SR-11-C (28)
e
e
} Ie
"NCV 2 E. 1980
Santa Monica, California November 24, 1980
TO: I~or and City Council
FROM: City staff
SUBJECT; Carousel Corporation leases at the Santa Monica Pier.
~ntroduction
This report is furnished at the direction of' the City Council to
determine whether the proposed "Outline of Solutions Re Santa Monica
Carousel Corporation Leases with City of Santa Monica" complies with
the City Council requirements of September 24, 1980.
Background
At the September 24, 1980 meeting of the City Council, Attorney Frank
J::lrniSOn, representing the Carousel Corporation assured the Council that
the Carousel project was funded and "ready to proceed." Mr. Jl'lrntson also
proposed to issue a $50~OOO Cashier's Check in favor of the City as a
good faith deposit. The City Council directed the Staf'f to accept the
.$50,000 deposit and renegotiate the Carousel leases provided the
leases adhere to strict performance schedules.
As of this writing Carousel has furnished no deposit, and as of November
20, 1980, according to Mr. JAmison, Carousel had no funding.
It appears to Staff, therefore, that Carousel cannot make the Good Faith
Deposit, nor is it capable of complying with Council's other instructions
regarding specific performance and proof of total project funding.
Th:ILS, it appears that the proposed '.Outline 01' Solutions II is meaningless
as Carousel. has no funding to implement the plan.
Alternatives
1. Allow Carousel more time for 1'unding and performl'tnce.
2. Allow Carousel to reml'tiu in Defau1.t.
lie.,
~;n\.i ., 5 '\980
e
e
- Page 2 -
Recommendation
Based on Carousel's past history of non performABce, currect lack of
funding, and failure to comply with previous Council direction, Staff
recommends Council allow the Carousel Corporation leases to remain in
Default and that all rights and interests created :tl. Carousel Cor:poration
as Lessee are terminated as specified in Notice of Default and
Termination to the Santa Monica Carousel Cor:poration, effective
September 2, 1980. Staff' further reconmtends that City should:
1. Obtain possession of the premises, by legal action if necessary.
2. Upon obtaining possession, immediately close and secure the
Carousel builiHn-& and equipment.
3. Appropriate $150,000.00 for the purpose of restoration of the
Merry Go Round and associated expenses.
4. Authorize Staff to ex.ecute contracts for Merry Go Round restoration.
Prepared by: David L. Shirey
Attachment: Outline of Solutions by Carousel Corporation.
e
e
OUTLINE OF SOLUTIONS
~
RE
SANTA ~ONICA CAROUSEL CORPORATION
LEASES WITH CITY OF SANTA MONICA
ObJectlve: a. Present agreed upon solutions between City staff
and Carousel Cornoration to City Council on
November 11, 1980
b. Present agreements embodYlng solut~ons for f1nal
approval and 5~gnature to Council on November 25,
1980.
Problem Area Number 1: Are Carousel1s cost prO]ectlons of $2,700,000
current?
Solutlon: Project Manager and proJect architect pre-
pared updated cost proJections as of October 4,
1980. Revlsed prO]ectlons total $2,747,000,
lncluding $543,000 for finlshed second ctory
restaurant and future construction of commissary
and offlce below pier floor (3500 sq. ft.) at
cost of $232,000. Agreed cash requirement:
$1,972,000.
Problem Area Number 2: When wlll Carousel provlde proof to satls-
factlon of City it can perform?
Solutlon: No later than 10 business days followiny
final approval of agreements by Councll, Carousel
w~ll deposit $150,000 in an lnterest bearlnq ac-
count des~g~~ted as llquldated ~~~aqes ~} be ~a~d
to c~ty If Carousel fails to meet performance
schedule stated below.
No later than 30 business days fol1ow~ng
final approval of agreements by Council, Carousel
w~ll prove to satlsfactlon of Clty, balance of
agreed cash requ~rement of $1,972,000, lncludln~
$150,000 liquidated damages fund.
Problem Area Number 3: What performance schedule 1S Carousel pre-
pared to meet to assure City of progress?
