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sr-090809-1qc7/~ ~;,Y o, City Council Report SantaMoniea City Council Meeting: September 8, 2009 Agenda Item: ~ "-'~ To: Mayor and City Council From: Marsha Jones Moutrie, City Attorney Subject: Resolution re Jonathan Club Lease Extension Recommended Action Staff recommends that Council adopt the attached resolution regarding the ten year extension of the Jonathan Club Lease of three parcels on Santa Monica beach. Executive Summary At its meeting of July 28, 2009, the Council again considered the matter of the Jonathan Club's request for a ten year extension of its lease with the City and the Club's proposal to provide benefits to the City which would be used to enhance public use of the beach. Council concluded that the ten year extension should be granted. The attached proposed resolution documents the Council's decision and makes the finding necessary for the lease extension. Background The Jonathan Club's 25 year lease with the City of three beach parcels immediately seaward of the clubhouse expires at the end of this year. The lease makes provision for one ten-year extension conditioned. upon a finding that there has been no change in the City and State's need to use the three parcels. Several months ago, the Club requested an extension and threatened suit if it was not granted. At three recent Council meetings, the Council considered the issue of whether need for the parcels has changed since the lease was made and whether the lease would be extended. Input to the Council on this issue has included staff reports, documentary evidence submitted as staff report attachments, submissions by the Jonathan Club, information provided orally by staff and public testimony. Most recently, the Jonathan Club submitted a proposal including significant financial benefits to the City which would bolster the Beach Fund and thereby assist the City's efforts to make public improvements to the beach, particularly the north beach. 1 These benefits consist of an annual rent payment $125,000, an annual improvement contribution of $75,000 and release of the Club's $212,300 overpayment claim. The Council considered this proposal at its meeting of July 28th and ultimately concluded that, to date, there has been no significant change in the City's need to use the Lease parcels for public purposes. While additional beach improvements and beach recreational opportunities are needed, such improvements and opportunities need not be sited on the Lease parcels during the next ten years. Moreover, at the end of the. ten-year option period, the Lease will expire by its own terms and the City will, in conjunction with the State, be able to exercise unfettered discretion as to the parcels' use. Discussion The attached proposed resolution makes the requisite finding and documents the Council's considerations and conclusion that the ten year extension should be granted. In particular, the resolution notes that the Club's proposal will increase the City's ability to enhance public use of the beach and that, in ten years, at the expiration of the lease the City will have discretion as to public use of the parcels, subject only to State control, since the Club's current legal claims will be extinguished by the expiration of the Lease. Financial Impacts & Budget Actions Adoption of the resolution and extension of the lease will benefit the City financially through the receipt of annual revenues and forgiveness of the Club's overpayment to the City. Prepared by: Marsha Jones Moutrie, City Attorney Approved: F~ryvard~d to J ,y P.r Manager 2 Reference Resolution No. 10426 (CCS).