SR-12-13-1977-13Ai
Santa Monica, California, December 6, 1977
To: Mayor and City Council
From: City Staff
Subject: Approval of Change of Lessee Al's Kitchen
Introduction:
0901x9977,
This report covers the change of lessee's dba Al's Kitchen on Santa
Monica Pier, from Mrs. Joan Crowne to Mr. Jack Rosenfeld. It describes
the new lessee's background, the appropriate Pier Master Lease sections,
and recommends the approval by the City Council.
Background:
The current lessee of Al's Kitchen on the Santa Monica Pier has asked
for the approval of City Council for a new operator for the restaurant,
Mr. Jack Rosenfeld.
He has been operating profitably in the small restaurant business for
thirty -two years, starting in the former "Toed -Inn" at Wilshire and
Saltair, later known as "Ben's Restaurant ". He is the current
operator of the "Continental Hofbrau" on Olympic Boulevard in West
Los Angeles.
At one time he was in charge of the complete commisary operation for
Goldwyn Studios in Hollywood at Santa Monica and Formosa Boulevards.
There he operated their dining room feeding 150 to 200; an executive
dining room seating 30; and all feeding operations out on location usually
numbering 200 to 300 at a time,
At the time he operated "Toed,Inn" he invested in its expansion, growing
from a seating capacity of 25 to 200, with 25 to 30 employees. He has
expanded the "Continental Hofbrau'' from 60 seats to 100. He has had
13 A , 177
To: Mayor and City Council 2- December 6, 1977
operating experience of a wide variety, from coffee shops to continental
dining, to a fast food operation, He has shown the ability to adjust to
different types of operations, and is looking forward to the challenge of
this new restaurant. He has extensive remodeling planned, with an additional
investment of $30,000 to $50,000 dependent upon approval by the City.
Dun & Bradstreet rates him with a ''clear history. His paying record has
been prompt, with sales within the last month. Dun & Bradstreet continues:
estimates show a moderate debt to worth condition, and a low current ratio
of 9.92; business has been established, Born 1920, married, active in
restaurant business most of adult life. Open 7:00 a.m.to 3:00 p.m. sells
beer and wine, sells to walk in trade, Territory West Los Angeles; rents
3,000 square feet in one story building in good condition. Premises neat.
He has been checked with his supplierswho report: "We have been selling
to Mr. ,Tack Rosenfeld for approximately ten years. He has always main-
tained an excellent credit record with us." Also: "Sold since 1968; terms
30 days net; manner of payment has been prompt and satisfactory."
As of this date, Mrs. .loan Crowne owes the City $19,283.38 of back rent
and interest on that back rent; and under the provisions of article 2.3
(late payment penalty) another $26,906.43 which as a practical matter
greatly exceeds any damage to the City and is effectively uncollectable.
Mrs. Croume had been paying the back rent in increments, but she was in-
formed that she would have to bring her account current. In light of
the back rent situation and Mrs. Crowne's inability to bring her account
current, staff has required as a condition of the escrow through an
irrevocable demand the escrow pay the City the amount due under the lease
rental provisions, i.e. $19,283.38. The escrow documents covering that
provision are attached. (see exhibit.)
To: Mayor and City Council -3- December 6, 1977
Lease Terms;
The lease was originally signed to begin July 1, 1976, and will
terminate on June 30, 1981. If approved by City Council, the
assignment to Mr, Rosenfeld would run until the end of the lease, at
the same terms as originally given to Mrs. Joan Crowne.,
Rental is ten percent of gross sales, with a minimum monthly rental of
$1,461. or $17,532 per year. Gross sales for 1975 were $194,820. and
for 1976 - $193,770.
Hours of operation are six days a week from 11:00 a.m. to 8:00 p.m.
minimum; with an annual three week vacation with approval of date by
the City of Santa Monica.
Appropriate Lease 'Se'ctions;
Sections of the Pier Master 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 pro-
vides' that all the restrictions of the lease shall be equally binding
upon the assignee,
13.4 Written Assumption Ureement - 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
To: Mayor and City Council -4- December 6, 1977
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 sublessee, or
can continue them on the original lease, or transfer the sublessee's
to a new lease.
Alternatives:
1. Disapprove the assignment, requiring lessee to continue operating
facility, or find another assignee.. As for other potential
assignees, we are unaware of any specific requests by viable
parties other than Jack Rosenfeld,
2. Approve the assignment and direct the City Manager to execute.the
applicable documents,
Recommendation:
It is the recommendation of City Staff that City Council direct the
City Manager to execute the transfer of the present lease for Al's
Kitchen held by Mrs. Joan Crowne to Mr. Jack Rosenfeld, upon the
receipt by the City Treasurer of all amounts due from the present
lessee and receipt of the Security Deposit and notification of adequate in-
surance. .as called for under Lease Article 12 from the new lessee.
