HomeMy WebLinkAboutAgenda Statement 1980/05/07 Item 16
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COUNCIL AGENDA STATEMENT
Item 16
Meeting Date 5/1i'/80
ITEM TITLE: Resolution fIJdr(, - Approving a revised lease agreement between the City of
Chula Vista and Glenn-Restaurant, Inc.
SUBMITTED BY:Assistant City Manager ~ (4/5ths Vote: Yes No~)
At a Council Conference on February 23, 1980, the City Council approved in concept a revised
floor plan for the interior of the Glenn, authorized staff to proceed with receiving pro-
posals for architectural services at City expense, and authorized preparation of a revised
1 ease agreement with the current operator. At its meeting of April 29, 1980, the City
Council authorized execution of the contract for architectural services. A revised lease
agreement has been prepared and, after numerous revisions, is now ready for Council con-
sideration. It is therefore my
RECOMMENDATION: That Council adopt resolution.
BOARD/COMMISSION RECOMMENDATION: N.A.
DISCUSSION
The proposed lease agreement that would replace the present lease approved on February 11,
1975 incorporates all those key provisions the City Council considered at a Council
Conference held September 13, 1979. The revised lease includes the following significant
changes:
1. RENT (Page 7, Section 17)
The minimum base rent per month will be $3,000 adjusted annually to reflect
the cost of living increase as.reported in the Consumer Price Index or a
sum equal to 6% of gross sales, whichever amount is greater. The current
lease provides a minimum rent of $300 per month or 4% of gross receipts.
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The new lease provides for a 1% per month penalty of rent due on all delinquent
payments of rent. In addition, the new lease provides that by March 1 of
each year an audited financial report prepared by an independent public
or certified public accountant shall be provided to the City.
Due to the d~stinct possibility that the Glenn will have to be closed or,
at best, business activity severely limited during renovation, the following
two options are provided: (a) the Council may suspend the rent entirely for
the peri od, and extending 60 days beyond the comp 1 eti on; or (b) the Council
may reduce the rent to an amount believed appropriate but, in this event,
the maximum rent could not exceed 6% of gross volume.
Form A-113 (Rev. 11/79)
/ b 0%'10
Continued
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EXHIBITS
Agreement_____ Resolution~ Ordinance_____ Plat_____ Notification List
Other
Submitted on
ENVIRONMENTAL DOCUMENT: Attached
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by the City Ccu:1ci! of
Chul" Vista, Caliiornia
Dated 5,..; 7-PO
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Item 16
Page 2
Meeting of 5/f'/80
3. SIGNING (Page 4, Section. 9)
The proposed lease places full responsibility for sign maintenance and
repair on the Lessee and requires the Lessee, subject to approval and in
conformity with City requirements, to modify the sign noting that the
facility is open to the public and the hours of operation.
4. RESPONSIBILITY FOR NEW FIXTURES AND EQUIPMENT (Page 5, Section 11)
The lease provides that the Lessee, at his own expense, will install new
fixtures and equipment in the renovated facility, and Section 14 of said
lease agreement provides that all new fixtures and equipment shall not be
subject to amortization:
5. RESPONSIBILITY FOR SPECIFIC PLANS AND SPECIFICATIONS (Page 5, Section 13)
Under terms of the lease, the City, at its sole expense, is responsible
for developing specific plans and specifications for the renovation of the
Glenn with a continued amortization of improvements that were installed by
former operator Dick Agee, as well as the continued amortization of those
improvements installed by Mr. Danielson and still being amortized under terms
of the old agreement. This section provides flexibility to the City in
determining at a later date whether or not the cost of the renovation will
be borne by the Lessee,wherein the amortization provisions would apply, or
by the City.
6. EXPANSION OF FACILITY BY LESSEE (Page 6, Section 15)
The lease provides that expansion of the facility may be required at such time
as (a) those structural improvements contemplated at this time have been
fully amortized or (b) when the gross monthly recei pts duri ng .any precedi ng
six-month period average over $80,000 per month. If or when either of these
conditions occurs, the City and Lessee may renegotiate the terms and conditions
of this lease to take into account further improvements or additions that
might be made to the facility. This section further provides that before
any such expansion is to occur, it would be the City's responsibility to
provide an economic and market feasibility study showing that expansion is
not only necessary and desirable but will have a reasonable expectation of
success.
7. TERM OF LEASE (Page 7, Section 16)
The term of the new lease is for fifteen (15) years, which represents the
remaining term of the original lease.
FISCAL IMPACT
The direct immediate financial impact of approving the revised lease will obligate the
City to a yet to be determined amount for architectural service in the preparation of
final plans and specifications for the renovation, estimated to be approximately $10-15,000.
Dependent upon a final decision by the City Council as to the method to be used in financing
the renovation, the City may expedence costs of up to $200,000 if it is determined that
the City will finance these improvements rather than requiring the Lessee to do so.
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