahoo.com >; Fran Ursini <fran.ursini @hotmail.com >; Gary Hill <gary@hillsfueldock.com >; Gary P Hill <garyphill @sbcglobal.net >; Gary Pickett <gary@mhsherman.com >; Greg Sinks <gsinks @irvinecompany.com>; Heather Goodman <HeatherG @electracruises.com >; Ira Beer / Lido Park Place HOA <ibeer @ari2000.com >; Jack Croul <jack @croul.com >; Jerry A. King Agenda Item #1 October 23, 2012 Special Meeting l Re: CNB Commercial Tidelands Lease Template - BCYC - Converted & Adjusted 121010c.docx John Corrough <marinaconsultant @aol.com> To: robinlombardoll @gmail.com Fri, Oct 12, 2012 at 10:30 AM Robin: Please utilize this email as an electronic signature equivalent for the lease letter. Sincerely John C. Corrough, President THE CORROUGH CONSULTING GROUP 1004 South Bayfront, Balboa Island Newport Beach, CA,92662 -1131, USA T: (1x949)673 -8077 (direcUwice mall) C: (1)(949) 466 -2909 (text/voice mail) F: (1)(949) 673 -8027 (fax) mahnaconsultant @aol.com waterfrontcnslt@aol.com wvvw. m ahna- consultants. com — Original Message From: Robin Lombardo <robinlombardoll @gmail.com> To: John Vallely <johnvalIL4y @me.corn> Cc: Dave New <dalel @basinmarine.com >; boseyachts <boseyachts @mac.com >; dlugo <dlugo @nhnm.org >; doug <doug @pelicanl.net >; george <george @ghj- inc.com >; jbhoch <jbhoch @pacbel1.net >; Jeff.gordon <jeff.gordon @messengerco.com >; johnl <johnl @curcicompanies.com >; johnmmorehart <johnmmorehart@sbcglobal.net >; Judigorski <judigorski @verizon.net >; klorton <klorton @homblower.com >; Nlcole.Jorenby < Nicole .Jorenby @soletechnology.cam >; pat < pat @balboaboatyard.com >; rstenlund <rstenlund @nhnm.org >; sam <sam @etcohomes.com >; schockboats <schockboats @att.net >; schockboats <schockboats @sbcglobal.net>; scsyinc <scsyinc @yahoo.com >; seaspray226 <seaspray226@aol.com >; tompollackl <tompollackl@gmail.com >; tridgeway <tridgeway @sbcglobal.net >; wattsnewprg <wattsnewprg @gmail.cam >; woodysnewport <woodysnewport@yahoo.com >; wpearson <wpearson @pacbell.net >; wperson <wperson @pacbell.net >; Afshin Elebar <afshine @etcohomes.com >; Bill Young / Lido Park Place HOA <byoung27 @aol.com >; Bob Black <bob @catalinainfo.com >; Bob McCaffrey <rtmccaffrey @yahoo.com >; Bob Sullivan < bob .sullil2n.b83A @statefarm.com >; Brad Avery <brad@occsailing.com >; Brian and Sherry White <thegallerycafe @gmall.com >; Brian Cleugh <bcleugh @murrel.com >; Casey Jones <casey @ghj- inc.com >; Chandler Bell <cbell @homblower.com >; Christian Bakewell <christianbakewell @gmail.com >; Craig Bodson <cb @dominorealty.cam >; Dan Ardell <dan @mhsherman.com >; Dan Gdbble < dgribble@boatswainslocker.com >; Dave Geoffroy <dave @scma.com >; Dave Salisbury <dave@harbars ide-pavi I ion. cam >; David Beek <dwAdbeek @earthlink.net >; David Ellis <dle @delta- partners. cam >; Dick Bessire <canneryvillage @gmail.com>; Don Funk <dflidoresort@gmail.com >; Duffy Duffield <dutTy @duffyboats.cam >; Elio Amato <elio @bayuewrrng.com >; Ferdinand Fam <fdfam @yahoo.cam >; Fran Ursini <fran.ursini @hotmail.com >; Gary HIII <gary@hillsfueldock.com >; Gary P Hill <garyphill @sbcglobal.net >; Gary Pickett <gary@mhsherman.com >; Greg Sinks <gsinks @irvinecompany.com >; Heather Goodman <HeatherG @electracruises.com >; Ira Beer 1 Lido Park Place HOA <ibeer@ari2000.com >; Jack Croul <jack @croul.com >; Jerry A. King <JAKingAssoc @gmail.com >; Jim Parker <portcalypso@aol.corn >; John Corrough <mannaconsultant @aol.com >; John Gueola <Jgueola @pacificavalon.com >; Kristine Thargard ___._._. Agenda Item #1 October 23, 2012 • Special Meeting Re: WNB Docks Tidelands Lease template and appropriate percentage of gross le... MlckeyHartling @aol.com <MickeyHartling @aol.com> Sat, Oct 13, 2012 at 1:07 PM To: robinlombardoll @gmail.com Dear Robin, Please utilize this e-mail as an electronic signature equivalent for the Lease Letter. Sincerely, Mickey Hartling Realtor In a message dated 10112/2012 11:19:36 A.M. Pacific Daylight Time, robinlombardoll @gmail.com writes: Hi Mickey, Per your request I have attached the letter addressing the Commercial Dock Tidelands Lease that was hand delivered to the Clty Mayor and all Council Members. We are continuing to collect signatures that we will deliver to the City showing support of the letter that was delivered previously. If you support this letter you can reply to this email as you showing that you support it. Thank you, Robin Lombardo Property Manager Waterfront Newport Beach, H C 2901 W. Coast Hwy. Suite # 200 Newport Beach, CA. 92663 Off : 949.258.4370 Fax: 949.258.4374 Cell: 949.293.9239 Agenda Item #1 October 23, 2012 Special Meeting FIRST AMENDMENT TO LEASE THIS FIRST AMENDMENT TO LEASE (this "Amendment "), made this _ day of ,d X48, 2012 by and between the City of Newport Beach, a municipal corporation °°a n ( "Lessor ") and 3 --h r__ °0' 484- Q - .b pit ( "Lessee "), is made with reference to the following recitals: RECITALS A. Lessor and Lessee have entered into, or concurrently herewith are entering into, that certain Lease dated , d 2012 (the "Lease ").. B. Lessor and Lessee desire to supplement and amend the Lease as hereinafter set forth. NOW, THEREFORE, Lessor and Lessee agree that the Lease is supplemented and amended as follows: 2. Add the phrase "Except as contemplated by Section 22 of this Lease," to the beginning of Section 18 of the Lease. 3. Add a new Section 22 to the Lease as follows: 22. PROVISIONS RELATING TO LEASEHOLD MORTGAGES A. Right of Leasehold Mortgagees. (1) Definitions (a) The term "Leasehold Mortgage" as used herein shall include a mortgage, a deed of trust, a deed to secure debt, or other security instrument by which Lessee's interest under this Lease and the leasehold estate created thereby is mortgaged, encumbered, conveyed, assigned, or otherwise transferred, to secure a debt or other obligation, and any and all amendments, modifications, supplements, extensions and renewals thereof. (b) The term "Leasehold Mortgagee" as used therein shall refer to a holder of a Leasehold Mortgage in respect to which the notice provided for by Section 22A(3) has been given. (2) Leasehold Mortgage Authorized. On one or more occasions, without Lessor's prior consent, Lessee may mortgage or otherwise encumber Lessee's Leasehold Agenda Item #1 October 23, 2012 Special Meeting Estate, under one or more Leasehold Mortgages and assign this Lease as security for such Leasehold Mortgage or Mortgages. (3) Notice to Lessor. (a) If the holder of a Leasehold Mortgage shall provide Lessor with notice of such Leasehold Mortgage together with a true copy of such Leasehold Mortgage and the name and address of the Leasehold Mortgagee, Lessor and Lessee agree that, following receipt of such notice by Lessor, the provisions of this Section 22 shall apply in respect to such Leasehold Mortgage and Leasehold Mortgagee. In the event of any assignment of a Leasehold Mortgage or in the event of a change of address of a Leasebold Mortgagee or of an assignee of such Leasehold Mortgagee, notice of the new name and address shall be provided to Lessor. (4) Notices to Leasehold Mortgagees. Lessor, upon providing Lessee with any notice of: (i) default under this Lease, or (ii) a termination of this Lease, or (iii) a matter on which Lessor may predicate or claim such a default or termination, shall at the same time provide a copy of such notice to any Leasehold Mortgagee. No such notice by Lessor to Lessee shall be deemed to have been duly given unless and until a copy thereof has been so provided to any Leasehold Mortgagee. From and after the date such notice has been given to Lessee and any Leasehold Mortgagee, any Leasehold Mortgagee shall have the right to remedy, commence remedying or cause to be remedied any default or acts or omissions which are the subject matter of such notice, within the same cure period as is given Lessee, plus in each instance, the additional periods of time specified in this Section 22. Lessee authorizes each Leasehold Mortgagee to take any such action at such Leasehold Mortgagee's option and does hereby authorize entry upon the Premises by the Leasehold Mortgagee for such purpose. (5) Leasehold- Mortgagee's Election to Cure. Anything contained in this Lease to the contrary notwithstanding, if any breach or default shall occur and remain uncured, Lessor shall have no right to terminate this Lease or exercise any other remedy unless, following the expiration of the period of time given Lessee to cure such breach or default, or the act or omission which gave rise to such breach or default, Lessor shall first notify any Leasehold Mortgagee of Lessor's intent to so exercise such remedy, such notice to be given at least thirty (30) days in advance of the proposed effective date of such exercise if such default is capable of being cured by the payment of money, and at least sixty (60) days in advance of the proposed effective date of such exercise if such default is not capable of being cured by the payment of money. The provisions of Section 22A(6) shall apply if, during such thirty (30) or sixty (60) day period, any Leasehold Mortgagee shall notify Lessor of such Leasehold Mortgagee's desire to exercise its rights to perform under Section 22A(6) and shall: (a) pay or cause to be paid all rent, and other payments -then due and in an-ears as specified in such notice and which may become due during such thirty (30) or sixty (60) day period; and Agenda Item #1 October 23, 2012 Special Meeting (b) comply or in good faith, with reasonable diligence and continuity, commence to comply with all non- monetary requirements of this Lease then in default and reasonably susceptible of being complied with by such Leasehold Mortgagee. (6) Procedure on Default. (a) If any Leasehold Mortgagee shall have proceeded in the manner provided Section 22A(5), the period specified in Section 22A(5) during which Lessor may not terminate this Lease or exercise any other remedy shall be extended for a period of six (6) additional months, provided that such Leasehold Mortgagee shall, during such additional six (6) month period: (i) pay or cause to be paid all rent, and other monetary obligations of Lessee under this Lease as the same become due, and continue its good faith efforts to perform all of Lessee's other obligations under this Lease, excepting non - monetary obligations not reasonably susceptible of being cured or performed by such Leasehold Mortgagee; and (ii) if not enjoined or stayed, take steps to acquire or sell Lessee's interest in this Lease by foreclosure of the Leasehold Mortgage or other appropriate means and prosecute the same to completion with reasonable diligence. (b) If at the end of such additional six (6) month period such Leasehold Mortgagee is complying with Section 22A(6)(a), this Lease shall not then terminate, and the time for completion by such Leasehold Mortgagee of its proceedings shall continue so long as such Leasehold Mortgagee is enjoined or stayed and thereafter for so long as such Leasehold Mortgagee proceeds to complete steps to acquire or sell Lessee's interest in this Lease by foreclosure of the Leasehold Mortgage or by other appropriate means with reasonable diligence and continuity. Nothing in this Section 22A(6)(b), however, shall be construed to extend this Lease beyond the original term hereof as extended by any exercised options; nor to require a Leasehold Mortgagee to continue such foreclosure proceedings after a breach or default has been cured. If the Lessee's breach or default is cured and the Leasehold Mortgagee discontinues such foreclosure proceedings, this Lease shall continue in full force and effect as if no breach or default under this Lease has occurred. (c) The making of a Leasehold Mortgage shall not impose personal liability or any Leasehold Mortgagee for the performance of any of the terms, covenants or conditions on the part of the Lessee to be performed hereunder. Nothing contained herein shall require a Leasehold Mortgagee to commence any cure or performance on behalf of Lessee or, once having commenced such a cure or performance, to continue or complete such cure or performance or require a Leasehold Mortgagee to commence any remedy or exercise any right under its Leasehold Mortgage or once having commenced such remedy or exercise to continue or complete such remedy or exercise. (d) The purchaser at any sale of this Lease and of the leasehold estate hereby created in any proceedings for the foreclosure of or trustee's sale under any Leasehold Mortgage, or pursuant to any deed in lieu of foreclosure, shall be deemed to be an Agenda Item #1 October 23, 2012 Special Meeting assignee or transferee of this Lease, and shall be deemed to have agreed to perform all of the terms, covenants and conditions on the part of the Lessee to be performed hereunder, but only fi-om and after the date of such purchase and assignment, and only for so long as such purchaser or assignee is the owner of the leasehold estate created hereby. Any such purchaser or assignee shall not have any personal liability for any obligations of the Lessee accruing either before or after such purchaser's period of ownership. (e) Notwithstanding any other provision of this Lease, any sale of this Lease and of the leasehold estate hereby created in any proceedings for the foreclosure of or Trustee's sale under any Leasehold Mortgage, or the assignment or transfer of this Lease and of the leasehold estate hereby created in lieu of the foreclosure of any Leasehold Mortgage, shall be deemed to be a permitted sale, transfer or assignment of this Lease and of the leasehold estate hereby created, not requiring any consent or approval of Lessor. B. Termination and New Lease. (1) New Lease. In the event this Lease is terminated by reason of the happening of any breach or default under this Lease which is not cured by Lessee or a Leasehold Mortgagee under the provisions and within the time limits set forth above, or in the event of rejection or disaffirmance of this Lease pursuant to bankruptcy or insolvency law or other law affecting creditors rights, Lessor shall give prompt notice thereof to any Leasehold Mortgagee. Lessor shall, on written request of any Leasehold Mortgagee, made at any time within sixty (60) days after the giving of such notice by Lessor, enter into a new lease of the Premises with such Leasehold Mortgagee within thirty (30) days after receipt of such request, which new lease shall be effective as of the date of such termination of this Lease for the remainder of the term of this Lease, at the rent provided for herein, and upon the same terms, covenants, conditions and agreements as are herein contained; provided that such Leasehold Mortgagee shall: (a) pay to Lessor at the time of the execution and delivery of said new lease any and all unpaid sums for rent and other charges payable by Lessee hereunder to and including the date thereof, less the net amount of all sums received by Lessor from any. subtenants in occupancy of any part or parts of the Premises or improvements thereon up to the date of commencement of such new lease; and (b) on or prior to the execution and delivery of said new lease, agree in writing that promptly following the delivery of such new lease, such Leasehold Mortgagee will perform or cause to be performed all of the other covenants and agreements herein contained on Lessee's part to be performed to the extent that Lessee shall have failed to perform the same to the date of delivery of such new lease except such covenants and agreements which are not reasonably susceptible of performance by such Leasehold Mortgagee. (2) New Lease Priority. Any new lease made pursuant to Section 22B(i) and any renewal Lease entered into with a Leasehold Mortgagee pursuant to this Lease shall be prior to any mortgage or other lien, charge or encumbrance on the fee interest in the Agenda Item #1 October 23, 2012 Special Meeting Premises and the tenant under such new lease shall have the same right, title and interest in and to the Premises and the improvements located thereon as Lessee had under this Lease. (3) Liability of New Lessee. The tenant under any such new lease shall be liable to perform the obligations imposed on the tenant by such new lease only during the period such person has ownership of the leasehold estate created thereby, subject to the possibility of exculpation noted in Section 2213(1). (4) Subleases and Rents. After the termination of this Lease and during the period thereafter during which any Leasehold Mortgagee shalt be entitled to enter into a new lease of the Premises, Lessor shall not terminate any sublease or the rights of the subtenant thereunder unless such subtenant shall be in default under such sublease. During such period Lessor shall receive all rent and other payments due from subtenants, including subtenants whose attornment Lessor shall have agreed to accept, as agent of such Leasehold Mortgagee and shall deposit such rents and payments in a separate and segregated account in trust for the Premises, but may withdraw such sums, from time to time, to pay necessary operating expenses and carrying charges of the Premises; and, upon the execution and delivery of such new lease, shall account to the tenant under the said new lease for the balance, if any, (after application as aforesaid) of the basic rent, additional rents and other payments made under said subleases, and said tenant shall thereupon assign the basic rent, additional rents and other payments due under said subleases to any Leasehold Mortgagees of the new lease in the same manner as such rentals and other payments had been assigned to the Leasehold Mortgagees under this Lease. The collection of rent by the Lessor acting as an agent pursuant to this subparagraph shall not be deemed an acceptance by Lessor for its own account of the attornment of any subtenant unless Lessor shall have agreed in writing with such subtenant that its tenancy shall be continued following the expiration of any period during which a Leasehold Mortgagee may be granted a new lease in which case such attornment shall take place upon such expiration but not before. C. Miscellaneous Provisions for Leasehold Mortgagees. (1) Leasehold Mortgagee Need Not Cure Specified Defaults. Nothing herein contained shall require any Leasehold Mortgagee, as a condition to the exercise of any of its rights hereunder, to cure any breach or default of Lessee not reasonably susceptible of being cured by such Leasehold Mortgagee, including without limitation any breach or default under Sections 19(a)(iii), (iv) and (v). (2) Consent of Leasehold Mortgagee Required. No cancellation, termination, surrender or modification of this Lease shall be effective as to any Leasehold Mortgagee unless either consented to in writing by such Leasebold Mortgagee or made pursuant to and in compliance with this Section 22. (3) Eminent Domain. So long as any Leasehold Mortgagee shall exist, the proceeds arising from a condemnation shall be disposed of as provided for in such Leasehold Mortgage. (4) Casualty Lose. A standard Lender's Loss Payable endorsement naming each Leasehold Mortgagee may be added to any and all insurance policies required to be Agenda Item #1 October 23, 2012 Special Meeting carried by Lessee hereunder. Nevertheless, the provisions in any Leasehold Mortgage for the application of insurance proceeds shall be subject to the provisions of this Lease with respect thereto and, in the event of any conflict between the provisions of this Lease and the provisions of any Leasehold Mortgage with respect thereto, the provisions of this Lease shall control. (5) Arbitration and Legal Proceedings. Lessor shall give any Leasehold mortgagee prompt notice of any arbitration or legal proceedings between Lessor and Lessee involving obligations under this Lease. Any Leasehold Mortgagee shall have the right to intervene in any such proceedings and be made a party to such proceedings, and the parties hereto do hereby consent to such intervention. Lessor shall also give any Leasehold Mortgagee notice of, and a copy of, any award or decision made in any such proceedings. Anything contained in this Lease to the contrary notwithstanding, in the event Lessee shall fail to appoint an arbitrator under circumstances where Tenant is required or authorized to do so, a Leasehold Mortgagee shall have an additional period of thirty (30) days, after notice by Lessor that Lessee has failed to appoint such arbitrator, to make such appointment, and the arbitrator so appointed shall thereupon be recognized in al] respects as if he had been appointed by Lessee. (6) Notices. No notice to be given by Lessor to any Leasehold Mortgagee or by any Leasehold Mortgagee to Lessor shall be effective unless in writing and, if to any Leasehold Mortgagee, sent by registered m ail to the most recent address furnished Lessor pursuant to Section 22A(2), and if to Lessor, sent by registered mail to the address set forth in Section 21(c). (7) Erroneous Payments. A Leasehold Mortgagee making any payment to Lessor in error or pursuant to Lessor's wrongful, improper or mistaken notice or demand shall be entitled to the return of any such payment or portion thereof. If, after any such payment by a Leasehold Mortgagee, the Lessee pays the same or any part thereof to Lessor, Lessor shall promptly refund said payment or portion thereof to such Leasehold Mortgagee. (8) Limitation on Lessor's Right to Encumber Fee. Any mortgage now or hereafter placed on Lessor's fee interest in the Premises shall be subject to this Lease, to any new lease created pursuant to Section 22B, to any mortgage now in existence on the leasehold estate as permitted by this Lease or such new lease, and to Lessee's right, as permitted by this Lease or such new lease, subsequently to encumber the leasehold estate created hereby or thereby. (9) No Rights to Encumber Fee of Lessor. The provisions of this Section do not give to any person whatsoever the right to mortgage, hypothecate or otherwise to encumber or to cause any liens to be placed against the freehold estate of Lessor, nor shall said provisions be construed as resulting in a subordination in whole or in part of the freehold estate of Lessor to any indebtedness of Lessee. (10) Performance by Leasehold Mortgagee. Any Leasehold Mortgagee shall have the right, but not the obligation, to make any payment, perform or cause to be performed any act, or otherwise comply or cause compliance with any and all terms, covenants and provisions of this Lease to be complied with by Lessee, and Lessor shall accept any such Agenda Item #1 October 23, 2012 Special Meeting payment, performance or compliance by any Leasehold Mortgagee as if such payment, performance or compliance had been made by Lessee. (11) Rights of Leasehold Mortgagees. The exercise by any Leasehold Mortgagee of its rights to obtain possession of the Premises, including without limitation the right to commence an action against the Lessee for the appointment of a receiver, shall not constitute a breach or default under this Lease. (12) Non - Merger. So long as any Leasehold Mortgage is in existence, unless the Leasehold Mortgagee thereof shall otherwise expressly consent in writing, the fee title to the Premises and the leasehold estate therein created by this Lease shall not merge but shall remain separate and distinct, notwithstanding the acquisition of both said fee title and said leasehold estate by Lessor, Lessee or by a third party, by purchase or otherwise. (13) Estoppel Certificate. Lessor shall, without charge, at any time and from time to time within ten (10) days after written request of Lessee or any Leasehold Mortgagee to do so, certify by written instrument duly executed and acknowledged to any Leasehold Mortgagee or purchaser, or proposed Leasehold Mortgagee or purchaser, or any other person, firm or corporation specified in such request: (a) as to whether this Lease has been modified, supplemented, amended, extended or renewed and if so, the substance and manner of such modification, supplement, amendment, extension or renewal; (b) as to the validity and force and effect of this Lease in accordance with its provisions; (c) as to the existence of any breach or default hereunder or any circumstance which. with the giving of notice or the passage of time, or both, would constitute a breach or default hereunder; (d) as to the existence of any offsets, counterclaims or defenses to the enforcement of this Lease on the part of either Lessor or Lessee; (e) as to the commencement and expiration dates of the term of this Lease; and (f) as to any other matters as may be reasonably so requested. Any such certificate may be relied upon by Lessee and any other person, firm or corporation to whom the same may be exhibited or delivered, and the contents of such certificate shall be binding upon Lessor. 14) Survival. The provisions of this Section 22 shall survive the termination, rejection or disaffirmance of this Lease and shall continue in full force and effect thereafter to the same extent as if this Section 22 was a separate and independent contract made by Lessor and any Leasehold Mortgagee and, from the effective date of such termination, rejection or disaffirmance of this Lease to the date of execution and delivery of any new lease pursuant to Section 22B, such Leasehold Mortgagee may use and enjoy the Premises without hindrance by Lessor or any person claiming by, through or under Lessor so long as such Leasehold Mortgagee or any person claiming by, through or under such Leasehold Mortgagee complies with the terms of this Lease except as otherwise provided in Section 22C(I). 4. Except as expressly set forth herein, the Lease remains unmodified and in full force and effect. Agenda Item #1 October 23, 2012 Special Meeting IN WITNESS WHEREOF, the parties have executed this Amendment effective as of the date first written above. LESSOR City of Newport Beach Attest: Mayor City Clerk Approved as to form: Asst. City Attorney C Its: M Its: Agenda Item #1 October 23; 2012 Special Meeting LEASE THIS LEASE, made this 4h day of N4,y, '4z 9 2012 by and between the City of Newport, a municipal corporation, °°d-r" '- C Thereinafter, "Lessor" and tlK_—BQ4t:a , non ptzefit hereinafter, "Lessee ", is made with reference to the following recitals: RECITALS A. Under the provisions of the Beacon Bay Bill (Chapter 740 of the Statues of 1978), Lessor is the grantee of certain harbor tidelands, located in the City of Newport Beach, County of Orange, ( "Tidelands Grant "); B. Lessee currently operates a marina in and over a portion of those tidelands under Harbor Permit C. Harbor Permit @1@k is issued to the owner of the upland property adjacent to the tidelands; D. Lessee has acquired the upland property adjacent to the tidelands; E. The parties desire to enter into a long -term lease in lieu of a City Harbor Permit, and F. The Marina use to be made of these tidelands, and the terms and conditions in this lease are consistent with the provisions of the City Charter and Ordinances of Lessor, and are consistent with the provisions of the Tideland's Grant.; ._ .. . - - - NOW THEREFORE, THE PARTIES AGREE: I. LEASED PREMISES In consideration of the rent to be paid and the covenants and conditions to be observed and performed by Lessee, Lessor leases to the Lessee those tidelands described in Exhibit "A" and depicted on the map attached, as Exhibit "B" (the "Premises' 1. Lessor reserves all oil, oil rights, gas, minerals, mineral rights, natural gas rights and other hydrocarbon substances in and under the Premises and the right to grant and transfer the same, together with all necessary and Agenda Item #1 October 23, 2012 Special Meeting convenient rights to explore for, develop, produce and extract and take the same, subject to the express limitation that any and all operations for the exploration, development, production, extraction and taking of any such substance shall be carried on at levels below the depth of five hundred feet (500') from the surface of the land by means of wells, derricks and other equipment from surface locations on adjoining or neighboring land, and subject further to all restrictions and regulations concerning the drilling for, and production of, oil, gas, minerals, petroleum and other hydrocarbon substances specified in the Newport Beach City Charter or the Newport Beach Municipal Code. 2. TERM The Term shall commence on the date first written above, and shall expire upon the �) ( )anniversary thereof (the "Expiration Date "), unless sooner terminated as provided in this Agreement. 3. QUIET POSSESSION So long as no default by Lessee has occurred under this Lease, Lessee shall peaceably and quietly use and enjoy the Premises for the Term, without hindrance or interruption by Lessor or any other person or persons claiming by, through or under Lessor. Lessor shall in no event be liable in damages or otherwise, nor shall Lessee be released from any obligations hereunder, because of the interruption or termination of any service provided by the Lessor (such as, water or sewer service), or a termination, interruption or disturbance of any service attributable to any act or neglect of Lessor or its servants, agents, employees, licensees, business invitees, or any person claiming by, through or under Lessee. 4. IMPROVEMENTS TO LEASED PREMISES Lessor and Lessee 'acknowledge that Lessee has constructed major improvements on and adjacent to the Premises. These improvements include, but are not necessarily limited to, bulkheads, piers, docks, floats and related improvements which comprise a manna consisting of 4,4$41{ii€al " -e€ slips square feet of tidelands for docking of boats, (collectively, the "Marina improvements ") as shown on Exhibit "B." Of the a=,544- `___ f ':r_ square feet of tidelands for docking boats, 2=,049 lineal feet of sueh square feet of tidelands are located on State Tidelands, which are the subject of this Lease and shall serve as the basis for calculating rent herein below. 5. RENT Upon execution of this lease Lessee shall pay to Lessor the sum wr ^*� « s r,- in twelve (12) equal monthly installments of ) payable on the first of each month, and every year thereafter. Lessee shall pay rent which sum is ectwd equivalent to nine and a half percent (94 9.5% ) of the annual gross receipts from slip rentals generated by ^� _-_square feet of tidelands at a rental rate of ) per k l-�square feet, the ( "rental rate ") or such Agenda Item #1 October 23, 2012 Special Meeting rental rate as maybe adjusted as provided in Paragraph 6 below. The 9.5% equivalent rate is to be converted to a rate per square foot basis, and ramped up from existing rate (Per exhibit B to be attached). 6. RENT ADJUSTMENT /MINIMUM RENT Every year, on the anniversary date of the Lease, the rental rate shall be adjusted upwards or downwards in direct proportion to the weighted average increase or decrease in the rate per lineal foot of slips in the "comparable marinas" described below, but in no event shall the rent adjust below the then prevailing commercial harbor permit fee paid by other commercial users within lower Newport Harbor. The weighted average rate per lineal foot of slips shall be determined by the following "comparable marinas. ": (To be determined, per exhibit C) From the list of "comparable marinas" the following size categories shall be excluded from the weighted average calculations: ' . (To be determined, per exhibit C) If the method of determining rental rates in the comparable marinas should change, Lessor agrees to consult with Lessee to establish a comparable method to determine the future rental rates. ALTERATIONS Lessee shall have the right to make, at its sole expense, such nonstructural changes, alterations, improvements and additions in and to the marina improvements, but such changes shall conform to the City's Harbor Permit Policies and Exhibit "B'. Structural changes shall not be made to any marina improvement without first submitting written plans and specifications of the proposed change, alteration or addition to the Lessor and obtaining Lessor's written approval. Lessee shall make, at its expense, such changes, alterations or additions in and to structures on the Premises that may be required by any public law ordinance from time to time, applicable to Lessee's use and occupancy of the Premises. 8. MARINA MAINTENANCE Lessee at its sole cost and expense, shall keep and maintain all marina improvements and related fixtures and personal property in first class order, condition and repair. Lessee shall maintain and operate not less than 2-,07-9 Viea4 � Ps square feet of tidelands available for rent. Maintenance dredging bayward of the property line, between the bulkhead line and the pierhead line, shall be the responsibility of the Lessee for the zone delineated by bayward prolongations of upland side property lines out to the U.S. project line. The Lessee agrees that the Lessor may go upon the leased Premises and make any necessary repairs to the Premises, and perform any work therein: (i) Which may be necessary to comply with any laws, ordinances, rules or regulations of any public entity; (ii) That Lessor is obligated to make, under the terms of this Lease; or Agenda Item #1 October 23, 2012 Special Meeting (iii) That the Lessor may deem necessary to prevent waste or deterioration of the Premises, if the Lessee does not make or cause such work to be performed promptly and diligently after receipt of written demand, therefore from the Lessor. Nothing herein contained shall apply any duty on the part of the Lessor to do any work which the Lessee may be required to do, nor shall it constitute a waiver of Lessee's default. No exercise by the Lessor of any rights reserved, shall entitle the Lessee to any damage for any injury or inconvenience occasioned thereby, or to any abatement of rent, however, such repairs once commenced, shall be completed in a timely manner. In the event that Lessor makes, or causes to be made, any repairs, within the Term of this Lease that is Lessee's obligation to make, Lessee shall upon demand, pay to the Lessor the cost of such repairs, which amounts shall be due and payable upon demand and shall bear interest from the date of demand, until totally paid at the rate of nine percent (9 %) per annum. USE OF THE PREMISES During the Term of this Lease, Lessee shall use and occupy the Premises, principally for the operation of a manna. The marina use shall be limited to the rental of boat slips, dock lockers, dry storage and related uses. Lessee shall not commit or permit the commission by others of any waste on the Premises. Lessee shall not maintain any nuisance, as defined in Section 3479 of the California Civil Code on the leased Premises. Lessee shall not unreasonably interfere with the rights of other harbor permittees or nearby residents, and Lessee shah not use or permit the use of the Premises for any unlawful purpose, or in violation of any provision of law. 10. UTILITIES Lessee shall be solely responsible for obtaining and shall promptly pay for all water, power, sewer, and other utility services provided to the Premises. 11. RIGHT TO ENTER Lessor expressly reserves the right to enter the Premises and all improvements for any purpose associated with this Lease or for carrying out any function required by law, or the rules, regulations or management policies of Lessor. Lessor shall have a right of reasonable access to the Premises across Lessee owned or occupied lands adjacent to the Premises for any purpose associated with this Lease. 12, RULES. REGULATIONS AND TAXES (a) Lessee shall comply with and be bound by all presently existing or subsequently enacted policies, regulations, statutes or ordinances of Lessor, including, but not limited to, rules and regulations prescribed under Council Policy H -1 (Harbor Permit Policies), or any other government agency or entity having lawful authority and jurisdiction. Agenda Item #1 October 23, 2012 Special Meeting (b) Lessee understands and agrees that a necessary condition for the granting and continued existence of this Lease is that Lessee obtain and maintain all permits or other entitlements. (c) During the Term of this lease, Lessee shall pay, prior to delinquency, any and all taxes assessed against Lessee's possessory interest under this Lease and all other taxes, assessments, user fees or service charges imposed on or associated with the leasehold interest, or personal property or improvements on the Premises, and such payment shall not reduce rent due Lessor under this Lease, and Lessor shall have no liability for such payment. 13. ENVIRONMENTAL REQUIREMENTS (a) Lessee shall practice conservation of water, energy, and other natural resources and shall prevent pollution and harm to the environment. Lessee shall not violate any law or regulation whose purpose is to conserve resources or to protect the environment. (b) Lessee shall not use, nor permit the use of, any hazardous wastes or materials in the construction, reconstruction or renovations of or use of the manna improvements in violation of any applicable law, regulation, code or ordinance. Lessee shall, at its expense, comply, and cause each of its members, licensees and/or concessionaires of space in the marina or elsewhere adjacent to the Premises to comply with all applicable laws, regulations, codes and ordinances relating to any hazardous regulated material, including obtaining and filing all applicable notices, permits, licenses and similar authorizations. Lessee shall be fully responsible to clean up any hazardous wastes, substances or materials as may be required under Federal, State or local law, regulation, code or ordinance that are manufactured, generated, used, placed, disposed, stored, or transported on the Premises by Lessee, its members, licensees and concessionaires during the Lease Term and shall comply with and be bound by all applicable provisions of such Federal, State or local law, regulation, code or ordinance dealing with such wastes, substances or materials. Lessee shall notify Lessor and the appropriate governmental emergency response agency(ies) immediately in the event of any release or threatened release of any such wastes, substances or materials. 14. INDEMNITY (a) Lessee agrees to defend, indemnify, protect and hold Lessor harmless from and against any and all liability, claims, damages, penalties, actions, demands or expenses of any kind or nature, including damage to any property and injury (including death) to any person (collectively, "Claims "), arising from Lessee's use or occupation of the Premises of from any activity, work or things done, permitted or suffered by Lessee, or from any activity, work or things done, permitted or suffered by Lessee or any omission of Lessee on or about the Premises or from any litigation concerning any of the foregoing in which Lessor is made a party Defendant. Lessee shall not be required hereunder to defend, indemnify or hold Landlord or any other person or entity indemnified under this Section harmless from or against any of the Claims to the extent such Claim arises solely out of the negligence or willful misconduct of Lessor. This obligation to indemnify shall include reasonable. attorneys' fees and investigation costs and all other reasonable costs, expenses and liabilities incurred by Lessor or its counsel from the first notice that any claim or demand is to be made or may be made. Agenda Item #1 October 23, 2012 Special Meeting (b) Upon receiving knowledge of any Claim that Lessor believes is covered by this indemnity, Lessor shall give Lessee notice of the matter and an opportunity to defend it, at Lessee's sole cost and expense, with legal counsel satisfactory to Lessor in its sole and absolute discretion. Lessor may also require Lessee to so defend the matter. So long as Lessee shall be defending any such Claim, Lessor shall not settle such clam without the consent of Lessee, (c) Lessee shall notify Lessor immediately in case of any accident, injury or casualty on the Premises. 15. INSURANCE (a) Lessee shall obtain and maintain in full force and effect during the Term of this Lease, comprehensive general liability insurance and property damage insurance, with such coverage and limits as may be reasonably requested by the Lessor from time to time, but in no event for less than the sum(s) specified below, insuring Lessee and Lessor against any and all claims or liability arising out of the ownersbip, use, occupancy, condition or maintenance of the Premises and all improvements. (i) Comprehensive General Liability Insurance. Lessee shall maintain Comprehensive General Liability Insurance with a combined single limit for bodily injury and property damages of Two Million Dollars ($2,000,000), (which amount shall be subject to periodic adjustment as may be determined by Lessor upon one hundred eighty days (180) prior notice. The limits of liability of the insurance coverage specified in this paragraph may be provided by any combination of primary and excess liability insurance policies. (ii) Property Insurance - Construction. During construction of any improvements on the Premises, Lessee shall maintain builder's risk insurance against "all risk" or physical loss, including without limitation the perils of flood, collapse and transit, with deductibles acceptable to Lessor, covering the total cost of work performed, equipment, supplies and materials furnished on a replacement cost basis. Lessee shall be permitted to obtain and maintain flood insurance in such amounts and forms as are available, from time to time, under National Flood Insurance Program. (iii) Property Insurance. Lessee shall obtain insurance on the marina improvements and shall maintain insurance continuously during the Term, against "all risk" perils of physical loss, including, but not limited to,flood, fire, lightning, riot and civil commotion, vandalism and malicious mischief. Such insurance shall be in amounts not less than the then full replacement cost of the marina improvements, without deduction for depreciation. Such policies of insurance shall Agenda Item #1 October 23, 2012 Special Meeting contain the "Replacement Cost Endorsement." Such full replacement cost shall pertain to the Project and Furnishings and be determined not less often than each two (2) years during the Term. (b) Insurance carriers shall be licensed and approved to do business in California having a general policyholders' rating of not less than B+ and financial rating or not less than 'VII" in the most current Best's Key Rating Guide. (c) The insurance policy or policies shall name the Lessor, its officers, agents and employees as additional insureds. Lessee shall provide Lessor with a certificate of such insurance and shall keep such certificate current. The policy (or endorsement) must provide that the insurer will not cancel the Lessee's coverage without thirty (30) days prior written notice to the Lessor. The Lessor will not be responsible for any premiums or other assessments on the policy. The coverage provided by the Lessee shall be primary and non - contributing. (d) The insurance coverage specified in this Lease shall be in effect at all times during the Lease Term and subsequently until all of the Premises have been either accepted as improved, by Lessor, or restored by Lessee. (e) Lessee shall not commit or permit the commission of any acts on the Premises that would cause the cancellation of any liability or other insurance policy, insuring either the Premises or the improvements on the Premises. Lessee shall, at its own cost and expense, comply with any and all requirements imposed by insurance companies that carry the policies described above. (f) Each policy of insurance procured pursuant to the Section shall contain, either. (i) A waiver by the insurer of the right of subrogation against either party hereto 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 described in the insurance policy. Lessor and Lessee each hereby waives any and all rights of recovery against the other, and against it shareholders, officers, directors, employees, subsidiaries, partners, servants, agents and representatives, for loss or damage arising from any cause insured against under the form of insurance policies required to be carried pursuant to this Section or under any other policy of insurance carried by either Lessor or Lessee. Lessee and Lessor each agrees to use reasonable efforts to obtain its liability insurance carriers' permission as to the waiver of subrogation described above in this Section. (g) Lessee shall at all times observe and comply with the requirements of all policies of insurance in force with respect to the Premises or any part thereof, and Lessee shall so perform and satisfy the requirements of the companies writing such policies so that, at all times, companies of good standing reasonably satisfactory to Lessor shall be willing to write or to continue such insurance. Lessee shall, if any member, licensee, concessionaire or other user of Agenda Item #1 October 23, 2012 Special Meeting any portion of the Premises engages in any activity in violation of the requirements of all policies of insurance in force with respect to the Premises, or any party thereof, take steps, immediately upon knowledge of such activity, to remedy or prevent the same, as the case may be. 16. CASUALTY Lessee shall promptly cause the marina improvements, or any part, thereof, which is damaged or destroyed, to be repaired and restored to its original condition whether or not required to be insured against, at Lessee's sole cost and expense. Such repair and restoration shall be commenced in good faith and with all reasonable diligence within a reasonable diligence within a reasonable period of time following casualty and shall be completed with due diligence. 17. NO ABATEMENT OF RENT Throughout the Term, no direct or indirect destruction of or damage to the marina improvements or any other personal property on the Premises or any part thereof or elsewhere by fire or other casualty whatsoever, whether such damage or destruction be partial or total, shall permit Lessee to surrender or terminate the Lease or relieve Lessee from its obligation to pay in full the rent and other sums and charges payable by Lessee hereunder or from any other obligation under the Lease, except as otherwise expressly set forth herein. 18. ASSIGNMENT. ENCUMBRANCING OR SUBLETTING (a) Lessee shall not either voluntarily or by operation of law, assign, transfer, mortgage, pledge, hypothecate or encumber this Lease and shall not sublet the Premises, in whole or in part, or allow any person other than the Lessee's employees, members, agents, servants and invitees to occupy or use all or any portion of the Premises without the prior written consent of Lessor which consent shall not be unreasonably withheld. (b) The following shall be deemed to be an assignment or transfer within the meaning of this Lease: (i) If Lessee is a corporation, any dissolution, merger, consolidation or other reorganization of Lessee or sale or other transfer of a percentage of capital stock of Lessee which results in a change of controlling persons, or the sale or other transfer of substantially all the assets of Lessee. (ii) If Lessee is a partnership, a transfer of any interest of a general partner, a withdrawal of any general partner from the partnership, or the dissolution of the partnership. (c) This Lease is appurtenant to adjoining littoral or riparian land and/or uplands, and Lessee shall not transfer or assign its ownership interest or use rights in such adjoining land separately from the leasehold rights granted by this Agreement without the prior written consent of Lessor. Agenda Item #1 October 23, 2012 Special Meeting 19. DEFAULT AND REMEDIES (a) The occurrence of any one or more of the following shall constitute a default by Lessee: (i) Failure of Lessee to pay rent due hereunder within thirty (30) days after written notice from Lessor, or (ii) Any failure by Lessee to perform any of the other terms, conditions or covenants of this Lease to be observed or performed by Lessee after thirty (30) days written notice from Lessor, or (iii) Lessee becoming insolvent or filing any debtor proceedings, or should any adjudications in bankruptcy be rendered against Lessee, or should Lessee take or have taken against it, in any court pursuant to any statute either of the United States or of any State, a petition in bankruptcy or insolvency or for reorganization or for the appointment of a receiver or trustee of all or a portion of Lessee's property, and should the same not be discharged within one hundred twenty (120) days thereafter; or (iv) Lessee permitting the Premises to become vacant or unoccupied for fifteen (15) consecutive days after written notice to Lessee (except for vacancies caused by any Force Majeure or by remodeling, reconstruction, alterations or repairs permitted under this Lease); or (v) The appointment of a trustee or receiver to take possession of substantially all of the assets of Lessee located at the Premises or Tenant's interest in this Lease or the Premises, where possession is not restored within thirty (30) days. (b) Except for the payment of rent, if the nature of Lessee's default or breach under this paragraph is such that more than thirty (30) days are reasonably required for its cure, then Lessee shall not be deemed to be in default or breach if Lessee commences such cure within such thirty (30) day period and diligently proceeds with such cure to completion. (c) Remedies. In the event of a default or breach by Lessee and Lessee's failure to cure such default or breach, Lessor may at any time and with or without notice do any one or more of the following: (i) Re -enter the Lease Premises, remove all persons and property, and repossess and enjoy such Premises. (ii) Terminate this Lease and Lessee's right of possession of the Lease Premises. Such termination shall be effective upon Lessor's giving written notice and upon receipt of such notice, Lessee shall immediately surrender possession of the Lease Premises to Lessor. Agenda Item #1 October 23, 2012 Special Meeting (iii) Maintain this Lease in full force and effect and recover any rental, royalty, or other consideration as it becomes due, without terminating Lessee's right of possession, regardless of whether Lessee shall have abandoned the Lease Premises. (vi) Exercise any other right or remedy which Lessor may have at law or equity. 