SR-12-12-1978-6NSanta Monica, California,November 30, 1978
TO: Mayor and City Council
FROM: City Staff
6 A
DEC 1 2 1978
SUBJECT: Santa Monica Pier Lease Assignments -- Fish N' Chips &
Seaview Seafood
Introduction
This report covers the proposed assignment of the leases
on the Santa Monica Pier from Mr. Anis Salloom dba Seaview Seafood
and Mr. Raymond Weishaup dba Fish N' Chips to Mr. Robert Morris.
The report discusses the improvements Mr. Morris plans, delineates the
changes in the leases negotiated by staff, presents the appropriate
sections of the standard pier lease and recommends City Council approve
the leases and direct the City Manager to execute the appropriate
documents.
Background
Mr. Anis Salloom and Mr. Raymond Weishaup both have opened
escrows with Mr. Robert Morris to sell their leasehold interests on
the pier. In turn, Mr. Morris plans to enlarge the Seaview Seafood
operation into a retail and wholesale fresh fish operation and will
operate Fish N' Chips as a sit -down fried fish restaurant serving
beer and wine. Mr. Morris also intends to add a fast -food fried -
fish-to-go operation offering outdoor tables with colorful canopys on
the north side boardwalk and in the sebluded patio facing the south,
adjacent to the parking lot.
The new fish market would display an inventory approaching
$40,000. whereas now it approximates $400.00. Seawater tanks displaying
live fish, crabs, lobster and other sea life would be installed for
1 6 /v
DEC
At
1978
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viewing by the strolling public on the boardwalk. Also considerable
advertising is planned to attract new visitors to the pier.
The assignment of Fish N" Chips will be in the name of Mr.
Robert Morris', father, Mr. Joseph Morris; the assignment of Seaview
Seafood will be to California Food Ser.mice, Inc.
Salient Conditions
Term: Twenty -five years from date of lease execution.
Rental:
In return for an investment of approximately $200,000,
he has agreed to the following percentage rental schedule:
e
Fish & Chips Restaurant 10%
Fish & Chips Fast Food 10%
Sea View Seafood:
Retail Fish 50
Wholesale 2 1/2%
Current minimum monthly rent on the two leases is $1158.
($870.
from Fish N!
Chips and $28.8. from
the Seaview
Seafood) and
under
the negotiated
leases would rise to
$2,050. (
$1,250. from Fish
N' Chips and $800. from Seaview Seafood ).
Rental Offset:
Rental off -set from percentage rental in addition to minimum
monthly rental of $2,050. would be set at a maximum of $100,000 or
half of the total investment. This recapture would be an off -set from
one -half the percentage rental, i.e., five per cent of the sales
paying 10 per cent, two and one -half per cent of the sales paying
five per cent, and one and one - fourth per cent. An estimate of sales,
I
-3-
rents, off -sets, and recaptures by city staff is attached.
( attached Exhibit "A" )
CPI: A Consumer Price Index (cpi) differential is to be included
as has been done in all previous Standard Pier Leases, to automatically
adjust the lease minimums in three years.
Wholesale Sales Percentage Increase:
In any month that the wholesale sales of Seaview Seafood
exceeds 50% of total gross sales, the rental percentage for wholesale
sales rises to 4% of that amount in excess of 50% of total gross sales.
chang(:s .
Price Review:
The City shall have the right of review for any menu price
Mr. Robert Morris currently holds a lease from the City on
the Sxnta Monica Pier for the area at the extreme south - westerly point
where he is planning an investment of approximately $700,000. for the
locat -on of his restaurant known as Gladstones 4 Fish. He also is the
operai:or of the restaurant on the Pacific Coast Highway known as Jetty'.s
Recommendation
It is the recommendation of the City Staff that the City
Council approve the assignment of the lease of Mr. Anis Salloom dba
Seaview Seafood to Mr. Robert Morris, dba California Food Service, Inc.,
approve the assignment of the lease of Mr. Raymond Weishaup dba Fish
N' Ch:_ps to Mr. Joseph Morris; and direct the City Manager to execute
the appropriate documents.