Exhibit "A" Letter from Jack Rosenfeld
Exhibit "B" Letters of Credit Reference
Exhibit "C" Irrevocable Escrow Order
Prepared by; Donald T. Arnett
Peter Kipp
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INGLEWOOD, CALIFORNIA 90302
678 -2234
November 8, 1977
Donald T. Arnett
Division of Parks & Recreation
City Ball
1685 Main Street
Santa Monica, California 90401
Dear Mr. Arnett:
We have "been selling Mr. Jack Rosenfeld for
approximately ten years. He has always maintained an
excellent credit record with us.
AK :te
Sincerely,
TROJAN MEAT COMPANY, INC.
aron Kipper
lt6Jay6� A
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le,V E'FS OF ROgsre S.
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e2v,, ` .MANUFACTURERS OF COFFEE MAKING EQUIPMENT
2 1 1 5 S 0 U T II G R A N D A V E N U E
Donald Key Arnett
Director of Recregtion 8 Parks
City Hall 1685 Main St.
Santa Monica, Calif. 90401
Gentlemen:
L 0 S A N G E L E S, C A L I F 0 R N 1 A 9 0 0 0 7
Re: Continental Hofbrau
11611 W. Olympic Blvd.
Los Angeles Calif. 90064
= f'ieasQ give us- belaw- your- exPeriance- and- apinidn =o# this account.
*11 - information - will -be - held -striatly-Confidential;- and- we- -shall-
-be- pleased -to- reciprocate - whenever -we -- can- provi- de-you -- with - credit=
data -on- any -of -our- accounts:
Phone:747 -7361
Please return to us in the enclosed postage -free envelope.
Sincerely yours
t4,
EDW. APFFEL''C0.
Credit Department
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MANNER OF PAYMENT
ITa
'; Prompt and
Sold Since 1968 -I Now
XX satisfactory
F
Slow, but
Terms
i
30 day s net
considered good
Highest
_
Slow and
Recent Credit.,
$ 400.00
unsatisfactory
Open
Account
36220.00
Pays C.O.D.
Owing Now
On
Sells for
Contract
$ 00
cash only
Open
Account
OO
36
Account secured
Past Due
On
Makes unjust
Contract
00
Claims
Other
Mr. Rosenfield asked me to sent this credit referent
I
Information
Please feel free to call me if anythinq else is neet
Phone:747 -7361
Please return to us in the enclosed postage -free envelope.
Sincerely yours
t4,
EDW. APFFEL''C0.
Credit Department
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December 7, 1977
Business Title Corporation
3920 Wilshire Blvd.
Los Angeles, California
Dear Ms. Alden:
The undersigned does hereby agree to pay to the City of
Santa Monica the sum of $19,283.38 upon the close of
escrow. This is an irrevocable order.
Very truly yours,
,,loan G. Crowne
This assignment shall be conditional upon payment of
the above sum to the City of Santa Monica. No rights under
the lease shall be transferred until the City receives payment.
BUSINESS TITLE CORPORATION
B'y;
Donna Alden, Escrow 0 i.cer
191.
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Agenda Item 13 -A: Presented at this time was Mayor Swink's request for
discussion of a transfer of a lease for a restaurant dba Al's Kitchen
from Mrs. Joan Crowne to Mr. Jack Rosenfeld and authorization of execution
of pertinent documents. City Manger Williams noted that the staff report,
outlines the conditions of the assignment and the new lessee's background'
and recommends approval. After discussion Counci.lmember van den Steenhoven
moved to award Contract No. 2438(CCS) approving transfer of -the present
lease for the restaurant dba Al's Kitchen held by Mrs. Joan Crowne to
Mr. Jack Rosenfeld, upon receipt by the City Treasurer of all amounts due'
from the present lessee and receipt of the Security Deposit and notifica-
tion of adequate insurance as called for under Lease Article 12 from the
new lessee, and authorizing the City Manager to execute the pertinent
documents. Second by Councilmember Reed. City Attorney Knickerbocker
added that the lessee has agreed to a collateral security agreement,
executed for financing purposes only, which provides for assumption of
the lease in the event the lessee does not perform on our loan agreement.
The motion was then approved by the following vote:
Council Vote: Unanimously approved 7 -0
CITY COUNCIL MINUTES - December 13, 1977
Reference:
Contract No. 2253
(CCS)