20. RESTORATION OF PREMISES (a) Upon expiration or sooner termination of this Lease, Lessor upon written notice, may take title to any or all improvements, including fills, or Lessor may require Lessee to remove all or any such improvements at its sole expense and risk; or Lessor may itself remove or have removed all or any portion of such improvements at Lessee's sole expense. Lessee shall deliver to Lessor such documentation as may be necessary to convey title to such improvements to Lessor, fi-ee and dear of any liens, mortgages, loans or any other encumbrances. (b) In removing any such improvements, Lessee shall restore the Premises as nearly as possible to the conditions existing prior to their installation or construction. (c) All plans for and subsequent removal and restoration shall be to the satisfaction of Lessor and shall be completed within ninety (90) days after the expiration or sooner termination of this Lease. (d) In removing any or all the improvements, Lessee shall be required to obtain any permits or other governmental approvals as may then be required by lawful authority. 21. ADDITIONAL PROVISIONS (a) Waiver (i) No term, covenant, or condition of this Lease and no default or breach of any such term, or condition shall be deemed to have waived by Lessor's acceptance of a late nonconforming performance or otherwise, such a waiver is expressly acknowledged Lessor in writing. (ii) Such waiver shall not be deemed to be a of any other term, covenant or condition this Lease. (b) Time Time is of the essence of this Lease and each and all its terms, covenants or conditions in which is a factor. (c) Notice Agenda Item #1 October 23, 2012 Special Meeting All notices required to be given under this Lease be given in writing, sent by U.S. Mail, to Lessor at: City of Newport Beach 3300 Newport Boulevard Newport Beach, California, 92658 Attention: City Manager and the Lessee at the address specified in this Lease. Lessee shall give Lessor notice of any change in its name, address or telephone number. Until such notice of change, all notices to Lessee shall be sent to: (d) Consent Where Lessors consent is required under this Lease, its consent for one transaction or event shall not be deemed to be a consent to any subsequent occurrence of the same or any other transaction or event. (e) Changes This Lease may be terminated and Its term, covenants and conditions amended, revised or supplemented only by mutual written agreement of the parties. (f) Successors The terms, covenants and conditions of this Lease shall extend to and be binding upon and inure to the benefit of the heirs, successors, and assigns of the respective parties. (g) Joint and Several Obligation If more than one Lessee is a party to this Lease, the obligations of the Lessees sball be joint and several. (h) Captions The captions of this Lease are not controlling and shall have no effect upon its construction or interpretation. Agenda Item #1 October 23, 2012 Special Meeting (i) Severability If any term, covenant or condition of this Lease is determined by a court of competent jurisdiction to be invalid, it shall be considered deleted and shall not invalidate any of the remaining terms, covenants and conditions. IN WITNESS WHEREOF, THE PARTIES HAVE EXECUTED THIS AGREEMENT EFFECTIVE AS OF THE DATE FIRST WRITTEN ABOVE. LESSOR CITY OF NEWPORT BEACH Mayor ATTEST: City Clerk APPROVED AS TO FORM: Assistant City Attorney Agenda Item #1 October 23, 2012 Special Meeting RECORDING REQUESTED BY AND WHEN RECORDED RETURN TO: MEMORANDUM OF LEASE This is the Memorandum of Lease dated this day of 449-92012, between the City of Newport Beach, a municipal corporation,: : (hereinafter "Lessor ") and (hereinafter "Lessee "), concerning those tidelands described in Exhibit "A" and depicted on the map attached hereto as Exhibit "B" and incorporated herein by this reference. For good and adequate consideration, Lessor leases the premises to Lessee, and Lessee hires them from Lessor, under the terms and conditions contained in the Lease ( "Lease ") and First Amendment to Lease ( "Amendment ") which are incorporated in this Memorandum of Lease by this reference. The term is " O years, commencing on and ending on the date which is O years after such commencement date, if not sooner terminated pursuant to the terms thereof. Agenda Item #1 October 23, 2012 Special Meeting This Memorandum of Lease is not a complete summary of the Lease and Amendment. Provisions in the Memorandum of Lease shall not be used in interpreting the Lease or Amendment provisions. In the event of conflict between the Memorandum of Lease, and the Lease or Amendment, the Lease and Amendment shall control. "Lessor ": CITY OF NEWPORT BEACH, a municipal corporation and Charter City 0 "Lessee ": 17 A TTI A Go p TTTT4.1 A AT $��1F2]"FP� , M. M. Its: Agenda Item #1 October 23, 2012 Special Meeting STATE OF CALIFORNIA ) SS. COUNTY OF ORANGE ) On , before me, personally appeared , personally known to me to be the person whose name is subscribed to the within instrument and acknowledged to me that he executed the same in his authorized capacity, and that by his signature on the instrument the person, or the entity upon behalf of which the person acted, executed the instrument. WITNESS my band and official seal. Notary Public in and for said County and State STATE OF CALIFORNIA ) )SS COUNTY OF ORANGE ) On . before me, _ , , personally appeared personally known to me (or proved to me on the basis of satisfactory evidence) to be the person whose name is subscribed to the within instrument and acknowledged to me that lie executed the same in Agenda Item #1 October 23, 2012 Special Meeting his authorized capacity, and that by his signature on the instrument the person, or the entity upon behalf of which the person acted, executed the instrument. WITNESS my hand and official seal. s _ Notary Public in and for said County and State EXHIBIT A LEGAL DESCRIPTION OF THE LAND Mim "Fill IN' 01 HARBOR PERMIT BOUNDARIES A. That area of State Tidelands bayward of the upland property between the U.S> Bulkhead Line and U.S. Project Line, as shown on the attached aerial photograph, Exhibit B. GROUND LESSOR'S ESTOPPEL CERTIFICATE ! i!!!lf7Rlf�+tT�7fR�Ni Gentlemen: Agenda Item #1 October 23, 2012 Special Meeting The City of Newport Beach, a municipal corporation and Charter City ( "Lessor "), hereby certifies to you ( "Lender ") as follows: The Lessor has entered into that certain Lease, dated amended by that certain First Amendment to Lease dated 0.1 short form of which has been or will be recorded in the Official Records of Orange County, California (collectively the "Lease "), with thg n_L, 14014 prof*� ( "Lessee "). 2. The Lease has been duly authorized, executed and delivered by the Lessor and is in full force and effect. 3. The Lessor has not assigned or agreed to assign its interest under the Lease in whole or in part. The Lessor has received no notice of any prior transfer, assignment or encumbering of the Lessee's interest under the Lease. 4. The Lessor is not in any respect in breach or default under the Lease. There is no fact or condition currently existing which, with notice or time or both, would constitute such a breach or default by the Lessor under the Lease. Gentlemen: Agenda Item #1 October 23, 2012 Special Meeting The City of Newport Beach, a municipal corporation and Charter City ( "Lessor "), hereby certifies to you ( "Lender ") as follows: The Lessor has entered into that certain Lease, dated amended by that certain First Amendment to Lease dated 0.1 short form of which has been or will be recorded in the Official Records of Orange County, California (collectively the "Lease "), with thg n_L, 14014 prof*� ( "Lessee "). 2. The Lease has been duly authorized, executed and delivered by the Lessor and is in full force and effect. 3. The Lessor has not assigned or agreed to assign its interest under the Lease in whole or in part. The Lessor has received no notice of any prior transfer, assignment or encumbering of the Lessee's interest under the Lease. 4. The Lessor is not in any respect in breach or default under the Lease. There is no fact or condition currently existing which, with notice or time or both, would constitute such a breach or default by the Lessor under the Lease. Agenda Item #1 October 23, 2012 Special Meeting 5. To the best of the Lessor's knowledge, the Lessee is not in any respect in breach or default under the Lease. To the best of the Lessor's knowledge, there is no fact or condition currently existing which, with notice or time or both, would constitute such a breach or default by the Lessee under the Lease. 6. The copy of the Lease attached hereto as Exhibit "A" is a true and complete copy of the Lease. The Lease has not been modified, altered or amended in any respect. 7. The Lease contains the entire agreement between the Lessor and Lessee with respect to the leasing of the "Premises" described therein. 8. The Lessor has been advised that the Lender has made or will be making a loan to the Lessee (the "Loan ") to be secured by a "Leasehold Mortgage" (as defined in the Lease). 9. The Lender shall be entitled to all rights and remedies granted to a "Leasehold Mortgagee" pursuant to the Lease and all such rights and remedies are incorporated herein by this reference for the benefit of Lender as though fully set forth. 10. The Lessor confirms that it has received appropriate notice and a true copy of the Lenders Leasehold Mortgage, that the Lender is a Leasehold Mortgagee entitled to the rights and protections afforded to Leasehold Mortgagees under the Lease, and that the Lender's name and address are as set forth above. The undersigned makes the above statements for the benefit and protection of the Lender with full knowledge that the Lender will rely on them in making the Loan to the Lessee. Dated: LESSOR CITY OF NEWPORT BEACH Attest: Mayor City Clerk Agenda Item #1 October 23, 2012 Special Meeting Approved as to form: Assistant City Attorney �—*Profl 100 1ree�r sir. fidtfiifiiiii'�il F Agenda Item #1 October 23, 2012 Special Meeting Agenda Item #1 October 23, 2012 Special Meeting B49Q41&�L Agenda Item #1 October 23, 2012 Special Meeting OPTION TO LEASE The City of Newport Beach, a- municipal Corporation, (hereinafter referred as "City ") hereby grants to (hereinafter referred as "BYE "), the option to lease the tidelands area adjacent to the lio ^_.__.L:.._ - , - -� / 1..L premises extending out to the U.S. Project Line (as more specifically set forth on Exhibit "A" attached hereto) for the consideration and upon the recitals, terms and conditions set forth below: RECITALS A. Under the provisions of the Beacon Bay Bill (Chapter 740 of the Statues of 1978), City is the grantee of certain harbor tidelands, located in the City of Newport Beach, County of Orange, ( "Tidelands Grant ") and B. currently operates a marina in and over a portion of those tidelands under Harbor Permit Q444 , and C. Harbor Permit k is issued to ^ °' `- ° ° �_ -- - aL_ ` L_ the owner of the upland property adjacent to the tidelands, and D. ° -_ 9144 has acquired the upland property adjacent to the tidelands from and E. The parties desire to enter into a long -term lease in lieu of a City Harbor Permit. However, l desires to postpone entering into a lease until such time as certain seawall repairs and structural reinforcements have been completed. NOW THEREFORE, the Parties agree as follows: 1 _ Grant of Option. City hereby grants to an exclusive right and option (the "Option ") to lease the Premises for the rent and upon the terms and conditions set forth in the Lease attached hereto as Exhibit B and incorporated herein by this reference (the "Lease "). 2. Consideration. The consideration for the option shall be a one -time fee of &44=,4W, payable upon the execution of this agreement by both parties. The d .r@$® option payment is consideration for the option only and shall not be applicable to the exercise of the lease nor to any rent payable thereunder, and the option payment shall be in addition to the Agenda Item #1 October 23, 2012 Special Meeting annual Harbor permit fee presently in force which shall continue to be imposed and ' shall continue to pay up until the date of exercise of this option. 3. Option Term. The term of the option shall be for three (3) successive years commencing upon the date of execution of this agreement by City and by B€*G and terminating at 5:00 p.m. on the third anniversary date of the execution of this agreement ( "Option Expiration Date "), if it has not been exercised on or prior thereto. 4. Exercise of Option. The option may be exercised by written notice of exercise signed on behalf of 1 and delivered to the City Clerk of the City on or before 5:00 p.m. on the Option Expiration Date. S. Precondition to Exercise of option -- Engineering Work. As a condition precedent to the exercise of this option by shall be required to have then completed all seawall repairs and reinforcements recommended by its structural engineers, to the satisfaction of the city engineer, or in the alternative, it shall post a performance bond acceptable in form, content and amount to the city attorney, assuring that all of such seawall repair and reinforcement so recommended shall be completed within six (6) months of the posting of said performance bond. 6. Further Assurances. Each of the Parties hereto agrees to execute and deliver any and all additional papers and documents, and to do any and all acts reasonably necessary in connection with the performance of its obligations hereunder to carry out the intent of the Parties hereto. 7. Entire Agreement. This Agreement and the documents expressly incorporated herein shall constitute the entire Agreement between the Parties hereto with respect to the subject matter hereof, and shall supersede all prior and contemporaneous agreements and representations of the Parties concerning the subject matter hereof and the terms applicable thereto. 8. Amendment. This Agreement may not be extended, supplemented, modified or amended in any manner, except by an instrument in writing signed by each of the Parties. 9. Waiver. No waiver of any of the provisions of this Agreement shall be deemed or constitute a waiver of any other provision, whether or not similar, nor shall any waiver constitute a continuing waiver. No waiver shall be binding unless executed in writing by the party making the waiver. 10. Successors and Assigns. All terms and provisions contained herein shall insure to the benefit of and shall be binding upon each of the Parties hereto and their respective directors, officers, shareholders, employees, agents, heirs, representatives, successors and assigns, and each of them. 11. Litigation Costs. If any legal action or other proceeding is brought to enforce this Agreement, or because of an alleged dispute, breach, or misrepresentation in connection with Agenda Item #1 October 23, 2012 Special Meeting any of the provisions of this Agreement, the successful or prevailing party or Parties shall be entitled to recover their reasonable attorney fees and other costs incurred in that action or proceeding, in addition to any other relief to which it or they may be entitled. 12. Applicable Law. This Agreement shall be deemed to have been entered into, and shall be construed and interpreted, in accordance with the laws of the State of California. 13. Severability. In the event that any provisions hereof is deemed to be illegal or unenforceable, such a determination shall not affect the validity or enforceability or the remaining provisions hereof, all of which shall remain in full force. 14. Form. As used in this Agreement, the masculine, feminine and neuter gender, and the singular and plural number shall be deemed to include the other and others whenever the context so indicates. All captions used in this Agreement are for convenience only and shall not be construed in interpreting this Agreement. 15. Time is of the Essence. Time is of the essence for this Agreement and all of the terms, provisions, covenants and conditions hereof. 16. Parties In Interest. Nothing in this Agreement, whether express or implied, is intended to confer any rights or remedies under or by reason of this Agreement on any persons other than the Parties to it and their respective successors and assigns, nor is anything in this Agreement intended to relieve or discharge the obligation or liability of any third persons to any party to this Agreement, nor shall any provision give any third persons any right of subrogation or action over against any party this Agreement. 17. Remedies. No remedy conferred by any specific provision of this Agreement is intended to be exclusive of any other remedy, and each and every remedy shall be cumulative and shall be in addition to every other remedy given hereunder, or now, or hereinafter existing at law, in equity, by statute or otherwise. The election of one of more remedies by a party shall not constitute a waiver of the right to pursue other available remedies. IN WITNESS WHEREOF, the Parties have executed this Agreement effective this _ day of _ at Newport Beach, California. City of Newport Beach By: Mayor By: City Clerk Agenda Item #1 October 23, 2012 Special Meeting APPROVED AS TO FORM: nnvin rnnrr____nnrvnr -* � rrr oe�� M Assistant City Attorney Agenda Item #1 Brown, Leilani October 23, 2012 From: Russ Fluter [cannery@earthlink.net] Sent: Thursday, October 18, 2012 2:02 PM To: Henn, Michael; Rosansky, Steven, Hill, Rush, Daigle, Leslie, Selich, Edward; Gardner, Nancy, Curry, Keith; Kiff, Dave; Harp, Aaron; Buzby, Lisa; Brown, Leilani; City Clerk's Office Subject: Commercial Marina City Fee Negotiation Attachments: 20121018154620.pdf Please see attached letter. Sincerely, RUSS FLUTER 2o25 W BAL.BO.A BLVD NEWFO-tT BEACH, CA 9663 T. 949.673.3777 F. 949.673.3451 28�h St. Marina 2600 and 2700 Newport Blvd. Newport Beach, CA 92663 (949) 673 -3777 October 18, 2012 Agenda Item #1 October 23, 2012 Special Meeting RE: Proposed Tidelands Commercial Lease for the 281h St. Marina (2600 and 2700 Newport Blvd. and 2800 Lafayette) To the Honorable Mayor, Council and Staff of the City of Newport Beach; Mayor Nancy Gardner, Mayor Pro Tem Keith Curry, Council Members; Mike Henn, Steve Rosansky, Rush Hill, Leslie Daigle, Ed Selich, City Manager David Kiff, City Attorney Aaron Harp, City Clerk L Brown (See attached distribution list) Dear City of Newport Beach Officials: We are long time property owners and residents in Newport Beach, CA. We have been watching the negotiations for tidelands reappraisal and fee increase for commercial boat docks that we own and are very disappointed with the way the fee increase is being negotiated for the following reasons: 1. Usually each side has their own appraisal. We feel that the appraisals the City of Newport Beach is using are flawed. 17% to 20% of gross dock revenues is unreasonable. How can one percentage fee be fair for different properties? Some properties have built seawalls, restrooms, provide parking. Each property is different. Some properties rent parking from the City for dock parking. All these docks were built based on an annual permit fee structure. 2. The City Council is rushing the process and not giving us a reasonable time or forum to negotiate. 3. Apparently the City is negotiating with some of the larger marina owners and not even looking at issues that affect the smaller marinas. 4. The City Council has a responsibility as elected officials to not only represent the City but also to represent the citizens. 5. The lease template the City wants us to sign is totally one sided and unfair. If the City kept the current annual permit fee it would fit all properties (it could still be raised). If the City forces us to use a lease format, we have the following concerns which were also stated by Sherman Stacey on behalf of the NHYC. Agenda Item #1 October 23, 2012 Special Meeting The proposed lease template is a complex document containing provisions which have never been applied to the commercial marinas in the past. Many of the provisions which duplicate the City's regulatory role have been deleted. But the proposed lease template continues to be a one sided document more designed for an improved, third party managed property on a triple net basis and not for a lease of water rights only. Although we realize that the lease template is intended for larger commercial marinas, we cannot blind ourselves to the fact that we operate a very small marina. a. Premises. The definition of the premises for 28th St. Marina will be of particular importance. A significant part of the 28th St. Marina is not located on City tidelands but on private tidelands. b. Default and Cure. The provisions on default and cure are too onerous. A greater rent cure period and a lighter late penalty and lower interest are desirable. However, it is the cure provisions on non -rent obligations that are of greater concern. Severe time deadlines for repairs, reconstruction and other obligations are unreasonable. All of the tidelands are in the permanent jurisdiction of the California Coastal Commission and no provision is made for the historic time delays which occur when permits must be sought. c. Changes. The lease template does not contemplate changes in the water uses that may alter the revenue which is produced. At some point the cost of replacing piers and slips may exceed the value to be derived from the improvements. A marina may be reconfigured at such time or after a casualty event. A lessee should be free to modify the Premises (subject to all other applicable laws) and adjust the rent accordingly. d. Security Deposit. There is no basis for the City to now Insist upon a security deposit for a water lease on Premises which have been enjoyed for many years without serious concerns. e. Releases. We can see no reason why a mutual release of all known and unknown claims is a reasonable provision in this lease. f. Maintenance. The maintenance standard of "first class" is too high and subjective. On extensions, there is no need to incur the cost of a third party report. We can report the condition and the City can inspect. g. Liens. The City has no risk of liens upon the water interests as the City's interest is not subject to the lien laws. h. Assignment and Hypothecation. The City needs to be more reasonable regarding assignment and hypothecation. Although we contemplate no assignment, hypothecation for financing purposes may arise in the future. As one of the features of the lease that has been highlighted by the City is the creation of an asset upon which a bank may loan, then the City should not unreasonably interfere with such a security interest in a legitimate lending transaction. Default, notice, cure and other provisions will need to be much less restrictive for a lender to accept this lease. Agenda Item #1 October 23, 2012 Special Meeting i. Default for Failure to Operate. As long as the City is receiving its rent, there should be no default for failure to operate. j. Remedies. The City's remedies upon an uncured default should be limited to the recovery of past due rent and the termination of the lease. The City would then have the water unencumbered by the lease and the Lessee should have no further liability. k. Condemnation. The only interest on the water which could be subject to condemnation is the private ownership of the piers and docks. The City's water rights are public and not subject to condemnation. Therefore, any award should go to the private owner who loses the docks and the value of its lease. I. Insurance. The insurance provisions are of great importance and would need to be reviewed by 2S`h St. Marina carriers to be sure that they can be met at a reasonable cost. The insurance provisions are not yet clear. Insurance on "environmental conditions' should not be required. m. Hazardous Substances. A marina which rents slips to boaters will have many sources of hazardous substances. Every boat has fuel, oil, cleaning and other toxic materials as well as sewage. The marina operator cannot be made strictly liable for the actions of the slip renters. If a slip renter improperly handles a hazardous substance, then that person is the proper focus of the City's enforcement of hazardous substance laws. n. Regulatory Duties. The City has no basis to demand that it have no liabilities associated with its regulatory duties. The City's regulatory duties exist independent of the lease. The City has duties (and potential liability) not to act is excess of its jurisdiction, not to deny a fair hearing, not to abuse its discretion, and not to act in a manner which takes private property for public use without payment of just compensation. These protections for the citizen from the government cannot-be compelled to be waived in the lease. We do not intend this letter to be a negotiation of some lease for itself. If the time comes for us to enter into a lease with the City, there will likely be other terms or clauses to-which we will askfor changes. This letter is to inform the City Council of the objections which 28'h St. Marina presently has with the form of the lease. We know that you have received comments from others. We believe that the process should be one by which agreement between parties is reached. At the present time it does not appear that the City has any agreement with any stakeholder on the rent or the terms of the lease. We ask that the City engage in real and substantive negotiation with its stakeholders. An agreement requires a meeting of the minds between two parties. The City should not impose terms. Agenda Item #1 October 23, 2012 Special Meeting Sincerely, 28th St. Marina and 2800 Lafayette By, Russell E. Fluter Agenda Item #1 October 23, 2012 Special Meeting Distribution: MHenn(a)NewportBeachCa.gov SRosansky(a-)NewportBeachCa.gov RHill(cDNewportBeachCa.gov leslieidaigle(a aol.com EdSelich(a)roadrunner.com NGardneri@NewportBeachCa.gov curryk @pf n.coin dkiff(a)newportbeachca.go aharp(a)newportbeachca gov Ibuzby@newportbeachca.gov Ibrown(@newportbeachca.gov cityclerkra'inewportbeachca.gov Agenda Item #1 Brown, Leilani October 23, 2012 From: Sent: To: Cc: Subject: Attachments Mayor, Please see the attached.... Thanks, Commodore - BYC [Commodore @balboayachtclub.coml Thursday, October 18, 2012 7:45 PM Gardner, Nancy Kiff, Dave; Brown, Leilani Letter regarding Tideland Fees Tidelands Gardner.pdf Balboa Yacht Club October 18, 2012 Honorable Nancy vardner Newport Beach City Council 3300 Newport Blvd. Newport Beach, CA 82663 Dear Mayor Gardner, . Agenda Item #1 October 23, 2012 Special Meeting The tidelands leasing debate has been and continues to be an issue of concern to our fellow members at Balboa Yacht Club. We have spent many hours considering the deliberations, and the repercussions of what has been proposed. As you approach the next turning point on this issue in the coming days, we urge restraint — slow down and think about this in a longer context. You recognized in the initial vote the fragile nature of the harbor's current economics when you put off the fee Increases for a year. We urge you to take that year and do this change, that we all agree must happen, in the right way, in the right farm and with the right result. Take the year — do it right. The current process is flawed: -I he appraisal process has many unanswered questions i methodology and did nat result in a meeting of the minds on value, uplands ownership rights and future developments. The stepwise approach of 4vorking your way through the moorings and then the marinas vvi'thout it being pant: of a totaY plan: for the bay has created uncertainty and anger in the community as concern mounts on what you are going to d'o next. Everyone knows; you must address all tidelands issues but: the Council. has been in denial abUlt the !plan to co s-o. 1 1SOI SAYSIDE DRIVE ° CORONA DEL MAR. CALIFORNIA 92625 (949) 673.3515 FAX (949) 6738937 W W W.SALSOAYACHTCLUS.COM Agenda Item #1 October 23, 2012 Special Meeting There has been faint recognition or study of the economics of Newport harbor and the boating community as fees are increased and the unintended consequences unfold. There hGs been no planning focused on considering the forced changes in the harbor that the steep jump in fees will cause. There has been no study of the harbors marinas and boaters in the context of the broader Southern California boating community. We do not want this issue tied up in litigation or secondary battles about other areas of harbor interest, for years to come; we are concerned that is the direction that we might be heading. This will be an embarrassment to the city, cost millions to the City and result in a delay in the needed actions. And it can be avoided, if you take the year, and do it right. As a Yacht Club we remain a vibrant, supportive and active member of the Newport Community, Our 800 members and 3000 extended family members are all interested in boating, Newport and the health of the harbor. We actively support all the events that are so crucial to the lifestyle we all enjoy, from beer can races to charity regattas to youth championships to high school sailing. This is about our harbor, our lifestyle and the ability of the intuitions that matter to all of us to prosper and build a rewarding future for all. We urge the council to step back from the edge of unknown consequences — take the year and do it right. With hope for the future, COMMODORES OF BALBOA YACHT CLUB Judi Gorski Ray Lewis Commodore Vice Commodore c: Dave Kiff, City Manager Leilani Brown, City Clerk 2 �r Glenn Highland Rear Commodore Agenda Item #1 Brown, Leilani October 23, 2012 From: Harp, Aaron Sent: Wednesday, October 17, 2012 5:10 PM To: Brown, Leilani Subject: FW: Letter from Balboa Boat Rentals with attachment this time Attachments: Balboa Boat Rentals - letter to City Council-1 2101 7.pdf Follow Up Flag: Follow up Flag Status: Flagged FYI From: Robin Lombardo [mailto :robinlombardoll @gmail.comj Sent: Wednesday, October 17, 2012 3:36 PM To: Daigle, Leslie; Harp, Aaron; Miller, Chris; Selich, Edward; Curry., Keith; Kiff, Dave; Gardner, Nancy; Henn, Michael; Hill, Rush; Rosansky, Steven Subject: Fwd: Letter from Balboa Boat Rentals with attachment this time Dear Mayor Nancy Gardner, Council Members, City Attorney, City Manager and Harbor Resources Manager: My apologies once again for having to send this to you as I recognized that Council Member Ed Selich's name was misspelled and came back to me undelivered. I caught it and did correct it, however I forgot to hit the refresh before sending it, so it sent to the email address where I misspelled it. I thought the best thing to do would be to forward it to you all again as it was intended to go to each of you (leaving no one out). Sorry about that. Balboa's Boat Rentals computer was down today so they called me to ask if I could send the letter to you for them Thank you for your attention to this matter. Sincerely, Robin Lombardo ---- - - - - -- Forwarded message ---- - - - - -- From: Robin Lombardo <robinlombardo t 1(a,gmail.com> Date: Wed, Oct 17, 2012 at 3:07 PM Subject: Letter from Balboa Boat Rentals with attachment this time To: aharp@,,newportbeachea.gov, emiller(cilnewportbeachca.gov, curryk@12fm.com, edslich a roadrunner.com, leslieidaigleaa aol.com, mhennna newportbeachea.gov, NGardner(@,newportbeachca.gov, rhill(a_tlevmortbeachca.gov, srosanskv(@)newportbeachca.gov, "Kiff, Dave" <dkiff(a,newportbeachca.Qov> Cc: boseyaehts@mae.eom, dlugon nhnm.org, doug@pelicanl.net, eorge c,ehi- mc.com, ibhoeh(iDpaebell.net, jeff .gordon(a messengerco.com, johnlnq curcicompanies.com, iohnmmorehart @,sbcglobal.net, iudieorski a,verizon.net, klortonna,hornblower.com, Nicole.Jorenby a,soleteehnoloey.eom, rstenlundt7a nhrun.org, samgetcohomes.eom, schoekboatspatt.net, sehockboats n sbeglobal.net, sesyincCwyahoo.eom, seaspray226(Qaol.eom, tompollacklEw mail.com, tridgeway@sbcglobat. net, wattsnewprg(a- ,gmail.com, wood vsnewport(a vahoo.com, wpearsonna pacbell.net, wpersonC@ pacbell.net, Afshin Etebar <afshinegetcohomes.com >, Bill Young / Lido Park Place HOA <byoung27@aol.com >, Bob Black <bobna,catalinainfo.com >, Bob McCaffrey <rtmccaffreynyahoo.com >, Bob Sullivan < bob. sullivan.b83A(c�statefarm.com >, Brad Avery <brad@occsailing com >, Brian and Sherry White <thegallerycafena gmail.com >, Brian Cleugh <bcleugh ,murrel.com >, Casey Jones <casey(@,ghi- ine.com >, Chandler Bell <cbellahorablower.com >, Christian Bakewell <christianbakewell(crgmail.com >, Craig Borison <cb _,dominorealtv.com >, Dan Ardell <dan ulmhsherman.com >, Dan Gribble <dpribble boatswainslocker.com >, Dave Geoffroy <dave(c,scma.com >, Dave New <davel((basinmarine.com >, Dave Salisbury <dave n harborside- pavilion.com >, David Beek <davidbeek(a,earthl ink. net >, David Ellis <dle @,delta- partners.com >, Dick Bessire <canneryvillage(c gmail.com >, Don Funk <dflidoresort(a gmail.com >, Duffy Duffield < duffy c�), Agenda Item #1 duffyboats.com >, Elio Amato Octo er 23 ?# 12 <elio@bayviewrme.com >, Ferdinand Fam <fdfam@yahoo.com >, Fran Ursim <fran.ursim h 3, Hill <gary@hillsfuetdock.com >, Gary P Hill <garyphill@sbcelobal. net >, Gary Pickett <gary@mhs erman.com >, Wreg Sinks < sg inks ri,irvmecompany.com >, Heather Goodman < HeatherG(a,electracruises.com >, Ira Beer / Lido Park Place HOA <ibeer@an2000.com >, Jack Croul <jack croul.com >, "Jerry A. King" <JAKingAssoc(a,grn ail. com >, Jim Parker <portcalypso6Daol.com >, John Corrough <marinaconsultant@aol.com >, John Gueola <Jgueola@pacificavalon.com >, John Vallely <iolmvallelv@me.com >, Katie & Jack Gaal <katieandlackn cox.net >, Kristine Thargard <kthagard cr calnevlaw.com >, Lee Goodin <Ieena,cynb.com >, Lido Park Place Marina <marina(a,lidoparkpl ace. com >, Linda Guinther <lguintherAsocal.rr.com >, Megan Delaney <megandelaney@ca.rr.com >, Michael Curci <michaellpcurcicompanies.com >, Mickey Harding <mickeyhartlmgna,aol.com >, Norm Goodin <Norrn@cynb.com >, Pat Werner <pat0,balboaboatvard.com >, Paul Gurst <prQr2permadock.com >, Rich Russell <adiosrichQyahoo.com >, "Richard R. Luehrs" <rluehrs(a,newportbeach.com >, Richard Russell <rich@permadock.com >, Robert Lounsbury <rllounsbur-y@msn.com >, Robin A Lombardo <robinlombardol I(o )zrnail.com >, Rochelle McReynolds < rochellemcreynolds (&,Jzmail.com >, Ron Salisbury <rs- rbinq elcholo.com >, Russ Fluter <cannery@earthlink.net >, Scott Schock <scottschockgsbeglobal. net >, Seymour Beek <sbeek(a),earthlink.net >, Steven James <stevenjames33Pyahoo.com >, Ted Robinson <newpobavgix.netcom.com >, Terri Remley < terri .pcandmpmarinasga,yahoo.com >, Tom Purcell <tomna,curcicompanies.com >, Warren Wimer <warren@wwimer.com> Dear Council Members: Sorry about forgetting to attach the letter. :( I have been asked to forward you this attachment. Please review Thank you, Robin Lombards Property T ianaar Waterfront Newport Beach, LT C 2901 W. Coast Hwy. Suite # 200 Newport Beach, CA. 92663 Off : 949.258.4370 Fax: 949.258.4374 Cell: 949.293.9239 Thank you, Robin Lombardo Property Manager Waterfront Newport Beach, L'LC 2901 W. Coast Hwy. 'Suite # 200 Newport Beach, CA, 92663 Off : 949.258.4370 Fax' 949.255.4374 Agenda Item #1 October 23, 2012 Cell: 949.293.9239 Special Meeting BALBOA L LONG BEACH bfARINA DEL REY OU'ANSIDE �, T ENIPE ww«cboars4rcar.com C0RPOILIT'E OFP1QiS 125 ii Baker'Strem Sic. 143 -hosre Mcsa. CA 92626 I'll ',14- 557 -5106 Pax 714 -5i' 5109 BALBOA BOXI RENTALS 510 F. Fdge;caicr Baba. C-A 92661 Ph 949.673 -7200 1a 949. 673 -1320 LONG Bb%CH BOAT RENTALS $boAlle Vil4agr Raiobw \•bina Ilk i62 -:191 -7400 Fax 502. 491 -747'1 MAINNA BOAT RENTALS, 13719 Fiji Al'<av :Marius Del ltep. CA 90292 Ph 510 -574 -252? Fat 310. 574 -2811 OCrlN51DE BOAT RI'a\NTAI S 256 Harbor Drive South Oceanside, Q% 9A54 Ph 760- 72!-0028 Pax '6(1.722-0474 TEMPE BOAT RENTALS 72 'HY. Iiin Salado Perim -w Tem)"c. Al 8523 i I'll 420-303-0803) Pra 430 -303 98115 Agenda Item #1 October 23, 2012 Special Meeting October 17, 2012 Mayor Nancy Gardner Mayor Pro Tern Keith D. Curry Council Member Michael F. Henn Council Member Steven Rosansky Council Member Rush N. Hill 11 Council Member Leslie Daigle Council Member Edward D. Selich 3300 Newport Boulevard Newport Beach, CA 92663 Cc: Davie Kiff Members of the Tidelands Committee Subject Commercial Tidelands Lease and Appropriate Percentage of Gross Dear Honorable Mayor and Members of the Newport Beach City Council, This letter is written at your request for comments on the above subject. INVOLVEMENT Our small business, Boat Rentals of America, Inc., dba Balboa Boat Rentals, is not a tidelands commercial property owner but we do rent several slips from two parties who own Newport Beach tidelands frontal property. whatever taxes /fees that are assessed to our landlords on slips we rent are passed directly down to our small business for reimbursement. These costs are in addition to the monthly slip rents paid by us. Therefore, we are directly affected by the confiscatory tax /fee increases being proposed. Agenda Item #1 October 23, 2012 Special Meeting BUSINESS DISCRIPTION Twenty years ago we started Balboa Boat Rentals and now have expanded to other locations. The other harbors charge us the following percentages of our gross business: 1. Oceanside Harbor: 6% 2. Marina del Rey: 6% 3. Long Beach, Rainbow Marina: 8% These are all municipally owned, developed and maintained harbors which also provide the parking, restrooms, docks, dredging, etc, within their revenue budgets. Our Oceanside Harbor lease was just renegotiated for ten (10) years plus two five year options at a 6% maximum rent which includes slips and dock space for our 47 rentals vessels. This formal lease agreement with the City of Oceanside is an easy to read 19 pages with no deposit or other adverse clauses. When you compare the above business friendly locations with the proposed taxes /fee, it equates to as much as 20% or more of revenue. Comparatively, the City of Newport Beach is not going to be competitive in the real world of business. One of our council members was quoted to say that they would go out of business if charged a 20 %tax /fee on their business. BUSINESS REALITIES Our small business has been fortunate to earn a modest profit each year. Over the last five years we have averaged a 3.6% net profit with the best year showing 4.2 %. These income statements have been examined by an independent CPA and used for our federal and State tax returns. We question the business world reality of proposing to legislate up to a confiscatory 20% tax /fee on the many small business which operate on the waterfront out of slips and docks. These are the folks to whom the tax /fee is passed down to for payment. You can say "lust raise your prices ". However, we have maintained our rental rates without increases for several years to adjust to the tightening economy. By survey, 70% of our customers are day visitors to the harbor and their demographics are quite different and diverse. Agenda Item #1 October 23, 2012 Special Meeting CONCLUSION We in Newport Beach are proudly part of the American system that functions in a market - driven economy. If our elected council members do not follow this system the citizens and business community are not currently being properly represented. The timing for this action could not be worse with the present economic situation. Any further negotiations and action should be brought forward and mutually agreed upon by those being affected. Harbor businesses, yacht clubs, restaurants and individuals are all suffering enough — please listen to us! Sincerely, Boat Rentals of America, Inc. dbaa Balboa Boat Rentals Penny Roi helm, Owner and General Manager Jack Hochadel, Owner and CFOI ' Ralph Rodheim, Owner and President Brown, Leilani Agenda Item #1 October 23, 2012 From: Harp, Aaron Sent: Monday, October 08, 2012 9:11 AM To: Brown, Leilani Cc: Torres, Michael Subject: FW: Commercial Tidelands Lease/ Lease Template & Appropriate Percentage of Gross Attachments: wnb docks tidelands lease template and appropriate percentage of gross letter to city council 121004.pdf; BCYC Exh. 1 - Part 1 of 2 121004.pdf, BCYC Exh. 1 - Part 2 of 2 121004.pdf; Exh 2 & Exh 3 BCYC Gifted Ratio 2 to 1 121003.pdf; Exh 4 Netzer 9 comps with 7 joinders & 2 ratio issues 121003.pdf; Exh 5 & Exh 6 Gifted Ratios 4 to 1 - Bayshore & 9 to 1- Swales 121003.pdf; Exh 7 Jones 5 non - joinder comps 121005.pdf FYI From: Robert Lounsbury [mailto:rllounsburv(a)msn.com] Sent: Thursday, October 04, 2012 5:52 PM To: Gardner, Nancy; Curry, Keith; Henn, Michael; Rosansky, Steven; Hill, Rush; Daigle, Leslie; Selich, Edward Cc: Kiff, Dave; Harp, Aaron; Miller, Chris; Tom Purcell; Michael Curci; Gary Pickett; John Vallely; Wattsneworg(a>gmail.com; Robert McCaffrey; Dave Ellis; Dave New; Duffield, Marshall; Dwight Belden; Ferdinand Fam; Gary Hill; Hill Gary; Jack Croul; Jim Parker; Corrough, John; Rodheim, Ralph; Richard R. Luehrs; Robert Lounsbury; Robin Lombardo; Beek, Seymour; Ted Robinson; George Jones; Casey Jones Subject: Re: Commercial Tidelands Lease/ Lease Template & Appropriate Percentage of Gross Mayor Nancy Gardner Mayor Pro Tem Keith D. Curry Council Member Michael F. Henn Council Member Steven Rosansky Council Member Rush N. Hill, II Council Member Leslie J. Daigle Council Member Edward D. Selich Re: Commercial Tidelands Lease/ Lease Template & Appropriate Percentage of Gross Dear Honorable Mayor and Honorable Members of the Newport Beach City Council, Please accept and consider the following summary of negotiations, comments and the attached exhibits, as part of the public comments regarding above matter. Thank you. Robert Lounsbury Waterfront Newport Beach, LLC @9 :19 Y 1 ,,VY tTTOR Ey,s OFFICE Agenda Item #1 October 23, 2012 714 644 3139Speci llMeeting i Pon_Qr C P " C C 'Yrpr Y0. 2 C C C r v =MIT "So (tba •p=esU" ") 'A- f Goode Maps � I TI 0 t 0 P Ir Lr � I I Go, Sic Nags; 1 of 2 To see ali the details that are wsibl0 on the screen, use the "Print" link rest to the map L .n Take your map anywhere R� "N t� 01012 Gowq' htgr /,'maps.google.com/ maps ?hl= en &sugexp= lest &cP= K &gs_id =vi xhr== t& bav =on.2,or.r_-9c.t ; _j)w.r_gf. &biw =1245 &bih =E00... 9/29/2012. THIS FIRST AMENDM� TO LEASE (th 7 day of _ //., 1998, Newport Beach, a manic pa corporation ( "Lessor "), and Bahia Corinthian Yacht profit corporation ( "Lessee "), is made following recitals: Agenda Item #1 October 23, 2012 Special Meeting Le "Amendment"), made this by and between the City of and Charter City Club, a California non - with reference to the A. Lessor and Lessee have entered into, or con t herewith are entering into, that certain Lease dated 1998 (the °Lease'). B. Lessor and Lessee desire to supplement and amend the Lease as hereinafter set forth. NOW, TFEMFOR, Lessor and Lessee agree that the Lease is supplemented and amended as follows: 1. Add the word *Beach* to the name of the Lessor in the preamble to the Lease. 2. Add the phrase "Hccept as contemplated by Section 22 of this Lease," to the beginning of Section 18 of the Lease. 3. Add a new Section 22 to the Lease as follows: (1) Definitions (a) The term •Leasehold Mortgage" as used herein shall include a mortgage, a deed of trust, a deed to secure debt, or other security instrument by which Lessee's interest under this Lease and the leasehold estate created thereby is mortgaged, encumbered, conveyed, assigned, or otherwise transferred, to secure a debt or other obligation, and any and all amendments, modifications, supplements, extensions and renewals thereof. (b) The term "Leasehold Mortgagee° as used therein shall refer to a holder of a Leasehold Mortgage in respect to which the notice provided for by Section 22A(3) has been given. (2) Leasehold Mortgage Authorized. On one or more occasions, without Lessor's prior consent, Lessee may mortgage or otherwise encumber Lessee's Leasehold Estate, tHXUM XIM Son" 2 Agenda Item #1 October 23, 2012 Special Meeting under one or more Leasehold Mortgages and assign this Lease as security for such Leasehold Mortgage or Mortgagee. (3) Notice to Lessor. (a) If the holder of a Leasehold Mortgage shall provide Lessor with notice of such Leasehold Mortgage together with a true copy of such Leasehold Mortgage and the name and address of the,Leasehold Mortgagee, Lessor and Lessee agree that, following receipt of such notice by Lessor, the provisions of this Section 22 shall apply in respect to such Leasehold Mortgage and Leasehold Mortgagee. In the event of any assignment of a Leasehold Mortgage or in the event of a change of address of a Leasehold Mortgagee or of an assignee of such Leasehold Mortgagee, notice of the new name and address shall be provided to Lessor. .(4) Notices to Leasehold Mortgagees. Lessor, upon providing Lessee with any notice of: (i) default under this Lease, or (ii) a termination of this Lease, or (iii) a matter on which Lessor may predicate or claim such a default or termination, shall at the same time provide a copy of such notice to any Leasehold Mortgagee. No such notice by Lessor to Lessee shall be deemed to have been duly given unless and until a copy thereof has been so provided to any Leasehold Mortgagee. From and after the date such notice has been given to Lessee and any Leasehold Mortgagee, any Leasebold Mortgagee shall have the right to remedy, commence remedying or cause to be remedied any default or acts or omissions which are the subject matter of much notice, within the same cure period as is given Lessee, plus in each instance, the additional periods of time specified in this Section 22. Lessee authorizes each Leasehold Mortgagee to take any such action at such Leasehold Mortgagee's option and does hereby authorize entry upon the Premises by the Leasehold Mortgagee for such purpose. (5) Leasehold Mort4agee's Election to Cure. Anything contained in this Lease to the contrary notwithstanding, if any breach or default shall occur and remain uncured, Lessor shall have no right to terminate this Lease or exercise any other remedy unless, following the expiration of the period of time given Lessee to cure such breach or default, or the act or omission which gave rise to such breach or default, Lessor shall first notify any Leasehold Mortgagee of Lessor's intent to so exercise such remedy, such notice to be given at least thirty (30) days in advance of the proposed effective date of such exercise if such default is capable of being cured by the payment of money, and it least sixty (60) days in advance of the proposed effective date of such exercise if such default is not capable of being cured by the payment of money. The provisions of Section 22A(6) shall apply if, during such thirty (30) or sixty (60) day period, any Leasehold nocum. 30217 229aen 2 -2- Agenda Item #1 October 23, 2012 . . Special Meeting Mortgagee shall notify Lessor of such Leasehold Mortgagee's desire to exercise its rights to perform under Section 22A(6) and shall: (a) pay or cause to be paid all rent, and other payments-then due and in arrears as specified in such notice and which may become due during such thirty (30) or sixty (60) day period; and (b) comply or in good faith, with reasonable diligence and continuity, commence to comply with all non - monetary requirements of this Lease then in default and reasonably susceptible of being complied with by such Leasehold Mortgagee. (a) If any Leasehold Mortgagee shall have proceeded in the manner provided Section 22A(5), the period specified in Section 22A(5) during which Lessor may not terminate this Lease or exercise any other remedy shall be extended for a period of six (6) additional months, provided that such Leasehold Mortgagee shall, during such additional six (6) month period: (i) pay or cause to be .paid all rent, and other monetary obligations of Lessee under this Lease as the ears become due, and continue its good faith efforts to perform all of Lessee's other obligations under this Lease, excepting non- monetary obligations not reasonably susceptible of being cured or performed by such Leasehold Mortgagee; and (ii) if not enjoined or stayed, take steps to acquire or sell Lessee's interest in this Lease by foreclosure of the Leasehold Mortgage or other appropriate means and prosecute the same to completion with reasonable diligence. (b) If at the end of such additional six (6) month period such Leasehold Mortgagee is complying with Section 22A(6)(a), this Lease shall not then terminate, and the time for completion by such Leasehold Mortgagee of its. proceedings shall continue so long as such Leasehold Mortgagee is enjoined or stayed and thereafter for so long as such Leasehold Mortgagee proceeds to complete steps to acquire or sell Lessee's interest in this Lease by foreclosure of the Leasehold Mortgage or by other appropriate means with reasonable diligence and continuity. Nothing in this section 22A(6)(b), however, shall be construed to extend this Lease beyond the original term hereof as extended by any exercised options; nor to require a Leasehold Mortgagee to continue such foreclosure proceedings after a breach or default has been cured. If swnno. 