Solutlon: In addition to fund~ng a liquidated damages
account within 10 buslness days and proving its
capacity to fund this proJect withln 30 business
-1-
e
e
days from flnal approval by Counell, Carousel
agrees further:
:.:
a. No later than 15 bUslness days following
final approval of Council, Council w1ll
execute contracts with Tracey CaMeron and
Horse of a Different Color for renovat1on
of werry-go-round under contracts and pey-
formance schedules already approved by C1ty.
b. No later than 30 bUs1ness days following
fund approval of Council, Carousel wlll
commence demolition per permit sought by
Carousel in Allqust. 1980.
c. ~a later than 90 business days follow1ng
f1nal approval of Caunell, Carousel wlll
5ubm1t draw1ngs to plan check for construc-
t10n of waterslide and renovation of
"Carousel" building.
d. No later than July 30, 1981, Carousel will
open for business the proposed waters1ide,
fast food operations on ground floor of
Carousel building, and merry-go-rou~d.
e. No later than December 1, 1981, Carousel
will open for buslness the proposed res-
taurant on the second floor of the Cdrousel
building.
If Carousel fails to fund the llquidated damages
account within time stated, the subJect Leases are ~or-
felted by Carousel. After funding of the llquldated
damages account, failure of any remaining performance
require~ent shall cause a forfeiture of the subJect
Leases and the liyuidaced dam~qe5 fUn~.
, I
If Carousel meets the foregolng performance
schedule and is not ln forfeiture, on July 31, 1981,
$100,000 of the liqu1dated da~ages tund 1S released to
Carousel. The balance 1S released to Carousel on
December 2, 1980.
Problem Area Number 4: Can the number of separate leases (seven)
be reduced?
Solutlon: The waterslide and bath house leases w1ll be
comb1ned luto one Lease. The min1mu~ rent under the
waters11de lease will be increased by $2,446 annually
so there will be no loss of income revenue to Clty.
-2-
e
e
:.
The three separate fast food Leases wlll be
combined into one covering entire ground floor of
Carousel buildlng, excluding area occupied by merry-
go-round and equipment.
The separate second floor restaurant lease and
merry-go-round lease will remain separate.
The number of separate Leases will be reduced
from seven to four.
Problem Area Number 5: What are Carousel's projected costs and
performance schedules for the merry-go-round?
Solutlon: Carousel's projected costs for renovating
the merry-go-round total $125,000 wlth work to commence
January 5, 1981, per performance schedule delivered to
Clty staff November 6, 1980. Tracey Cameron contract
for $75,000 and Horse of a Different Color contract
for $35,000 plus projected mlscellaneous costs of
$15,000 (rental of location for work, lodging for crew,
etc.) already approved by city.
Problem Area Number 6: Tvhat are Carousel's projected costs fa r
renovation of Carousel buildlng and relater costs?
Solutlon: October 4, 1980, revlsed prO]ectlons of
costs to Carousel are as follows:
a. Renovation of Carousel bUllding
$ 615,000
b. Finish interior ground floor of
Carousel bUllding
62,000
c. Renovatlan of merry-go-round
125,000
d. Construction of ~aters1ide
923.000
e. General expenses (A&E, etc.)
247,000
$1,972,000
, \
f. Separate operator of second
story restaurant-proJected
finlsh cost
543,000
g. Cowmissary-office below pler
floor {projected deferred
cost}
232,000
Total completed proJect costs $2,747,000
-3-
e
e
:.
Problem Area Number 7: When wlll rent commence and rental security
deposlts be made by Carousel?
Solutlon: Rent commences and secur~ty deposlts will be
made for the waterslide, merry-go-round and fast food
operations on July 30, 1981, or when o?en for business,
whichever occurs f~rst. Rent commences and security
deposlt will be made for the second story restaurant on
December 1, 1981, or when open for business, whlchever
occurs first.
Respectfully submltted,
By
) / / I
~ /. Ii 1--- --~-
FRANK L. . JA..M!SON,' JR.' fo'r and
on/behalf of Spnta Monlca
C~rousel Corporatlon, ~ith
concurrence by designated staff,
City of Santa Monica
, I
-4-