HomeMy WebLinkAboutAgenda Statement 1985/04/23 Item 11 COUNCIL AGENDA STATEMENT
Item 11
Meeting Date 4/23/85
ITEM TITLE: Resolution /,Zo Appropriating funds for the Acquisition of Restaurant
Equipment and Fixtures
SUBMITTED BY: Assistant City Manager - (4/5ths Vote: YesX No )
The lease agreement between the City and Jimmy's Family of Fine Restaurants,
Inc. provided the City with the first right of refusal to acquire all the
equipment and fixtures placed in the facility by lessee at their cost in the
event that the lease agreement had to be terminated for any cause during its
term. It has now been determined that the lessee is unable, for a variety of
reasons, to meet the obligations and requirements of the lease agreement and.
` therefore the lease must be terminated. It has been determined that it is in
the best interest of the City to acquire all the -equipment and fixtures so
that an interim operator will be able to assume operation of the facility
until such time as proposals for a new operator can be received and a new
operator selected.
RECOMMENDATION: Adopt resolution appropriating $250,000 for the purchase of
said equipment and fixtures. .
DISCUSSION:
Fixturization of the restaurant facility in 1982 cost the lessee in excess of
$500,000. A "market value in use" appraisal of the fixtures was made on
April 12, 1985. The"value in use"figure is the value placed on the fixtures
in use or available for use as an integrated part of an operating enterprise,
giving consideration to age, condition, utility and the used market insofar as
applicable, and the cost of an asset plus transportation and installation
costs if any, depreciated on a "real life" basis.
Acquisition of the equipment and fixtures will enable the City to negotiate
with an interim operator to take over the facility without interruption and
continue to operate the restaurant until the City can seek proposals from
other operators. If the City does not acquire the fixtures, the lending
institution that holds the equipment as security would have to remove the
fixtures from the facility, leaving the City wi-th a building shell that would
have to be refixturized by a new operator or City at a cost substantially
higher than the "in use appraisal figure." Removal of the fixtures would also
necessitate closing of the facility pending selection of a new operator, and
refixturization, all to the detriment of the City.
FINANCIAL IMPACT: The $250,000 required for this acquisition will come from
the City's unappropriated General Fund reserve, with repayment of at least
that amount in approximately six months when a ne
selected.
i �., C;iy Cou;;ci! of
C iu Vista, Cuii ornia
Form A-113 (Rev. 11/79) 023- JR:s"—'