20w 3AMM 2 -3- Agenda Item #1 October 23, 2012 • • Special Meeting the Lessee's breach or default is cured and the Leasehold Mortgagee discontinues such foreclosure proceedings, this Lease shall continue in full force and effect as if no breach or default under this Lease has occurred. (c) The making of a Leasehold Mortgage shall not impose personal liability or any Leasehold Mortgagee for the performance of any of the terms, covenants or conditions on the part of the Lessee to be performed hereunder. Nothing contained herein shall require a Leasehold Mortgagee to commence any cure or performance on behalf of Lessee or, once having commenced such a cure or performance, to continue or complete such cure or performance or require a Leasehold Mortgagee to commence any remedy or exercise any right under its Leasehold Mortgage or once having commenced such remedy or exercise to continue or complete such remedy or exercise. (d) The purchaser at any sale of this Lease and of the leasehold estate hereby created in any proceedings for the foreclosure of or trustee's sale under any Leasehold Mortgage, or pursuant to any deed in lieu of foreclosure, shall be deemed to be an assignee or transferee of this Lease, and shall be deemed to have agreed to perform all of the terms, covenants and conditions on the part of the Lessee to be.performed hereunder, but only from and after the date of such purchase and assignment, and only for so long as such purchaser or assignee is the owner of the leasehold.estate.created hereby. Any ouch purchaser or assignee shall not have any personal liability for any obligations of the Lessee accruing either before or after such purchaser's period of ownership. (e) Notwithstanding any other provision of this Lease, any sale of this Lease and of the leasehold estate hereby created in any proceedings for the foreclosure of or Trustee's sale under any Leasehold Mortgage, or the assignment or transfer of this Lease and of the leasehold estate hereby created in lieu of the foreclosure of any Leasehold Mortgage, shall be deemed to be a permitted sale, transfer or assignment of this Lease and of the leasehold estate hereby created, not requiring any consent or approval of Lessor. (1) New Lease. In the event this Lease is terminated by reason of the happening of any breach or default under this Lease which is not cured by Lessee or a Leasehold Mortgagee under the provisions and within the time limits set forth above, or in the event of rejection or disaffirmance of this Lease pursuant to bankruptcy or insolvency law or other law affecting creditors rights, Lessor shall give prompt notice thereof to any Leaeehold JHKU3LL 3UM M" - q - Agenda Item #1 October 23, 2012 . Special Meeting Mortgagee. Lessor shall, on written request of any Leasehold Mortgagee, made at any time within sixty (60) days after the giving of such notice by Lessor, enter into a new lease of the Premises with such Leasehold Mortgagee within thirty (30) days after receipt of such request, which new lease shall be effective as of the date of such termination of this Lease for the remainder of the term of this Lease, at the rent provided for herein, and upon the same terms, covenants, conditions and agreements as are herein contained; provided that such Leasehold Mortgagee shall: (a) pay to Lessor at the time of the execu- tion and delivery of said new lease any and all unpaid sums for rent and other charges payable by Lessee hereunder to and including the date thereof, less the net amount of all all received by Lessor from any subtenants in occupancy of any part or parts of the Premises or improvements thereon up to the date of commencement of such new lease; and (b) on or prior to the execution and delivery of said new lease, agree in writing that promptly following the delivery of such new lease, such Leasehold Mortgagee will perform or cause to be performed all of the other covenants and agreements herein contained on Lessee's part to be performed to the extent that Lessee shall have failed to perform the same to the date of delivery of such new lease except such covenants and agreements which are not reasonably susceptible of performance by such Leasehold Mortgagee. (2) New Lease Priority. Any new lease made pursuant to section 22B(1) and any renewal Lease entered into with a Leasehold Mortgagee pursuant to this Lease shall be prior to any mortgage or other lien, charge or encumbrance on the fee interest in the Premises and the tenant under such new lease shall have the same right, title and interest in and to the Premises and the improvements located thereon as Lessee had under this Lease. (3) Liability of New Lessee. The tenant under any such new lease shall be liable to perform the obli- gations imposed on the tenant by such new lease only during the period such person has ownership of the leasehold estate created thereby, subject to the possibility of exculpation noted in Section 22B(1). (4) Subleases and Rents. After the termination of this Lease and during the period thereafter during which any Leasehold Mortgagee shall be entitled to enter into a new lease of the Premises, Lessor shall not terminate any sublease or the rights of the subtenant thereunder unless such subtenant shall be in default under such sublease. During such period Lessor shall receive all rent and other payments due from subtenants, including subtenants whose nWffl xzn 30M z -5- Agenda Item #1 October 23, 2012 • • Special Meeting attornment Lessor shall have agreed to accept, as agent of such Leasehold Mortgagee and shall deposit such rents and payments in a separate and segregated account in trust for the Premises, but may withdraw such sums, from time to time, to pay necessary operating expenses and carrying charges of the Premises; and, upon the execution and delivery of such new lease, shall account to the tenant under the said new lease for the balance, if any, (after application as aforesaid) of the basic rent, additional rents and other payments made under said subleases, and said tenant shall thereupon assign the basic rent, additional rents and other payments due under said subleases to any Leasehold Mortgagees of the new lease in the same manner as such rentals and other payments had been assigned to the Leasehold Mortgagees under this Lease. The collection of rent by the Lessor acting as an agent pursuant to this subparagraph shall not be deemed an acceptance by Lessor for its own account of the attornment of any subtenant unless Lessor shall have agreed in writing with such subtenant that its tenancy shall be continued following the expiration of any period during which a Leasehold Mortgagee may be granted a new lease in which case such attornment shall take place upon such expiration but not before. (1) .Leasehold Mortgagee Need Not Cure Specified Defaults. Nothing herein contained shall require any Leasehold Mortgagee, as a condition to the exercise of any of its rights hereunder, to cure any breach or default of Lessee not reasonably susceptible of being cured by such Leasehold Mortgagee, including without limitation -any breach or default under Sections 19(a)(iii), (iv) and (v). (2) Consent of Leasehold Mortgagee Recuired. No cancellation, termination, surrender or modification of this Lease shall be effective as to any Leasehold Mortgagee unless either consented to in writing by such Leasehold Mortgagee or made pursuant to and in compliance with this Section 22. (3) Eminent Domain. So long as any Leasehold Mortgagee shall exist, the proceeds arising from a condemnation shall be disposed of as provided for in such Leasehold Mortgage. (4) Casualty Lose. A standard Lender's Loss Payable endorsement naming each Leasehold Mortgagee may be added to any and all insurance policies required to be carried by Lessee hereunder. Nevertheless, the provisions in any Leasehold Mortgage for the application of insurance proceeds shall be subject to the provisions of this Lease with respect thereto and, in the event of any conflict between the provisions of this Lease and the provisions of IHKUM XM R%H 2 - 6 - Agenda Item #1 October 23, 2012 • Special Meeting any Leasehold Mortgage with respect thereto, the provisions of this Lease shall control. (5) Arbitration and Legal Proceedings. Lessor shall give any Leasehold Mortgagee prompt notice of any arbitration or legal proceedings between Lessor and Lessee involving obligations under this Lease. Any Leasehold Mortgagee shall have the right to intervene in any such proceedings and be made a party to such proceedings, and the parties hereto do hereby consent to such intervention. Lessor shall also give any Leasehold Mortgagee notice of, and a copy of, any award or decision made in any such proceedings. Anything contained in this Lease to the contrary notwithstanding, in the event Lessee shall fail to appoint an arbitrator under circumstances where Tenant is required or authorized to do so, a Leasehold Mortgagee shall have an additional period of thirty (30) days, after notice by Lessor that Lessee has failed to appoint such arbitrator, to make such appointment, and the arbitrator so appointed shall thereupon be recognized in all respects as if he had been appointed by Lessee. (6) Notices. No notice to be given by Lessor to any Leasehold Mortgagee or by any Leasehold Mortgagee to Lessor shall be effective unless in writing and, if to any Leasehold Mortgagee, sent by registered mail to the most recent address furnished Lessor pursuant to Section 22A(2), and if to Lessor, sent by registered mail to the address set forth in Section 21(c). (7) Erroneous Payments. A Leasehold Mortgagee making any payment to Lessor in error or pursuant to Lessor's wrongful, improper or mistaken notice or demand shall be entitled to the return of any such payment or portion thereof. If, after any such payment by a Leasehold Mortgagee, the Lessee pays the same or any part thereof to Lessor, Lessor shall promptly refund said payment or portion thereof to such Leasehold Mortgagee. (8) Limitation on Lessor's Right to sactunber Fee. Any mortgage now or hereafter placed on Lessor's fee interest in the Premises shall be subject to this Lease, to any new lease created pursuant to Section 22H, to any mortgage now in existence on the leasehold estate as permitted by this Lease or such new lease, and to Lessee's right, as permitted by this Lease or such new lease, subsequently to encumber the leasehold estate created hereby or thereby. (9) No Rights to Encumber Fee of Lessor. The provisions of this Section do not give to any person whatsoever the right to mortgage, hypothecate or otherwise to encumber or to cause any liens to be placed against the freehold estate of Lessor, nor shall said provisions be nxvn wm 9sws z -7- Agenda Item #1 October 23, 2012 t • • Special Meeting construed as resulting in a subordination in whole or in part of the freehold estate of Lessor to any indebtedness of Lessee. (10) Performance by Leasehold Mortgagee. Any Leasehold Mortgagee shall have the right, but not the obligation, to make any payment, perform or cause to be performed any act, or otherwise comply or cause compliance with any and all terms, covenants and provisions of this Lease to be complied with by Lessee, and Lessor shall accept any such payment, performance or compliance by any Leasehold Mortgagee as if such payment, performance or compliance had been made by Lessee. (11) Biahte of Leasehold Mortgagees. The exercise by any Leasehold Mortgagee of its rights to obtain possession of the Premises, including without limitation the right to commence an action against the Lessee for the appointment of a receiver, shall not constitute a breach or default under this Lease. (12) Non - Merger. go long as any Leasehold Mortgage is in existence, unless the Leasehold Mortgagee thereof shall otherwise expressly consent in writing, the fee title to the.Premises and the leasehold estate therein created by this Lease shall not merge but shall remain separate and distinct, notwithstanding the acquisition of both said fee title and said leasehold estate by Lessor, Lessee or by a third party, by purchase or otherwise. (13) Bstonnel Certificate. Lessor shall, without charge, at any time and from time to time within ten (10) days after written request of Lessee or any Leasehold Mortgagee to do so, certify by written instrument duly executed and acknowledged to any Leasehold Mortgagee or purchaser, or proposed Leasehold Mortgagee or purchaser, or any other person, firm or corporation specified in such request: (a) as to whether this Lease has been modified, supplemented, amended, extended or renewed and if so, the substance and manner of such modification, supplement, amendment, extension or renewal; (b) as to the validity and force and effect of this Lease in accordance with its provisions; (c) as to the existence of any breach or default hereunder or any circumstance which, with the giving of notice or the passage of time, or both, would constitute a breach or default hereunder; (d) as to the existence of any offsets, counterclaims or defenses to the enforcement of this Lease on the part of either Lessor or Lessee; (e) as to the commencement and expiration dates of the term of this Lease; and (f) as to any other matters as may be reasonably so requested. Any such certificate may be relied upon by Lessee and any other person, firm or corporation to whom the same may be exhibited or delivered, and the contents of such certificate shall be binding upon Lessor. 1HKUHLwmX%W2 -8- •y\ Agenda Item #1 October 23, 2012 • Special Meeting (14) Survival. The provisions of this Section 22 shall survive the termination, rejection or disaffirmance of this Lease and shall continue in full force and effect thereafter to the same extent as if this Section 22 was a separate and independent contract made by Lessor and any Leasehold Mortgagee and, from the effective date of such termination, rejection or disaffirmance of this Lease to the date of execution and delivery of any new lease pursuant to Section 22B, such Leasehold Mortgagee may use and enjoy the Premises without hindrance by Lessor or any person claiming by, through or under Lessor so long as such Leasehold Mortgagee or any person claiming by, through or under such Leasehold Mortgagee complies with the terms of this Lease except as otherwise provided in Section 22C(1). 4. Except as expressly set forth herein, the Lease remains unmodified and in full force and effect. IN WITNESS WHEREOF, the parties have executed this Amendment effective as of the date first written above. Attest: i Fa4hJ C ty Clerk Appr d to form: t. y Attorney MKUH .3UM 3MU 2 LESSEE Bahia Corinthian Yacht Club I -- Agenda Item #1 October 23, 2012 • • Special Meeting LEASE THIS LEASE, made this 7" day of May, 1998, by and between the City of Newport, a municipal corporation, and Charter City, hereinafter, "Lessor" and ifte Bahia Corinthian Yacht Club, a Caltfomia, non- profit Corporation, hereinafter, "Lessee ", is made with reference to the following recitals: RECITALS A. Under the provisions of the Beacon Bay Bill (Chapter 740 of the Statues of 1978). Lessor is the grantee of certain harbor tidelands, located in the City of Newport Beach, County of Orange, (Tidelands Grant'); B. Lessee currently operates a marina in and over a portion of those tidelands under Harbor Permit 0101 - 1801 -1; C. Harbor Permit 0101- 1801 -1 is issued to California Recreation, a dba of The Irvine company, the owner of the upland property adjacent to the tidelands; D. Lessee has aogmired the upland property adjacent to the tidelands; E. The parties desire to enter into a long -term lease in Hsu of a City Harbor Permit, and F. The Marina use to be made of these tidel ands, and the terns and conditions in this lease are consistent with the provisions of the City Charter and Ordinances of Lessor, and are consistent with the provisions ofthe Tidelard's Grant; and G. Lessor and Lessee entered into that certain Option Agreement for the Lease of Real Property dated as of October 4, 1995 (the "Option Agreement*) granting Lessee the right to enter Into a lease for the premises on the terms and conditions Agenda Item #1 October 23, 2012 • Special Meeting set forth herein. Lessee has duly exercised such option, all conditions precedent to such exercise have been satisfied, and there exists no event of default by Lessee under the Option Agreement as of the date of the exercise of the option by Lessee or the date hereof. NOW THEREFORE, THE PARTIES AGREE: 1. LEASED PREMISES In consideration of the rpm to be paid and the covenants and conditions to be observed and performed by Lessee, Lessor leases to the Lessee those tidelands described in Exhibit "A'and depicted on the map attached, as Exhibit "B' (the "Premises'. Lessor reserves all oil, oil rights, gas, minerals, mineral rights, natural gas rights and other hydrocarbon substances in and under the Premises and the right to grant and transfer the same, together with all necessary and convenient rights to explore for, develop, produce and extract and take the same, subject to the express Imitation that any and all operations for the exploration, development, production, extraction and taking of any such substance shall be carried on at levels below the depth of five hundred feet (5001 from the surface of the land by means of wells, derricks and other equipment from surface locations on adjoining or neighboring land, and subject further to all restrictions and regulations concerning the drifing for, and production of, oli, gas, minerals, petroleum and other hydrocarbon substances specified in the Newport Beach City Charter or the Newport Beach Municipal Code. 2 Agenda Item #1 October 23, 2012 • , Special Meeting 2. TERM The Term shall commence on the date first written above, and shall expire upon the thirty -fifth (35) anniversary thereof (the "Expiration Date'), unless sooner temvnated as provided in this Agreement 3. QUIET POSSESSION So long as no default by Lessee has occurred under this Lease, Lessee shah peaceably and quietly use and enjoy the Premises for the Term, without hindrance or interruption by Lessor or any other person or persons claiming by, through or under Lessor. Lessor shall in no event be liable in damages or otherwise, nor shall Lessee be released from any obligations hereunder, because of the interruption or termination of any service provided by the Lessor (such as, water or sewer service), or a termination, interruption or disturbance of any service attributable to any act or neglect of Lessor or its servants, agents, employees, licensees, business invitees, or any person claiming by, through or under Lessee. 4. IMPROVEMENTS TO LEASED PREMISES Lessor and Lessee aciaxwtedge that Lessee has constructed major improvements on and adjacent to the Premises. These improvements include, but are not necessarily limited to, bulkheads, piers, docks, floats and related improvements which comprise a marina consisting of 2,504 lineal feet of slips for docking of boats, (coliec ively, the "Marina improvements' as shown on Exhibit "B.' Of the 2,504 kneel feet of slips for docking boats, 2,079 lineal feet of such slips are located on State Tidelands, which are 3 Agenda Item #1 October 23, 2012 • • Special Meeting the subject of this Lease and shall serve as the basis for calculating rent herein below. 5. RENT Upon execution of this lease Lessee shall pay to Lessor the sum of twenty -nine thousand, two hundred, fifty -six dollars and fifty -one cents ($29,258.51), in twelve (12) equal monthly installments of two thousand four hundred and thirty -eight dollars and four cents ($2,438.04) payable on the first of each month, and every year thereafter. Lessee shall pay rent which sum is equal to nine percent (g %) of the annual gross receipts from slip rentals generated by 2,079 lineal feet of marina slips at a rental rate of thirteen dollars and three cents ($13.03) per lineal foot, the ("rental rate') or such rental rate as may be adjusted as provided in Paragraph B below. 6. RENT ADJUSTMENT/MINIMUM RENT Every year, on the anniversary date of the Lease, the rental rate shall be adjusted upwards or downwards in direct proportion to the weighted average increase or decrease in the rate per lineal foot of slips in the "comparable marinas' described below, but in no event shall the rent adjust below the then prevailing commercial harbor permh fee paid by other commercial users within lower Newport Harbor. The weighted average rate per lineal foot of slips shall be determined by the following "comparable marinas Bayside Marina, Villa Cove Marina, Balboa Yacht Basin, Balboa Marina and Bayshores Marina. From the fist of "comparable marinas' the following size categories shall be excluded from the weighted average calculations: Bayside Marina, forty sbd foot (46') to seventy four foot (74'); Bayshores Marina, sixty eight foot (68) to eighty two foot (82'). If the method of 4 Agenda Item #1 October 23, 2012, • . Special Meeting determining rental rates in the comparable marinas should change, Lessor agrees to consult with Lessee to establish a comparable method to determine the future rental rates. 7. ALTERATIONS Lessee shall have the right to make, at its sole expense, such nonstructural changes, alterations, Improvements and additions in and to the marina improvements, but such changes shall conform to the City's Harbor Permit Policies and Exhibit'8'. Structural changes shall not be made to any marina improvement without first submitting written plans and specifrcatbons of the proposed change, alteration or addition to the Lessor and obtaining Lessor's written approval. Lessee shall make, at its expanse, such changes, alterations or additions In and to structures on the Premises that may be required by any public law ordinance from time to time, applicable to Lessee's use and occupancy of the Premises. 8. MARINA MAINTENANCE Lessee at its sole cost and expense, sha8 keep and maintain al marina improvements and related fixtures and personal property in fast ciass order, oondftion and repair. Lessee shall maintain and operate not less than 2,079 lineal feet of slips available for rent Maintenance dredging bayward of the property line, between the bulkhead line and the pierhead line, shall be the responsibility of the Lessee for the zone delineated by bayward prolongations of upland side property lines out to the U.S. project line. The Lessee agrees that the Lessor may go upon the leased Premises and make any 5 Agenda Item #1 October 23, 2012 • . Special Meeting necessary repairs to the Premises, and perform any work therein: (I) Which may be necessary to comply with any laws, ordinances, rules or regulations of any public entity; (i) That Lessor is obligated to make, under the terms of this Lease; or (li) That the Lessor may deem necessary to prevent waste or deterioration of the Premises, if the Lessee does not make or cause such work to be performed promptly and diligently after receipt of written demand, therefore from the Lessor. Nothing herein contained shall apply any duty on the part of the Lessor to do any work which the Lessee may be required to do, nor shall it constihrte a waiver of Lessee's default. No exercise by the Lessor of any rights reserved, shall entitle the Lessee to any damage for any injury or inconvenience occasioned thereby, or to any abatement of rent, however, such repairs once commenced, shall be completed in a timely manner. In the event that Lessor makes, or causes to be made, any repairs, within the Tenn of this Lase that is Lessees obligation to make, Lessee shah upon demand, pay to the Lessor the cost of such repairs, which amounts shall be due and payable upon demand and shah bear interest from the date of demand, until totally paid at the rate of nine percent (9%) per annum. H Agenda Item #1 October 23, 2012 . . Special Meeting 9. USE OF THE PREMISES During the Term of this Lease, Lessee shag use and occupy the Premises, principally for the operation of a marina. The marina use shag be limited to the rental of boat slips, dock lockers, dry storage and related uses. Lessee shall not commit or permit the commission by others of any waste on the Premises. Lessee shag not maintain any nuisance, as defined In Section 3479 of the CaGfomia Civil Code on the leased Premises. Lessee shall not unreasonably interfere with the rights of other harbor permilises or nearby residents, and Lessee shag not use or permit the use of the Promises for any unlawful purpose, or in violation of arty provision of law. 10. UTILITIES Lessee shall be solely responsible for obtaining and shall promptly pay for all water, power, sewer, and other utility services provided to the Premises. 11. RIGHT TO ENTER Lessor expressly reserves the right to enter the Premises and all improvements for any purpose associated with this Lease or for carrying out any function required by law, or the rules, regulations or management policies of lessor. Lessor shall have a right of reasonable access to the Premium across Lessee owned or occupied lands adjacent to the Premises for any purpose associated with this Lease. 12. RULES, REGULATIONS AND TAXES (a) Lessee shall comply with and be bound by all presently existing or subsequently enacted policies, regulations, statutes or ordinances of Lessor, including, 7 Agenda Item #1 October 23, 2012 • Special Meeting but not limited to, rules and regulations prescribed under Council Policy H -1 (Harbor Permit Policies), or any other government agency or entity having lawful authority and jurisdiction. (b) Lessee understands and agrees that a necessary condition for the granting and continued existence of this Lease is that Lessee obtain and maintain all permits or other entitlements. (c) During the Tenn of this lease, Lessee shall pay, prior to delinquency, any and all taxes assessed against Lessee's possessory Interest under this Lease and al other taxes, assessments, user fees or service charges imposed on or associated with the leasehold interest, or personal property or Improvements on the Premises, and such payment shall not reduce rent due Lessor under this Lease, and Lessor shall have no liability for such payment. (a) Lessee shall practice conservation of water, energy, and other natural resources and shall prevent pollution and harm to the environment. Lessee shall not violate any law or regulation whose purpose is to conserve resources or to protect the environment (b) Lessee shag not use, nor permit the use of, arty hazardous wastes or materials in the construction, reconstruction or renovations of or use of the marina improvements In vlolatlon of any applicable law, regulation, code or ordinance. Lessee shall, at its expense, comply, and cause each of its members, licensees and /or L•' Agenda Item #1 October 23, 2012 • • Special Meeting concessionaires of space in the marina or elsewhere adjacent to the Premises to comply with all applicable laws, regulations, codes and ordinances relating to any hazardous regulated material, including obtaining and filing all applicable notices, permits, licenses and similar authorizations. Lessee shall be fully responsible to dean up any hazardous wastes, substances or materials as may be required under Federal, State or local law, regulation, code or ordinance that are manufactured, generated, used, placed, disposed, stored, or transported on the Premises by Lessee, its members, licensees and concessionares during the Lease Term and shall comply with and be bound by all applicable provisions of such Federal, State or local law, regulation, code or ordinance dealing with such wastes, substances or materials. Lessee shall notify Lessor and the appropriate govemmental emergency response agency(ies) immediately in the event of any release or threatened release of any such wastes, substances or materials. 14. INDEMNITY (a) Lessee agrees to defend, indemnify, protect and hold Lessor harmless from and against any and all liabiity, claims, damages, penalties, actions, demands or expenses of any kind or nature, including damage to any property and injury (including death) to any person (collectively, "Claims"), arising from Lessee's use or occupation of the Premises of from any activity, work or things done, permitted or suffered by Lessee, or from any activity, work or things done, permitted or suffered by Lessee or any omission of Lessee on or about the Premises or from any litigation conceming any of the foregoing in which Lessor Is made a party Defendant. Lessee shall not be required hereunder to E Agenda Item #1 October 23, 2012 Special Meeting defend, Indemnity or hold Landlord or any other person or entity indemnified under this Section harmless from or against any of the Claims to the extent such Claim arises solely W of the negligence or wiltful misconduct of Lessor. This obligation to Indemnify shall include reasonable, attorneys' fees and investigation costs and all other reasonable costs, expenses and liabilities Incurred by Lessor or its counsel from the first nofe that any claim or demand is to be made or may be made. (b) Upon receiving knowledge of any.Claim that Lessor believes is covered by this indemnity, Lessor shall give Lessee notice of the matter and an opportunity to defend it, at Lessee's sole cost and expense, with legal counsel saftfactory to Lessor in its sole and absolute discretion. Lessor may also require Lessee to so defend the rnatier. So long as Lessee shall be defending any such Claim, Lessor shall not settle such lain without the consent of Lessee. (c) Lessee shall notify Lessor Immediately in case of any accident, injury or casualty on the Premises. 15. INSURANCE (a) Lessee shall obtain and maintain in full force and effect during the Term of this Lease, comprehensive general liability insurance and property damage insurance, with such coverage and limits as may be reasonably requested by the Lessor from time to time, but in no event for less than the sum(s) specified below, insuring Lessee and Lessor against any and all claims or liability arising out of the ownership, use, occupancy, condition or maintenance of the Premises and all improvements. 10 Agenda Item #1 October 23, 2012 • • Special Meeting (i) Comprehensive General Liability Insurance. Lessee shall maintain Comprehensive General Liability Insurance with a combined single limit for bodily injury and property damages of Two Milllon Dollars ($2,000,000), (which amount shall be subject to periodic adjustment as may be determined by Lessor upon one hundred eighty days (180) prior notice. The Emits of liability of the insurance coverage specified in this paragraph may be provided by any combination of primary and excess liability insurance policies. improvements on the Premises, Lessee shall maintain builder's risk insurance against "all risk" or physical loss, Including without v limitation the perils of flood, collapse and transit, with deductibles acceptable to Lessor, covering the total cost of worts performed, equipment, supplies and materials himished on a replacement cost basis. Lessee shall be permitted to obtain and maintain flood insurance In such amounts and forms as are available, from time to tine, under National Flood Insurance Program. (iii) Property Insurance. Lessee shall obtain Insurance on the marina improvements and shall maintain insurance continuously during the Term, against "all risk" perils of physical loss, Including, but not limited to, flood, fire, lightning, riot and sail commotion, vandalism 11 Agenda Item #1 October 23, 2012 . . Special Meeting and malicious mischief. Such insurance shad be in amounts not less than the then fug replacement cost of the marina improvements, without deduction for depreciation. Such policies of Insurance shall contain the "Replacement Cost Endorsement" Such full replacement cost shall pertain to the Project and Furnishings and be determined not less often than each two (2) years during the Term. (b) Insurance carriers shag be Ikensed and approved to do business in Califomis having a general policyholders' rating of not less than B+ and financial rating or not less than " VII" in the most current Best's Key Rating Guide. (c) The insurance policy or policies shag name the Lessor, its officers, agents and employees as additional insureds. Lessee shall provide Lessor with a oertificate of such insurance and shall keep such certificate current. The policy (or endorsement) must provide that the insurer will not cancel the Lessee's coverage without thirty (30) days prior written notice to the Lessor. The Lessor will not be responsible for any premiums or other assessments on the policy. The coverage provided by the Lessee shall be primary and non - contributing. (d) The insurance coverage specified in this Lease shag be in effect at all times during the Lease Tenn and subsequently until all of the Premises have been either accepted as improved, by Lessor, or restored by Lessee. (e) Lessee shall not commit or permit the commission of any acts on the Premises that would cause the cancellation of any liability or other insurance policy, 12 Agenda Item #1 October 23, 2012 Special Meeting insuring ember the Premises or the improvements on the Premises. Lessee shall, at its own cost and expense, comply with any and all requirements imposed by insurance companies that cant' the policies described above. either. (f) Each policy of insurance procured pursuant to the Section shall contain, (1) A waiver by the insurer of the right of subrogation against either party hereto for negligence of such party; or u A statement that the insurance shah not be imaUdated should any insured waive in writing prior to a loss any or ail right of recovery against any party for loss described in the insurance policy. Lessor and Lessee each hereby waives any and aft rights of recovery against the other, and against it shareholders, officers. directors, empbyees, subsidiaries, partners, servants. agents and representatives, for loss or damage arising from any cause insured against under the form of insurance policies required to be carried pursuant to this Section or under any other policy of Insurance carried by either Lessor or Lessee. Lessee and Lessor each agrees to use reasonable efforts to obtain Its liability insurance carriers' permission as to the waiver of subrogation described above in this Section. 13 (msonmia, *q3) a.1a -d 40 6£t£ vd9 tFU 'Agenda It m #1 October 2 , 2012 Special Mjeeting i 1 6S :6S 1)G6 .!p£—tM . Agenda Item #1 October 23, 2012 Special Meeting WATERFRONT NEWPORT BEACH, LLC '9)1 GI %cs/ Cbast z]iglns a.y, Suite 200. ! icivpa -1 Beach, CA 9?6(>3 Tel: (20F) 619 -5332 F'ra_ . (949) 2.i& -4379 rlloutrsbury msn.crrr October 4. 2012 Mai or 'Nancy Gardner Mayor Pro Tem Keith D. C LnTy CoUTICil Member ylichael F. Henn Council Member Steven Rosansky Cowicil idember Rush \1. Hill. 1t Council Member Leslie Daigle Council Member Edward D. 5elich 3300 Ne%vport Boulevard - Nmvport Beach. "A 92663 Re: Commercial Tidelands Lease / Lease Template dC Appropriate Percentage oi' Gross Dear 1- fonnrai)lc Mavor and Honorable, iMembers, of the Newport Beach City Cowicii. Per the Catn(;il`s request please accept and consider the foRowing documents and co. -mmzts as }cart o,'thc public comments rcl arding above. matter. 0) lease Template. Enclosed p {ease find ehe fc,llori in,g ) eaase. and =ease tcanpt.alc: (a) Lease data',.14w 7., 1998. including First Amendmcnt to Lease dated may 7. 1998 between the Cif of�\levvpor; Beach (Lessor) and Bahia. Cori:nihian `. ✓'acht Club - BC YC (Lessee) ('i_'.xh t ) Our first request is that the above cease tcmplatc in itern !' E Q be used as the ?en)�plate for the Commercial 1rdekinds lease- Since BCYC Cs an. existing lease used by the City of Newport Beach for an existing Newport Harbor lessee, we be ieve the City should have no. problem - aecenting its own exishntr lease as the template :tor ovy contemplated lease. This should also minimize /avoid an} accusations of favorabfc>' unequal treatments bc1%, -.xn one lessor; and anoth.r. Agenda Item #1 October 23, 2012 Special Meeting Flavor Nancy Gardner. et at October 4. 2012 Page 2 of 5 (2) Appropriate Percentage of Gross: (al) The BCYC lease nboye uses a 9% ([osjpert nta in 1998. [t is a 35 years lease and therefore is still at 9 0/o in. 2012 and even through 2033. It is a lease between the Cux of Newpon Beach and a Newport Harbor tenant. The City owns the tideland and the tenant owns the uplands. `thus BCYU is directly comparable. in almost all respect (especially non - joinder) and 9 % appears to be fair. (u2) Moreover, here, BCYC is gi1 en about a 2:1 ratio in tidelands to uplands water frontage" Specifically. the water frontage of BCYC has 31 slips. but the City gifted BCYC another 32 slips from adjacent uplands to BCYC (thus the r oughty 2:1 ratio). Pleasc sec attached lease floor plan (15sh 2) and aerial photo (13Lh =). vtost of the current contemplated lessees have a 1:1 ratio. '1 hus. compared to the C --" lease wh_ero the ratio is 2:1. at the wry least an adjustment to 9%/2 = 4.50% of gross should be appropriate where the ratio is 1:1 (3) Percentage cf' Gross per 0tv (Netter) Appraisers: (al) I Ile Netter 2006 appraisal proposed a 20°./0 of gross rate based on 13 "comps." Flowevcr. 1 I of the "comps" are not appropriate comps since they all have joinder of tidelands and uplands. The Netzer _!112 re- appraisal uses 9 comps, of which 7 have joinder and only Bayshore and Swales are non - joinder (esh 4). It is self - evident that these I 1 and 7 joinder comps should not be given a lot of wei<.ht because the} have joinder and are not comparable to the Newport Harbor where the uplands and tidelands have non- joinder status. (ag) T1bc only 2 Netter comps that have separate non - joinder of tidelands and uplands arc the Bayshore and Swales comps. However, the Bayshore property is gifted a 4:1 ratio in tidelands to uplands water fron(agc (esh 5). Thus. compared to the Bayshore lease where the ratio is 4:1, at the very least an adjustment to "_'0"/0/4 = 5.00"/0 of gross should be app, ro . Hate where the ratio is 1:1. (a3) The last Netter comp is the Swales comp. -fltc Swales property is gifted a 9:1 ratio in tidelands to uplands water frontage (exh 6). Thus. compared to the Swales lease where the ratio is 9:1. at the very least an adjustment to 20%'9 = 2.200/o of Woss should be a ... tpropriate where the ratio is 1_l. Furthermore. the above S�.valcs lease has been replaced by a new lease in November 2011 at $6,000 /mo for 50,094 sf of tidelands : $72,000'50.094sf $1.44/sf. . Agenda Item #1 October 23, 2012 Special Meeting Mayor Nancy Gardner. et al October 4.201" Paae 3 of 5 ) Percentage of Gross 1 cr upland owncrs' (Jones ail Associt_:'es) appr Fisal: (al) On pages 55 - 51) of the Jones appraisal - it lists the Initowing non -joinder lease comps (cth 7): Comp Emily % Nominal I idelattcl %Uplands Adjusted No. City, Year Rate "Uillcd" Ratio Rate (i) Bahia Corinthian YchtClub9.0V'o gross 2:1.....,.9 % /2 = 4.50% Newport Beach, 'May 1998 (ii) Bayshore 20% cross 4:1..... .20",5J4= 5.00/, Newport Beach, Dec 2004 Swales ($72,000!50,094 „1) $1.44.sf 9:1. sf no adj nee Si.441sf Newport Beach. Novi 201 I (iv) Sunsct Aquatic [Marina 8.50% gross adjacent to joinder &501/a Seal Beach, Jan 2000 - Comp iv is State tidelands adjacent to parcels of tidelands and uplands that the tenant leased from the Count'. (v) Glorietta [day Marina 11.00% gross Has kinder issues (see below) San Diego, Aug _'012 - Comp v has joinder and 11% was just a 50 150 allocation of a 22P/� overall lease of the uplands 2 tidelands in joinder On page 62, alter detailed analysis. Jones concludes that where there is no joinder. the Percentao,e Rental Rate should be "9.501;/” of gross rcicnues, or 01.20 per square Ibot of tidelands." Side memo on gi ding: In order fn the City to claim that 6gv.daare is a direct comp at 201%). the City is providing elirecl proof that the Coutuv actatc;lly "gifted" 3 time,c the Bayshor•e uplands to h'vine Co. To re- phrase, if 1:1 land is the sctrne 20 %. ilzen the Other 3:1 of Irvine Co. tidelands is a dn'ecr "g jl" spec ilicall,); Jorhidden bti• llze State. One wav to avoid this ", ifi" is to ucknowlerlge that 4, 1 rare is a la higher than 1:1 rare leg. 20% vs %!. Simllarl6,, for 2: 1 ralio BC•YC•. if the scone 9% is e yplied to 1: 1 land, then the other half iIjBCYC is a direct "gif!" /i'om the Cin, specii icallv.forhidden by the State. Perhaps an analogy i,c that the Ciro is comparing 4 stay laud to 1 story land. )First. it is alreudv trvfairly.Jhvoring the 4 srnt,e land bn bestowing the ,siveciheort right to build the 4 stories to the privileged Irvine Co. Then. it adds salt 10 the wntotd by oyin•g to charge the 1 s'tor , land the scmte leas: rates as the 4 dory privileged (gifted) land. ie: "Grua us 4 tunes our waler_lrontage. and we will oaq the City the 20%. " Agenda Item #1 October 23, 2012 Special Meeting Mayor Nanc} Gardner, et at October 4, 2012 Page 4 of 5 (5) Summary Conclusion of appropriate Percentage of Gross: Based on above comparable non- joinder leases. the percentage gross rate is in the range of 4.50% to 8.50 %. Since Jones &s Associates concluded with 9.50% we are willin to accept 9.50'.'10 as a fair appropriate percentage of Gross. (6) Compromise Proposal It appears. for whatever reason, that the COLIC wishes to use the 20% of gross number regardless of whether the non joinder comps support it or not. -1 he COLIC "s 2012 Netzer review suggest 20% or S 1.45 /sf. but basical h with zero comps to support it per above. fhc CORC's Rasmussen suggests 173 e or S 1.40 to 51.50 /sf also with no better non - joinder comps. In the spirit of compromise. we -would respectfully propnse the follovt ing "meet in the middle" compromise. We 12ropose that we "better than a�crage" the current S0.36Ai. fee with the COT -TC's 17% and. settle on the Jones & associates' 9.50% as the appropriate percentage of grass, which is welt supported by the Citv's ow -n, non - joinder 9.0% lease with BCYC. This is despite the 'tact that 13CY" actual I% has a Z:1 tidelands to uplands "e.ified" ratio and the 9.0`'•40 should be adjusted to 4.501io when used as a comp for I :l ratio properties. It has been pointed out that the City has the right to charge "whateccr it want_ to" and the upland owners have "to take it or lcat e it" since the\ have alread\ spent a lot of resources, time. effort, blood, sweat and tears over the decades to build the docks. access, parking. other supporting facilities. and the ongoing businesses that created the "gross" income. Furthermore, we actually heard and understand the COI-IC's point that the Cit) owns the tidelands. and the uplands owners have been undercharged all these years. However. that is not as straightforward as it sounds. e.g. In W -N13's case, we bought the building 11 years ago paying tuft price for the tidelands -,There we were repeatedly told that all we had to pay was the annual tideland fees. Now, we are asked to pay for the same tidelands a second time. Obviously, had the leases been correctly done 1 l years ago. we would have negotiated for a lower purchase price and not have to pay for The same tidelands use twice. There are many other uplands owners who have spent resources to buy uplands. or to build docks and improvements only to be retroactively told that they now have to pay a 20% of gross lease. Agenda Item #1 October 23, 2012 Special Meeting Mayor Nancy Gardner. et al October 4, 2012 Page 5 of 5 In short. w'e understand the COHC's points but we also request that the ' :ity feet compassion, and appreciate that it is not entirely the upland owners fault that the Ci ly undercharged for years ;_many of us over -paid our sellers for the difference alreauy based on this oversight;. Nevertheless, we agree that the rates are low and we are offering a compromise that is consistent with our own appraisal's better supported numbers. We hope this compromise offer (al 9.50% of D•oss) will truly be given sonic consideration in our continued effort to seek a peaceful settlement of the issue. Thank you all for your titne and consideration. Very truly yours. Kober[ Lounsbury Nancy Gw-clncr: Keith D. Curry: Michael F. Henn: Steven Rosarskv: Rush N. Hill, 11: Leslie Daigte: Edward D. Selich: NGard tier aiN ewportBeachCa.go% currvk d,,p1m.com ,Mlienn(r_i,NewportBeachC'a. SRosansky,a Newport BeachCa.eov RhiI I'd NewportBeachCa.aov Icstieidaitaei:roLcom F:dSelich2i roadrunncr.com Dave KifE City Minagc, dkiffL net +Qrtbeachea.gov Aaron C. Ilarp: City _Xtlorney sham iiimewportbeachca.aov Chris Millcr: Harbor Resources Manager aniller'rinewportbeachca.aov Agenda Item #1 October 23, 2012 Special Meeting The following Commercial'fidelands Stak-ebolders support the contents of this letter and urge the City Council to consider approval of the compromise offer presented. o Vallely ,Marshall "Duffy" Duflicl Duffy Boat Company City pfNe% rt ea arbor Commissioner / 12 otitltei4fi President of Balboa :cn —a D kT> Prior Chairman of the City of 'Newport Beacchh'Hat�rbbooJrConu 'ssi red Robinson Owner, Larson s Shipyard, iVtarina and Offices Dave \ rJ - Mee -,tJ E ass 0 - -v t Cg wk� rn P� Agenda Item #1 October 23, 2012 Special Meeting Agenda Item #1 October 23, 2012 Special Meeting Agenda Item #1 October 23, 2012 • Special Meoting any Leasehold Mortgage with respect thereto, the provisions of this Lease shall control. (5) Arbitration and Leval Proceedings. Lessor shall give any Leasehold Mortgagee prompt notice of any arbitration or legal proceedings between Lessor and Lessee involving obligations under this Lease. Any Leasehold Mortgagee shall have the right to intervene in any such proceedings and be made a party to such proceedings, and the parties hereto do hereby consent to such intervention. Lessor shall also give any Leasehold Mortgagee notice of, and a copy of, any award or decision made in any such proceedings. Anything contained in this Lease to the contrary notwithstanding, in the event Lessee shall fail to appoint an arbitrator under circumstances where Tenant is required or authorized to do so, a Leasehold Mortgagee shall have an additional period of thirty (30) days, after notice by Lessor that Lessee has failed to appoint such arbitrator, to make such,appointaent, and the arbitrator so appointed shall thereupon be recognized in all respects as if he had been appointed by Lessee. (6) Notices. No notion to be given by Lessor to any Leasehold Mortgagor or by any Leasehold Mortgagee to Lessor shall be effective unless in writ and, if to any Leasehold Mortgagee, sent by registered 1 to the most recent address furnished Lessor pursuant to section 22A(2), is if to Lessor, sent by registered mail to the address set forth in Section 21(e). (7) Erroneous ftyments. A Leasehold Mortgagee making any payment to Lessor in error or pursuant to Lessor's wrongful, improper or mistaken notice or demand shall he entitled to the return of any such payaeat or portion thereof. If, after any such payment by a Leasehold Mortgagee, the Lessee pays the same or any part thereof to Lessor, Lessor shall promptly refund said payment or portion thereof to such Leasehold Mortgagee. (8) Limitation on Le"or's JUGht to En +mbiAr Fee. Any mortgage now or hereafter placed on Lessor's fee interest in the premises shall be subject to this Lease, to any new lease created pursuant to Section 228, to any mortgage now in existence on the leasehold estate as permitted by this Lease or such new lease, and to Lessee's right, as permitted by this Lease or such new lease, subsequently to encumber the leasehold estate created hereby or thereby. (9) NO to EnGlUpbar Foe of easor. The provisions of this Section do not give to any person whatsoever the right to mortgage, hypothecate or otherwise to encumber or to cause any liens to be placed against the , freehold estate of Lessor, nor shall said provisions be IHK%M imn nw" i -7- 0 Agenda Item #1 October 23, 2012 Special Meeting construed as resulting in a subordination in whole or in . part of the freehold estate of Lessor to any indebtedness of Lessee. (10) Rerforgance by sehold Mortcagee. Any Leasehold Mortgagee shall have the right, but not the obligation, to make any payment, perform or cause to be performed any act, or otherwise comply or cause compliance with any and all terms, covenants and provisions of this Lease to be complied with by Lessee, and Lessor shall accept any such payment, performance or compliance by any Leasehold Mortgagee as if such payment, performance or compliance had been made by Lessee. (11) Rights of Leasehold IQortaaaess. The exercise by any Leasehold Mortgagee of its rights to obtain possession of tha Promises, including without lisLitation the right to commence an action against the Lessee for the appointment of a receiver, shall not constitute a breach or default under this Lease. (12) XQn- Merasr. so long as any Leasehold Mortgage is in existence, unless the Leasehold Mortgagee thereof shall otherwise expressly consent in writing, the fee title to the Premises and the leasehold estate therein created by this Lease shall not merge but shall remain separate and distinct, notwithstanding the acquisition of 0 both said fee title and said leasehold estate by Lessor, Lessee or by a third party, by purchase or otherwise. (13) Utonnel Qext f e. Lessor shall, without charge, at any time and from time to time within ten (10) days after written request of Lessee or any Leasehold Mortgagee to do so, certify by written instrument duly executed and acknowledged to any Leasehold Mortgagee or purchaser, or proposed Leasehold Mortgagee or purchaser, or any other person, firm or corporation specified in such request: (a) as to whether this Lease has been modified, supplemented, amended, extended or renewed and if so, the substance and manner of such modification, supplement, amendment, extension or renewal; (b) as to the validity and force and effect of this Lease in accordance with its provisions; (c) as to the existence of any breach or default hereunder or any circumstance which, with the giving of notice or the passage of time, or both, would constitute a breach or default hereunder; (d) as to the existence of any offsets, counterclaims or defanees to the enforcement of this Lease on the part of either Lessor or Lessee; (e) as to the commencement and expiration dates of the term of this Lease; and (f) as to any other matters as may be reasonably so requested. Any such certificate may be relied upon by Lessee and any other person, firm or corporation to whom the same may be exhibited or delivared, and the contents of such certificate shall be binding upon Lessor. necve< earn 34%U 2 _8 1 Agenda Item #1 October 23, 2012 Special Meeting (14) Sure val. The provisions.of this Section 22 shall survive the termination, rejection or disaffirmance of this Lease and shall continue in full force and affect thereafter to the same extent as if this Section 22 vas a separate and independent contract made by Lessor and any Leasehold Mortgagee and, from the effective date of such termination, rejection or disaffirmance of this Lease to the date of execution and delivery of any new lease pursuant to Section 228, such Leasehold Mortgagee may use and enjoy the Premises without hindrance by Lessor or any person claiming by, through or under Lessor so long as such Leasehold Mortgagee or any person claiming by, through or under such Leasehold Mortgagee complies with the terms of this Lease except as otherwise provided in Section 22C(1). 