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HomeMy WebLinkAboutAgenda Statement 1986/07/08 Item 47 COUNCIL AGENDA STATEMENT "�JJ Item ° Meeting Date 7/R/R6 ITEM TITLE a) Resolution /.i1-9i- Approving a Restaurant Lease Agreement between the City of Chula Vista and American Golf Corporation and authorizing the Mayor to executive same on behalf of the City b) Resolution - Approving Amendment No. 1 of the Lease between the City of Chula Vista and American Golf Corporation for the operation of a public golf course and driving range, and authorizing the Mayor to execute same in behalf of the City SUBMITTED BY Assistant City Manage REVIEWED BY City Manager 4/5 Vote: Yes No X On June 10, 1986, the subject agreements were submitted to the City Council for consideration but were referred back to the staff and a Council sub-committee in order to address some concerns/issues contained in the original agreements. A City Council sub-committee consisting of Councilmen Malcolm and Campbell met with American Golf Corporation officials and staff, and addressed those issues that were raised. RECOMMENDATION Adopt resolutions approving the lease agreements and authorizing the Mayor to execute same in behalf of the City. BOARDS/COMMISSIONS RECOMMENDATION: N.A. DISCUSSION The concerns/issues raised by the City Council at the June 10, 1986 meeting essentially involved five sections of the lease agreements: 1 . Terms of the lease 2. Application of CPI provisions 3. Maintenance of facilities language 4. Mechanism for insurance coverage increases 5. Insurance coverage in general . Lease Terms - The revised golf course and restaurant leases each provide for maximum terms of 30 years from July 1, 1986. Inasmuch as the original golf course lease was extended from a 20 year agreement to 30 years as part of the negotiating process for the restaurant lease, the amended golf course document contains a provision (Section 3C) that would revert the golf course lease back to a 20 year term if American Golf terminates their restaurant lease anytime during its 30 year term. Page 2, Item Meeting Date 7/3/86 CPI - Section 5 B (1 ) and (2) of the restaurant lease has been revised to delete the term "decrease", thereby not allowing for a potential reduction in rents if by chance the CPI should show an overall decrease. Additionally, this section has been revised to limit CPI increases to an average of 6% per year over the 3 year incremental periods that minimum rent adjustments will be made under the terms of the agreement. Maintenance of Premises - Section 10 of the revised agreement has incorporated more specific language relating to the maintenance of the premises during the term of the lease. The language inserted is similar to that currently being used in owner participation agreements used by the Redevelopment Agency. Insurance Coverage Increases - Section 11 of the revised agreement still provides for the Lessor and Lessee to each appoint a representative to a three member panel if the City and American Golf disagree as to the need for and the amount of increased insurance coverage. In the event the two members appointed cannot agree upon a third within 30 days, the revised lease provides that the City would appoint the third member. Liability Coverage - Section 11 A of the revised agreement clearly provides that the Lessee shall initially provide insurance of at least $250,000 property damage, $1 ,000,000 for injury or death to any one person in any one accident, and a single limit liability policy of $5,000,000 per occurrence, with that $5,000,000 limit applicable to products and liquor liability coverage. Previously, the agreement seemed to provide only $1,000,000 coverage as it pertained to products and liquor liability. American Golf Corporation officials have agreed to all the provisions of the revised lease agreements and, from staff's perspective, the agreements are now ready for approval by the City Council. FINANCIAL IMPACT During the first year of the agreement, what the City would receive would be a minimum of $74,000 under the terms of the golf course lease, and approximately $48,000 from the restaurant lease. ERA:mab . the City Council of Chula Vista, California Dated =, � COUNCIL AGENDA STATEMENT Item '40/(/1 Meeting Date 7/R/R6 ITEM TITLE a) Resolution - Approving a Restaurant Lease Agreement between the City of Chula Vista and American Golf Corporation and authorizing the Mayor to executive same on behalf of the City b) Resolution h �Jl - Approving Amendment No. 1 of the Lease between the City of Chula Vista and American Golf Corporation for the operation of a public golf course and driving range, and authorizing the Mayor to execute same in behalf of the City SUBMITTED BY Assistant City Manage REVIEWED BY City Manager 4/5 Vote: Yes No X On June 10, 1986, the subject agreements were submitted to the City Council for consideration but were referred back to the staff and a Council sub-committee in order to address some concerns/issues contained in the original agreements. A City Council sub-committee consisting of Councilmen Malcolm and Campbell met with American Golf Corporation officials and staff, and addressed those issues that were raised. RECOMMENDATION Adopt resolutions approving the lease agreements and authorizing the Mayor to execute same in behalf of the City. BOARDS/COMMISSIONS RECOMMENDATION: N.A. DISCUSSION The concerns/issues raised by the City Council at the June 10, 1986 meeting essentially involved five sections of the lease agreements: 1. Terms of the lease 2. Application of CPI provisions 3. Maintenance of facilities language 4. Mechanism for insurance coverage increases 5. Insurance coverage in general . Lease Terms - The revised golf course and restaurant leases each provide for maximum terms of 30 years from July 1, 1986. Inasmuch as the original golf course lease was extended from a 20 year agreement to 30 years as part of the negotiating process for the restaurant lease, the amended golf course document contains a provision (Section 3C) that would revert the golf course lease back to a 20 year term if American Golf terminates their restaurant lease anytime during its 30 year term. Page 2, Item - /41 Meeting Date 7/8/86 CPI - Section 5 B (1) and (2) of the restaurant lease has been revised to delete the term "decrease", thereby not allowing for a potential reduction in rents if by chance the CPI should show an overall decrease. Additionally, this section has been revised to limit CPI increases to an average of 6% per year over the 3 year incremental periods that minimum rent adjustments will be made under the terms of the agreement. Maintenance of Premises - Section 10 of the revised agreement has incorporated more specific language relating to the maintenance of the premises during the term of the lease. The language inserted is similar to that currently being used in owner participation agreements used by the Redevelopment Agency. Insurance Coverage Increases - Section 11 of the revised agreement still provides for the Lessor and Lessee to each appoint a representative to a three member panel if the City and American Golf disagree as to the need for and the amount of increased insurance coverage. In the event the two members appointed cannot agree upon a third within 30 days, the revised lease provides that the City would appoint the third member. Liability Coverage - Section 11 A of the revised agreement clearly provides that the Lessee shall initially provide insurance of at least $250,000 property damage, $1,000,000 for injury or death to any one person in any one accident, and a single limit liability policy of $5,000,000 per occurrence, with that $5,000,000 limit applicable to products and liquor liability coverage. Previously, the agreement seemed to provide only $1,000,000 coverage as it pertained to products and liquor liability. American Golf Corporation officials have agreed to all the provisions of the revised lease agreements and, from staff's perspective, the agreements are now ready for approval by the City Council . FINANCIAL IMPACT During the first year of the agreement, what the City would receive would be a minimum of $74,000 under the terms of the golf course lease, and approximately $48,000 from the restaurant lease. ERA:mab Age • the City Council of Chula Vista, California Dated