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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 d � �•- 1,����'`�� \� X71611 W ;y LOS ANC -r rTf 14 14y v >LYM ELES~ >)-2 . E21.. -t,- r`. °sue 11611 W, OLYMPICBLVD 1LOS ,ANGELES , CALIF a C � 0 f � \2� 3u Q J "/n good Taste" i 420 EAST BEACH AVENUE 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 �O(NOW �!NVS JO 1d110 le,V E'FS OF ROgsre S. R 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 AA /qh 1J, fib q? 0! ', dorr SatiCd s Jzid yn U vorriow yiHva jo.� e to you. led 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 AA /qh 1J, fib q? 0! ', dorr SatiCd s Jzid yn U vorriow yiHva jo.� e to you. led 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. i ( �� c 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)