4. Except as expressly set forth herein, the Lease remains unmodified and in full force and effect. IN WITNESS WHIREOF, the parties have executed this Amendment effective as of the date first written above. LESSOR LESSEE city of Newport Beach Bahia Corinthian Yacht Club - .Mayor It Tts: Attest: Hy: City Clark Its: Approved as to form: Asst. City Attorney AD[vaL X= HMS! 2 -9- 10 0 nushorieed to Nblhh Ad.rnieememb of atl kinds kxfudln6 pubk notices by Decree of she svmioI Court of 01`3118t County, CbhWnk. Number n•621+, •- osember 24, 1461, and A -24621 June 11, 1467. PROOF OF PUBLICATION STATE OF CALIFORNIA) ) SS. County of Orange ) I am a Citizen of the United States and a resident of the County aforesaid; 1 am over the age of eighteen years, and not a party to or interested in the below entitled matter. I am a principal clerk of the NEWPORT BEACH -COSTA MESA DAILY PILOT, a newspaper of general circulation, printed and published in the City.of Costa Mesa, County of Orange, State of California, and that attached Notice is a true and complete copy was printed and published on the tbllowing dates: April 27, 1998 declare, under penalty of perjury, that the �oregoing is true and correct. _xecuted on . April 27 , 1 99�_ it Costa Mesa, California, Signature 1 V ED NO :30 CITY CLERK ?ORT BEACH Agenda Item #1 October 23, 2012 Special Meeting TO: Mayor and Members of the City Council FROM: Tim Riley, Fire and Marine Chief SUBJECT: Bahia Corinthian Yacht Club Tidelands Lease c -9057 Agenda Item #1 October 23, 2012 Special Meeting ! September 11, 1995 Council Agenda Item No. 8 err Cr�C F NEWPORT H F N pT , nCN APPROVED Approve a revision to the Tidelands Lease with the Bahia Corinthian Yacht Club as follows: 1. First year annual rent to be $29,256.51. 2. Leaseable lineal footage to be 2,079 feet. At its meeting of June 12, 1995, the City Council approved a thirty-five (35) year lease for the tidelands bayward of the Bahia Corinthian Yacht Club. The rent was calculated based upon 2, 504 lineal feet of slips within the lease area for an annual return to the City of $35,237.00. The lineal footage was based on the docks directly in front of the Yacht Club and 456 feet of the docks to the west of the Club that were to be included within the lease. These docks (456 lineal feet) have been retained by the Irvine Company and will not be part of the lease. In conjunction with that change, the Club has added 31 lineal feet to their existing slips that are within the lease area. The net effect of these two changes is that the new leaseable lineal footage is 2,079 lineal feet (2,504 - 456 + 31 = 2,079) for a revised income figure of $29,256,51 per year to the City, WA 19 v /1•'1:.A , v. Agenda Item #1 October 23, 2012 Special Meeting P N Agenda Item #1 October 23, 2012 Special Meeting C -3167 The City of Newport Beach, a municipal Corporation, (hereinafter referred as "City ") hereby grants to Bahia Corinthian Yacht Club, a California non - profit corporation (hereinafter referred as "BCYC "), the option to lease the tidelands area adjacent to the Bahia Corinthian Yacht Club premises extending out to the U.S. Project Line (as more specifically set forth on Exhibit "A" attached hereto) for the consideration and upon the recitals, terms and conditions set forth below: -Wl A. Under the provisions of the Beacon Bay Bill (Chapter 740 of the Statues of 1978). City is the grantee of certain harbor tidelands, located in the City of Newport Beach, County of Orange, ( "Tidelands Grant ") and B. The Bahia Corinthian Yacht Club currently operates a marina in and over a portion of those tidelands under Harbor Permit 0101 - 1801 -1, and C. Harbor Permit 0101- 1801 -1 is issued to California Recreation, a dba of The Irvine company, the owner of the upland property adjacent to the tidelands, and D. The Bahia Corinthian Yacht Club has acquired the upland property adjacent to the tidelands from California Recreation, and E. The parties desire to enter into a long -term lease in lieu of a City Harbor Permit. However, BCYC desires to postpone entering into a lease until such time as certain seawall repairs and structural reinforcements have been completed. NOW THEREFORE, the Parties agree as follows! 1. Grant of option. City hereby grants to BCYC an exclusive right and option (the "Option ") to lease the Premises for the rent and upon the terms and conditions set forth in the Lease attached hereto as Exhibit B and incorporated herein by this reference (the "Lease "). 2. Consideration. The consideration for the option shall be a one -time fee of $15,000, payable upon the execution of this agreement by both parties. The $15,000 option payment is consideration for the option only and shall not be applicable to the exercise of the lease nor to any rent payable thereunder, and the option payment shall be in addition to the annual Harbor permit fee presently in force which shall continue to be imposed and BCYC shall continue to pay up until the date of exercise of this option. 3. Option Term. The term of the option shall be for three (3) successive years commencing upon the date of execution of this _ agreement by City and by BCYC and terminating at 5:00 p.m. on the third anniversary date of the execution of this agreement ( "option Expiration Date ") , if it has not been exercised on or prior thereto. Agenda Item #1 October 23, 2012 • • Special Meeting 4. Exercise of option, The option may be exercised by written notice of exercise signed on behalf of BCYC and delivered to the City Clerk of the City on or before 5:00 p.m. on the option Expiration Date. 5. Precondition to Exercise of option -- Engineering Work. As a condition precedent to the exercise of this option by BCYC, BCYC shall be required to have then completed all seawall repairs and reinforcements recommended by its structural engineers, to the satisfaction of the city engineer, or in the alternative, it shall post a performance bond acceptable in form, content and amount to the city attorney, assuring that all of such seawall repair and reinforcement so recommended shall be completed within six (6) months of the posting of said performance bond. 6. Further Assurances. Each of the Parties hereto agrees to execute and deliver any and all additional papers and documents, and to do any and all acts reasonably necessary in connection with the performance of its obligations hereunder to carry out the intent of the Parties hereto. 7. Entire Agreement, This Agreement and the documents expressly incorporated herein shall constitute the entire Agreement between the Parties hereto with respect to the subject matter hereof, and shall supersede all prior and contemporaneous agreements and representations of the Parties concerning the subject matter hereof and the terms applicable thereto. B. Amendment. This Agreement may not be extended, supplemented, modified or amended in any manner, except by an instrument in writing signed by each of the Parties. 9. Waiver. No waiver of any of the provisions of this Agreement shall be deemed or constitute a waiver of any other provision, whether or not similar, nor shall any waiver constitute a continuing waiver. No waiver shall be binding unless executed in writing by the party making the waiver. 10. Successors and Assigns. All terms and provisions contained herein shall insure to the benefit of and shall be binding upon each of the Parties hereto and their respective directors, officers, shareholders, employees, agents, heirs, representatives, successors and assigns, and each of them. 11. Litigation Costs. If any legal action or other proceeding is brought to enforce this Agreement, or because of an alleged dispute, breach, or misrepresentation in connection with any of the provisions of this Agreement, the successful or prevailing party or Parties shall be entitled to recover their reasonable attorney fees and other costs incurred in that action or proceeding, in addition to any other relief to which it or they may be entitled. Agenda Item #1 October 23, 2012 • Special Meeting 12. tflicable Law. This Agreement shall be deemed to have been entered into, and shall be construed and interpreted, in accordance with the laws of the State of California. 13. Severability. In the event that any provisions hereof is deemed to be illegal or unenforceable, such a determination shall not affect the validity or enforceability or the remaining provisions hereof, all of which shall remain in full force. 14. Form. As used in this Agreement, the masculine, feminine and neuter gender, and the singular and plural number shall be deemed to include the other and others whenever the context so indicates. All captions used in this Agreement are for convenience only and shall not be construed in interpreting this Agreement. 15. Time is of the Essence. Time is of the essence for this Agreement and all of the terms, provisions, covenants and conditions hereof. 16. Parties In Interest. Nothing in this Agreement, whether express or implied, is intended to confer any rights or remedies under or by reason of this Agreement on any persons other than the Parties to it and their respective successors and assigns, nor is anything in this Agreement intended to relieve or discharge the obligation or liability of any third persons to any party to this Agreement, nor shall any provision give any third persons any right of subrogation or action over against any party this Agreement. 17. Remedies. No remedy conferred by any specific provision of this Agreement is intended to be exclusive of any other remedy, and each and every remedy shall be cumulative and shall be in addition to every other remedy given hereunder, or now, or hereinafter existing at law, in equity, by statute or otherwise. The election of one of more remedies by a party shall not constitute a waiver of the right to pursue other available remedies. IN WITNESS WHE OF, the P t'e have executed this Agreement effective this 7day of 1995 at Newport Beach, California. CITY QF NEF ORT BF�ACH By: J) Agenda Item #1 October 23, 2012 . • Special Meeting LEASE THIS LEASE, made this day of ,19_, by and between the City of Newport, a municipal corporation, and Charter City, hereinafter, "Lessor" and the Bahia Corinthian Yacht Club, a California, non - profit Corporation, hereinafter, nLessee", is made with reference to the following recitals: RECITALS A. Under the provisions of the Beacon Bay Bill (Chapter 790 of the Statues of 1978), Lessor is the grantee of certain harbor tidelands, located in the City of Newport Beach, County of Orange, ( "Tidelands Grant") and B. The Bahia Corinthian Yacht Club currently operates a marina in and over a portion of those tidelands under Harbor Permit 0101- 1801 -1, and C. Harbor Permit 0101- leo1 -1 is issued to California Recreation, a dba of The Irvine company, the owner of the upland property adjacent to the tidelands, and D. The Bahia Corinthian Yacht Club has acquired the upland property adjacent to the tidelands, and E. The parties desire to enter into a long -term lease in lieu of a City Harbor Permit, and F. The Marina use to be made of these tidelands, and the terms and conditions in this lease are consistent with the pro- visions of the City Charter and Ordinances of the City of Newport Beach, and are consistent with the provisions of the Tideland's Grant. Agenda Item #1 October 23, 2012 • • Special Meeting G. Lessor and Lessee entered into that certain Option Agreement for the Lease of Real Property dated as of , 1995 (the "Option Agreement') granting Lessee the right to enter into a lease for the Premises on the terms and conditions set forth herein. Lessee has duly exercised such option, all conditions precedent to such exercise have been satisfied, and there exists no event of default by Lessee under the Option Agreement as of the date of the exercise of the option by Lessee or the date hereof. NOW TTBE&BFOR.E, THE PARTIBB AGREE t 1,. LEASED PREMISES In consideration of the rent to be paid and the covenants and conditions to be observed and performed by Lessee, Lessor leases to the Lessee those tidelands described in Exhibit A and depicted on the map attached, as Exhibit B, (the "Premises "). Lessor reserves all oil, oil rights, gas, minerals, mineral rights, natural gas rights and other hydrocarbon substances in and under the Premises and the right to grant and transfer the same, together with all necessary and convenient rights to explore for, develop, produce and extract and take the same, subject to the express limitation that any and all operations for the exploration, development, production, extraction and taking of any such substance shall be carried on at levels below the depth of five hundred feet (5001) from the surface of'the land by means of wells, derricks and other equipment from surface locations on adjoining or neighboring land, and subject further to all restrictions and regulations concerning E Agenda Item #1 October 23, 2012 • . Special Meeting the drilling for, and production of, oil, gas, minerals, petroleum and other hydrocarbon substances specified in the Newport Beach City Charter or the Newport Beach Municipal Code. 3. TERM._ The Term shall commence on the date first written above, and shall expire upon the thirty -fifth (35) anniversary thereof (the "Expiration Date■), unless sooner terminated as provided in this agreement. 3. QUIET POSSESSION So long as no default by Lessee has occurred under this Lease, Lessee shall peaceably and quietly use and enjoy the Premises for the Term, without hindrance or interruption by Lessor or any other person or persons claiming by, through or under Lessor. Lessor shall in no event be liable in damages or otherwise, nor shall Lessee be released from any obligations hereunder, because of the interruption or termination of any service provided by the Lessor (such as , water or newer service), or a termination, interruption or disturbance of any service attributable to any act or neglect of Lessor or its servants, agents, employees, licensees, business invitees, or any person claiming by, through or under Lessee. !L, IMPROVEMENTS TO LEASED PREMISES Lessor and Lessee acknowledge that Lessee has constructed major improvements on and adjacent to the Premises. These improvements include, but are not necessarily limited to, bulkheads, piers, docks, floats and related improvements which comprise a marina consisting of 2,504 lineal feet of slips for 3 Agenda Item #1 October 23, 2012 . Special Meeting docking of boats, (collectively, the "Marina improvements") as shown on Exhibit B. Of the 2,504 lineal feet of slips for docking boats, 2,079 lineal feet of such slips are located on State Tidelands, which are the subject of this Lease and shall serve as the basis for calculating rent herein below. �. RENT Upon execution of this lease Lessee shall pay to Lessor the sum of twenty -nine thousand, two hundred, fifty -six dollars and fifty -one cents ($29,256.51), in twelve equal monthly installments of two thousand four hundred and thirty -eight dollars and four cents ($2,438.04) payable on the first of each month, and every year thereafter Lessee shall pay rent which sum is equal to 9 percent of the annual gross receipts from slip rentals generated by 2,079 lineal feet of marina slips at a rental rate of $13.03 per lineal foot, the (•rental rate•) or such rental rate as may be adjusted as provided in Paragraph 6 below. .k_ RENT AWUSTMENT /MINIMUM RENT Every year, on the anniversary date of the lease, the rental rate shall be adjusted upwards or downwards in direct proportion to the weighted average increase or decrease in the rate per lineal foot of slips in the "comparable marinas" described below, but in no event shall the rent adjust below the then prevailing commercial harbor permit fee paid by other commercial users within lower Newport Harbor. The weighted average rate per lineal foot of slips shall be determined by the following "comparable marinas. ": Bayside Marina, Villa Cove Marina, Balboa Yacht Basin, Balboa 4 Agenda Item #1 October 23, 2012 • . Special Meeting Marina and Bayshores Marina. From the list of "comparable marinas" the following size categories shall be excluded from the weighted average calculations! Bayside Marina, 46 foot to 74 foot; Bayshores Marina, 68 foot to 82 foot. If the method of determining rental rates in the comparable marinas should change, Lessor agrees to consult with Lessee to establish a comparable method to . determine the future rental rates. s Lessee shall have the right to make, at its sole expense, such nonstructural changes, alterations, improvements and additions in and to the marina improvements, but such changes shall conform to the City's Harbor Permit Policies and Exhibit B. Structural changes shall not be made to any marina improvement without first submitting written plans and specifications of the proposed change, alteration or addition to the Lessor and obtaining Lessor's written approval. Lessee shall make, at its expense, such changes, alterations or additions in and to structures on the Premises that may be required by any public law ordinance from time to time, applicable to Lessee's use and occupancy of the Premises, g, MARINA MAINTENANCE Lessee at its sole cost and expense, shall keep and maintain all marina improvements and related fixtures and personal property in first class order, condition and repair. Lessee shall maintain and operate not less than 2,079 lineal feet of slips available for rent. Maintenance dredging bayward of the property line, between the bulkhead line and the pierhead line, shall be the 5 Agenda Item #1 October 23, 2012 Special Meeting responsibility of the Lessee for the zone delineated by bayward prolongations of upland side property lines out to the U. S. project line. The Lessee agrees that the Lessor may go upon the leased Premises and make any necessary repairs to the Premises, and perform any work therein: 1) Which may be necessary to comply with any laws, ordinances, rules or regulations of any public entity; 2) That Lessor is obligated to make, under the terms of this lease, ort 3) That the Lessor may deem necessary to prevent waste or deterioration of the Premises, if the Lessee does not make or cause such work to be performed promptly and diligently after receipt of written demand, therefore from the Lessor. Nothing herein contained shall apply any duty on the part of the Lessor to do any work which the Lessee may be required to do, nor shall it constitute a waiver of Lessee's default. No exercise by the Lessor of any rights reserved, shall entitle the Lessee to any damage for any injury or inconvenience occasioned thereby, or to any abatement of rent, however, such repairs once commenced, shall be completed in a timely manner. In the event that Lessor makes, or causes to be made, any repairs, within the term of this lease that is Lessee's obligation to make, Lessee shall upon demand, pay to the Lessor the cost of such repairs, which amounts shall be due and payable upon demand and shall bear interest from the date of demand, until totally paid at the rate of nine percent (9 *) per annum. 0 Agenda Item #1 October 23, 2012 • • Special Meeting USE OF THE PREMISES During the term of this Lease, Lessee shall use and occupy the Premises, principally for the operation of a marina. The marina use'shall be limited to the rental of boat slips, dock lockers, dry storage and related uses. Lessee shall not commit or permit the commission by others of any waste on the Premises. Lessee shall not maintain any nuisance, as defined in Section 3479 of the California Civil Code on the leased Premises. Lessee shall not unreasonably interfere with the rights of other harbor permittees or nearby residents, and Lessee shall not use or permit the use of the Premises for any unlawful purpose, or in violation of any provision of law. la, UTILITIES Lessee shall be solely responsible for obtaining and shall promptly pay for all water, power, sewer, and other utility services provided to the Premises. P 41 -A . (1) Lessor expressly reserves the right to enter the Premises and all improvements for any purpose associated with this Lease or for carrying out any function required by law, or the rules, regulations or management policies of the City of Newport Beach. Lessor shall have a right of reasonable access to the Premises across Lessee owned or occupied lands adjacent to the Premises for any purpose associated with this Lease. 12. RULES, RSCR?1_�ATION8 AND TAXES (a) Lessee shall comply with and be bound by all presently 7 Agenda Item #1 October 23, 2012 • • Special Meeting existing or subsequently enacted policies, regulations, statutes or ordinances of the City of Newport Beach, including, but not limited to, rules and regulations prescribed under Council Policy H -1 (Harbor Permit Policies), or any other government agency or entity having lawful authority and jurisdiction. (b) Lessee understands and agrees that a necessary condition for the granting and continued existence of this Lease is that Lessee obtain and maintain all permits or other entitlements. (c) During the term of this lease, Lessee shall pay, prior to delinquency, any and all taxes assessed against Lessee's possessory interest under this Lease and all other taxes, assessments, user fees or service charges imposed on or associated with the leasehold interest, or personal property or improvements on the Premises, and such payment shall not reduce rent due Lessor under this Lease, and Lessor shall have no liability for such payment. 13. 9W1RQbWNTAL REQUIREMENTS (a) Lessee shall practice conservation of water, energy, and other natural resources and shall prevent pollution and harm to the environment. Lessee shall not violate any law or regulation whose purpose is to conserve resources or to protect the environment. (b) Lessee shall not use, nor permit the use of, any hazardous wastes or materials in the construction, reconstruction or renovations of or use of the marina improvements in violation of any applicable law, regulation, code or ordinance. Lessee shall, at its expense, comply, and cause each of its members, licensees and /or concessionaires of space in the marina or elsewhere adjacent a Agenda Item #1 October 23, 2012 Special Meeting to the Premises to comply with all applicable laws, regulations, codes and ordinances relating to any hazardous regulated material, including obtaining and filing all applicable notices, permits, licenses and similar authorizations. Lessee shall be fully responsible to clean up any hazardous wastes, substances or materials as may be required under federal, state or local law, regulation, or ordinance that are manufactured, generated, used, placed, disposed, stored, or transported on the Premises by Lessee, its members, licensees and concessionaires during the Lease term and shall comply with and be bound by all applicable provisions of such federal, state or local law, regulation or ordinance dealing with such wastes, substances or materials. Lessee shall notify Lessor and the appropriate governmental emergency response agency(ies) immediately in the event of any release or threatened release of any such wastes, substances or materials. 14.E (a) Lessee agrees to defend, indemnify, protect and hold Lessor harmless from and against any and all liability, claims, damages, penalties, actions, demands or expenses of any kind or nature, including damage to any property and injury (including death) to any person (collectively, "Claims "), arising from Lessee's use or occupation of the Premises of from any activity, work or things done, permitted or suffered by Lessee, or from any activity, work or things done, permitted or suffered by Lessee or any omission of Lessee on or about the Premises or from any litigation concerning any of the foregoing in which Lessor is made 9 Agenda Item #1 October 23, 2012 • • Special Meeting a party Defendant. Lessee shall not be required hereunder to defend, indemnify or hold Landlord or any other person or entity indemnified under this Section harmless from or against any of the Claims to the extent such Claim arises solely out of the negligence or willful misconduct of Lessor. This obligation to indemnify shall include reasonable attorneys' fees and investigation costs and all other reasonable costs, expenses and liabilities incurred by Lessor or its counsel from the first notice that any claim or demand is to be made or may be made. (b) Upon receiving knowledge of any Claim that Lessor believes is covered by this indemnity, Lessor shall give Lessee notice of the matter and an opportunity to defend it, at Lessee's sole cost and expense, with legal counsel satisfactory to Lessor in its sole and absolute discretion. Lessor may also require Lessee to so defend the matter. So long as Lessee shall be defending any such Claim, Lessor shall not settle such claim without the consent of Lessee. (c) Lessee shall notify Lessor immediately in case of any accident, injury or casualty on the Premises. � INSURANCE (a) Lessee shall obtain and maintain in full force and effect during the term of this lease, comprehensive general liability insurance and property damage insurance, with such coverage and limits as may be reasonably requested by the Lessor from time to time, but in no event for less than the sum(s) specified below, insuring Lessee and Lessor against any and all claims or liability 10 Agenda Item #1 October 23, 2012 • • Special Meeting arising out of the ownership, use, occupancy, condition or maintenance of the Premises and all improvements. (i) Comprehensive General Liability Insurance. Lessee shall maintain Comprehensive General Liability Insurance with a combined single limit for bodily injury and property damages of Two Million Dollars ($2,000,000), (which amount shall be subject to periodic adjustment as may be determined by City upon 180 days prior notice. The limits of liability of the insurance coverage specified in this paragraph may be provided by any combination of primary and excess liability insurance policies. (ii) Property Insurance - Construction. During construction of any improvements on the Premises, Lessee shall maintain builder's risk insurance against *all risk" or physical lose, including without limitation the perils of flood, collapse and transit, with deductibles acceptable to Lessor, covering the total cost of work performed, equipment, supplies and materials furnished on a replacement cost basis. Lessee shall be permitted to obtain and maintain flood insurance in such amounts and forme as are available, from time to time, under National Flood Insurance Program. (iii) Property Insurance. Lessee shall obtain insurance on the marina improvements and shall maintain insurance continuously during the Term, against wall 11 Agenda Item #1 October 23, 2012 • Special Meeting risk" perils of physical loss, including, but not limited to, flood, fire, lightning, riot and civil commotion, vandalism and malicious mischief. Such insurance shall be in amounts not less than the then full replacement cost of the marina improvements, without deduction for depreciation. Such policies of insurance shall contain the "Replacement Cost Endorsement.° Such full replacement cost shall pertain to the Project and Furnishings and be determined not less often than each two (2) years during the Term. (b) Insurance carriers shall be licensed and approved to do business in California having a general policyholders' rating of not less than B+ and financial rating or not less than "VII" in the most current Best's Key Rating Guide. (c) The insurance policy or policies shall name the Lessor, its officers, and employees as additional insureds. Lesaee shall provide Lessor with a certificate of such insurance and shall keep such certificate current. The policy (or endorsement) must provide that the insurer will not cancel the Lessee's coverage without thirty (30) days prior written notice to the Lessor. The Lessor will not be responsible for any premiums or other assessments on the policy. The coverage provided by the Lessee shall he primary and non- contributing. (d) The insurance coverage specified in this Lease shall be in effect at all times during the Lease term and subsequently until all of the Premises have been either accepted as 12 Agenda Item #1 October 23, 2012 Special Meeting improved, by Lessor, or restored by Lessee. (e) Lessee shall not commit or permit the commission of any acts on the Premises that would cause the cancellation of any liability or other insurance policy, insuring either the Premises or the improvements on the Premises. Lessee shall, at its own cost and expense, comply with any and all requirements imposed by insurance companies that carry the policies described above. (f) Each policy of insurance procured pursuant to the Section shall contain, either (i) a waiver by the insurer of the right of subrogation against either party hereto 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 described in the insurance policy. Lessor and Lessee each hereby waives any and all rights of recovery against the other, and against it shareholders, officers, directors, employees, subsidiaries, partners, servants, agents and representatives, for loss or damage arising from any cause insured against under the form of insurance policies required to be carried pursuant to this Section or under any other policy of insurance carried by either Lessor or Lessee. Lessee and Lessor each agrees to use reasonable efforts to obtain its liability insurance carriers, permission as to the waiver of subrogation described above in this Section. (g) Lessee shall at all times observe and comply with the requirements of all policies of insurance in force with respect to the Premises or any part thereof, and Lessee shall so perform and 13 Agenda Item #1 October 23, 2012 • • Special Meeting satisfy the requirements of the companies writing such policies so that, at all times, companies of good standing reasonably satisfactory to Lessor shall be willing to write or to continue such insurance. Lessee shall, if any member, licensee, concessionaire or other user of any portion of the Premises engages in any activity in violation of the requirements of all policies of insurance in force with respect to the Premises, or any party thereof, take steps, immediately upon knowledge of such activity, to remedy or prevent the same, as the case may be. 146. CASUALTY Lessee shall promptly cause the marina improvements, or any part, thereof, which is damaged or destroyed,to be repaired and restored to its original condition whether or not required to be insured against, at Lessee's sole cost and expense. such repair and restoration shall be commenced in good faith and with all reasonable diligence within a reasonable diligence within a reasonable period of time following casualty and shall be completed with due diligence. 12' NO ABATEMENT OF RENT Throughout the Term, no direct or indirect destruction of or damage to the marina improvements or any other personal property on the Premises or any part thereof or elsewhere by fire or other casualty whatsoever, whether such damage or destruction be partial or total, shall permit Lessee to surrender or terminate the Lease or relieve Lessee from its obligation to pay in full the rent and other sums and charges 14 Agenda Item #1 October 23, 2012 • . Special Meeting payable by Lessee hereunder or from any other obligation under the Lease, except as otherwise expressly set forth herein. ASSIGNMENT. ENCOMHRANCING OR SUBLETTING (a) Lessee shall not either voluntarily or by operation of law, assign, transfer, mortgage, pledge, hypothecate or encumber this Lease and shall not sublet the Premises, in whole or in part, or allow any person other than the Lessee's employees, members, agents, servants and invitees to occupy or use all or any portion of the Premises without the prior written consent of Lessor which consent shall not be unreasonably withheld. (b) The following shall be deemed to be an assignment or transfer within the meaning of this Lease: 1) If Lessee is a corporation, any dissolution, merger, consolidation or other reorganization of Lessee or sale or other transfer of a per- centage of capital stock of Lessee which re- sults in a change of controlling persons, or the sale or other transfer of substantially all the assets of Lessee. 2) If Lessee is a partnership, a transfer of any interest of a general partner, a withdrawal of any general partner from the partnership, or the dissolution of the partnership. (c) This lease is appurtenant to adjoining littoral or riparian land and /or uplands, and Lessee shall not transfer or assign its ownership interest or use rights in such adjoining land 1s Agenda Item #1 October 23, 2012 . • Special Meeting separately from the leasehold rights granted by this Agreement without the prior written consent of Lessor. 19. DEFAULT AND RSMEDTES (a) The occurrence of any one or more of the following shall constitute a default by Lessee: (i) Failure of Lessee to pay Rent due hereunder within thirty (30) days after written notice from Landlord; or (ii) Any failure by Lessee to perform any of the other terms, conditions or covenants of this Lease to be observed or performed by Lessee after thirty (30) days written notice from Landlord. (iii) Lessee becoming insolvent or filing any debtor proceedings, or should any adjudications in bankruptcy be rendered against Lessee, or should Lessee take or have taken against it, in any court pursuant to any statute either of the United States or of any State, a petition in bankruptcy or insolvency or for reorganization or for the appointment of a receiver or trustee of all or a portion of Lessee's property, and should the same not be discharged within one hundred twenty (120) days thereafter; or (iv) Lessee permitting the Premises to become vacant or unoccupied for fifteen (15) consecutive days after written notice to Lessee (except for vacancies caused, by any Force Majeure or by remodeling, reconstruction, alterations or repairs permitted under this Lease); or 16 Agenda Item #1 October 23, 2012 • Special Meeting (v) The appointment of a trustee or receiver to take possession of substantially all of the assets of Lessee located at the Premises or Tenant's interest in this Lease or the Premises, where possession is not restored within thirty (30) days. (b) Except for the payment of rent, if the nature of Lessee's default or breach under this paragraph is such that more than thirty (30) days are reasonably required for its cure, then Lessee shall not be deemed to be in default or breach if Lessee commences such cure within such thirty (30) day period and diligently proceeds with such cure to completion. (c) Remedies in the event of a default or breach by Lessee and Lessee's failure to cure such default or breach, Lessor may at any time and with or without notice do any one or more of the following: (1) Re -enter the Lease Premises, remove all persons and property, and repossess and enjoy such Premises. (2) Terminate this Lease and Lessee's right of possession of the Lease Premises. Such termination shall be effective upon Lessor's giving written notice and upon receipt of such notice, Lessee shall immediately surrender possession of the Lease Premises to Lessor. (3) Maintain this Lease in full force and effect and recover any rental, royalty, or other consideration as it becomes due, without terminating Lessee's 17 Agenda Item #1 October 23, 2012 • • Special Meeting right of possession, regardless of whether Lessee shall have abandoned the Lease Premises. (4) Exercise any other right or remedy which Lessor may have at law or equity. 20. RESTORATION OF PREMISES (a) upon expiration or sooner termination of this Lease, Lessor upon written notice, may take title to any or all improvements, including fills, or Lessor may require Lessee to remove all or any such improvements at its sole expense and risk; or Lessor may itself remove or have removed all or any portion of such improvements at Lessee's sole expense. Lessee shall deliver to Lessor such documentation as may be necessary to convey title to such improvements to Lessor, free and clear of any liens, mortgages, loans or any other encumbrances. (b) In removing any such improvements, Lessee shall restore the Premises as nearly as passible to the conditions existing prior to their installation or construction. (c) All plans for and subsequent removal and restoration shall be to the satisfaction of Lessor and shall be completed within ninety (90) days after the expiration or sooner termination of this Lease. (d) In removing any or all the improvements, Lessee shall be required to obtain any permits or other governmental approvals as may then be required by lawful authority. 18 Agenda Item #1 October 23, 2012 • Special Meeting (a) Waiver (1) No term, covenant, or condition of this Lease and no default or breach of any such term, covenant or condition shall be deemed to have been waived by Lessor's acceptance of a late or nonconforming performance or otherwise, unless such a waiver is expressly acknowledged by Lessor in writing. (2) Any such waiver shall not be deemed to be a waiver of any other term, covenant or condition of this Lease. (b) Time Time is of the essence of this Lease and each and all of its terms, covenants or conditions in which performance is a factor. (c) Notice All notices required to be given under this Lease shall be given in writing, sent by U. S. Mail with postage prepaid, to Lessor at the offices of the City of Newport Beach, Attn: City Manager, and the Lessee at the address specified in this Lease. Lessee shall give Lessor notice of any change in its name or address. Until such notice of change, all notices to Lessee shall be sent to: BAHIA CORINTHIAN YACHT CLUB, 19 Agenda Item #1 October 23, 2012 • • Special Meeting 1600 Bayside Drive, Corona del Mar, CA 92625. Attn: (d) Consent Where Lessor's consent is required under this Lease, its consent for one transaction or event shall not be deemed to be a consent to any subsequent occurrence of the same or any other transaction or event. (e) chances This Lease may be terminated and its term, covenants and conditions amended, revised or supplemented only by mutual written agreement of the parties. (f) Successors The terms, covenants and conditions of this Lease shall extend to and be binding upon and inure to the benefit of the heirs, successors, and assigns of the respective parties. (g) Joint and Several obligation If more than one Lessee is a party to this Lease, the obligations of the Lessees shall be joint and several. (h) Captions The captions of this Lease are not controlling and shall have no effect upon its construction or interpretation. (i) Severability If any term, covenant or condition of this Lease is 20 Agenda Item #1 October 23, 2012 . • Special Meeting determined by a court of competent jurisdiction to be invalid, it shall be considered deleted and shall not invalidate any of the remaining terms, covenants and conditions. IN WITNESS WHEREOF, THE PARTIES HAVE EXECUTED THIS AGREEMENT EFFECTIVE AS OF THE DATE FIRST WRITTEN ABOVE. LESSOR For City of Newport Beach Mayor Attest: City Clerk Approved As To Form: r I MIM li'41206 . 21 LESSEE Bahia Corinthian Yacht Club .e\.sr�b.ns..I" A B. A EXHIBIT A' Agenda Item #1 October 23, 2012 Special Meeting LEGAL DUMPTION OP '=' L1ND Lot D of Tract No. 6927, in the City of Newport Beach, County of orange, State of California, is per, .I4ap: recorded in Book 265; Pages 17 and 18 of Miscellaneous Maps, in 'the Office of the County Recorder of said County. All of Buyer's rights, title and inte=sE:. iim '0r- hereafter held in and to the portion of=.Lot C:of Tract No. 6927, in the City of Newport Beach, County of Ozau�e,, State of California, as per Map recorded in Book 265,, Pages 17 and 10 of Miscellaneous Maps, in the office dg th .County P&e order of said County, depicted on Schedule. L chadiereto . f That area of State Tidelands ba�r aL*-u plagd property between the U. S. Bulkhead Li sad �L: Mooj`ecC Lice; as shown on the attached aerial. ,,.8lchibit B. SSA M ro �� h" .+ijHn e g I Agenda Item #1 October 23, 2012 Special Meeting wj" "Presisesit) Agenda Item #1 October 23, 2012 • . Special Meeting MA COMMAN YAC1ff CLUB • 1601 SAYSM ORVE • COMM DEL MAR CAUMM A 9M45 0069 NEWPORT REACH, CITY OF 09/22/95 10991 09/22/95 TIDELANDS LEASE 15000.00 .00 15000.00 15000.00 ,00 18800.00A Agenda Item #1 October 23, 2012 Special Meeting MEMORANDUM Newport Beach Fire and Marine Department Office of the Deputy Chief ck7r�.t (G,l- DATE: October 5, 1995 TO: City Clerk FROM: Marine Division SUBJECT: Bahia Corinthian Yacht Club Option Attached is a copy of the check recently received from the Bahia Corinthian Yacht Club and forwarded to the Revenue Department, as required by the Option to Lease. Also attached and signed by a representative of the Club is the Option. Once the Mayor and City Clerk have signed, could you forward a copy of the signed option and the blank Lease to the Bahia Corinthian Yacht Club at 1601 Bayside Drive, Corona del Mar, California 92625. Tony Melum, Deputy Chief 7MJjb June 1, 1995 TO: FROM: SUBJECT: Agenda Item #1 October 23, 2012 S ecial M etin #, y� � n s CITY OP N'SWPORT BEACH Marine Department MAYOR AND CITY COUNCIL Marine Department BAHIA CORINTHIAN YACHT CLUB TIDELANDS LEASE C —)45 -7 Recommendation: If desired: Approve the transition from an annual Commercial Harbor Permit to a 35 year Lease for the tidelands bayward of the Bahia Corinthian Yacht Club (BCYC). Approve the attached Option and Lease in substantially the form attached. .� . Within the last year, the Bahia Corinthian Yacht Club (BCYC) has had an opportunity to purchase the land on which their yacht club sits from the Irvine Company. The majority of the marina bayward of the yacht club is over State Tidelands and is permitted to California Recreation, a dba of the Irvine Company. The City's permit fee for the use of this water area.is based on an appraisal done in 1989, at which time it was recommended that the fair market permit fee for commercial tidelands use be 21 cents a square foot per year. The fee is reviewed annually and recommendations for adjustments are based upon the Consumer Price Index. To assist in financing the purchase of the property, BCYC has approached the City with a proposal to lease the tidelands bayward of the yacht club rather then have them under a permit. In June of 1993, the Marine Department, in conjunction with the BCYC, commissioned an appraisal of the fair rental value of the tidelands bayward of the yacht club. The appraisal, done by George Hamilton Jones Incorporated, concluded that the fair rental value of the water area, pursuant to a long term lease, would be 9 percent of the gross receipts from the slip rentals within the tidelands. Analysis: Currently, the marina, under the permit system, occupies 62,800 square fee of the City tidelands. The City's permit fee is Agenda Item #1 October 23, 2012 • Special Meeting calculated by multiplying the occupied square footage times 27 cents a square foot. Using this formula, the marina currently generates $16,956.00 for the City on an annual basis. Based upon the appraisal prepared by George Hamilton Jones Inc., it was recommended that the Lease rent he 9 percent of the gross rental charge per lineal foot. At the time of the appraisal, the average slip rate in Newport Harbor was $13.03 per lineal foot. The lineal footage of slip space over State Tidelands bayward of BCYC is 2,504 lineal feet. As a result, the annual return to the City under a lease, based on 9 percent, would be $35,237.00. The difference between the current permit fee and a lease would be $18,281.00 per year. The benefits to the City in a lease arrangement are, initially, increased revenue, and rather then have the return tied to the Consumer Price Index, the rent would be tied to the market rate for slip space rentals within Newport Beach. This would insure that the City's return per lineal foot would be reflective of the rates that are currently charged within Newport Harbor. The benefits to the harbor permittees would be the ability to obtain long term financing to purchase the upland property. Due to extensive bulkhead repairs that must be made on the property immediately, the Lessee, SCYC, has asked that the City consider an "Option to Lease" that would run for three years. In consideration for that option, there would be a one time fee of $15,000.00, in addition to the ongoing permit fee that they are currently paying in the amount of $16,956.00. The option fee would be payable upon the execution of the option agreement. As mentioned above, the rent shall be a percentage rent, at the rate of 9 percent (9t) of gross slip rents within the tidelands. Every year, on the anniversary date of the lease, the rental rate shall be adjusted upwards or downwards in direct proportion to the average increase or decrease in the rental rate per lineal foot of slips in the "comparable marinas* described in the Lease Exhibit C, but in no event, if adjusted downward, shall it drop below the then prevailing permit fee paid by other commercial harbor permittees within lower Newport Harbor. The proposed terms for the Lease and Option have been reviewed by the City Council Finance Committee, and they concur with the above staff recomm�e�nddatt�ion Tony Melum - Acting Marine Director M1 P O O O R R h h e� n h I 2 h �Y3Y = sr = �a9�4a� 1 5 .. # -' 4.. 30vw �.IJ YO14YI - ItlI ..> .R40 1. �v I It 14 _ `mil • • lip 1 r�' R �cJ Y J ' Agenda Item #1 October 23, 2012 Special Meeting • iz= �OoZZ �LLN or L kl a". Ifl OLSL ZI'LLt E10 zjoz-:,OL 'YO 'ao�e� _ FFg s v, 2 � m V a W O y O ' m m Io > n a m N i - ItlI 14 _ `mil • • iii - - -- or L kl a". Ifl OLSL ZI'LLt E10 zjoz-:,OL 'YO 'ao�e� _ FFg s v, 2 � m V a W O y O ' m m Io > n a m N i rn, i f C • yp1 L3, �r a s m � 1. n ��,M v CNW �r G a) 1 \ In i I on <</ .,C, Ya•uS •� ".•;. '•` -`-v 91YilS {95tH yJ =�+p .c6vay ,C .aw „dw91RQ2 (C .R:-8M'2•S:i•iS Yi �'L"q Agenda Item #1 October 23, 2012 Special Meeting b� V yd O � Y ' C w 3 N U CL O V N 61 Z M�p V' �D N d M > QQ v a o a r m a O V 1A N Z L � 3Q(•(f��'ir � �� • yp1 L3, �r a s m � 1. n ��,M v CNW �r G a) 1 \ In i I on <</ .,C, Ya•uS •� ".•;. '•` -`-v 91YilS {95tH yJ =�+p .c6vay ,C .aw „dw91RQ2 (C .R:-8M'2•S:i•iS Yi �'L"q Agenda Item #1 October 23, 2012 Special Meeting b� V yd O � Y ' C w 3 N U CL O V N 61 Z M�p V' �D N d M > QQ v a o a r m a O V 1A N Z Agenda Item #1 October 23, 2012 Special Meeting VALUATION — continued This test based on capitalized value supports the indication of tidelands rent based upon an equalized rate of return for each, considering the highest and best use of each parcel. Approach 2 — Conclusion: Based on the methodology of Approach 2, which was designed to address the interrelationship between tidelands and uplands in terms of equalizing the allocation of market rent for established marinas, it is our judgment that the well - informed lessor and lessee would consider the following rent for the tidelands to be reflective of prevailing market conditions: Market Rent as a Percentage of Gross Income: 10.0% Market Rent on a Price per Square Foot Basis: $1.26 Approach 3: As indicated in the Introduction to this Valuation Section of the report, our search for market data of directly comparable leases of tidelands only for marina use revealed only a limited number of potential data items throughout all of Southern California. According to the records of the Department of Navigation and Ocean Development, less than 10% of the berths spaces, in Southern California involve privates owned uplands. Most of these privately owned marinas are in Newport Harbor. investigations uncovered only five leases that were potentially analysis Three of these were in Newport Harbor, one in San Diego, and one in Huntington Harbor. In our judgment, two of the leases in Newport Harbor did not represent open market transactions where each party was "acting prudently and knowledgeably, and ...the price was unaffected by undue stimulus."' We will provide a short discussion of each of the leases to be followed by analysis. We will begin with the three leases in Newport Harbor. Definition of Market Value: The Dictionary of Real Estate Appraisal, Fifth Edition, CGEORGE HAMILTON_ JONES, INC. W „- -54- M1� J 1/1 VALUATION — continued __........_._...._ Bahia Corinthian Yacht Club: Agenda Item #1 October 23, 2012 Special Meeting I�ncss wc.� -e.l tun70_ e to 11delond; tat a Date: May 7, 1998 } Term: 35 Years — New Lease t5/ Area of Tidelands: 76,5.50 Square Feet a� Rental: %of Gross Slip Rental t{� .ca 1 This was a new lease based upon an appraisal prepared by an independent appraiser. The lessor was the City of Newport Beach and the lessee was the Bahia Corinthian Yacht Club. It is considered an open market transaction with neither lessor nor lessee affected by undue stimulus. 6 l) �Bayshores Marina: �..X In S Vends, WCAlPr' Cror, "i0%a. Date: December 7, 2004 to -1-, a ' ` °^ a � ra t Term: 20 Years with Option Area of Tidelands: 2.297 AC — 100,057 Square Feek Rental: % of Gross Slip Rental Y, T20. -- ....... .-._,._. — This lease agreement is an outgrowth of an original Iease, which was entered into in 1974, between the County of Orange as lessor and The Irvine Company as lessee. One of the undersigned, George Hamilton Jones, MAI, has personal knowledge regarding the terms of the original lease. In that agreement, rental value was based upon a formula, expressed as percentage rent, that was to be adjusted to account for increasing upland values. It has been reported to this office that there was confusion in implementing these adjustments. As a consequence, by failing to make the appropriate adjustments for increases in land value, the inflationary increases in effective gross rental income (increasing slip rental rates) over time resulted in ever increasing percentage rental rates for the tidelands.' It has been reported that the 20% figure was reached through this misunderstanding and had no basis in independent analysis or reference to supporting market evidence. Our interviews with involved parties indicated 'This phenomenon was implicitly addressed in sensitivity analyses carried out in Approach 1 and retained in our files. All other elements being equal, a decrease in uplands value results in an increase in indicated percentage rent to the tidelands. Likewise, an increase in uplands land value results in a lower indication in percentage rent for the tidelands. 