Exibit "A" Staff Estimate of Sales, rents, and off -sets
"B" Analysis of original Proposal from Mr. Robert Morris
"C" Copy of Proposed Lease Assignment
"D" Applicable sections of standard Pier Lease
�z
Total, End 4,386,096 276,661 123,000(1) 153,661 76,831 76,831(2) 199,831
of Five
Year Period
Note: (1) Previous lessee's guaranteed minimum is $69,480, therefore these new leases guarantee
the City an increase of 77 %.
(2) Staff estimates recapture provision will total $76,831 with an equal amount to City
in Additional % Rental, over the five year period, during which time the total City
revenues will be $199,831.
(EXHIBIT
"A ")
SEAVIEW
SEAFOOD &'FISH N_' CHIPS
Annual
Estimated
Total
Guaranteed
Recapture
Annual
% Sales
Rental
Minimum
$ Above
(1/2 of %)
Total
Total
Increase
10 % -5%-
Paid to
Minimum
After Min. Pay-
for
to
Per Year
Year
Sales
2 1/2%
City
Available
ment to City
Recapture
City
Base
1
390,000
24,600
24,600
-0-
-0-
-0-
24,60C,
60%
2
624,000
39,360
24,600
14,760
7,380
7,380
31,980
40%
3
873,600
55,104
24,600
30,504
15,252
22,632
39,852
308
4
1,135,680
71,635
24,600
47,035
23,518
46,150
48,118
20%
5
1,362,816
85,962
24,600
61,362
30,681
76,831
55,281
Total, End 4,386,096 276,661 123,000(1) 153,661 76,831 76,831(2) 199,831
of Five
Year Period
Note: (1) Previous lessee's guaranteed minimum is $69,480, therefore these new leases guarantee
the City an increase of 77 %.
(2) Staff estimates recapture provision will total $76,831 with an equal amount to City
in Additional % Rental, over the five year period, during which time the total City
revenues will be $199,831.
( Exhibit "B" )
ANALYSIS OF .ORIGI14AL
PROPASAL FROM MR. ROBERT MORRIS
for
SEAVIEW SEAFOOD, INC
(To include Fish N' Chips)
Mr. Robert Morris has opened an escrow for the purchase of the
leasehold interest of both the Seaview Seafood Fish Market, and the
restaurant known as "Fish N' Chips ". He plans an investment of over
$200,000 to operate the Fish N' Chips Restaurant as both a fast food
take out operation and a sit down facility with beer and wine; and
the fish market as both a retail and wholesale enterprise serving the
entire bay area.
He plans on a much =xpanded operation, with extensive advertising
to draw new visitors to the pier. In place of the use of a display
which now is estimated a-- $400. of inventory, approximately $40,000
inventory will be shown, . including live fish, crab, and lobster
tanks with continually circulating salt water.
In front of the exs: =sting restaurant Mr. Morris plans to put
tables and canopy's for Luncheon dining, and decorate the exsisting
back patio for secluded :lied fresh fish dining, opening onto the
parking area to the south.
Term: 25 years
Minimum: $1,000 pe:: month
Rental Off -Set: After payment of Minimum rental, one -half the additional
percentage rental up to a maximum of $ 100, 000, or no more than five years.
Rental Percentage:
10% Food t3 Go
8% Sit Down Food, and Beer and Wine
5% Retail Fresh Fish
22% Wholesale Fresh Fish
( Exhibit "D" )
APPLICABLE SECTIONS OF STANDARD PIER LEASE
Sections of the Standard Pier Lease which govern a transfer of a
lease are:
13.1 Restrictions on Assignments -- This article of the lease
requires prior written consent of the City, and requires assignee to
agree to all the previous conditions of the lease, It states: Lessor's
consent will not be unreasonably withheld.
13.2 Termination -- This article of the lease provides for
the termination of the lease if an assignment is made without prior
approval.
13.3 Effect of Lessor's Consent -- This Article of the lease
provides that all the restriction3 of the lease shall be equally
binding upon the assignee.
13.4 Written Assumption Agreement -- This article of the lease
provides that the original lessee is not released from liability
under the lease except in the case of a valid assignment, where the
assignee in writing has assumed all obligations of the lease.
13.5 Transfer on Termination -- This article of the lease
provides for complete discretion by the City if previous to the lease
term, the lease is terminated; the City can terminate the sublease,
or can continue them on the origi:zal lease, or transfer the sublessees
to a new lease.
J:,.