SR-03-09-2010-1Cc7
City of ' ~~~
Santa Monica
City Council Meeting: March 9, 2010
Agenda Item: ~-'~-
To: Mayor and City Council
From: Andy Agle, Director of Housing and Economic Development
Subject: Modification of Lease Agreement for Civic Center Cafe
Recommended Action
Staff recommends that the City Council authorize the City Manager to negotiate and
execute a First Modification of Lease Agreement #8982 (CCS) with High Rise Goodies
Restaurant Group d.b.a. Trimana Grill to restructure lease terms relating to the formula
for base rent and the duration of validated patron parking for the cafe space in the-Civic
Center Parking Structure.
Executive Summary
On September 23, 2008, the City Council authorized a Lease with the High Rise
Goodies Restaurant Group (Tenant) to operate a cafe located at the Santa Monica Civic
Center Parking Structure at 333 Civic Center Drive.
Citing the downturn in the economy and a concern regarding the viability of the location,
the Tenant requests a modification to the Lease that would adjust the base rent formula
and increase validated patron parking from 40 minutes to 60 minutes.
Background
The design of the Civic Center Parking Structure included a cafe space to serve the
breakfast and lunch needs of people working in and visiting the Civic Center. Following
a series of RFPs seeking a food service operator for this location, the City selected High
Rise Goodies Restaurant Group d.b.a. Trimana Grill (Tenant), whose proposal most
closely met the City's operational expectations. The City Council authorized entering
into a ten year lease with two five-year options
The Tenant's plans are currently being reviewed by the Building and Safety Division.
Subsequent to Council's approval of the lease, and in light of today's challenging
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economic conditions, the owners of Trimana Grill had considered cancelling their plans
for the Santa Monica Civic Center; however, because of the investment they have
already made toward the realization of the Civic Center cafe, they would like to continue
forward if certain terms of the lease can be modified to aid in the viability of this location.
Discussion
The proposed First Modification of the Lease is as follows:
® Modify the existing rent provision which currently requires the Tenant to pay the
City the greater of base rent of $4,135 per month or 10 percent of gross sales.
The revised rent provision maintains the payment of Percentage Rent at 10
percent of gross sales, but modifies the base rent as follows:
o For the first year following the opening of business, only Percentage Rent
will be due. This will allow the Tenant the opportunity to pay rent on a
performance basis as the business establishes itself in an untested
location and creates a customer base.
o For Years 2 through 5, the Annual Base Rent will be calculated as
seventy-five percent (75 percent) of the average of the first year's rental
payments, while still retaining the percentage rent of 10 percent.
o For the remainder of the Term and for the Option Periods, the. Annual
Base Rent will be seventy-five (75 percent) of the previous three (3) years'
average rental payments while retaining the percentage rent of 10
percent.
® Modify the existing parking validation provision to allow an additional 20 minutes
of validated parking for cafe patrons, increasing the time from 40 minutes to 60
minutes. This modification is intended to help the Tenant stay competitive with
other "grab and go" locations with adjacent short-term parking and help promote
the cafe to visitors to the Civic Center
The current state of the economy has resulted in landlords being more flexible in
considering concessions to their tenants in order to facilitate opportunities for success in
a difficult market. The proposed lease modifications address the cafe operator's
concerns as well as the desires of employees and visitors for a quality, affordable food
service amenity in the Civic Center.
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Financial Impacts & Budget Actions
Revenues associated. with this Lease will be credited to Revenue Account
01263.400770. Funds for the construction of structural and mechanical improvements
are available in Account 0014017.589000 (Civic Center Parking Tenant Improvements).
Prepared by: Elana Buegoff, Sr. Development Analyst
Approved:
AndyAgle, Dire or
Housing. and Economic Development
Forwarded to Council:
Rod Gould
City Manager
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Reference Amended
Contract No. 8982 (CCS).