55- GEORGE HAMILTON JONES, INC. / L Y 2/ l Agenda Item #1 October 23, 2012 Special Meeting VALUATION — continued that when the new (2004) lease was entered into, no independent appraisal was performed to establish market rent and the prevailing rate of 20% was simply continued. In our judgment, this transaction does not represent an open market exchange for several reasons. First, there was no independent appraisal undertaken to provide an unbiased opinion of market rent. Second, the lessee had a large capital investment in an operating marina, which it could not readily walk away from, for both economic reasons and the fact that it had an obligation to serve existing tenants. Finally, the lessee was California Recreation Company, a subsidiary of The Irvine Company, which, as most readers will know, is a very large property owner with a wide range of business and property interests throughout the Orange County community. This manna is a small part of a very large operation. Therefore, this is considered to be a special buyer /lessee, not reflective of the market generally. The uplands property was purchased in excess of fifty years prior to entering the lease, and it has been essentially dedicated to manna support use. Because of the nominal effective investment in land for this particular lessee, the economic considerations of the lessee are not equivalent to those of a well- informed owner of vacant land at the date of value seeking to develop that land to its highest and best use. In essence, the lessee was not "typically motivated" per the definition of market value. For the above reasons this lease transaction was judged not to meet the standards of a "competitive and open market" and was given nominal weight in this analysis. 6. � ) Swales Anchoraae Date of Lease: November 25, 2011 Term: 3 -Year Interim Lease Area of Tidelands: 1.15 AC — 50,094 Square Feet Rental: _ _ $6,000 per Month A 12.. ifV� 5p �q �{ �F. 1 �` Lx-is) ese i3e an s were originally leased by the County of Orange to the Falwell Family, which was leasing the uplands from The Irvine Company, in 1971. Shortly prior to the revaluation in 1991, the lessee had made a substantial investment in upgrading the marina improvements. UPla,nds wn.1R.,., f+�nt'R.o�e. -56- GEORGE HAMILTON JONES, INC. ~? I Agenda Item #1 October 23, 2012 Special Meeting VALUATION — continued When the.County raised the percentage rent to 20 %, Mr. Falwell actively challenged this level of rent; however, there was no established forum or court for seeking adjudication by any third party entity. Legal counsel was employed by Mr. Falwell in order to seek hearing in which an independent opinion of market rent would be presented. These efforts went up to the level of the County Board of Supervisors, but they refused to consider the matter. With no other legal recourse available, and given the substantial investment in the marina improvements, the Falwell Family had no option but to accept the rent terms. Prior interviews with the principal lessee and his counsel indicated these circumstances created substantial economic hardships that had negative long -term consequences. The 1991 revaluation, which set the rent at 20% of the gross income, is not considered to have had a willing lessee nor was it, in our judgment, reflective of an "open and competitive market" The current lease at Swales Anchorage is between the County of Orange and Palmo Investments as lessee. It is an interim lease with a three - year term, commencing July 1, 2011. The rent is a flat rate of $6,000 per month and is not based upon a percentage rent. The lease indicates that the tenant is challenging the ownership of the tidelands by the County. Because of the conditions of the 1991 revaluation, with an unwilling lessee who sought to challenge the 20% rent terms but could not have the matter heard for independent adjudication (as is the case in other jurisdictions), and the interim nature of the current lease agreement which is based on a flat monthly rate and is concurrently being contested, this is not judged to be an transaction that occurred in an "open and competitive market" with a Iessee in circumstances anywhere analogous to having a vacant site available for its highest and best use. Thus, it is not judged to be an open market data item and is given nominal consideration in the market rent analysis. GEORGE HAMILTON JONES, INC. yam,., -57_ Agenda Item #1 October 23, 2012 Special Meeting VALUATION — continued �l y Sunset Harbor Mann Date of Lease: January 1, 2000 Term: 40 years Area of Tidelands: A tidelands portion of substantially larger (50± acres) Sunset Aquatic Marina project Rental: 8.5% of gross revenue generated from boat e ng, m. This marina is located in the westerly portion of Huntington Harbor adjacent to Anaheim Bay in Seal Beach. Access to the open ocean is from Anaheim Bay. This is part of the much larger Sunset Aquatic Marina, which includes a wide range water - oriented recreational activities and services. In additional to the commercial marina, these uses include a launch ramp, dry storage, RV storage, parks, and an on -site shipyard. The lease was of the tidelands -only, for 40 years with the State of California as lessor and County of Orange as lessee. The rent is 8.5% of the gross revenue generated from marina berthing. Glorietta Bay Marina) Date of Lease: Term: Area of Tidelands: Rental: July 1, 2012 40 years 1_40,780 sq. ft. of tidelands only 11 �% of gross revenue generated from s rp ren�wtt�i a three -year build -up at $11,616 per year to a $95,000 per year minimum against the 11% of the gross. This forty -year lease agreement is of the tidelands only portion of the Glorietta Bay Marina. The tidelands are occupied by a 100 -slip marina at a density of approximately 1,400 square feet per slip. Because the water area made up approximately 50% of the total marina area, the San Diego Unified Port District prorated the Board - adopted rate of 22% (for land and water) at 50% to obtain the 11% for the tidelands alone. The lease was adopted at the San Diego Unified Port District Board Meeting August 14, 2012. GEORGE HAMILTON JONES, INC. $8 y'..w. -i -.., 5/1 Agenda Item #1 October 23, 2012 Special Meeting VALUATION — continued This new 40 -year lease was entered into in recognition of the fact that the lessee would, in the near term, complete a total replacement of the marina improvements. The lease specifically allows for a 40 -year term in order to provide sufficient time for amortization of the $6,600,000 capital investment over the term of the lease. This lease is considered a reasonably negotiated instrument in which both parties were acting in their own best interests, and with an understanding of the economic needs of both parties in obtaining highest and best use. Approach 3 — Conclusion: As spelled out in the analyses above, our understanding of the conditions of two of the leases reviewed — Bayshores Marina and Swales Anchorage — preclude them from being considered appropriate market data items in that they did not meet the standards of an open market transaction. These are the standards of market value as defined by agencies that regulate federally insured financial institutions in the United States and by the Appraisal Institute', the standard of market rent as defined by The Appraisal Institute, and California Code of Civil Procedure (1263.320). The other data indicated a range of 8.5% to 11.0% of gross revenues for the tidelands only. Among these only one market rental rate was based upon an independent appraisal. This was the 9.0% at the Bahia Corinthian Yacht Club in Newport Harbor. Overall, it is our judgment that this data indicates a range of percentage market rent for the tidelands only of 9.0% to 10.0 %. Market Rent as a Percentage of Gross Income: 9.0% to 10.0% Reconciliation: In this valuation analysis three approaches to judging market rent for the subject tidelands were used. These studies recognized that the subject property is an independent tidelands parcel with no rights of access to the adjacent uplands. Because such access is necessary for the operation of a commercial marina, this valuation invoked the extraordinary assumption that the subject has access to the adjacent uplands. This allowed us to carry 6 The Appraisal of Real Estate, The Appraisal Institute, 13ih Edition, pg. 23. GEORGE HAMIL70N JONES, INC. .0 -_S9- r 9 Agenda Item #1 October 23, 2012 Special Meeting VALUATION - continued out a meaningful analysis of the tidelands as dedicated to commercial marina use. Approach 1 used market evidence to consider the value of both the tidelands and the uplands as independent. This was done in order to gain a frame of reference of the economic benefits, if any, that joinder of the two parcels for marina purposes would generate. Discussions were presented regarding the economic considerations of a bilateral monopoly, and the reasonable expectations of the two parties who undertake joinder. It was recognized that, in joinder, both parties would require an enhancement in the returns over what would be expected as independent sites. The allocation of the enhancement, as set out in the analysis in Approach 1, was shown to be reasonable and fair and consistent what would be expected by well - informed participants acting without any undue stimulus. Approach 1 resulted in an indication of market rent for the subject property of 7.25% to 7.50% of the gross rental income, or $0.90 to $0.95 per square foot of tidelands area. Approach 2 employed the same fundamental economic principles as did Approach 1, but also included analyses designed to equalize the return to each parcel (at its highest and best use in joinder). This approach gave increased weight to the subject tidelands as already effectively joined to the uplands. This is recognized to be a benefit to the tidelands, especially in light of earlier discussions regarding the relative value of the parcels as independent entities. This approach is judged to more closely reflect the condition of an established marina, as opposed to the assumption of vacant land and tidelands that is implicit in Approach 1. The Approach 2 analysis reflected market rent for the subject property of 10.0% of the gross rental income and $1.26 per square foot of tidelands area. Approach 3 involved analysis of tidelands -only leases, Unfortunately, there are very few of these leases in the Southern California region because the vast majority of tidelands leases for marina purposes include joint lease with the supporting uplands. There were three leases in Newport Harbor. One of these, which was given considerable weight in -60- GEORGE HAMILTON JONES, INC. ..,..,_ a / Agenda Item #1 October 23, 2012 Special Meeting VALUATION - continued this reconciliation, was based upon an independent appraisal of market rent. It was a new lease (as opposed to a lease extension), and was entered into by well - informed parties under no undue influence to consummate the lease. This transaction was the BCYC lease and was based upon 9.0% of the gross revenue generated by slip rentals. A discussion of the conditions surrounding the other two leases in Newport Harbor — Bayshores Marina and Swales Anchorage — led us to conclude that neither one of these leases met the standards of an open market transaction. Accordingly, they were not considered reflective of market rent and were given nominal weight in this reconciliation. Even though they were not based upon independent appraisals, the leases at Glorietta Bay (11% of gross) and Sunset Harbor Marina (8.5% of gross) represent leases entered into by well- informed participants under no undue influences. At Glorietta Bay, the lease specifically recognizes that the tenant is fully replacing the improvements, and the 40 -year lease term is in recognition of that fact. In our judgment, the open - market tidelands -only lease data represented a range of 8.5% to 11.0 %, with greatest weight given to the BCYC lease at 9.0% because both parties were well- informed, acting in their own best interests, and based their acceptance of lease terms on an independent (3 d party) assessment of market rent. Summary of Indications: Approach 1: 7.25% to 7.50% of gross revenue $0.90 to $0.95 per square foot of tidelands Approach 2: 10% of gross revenue $1.26 per square foot Approach 3: 8.5% to 11.0% of gross revenue In our opinion, Approach 1 most closely represents the theoretical condition of the subject tidelands property as a vacant parcel with a dimension of 700 feet x 80 feet (56,000 square feet) in joinder with 10,000 square feet of vacant adjacent uplands; however, in this reconciliation slightly greater weight was given to Approach 2, which is designed to -61- GEORGE HAMILTON JONES, INC. , I Agenda Item #1 October 23, 2012 Special Meeting VALUATION — confinued more closely reflect the existing (and operative) joinder of tidelands and uplands as was actually found in Newport Harbor at the date of value. Approach 3 supported this weighting by virtue of the fact that the low end of its indications was above Approach 1. Amongst these tidelands - only data, the 9.0% indication of the BCYC lease was given greatest priority because it was based upon an independent appraisal that was accepted by both parties acting without any undue stimulus for a particular market rent conclusion. In light of all the foregoing, and other less pertinent factors, we formed the opinion that market rent for the subject tidelands property, as dedicated to marina use and considering the extraordinary assumption of joinder with the adjacent uplands parcel, was, as of July 15, 2012, equivalent to: 9.50% of the gross slip rental revenue, or $1.20 per square foot of tidelands. MARKET RENT CONCLUSION 9SO% of gross revenues, or $1.20 per square foot of tidelands 62- GEORGE HAMILTON JONES, INC. ... -,,.,� 14 Agenda Item #1 October 23, 2012 Special Meeting Newport Harbor Tidelands Newport Beach, California August 16, 2012 NETZER & ASSOCIATES COMMERCIAL PIER/MARINA LEASE SUMMARY .IUN &JULY 2012 Data No. Parcel Annual - Marina .Jurisdiction Lease Date Property Area I Base Rent Rent Location TypE Tv e / .FC) (S/S .Ft.1 °onfgross) County ofOrangg�\ 111.011 'Tidelands 1, 50.175 $1.44 Not Newport Marina 's waieS New e p Applicable 2888 Bayshore Drive Leave Newport Beach 2/ -01 CnuwN, 61,01-am-'e 1142004 I'idelnuds 100.057 $1.65 20.0% fiay� sha��i,1Mrrina New Lease I ,572 Drive by prig* •F, . . - Newport lurch Tenant - - 3/ f Unified Port of San Diego 212006 ' Tidelands 163,285 Sliding 22.0% Point Loma Marina New Uplands I 75.650 Scale from 4960 Marina Drive Lease pr f Combined 238,935 $0.1010 DanDieeo - r _ _ SI -15 4/ Unified Port of San Diego 42006 Tidelands I 724,412 Sliding Sliding Pier 32 Marina New Uplands 175975 Scale from Scale from 3201 Marina Way Lease ( Combined 900,387 $0.111 to 7.5% to City _ $0.11 16.5% _National — County of Los Angeles 82008 1 Tidelands 523,074 +$0.95 25-0% Neptune Marina &Apartments New � Uplands (combined) (combined) 141(10 Marquesas Way Option Marina del Rev r6! , County of Las Angeles 12012 Tidelands 484,973 +$1.52 25.0% Tahiti Marina & Apartments Amended & Uplands (combined) (combined) 13900 Tahiti Way Restated Marina del Rev Lease 71 - -� -' County of Los Angeles 72008 Tidelandsf I 252,895 ±$0,85 25.0% Holiday Harbor New Uplands (combined) (combined) 13915 Panay Way Option Mariaadel Rey _ _ _ —____ 8/ County of Los Angeles Marina Bay Club Apartments 82009 New Option Tidelands Uplands ` 246,044 (combined) !$2.54 (combined) 25.0% 14015'rahiti Way 112011 �_ I _Marinade) 9/ _Renewal_ I I Vzontra ,,err DiOrict Current Tidelands 914,760 Not i 25.0% S,)ndennann•Rin_, option IJplands (combined) .Available i WiS Anchws Wav ,'it) Schowwr Drive _ -- Ventura I Inrhor ------------- `t �r Agenda Item #1 Brown, Leilani October 23, 2012 From: McKitterick, Gary [gmckitterick @allenmatkins.com] Sent: Tuesday, October 02, 2012 3:41 PM To: Harp, Aaron; Kiff, Dave; Torres, Michael; Brown, Leilani Cc: McKitterick, Gary; Dennis D. O'Neil Subject: City of Newport Beach Lease Agreement Attachments: 10- 2- 12BL- CityofNewportBeachLeaseAgreement .DOCX; 10- 2- 12Clean- CityofNewportBeach LeaseAgreem ent. DOCX Importance: High Aaron, Dave and Michael, As you know I represent several commercial marina owners in Newport Harbor. I have enclosed a revised draft of the Lease incorporating our changes however I need to reserve the right to make additional comments based on further comments from my clients. The version is marked to indicate all changes from the City's draft Lease produced on Friday 9/28. This should be part of the public record. The form Lease the City proposes does not reflect the interest being leased, which is a water parcel only with no land access. Every single property in the Harbor is unique and in many properties there is private water between the bulkhead and the public water parcel. This very important fact was not considered in the City lease draft and therefore significant changes are required. Please note: 1. We object to the City attempt to impose a 20% rate and can show by independent experts this City rate is significantly above fair market. The City is an owner of a commercial marina which is a direct competitor of my clients and every other privately owned marina in Newport Harbor. This is a major concern to us which we must address. The Harbor is unique and a Bilateral Monopoly exists with no free market, as I have stated before. 2. We provided comments to the Marina Index and will have additional comments prior to the Study Session 3. The City holds an interest in a water parcel only. The Lessee's paid for and built the docks, installed utilities, built bulkheads and own private uplands. This Lease is not desired by the Harbor Marina owner's but, if they are compelled to sign a Agenda Item #1 lease, the owners will not (a)grant access to the City to private pTiotpimt?3n2etksts or (b)allow the lease to restrict the private property rights of the �iwlnerns eting I am available to meet with you to discuss this matter . Please confirm receipt. Thank you. Gary S. McKitterick Esq. Partner Alien Niatkins Led( Gamble Mallory & Natsis LLP 1900 Main Street, 5th Floor, Irvine, CA 92614 -7321 (949) 553 -1313 (main) (949) 851 -5432 (direct) (949) 751 -8270 (mobile) (949) 553 -8354 (iax) www.allenmatkins.com Allen Matkins IRS Circular 230 Disclosure. To ensure compliance with requirements imposed by the IRS, please be advised that any U.S. federal tax advice contained in this communication (including any attachments) is not intended or written to be used or relied upon, and cannot be used or relied upon, for the purpose of (i) avoiding penalties under the Internal Revenue Code, or (ii) promoting, marketing or recommending to another party any transaction or matter addressed herein. Confidentiality Notice: The information contained in this electronic e -mail and any accompanying attacbment(s) is intended only for the use of the intended recipient and may be confidential and /or privileged. If any reader of this communication is not the intended recipient, unauthorized use, disclosure or copying is strictly prohibited, and may be unlawful. If you have received this communication in error, please immediately notify the sender by return e -mail, and delete the original message and all copies from your system. Thank you. Agenda Item #1 October 23, 2012 Special Meeting This Lease Agreement [(With Options for Renewal)] ( "Agreement ") is entered into this 1st day of March, 2013 by and between the City of Newport Beach, a California municipal corporation and charter city ( "Lessor" or "City "), and a ( "Lessee "). RECITALS A. Pursuant to the Tidelands Grant, the State of California granted to Lessor, as trustee, certain Tidelands. The Tidelands must be used to promote the public's interest in water - dependent or water- oriented activities, as described more fully in the Tidelands Grant; B. The Tidelands Grant provides that the Tidelands shall not, at any time, be granted, conveyed, given, or alienated to any individual, firm or corporation for any purpose whatever except pursuant to Lessor's grant of either a franchise or lease, C. The Tidelands Grant authorizes Lessor to enter into leases of the Tidelands for a period not exceeding fifty (50) years so long as such leases are consistent with Lessor's obligations to hold the Tidelands in trust for the uses and purposes contained in the Tidelands Grant; D. On 20 the City Council approved this Agreement by adopting Resolution No. , as required by Municipal Code section 17.60.060(A); therefore, subject to the terms and conditions of this Agreement, Lessor desires to lease a portion of the Tidelands defined as the Premises to Lessee and Lessee desires to lease the Premises; E. The City previously issued City Pier Permit Number ( "Permit ") for the Premises; City Pier Permit Number , which shall expire February 28 2013 after which time the City has stated such Permit will has -not be been renewed and Lessee or any other party has no continuing rights in th+& -such pPermit after such date; F. The parties desire to enter this Agreement for a term described herein of T- n -44t < r� (-59) years -and to grant Lessee an option to extend the term of this Agreement; and G T— e Lessee's kR • ledgo I_v..see pFesoMc and a aRtS that it has ebtained all � ghts from th ;Fd aFtie (in.-I d R former pier perrnit hel.lnrs Rd aljaG nt l..nrlewners) to use the piers —cpid ether v6vtCp_vn --the Prc-,• .!ses, ipr RF,.F ait Number ; aad In consideration of the mutual promises and obligations contained in this Agreement, the receipt and sufficiency of which is hereby acknowledged, and the Recitals above, which are incorporated by this reference, Lessee and Lessor hereby enter into this Agreement on the following terms and conditions: NOW, THEREFORE, THE PARTIES AGREE AS FOLLOWS: 1. Definitions Capitalized terms that are not otherwise defined in the body of this Agreement (which are identified in parentheses (" ")) have the meanings attributed in Exhibit "A ". 966187.02/OC 888888.00165/ 10.1.12/GSM /MMS 2. 3. Q Agenda Item #1 October 23, 2012 Special Meeting Leased Premises Lessor hereby leases to Lessee, for the Term specified in Section 3, the Premises. The rights granted to Lessee by this Agreement are subject to Lessee's compliance with the terms, covenants and conditions in this Agreement. Lessee covenants, as a material part of the consideration for this Agreement, to keep and perform each and every term, covenant and condition of this Agreement. Term (a) Initial Term: The Term of this Agreement shall be ( —) years commencing on the 1st day of March , 2013 —, which shall be the "Commencement Date," and terminating on the day of , 20, unless sooner terminated as provided in this Agreement. (b) Option for Renewal Term(s): If Lessee is not in default of its obligations in this Agreement, then Lessee shall have the option to extend the Term of this Agreement for ( —) additional successive "Renewal Term(s)" of ( —) years each, on the same terms and conditions contained in this Agreement. As provided by the Tidelands Grant, in no event shall the Term and any Renewal Terms exceed a total of fifty (50) years. (i) Each Renewal Term for which an option is exercised shall commence at the expiration of the immediately preceding Term. Lessee must exercise its option to a Renewal Term by giving a written "Option Notice" of its election to Lessor no earlier than eae -two hundred and seventy (270) &4hty- (448�-calendar days and no later than aty 0QQ4-sixt 60 calendar days prior to the expiration of the immediately preceding Term.. Should Lessee fail to timely give an Option Notice Landlord shall send writien notice to the Tenant of the potential laose of rights and if Tenant fails to exercise such Option within ten (10) business days of such reminder notice, then the option for the Renewal Term and all subsequent Renewal Terms shall be null and void and of no further force and effect. Rent for the Renewal Term shall be determined and adjusted as described in Section 4(b) below. Rent (a) Rent: Beginning on the Commencement Date, Lessee shall pay to Lessor, at the times prescribed within this Agreement, an annual "Rent" during a Lease Term Year in the sums identified in subsection 4(a)(i) as adjusted pursuant to subsection 4(a)(i) and Section 4(b). (i) Rent: Rent shall be calculated on an annual basis as follows [Section to be revised with a different rate]: First, the Lessor shall determine the "Target Indexed Rate" as follows: the "Aggregate 20% %Equivalent Rent" shall be determined, which is comprised of Gross Revenue for Slip Rentals for the preceding 966187.0210C 88888 8 - 00155110.1- 12/GSM /mms -2- Agenda Item #1 October 23, 2012 Special Meeting calendar year of all marinas included within the Marina Index (as set forth in 4(a)(ii) below) multiplied by ( ) pOIRt twenty (i.e., if aggregate Gross Revenue for Slip Rentals is $14,000,000, multiply $14,000,000 by 9-29 to yield an Aggregate %2 o Equivalent Rent of $ 299 099). If a Lessee of a marina included in the Marina Index fails to provide Gross Revenue for Slip Rentals for any calendar year the Lessor shall use the Lessee's immediate prior Gross Revenue for Slip Rentals as adjusted by the Consumer Price Index ( "CPI "). The Aggregate %2"0 Equivalent Rent shall then be divided by the aggregate Premises' square footage for all marinas included in the Marina Index to determine the Target Indexed Rate for the succeeding twelve (12) months of Rent beginning on March 1 (i.e., if the Aggregate %20°6 Equivalent Rent is $ X99&998 and the aggregate square footage for all marinas in the Marina Index is 1,111,111 square feet, the Target Index Rate would be $ 2-.2 a square foot [$ 299;909 divided by 1,111,111 square feet]). The Premises for the individual Marina Index marinas will be based on known amounts determined by reference to existing City or County permits or leases. Where the square footage of a Marina Index marina is not known, it shall be estimated in good faith by the Lessor, in its sole and absolute discretion, using the same method employed to determine square footage for marinas currently under City permit or lease. The Target Index Rate shall be calculated annually by the Lessor in accordance with this paragraph as soon as practicable after December 31 of each calendar year. For Lease Term Year beginning March 1, 2020, and thereafter, Rent shall equal the then applicable Target Index Rate, rounded to the nearest cent, times the Premises square footage as set forth in this Agreement (i.e., if the Target Index Rate is $ 262 and the Premises is 10,000 square feet the annual Rent would be $ 2,289. Until March 1, 2020, Rent will be set in accordance with a phase -in procedure as follows: From the Commencement Date until March 1, 2014 the Rent shall be equal to the Premises' square feet multiplied by thirty -six cents ($0.36). TtiereamT, Pert Shall be Gal laced aR:, ally eaG" MarGh 1. -by r4�t0 the fell ,. ;. er ..a� _T er I d data_ Minus th2 triHor oa n1og R d..a..'. r t year Cn .arte fGGta ye rate divided by the . .. hmcr— of � ye- 'he ,...: (7) year phase .�pe e .I h:fa'S r ealendaF year .s9yar . fee — rRrexample of the Rent r@Ir�vcnc9triAn (Note: The initial seven vear adiustment can be based on the revised Marina Index. However, subsequent adjustments after year seven will be based on CPI growth after year seven. (ii) Marina Index Composition: The Marina Index shall be comprised of the following marinas: 1) Ardell 2) Bayshores Marina 966187.02/OC 8 88 888 - 001 55 /1 0 -1 -1 2 /GSM /mms -3- Agenda Item #1 October 23, 2012 Special Meeting 3) 4) Lido Yacht Anchorage 5) Harbor Towers Marina 6) Newport Dunes Marina 7) Newport Marina To be included within the Marina Index, a Lessee must agree to the terms provided in Exhibit "C ". The marinas included in the Marina Index may be revised by the City Council at a regular or special meeting in the event that an index marina ceases operation, fails to comply with the terms provided in Exhibit "C ", or in the reasonable discretion of the City Council ceases to be meaningful for use in the Marina Index. In that event, the City Council shall strive to select a new marina whose operating characteristics, revenue, and Tidelands square footage is similar to the marina to be replaced. (b) Fair Market Adiustment of Rent and Other Fees and Charges: tR- 6esser`s -sele elule ^anatienAt the start of any Renewal Term and at the Market Adjustment Date, the Rent will and the SeG111 i y Deposit „arbe adjusted to reflect then - current fair market value, as such value shall be an amount determined icintly by Landlord and Tenant and if such parties can't aaree then the value will be determined by appraisal pursuant to Section 43. T*ie�pfa�sa]l shall be GE)RdoGted under a similar pFeeess used by the City of Newport Beach t shall retain e ec e r- turn w;4l a fair market value differerlGe ef greater Ila- ten %1, Lesser shall retain a third RdepeRdeRt appra���4e Th&-fa#-4iiafket va44e-4eteFmiried by 'he ee e p: ,eFaged will Ile ether twe 1,121, appraisals te PFedUGG the then GUFFeAl fair FAaFkPt ^}s (c) [Omittedl Pe�/RleRt ef Rant. TvWeRty Five pement (251%) Gf annual A fer a particular Lease Term Year shall be payable an the first (Ist) day ef eaG (d) Place for Payment of Rent: All payments of Rent shall be made in lawful money of the United States of America and shall be paid to Lessor in person or by United States' mail, or overnight mail service, at the Cashier's Office located at 3300 Newport Boulevard, Newport Beach, CA 92658, or to such other address as Lessor may from time to time designate in writing to Lessee. If requested by Lessor, Lessee shall make payments electronically (at www.newportbeachca.gov) or by wire transfer (at Lessee's cost). Lessee' 966187.02/OC 888888 - 00155110 -1 -12 /GSM /mms -4- Agenda Item #1 October 23, 2012 Special Meeting assumes all risk of loss and responsibility for late charges and delinquency rates if payments are not timely received by Lessor regardless of the method of transmittal. .. ­21111 _11ft ­i Wi �. (e) No Abatement or Reduction in Rent: Lessee has no right to any abatement, set- off or reduction in Rent eF Addit;'o :al Rent. No endorsement or statement on any check or any letter accompanying any check or payment will be deemed an accord and satisfaction, and Lessor may accept such check or payment without prejudice to Lessor's right to recover the balance or pursue any other available remedy. (f) Net Lease: Rent, as defined in this Agreement, is based upon Lessee's material representation and covenant that it will pay all expenses, costs, taxes; assessments, fees or charges, and incur all liabilities, of every kind in any way relating to, or in connection with, the Premises and the Improvements during the Term; provided, however, notwithstanding the foregoing, to the extent Tenant incurs any form of possessory interest tax, the full amount of such tax shall be offset against Rent. Accordingly, Lessee will promptly pay all expenses, costs, taxes, assessments, fees or charges, and incur all liabilities, of every kind and description relating to, or in connection with, the Premises and the Improvements during the Term. 5. Utilities, Taxes and Assessments (a) Lessee is solely responsible for obtaining all utilities and paying all taxes, fees and assessments for the Premises or Improvements located thereon. Lessee shall promptly pay, and discharge prior to delinquency, any and all charges for services or utilities and all taxes, fees and assessments furnished to or due on the Premises or Improvements located thereon, or occupants thereof. was! PISMO- e W Mb)_Any payments under this Section shall not reduce or offset Rent payments. Lessor has no liability for such payments. 6. Use of the Premises (a) During the term of this Agreement, Lessee will use and occupy the Premises solely and exclusively for the operation of a marina or boat berthing facility a1a a.{arerimafely = --- sRp- +_ar +aa -and associated ancillary uses. 966187.02/OC 888888-00155/10 4 -1 2 /GSM /mms -5- Agenda Item #1 October 23, 2012 Special Meeting (b) Reserved. 1c) Lessee's -4 11 Rat use e4��of the Premises will be limited to any lawful use. te pp - e e _ e P GIPR (d) Reserved (e) Reserved x - x x• Bulkheads, • this is not appropriate.] 7. fOmittedl S��t (Note: The City holds interest in water only, the owners built the docks and improvements and therefore a Security Deposit is not appropriate.) •a. e - WINN— 11110. -W. 11010.01 -11 Wo Hill ■_ x __ x _ GSi7R- �l�l_7 Td - _ _ _ x _ _ _ - _ _ _ x - - _ 966187.0210C 888888 - 0015510 -1 -1 2 /GSM /mms -6- Agenda Item #1 October 23, 2012 Special Meeting 8. Acceptance of Condition of Premises - "As -Is" / Waiver / Release (a) Lessee's Acknowledgment: Lessee acknowledges that Lessee, Lessor or unrelated third parties may have constructed improvements (some or all of which may be Improvements as specified on Exhibit "D ") on and adjacent to the Premises (including, without limit, bulkheads in the surrounding area adjacent to and /or abutting the Premises). Lessee agrees and acknowledges that it is relying solely on its own inspections and investigations regarding the Premises, the condition of the Premises, the surrounding area and all other matters related thereto. Lessee represents and warrants that it has obtained the advice of such independent professional consultants as it deems necessary in connection with its investigation and study of the Premises and surrounding area, including, without limitation, water quality, Improvement quality, soils, hydrology, seismology, archaeology, Applicable Laws (including, without limitation, the laws relating to the construction, maintenance, use and operation of the Premises and Improvements), and all environmental, zoning and other land use entitlement requirements and procedures, height restrictions, floor area coverage limitations and similar matters. (b) Only Lessor's Express Written Agreements Binding: Lessee acknowledges and agrees that no person acting on behalf of Lessor is authorized to make, and that except as expressly set forth in this Agreement, neither Lessor nor anyone acting for or on behalf of Lessor has made, any representation, warranty, statement, guaranty or promise to Lessee, or to anyone acting for or on behalf of Lessee, concerning the condition of the Premises, any other aspect of the Premises or the surrounding area. Lessee further acknowledges and agrees that no representation, warranty, agreement, statement, guaranty or promise, if any, made by any person acting on behalf of Lessor which is not expressly set forth in this Agreement will be valid or binding on Lessor. (c) Verification of Acceptance: Lessee further acknowledges and agrees that Lessee's execution of this Agreement constitutes Lessee's representation, warranty and covenant that the condition of the Premises and the surrounding area has been independently verified by Lessee to its full satisfaction, and that, except to the extent of the express covenants of Lessor set forth in this Agreement, Lessee will be leasing the Premises based solely upon and in reliance on its own inspections, evaluations, analyses and conclusions, or those of Lessee's representatives. As material inducement to Lessor's entering this Agreement, Lessee represents, warrants and covenants that LESSEE ACCEPTS AND IS LEASING THE PREMISES, AND IS AWARE OF THE SURROUNDING AREA, IN ITS "AS -IS, WITH ALL FAULTS" CONDITION AND STATE OF REPAIR INCLUSIVE OF ALL FAULTS AND DEFECTS, WHETHER KNOWN OR UNKNOWN, AS MAY EXIST AS OF THE LESSEE'S EXECUTION OF THIS AGREEMENT, AND WITH NO WARRANTY EXPRESS OR IMPLIED FROM LESSOR AS TO ANY LATENT, PATENT, FORESEEABLE AND UNFORESEEABLE CONDITIONS. Without limiting the scope or generality of the foregoing, Lessee expressly assumes the risk that the Premises do not or will not comply with any Applicable Laws now or hereafter in effect. 966187.02/OC 888888 -00155/10 -1.12 /GSM /mms -7- Agenda Item #1 October 23, 2012 Special Meeting (d) Waivers, Disclaimers and Release: (i) Waiver and Disclaimer: Lessee hereby fully and forever waives, and Lessor hereby fully and forever disclaims, all warranties of whatever type or kind with respect to the Premises and Improvements, whether expressed, implied or otherwise including, without limitation, those of fitness for a particular purpose, tenant ability, habitability or use. (ii) Lessor's Materials: Lessee further acknowledges that any information and reports including, without limitation, any engineering reports, architectural reports, feasibility reports, marketing reports, soils reports, environmental reports, analyses or data, or other similar reports, analyses, data or information of whatever type or kind which Lessee has received or may hereafter receive from Lessor or its agents or consultants have been furnished without warranty of any kind and on the express condition that Lessee will make its own independent verification of the accuracy, reliability and completeness of such information and that Lessee will not rely thereon. Accordingly, subject to terms of Section 8(e) below, Lessee agrees that under no circumstances will it make any claim against, bring any action, cause of action or proceeding against, or assert any liability upon, Lessor or any of the persons or entities who prepared or furnished any of the above information or materials as a result of the inaccuracy, unreliability or incompleteness of, or any defect or mistake in, any such information or materials. Lessee hereby fully and forever releases, acquits and discharges Lessor and each person furnishing such information or materials of and from, any such claims, actions, causes of action, proceedings or liability, whether known or unknown. (e) Re; R. -2 A P -2^,o giv&P[This is not appropriate for a water parcel leasel - e• - e mime ON- 966187.0210C 88 8 8880 015517 0- 1- 1 21GSMImms -8- Agenda Item #1 October 23, 2012 Special Meeting : Reserved 10. Reconstruction or Removal Lessee will promptly cause the Improvements or any part thereof, which are (a) damaged or destroyed or (b) declared unsafe or unfit for occupancy or use by a public entity with the appropriate authority, to be- either be (i) removed or (ii) restored or reconstructed to their original design and layout, whether or not required to be insured against, at Lessee's sole cost and expense. Restoration or reconstruction shall commence within s#fy--�- ninety (90) calendar days from the date of issuance of all permits (City and Coastal) to repairs; ^fie, and Lessee shall diligently pursue reconstruction to completion. Lessee shall not be entitled to any abatement in Rent or other form of compensation from Lessor for loss of use of the Premises or Improvements in the event of damage or destruction of the Premises or Improvements. Damage to or destruction of the Premises or the Improvements shall not permit Lessee to terminate this Agreement. Alternatively, in the event of damage or destruction, Lessee may remove all Improvements from the Premises and-- reatere the Prern ° ^^ to a GoRd `'GR at6�,^�',e —t l�l YblIs- ea�tity -and terminate this Lease. WRIess Lessee —e11r mac- tS to tom°- "r.,- r*rrcrccIe. 1h is i=ease and remove all impFavemvnts, LLSSee shall be in defn la If it dARs Rot +n.e O StF Gt „ � SeGt The force majeure provisions in this Agreement shall apply to reconstruction. 11. Maintenance and Repair (a) Maintenance by Lessee: Lessee assumes full responsibility for operation and maintenance and repair of the Premises throughout the Term at its sole cost, and without expense to Lessor. (i) Without limiting Lessee's obligations to maintain the Premises, Lessee shall keep and maintain all Improvements in f'FSt GIa-good order, condition and repair consistent with similar marinas in Newport Harbor. (ii) Maintenance dredging bayward of the property line, between the bulkhead line and the pierhead line, shall be the responsibility of Lessee. i prev sled that with Gt to thin Gbl'nn!'n I n wL sh 4–Rr��44ata_t_e cSeot �, - Lessee shall perform all maintenance in compliance with all Applicable Laws. (iii) Reserved. (iv) Reserved. 966187.0210C 888888- 00155/101.12/GSM/mms -to- Agenda Item #1 October 23, 2012 Special Meeting (v) Lessee expressly waives (a) the right to require Lessor to make repairs; (b) any right to make repairs at the expense of Lessor; (c) the right to reduce or offset Rent as a consequence of the condition of the Premises or the Improvements; and (d) the benefits of California Civil Code Sections 1932, 1941 and 1942, as amended from time to time, and (e) any law, judicial pronouncement, or common law principle similar thereto, which is now or hereafter in effect or is otherwise inconsistent with the provisions of this Agreement. (b) Reserved. (c) Reserved. (d) Maintenance Prior to Renewal Term: In addition to any other conditions to Lessee's exercise of the option to extend the Term (or Renewal Term) of this Agreement, no less than sixty (60) calendar days prior to the end of a Term that may be renewed, Lessee shall submit a maintenance report stating the condition i+-r to shall be ' + .d �...d the o the Improvements on the Premises. �; n>,= .r�.:,s�� .., ..,, f332#r+S:Ra^c^- report shall be ,... by .. .y.. alifed ...aF.R., ^.g!R82r,,criS Feta Red and paid fer by Lessee but appFaved by LeSSGF. The maintenance report shall make repair and maintenance recommendations to ensure that the maintenance standards in this Agreement are met and will be maintained_ aad + - wf 1 1'f.. f the 1 „� , will extend throughou # the Re4,ei r . �TAt the time of providing the maintenance report to Lessor, Lessee shall sign a certification U,nder penal y-ef perury that Lessee shall, at its sole cost, make all repairs and perform all maintenance identified in the maintenance report t to o �satsfna r-o on a mutually approved schedule satisfactory to, Lessor and Lessee. Any costs incurred by Lessee to make repair and maintenance recommendations is a qualification for the Term of this Agreement and is not Rent. The cost of repair and maintenance recommendations shall not be considered by the parties or appraiser in determining any Rent or Rent adjustment during the term of this Agreement. (e) Maintenance by Lessor (i) Nothing in this Agreement requires Lessor to perform any maintenance or repair to the Premises or to any adjacent property or bulkheads; or to make any improvements whatsoever on or for the benefit of the Premises. However, with no less than twenty -four (24) hours written notice -from Lessor to Lessee, Lessor shall have the right, but not the obligation, to maintain or make any necessary repairs related to safety or hazard concerns to or on the Premises. Lessee shall reasonably cooperate with Lessor in any activity undertaken by Lessor on the Premises. L°C h t ac _i F ...._. fin .. F.,, t ._ '_'r_.._.._m... %e & SE19- IFt- th.°,- rrr2rmn.;'- ^pFov+ve -r-r 12. Liens (a) Liens Prohibited: Lessee shall not permit to be imposed, recorded or enforced against the Premises, any portion thereof or any structure or Improvement thereon, any mechanics, materialmen's, contractors or other liens arising from, or 966187.02/OC 888888.00155/10.1 -12 /GSM /mms -t t- (b) Agenda Item #1 October 23, 2012 Special Meeting any claims for damages growing out of, any work or repair, construction or alteration of improvements on the Premises. Lessee gWe� east armo Pr-M -86 SO that '-vsseF f-r o F&&PG � a- • ed - other Gef*-a-Gt�bGentra ters, or agents, is filed - de the payment in f 1! of all 612;FP-- .O- (d) Exceptions: Section 12 shall not apply to a foreclosure of a Leasehold Mortgage encumbering the Leasehold Estate if the Leasehold Mortgage has previously received Lessor consent in accordance with Section 16(c) of this Agreement. 13. Reserved. 14. Quitclaim Deed Upon expiration or the earlier termination of this Agreement for any reason, including but not limited to termination because of default by Lessee, Lessee shall, at Lessee's sole expense, remove all fixtures, equipment, and Improvements installed by Lessee from the Premises. Unless another time line is agreed upon by Lessor, all fixtures, equipment and Improvements shall be removed by Lessee within th Ffy-(30)- ninety (90) calendar days following the expiration or termination of this Agreement. Alternatively, Lessee, with Lessor's written consent, may quitclaim all fixtures, equipment, and Improvements on the Premises to Lessor. Lessor acknowledges the bulkhead is owned by Lessee and Lessor has no rights to use any portion of such bulkhead. Notwithstanding any other provision of this Agreement as permitted by California Public Resources Code Section 6312, or any successor statute, the parties agree that upon expiration or earlier termination of this Agreement Lessor shall have no liability or obligation to pay compensation for any improvements made to the Premises. 966187.02/0C 888888 - 00155/10 -1.12 /GSM /mms -12- Agenda Item #1 October 23, 2012 Special Meeting 15. Right to Enter the Premises for Inspection Lessor expressly reserves the right and shall be entitled to enter the Premises, and all Improvements, including a right of reasonable access to the Premises across Lessee owned or occupied lands adjacent to the Premises, to inspect the Premises for compliance with the terms of this Agreement. Unless otherwise provided in this Agreement, Lessee shall provide Lessor access to the Premises for such purposes, upon not less than seventy -two (72) hours written notice. 16. Transfers / Hypothecation for Financinq (a) Transfers: Except as expressly provided herein, Lessee and its successors shall not either voluntarily, or by operation of law, engage in a Transfer without first providing written request to Lessor and obtaining Lessor's prior written consent assign all or a portion of its interest in the Premises and /or this Agreement to any entity or person affiliated with Lessee or a partner member, shareholder or trustee of Lessee ( "Permitted Transferees "). Lessee agrees that Lessor's discretion to provide, withhold or condition consent to any Transfer (except for the Permitted Transfers to a Permitted Transferee in which the City has no consent ) includes, without limitation, Lessor's discretion in administering the Tidelands, which are a valuable public resource held by Lessor in trust for the people of the State of California; therefore, . ' ,acts- ef-4r-aud-- er- arb #ary aG+;_R in ^'^^d-g to provide aP— w #hh &ld c.,A&ePt, Lessor's decision to grant, withhold or condition consent shall be reasonable. final an -sh^"� - be-dae-m� rea &ena_bte —A Transfer made in violation of this Section 16, including without limitation the obligation to receive Lessor's prior consent, is a default subject to the cure right in Section 18(b). (i) Lessee shall comply with the following requirements for any Transfer. Lessee agrees that failure to satisfy these requirements are reasonable bases for Lessor to deny consent (but is not exhaustive bases to deny consent): (1) Lessee shall give Lessor at least thirty (30) calendar days written notice of its proposed Transfer and provide appropriate documentation demonstrating to Lessor's satisfaction the financial and operational responsibility and appropriateness of the proposed transferee. Lessee shall provide Lessor within five (5) calendar days such other or additional information and /or documentation as may be reasonably requested by Lessor. (2) Lessee shall provide the terms and provisions of the proposed Transfer. (3) Except as otherwise provided in this Agreement for a permitted Leasehold Mortgagee, the proposed transferee shall, in recordable form, expressly assume this Agreement. 966187.0210C 888888 - 00155/10.1 -12 /GSM /mms -13- Agenda Item #1 October 23, 2012 Special Meeting (4) In the event the proposed transferee is acquiring only a portion of the adjoining Other Real Property, the rights and obligations of Lessee and the proposed assignee shall be proportionately adjusted in the manner deemed appropriate by Lessor in light of its obligations under the Tidelands Grants; and (5) Lessee shall pay all Lessor's costs .associated with Lessor's consideration of the Transfer, regardless of whether such transfer is consummated, or in connection with any other actions taken by Lessor pursuant to this Section 16 in the manner provided in Section O. (b) [Omitted] rNote: 'This is a restraint on alienation of property rights and is not acceptable.] Transfe" s nrr.,.+R. ARt le QtheF Real o. +.. W W IRWIN III. (c) Subletting Permitted to Boat Slip Renters (i) Notwithstanding other provisions of this Section 16, Lessee shall have the right to sublease the slips to Boat Slip Renters and to extend or renew any subleases with Boat Slip Renters. (d) Hypothecation for Financing: For the purpose of financing or refinancing the acquisition of the Premises, the Improvements, the fixtures and equipment located on the Premises, the alteration, construction or reconstruction of Improvements, Lessee may engage in a Transfer to a Leasehold Mortgagee only if, in addition to such other applicable provisions in this Agreement, the provisions in this Section 16(d) are satisfied. In no event shall Leasehold Mortgages either individually or collectively exceed a loan -to -value ratio of seventy -five percent (75 %) of the Premises. (i) Notice to Lessor. Lessee shall provide Lessor with a fully executed complete copy of each Leasehold Mortgage, and all related loan 966187.0210C 888888-00155/10-1 -1 2/GS M/mm s -14- Agenda Item #1 October 23, 2012 Special Meeting documents (including copies of all appraisals), any and all amendments thereto, and the name and address of each Leasehold Mortgagee. In the event of any assignment of a Leasehold Mortgage or in the event of a change of address of a Leasehold Mortgagee, Lessee shall provide the new name and address of the assignee or Leasehold Mortgagee to Lessor. Notices of default and notices of foreclosure shall be given to Lessor contemporaneously with service on Lessee. (ii) Notices to Leasehold Mortgagees. A Leasehold Mortgagee shall not be entitled to notice or a copy of any notice from Lessor unless Lessee provides Lessor with Leasehold Mortgagee's name and address and requests that such Leasehold Mortgagee receive notices. (iii) Leasehold Mortgagee Opportunity to Remedy Default. Any Leasehold Mortgagee who is entitled to notice as provided in Section 16(d)(ii) shall have the right, but not the obligation, to remedy the default or acts or omissions of Lessee within the period and in the manner specified in this provision. Upon Lessee's default and subsequent expiration of the applicable cure period in Section 18, a Leasehold Mortgagee shall be permitted to remedy such default(s) at any time within fifteen (15) calendar days (for nonmonetary defaults) and five (5) calendar days (for monetary defaults) following the expiration of the Lessee's cure period; provided, however, Lessor shall not be required to furnish any further notice(s) of default(s) to said Leasehold Mortgagee. (iv) Leasehold Mortgagee Procedure on Lessee's Default. (1) Upon Leasehold Mortgagee's remedy of Lessee's default to the reasonable satisfaction of Lessor, this Agreement shall continue provided that a Leasehold Mortgagee: a. Pays all Rent, and other monetary obligations of Lessee under this Agreement as the same becomes due, and perform all of Lessee's other obligations under this Agreement; and b. If not enjoined or stayed, takes steps to acquire or sell Lessee's interest in this Agreement and in the Premises to an assignee, future transferee or purchaser by foreclosure of the Leasehold Mortgage or other appropriate means, and prosecutes the same to completion with reasonable diligence. (2) Nothing in this Section 16(d) shall extend this Agreement beyond the Term; nor to require a Leasehold Mortgagee to continue such foreclosure proceedings after a breach or default has been remedied. If Lessee's breach or default is remedied and the Leasehold Mortgagee discontinues such foreclosure proceedings, this Agreement, at Lessor's option and in its sole and absolute discretion, may continue as if no breach or default under this Agreement occurred. 