SR-308-002-02 (12)
CCS:f:ccsadmn\share\staffreports\osm\hdos
Council Meeting: July 23, 2002 Santa Monica, California
TO: Mayor and City Council
FROM: City Staff
SUBJECT: Lease and Concession Agreement with Hot Dog on a Stick, Inc.
INTRODUCTION
This report recommends that the City Council authorize the City Manager to negotiate and
execute a lease and concessions agreement with Hot Dog on a Stick, Inc. to continue
operation of a beach concession at Santa Monica State Beach.
BACKGROUND
Hot Dog on a Stick, located at 1633 Ocean Front Walk, is the original concession in the
chain founded by David Barham in 1945. Mr. Barham sublet the storefront from Selma
Doumani for $600 per year from 1954 through 1958. In 1958, the State of California
acquired the property subject to the existing lease by Mr. Barham whose rental payments
continued at $600 per year. Mr. Barham understood that he had a five-year option on his
lease and exercised it to extend the lease to 1964. In 1964, the City approved a month-to-
month lease renewal with Mr. Barham at a rental rate of $300 per month. In 1979, the City
modified the month-to-month lease and increased the monthly rent to $450 per month.
The agreement was modified again in 1981 to increase the monthly rental rate to $550.
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In 1998, City staff contracted for an appraisal of Hot Dog on a Stick so that current market
rate rent could be established. The City did not seek a new use or tenant for the location
since the original Hot Dog on a Stick concession has become closely associated with the
Santa Monica beachfront. An appraisal study was completed and the market rent was
established at $2,200 per month. Staff initiated discussions with Hot Dog on a Stick, Inc.
(HDOS) regarding the negotiation of a new market rate lease and concession agreement
and construction of the Appian Way retaining wall, as these projects impacted HDOS
operations.
Now that all construction adjacent to the property has been completed, City staff has
undertaken a current appraisal and staff recommends a market rate lease.
DISCUSSION
Staff proposes a five-year lease and concession agreement with the term to be effective
July 1, 2002 with two one-year extensions. The proposed monthly rental rate is $2,200.
Payments will be adjusted each year by the percentage increase in the Consumer Price
Index (CPI). The proposed agreement is subject to and conditional upon the approval of
the State of California, Department of Parks and Recreation. The remaining terms of the
agreement are similar to other beach lease and concession agreements and continue the
current quality of service currently offered by HDOS.
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BUDGET/FINANCIAL IMPACT
Previously, HDOS paid $6,600 per year in rent. The proposed agreement will result in an
annual rental payment of $26,400. The proposed lease and concession agreement will
result in a net increase of $19,800 in annual rent revenue. No additional budget action is
necessary.
RECOMMENDATION
Staff recommends that the City Council authorize the City Manager to negotiate and
execute a lease and concessions agreement with Hot Dog on a Stick, Inc. to continue its
operation of a beach concession at Santa Monica State Beach.
Prepared by: Barbara Stinchfield, Director, Community & Cultural Services Dept.
Elaine Polachek, Open Space Manager
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