966187.0210c 888888. 00155110- 1.12IGSMlmms -15- Agenda Item #1 October 23, 2012 Special Meeting (3) Before a Leasehold Mortgagee, or any other assignee, future transferee or purchaser by foreclosure of the Leasehold Mortgage, acquires the Leasehold Estate, it shall, as an express condition precedent, agree in writing to assume each and every obligation under the Agreement. Regardless, with the exception of said Leasehold Mortgagee, no Transfer to an assignee, future transferee or purchaser by foreclosure of a Leasehold Mortgage shall be effective without Lessor's prior written consent, which shall not be unreasonably withheld. (4) The assignee, purchaser or future transferee at any sale of this Agreement or of the Leasehold Estate in any proceedings for the foreclosure of or trustee's sale under any Leasehold Mortgage, or pursuant to any deed in lieu of foreclosure, shall be deemed an assignee or transferee of this Agreement, and shall be deemed to have agreed to perform all of the terms, covenants and conditions on the part of Lessee to be performed in this Agreement but only from and after the date of such purchase and assignment, and only for so long as such purchaser; future transferee or assignee is the owner of the Leasehold Estate. (5) If Lessor denies consent to (a) the successful bidder or purchaser upon foreclosure or (b) a proposed future transferee, assignee or sublessee of the Leasehold Mortgagee, the sole and exclusive remedy shall be for such party or the Leasehold Mortgagee to seek relief in the nature of specific performance. (6) A Leasehold Mortgagee shall include a statement in any Notice of Foreclosure Sale that provides the requirements for Lessor's consent. (v) Casualty Loss. A standard lender's loss payable endorsement naming each Leasehold Mortgagee may be added to any and all insurance policies required to be carried by Lessee hereunder. Nevertheless, the provisions in any Leasehold Mortgage for the application of insurance proceeds shall be subject to the provisions of this Agreement and, in the event of any conflict between the provisions of this Agreement and the provisions of any Leasehold Mortgage with respect thereto, the provisions of this Agreement shall control. (vi) Limitation on Lessee's Right to Encumber. Any Leasehold Mortgage now or hereafter placed on Lessee's interest in the Premises shall be subject and subordinate to any limitations in the Tidelands Grants, Lessor's interest in the Tidelands, this Agreement, and any mortgage now in existence on the Leasehold Estate. Lessee shall not use, encumber or Transfer this Agreement or the Premises as security or collateral for any action unless directly related to the Tidelands and the permitted uses allowed by this Agreement. (vii) No Rights to Encumber Interest of Lessor. The provisions of Section 16 do not give any entity the right to mortgage, hypothecate, cause a 966187.0210C 888888 - 00155/10- 1- 12/GSM /mms -16- Agenda Item #1 October 23, 2012 Special Meeting Transfer of, or otherwise encumber or cause any liens to be placed against the Lessor's interest in the Premises as trustee of the Tidelands, nor shall anything in this Agreement be construed as resulting in a subordination in whole or in part of Lessors interests. (viii) Estoppel Certificate. Lessor shall, within ten (10) business days after written request from Lessee or any Leasehold Mortgagee, certify by written instrument to any Leasehold Mortgagee or proposed Leasehold Mortgagee: (a) as to whether this Agreement has been modified, supplemented, amended, extended or renewed; (b) as to the existence of any breach or default of this Agreement; and (c) as to the commencement and expiration dates of the term of this Agreement. 17. Bankruptcy Lessee agrees that if all, or substantially all, of Lessee's assets are placed in the hands of a receiver or trustee and remain so for a period of thirty (30) calendar days; or if Lessee makes an assignment for the benefit of creditors or be adjudicated bankrupt; or if Lessee institutes any proceedings under the Bankruptcy Act or similar law wherein Lessee seeks to be adjudicated bankrupt or to be discharged of its debts or seeks to effect a plan of liquidation or reorganization; or if any involuntary proceedings be filed against Lessee and not dismissed or stayed within "done hundred twenty (120) calendar days, then this Agreement or any interest in and to the Premises shall not become an asset in any such proceeding and, to the extent permitted by law (and in addition to the provisions of Section 18) Lessor may declare this Agreement terminated and take possession of the Premises. 18. Defaults The occurrence of any of the following constitutes a default of this Agreement by Lessee: (a) f0mitt:edl [Note: If City gets rent, there is absolutely no obligation of Lessee to operate.l Seated -44u% to epe dar n of - -t[ie Qrpw C; C. fop Ane h r,.l...�m- cv- covcrrrly .outrve tale RdaF dpi. the date 4 Le&&aF &�n-ae4 e- cr- 6essee- (b) Failure to make any payment required by this Agreement when such failure continues for a period of teR (10) fifteen (15) GalendaF business days after the date of Lessor's written notice that payment is due (unless another time period within which to make payment is specifically provided); provided that any such notice provided in this Section 18(b) or in Section 18(c) shall be in lieu of, and not in addition to, any notice required under Section 1161 of the California Code of Civil Procedure, as may be amended. (c) Failure of Lessee to observe or perform any of the covenants, conditions, or provisions in this Agreement, except for a monetary default specified in Section 18(b)18(a) above, where such failure continues for a period of twenty R42 -sixty (60) calendar days after the date of Lessor's written notice of the default (unless another time period within which to perform is specifically provided in this Agreement); provided, however, that if the nature of Lessee's 966187.02/OC 888888 - 00155/10 -1 -12 /GSM /mms -17- Agenda Item #1 October 23, 2012 Special Meeting default is such that more than tw,Rty--RjC7 —sixty (60) calendar days are reasonably required to complete its cure, then Lessee shall not be in default if Lessee commences to cure the default within twerp 4204 —sixty (60) calendar days after written notice and thereafter diligently and continuously pursues the cure to completion. (d) Any of the events in Section 17 occur; provided that this provision is not applicable or binding on a Leasehold Mortgagee which is of record and has been consented to by Lessor, or to said Leasehold Mortgagee's successors in interest consented to by Lessor, as long as (i) there remains any monies to be paid by Lessee to such Leasehold Mortgagee under the terms of such Leasehold Mortgage, (ii) that such Leasehold Mortgagee or its successors in interest, continuously and timely pays to Lessor all Rent due or coming due under the provisions of this Agreement and the Premises are continuously and actively used and (iii) that said Leasehold Mortgagee agrees in writing to assume and perform each and every obligation under the Agreement. 19. Remedies [Note: The City only has rights to a "water parcel" only so the remedies must be limited to a suit for rent or terminate and nothing else. The Lessee will (a) Cumulative Nature of Remedies. If any default by Lessee continues without being cured in the time period specified in Section 18, then Lessor shall have the remedies described in this Section 19_, y "h a<- +nade4tea to shall have the Fight te "@6t- rro -rei icon. ,,^ such Fc"Trrevco MIN 1101 OWN .�. O• C. ( Of i) Maintain Agreement. Lessor may maintain this Agreement in full force and effect and recover Rent, Additional Rent, payment or other charges or consideration as they become due, without terminating Lessee's right of possession, regardless of whether Lessee has abandoned the Premises. 966187.02/OC 888888 - 00155!0' -12 /GSM /mms -� 8- Agenda Item #1 October 23, 2012 Special Meeting 4+ 4 Li I Termination. Lessor may terminate this Agreement by giving Lessee fine (,5 1 i y (301 calendar days written notice. If Lessor terminates this Agreement, Lessor may recover possession (which Lessee shall surrender and vacate upon demand) and remove all persons, and property and Improvements. Lessor shall be entitled to recover the following as damages: (1) The Worth at the Time of Award of the unpaid Rent, Additferlat Refit —or other charges which had been earned at the time of termination_; (2) The ,—.�V� /tea the T el! fl . alpa of the. °TTP°1e[-REsti t Add ti en,al_Da_n t ,. e*he. Ghii (3) The Werth at trnG— Ti-rrl m',�^. -_e Av-oa-.-d of the arnGwRt by WhiGh t48 kx'"rpajdl Re rit, th, -,mss: 91 4. is a, �t af#e�#J e t+f e -0f award eE yes the AMAIIF)t ..f ..h Ir. e.c ki.�-- .rrci--- e6SSe PFGV:eG —vverii have �bee.. f , Any --other GeSG@F`' t9-- KecaFeRabiy Gerri3eRsa4e, -16e saF for tRl@— EFatr4m2Rt --p i vn.'r.�.a ^- ry ---- -- ate,— v�SFii?e=S-- faf✓+�fe —t0 p erfGm;4� I'. a' r° - v^d 2'rthri a- rg{v°nvFrt; (6) At L-esser's el the f9p&9ei � be p i4;i ed frerR time to4ir'ne by-af3PIIIGable Sal f@r a a aw7a4d M(-6) Lessor shall also be entitled to an award of the costs and expenses (including, without limitation, actual attorneys' fees and costs) incurred by Lessor in maintaining or preserving the Premises after default, t "^ ?_e,�s f F Fe leWRg or repairing any damage caused by the act or omission of Lessee. The "Worth at the Time of Award" of the amounts referred to in "(1)" afad 42-)=above shall be computed by charging interest at ten percent (10 %) per annum from the dates such amounts accrued to Lessor. The "Worth at-t e Tme of-Award" of the a Rt FeferFed to "(3)" ab � �-h ^� I� 69r` HpE4t29 '- �y- C`fFSG @FN,'tFia�GUG %R, ,, I te^-rpuT69Rt 0 001 s3fl F 98818T0210C 8888 88 - 0 01 5 5 /1 0 -1 -1 2 /GSM /mms -1 g- Agenda Item #1 October 23, 2012 Special Meeting 20. Surrender of Premises 21. (a) Upon expiration or earlier termination, of this Agreement Lessee shall peaceably surrender the Premises to Lessor. A--s4rr ^r the am - s4a4 -be_;R as geed seams'^^ as the of the SeFAF4aensement- Date, exG49 le t aTt "T Pr8FniSeS -.ri8Fe repa;n:a .,4sro'^ a-s-j�,•-,^,'`ti^a -ate rn.d by the -4RaF) e, aR d te2- .. �.�.! nd bje Gn tG thGse n v i ^.-rrn^ ^-v-vcivvv- (b) If Lessee elects to remove any fixtures, improvements (including all Improvements to which Lessee has title), or if Lessor declines Lessee's offer to accept ownership of the same, then Lessee shall restore the Premises to its natural state as deemed acceptable by Lessor. All plans for Lessee's subsequent removal e-4 esterafer� -shall be to the reasonable satisfaction of Lessor and shall be completed no later than tkry (30)-_sixjy 60 calendar days after the expiration or sooner termination of this Agreement or other time line agreed upon by the Lessor. During any period of time employed by Lessee to remove fixtures, improvements (including all Improvements to which Lessee has title) Lessee shall continue to pay Rent to Lessor in accordance with this Agreement, which said Rent shall be prorated daily. (c) Any holding over by Lessee after either expiration or earlier termination shall not constitute a renewal or extension, or give Lessee any rights in or to the Premises. If Lessee, with Lessor's consent, remains in possession of the Premises after Agreement expiration or earlier termination (including for the purpose of Lessee's removal of Improvements), such possession shall be deemed a month -to -month tenancy terminable upon thirty (30) calendar days' notice furnished at any time by either party to the other. In addition, all provisions of this Agreement, except those pertaining to Term, shall apply to the month -to- month tenancy, and Lessee shall continue to pay all Rent required by this Agreement. Provided, however, Rent shall be paid monthly on the first (1st) day of the month. (a) Lessor shall notify Lessee of any Condemnation by providing written notice thereof no later than thirty (30) calendar days after the later of (i) the filing of a complaint in eminent domain by Condemnor or (ii) any voluntary final agreement by Lessor and Condemnor of the extent of the scope and extent of property interests in the Premises to be included within the Condemnation. 966187.02/OC 888888- 00155/10 -1 -12 /GSM /mms -20- Agenda Item #1 October 23, 2012 Special Meeting (b) If the Premises are totally taken by Condemnation, this Agreement shall terminate as of the date on which Condemnor actually takes physical possession of the Premises, which date is referred to in this Section 21 as the "Termination Date." If less than all but more than fifty percent (50 %) of total area of the Premises are taken through Condemnation, Lessee shall have the option to terminate this Agreement by providing written notice to Lessor. Lessee's notice must be given within thirty (30) calendar days after Lessee's receipt of Lessor's notice provided pursuant to subparagraph (a) above, and if Lessee's notice of termination is not timely given, then Lessee shall conclusively be deemed to have elected not to terminate this Agreement. If this Agreement is terminated under this Section, the termination shall be effective on the Termination Date, and Lessor shall prorate Rent to that date. Lessee must pay Rent for the period up to, but not including, the Termination Date, as prorated by Lessor. Lessor shall return to Lessee any prepaid Rent allocable to any period on or after the Termination Date. (c) If any part of the Premises is taken by Condemnation and this Agreement is not terminated, Rent shall be proportionately reduced based on the value of the actual portion of the Premises taken as a percentage of the value of the entire Premises, in its "before" condition and without regard to any injury to the remainder, or benefit to the remainder, resulting from the taking or the construction of the project for which the taking occurs. Lessor shall make such determination of the amount of reduction in Rent in its reasonable discretion, based upon either the appraisal for the Condemnation provided by the Condemnor, or pursuant to an appraisal prepared in the manner provided in Section 43, as Lessor shall determine. Lessor and Lessee agree to execute an amendment or other appropriate instrument modifying this Agreement within thirty (30) calendar days after a partial taking, confirming the reduction in Premises and reduction in Rent. (d) If a temporary taking of part of the Premises occurs through (i) the exercise of any government power by Condemnor or (ii) a voluntary sale or transfer by Lessor to any Condemnor, either under threat of exercise of eminent domain by a Condemnor or while legal proceedings for condemnation are pending, Rent shall abate during the time of such taking but only with respect to that physical portion of the Premises actually temporarily taken, and all Rent or other compensation paid by the Condemnor shall be the sole and exclusive property of Lessor. (e) All damages awarded for any Condemnation or a temporary taking shall belong to and be the property of Lessor, whether such damages shall be awarded as compensation for the value of the property taken, severance or other damages to the remainder, improvements pertaining to the Premises, damages for loss of use or access, loss of abutter's rights, diminution in value to the leasehold or loss of bonus value, or reimbursement for any costs of any appraisal or litigation expenses or recoverable costs. Notwithstanding the foregoing, however, Lessor shall not be entitled to any separate award made to Lessee for the taking of any moveable inventory or tangible personal property of Lessee, any relocation benefits or moving expense reimbursements paid to Lessee, and any award to Lessee for loss of Lessee's business goodwill, 966187.02/OC 888888- 00155/10 -1 -12 /GSM /mms -21- Agenda Item #1 October 23, 2012 Special Meeting 22. Indemnification In addition to any other indemnity provided for in this Agreement, and notwithstanding any other provisions of this Agreement to the contrary, Lessee indemnifies, defends (wth Gounsel ° °'° motewhy -Lessef) -and holds harmless Lessor, its elected officials, officers, employees, agents, attorneys, volunteers and representatives from and against all claims, demands, obligations, damages, actions, causes of action, suits, losses, judgments, fines, penalties, liabilities, costs and expenses (including, without limitation, attorneys fees, disbursements and court costs) of every kind that may arise from or in any manner relate to (directly or indirectly): (i) Lessee's rights, obligations, acts or omissions under this Agreement, (ii) Lessee's occupancy and use, or Lessee's guests, invitees, sublessees, or licensees occupancy and use, of the Premises, a IRxpre„^..,^ U-�i^ difieatien, n its GapaGity as A 1^..^^. ^ s the City of Newport Beach or Ns Agreement 1 e GGG ^ anal ^s the I?Fen*., h e impFOvements, GE A deG .. ent-,,_eF-any-a 4d i laRS t� i ce, Gy �ls .elat to the. o at,- ;�,a,,�;�;,.zT- „�a��; -r�.g ^tay ap;,r^ ��,�,���T,+ses (individually, each a "Claim” and, collectively, "Claims "). The indemnification in this Section 22 specifically includes, without limitation, all Claims arising by reason of: (a) The death or injury of any person or damage to real or personal property caused or allegedly caused by the condition of the Premises, or an act or omission of Lessee or an agent, contractor, subcontractor, supplier, employee, servant, sublessee or concessionaire of Lessee; (b) Any work performed on the Premises, Improvements, or materials furnished to the Premises, Improvements, by or at the request of Lessee or any agent, contractor, subcontractor, supplier, employee, servant, sublessee or concessionaire of Lessee, with the exception of maintenance performed by City, and /or (c) Lessee's failure to perform any provision of this Agreement or to comply with any requirement of Applicable Law or any requirement imposed on the Premises er Eby any duly authorized governmental agency or political subdivision. Lessee's obligations in this Section (or any other provision providing indemnity in this Agreement) shall not extend to the degree any Claim is proximately caused by the se=e—negligence or willful misconduct of Lessor, subject to any immunities which may apply to Lessor with respect to such Claims. This indemnification provision and any other indemnification provided elsewhere in this Agreement shall survive the termination of this Agreement and shall survive for the entire time that any third party can make a Claim. 23. Insurance rNote: Insurance is an important requirement and all parties need to review this Exhibit in advance." Without limiting Lessee's indemnification of Lessor, Lessee will obtain, provide and maintain at its own expense during the Term of this Agreement, a policy or policies of insurance of the type, amounts and form acceptable to Lessor. The policy or policies shall provide, at a minimum, those items described in Exhibit 7 ". 966187.02/0C 888888 - 00155 /10.1- 12 1GSMIMms -22- Agenda Item #1 October 23, 2012 Special Meeting • C. .' . - 966187.0210C 8 8 8 888-001 55/10 -1 -1 2 /GSM /mms -23- Agenda Item #1 October 23, 2012 Special Meeting -- - - _. IN - 25. Quiet Possession - nr (a) So long as no default by Lessee has occurred and is continuing uncured under this Agreement, and subject to the Tidelands Grant or any amendment to that grant, Lessee shall peaceably and quietly use and enjoy the Premises for the Term, without hindrance or interruption by Lessor. (b) Lessor shall in no event be liable in damages or otherwise, nor shall Lessee be released from any obligations hereunder, 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 neglect (other than gross negligence or willful misconduct) of Lessor or its 966187.0210C 88888 8 - 001 5 5110 4 -1 2 /GSM /mms -24- Agenda Item #1 October 23, 2012 Special Meeting servants, agents, employees, licensees, business invitees, or any person claiming by, through or under Lessee. 26. Compliance with Applicable Laws Lessee agrees that, in all activities on or in connection with the Premises, and in all uses thereof, it will comply with and conform, at its sole cost, to all Applicable Laws. Lessee is solely responsible for compliance with Applicable Laws. 27. Not Agent of Lessor Neither anything in this Agreement nor any acts of Lessee shall authorize Lessee or any of its employees, agents or contractors to act as agent, contractor, joint venturer or employee of Lessor for any purpose. The parties' relationship under this Agreement is exclusively that of a lessor and lessee. 28. No Third Party Beneficiaries Lessor (both as a lessor and as the City of Newport Beach) and Lessee do not intend, by any provision of this Agreement, to create in any third party, any benefit or right owed by one party, under the terms and conditions of this Agreement, to the other party. 29. Limitation of Leasehold / Easements This Agreement and the rights and privileges granted Lessee in and to the Premises and Improvements are subject to all covenants, conditions, restrictions, and exceptions of record, including those which are set out in the Tidelands Grant by the State of California to Lessor. Nothing contained in this Agreement or in any related document shall be construed to imply the conveyance to Lessee of rights in the Premises or that exceed those owned by Lessor. -h;S Agreee neR' and ",e Fights and v l^^^^ C 30. Notices All notices and other communications required or permitted to be given under this Agreement, including any notice of change of address, shall be in writing and given by personal delivery, or deposited with the United States Postal Service, certified and postage prepaid, or by national overnight mail service addressed to the parties intended to be notified. Notice shall be deemed given as of the date of personal delivery, or if mailed, two (2) calendar days following the date of deposit with the United States Postal Service. Notice shall be given as follows: 966187,0210C 888888 - 00155/10- 1- 12 /GSMIMMS -25- Agenda Item #1 October 23, 2012 Special Meeting To Lessor: City of Newport Beach Attn: City Manager PO Box 1768 3300 Newport Boulevard Newport Beach, CA 92658 949- 644 -3153 With Copy To: City Attorney (at same address) To Lessee: 31. Entire AgreemenUAmendments (a) The terms and conditions of this Agreement, all exhibits attached hereto are incorporated by reference into this Agreement, and all documents expressly incorporated by reference, represent the entire Agreement of the parties with respect to the subject matter of this Agreement. (b) This Agreement may be executed in counterparts, including electronic counterparts, each of which, after all the parties have signed this Agreement, shall be deemed to be an original, and such counterparts shall constitute one Agreement binding on the parties. (c) This written Agreement shall supersede any and all prior agreements, oral or written, regarding the subject matter. Notwithstanding the foregoing sentence, with respect to City Pier Permit No. , nothing herein is a release of any violation of Lessee's duties or obligations if any, with respect to City Pier Permit No. , whether known or unknown at this time or upon the effective date of this Agreement. rThese permits are fully paid, so what: nhliny4inn is trhurra'J Thu Char nuurlc 4n rnvnr _ ninacu cvniain 1 I uccnr (d) Except as permitted by Section 33 below, no other agreement, promise or statement, written or oral, relating to the subject matter of this Agreement, shall be valid or binding, except by way of a written amendment to this Agreement. (e) The terms and conditions of this Agreement shall not be altered or modified except by a written amendment to this Agreement signed by Lessee and Lessor. (f) If any conflicts arise between the terms and conditions of this Agreement, and the terms and conditions of the attached exhibits or the documents expressly incorporated by reference, the terms and conditions of this Agreement shall control. (g) Any obligation of the parties relating to monies owed, as well as those provisions relating to limitations on liability and actions, shall survive termination or expiration of this Agreement. 966187.02/OC 888888.00155710 -1 a 2 /GSWMMS -26- Agenda Item #1 October 23, 2012 Special Meeting 32. Waivers The waiver by either party of any breach, default or violation of any term, covenant or condition of this Agreement, or of any Applicable Law, shall not be deemed a waiver of any other term, covenant, condition, or Applicable Law, or of any subsequent breach or violation of the same or other term, covenant, condition, or Applicable Law. The subsequent acceptance by either party of any fee, performance, or other consideration which may become due or owing under this Agreement, shall not be deemed to be a waiver of any preceding breach or violation by the other party of any term, condition, covenant of this Agreement or any Applicable Law. 33. Lessor's Authorized Representative Unless otherwise specified in this Agreement or unless Applicable Law requires action of the City Council or some other person or body of Lessor (in its capacity as the City of Newport Beach), Lessor shall maintain the authority to implement this Agreement on its behalf through the City Manager of the City of Newport Beach (or his or her designee). The City Manager (or his or her designee) shall have authority (but not the obligation) to issue interpretations, waive provisions (including, without limitation, imposition of late charges and delinquency rates, Lessee's payment of costs and times of performance), and /or enter into amendments of this Agreement on behalf of the Lessor. 34. City Business License Lessee shall obtain and maintain during the duration of this Agreement a City business license as required by the Newport Beach Municipal Code. 35. Governing Law & Non - Binding Arbitration (a) Prior to instituting any legal action in a court, in the event the Lessor and Lessee shall be unable to agree as to any matter provided for in this Agreement such dispute shall be submitted to three (3) disinterested arbitrators (unless the parties can agree on one (1) arbitrator). Such arbitration shall be conducted upon request of either the Lessor or the Lessee, before three (3) arbitrators (unless the Lessor or the Lessee agree to one (1) arbitrator) designated by the American Arbitration Association and in accordance with the rules of such Association. The decision(s) of the arbitrator(s) designated and acting under this Agreement shall be nonbinding and the arbitrator(s) have no power to depart from or change any of the provisions thereof. The expense of arbitration proceedings conducted hereunder shall be borne equally by the parties. (b) This Agreement shall be construed in accordance with the laws of the State of California. Any action brought relating to this Agreement shall be adjudicated in a court of competent jurisdiction in the County of Orange. Lessee is advised that Public Resources Code Section 6308 may require that the State of California be joined to any action against the City involving title to or boundaries of the Tidelands. (c) The prevailing party in any non - binding arbitration or legal action authorized under this section shall aet-be entitled to attorneys' fees. 066187.02100 888888.0015510- 1- 12 /GSM/mms -27- Agenda Item #1 October 23, 2012 Special Meeting 36. Interpretation The terms of this Agreement shall be construed in accordance with the meaning of the language used and shall not be construed for or against either party by reason of the authorship of the Agreement or any other rule of construction which might otherwise apply. 37. Time is of the Essence Time is of the essence to the performance of each and every act required to be performed by this Agreement. 38. California Labor Laws It shall be the obligation of Lessee or any subcontractor under Lessee to comply with all State of California labor laws, rules and regulations and the parties agree that the Lessor shall not be liable for any violation thereof. 39. de+rif aRJ-- ��YNote: Liability is limited at the (Entity level.] M� • - - .s s- a �nJ_T..tTL7:TIfr7S � - _ _ - 41. [Omitted] [Note: Not appropriate for a lease of water parcela Pla° n' SGretian _R' i, .i N�' 1 s � s. - e ss.s o._•._ s s_- 966187.02/OC 888888. 00155/10 -1 -12 /GSM /mms -28- Agenda Item #1 October 23, 2012 Special Meeting 43. Appraisals in (a) Ap a;�i Unless otherwise provided in this Agreement, this Section governs the process for all appraisals required or permitted in this Agreement. Any time an appraisal is required or permitted by this Agreement, Lessor and Lessee shall each select an independent appraiser with qualifications of MAI to appraise Tidelands properties. If the two (2) appraisals return with a fair market value that is within tern pereei >t- �five percent (5 %) of each other the two (2) appraisal fair market values shall be averaged to produce the fair market value. For clarity, the total value is used to determine if the appraisals differ by five percent (5 %) which means by way of example if one appraiser concludes 13 percent and one appraiser concludes 15 percent the difference in thair conclusions is 13.333 percent and therefore a t')ird appraisal would be needea. If the two (2) appraisals return with a fair market value difference of greater than teR pec Bent 140 %) five percent (5 %) the two (2) appraisers shall retain a third independent appraiser to conduct an appraisal. If the two appraisers should fail to agree on the Fair Market ;dental Value, and the difference between the two appraisals exceeds five percent (5 %), then the two appraisers thus appointed shall muivally appoint a third MAI designated appraiser, and in case of their failure to agree on a third aDoraiser within thirty (30) days after their individual determination of the Fair Market Rental Value, either party may apply to the Presiding Judqe of the Superior Court for Orange County, requesting said Judge to appoint the third MAI designated appraiser. The third appraiser so appointed shall meet and confer with the two (2) other appraisers and then conduct its own analysis to determine the Fair Market Rental Value of the Site Specific Tidelands within sixty (60) days of their appointment and the average of the Fair Market Rental Value per square foot as set forth in the appraisals of the two closest appraisers shall be used as the Fair Market Rental. All MAI appraisers appointed or selected pursuant to this subsection shall have at least ten (10) years experience appraising tidelands in the Southern California area. The values shall be expressed on a per square foot basis without a percentage of revenue and in terms of a percentage of slip revenue. The -fair appraisals to predase arkerue. Lessor and Lessee shall pay the costs of their own appraiser, and, if necessary, shall equally split the costs of the third appraiser. 966187.0210C 888888.00 1 55/101- 1 21GSM /mms -30- :• - re�rs�ssecs`�.�� 45. Late Charges and Delinquency Rates EM Agenda Item #1 October 23, 2012 Special Meeting A ten percent (10 %) late charge shall be added to all payments due but not received by Lessor with five (5) ten 10 calendar days following the due date, unless another due date is specified in this Agreement. In addition, all unpaid amounts shall accrue at a delinquency rate of one and a half percent (1'h %) per month or any portion of a month until paid in full. Lessor and Lessee hereby agree that such late charges and delinquency rates represent a fair and reasonable estimate of the costs Lessor will incur by Lessee's late payment, including, without limitation, lost opportunities and the cost of servicing the delinquent account. Lessee agrees that such late charges and delinquency rates are Additional Rent and are not interest. Acceptance of such late charges and delinquency rates (and /or any portion of the overdue payment) by Lessor does not constitute a waiver of Lessee's default with respect to such overdue payment, or prevent Lessor from exercising any of the other rights and remedies granted in this Agreement. e- e WIN 11- 10-1101111-- 966187.02/OC 888888- 00155 /10- 1- 12/GSM /mms -31- Agenda Item #1 October 23, 2012 Special Meeting NIN W-1-11W WON 1111WININ WOMEN W-11 M.1 � 47, Government Claims Act Lessee and Lessor agree that in addition to any claims filing or notice requirements in this Agreement, Lessee shall file any claim that Lessee may have against Lessor in strict conformance with the Government Claims Act (Government Code sections 900 et sec.). 48. Lessee' Termination Right Lessee may in its sole and absolute discretion terminate this Agreement at anvtime during the Term upon thirty (30) days written notice. Lessee shall comply with Section 20 upon termination. 958187.02/0G 888888 - 001551104 -12 /GSM /mms -32- Agenda Item #1 October 23, 2012 Special Meeting IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed in duplicate on the date and year first written herein. LESSOR LESSEE City of Newport Beach _ A Municipal Corporation a Mayor Name: ATTEST: Leilani Brown City Clerk APPROVED AS TO FORM: Aaron C. Harp City Attorney 966187.0210C 888888- 00155110- 1- 12/GSM /mms -33- Agenda Item #1 October 23, 2012 Special Meeting EXHIBIT "A" DEFINITIONS Accounting Period means each period as follows: Commencement Date (or any anniversary thereof) to to to to and to [day immediately prior to the anniversary of the Commencement Date]. [Note: Complete once Commencement Date is known. There are 4 three -month Accounting Periods in each Lease Term Year.] Additional Rent is defined in Section 4. Adjustment Date means the fifth anniversary of the Commencement Date 20), and every subsequent fifth anniversary thereafter ( 20, 20) [including, any fifth anniversary during a Renewal Term]. Aggregate 201% %Equivalent Rent is defined in Section 4(a)(i). Agreement is defined in the Preamble. Applicable Law(s) mean and include, but are not limited to, those prescribed by Title 17 of the Newport Beach Municipal Code; any ordinances of the City of Newport Beach, including the Building Code thereof; the City Charter of Newport Beach; any regulations, policies and general rules of the City of Newport Beach; the Tidelands Grant; Hazardous Substances Laws; CEQA; and any other Federal, State or local, statute, law, ordinance, resolution, code, rule, regulation, order or decree as any of the same now exist or may hereafter be adopted or amended. Boat Slip Renters is defined in Section 1(a)(i). Books and Records means full, complete, accurate and proper books, records and accounts of all business, use or occupation, or any combination thereof, transacted, arranged or performed, in whole or in part, on, from or for goods, services or events from or related to the Premises, whether by the Lessee or by a sublessee, licensee, concessionaire or other party, J=P aGco-rda e With g8ReFally aGGepted aGG IRGI', ..tigvip ^i ivnt Fro • •••o all ^�s^n� ^S�^t inc -t •••.�.J••f 1r.... ...4'....; and shall all .�I 4E -� itheUi 4i:Rit, iRGOrxe, sales w;d pFepeity tare d-- on a cash basis method of accounting information. COP means a Coastal Development Permit. CEQA means the California Environmental Quality Act, codified at California Public Resources Code Sections 21000 et sec. as may be amended from time -to -time. Claim(s) is defined in Section 22. Commencement Date is defined in Section 3(a). Condemnation means a permanent taking of the Premises through (i)'the exercise of any government power, by any public or quasi - public authority or by any other party having the right of eminent domain (Condemnor) or (ii) a voluntary sale or transfer by Lessor to any Condemnor, 966187.02/00 EXHIBIT "A" 888888. 00155/10.1 -12 /GSM /mms -1- Agenda Item #1 October 23, 2012 Special Meeting either under threat of exercise of eminent domain by a Condemnor or while legal proceedings for condemnation are pending. Fiscal Year means the period of July 1 through June 30 of each year of the term. Gross Revenue for Slip Rentals means all receipts of every kind and nature, whether for cash, credit or barter, received /due for the rental or use of a slip, dock, or pier on the public Tidelands portion of the Premises. Without limiting the breadth of the prior sentence, Gross Revenue for Slip Rentals shall include, without limitation, receipts of every kind and nature derived from any promotion, package deal, service, or other item that is associated in any way with the rental or use of a slip, dock, or pier on the Premises. For purposes of determining Gross Revenue for Slip Rentals any fixed, annual, monthly and /or recurring charge that a person or entity is required to pay shall be counted as part of the Gross Revenue for Slip Rentals. Gross Revenue for Slip Rentals shall not be offset or reduced for any reason except for possessory interest tax which shall offset, including, but not limited to, the payment of taxed fees, repairs, maintenance, construction, or inability or failure to collect any cash, credit, or barter due for the use of a slip, dock, or pier on the Premises. Hazardous Substance means: (i) any substance, product, waste or other material of any nature whatsoever which is or becomes listed, regulated, or addressed pursuant to the Comprehensive Environmental Response, Compensation and Liability Act, 42 U.S.C. Section 9601 et sec. (CERLCA); the Hazardous Materials Transportation Act, 49 U.S.C. Section 1801, et se q., the Resource Conversation and Recovery Act, 42 U.S.C. Section 6901 et se q. "RCRA "); the Toxic Substances Control Act, 15 U.S.C. Section 2601 et sec.; the Clean Water Act, 33 U.S.C. Section 1251 et sec.; the California Hazardous Waste Control Act, Health and Safety Code Section 25100 et seq.; the California Hazardous Substance Account Act, Health and Safety Code Sections 25330 et se q.; the California Safe Drinking Water and Toxic Enforcement Act, Health and Safety Code Sections 25249.5 et see .; California Health and Safety Code Sections 25280 et sec. (Underground Storage of Hazardous Substances); the California Hazardous Waste Management Act, Health and Safety Code Sections 25170.1 et sec.; California Health and Safety Code Sections 25501 et sue. (Hazardous Materials Response Plans and Inventory); or the Porter - Cologne Water Quality Control Act, Water Code Sections 13000 et sec., all as they, from time -to -time may be amended or re- codified, (the above -cited statutes are here collectively referred to as lithe Hazardous Substances Laws ") or any other Federal, State or local statute, law, ordinance, resolution, code, rule, regulation, order or decree regulating, relating to, or imposing liability or standards of conduct concerning, any hazardous, toxic or dangerous waste, substance or material, as now or at any time hereafter in effect; (ii) any substance, product, waste or other material of any nature whatsoever which may give rise to liability under any of the above statutes or under any statutory or common law theory, including but not limited to negligence, trespass, intentional tort, nuisance, waste or strict liability or under any reported decisions of a state or federal court; (iii) petroleum or crude oil; and (iv) asbestos. Improvements are owned by Lessee and means those items described on Exhibit V' as they may be modified, altered, restored, or rebuilt pursuant to this Agreement. Leasehold Estate means Lessee's interest in the Premises and lrnpFeveMents created by this Agreement. 966187.02/OC EXHIBIT "A" 888888- 00155 /10 -1 -12 /GSM /mms -2- Agenda Item #1 October 23, 2012 Special Meeting Leasehold Mortgage means a Transfer or security instrument by which the Leasehold Estate is used to secure a debt or other obligation arising from or related to Lessee's use or operation of the Premises. Leasehold Mortgagee means a holder or holders of the Leasehold Mortgage. Lease Term Year means each twelve (12) month period beginning on the Commencement Date (or anniversary thereof) and ending on the day prior to the next anniversary of the Commencement Date. Lessee is defined in the Preamble. Lessee's Lessor is defined in the Preamble. Marina Index is comprised of the marinas listed in Section 4(a)(ii). Market Adjustment Date means the commencement of any Renewal Term and the tenth 10tH twenty , rut. (25th) [or etheF ea 'hat , m:d point th�� gh the i ( ') . .. r..,,, uy.. .ease-- Trti�ra4anniversary of the Commencement Date, 2 p ter. Option Notice is defined in Section 3(b)(i). Other Real Property is defined in Section 16(b). Premises means those Tidelands which is an independent site with no land access consisting of approximately f square feet of Iand apea and apprex xlate4yj f ^�f water area located generally at in the City of Newport Beach, California, more particularly described in Exhibit H and depicted on the map set forth in Exhibit I, excluding any private water. afeag as of the r^ ^ ^ ^e�fler Bze aheve- eF Yader said Tidelands a-x4en3-#?a- #44e- QFY-I;,as -ti #e ef- IQf+t -tG suGh !FApre eAt6]— frN4-'Av4 4&tanding th,. ^ eRtom.RGe, ! esser- ^--`.,- t.� .,how th..r Lh' rl rt' have representataen- er- �vafran�,- a?- � -o�,.� #per- L�.,seF- or- ar7�,,� -mss- �ar er title to the i ................. ^t^ .. .. i ^ t1, at ^t, . .,.,.S .,tit',,., 9F .. t., has be 4ia4e1 Renewal Term(s) is defined in Section 3(b). Rent is defined in Section 4(a). Target Indexed Rate is defined in Section 4(a)(i). Term is defined in Section 3(a). Tidelands means certain up blic tidelands and submerged land (whether filled or unfilled), located in the City of Newport Beach, County of Orange, State of California granted to the City of Newport Beach, as trustee, by the State of California pursuant to the Tidelands Grant. Tidelands Grant means uncodified legislation related to the State of California's grant of certain rights in the Tidelands to the City of Newport Beach, including, without limitation, the Beacon Bay Bill (Chapter 74 of the Statutes of 1978, as amended [citations omitted]). 966W.0210C EXHIBIT "A" 888888- 00155J104.121GSMImms -3- Agenda Item #1 October 23, 2012 Special Meeting Transfer(s) means any attempt to sell, convey, assign, transfer, mortgage, pledge, grant, hypothecate or encumber this Agreement or any interest in this Agreement, or the Premises or any porfion of the Premises_, and aRy atteR'4 t tG sublet (-hiGh sha!l also irldude ma qe --W y Premises, ,hele a iR part, or-any persBR._• F-t .. , members, �.gen4r se t r. vantsv.+.Jc ;Rviless to 9&a py or use all a aRy ..r+'.. Work is defined in Section 38. 958187.0210c EXHIBIT "A" 888888. 00155 /10.1 -12 /GSM /mms -4- Agenda Item #1 October 23, 2012 Special Meeting EXHIBIT "B" SAMPLE RENT CALCULATION rTa be revisedl 988187.02/OC EXHIBIT "B" 888888- 00155/10 -1 -12 /GSM /mms -1- Agenda Item #1 October 23, 2012 Special Meeting EXHIBIT "C" MARINA INDEX TERMS To be revised -e bey Glud..d w'11 ;q I"e M.'.,. ;na !nd.e , a Lessee must e to b.". !'.eWRd b the w ^y. .,y f..l! .. 4r. T (1) Slip Rental Documentation: ^ maFiRa iRGIUdGd iR the Va6g.a—R,d.. reeste provide by Pebr a t's �—ar. Gross Revenue for Slip Rentals for the Premises certified by Lessee's external auditor to be true and accurate to the Lessor for purposes of calculation of the Marina Index. ^', -.t the �:esse e'c ept;o.,, tThe Gross Revenue for Slip Rentals may be provided directly to the mutually approved I ^ ^c " ` rvar�n + " ' to the e Lease s designated certified public accountant ( "CPA ") for such purposes. The shall use 16 Lent_ affn -rts to. ma-intain Gh orow --r s "Ne-rwrmrn- �- rrrvr. C. .G. rNote: Audit — the only audit permitted would be of gross revenue from slip rent located in public tidelands. There will be no audit of financial statements.] Nim e ev 988187.02/0C EXHIBIT "C" 888888. 00155/10.1 -12 /GSM /mms -1- Agenda Item #1 October 23, 2012 Special Meeting EXHIBIT "D" IMPROVEMENTS 966187 0210C EXHIBIT T" 8888 8 8 - 001 5 5 /1 0 -1 -1 2 /GSM /mms -1- Agenda Item #1 October 23, 2012 Special Meeting EXHIBIT "E" OTHER REAL PROPERTY 966187,0210C EXHIBIT "E" 888888 -00155110- 1- 121GSWmms -1- Agenda Item #1 October 23, 2012 Special Meeting EXHIBIT "F" INSURANCE 966187.02/CC EXHIBIT "F" 888888- 00155 /10- 1- 12 1CSWMms -1- EXHIBIT "G" RECORDING REQUESTED AND WHEN RECORDED RETURN TO: Office of the City Clerk City of Newport Beach 3300 Newport Boulevard Newport Beach, CA 92658 [Exempt from Recordation Fee- MEMORANDUM OF LEASE AGREEMENT [(WITH OPTIONS FOR RENEWAL)1 This Memorandum of Lease Agreement [(With Options for Renewal)] (" , 20 , and is made between City of Newport Beach, corporation and charter city ( "Lessor' or "City ") and ( "Lessee "), concerning the Premises described in Exhibits A" and "B," this reference made a part hereof. Agenda Item #1 October 23, 2012 Special Meeting Memorandum ") is dated a California municipal attached hereto and by For good and adequate consideration, Lessor leases the Premises to Lessee, and Lessee hires them from Lessor, for the term and on the provisions contained in the Agreement dated 20 , including without limitation provisions prohibiting assignment, subleasing, and encumbering said leasehold without the express written consent of Lessor in each instance, all as more specifically set forth in said Agreement, which said Agreement is incorporated in this Memorandum by this reference. The term is ( ) years, beginning 20 , and ending 20. [If needed, insert recitation of Options and Renewal Terms(s).] This Memorandum is not a complete summary of the Agreement. Provisions in this Memorandum shall not be used in interpreting the Agreement's provisions. In the event of conflict between this Memorandum and other parts of the Agreement, the other parts shall control. Execution hereof constitutes execution of the Agreement itself. [Signatures on the next page] 966187,02/oC EXHIBIT "G" 88 8 8 8 8 - 0 01 5 5/1 0 -1 -1 2 /GSM /mm5 -1- LESSOR LESSEE City of Newport Beach _ A Municipal Corporation a Mayor 0 Name: ATTEST: Leilani Brown City Clerk APPROVED AS TO FORM: Aaron C. Harp City Attorney Agenda Item #1 October 23, 2012 Special Meeting [NOTE: Attach Exhibits A and B from Agreement as Exhibits to this Memorandum behind attached Notary form] 888187.02/OC EXHIBIT "G" 888888.00155110 -1 -12 /GSM /mms -2- CALIFORNIA ALL - PURPOSE ACKNOWLEDGMENT STATE OF CALIFORNIA ss: COUNTY O- ORANGE Or. this _ day of _, 2611, Wore me, the u ^derslgned notary public, personally appeared l.AFAE(S) OF SIGNER(S) proved to ire an the basis of satisfactory evidence to be the parsoa(s) whose name(s) Islare subscribed to the vAthln Instrument, and acknowledged to me that helshe,Yhey executed the same in hisiheiMeir authorized capacity(ios), and that by tfisfheolhelr signatures) on the instrument the person(s), or the entity(ies) upon behalf -of which the persona) acted, executed the Instrument. I cortify under PENALTY OF PERJURY under the Ialvs of the State of California that the fomgoing paragraph is true and correct. VATRESS my hand and otficlal seal SIGNATURE OF NOTARY OPTIONAL SECTION Agenda Item #1 October 23, 2012 Special Meeting -- OPTIONAL SECTION — CAPACITY CLAIMED BY SIGNER Though 414me does not requhe the Notary to fill In the data below, doing so may Prove invaluable to persons raying on the (locum =n° 0 ;NDIVIUUAl- Cl CORPORATE OFFICERS) TITLE(S) G PARTNER(S) • LIMITED • GENERAL ❑ ATTORNEY -IN -FACT O TRUSTEES) C. GUi =RDIANICONSERVATOR U OTHER :SIGNER IS REPRESENTING !NAVE OF PERSON(S) OR ENTI - Y(IE_S) THIS CERTIFICATE MUST BE ATTACHED TO THE TITLE OR TYPE OF 10CUMFNT: DOCUMENT DESCRIBED AT RIGHT: Though he data requested here Is not roquimd by taw, it could prevent fraudulent reattachment 0. this form. 966187.0210C 888888- 00155/10- 1- 121GSM /mms -� - L-qUMBLfi OF DA'E OF DOCUMENT: OTHER SIGNER(S) THAN N-46FOABOVE: Agenda Item #1 October 23, 2012 Special Meeting EXHIBIT "H" DESCRIPTION OF PREMISES 888187.02IOC EXHIBIT "H" 888888 -00155110- 1- 12IGSMIMMS -1- Agenda Item #1 October 23, 2012 Special Meeting EXHIBIT "I" DEPICTION OF PREMISES 966187.02/0C EXHIBIT "I" 8 88 88 8- 001 55 /1 0 -1 -1 2 /GSM /mms -1- Agenda Item #1 October 23, 2012 Special Meeting LEASE AGREEMENT [(WITH OPTIONS FOR RENEWAL)] BY AND BETWEEN City of Newport Beach, a California municipal corporation ( "Lessor ") AND ,a ( "Lessee ") 966187 02 /OC 888886 - 00155110 -1 121GS M /mms 966187.02/OC 88888800155110 -1.12 /GSM /mms Agenda Item #1 October 23, 2012 Special Meeting TABLE OF CONTENTS Page 1. Definitions ..................................................................................... ............................... 1 2. Leased Premises ........................................................................... ............................... 2 3. Term .............................................................................................. ............................... 2 4. Rent .............................................................................................. ............................... 2 5. Utilities, Taxes and Assessments ......................... : ..................... .................................. 5 6. Use of the Premises ...................................................................... ............................... 5 7. [Omitted] ...................................................................................... ..............................6 8. Acceptance of Condition of Premises - "As -Is" / Waiver / Release . ............................... 7 9. Reserved ....................................................................................... .............................10 10. Reconstruction or Removal ......................................................... ............................... 10 11. Maintenance and Repair ............................................................. ............................... 10 12. Liens ........................................................................................... ............................... 11 13. Reserved ....................................................................................... .............................12 14. Quitclaim Deed.. .............................................................. .................................. _ _ - 12 15. Right to Enter the Premises for Inspection ................................... ............................... 13 16. Transfers / Hypothecation for Financing ...................................... ............................... 13 17. Bankruptcy .................................................................................... .............................17 18. Defaults ......................................................................................... .............................17 19. Remedies ...................................................................................... .............................18 20. Surrender of Premises ................................................................ ............................... 20 21. Condemnation ............................................................................... .............................20 22. Indemnification ............................................................................ ............................... 22 24. Hazardous Substances ............................................................... ............................... 23 25. Quiet Possession ........................................................................ ............................... 24 26. Compliance with Applicable Laws ............................................... ............................... 25 27. Not Agent of Lessor ..................................................................... ............................... 25 28. No Third Party Beneficiaries ........................................................ ............................... 25 29. Limitation of Leasehold / Easements ........................................... ............................... 25 30. Notices .......................................................................................... .............................25 31. Entire Agreement/ Amendments ................................................... ............................... 26 32. Waivers ......................................................................................... .............................27 33. Lessor's Authorized Representative ............................................ ............................... 27 34. City Business License ................................................................. ............................... 27 35. Governing Law & Non - Binding Arbitration ................................... ............................... 27 36. Interpretation ............................................................................... ............................... 28 37. Time is of the Essence ................................................................ ............................... 28 38. California Labor Laws .................................................................. ............................... 28 40. [Omitted ...................................................................................... ............................... 28 41. [Omitted ...................................................................................... ............................... 28 42. [Omitted ...................................................................................... ............................... 29 43. Appraisals ................................................................................... ............................... 30 45. Late Charges and Delinquency Rates ......................................... ............................... 31 46. [Omitted] ..................................................................................... ............................... 31 47. Government Claims Act ............................................................... ............................... 32 48. Lessee' Termination Right....... ................................................................................... 32 966187.02/OC 88888800155110 -1.12 /GSM /mms Agenda Item #1 October 23, 2012 Special Meeting This Lease Agreement [(With Options for Renewal)] ( "Agreement ") is entered into this 1st day of March, 2013 by and between the City of Newport Beach, a California municipal corporation and charter city ( "Lessor" or "City "), and a ( "Lessee "). . RECITALS A. Pursuant to the Tidelands Grant, the State of California granted to Lessor, as trustee, certain Tidelands. The Tidelands must be used to promote the public's interest in water - dependent or water - oriented activities, as described more fully in the Tidelands Grant; B. The Tidelands Grant provides that the Tidelands shall not, at any time, be granted, conveyed, given, or alienated to any individual, firm or corporation for any purpose whatever except pursuant to Lessor's grant of either a franchise or lease; C. The Tidelands Grant authorizes Lessor to enter into leases of the Tidelands for a period not exceeding fifty (50) years so long as such leases are consistent with Lessor's obligations to hold the Tidelands in trust for the uses and purposes contained in the Tidelands Grant; D. On 20 the City Council approved this Agreement by adopting Resolution No. - as required by Municipal Code section 17.60.060(A); therefore, subject to the terms and conditions of this Agreement, Lessor desires to lease a portion of the Tidelands defined as the Premises to Lessee and Lessee desires to lease the Premises, E. The City previously issued City Pier Permit Number ( "Permit ") for the Premises; City Pier Permit Number , which shall expire February 28, 2013 after which time the City has stated such Permit will not be renewed and Lessee or any other party has no continuing rights in such Permit after such date; F. The parties desire to enter this Agreement for a term described herein and to grant Lessee an option to extend the term of this Agreement; and In consideration of the mutual promises and obligations contained in this Agreement, the receipt and sufficiency of which is hereby acknowledged, and the Recitals above, which are incorporated by this reference, Lessee and Lessor hereby enter, into this Agreement on the following terms and conditions: NOW, THEREFORE, THE PARTIES AGREE AS FOLLOWS: 1. Definitions Capitalized terms that are not otherwise defined in the body of this Agreement (which are identified in parentheses (" ")) have the meanings attributed in Exhibit "A ". 2. Leased Premises Lessor hereby leases to Lessee, for the Term specified in Section 3, the Premises. The rights granted to Lessee by this Agreement are subject to Lessee's compliance with the 966187.02/OC 888888. 001551 10 -24 2 /GSM /mms Agenda Item #1 October 23, 2012 Special Meeting terms, covenants and conditions in this Agreement. Lessee covenants, as a material part of the consideration for this Agreement, to keep and perform each and every term, covenant and condition of this Agreement. 3. Term (a) Initial Term: The Term of this Agreement shall be (_) years commencing on the 1st day of March, 2013, which shall be the "Commencement Date," and terminating on the day of , 20_, unless sooner terminated as provided in this Agreement. (b) Option for Renewal Term(s): If Lessee is not in default of its obligations in this Agreement, then Lessee shall have the option to extend the Term of this Agreement for (_) additional successive "Renewal Term(s)" of (_) years each, on the same terms and conditions contained in this Agreement. As provided by the Tidelands Grant, in no event shall the Term and any Renewal Terms exceed a total of fifty (50) years. (i) Each Renewal Term for which an option is exercised shall commence at the expiration of the immediately preceding Term. Lessee must exercise its option to a Renewal Term by giving a written "Option Notice" of its election to Lessor no earlier than two hundred and seventy (270) calendar days and no later than sixty (60) calendar days prior to the expiration of the immediately preceding Term. (ii) Should Lessee fail to timely give an Option Notice Landlord shall send written notice to the Tenant of the potential lapse of rights and if Tenant fails to exercise such Option within ten (10) business days of such reminder notice, then the option for the Renewal Term and all subsequent Renewal Terms shall be null and void and of no further force and effect. Rent for the Renewal Term shall be determined and adjusted as described in Section 4(b) below. 4. Rent (a) Rent: Beginning on the Commencement Date, Lessee shall pay to Lessor, at the times prescribed within this Agreement, an annual "Rent' during a Lease Term Year in the sums identified in subsection 4(a)(i) as adjusted pursuant to subsection 4(a)(i) and Section 4(b). (i) Rent: Rent shall be calculated on an annual basis as follows [Section to be revised with a different rate]: First, the Lessor shall determine the "Target Indexed Rate" as follows: the "Aggregate % Equivalent Rent' shall be determined, which is comprised of Gross Revenue for Slip Rentals for the preceding calendar year of all marinas included within the Marina Index (as set forth in 4(a)(ii) below) multiplied by (_) (i.e., if aggregate Gross Revenue for Slip Rentals is $14,000,000, multiply $14,000,000 by to yield an Aggregate % Equivalent Rent of $ ). If a Lessee of a marina included in the Marina Index fails to provide Gross Revenue 966187.02/OC 88888&00 1 55/10- 2- 12(GSMlmms -2- Agenda Item #1 October 23, 2012 Special Meeting for Slip Rentals for any calendar year the Lessor shall use the Lessee's immediate prior Gross Revenue for Slip Rentals as adjusted by the Consumer Price Index ( "CPI "). The Aggregate % Equivalent Rent shall then be divided by the aggregate Premises' square footage for all marinas included in the Marina Index to determine the Target Indexed Rate for the succeeding twelve (12) months of Rent beginning on March 1 (i.e., if the Aggregate % Equivalent Rent is $ and the aggregate square footage for all marinas in the Marina Index is 1,111,111 square feet, the Target Index Rate would be $ a square foot [$ divided by 1,111,111 square feet]). The Premises for the individual Marina Index marinas will be based on known amounts determined by reference to existing City or County permits or leases. Where the square footage of a Marina Index marina is not known, it shall be estimated in good faith by the Lessor, in its sole and absolute discretion, using the same method employed to determine square footage for marinas currently under City permit or lease. The Target Index Rate shall be calculated annually by the Lessor in accordance with this paragraph as soon as practicable after December 31 of each calendar year. For Lease Term Year beginning March 1, 2020, and thereafter, Rent shall equal the then applicable Target Index Rate, rounded to the nearest cent, times the Premises square footage as set forth in this Agreement (i.e., if the Target Index Rate is $ and the Premises is 10,000 square feet the annual Rent would be $ . Until March 1, 2020, Rent will be set in accordance with a phase -in procedure as follows: From the Commencement Date until March 1, 2014 the Rent shall be equal to the Premises' square feet multiplied by thirty -six cents ($0.36). [Note: The initial seven year adjustment can be based on the revised Marina Index. However, subsequent adjustments after year seven will be based on CPI growth after year seven.] (ii) Marina Index Composition: The Marina Index shall be comprised of the following marinas: 1) Ardell 2) Bayshores Marina 3) Bahia Corinthian -City Lease [City Lease based on appraisal needs to be used] 4) Lido Yacht Anchorage 5) Harbor Towers Marina 6) Newport Dunes Marina 7) Newport Marina 8) Balboa Yacht Basin [City owned Marina must be included] To be included within the Marina Index, a Lessee must agree to the terms provided in Exhibit "C ". The marinas included in the Marina Index may be revised by the City Council at a regular or special meeting in the event that an index marina ceases operation, fails to comply with the terms provided in Exhibit "C ", or in the reasonable discretion of the City Council 966187.0210c 886888 - 00155110- 2- 121GSM /mms -3- Agenda Item #1 October 23, 2012 Special Meeting ceases to be meaningful for use in the Marina Index. In that event, the City Council shall strive to select a new marina whose operating characteristics, revenue, and Tidelands square footage is similar to the marina to be replaced. (b) Fair Market Adjustment of Rent and Other Fees and Charges: At the start of any Renewal Term and at the Market Adjustment Date, the Rent will be adjusted to reflect then - current fair market value, as such value shall be an amount determined jointly by Landlord and Tenant and if such parties can't agree then the value will be determined by appraisal pursuant to Section 43. (c) [Omitted] (d) Place for Payment of Rent: All payments of Rent shall be made in lawful money of the United States of America and shall be paid to Lessor in person or by United States' mail, or overnight mail service, at the Cashier's Office located at 3300 Newport Boulevard, Newport Beach, CA 92658, or to such other address as Lessor may from time to time designate in writing to Lessee. If requested by Lessor, Lessee shall make payments electronically (at www.newportbeachca.gov) or by wire transfer (at Lessee's cost). Lessee' assumes all risk of loss and responsibility for late charges and delinquency rates if payments are not timely received by Lessor regardless of the method of transmittal. (e) No Abatement or Reduction in Rent: Lessee has no right to any abatement, set- off or reduction in Rent. No endorsement or statement on any check or any letter accompanying any check or payment will be deemed an accord and satisfaction, and Lessor may accept such check or payment without prejudice to Lessor's right to recover the balance or pursue any other available remedy. (f) Net Lease: Rent, as defined in this Agreement, is based upon Lessee's material representation and covenant that it will pay all expenses, costs, taxes; assessments, fees or charges, and incur all liabilities, of every kind in any way relating to, or in connection with, the Premises and the Improvements during the Term; provided, however, notwithstanding the foregoing, to the extent Tenant incurs any form of possessory interest tax, the full amount of such tax shall be offset against Rent. Accordingly, Lessee will promptly pay all expenses, costs, taxes, assessments, fees or charges, and incur all liabilities, of every kind and description relating to, or in connection with, the Premises and the Improvements during the Term. 5. Utilities, Taxes and Assessments (a) Lessee is solely responsible for obtaining all utilities and paying all taxes, fees and assessments for the Premises or Improvements located thereon. Lessee shall promptly pay, and discharge prior to delinquency, any and all charges for services or utilities and all taxes, fees and assessments furnished to or due on the Premises or Improvements located thereon, or occupants thereof. (b) Any payments under this Section shall not reduce or offset Rent payments. Lessor has no liability for such payments. 966187.02/OC 888888- 00155/10 -2 -12 1GSM /mms -4- Agenda Item #1 October 23, 2012 Special Meeting 6. Use of the Premises (a) During the term of this Agreement, Lessee will use and occupy the Premises solely and exclusively for the operation of a marina or boat berthing facility and associated ancillary uses. (b) Reserved. (c) Lessee's use of the Premises will be limited to any lawful use. (d) Reserved. (e) Reserved. 7. rNote: Lessee owns the Bulkheads, so this is not appropriate.l(Omitted] [Note: The City holds interest in water only, the owners built the docks and improvements and therefore a Security Deposit is not appropriate.] 8. Acceptance of Condition of Premises - "As -Is" / Waiver / Release (a) Lessee's Acknowledgment: Lessee acknowledges that Lessee, Lessor or unrelated third parties may have constructed improvements (some or all of which may be Improvements as specified on Exhibit "D ") on and adjacent to the Premises (including, without limit, bulkheads in the surrounding area adjacent to and /or abutting the Premises). Lessee agrees and acknowledges that it is relying solely on its own inspections and investigations regarding the Premises, the condition of the Premises, the surrounding area and all other matters related thereto. Lessee represents and warrants that it has obtained the advice of such independent professional consultants as it deems necessary in connection with its investigation and study of the Premises and surrounding area, including, without limitation, water quality, Improvement quality, soils, hydrology, seismology, archaeology, Applicable Laws (including, without limitation, the laws relating to the construction, maintenance, use and operation of the Premises and Improvements), and all environmental, zoning and other land use entitlement requirements and procedures, height restrictions, floor area coverage limitations and similar matters. (b) Only Lessor's Express Written Agreements Binding: Lessee acknowledges and agrees that no person acting on behalf of Lessor is authorized to make, and that except as expressly set forth in this Agreement, neither Lessor nor anyone acting for or on behalf of Lessor has made, any representation, warranty, statement, guaranty or promise to Lessee, or to anyone acting for or on behalf of Lessee, concerning the condition of the Premises, any other aspect of the Premises or the surrounding area. Lessee further acknowledges and agrees that no representation, warranty, agreement, statement, guaranty or promise, if any, made by any person acting on behalf of Lessor which is not expressly set forth in this Agreement will be valid or binding on Lessor. (c) Verification of Acceptance: Lessee further acknowledges and agrees that Lessee's execution of this Agreement constitutes Lessee's representation, 966187.0210C 888888 -00155/10 -2-12/GS M/m ms -5- Agenda Item #1 October 23, 2012 Special Meeting warranty and covenant that the condition of the Premises and the surrounding area has been independently verified by Lessee to its full satisfaction, and that, except to the extent of the express covenants of Lessor set forth in this Agreement, Lessee will be leasing the Premises based solely upon and in reliance on its own inspections, evaluations, analyses and conclusions, or those of Lessee's representatives. As material inducement to Lessor's entering this Agreement, Lessee represents, warrants and covenants that LESSEE ACCEPTS AND IS LEASING THE PREMISES, AND IS AWARE OF THE SURROUNDING AREA, IN ITS "AS -IS, WITH ALL FAULTS" CONDITION AND STATE OF REPAIR INCLUSIVE OF ALL FAULTS AND DEFECTS, WHETHER KNOWN OR UNKNOWN, AS MAY EXIST AS OF THE LESSEE'S EXECUTION OF THIS AGREEMENT, AND WITH NO WARRANTY EXPRESS OR IMPLIED FROM LESSOR AS TO ANY LATENT, PATENT, FORESEEABLE AND UNFORESEEABLE CONDITIONS. Without limiting the scope or generality of the foregoing, Lessee expressly assumes the risk that the Premises do not or will not comply with any Applicable Laws now or hereafter in effect. (d) Waivers Disclaimers and Release: (i) Waiver and Disclaimer: Lessee hereby fully and forever waives, and Lessor hereby fully and forever disclaims, all warranties of whatever type or kind with respect to the Premises and Improvements, whether expressed, implied or otherwise including, without limitation, those of fitness for a particular purpose, tenant ability, habitability or use. (ii) Lessor's Materials: Lessee further acknowledges that any information and reports including, without limitation, any engineering reports, architectural reports, feasibility reports, marketing reports, soils reports, environmental reports, analyses or data, or other similar reports, analyses, data or information of whatever type or kind which Lessee has received or may hereafter receive from Lessor or its agents or consultants have been furnished without warranty of any kind and on the express condition that Lessee will make its own independent verification of the accuracy, reliability and completeness of such information and that Lessee will not rely thereon. Accordingly, subject to terms of Section 8(e) below, Lessee agrees that under no circumstances will it make any claim against, bring any action, cause of action or proceeding against, or assert any liability upon, Lessor or any of the persons or entities who prepared or furnished any of the above information or materials as a result of the inaccuracy, unreliability or incompleteness of, or any defect or mistake in, any such information or materials. Lessee hereby fully and forever releases, acquits and discharges Lessor and each person furnishing such information or materials of and from, any such claims, actions, causes of action, proceedings or liability, whether known or unknown. 966187.02/OC 888888 - 00155 /10- 2.12 1GSM /mms -6- Agenda Item #1 October 23, 2012 Special Meeting (e) [This is not appropriate for a water parcel lease] Reserved 10. Reconstruction or Removal Lessee will promptly cause the Improvements or any part thereof, which are (a) damaged or destroyed or (b) declared unsafe or unfit for occupancy or use by a public entity with the appropriate authority, to either be (i) removed or (ii) restored or reconstructed to their original design and layout, whether or not required to be insured against, at Lessee's sole cost and expense. Restoration or reconstruction shall commence within ninety (90) calendar days from the date of issuance of all permits (City and Coastal) to repair, and Lessee shall diligently pursue reconstruction to completion. Lessee shall not be entitled to any abatement in Rent or other form of compensation from Lessor for loss of use of the Premises or Improvements in the event of damage or destruction of the Premises or Improvements. Damage to or destruction of the Premises or the Improvements shall not permit Lessee to terminate this Agreement. Alternatively, in the event of damage or destruction, Lessee may remove all Improvements from the Premises and terminate this Lease. The force majeure provisions in this Agreement shall apply to reconstruction. 11. Maintenance and Repair (a) Maintenance by Lessee: Lessee assumes full responsibility for operation and maintenance and repair of the Premises throughout the Term at its sole cost, and without expense to Lessor. (i) Without limiting Lessee's obligations to maintain the Premises, Lessee shall keep and maintain all Improvements in good order, condition and repair consistent with similar marinas in Newport Harbor. (ii) Maintenance dredging bayward of the property line, between the bulkhead line and the pierhead line, shall be the responsibility of Lessee. Lessee shall perform all maintenance in compliance with all Applicable Laws. (iii) Reserved. (iv) Reserved. (v) Lessee expressly waives (a) the right to require Lessor to make repairs; (b) any right to make repairs at the expense of Lessor, (c) the right to reduce or offset Rent as a consequence of the condition of the Premises or the Improvements; and (d) the benefits of California Civil Code Sections 1932, 1941 and 1942, as amended from time to time; and (e) any law, judicial pronouncement, or common law principle similar thereto, which is now or hereafter in effect or is otherwise inconsistent with the provisions of this Agreement. (b) Reserved. 966187.02/OC 888888- 00155/10 -2 -12 /GSM /mms -7- Agenda Item #1 October 23, 2012 Special Meeting (c) Reserved (d) Maintenance Prior to Renewal Term: In addition to any other conditions to Lessee's exercise of the option to extend the Term (or Renewal Term) of this Agreement, no less than sixty (60) calendar days prior to the end of a Term that may be renewed, Lessee shall submit a maintenance report stating the condition of the Improvements on the Premises. The maintenance report shall make repair and maintenance recommendations to ensure that the maintenance standards in this Agreement are met and will be maintained. At the time of providing the maintenance report to Lessor, Lessee shall sign a certification that Lessee shall, at its sole cost, make all repairs and perform all maintenance identified in the maintenance report on a mutually approved schedule satisfactory to, Lessor and Lessee. Any costs incurred by Lessee to make repair and maintenance recommendations is a qualification for the Term of this Agreement and is not Rent. The cost of repair and maintenance recommendations shall not be considered by the parties or appraiser in determining any Rent or Rent adjustment during the term of this Agreement. (e) Maintenance by Lessor (i) Nothing in this Agreement requires Lessor to perform any maintenance or repair to the Premises or to any adjacent property or bulkheads; or to make any improvements whatsoever on or for the benefit of the Premises. However, with no less than twenty -four (24) hours written notice -from Lessor to Lessee, Lessor shall have the right, but not the obligation, to maintain or make any necessary repairs related to safety or hazard concerns to or on the Premises. Lessee shall reasonably cooperate with Lessor in any activity undertaken by Lessor on the Premises. 12. Liens (a) Liens Prohibited: Lessee shall not permit to be imposed, recorded or enforced against the Premises, any portion thereof or any structure or Improvement thereon, any mechanics, materialmen's, contractors or other liens arising from, or any claims for damages growing out of, any work or repair, construction or alteration of improvements on the Premises. (b) [Omitted] [Note: The City interest is a water parcel that is not subject to private liens.] (c) [Omitted] (d) Exceptions: Section 12 shall not apply to a foreclosure of a Leasehold Mortgage encumbering the Leasehold Estate if the Leasehold Mortgage has previously received Lessor consent in accordance with Section 16(c) of this Agreement. 966187.02/0C 888888- 00155110- 2- 121GSM /mms -8- Agenda Item #1 October 23, 2012 Special Meeting 13. Reserved. 14. Quitclaim Deed Upon expiration or the earlier termination of this Agreement for any reason, including but not limited to termination because of default by Lessee, Lessee shall, at Lessee's sole expense, remove all fixtures, equipment, and Improvements installed by Lessee from the Premises. Unless another time line is agreed upon by Lessor, all fixtures, equipment and Improvements shall be removed by Lessee within ninety (90) calendar days following the expiration or termination of this Agreement. Alternatively, Lessee, with Lessor's written consent, may quitclaim all fixtures, equipment, and Improvements on the Premises to Lessor. Lessor acknowledges the bulkhead is owned by Lessee and Lessor has no rights to use any portion of such bulkhead. Notwithstanding any other provision of this Agreement as permitted by California Public Resources Code Section 6312, or any successor statute, the parties agree that upon expiration or earlier termination of this Agreement Lessor shall have no liability or obligation to pay compensation for any improvements made to the Premises. 15. Right to Enter the Premises for Inspection Lessor expressly reserves the right and shall be entitled to enter the Premises, and all Improvements, including a right of reasonable access to the Premises across Lessee owned or occupied lands adjacent to the Premises, to inspect the Premises for compliance with the terms of this Agreement. Unless otherwise provided in this Agreement, Lessee shall provide Lessor access to the Premises for such purposes, upon not less than seventy -two (72) hours written notice. 16. Transfers / Hypothecation for Financing (a) Transfers: Except as expressly provided herein, Lessee and its successors shall not either voluntarily, or by operation of law, engage in a Transfer without first providing written request to Lessor and obtaining Lessor's prior written consent which shall not be unreasonably withheld or delayed. Notwithstanding anything to the contrary set forth herein, Lessee may, without consent from the City, assign all or a portion of its interest in the Premises and /or this Agreement to any entity or person affiliated with Lessee or a partner member, shareholder or trustee of Lessee ( "Permitted Transferees "). Lessee agrees that Lessor's discretion to provide, withhold or condition consent to any Transfer (except for the Permitted Transfers to a Permitted Transferee in which the City has no consent) includes, without limitation, Lessor's discretion in administering the Tidelands, which are a valuable public resource held by Lessor in trust for the people of the State of California; therefore, Lessor's decision to grant, withhold or condition consent shall be reasonable. A Transfer made in violation of this Section 16, including without limitation the obligation to receive Lessor's prior consent, is a default subject to the cure right in Section 18(b). (i) Lessee shall comply with the following requirements for any Transfer. Lessee agrees that failure to satisfy these requirements are reasonable bases for Lessor to deny consent (but is not exhaustive bases to deny consent): 966187A210c 888888. 00155 /10.2 -12 1GSM /mms -9- Agenda Item #1 October 23, 2012 Special Meeting (1) Lessee shall give Lessor at least thirty (30) calendar days written notice of its proposed Transfer and provide appropriate documentation demonstrating to Lessor's satisfaction the financial and operational responsibility and appropriateness of the proposed transferee. Lessee shall provide Lessor within five (5) calendar days such other or additional information and /or documentation as may be reasonably requested by Lessor. (2) Lessee shall provide the terms and provisions of the proposed Transfer. (3) Except as otherwise provided in this Agreement for a permitted Leasehold Mortgagee, the proposed transferee shall, in recordable form, expressly assume this Agreement. (4) In the event the proposed transferee is acquiring only a portion of the adjoining Other Real Property, the rights and obligations of Lessee and the proposed assignee shall be proportionately adjusted in the manner deemed appropriate by Lessor in light of its obligations under the Tidelands Grants, and (5) Lessee shall pay all Lessor's costs .associated with Lessor's consideration of the Transfer, regardless of whether such transfer is consummated, or in connection with any other actions taken by Lessor pursuant to this Section 16 in the manner provided in Section O. (b) [Omitted] [Note: This is a restraint on alienation of property rights and is not acceptable.] (C) Subletting Permitted to Boat Slip Renters (i) Notwithstanding other provisions of this Section 16, Lessee shall have the right to sublease the slips to Boat Slip Renters and to extend or renew any subleases with Boat Slip Renters. (d) Hypothecation for Financing: For the purpose of financing or refinancing the acquisition of the Premises, the Improvements, the fixtures and equipment located on the Premises, the alteration, construction or reconstruction of Improvements, Lessee may engage in a Transfer to a Leasehold Mortgagee only if, in addition to such other applicable provisions in this Agreement, the provisions in this Section 16(d) are satisfied. In no event shall Leasehold Mortgages either individually or collectively exceed a loan -to -value ratio of seventy -five percent (75 %) of the Premises. (i) Notice to Lessor. Lessee shall provide Lessor with a fully executed complete copy of each Leasehold Mortgage, and all related loan documents (including copies of all appraisals), any and all amendments thereto, and the name and address of each Leasehold Mortgagee. In the event of any assignment of a Leasehold Mortgage or in the event of a change of address of a Leasehold Mortgagee, Lessee shall provide the 966187.oaoc 888888- 00155/10 -242 /GSM /mms -10- Agenda Item #1 October 23, 2012 Special Meeting new name and address of the assignee or Leasehold Mortgagee to Lessor. Notices of default and notices of foreclosure shall be given to Lessor contemporaneously with service on Lessee. (ii) Notices to Leasehold Mortgagees. A Leasehold Mortgagee shall not be entitled to notice or a copy of any notice from Lessor unless Lessee provides Lessor with Leasehold Mortgagee's name and address and requests that such Leasehold Mortgagee receive notices. (iii) Leasehold Mortgagee Opportunity to Remedy Default. Any Leasehold Mortgagee who is entitled to notice as provided in Section 16(d)(ii) shall have the right, but not the obligation, to remedy the default or acts or omissions of Lessee within the period and in the manner specified in this provision. Upon Lessee's default and subsequent expiration of the applicable cure period in Section 18, a Leasehold Mortgagee shall be permitted to remedy such default(s) at any time within fifteen (15) calendar days (for nonmonetary defaults) and five (5) calendar days (for monetary defaults) following the expiration of the Lessee's cure period; provided, however, Lessor shall not be required to furnish any further notice(s) of default(s) to said Leasehold Mortgagee. (iv) Leasehold Mortgagee Procedure on Lessee's Default. (1) Upon Leasehold Mortgagee's remedy of Lessee's default to the reasonable satisfaction of Lessor, this Agreement shall continue provided that a Leasehold Mortgagee: a. Pays all Rent, and other monetary obligations of Lessee under this Agreement as the same becomes due, and perform all of Lessee's other obligations under this Agreement; and b. If not enjoined or stayed, takes steps to acquire or sell Lessee's interest in this Agreement and in the Premises to an assignee, future transferee or purchaser by foreclosure of the Leasehold Mortgage or other appropriate means, and prosecutes the same to completion with reasonable diligence. (2) Nothing in this Section 16(d) shall extend this Agreement beyond the Term; nor to require a Leasehold Mortgagee to continue such foreclosure proceedings after a breach or default has been remedied. If Lessee's breach or default is remedied and the Leasehold Mortgagee discontinues such foreclosure proceedings, this Agreement, at Lessor's option and in its sole and absolute discretion, may continue as if no breach or default under this Agreement occurred. (3) Before a Leasehold Mortgagee, or any other assignee, future transferee or purchaser by foreclosure of the Leasehold Mortgage, acquires the Leasehold Estate, it shall, as an express condition 966i87.02/OC 888888 - 00155/10.2- 12 1GSM/mms -1 1- Agenda Item #1 October 23, 2012 Special Meeting precedent, agree in writing to assume each and every obligation under the Agreement. Regardless, with the exception of said Leasehold Mortgagee, no Transfer to an assignee, future transferee or purchaser by foreclosure of a Leasehold Mortgage shall be effective without Lessor's prior written consent, which shall not be unreasonably withheld. (4) The assignee, purchaser or future transferee at any sale of this Agreement or of the Leasehold Estate in any proceedings for the foreclosure of or trustee's sale under any Leasehold Mortgage, or pursuant to any deed in lieu of foreclosure, shall be deemed an assignee or transferee of this Agreement, and shall be deemed to have agreed to perform all of the terms, covenants and conditions on the part of Lessee to be performed in this Agreement but only from and after the date of such purchase and assignment, and only for so long as such purchaser; future transferee or assignee is the owner of the Leasehold Estate. (5) If Lessor denies consent to (a) the successful bidder or purchaser upon foreclosure or (b) a proposed future transferee, assignee or sublessee of the Leasehold Mortgagee, the sole and exclusive remedy shall be for such party or the Leasehold Mortgagee to seek relief in the nature of specific performance. (6) A Leasehold Mortgagee shall include a statement in any Notice of Foreclosure Sale that provides the requirements for Lessor's consent. (v) Casualty Loss. A standard lender's loss payable endorsement naming each Leasehold Mortgagee may be added to any and all insurance policies required to be carried by Lessee hereunder. Nevertheless, the provisions in any Leasehold Mortgage for the application of insurance proceeds shall be subject to the provisions of this Agreement and, in the event of any conflict between the provisions of this Agreement and the provisions of any Leasehold Mortgage with respect thereto, the provisions of this Agreement shall control. (vi) Limitation on Lessee's Right to Encumber. Any Leasehold Mortgage now or hereafter placed on Lessee's interest in the Premises shall be subject and subordinate to any limitations in the Tidelands Grants, Lessor's interest in the Tidelands, this Agreement, and any mortgage now in existence on the Leasehold Estate. Lessee shall not use, encumber or Transfer this Agreement or the Premises as security or collateral for any action unless directly related to the Tidelands and the permitted uses allowed by this Agreement. (vii) No Rights to Encumber Interest of Lessor. The provisions of Section 16 do not give any entity the right to mortgage, hypothecate, cause a Transfer of, or otherwise encumber or cause any liens to be placed against the Lessor's interest in the Premises as trustee of the Tidelands, 966187.02/0C 888888 - 00155 /10- 2- 12/GSM /mms -12- Agenda Item #1 October 23, 2012 Special Meeting nor shall anything in this Agreement be construed as resulting in a subordination in whole or in part of Lessor's interests. (viii) Estoppel Certificate. Lessor shall, within ten (10) business days after written request from Lessee or any Leasehold Mortgagee, certify by written instrument to any Leasehold Mortgagee or proposed Leasehold Mortgagee: (a) as to whether this Agreement has been modified, supplemented, amended, extended or renewed; (b) as to the existence of any breach or default of this Agreement; and (c) as to the commencement and expiration dates of the term of this Agreement. 17. Bankruptcy Lessee agrees that if all, or substantially all, of Lessee's assets are placed in the hands of a receiver or trustee and remain so for a period of thirty (30) calendar days; or if Lessee makes an assignment for the benefit of creditors or be adjudicated bankrupt; or if Lessee institutes any proceedings under the Bankruptcy Act or similar law wherein Lessee seeks to be adjudicated bankrupt or to be discharged of its debts or seeks to effect a plan of liquidation or reorganization; or if any involuntary proceedings be filed against Lessee and not dismissed or stayed within one hundred twenty (120) calendar days, then this Agreement or any interest in and to the Premises shall not become an asset in any such proceeding and, to the extent permitted by law (and in addition to the provisions of Section 18) Lessor may declare this Agreement terminated and take possession of the Premises. 18. Defaults The occurrence of any of the following constitutes a default of this Agreement by Lessee: (a) [Omitted] [Note: If City gets rent, there is absolutely no obligation of Lessee to operate.] (b) Failure to make any payment required by this Agreement when such failure continues for a period of fifteen (15) business days after the date of Lessor's written notice that payment is due (unless another time period within which to make payment is specifically provided); provided that any such notice provided in this Section 18(b) or in Section 18(c) shall be in lieu of, and not in addition to, any notice required under Section 1161 of the California Code of Civil Procedure, as may be amended. (c) Failure of Lessee to observe or perform any of the covenants, conditions, or provisions in this Agreement, except for a monetary default specified in Section 18(b)18(a) above, where such failure continues for a period of sixty (60) calendar days after the date of Lessor's written notice of the default (unless another time period within which to perform is specifically provided in this Agreement); provided, however, that if the nature of Lessee's default is such that more than sixty (60) calendar days are reasonably required to.complete its cure, then Lessee shall not be in default if Lessee commences to cure the default within sixty (60) calendar days after written notice and thereafter diligently and continuously pursues the cure to completion. 966187.02/OC 888888 - 00155!10.2- 121GSM /mms -1 3- Agenda Item #1 October 23, 2012 Special Meeting (d) Any of the events in Section 17 occur; provided that this provision is not applicable or binding on a Leasehold Mortgagee which is of record and has been consented to by Lessor, or to said Leasehold Mortgagee's successors in interest consented to by Lessor, as long as (i) there remains any monies to be paid by Lessee to such Leasehold Mortgagee under the terms of such Leasehold Mortgage, (ii) that such Leasehold Mortgagee or its successors in interest, continuously and timely pays to Lessor all Rent due or coming due under the provisions of this Agreement and the Premises are continuously and actively used and (iii) that said Leasehold Mortgagee agrees in writing to assume and perform each and every obligation under the Agreement. 19. Remedies rNote: The City only has rights to a "water parcel" only so the remedies must be limited to a suit for rent or terminate and nothing else. The Lessee will not give rights to its private property to the City. The Lessee has a private bulkhead and uplands and the City has no access.] (a) Cumulative Nature of Remedies. If any default by Lessee continues without being cured in the time period specified in Section 18, then Lessor shall have the remedies described in this Section 19. [Note: This does not work - the Lessee will not grant access to its land parcel so this is not a City Remedy.] (i) Maintain Agreement. Lessor may maintain this Agreement in full force and effect and recover Rent, Additional Rent, payment or other charges or consideration as they become due, without terminating Lessee's right of possession, regardless of whether Lessee has abandoned the Premises. (ii) Termination, Lessor may terminate this Agreement by giving Lessee thirty (30) calendar days written notice. If Lessor terminates this Agreement, Lessor may recover possession (which Lessee shall surrender and vacate upon demand) and remove all persons, and property and Improvements. Lessor shall be entitled to recover the following as damages: (1) The Worth at the Time of Award of the unpaid Rent, or other charges which had been earned at the time of termination. (2) Lessor shall also be entitled to an award of the costs and expenses (including, without limitation, actual attorneys' fees and costs) incurred by Lessor in maintaining or preserving the Premises after default or repairing any damage caused by the act or omission of Lessee. The "Worth at the Time of Award" of the amounts referred to in "(1)" above shall be computed by charging interest at ten percent (10 %) per annum from the dates such amounts accrued to Lessor. 966187.0210C 888888- 00155110 -2 -12 1GSM /mms -14- Agenda Item #1 October 23, 2012 Special Meeting 20. Surrender of Premises (a) Upon expiration or earlier termination, of this Agreement Lessee shall peaceably surrender the Premises to Lessor. (b) If Lessee elects to remove any fixtures, improvements (including all Improvements to which Lessee has title), or if Lessor declines Lessee's offer to accept ownership of the same, then Lessee shall restore the Premises to its natural state as deemed acceptable by Lessor. All plans for Lessee's subsequent removal shall be to the reasonable satisfaction of Lessor and shall be completed no later than sixty (60) calendar days after the expiration or sooner termination of this Agreement or other time line agreed upon by the Lessor. During any period of time employed by Lessee to remove fixtures, improvements (including all Improvements to which Lessee has title) Lessee shall continue to pay Rent to Lessor in accordance with this Agreement, which said Rent shall be prorated daily. (c) Any holding over by Lessee after either expiration or earlier termination shall not constitute a renewal or extension, or give Lessee any rights in or to the Premises. If Lessee, with Lessor's consent, remains in possession of the Premises after Agreement expiration or earlier termination (including for the purpose of Lessee's removal of Improvements), such possession shall be deemed a month -to -month tenancy terminable upon thirty (30) calendar days' notice furnished at any time by either party to the other. In addition, all provisions of this Agreement, except those pertaining to Term, shall apply to the month -to- month tenancy, and Lessee shall continue to pay all Rent required by this Agreement. Provided, however, Rent shall be paid monthly on the first (1st) day of the month. 21. Condemnation [Need to modify to reflect interests. Changes will be suggested at a later date. The City does not own interests — the water is State Tidelands and owners have no obligation to operate.! (a) Lessor shall notify Lessee of any Condemnation by providing written notice thereof no later than thirty (30) calendar days after the later of (i) the filing of a complaint in eminent domain by Condemnor or (ii) any voluntary final agreement by Lessor and Condemnor of the extent of the scope and extent of property interests in the Premises to be included within the Condemnation. (b) If the Premises are totally taken by Condemnation, this Agreement shall terminate as of the date on which Condemnor actually takes physical possession of the Premises, which date is referred to in this Section 21 as the "Termination Date." If less than all but more than fifty percent (50 %) of total area of the Premises are taken through Condemnation, Lessee shall have the option to terminate this Agreement by providing written notice to Lessor. Lessee's notice must be given within thirty (30) calendar days after Lessee's receipt of Lessor's notice provided pursuant to subparagraph (a) above, and if Lessee's notice of termination is not timely given, then Lessee shall conclusively be deemed to have elected not to terminate this Agreement. If this Agreement is terminated under this Section, the termination shall be effective on the Termination Date, and Lessor shall prorate Rent to that date. Lessee must pay Rent for the period 986187.02roc 888888 - 00155!10- 2- 12 /GSMlmms -1 $- Agenda Item #1 October 23, 2012 Special Meeting up to, but not including, the Termination Date, as prorated by Lessor. Lessor shall return to Lessee any prepaid Rent allocable to any period on or after the Termination Date. (c) If any part of the Premises is taken by Condemnation and this Agreement is not terminated, Rent shall be proportionately reduced based on the value of the actual portion of the Premises taken as a percentage of the value of the entire Premises, in its "before" condition and without regard to any injury to the remainder, or benefit to the remainder, resulting from the taking or the construction of the project for which the taking occurs. Lessor shall make such determination of the amount of reduction in Rent in its reasonable discretion, based upon either the appraisal for the Condemnation provided by the Condemnor, or pursuant to an appraisal prepared in the manner provided in Section 43, as Lessor shall determine. Lessor and Lessee agree to execute an amendment or other appropriate instrument modifying this Agreement within thirty (30) calendar days after a partial taking, confirming the reduction in Premises and reduction in Rent. (d) If a temporary taking of part of the Premises occurs through (i) the exercise of any government power by Condemnor or (ii) a voluntary sale or transfer by Lessor to any Condemnor, either under threat of exercise of eminent domain by a Condemnor or while legal proceedings for condemnation are pending, Rent shall abate during the time of such taking but only with respect to that physical portion of the Premises actually temporarily taken, and all Rent or other compensation paid by the Condemnor shall be the sole and exclusive property of Lessor. (e) All damages awarded for any Condemnation or a temporary taking shall belong to and be the property of Lessor, whether such damages shall be awarded as compensation for the value of the property taken, severance or other damages to the remainder, improvements pertaining to the Premises, damages for loss of use or access, loss of abutter's rights, diminution in value to the leasehold or loss of bonus value, or reimbursement for any costs of any appraisal or litigation expenses or recoverable costs. Notwithstanding the foregoing, however, Lessor shall not be entitled to any separate award made to Lessee for the taking of any moveable inventory or tangible personal property of Lessee, any relocation benefits or moving expense reimbursements paid to Lessee, and any award to Lessee for loss of Lessee's business goodwill. 22. Indemnification In addition to any other indemnity provided for in this Agreement, and notwithstanding any other provisions of this Agreement to the contrary, Lessee indemnifies, defends and holds harmless Lessor, its elected officials, officers, employees, agents, attorneys, volunteers and representatives from and against all claims, demands, obligations, damages, actions, causes of action, suits, losses, judgments, fines, penalties, liabilities, costs and expenses (including, without limitation, attorney's fees, disbursements and court costs) of every kind that may arise from or in any manner relate to (directly or indirectly): (i) Lessee's rights, obligations, acts or omissions under this Agreement, (ii) Lessee's occupancy and use, or Lessee's guests, invitees, sublessees, or licensees occupancy and use, of the Premises (individually, each a "Claim" and, collectively, 966187.0210C 888888 - 00155/10 -2 -12 /GSM /mms -t 6- Agenda Item #1 October 23, 2012 Special Meeting "Claims "). The indemnification in this Section 22 specifically includes, without limitation all Claims arising by reason of: (a) The death or injury of any person or damage to real or personal property caused or allegedly caused by the condition of the Premises, or an act or omission of Lessee or an agent, contractor, subcontractor, supplier, employee, servant, sublessee or concessionaire of Lessee; (b) Any work performed on the Premises, Improvements, or materials furnished to the Premises, Improvements, by or at the request of Lessee or any agent, contractor, subcontractor, supplier, employee, servant, sublessee or concessionaire of Lessee, with the exception of maintenance performed by City; and /or (c) Lessee's failure to perform any provision of this Agreement or to comply with any requirement of Applicable Law or any requirement imposed on the Premises by any duly authorized governmental agency or political subdivision. Lessee's obligations in this Section (or any other provision providing indemnity in this Agreement) shall not extend to the degree any Claim is proximately caused by the negligence or willful misconduct of Lessor, subject to any immunities which may apply to Lessor with respect to such Claims. This indemnification provision and any other indemnification provided elsewhere in this Agreement shall survive the termination of this Agreement and shall survive for the entire time that any third party can make a Claim. 23. Insurance [Note: Insurance is an important requirement and all parties need to review this Exhibit in advance.1 Without limiting Lessee's indemnification of Lessor, Lessee will obtain, provide and maintain at its own expense during the Term of this Agreement, a policy or policies of insurance of the type, amounts and form acceptable to Lessor. The policy or policies shall provide, at a minimum, those items described in Exhibit 7 ". 24. Hazardous Substances (a) From the Commencement Date and throughout the Term, Lessee will not use, occupy, or permit any portion of the Premises to be used or occupied in violation of any Hazardous Substance Laws. [Note: This section needs to be revised to require Lessee to comply with law but additional language is not necessary.] (b) Lessee does not, and will not, authorize any third party to use, generate, manufacture, maintain, permit, store, or dispose of any Hazardous Substances in violation of Applicable Laws on, under, about or within the Premises. (c) Upon expiration or earlier termination of this Agreement, Lessee shall deliver possession of the Premises in compliance with Hazardous Substance Laws. 9661 57.02 /OC 88888800155110- 2- 121GSM/mms -1 %- Agenda Item #1 October 23, 2012 Special Meeting 25. Quiet Possession (a) So long as no default by Lessee has occurred and is continuing uncured under this Agreement, and subject to the Tidelands Grant or any amendment to that grant, Lessee shall peaceably and quietly use and enjoy the Premises for the Term, without hindrance or interruption by Lessor. (b) Lessor shall in no event be liable in damages or otherwise, nor shall Lessee be released from any obligations hereunder, 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 neglect (other than gross negligence or willful misconduct) of Lessor or its servants, agents, employees, licensees, business invitees, or any person claiming by, through or under Lessee. 26. Compliance with Applicable Laws Lessee agrees that, in all activities on or in connection with the Premises, and in all uses thereof, it will comply with and conform, at its sole cost, to all Applicable Laws. Lessee is solely responsible for compliance with Applicable Laws. 27. Not Agent of Lessor Neither anything in this Agreement nor any acts of Lessee shall authorize Lessee or any of its employees, agents or contractors to act as agent, contractor, joint venturer or employee of Lessor for any purpose. The parties' relationship under this Agreement is exclusively that of a lessor and lessee. 28. No Third Party Beneficiaries Lessor (both as a lessor and as the City of Newport Beach) and Lessee do not intend, by any provision of this Agreement, to create in any third party, any benefit or right owed by one party, under the terms and conditions of this Agreement, to the other party. 29. Limitation of Leasehold / Easements This Agreement and the rights and privileges granted Lessee in and to the Premises and Improvements are subject to all covenants, conditions, restrictions, and exceptions of record, including those which are set out in the Tidelands Grant by the State of California to Lessor. Nothing contained in this Agreement or in any related document shall be construed to imply the conveyance to Lessee of rights in the Premises that exceed those owned by Lessor. 30. Notices All notices and other communications required or permitted to be given under this Agreement, including any notice of change of address, shall be in writing and given by personal delivery, or deposited with the United States Postal Service, certified and postage prepaid, or by national overnight mail service addressed to the parties intended to be notified. Notice shall be deemed given as of the date of personal delivery, or if 966187.02/OC 888888 -00155/10 -2 -12 /GSM /mms -t 8- Agenda Item #1 October 23, 2012 Special Meeting mailed, two (2) calendar days following the date of deposit with the United States Postal Service. Notice shall be given as follows: To Lessor: City of Newport Beach Attn: City Manager PO Box 1768 3300 Newport Boulevard Newport Beach, CA 92658 949 - 644 -3153 With Copy To: City Attorney (at same address) To Lessee: 31. Entire Aoreement/Amendments (a) The terms and conditions of this Agreement, all exhibits attached hereto are incorporated by reference into this Agreement, and all documents expressly incorporated by reference, represent the entire Agreement of the parties with respect to the subject matter of this Agreement. (b) This Agreement may be executed in counterparts, including electronic counterparts, each of which, after all the parties have signed this Agreement, shall be deemed to be an original, and such counterparts shall constitute one Agreement binding on the parties. (c) This written Agreement shall supersede any and all prior agreements, oral or written, regarding the subject matter. Notwithstanding the foregoing sentence, with respect to City Pier Permit No. , nothing herein is a release of any violation of Lessee's duties or obligations, if any, with respect to City Pier Permit No. , whether known or unknown at this time or upon the effective date of this Agreement. [These permits are fully paid, so what obligation is there? The City needs to cover — please explain.] Lessor acknowledges it is not aware of any known defaults by Lessee. (d) Except as permitted by Section 33 below, no other agreement, promise or statement, written or oral, relating to the subject matter of this Agreement, shall be valid or binding, except by way of a written amendment to this Agreement. (e) The terms and conditions of this Agreement shall not be altered or modified except by a written amendment to this Agreement signed by Lessee and Lessor. (f) If any conflicts arise between the terms and conditions of this Agreement, and the terms and conditions of the attached exhibits or the documents expressly incorporated by reference, the terms and conditions of this Agreement shall control. 966187.02/OC 888888. 00155/10 -2 -12 /GSM /mms -19- (g) Any obligation of the parties relating relating to limitations on liability expiration of this Agreement. 32. Waivers Agenda Item #1 October 23, 2012 Special Meeting to monies owed, as well as those provisions and actions, shall survive termination or The waiver by either party of any breach, default or violation of any term, covenant or condition of this Agreement, or of any Applicable Law, shall not be deemed a waiver of any other term, covenant, condition, or Applicable Law, or of any subsequent breach or violation of the same or other term, covenant, condition, or Applicable Law. The subsequent acceptance by either party of any fee, performance, or other consideration which may become due or owing under this Agreement, shall not be deemed to be a waiver of any preceding breach or violation by the other party of any term, condition, covenant of this Agreement or any Applicable Law. 33. Lessor's Authorized Representative Unless otherwise specified in this Agreement or unless Applicable Law requires action of the City Council or some other person or body of Lessor (in its capacity as the City of Newport Beach), Lessor shall maintain the authority to implement this Agreement on its behalf through the City Manager of the City of Newport Beach (or his or her designee). The City Manager (or his or her designee) shall have authority (but not the obligation) to issue interpretations, waive provisions (including, without limitation, imposition of late charges and delinquency rates, Lessee's payment of costs and times of performance), and/or enter into amendments of this Agreement on behalf of the Lessor. 34. City Business License Lessee shall obtain and maintain during the duration of this Agreement a City business license as required by the Newport Beach Municipal Code. 35. Governing Law & Non - Binding Arbitration (a) Prior to instituting any legal action in a court, in the event the Lessor and Lessee shall be unable to agree as to any matter provided for in this Agreement such dispute shall be submitted to three (3) disinterested arbitrators (unless the parties can agree on one (1) arbitrator). Such arbitration shall be conducted upon request of either the Lessor or the Lessee, before three (3) arbitrators (unless the Lessor or the Lessee agree to one (1) arbitrator) designated by the American Arbitration Association and in accordance with the rules of such Association. The decision(s) of the arbitrator(s) designated and acting under this Agreement shall be nonbinding and the arbitrator(s) have no power to depart from or change any of the provisions thereof. The expense of arbitration proceedings conducted hereunder shall be borne equally by the parties. (b) This Agreement shall be construed in accordance with the laws of the State of California. Any action brought relating to this Agreement shall be adjudicated in a court of competent jurisdiction in the County of Orange. Lessee is advised that Public Resources Code Section 6308 may require that the State of California be joined to any action against the City involving title to or boundaries of the Tidelands. 986187.0210c 888888- 00155!10- 2- 12 /GSM1mms -20- Agenda Item #1 October 23, 2012 Special Meeting (c) The prevailing party in any non - binding arbitration or legal action authorized under this section shall be entitled to attorneys' fees. 36. Interpretation The terms of this Agreement shall be construed in accordance with the meaning of the language used and shall not be construed for or against either party by reason of the authorship of the Agreement or any other rule of construction which might otherwise apply. 37. Time is of the Essence Time is of the essence to the performance of each and every act required to be performed by this Agreement. 38. California Labor Laws It shall be the obligation of Lessee or any subcontractor under Lessee to comply with all State of California labor laws, rules and regulations and the parties agree that the Lessor shall not be liable for any violation thereof. 39. [Note: Liability is limited at the Entity level.] 40. [Omittedl [Note: If you want to record against City Tidelands only, that may be acceptable but no recording on uplands.] 41. [Omittedl [Note: Not appropriate for a lease of water parcel.] 42. Omitted [Note: Not appropriate for a water parcel lease.] 43. Appraisals Unless otherwise provided in this Agreement, this Section governs the process for all appraisals required or permitted in this Agreement. Any time an appraisal is required or permitted by this Agreement, Lessor and Lessee shall each select an independent appraiser with qualifications of MAI to appraise Tidelands properties. If the two (2) appraisals return with a fair market value that is within five percent (5 %) of each other the two (2) appraisal fair market values shall be averaged to produce the fair market value. For clarity, the total value is used to determine if the appraisals differ by five percent (5 %) which means by way of example if one appraiser concludes 13 percent and one appraiser concludes 15 percent the difference in their conclusions is 13.333 percent and therefore a third appraisal would be needed. If the two (2) appraisals return with a fair market value difference of greater than five percent (5 %) the two (2) appraisers shall retain a third independent appraiser to conduct an appraisal. If the two appraisers should fail to agree on the Fair Market Rental Value, and the difference between the two appraisals exceeds five percent (5 %), then the two appraisers thus appointed shall mutually appoint a third MAI designated appraiser, and in case of their failure to agree on a third appraiser within thirty (30) days after their individual determination of the Fair Market Rental Value, either party may apply to the Presiding Judge of the Superior Court for Orange County, requesting said Judge to appoint the third MAI designated appraiser. The third appraiser so appointed shall meet and confer 966187.02100 888888. 00155/10.2- 12/GSM /mms -21- Agenda Item #1 October 23, 2012 Special Meeting with the two (2) other appraisers and then conduct its own analysis to determine the Fair Market Rental Value of the Site Specific Tidelands within sixty (60) days of their appointment and the average of the Fair Market Rental Value per square foot as set forth in the appraisals of the two closest appraisers shall be used as the Fair Market Rental. All MAI appraisers appointed or selected pursuant to this subsection shall have at least ten (10) years experience appraising tidelands in the Southern California area. The values shall be expressed on a per square foot basis without a percentage of revenue and in terms of a percentage of slip revenue. Lessor and Lessee shall pay the costs of their own appraiser, and, if necessary, shall equally split the costs of the third appraiser. 44. Omitted L [Note: Not appropriate for water lease.] 45. Late Charges and Delinquency Rates A ten percent (10 %) late charge shall be added to all payments due but not received by Lessor with ten (10) calendar days following the due date, unless another due date is specified in this Agreement. In addition, all unpaid amounts shall accrue at a delinquency rate of one and a half percent (1'/: %) per month or any portion of a month until paid in full. Lessor and Lessee hereby agree that such late charges and delinquency rates represent a fair and reasonable estimate of the costs Lessor will incur by Lessee's late payment, including, without limitation, lost opportunities and the cost of servicing the delinquent account. Lessee agrees that such late charges and delinquency rates are Additional Rent and are not interest. Acceptance of such late charges and delinquency rates (and /or any portion of the overdue payment) by Lessor does not constitute a waiver of Lessee's default with respect to such overdue payment, or prevent Lessor from exercising any of the other rights and remedies granted in this Agreement. 46. [Omitted] rNote: The interest is only Tidelands which is not subject to a lien for work done privately.1 47. Government Claims Act Lessee and Lessor agree that in addition to any claims filing or notice requirements in this Agreement, Lessee shall file any claim that Lessee may have against Lessor in strict conformance with the Government Claims Act (Government Code sections 900 et sec.). 48. Lessee' Termination Right Lessee may in its sole and absolute discretion terminate this Agreement at anytime during the Term upon thirty (30) days written notice. Lessee shall comply with Section 20 upon termination. 966187.02100 888888. 00155/10- 2- 121GSM /mms -22- Agenda Item #1 October 23, 2012 Special Meeting IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed in duplicate on the date and year first written herein. LESSOR LESSEE City of Newport Beach A Municipal Corporation a Mayor 0 Name: ATTEST: Leilani Brown City Clerk APPROVED AS TO FORM: Aaron C. Harp City Attorney s8518zo2roc 888888. 0 01 55 /10- 2- 1 2/GSM /mms -23- Agenda Item #1 October 23, 2012 Special Meeting EXHIBIT "A" nFFINITIONR Accounting Period means each period as follows: Commencement Date (or any anniversary thereof) to to to to and to [day immediately prior to the anniversary of the Commencement Date]. [Note: Complete once Commencement Date is known. There are 4 three -month Accounting Periods in each Lease Term Year.] Additional Rent is defined in Section 4. Adjustment Date means the fifth anniversary of the Commencement Date ( _, 20_), and every subsequent fifth anniversary thereafter ( 20, 20) [including, any fifth anniversary during a Renewal Term]. Aggregate % Equivalent Rent is defined in Section 4(a)(i). Agreement is defined in the Preamble. Applicable Law(s) mean and include, but are not limited to, those prescribed by Title 17 of the Newport Beach Municipal Code; any ordinances of the City of Newport Beach, including the Building Code thereof; the City Charter of Newport Beach; any regulations, policies and general rules of the City of Newport Beach; the Tidelands Grant; Hazardous Substances Laws; CEQA; and any other Federal, State or local statute, law, ordinance, resolution, code, rule, regulation, order or decree as any of the same now exist or may hereafter be adopted or amended. Boat Slip Renters is defined in Section 1(a)(i). Books and Records means full, complete, accurate and proper books, records and accounts of all business, use or occupation, or any combination thereof, transacted, arranged or performed, in whole or in part, on, from or for goods, services or events from or related to the Premises, whether by the Lessee or by a sublessee, licensee, concessionaire or other party, on a cash basis method of accounting information. COP means a Coastal Development Permit. CEQA means the California Environmental Quality Act, codified at California Public Resources Code Sections 21000 et seq. as may be amended from time -to -time. Claim(s) is defined in Section 22. Commencement Date is defined in Section 3(a). Condemnation means a permanent taking of the Premises through (i) the exercise of any government power, by any public or quasi - public authority or by any other party having the right of eminent domain (Condemnor) or (ii) a voluntary sale or transfer by Lessor to any Condemnor, either under threat of exercise of eminent domain by a Condemnor or while legal proceedings for condemnation are pending. Fiscal Year means the period of July 1 through June 30 of each year of the term. 966187.0210C EXHIBIT "A" 888888 - 00155/10- 2- 12/GSM /mms -1- Agenda Item #1 October 23, 2012 Special Meeting Gross Revenue for Slip Rentals means all receipts of every kind and nature, whether for cash, credit or barter, received /due for the rental or use of a slip, dock, or pier on the public Tidelands portion of the Premises. Without limiting the breadth of the prior sentence, Gross Revenue for Slip Rentals shall include, without limitation, receipts of every kind and nature derived from any promotion, package deal, service, or other item that is associated in any way with the rental or use of a slip, dock, or pier on the Premises. For purposes of determining Gross Revenue for Slip Rentals any fixed, annual, monthly and /or recurring charge that a person or entity is required to pay shall be counted as part of the Gross Revenue for Slip Rentals. Gross Revenue for Slip Rentals shall not be offset or reduced for any reason except for possessory interest tax which shall offset, including, but not limited to, the payment of fees, repairs, maintenance, construction, or inability or failure to collect any cash, credit, or barter due for the use of a slip, dock, or pier on the Premises. Hazardous Substance means: (i) any substance, product, waste or other material of any nature whatsoever which is or becomes listed, regulated, or addressed pursuant to the Comprehensive Environmental Response, Compensation and Liability Act, 42 U.S.C. Section 9601 et seq. (CERLCA); the Hazardous Materials Transportation Act, 49 U.S.C. Section 1801, et sec.; the Resource Conversation and Recovery Act, 42 U.S.C. Section 6901 et sec. "RCRA"); the Toxic Substances Control Act, 15 U.S.C. Section 2601 et sec.; the Clean Water Act, 33 U.S.C. Section 1251 et sec.; the California Hazardous Waste Control Act, Health and Safety Code Section 25100 et se q.; the California Hazardous Substance Account Act, Health and Safety Code Sections 25330 et sue.; the California Safe Drinking Water and Toxic Enforcement Act, Health and Safety Code Sections 25249.5 et sec.; California Health and Safety Code Sections 25280 et se q. (Underground Storage of Hazardous Substances); the California Hazardous Waste Management Act, Health and Safety Code Sections 25170.1 et seg.; California Health and Safety Code Sections 25501 et seq. (Hazardous Materials Response Plans and Inventory); or the Porter - Cologne Water Quality Control Act, Water Code Sections 13000 et sec., all as they, from time -to -time may be amended or re- codified, (the above -cited statutes are here collectively referred to as lithe Hazardous Substances Laws ") or any other Federal, State or local statute, law, ordinance, resolution, code, rule, regulation, order or decree regulating, relating to, or imposing liability or standards of conduct concerning, any hazardous, toxic or dangerous waste, substance or material, as now or at any time hereafter in effect; (ii) any substance, product, waste or other material of any nature whatsoever which may give rise to liability under any of the above statutes or under any statutory or common law theory, including but not limited to negligence, trespass, intentional tort, nuisance, waste or strict liability or under any reported decisions of a state or federal court; (iii) petroleum or crude oil; and (iv) asbestos. Improvements are owned by Lessee and mean those items described on Exhibit "D" as they may be modified, altered, restored, or rebuilt pursuant to this Agreement. Leasehold Estate means Lessee's interest in the Premises created by this Agreement. Leasehold Mortgage means a Transfer or security instrument by which the Leasehold Estate is used to secure a debt or other obligation arising from or related to Lessee's use or operation of the Premises. Leasehold Mortgagee means a holder or holders of the Leasehold Mortgage. 966187.02JOC EXHIBIT "A" 8 88 88 8- 001 55110- 2.121GSM1mms -2- Agenda Item #1 October 23, 2012 Special Meeting Lease Term Year means each twelve (12) month period beginning on the Commencement Date (or anniversary thereof) and ending on the day prior to the next anniversary of the Commencement Date. Lessee is defined in the Preamble. Lessor is defined in the Preamble. Marina Index is comprised of the marinas listed in Section 4(a)(ii). Market Adjustment Date means the commencement of any Renewal Term and the tenth (10th) anniversary of the Commencement Date, 2 Option Notice is defined in Section 3(b)(i). Other Real Property is defined in Section 16(b). Premises means those Tidelands which is an independent site with no land access consisting of approximately square feet of water area located generally at in the City of Newport Beach, California, more particularly described in Exhibit H and depicted on the map set forth in Exhibit I, excluding any private water. Renewal Term(s) is defined in Section 3(b). Rent is defined in Section 4(a). Target Indexed Rate is defined in Section 4(a)(i). Term is defined in Section 3(a). Tidelands means certain public tidelands and submerged land (whether filled or unfilled), located in the City of Newport Beach, County of Orange, State of California granted to the City of Newport Beach, as trustee, by the State of California pursuant to the Tidelands Grant. Tidelands Grant means uncodified legislation related to the State of California's grant of certain rights in the Tidelands to the City of Newport Beach, including, without limitation, the Beacon Bay Bill (Chapter 74 of the Statutes of 1978, as amended (citations omitted]). Transfer(s) means any attempt to sell, convey, assign, transfer, mortgage, pledge, grant, hypothecate or encumber this Agreement or any interest in this Agreement, or the Premises or any portion of the Premises. Work is defined in Section 38. 966187.02/GC EXHIBIT "A" 888888-00155/10 -2.1 2 /GSM /mms -3- Agenda Item #1 Brown, Leilani October 23, 2012 From: Harp, Aaron Sent: Friday, September 28, 2012 10:07 AM To: Mike Henn; Selich, Edward; Rosansky, Steven Cc: Kiff, Dave; Brown, Leilani Subject: FW: Comments for the Record Attachments: 20120927160545021. pdf Good Moring, Attached are comments that we received from Gary yesterday. Aaron C. Harp City Attorney City of Newport Beach 3300 Newport Blvd. Newport Beach, CA, 92658 Phone: (949) 644 -3131 Fax: (949) 644 -3139 Email: aharp @newportbeachca.Rov CONFIDENTIALITY NOTICE: The information in this e -mail message is intended forthe confidential use of the addressees only. The information is subject to the attorney - client privilege and /or may be attorney work - product. Recipients should not file copies of this e -mail with publicly accessible records. If you are not an addressee or an authorized agent responsible for delivering this e-mail to a designated addressee, you have received this e -mail in error, and any further review, dissemination distribution, copying or forwarding of this e -mail is strictly prohibited. Moreover, such inadvertent disclosure shall not compromise or waive the attorney - client privilege as to This communication. If you received this e-mail in error, please notify us immediately at (949) 644 -3131. Thank you. From: McKitterick, Gary [ma ilto:o mckitterick(sDaIlenmatkins.corn) Sent: Thursday, September 27, 2012 3:52 PM To: Harp, Aaron; Torres, Michael Cc: Dennis D. O'Neil; Kiff, Dave; McKitterick, Gary Subject: Comments for the Record Aaron, Michael and Dave, I am sending you my 9/12/12 Presentation and 9/25/12 Presentation for the public record. The City limits the time to speak so some of -"-ne material was not heard but it ;s important to have on the record. I am available to discuss commercially reasor:able terms after you revise the Lease. The 'Lease form, which was preser::ed, needs significant changes to be acceptable to the Harbor Marina owners. Dave the staff report is also incorrect when stating what the City appraisals say. For the Record, Rasmuson on page 50 says 13% of Marina revenue has equal weight to the comparable market data which is the only method Netzer used. The bracket is 13% to 20% not the 17% to 25% in the staff report. Our experts car. show that these numbers 1 Agenda Item #1 are in excess of FMR. in addition to the error in the staff report I menooVptIeoa�y4QI;e per square foot rate of $1.40 and $1.50 in the Rasmuson report is givA' fAWV not as base rent plus percentage rent as was stated by Mr. Henn. See pages iv, 46 and 5C. Rasmuson complied with the instruction to appraisers \A /hich was to provide both a per square foot number and a percent number. Cary S. McKitterick Esc. Partner Allen Mat!cns Ledo Gamble Mallory & Narsis LLP 1900 Main Street, 5th Floor, Irvine, CA 92614 -7321 (949) 553 -1313 (main) (949) 851 -5432 (direct) (949) 751 -8270 (mobile) (949) 553 -8354 (fax) www.a I len matkins.com Allen Matkins From: McKitterick, Gary Sent: Thursday, September 27, 2012 12:47 PM To: Harp, Aaron; Torres, Michael Cc: Dennis D. O'Neil; Saulus, Mary; McKitterick, Gary Subject: RE: Examples of City provisions The 3 appraisal provision which is attached is the commercially reasonable approach to setting FMV. As you draft the revisions please include this provision IRS Circular 230 Disclosure: To ensure compliance with requirements imposed by the IRS, please be advised that any U.S. federal tax advice contained in this communication (including any attachments) is not intended or written to be used or relied upon, and cannot be used or relied upon, for the purpose of (i) avoiding penalties under the Internal Revenue Code, or (ii) promoting, marketing or recommending to another party any transaction or matter addressed herein. Confidentiality Notice: The information contained in this electronic e -mail and any accompanying attachment(s) is intended only for the use of the intended recipient and may be confidential and/or privileged. If any reader of this communication is not the intended recipient, unauthorized use, disclosure or copying is strictly prohibited, and may be unlawful. If you have received this communication in error, please immediately notify the sender by return e -mail, and delete the original message and all copies from your system. Thank you. 2 Agenda Item #1 October 23, 2012 Special Meeting NEWPORT BEACH — RENTAL RATES FOR COMMERCIAL MARINAS OVER CITY- MANAGED TIDELANDS PRESENTATION BY GARY S. MCKITTERICK OF ALLEN MATKINS LECK GAMBLE MALLORY & NATSIS, LLP September 12, 2012 I. Overview We agree the City should charge "fair market.rent" for the public tidelands portion of the water. So why is there controversy? I will try to boil it down to a few points. 1. First, there is no competitive and open market in Newport Harbor. There is a single landlord for the water parcels, and the adjacent marina owner is the only tenant. This is a bilateral monopoly. The tenants are not able to make decisions that represent an open market exchange. What is the impact? The current permittee /tenants are compelled to pay the rent (despite it being in.excess of FMV) in order to retain control and use of their existing improvements, including docks and utilities. This action to compel is very harmful to marina owners of all sizes, and particularly tough on smaller operators. 2. The water parcel is what we are valuing. As an independent site, the water parcel is severely restricted because it has no access to the uplands for utilities or marina - supporting land uses such as parking, restrooms and showers. 964198.01 /OC 372184- 00002/9- 12- 12/89m/mel Agenda Item #1 October 23, 2012 Special Meeting 3. The Netzer and Rasmusson appraisals posted for review contain numerous factual errors and, until they are corrected, the conclusions cannot form the basis of value. 4. Although the Harbor commercial owners and two highly - qualified experts opine the Committee proposal in the staff report is significantly above FMV, THERE IS NO RECOURSE AVAILABLE. Given the substantial investment in marina improvements, the marina owners are being compelled to pay rent, which our two experts opine is significantly in excess of Fair Market Value. 5. There is a solution. There is a validation method to properly determine value in a closed market, and my clients have submitted proposals, and other owners have had a City - approved appraiser submit an opinion. H. There is no Competitive and Open Market A. There is no open market. There is only one landlord and one tenant. This is a bilateral monopoly. Why is this important? Because this means that the definition of Fair Market Value is not satisfied. A critical component in determining the appropriate information to rely upon in forming an opinion of value is that the data conform to key definitions of market value. In particular, it is essential to confirm that the buyer and seller were "each acting prudently and knowledgeably, and assuming the price is not affected by undue stimulus." The test fails. B. A thorough analysis of these special issues in the market are essential to form a credible opinion of value. This critical analysis was not done by the City. 964198.0110C 372184 - 00002!9- 12- 121esm/mel -2- Agenda Item #1 October 23, 2012 Special Meeting III. Value for the Independent Parcel is the Issue to Resolve A. In Newport Harbor, the uplands are privately owned and provide access to the water. Private investment has built parking, restrooms, docks, seawalls, ramps, guardrails and utilities. B. In addition, private water, in many cases, abuts the privately - owned land parcel. See Map. C. The water parcels have no direct land access. The highest and best use of the water parcels, as an independent site, is severely restricted by its lack of access to the uplands for support of any commercial use. The water parcels could potentially be used for offshore moorings; however, lack of uplands parking, restrooms and dingy launching facilities would present problems of approval from local citizens' groups and certain regulatory agencies. Therefore, as an independent site, the water parcels have limited economic value. IV. Appraisal Problems A. History of Appraisals: 1. The City commissioned an appraisal to value tidelands in 1989 and 2001. These appraisals properly analyzed the unique characteristics in the Harbor. 2. I have submitted a letter to the City dated August 30, 2012 which should be part of the record. My letter identifies numerous problems with the City appraisals, but let me identify a few critical issues: a. The City uses two county leases as the basis for its decision that FMV in the Harbor should be 20 %. The water -only lease data the Committee says should be the market value are from county 964198.01/OC 372184 - 0000219- 12- 1219=9mel -3- Agenda Item #1 October 23, 2012 Special Meeting leases at Bayshores and Swales. The City appraiser describes these as renewals with no appraisal, and the tenants said there was little room for negotiation because they had invested considerable money in leasehold improvements. As stated before, the bilateral monopoly drives a decision of a tenant to be compelled to pay in order to protect its private investment. This is not a comparable deal to be used since it does not meet FMV requirements of the appraisal institute. Please refer to the Jones appraisal, pages 55 -59, for further support that the county leases do not meet the standards of an open market transaction. b. All of the appraisals show a combined water parcel and land parcel together have a 25% total rent figure. The City proposes that 80% of the total value of a combined land -water parcel be allocated to the water. Our experts and common sense tells you there is no way the number is correct. The water alone with no access to land is, at best, a mooring field. 3. The "Residual Formula" Rasumusson sets forth starting on page 31 of his appraisal is a good approach to help frame FMV. My letter, which is in your package, illustrates on Exhibit B the impact on the FMV if you use the corrected Harbor facts. Despite using a few components in the calculations that need correction, Rasmusson concludes FMR is 13 %, which is significantly under what the City if proposing. Please use the formula with the corrected facts below. Do your own math. 964198,01100 372184 -0000219- 12- I2/gsm/mel A- Agenda Item #1 October 23, 2012 Special Meeting Land values — .250 -275 (Netzer) Vacancy — 5 -10% Land to Water Ratio — 28% Average Slip Size — 33 -35 feet V. Conclusion Please do not compel the Harbor owners to pay more than FMV. Please work with them. 964198.0110C 372181- 0000219- 12- 12/pmhnel -5- Agenda Item #1 October 23, 2012 Special Meeting NEWPORT BEACH — RENTAL RATES FOR COMMERCIAL MARINAS OVER CITY - MANAGED TIDELANDS PRESENTATION BY GARY S. MCKITTERICK OF ALLEN MATKINS LECK GAMBLE MALLORY & NATSIS, LLP September 25, 2012 1. Govern as you want to be Governed. Please govern with balance. Provide a forum to have all of the City Council hear in detail the concerns of the Harbor marina owners. The City Council meeting is not sufficient time to properly evaluate the various material issues. The Lease which the City prepared over a period of seven months is not commercially reasonable. All of the City Council needs to engage and understand the detail to reach a decision. 2. On September 12, 2012, I discussed the Bilateral Monopoly and its impact on your decision. Please review the Lease and Marina index proposed by the City with the understanding there is no open market. There is only one Landlord and Tenant for the water parcels and the City is a direct competitor. The current permittee's are compelled to do what City says, despite the fact it is harmful, in order to protect existing investments and their improvements . 3. The City is a Direct Competitor of the marina owners because the City owns and operates a marina that is not part of this action. It is therefore essential that the City's actions be balanced. The City is required to study the direct effects and all foreseeable indirect impacts of its action. Despite numerous requests to do so the City has not properly studied the direct effects and all foreseeable indirect impacts of the proposed action. The Lease, as an example, needs to include a commercially reasonable Dispute Resolution Process with an independent determination of fair market. We have requested, on numerous occasions, that the value process include experts who are independent from the City. George Jones has completed an appraisal. 965998.0110C 372184 - 00002/9.27- 12 /89m/mms Agenda Item #1 October 23, 2012 Special Meeting Please read it to understand why the Harbor is unique. My August 30, 2012 letter to the City details the legal, procedural, factual, and math errors in the City's appraisals and the rent setting process. 4. Listen to the September 12`h testimony and realize the hardship the proposed level of rent and Lease will cause on the Harbor. The citizens are not requesting a lease, they are happy to stay with annual permits. The City's excessive above market rent and onerous lease will drive many small businesses out of the Harbor, cause marinas to be closed and boaters will leave Newport Harbor. Adverse impacts can be avoided if you listen to your citizens. Again I request you govern with balance. The citizens are requesting the City be reasonable. 5. Please follow the City's Coastal Land Use Plan to expand and enhance Harbor support facilities. The City is doing the opposite by this action. 6. Each property in the Harbor is unique with different characteristics and therefore property values in the Harbor are not uniform. This "one size fits all" approach is in violation of policy. The City proposal on the lease rate is not acceptable and could not be sustained in an independent review. 7. The consequences of your actions will have a material adverse impact on the Harbor environment, so I encourage engagement by all of you on City Council on the issues. 8. Please Govern reasonably by slowing down and evaluating the information submitted by the Harbor marina owners. 965998.01/OC 372184. 0000719- 27- 12/8smlmms -2- Agenda Item #1 October 23, 2012 Special Meeting EXHIBIT "B" SAMPLE RENT CALCULATION [To be revisedl 988187.02/GC EXHIBIT "B" 888888 - 00155110.2- 12IGSM /mms -1- Agenda Item #1 October 23, 2012 Special Meeting EXHIBIT "C" MARINA INDEX TERMS [To be revisedl (1) Slip Rental Documentation: Gross Revenue for Slip Rentals for the Premises certified by Lessee's external auditor to be true and accurate to the Lessor for purposes of calculation of the Marina Index. The Gross Revenue for Slip Rentals may be provided directly to the mutually approved designated certified public accountant ( "CPA ") for such purposes. [Note: Audit — the only audit permitted would be of gross revenue from slip rent located in public tidelands. There will be no audit of financial statements.] [Note: Independent CPA — Lessor and Lessee shall mutually approve a CPA to review information.] 966187.02/OC EXHIBIT "C" 888888 - 00155110- 2- 12/GSM /mms -1- Agenda Item #1 October 23, 2012 Special Meeting EXHIBIT "D" IMPROVEMENTS 966187.0210C EXHIBIT T" 888888-0015W 1 0- 2- 1 2/GSMlmms -1- Agenda Item #1 October 23, 2012 Special Meeting EXHIBIT "E" OTHER REAL PROPERTY 966187.0210C EXHIBIT "E" 888868-00155/10-2-1 21GSM /mms -1- Agenda Item #1 October 23, 2012 Special Meeting EXHIBIT' F" INSURANCE 088187.0210C EXHIBIT T" 888888- 00155/10- 2 -12 /GS M /mms -1- EXHIBIT "G" RECORDING REQUESTED AND WHEN RECORDED RETURN TO: Office of the City Clerk City of Newport Beach 3300 Newport Boulevard Newport Beach, CA 92658 Agenda Item #1 October 23, 2012 Special Meeting [Exempt from Recordation Fee - Govt. Code Sec. 6103] MEMORANDUM OF LEASE AGREEMENT [(WITH OPTIONS FOR RENEWAL)1 This Memorandum of Lease Agreement [(With Options for Renewal)] ( "Memorandum ") is dated , 20 , and is made between City of Newport Beach, a California municipal corporation and charter city ( "Lessor" or "City ") and ( "Lessee "), concerning the Premises described in Exhibits A" and "B," attached hereto and by this reference made a part hereof. For good and adequate consideration, Lessor leases the Premises to Lessee, and Lessee hires them from Lessor, for the term and on the provisions contained in the Agreement dated , 20 , including without limitation provisions prohibiting assignment, subleasing, and encumbering said leasehold without the express written consent of Lessor in each instance, all as more specifically set forth in said Agreement, which said Agreement is incorporated in this Memorandum by this reference. The term is ( ) years, beginning 20 , and ending 20. [If needed, insert recitation of Options and Renewal Terms(s).] This Memorandum is not a complete summary of the Agreement. Provisions in this Memorandum shall not be used in interpreting the Agreement's provisions. In the event of conflict between this Memorandum and other parts of the Agreement, the other parts shall control. Execution hereof constitutes execution of the Agreement itself. [Signatures on the next page] 966187.021GC EXHIBIT "G" 888888. 00155/10 -2 -12 /GSM /mms -1- LESSOR LESSEE City of Newport Beach _ A Municipal Corporation a Mayor M Name ATTEST: Leilani Brown City Clerk APPROVED AS TO FORM: Aaron C. Harp City Attorney Agenda Item #1 October 23, 2012 Special Meeting [NOTE: Attach Exhibits A and B from Agreement as Exhibits to this Memorandum behind attached Notary form] 988187.0210C EXHIBIT "G" 888888 - 00155 /10 -2 -12 1GSM /mms -2- CALIFORNIA ALL - PURPOSE ACKNOWLEDGMENT STATE OF CALIFORNIA COUNTY OF ORANGE I On this _ day of , 2011, before me, the undersigned notary public, personally appee,ed NAME($) OF &GNER(S) proved to me on the basis of satisfactory evidence to be the person(s) whose name(s) Ware subscribed to the within Instrument, and acknowledged to me that helshcAhey executed the sama in hisiherAheir authorized capacity(ies), and that by hlslheritheir signaturo(s) on the instrument the person(s), or the entity(ies) upon behalf of v.•hich the persons) acted, cxect,tgd the Instrument. I certify under PENALTY OF PERJURY under the laws of the State of Califomla that the ipmgoing paragraph Is true and correct. WITNESS my nand and official seal. &&NATURE OF NOTARY OPTIONAL SECTION Agenda Item #1 October 23, 2012 Special Meeting —OPTIONAL SECTION — CAPACITY CLAIMED eY SIGNER Though statute does not -,;cube the Notaiy to rill in the data beimv, doing so may prove Invaluable to persons relying on the document • INDIVIDUAL • CORPORATE OF FICER(S) TITLE(S) • PARTNER(S) • LIMITED • GENERAL • ATTORNEY -IN -FACT • TRUSTEE(S) G GUA.RDIANICONSERVATOR ❑ OTHER SIGNER IS REPRESENTING: NAME OF PERSONS) OR ENTITY(IES) THIS CERTIFICATE MUST BE ATTACHED TO THE TITLE OR TYPE OF DOCI.IMF.AIT: DOCUMENT DESCRIBED AT RIGHT: Though the data requested hore is not required by law, R could ?revent fraudulent reea&merlt of this form. 966187.0210C 8 888 88 - 001 5 5/1 0 -2 -1 2 /GSM /mms -� - NUMBER OF PAGES: DATE OF DOCUMENT: OTHER SIGNER(S) THAN NAMED ABOVE: Agenda Item #1 October 23, 2012 Special Meeting EXHIBIT "H" DESCRIPTION OF PREMISES 966187.021OC EXHIBIT "H" 888888 - 00155110- 2- 121GSMImms -1- Agenda Item #1 October 23, 2012 Special Meeting EXHIBIT "I" DEPICTION OF PREMISES 0661870 &0C EXHIBIT "I" 888888.00155110.24 21GSM /MMs -1- Agenda Item #1 October 23, 2012 Special Meeting LEASE AGREEMENT [(WITH OPTIONS FOR RENEWAL)] BY AND BETWEEN City of Newport Beach, a California municipal corporation ( "Lessor ") AND ,a ( "Lessee ") 96618T02/0C 888888 - 00155/10- 2- 121GSM /mms 966187.0?IOC 888888 - 00155110.2.12 1GSM /mms Agenda Item #1 October 23, 2012 TABLE OF CONTENTS Special Meeting Paqe 1. Definitions ..................................................................................... ............................... 1 2. Leased Premises, ................ ...... .................. ................................ ............................. 1 3. Term .............................................................................................. ............................... 2 4. Rent .............................................................................................. ............................... 2 5. Utilities, Taxes and Assessments .................................................. ............................... 4 6. Use of the Premises ...................................................................... ............................... 5 7. [Omitted] ...................................................................................... ..............................5 8. Acceptance of Condition of Premises - "As -Is" / Waiver / Release . ............................... 5 9. Reserved ........................................................................................ ..............................7 10. Reconstruction or Removal ........................................................... ............................... 7 11. Maintenance and Repair ............................................................... ............................... 7 12. Liens ............................................................................................. ............................... 8 13. Reserved.. . ...... .............. ....................................................................................... 9 14. Quitclaim Deed. ..................................... .................. ...... __ ..................................... 9 15. Right to Enter the Premises for Inspection ..................................... ............................... 9 16. Transfers / Hypothecation for Financing ........................................ ............................... 9 17. Bankruptcy .................................................................................... .............................13 18. Defaults ......................................................................................... .............................13 19. Remedies ...................................................................................... .............................14 20. Surrender of Premises ................................................................ ............................... 15 21. Condemnation... ..................................... ........ ....... ............................. 15 22. Indemnification ............................................................................ ............................... 16 24. Hazardous Substances ............................................................... ............................... 17 25. Quiet Possession ........................................................................ ............................... 18 26. Compliance with Applicable Laws ............................................... ............................... 18 27, Not Agent of Lessor ..................................................................... ............................... 18 28. No Third Party Beneficiaries ........................................................ ............................... 18 29. Limitation of Leasehold / Easements ........................................... ............................... 18 30. Notices ........................................................................................ ............................... 18 31. Entire Agreement / Amendments ................................................... ............................... 19 32. Waivers ......................................................................................... .............................20 33. Lessor's Authorized Representative ............................................ ............................... 20 34. City Business License ................................................................. ............................... 20 35. Governing Law & Non - Binding Arbitration ................................... ............................... 20 36. Interpretation ............................................................................... ............................... 21 37. Time is of the Essence ................................................................ ............................... 21 38. California Labor Laws .................................................................. ............................... 21 40. [Omitted ...................................................................................... ............................... 21 41. [Omitted ...................................................................................... ............................... 21 42. [Omitted ...................................................................................... ............................... 21 43. Appraisals ................................................................................... ............................... 21 45. Late Charges and Delinquency Rates ......................................... ............................... 22 46. [Omitted] ..................................................................................... ............................... 22 47. Government Claims Act ............................................................... ............................... 22 48, Lessee' Termination Right ........................................................... ............................... 22 966187.0?IOC 888888 - 00155110.2.12 1GSM /mms