SR-09-26-1978-6N-1-
Santa Monica, California, September 5, 1978
To: Mayor and City Council
SEP 2 6 1978
From: City Staff
Subject: Pier Lease Extention -- Playland Arcade
Introduction:
This report covers the request for Mr. George Gordon dba Playland
Arcade to extend his lease in return for his investment in up- grading
the building housing the Playland Arcade. It analyses his proposal,
discusses changes negotiated by staff, recommends City Council approve
the addendum to the lease and directs the City Manager to execute the
appropriate documents.
Background:
Mr. George Gordon recently added approximately 1000 square feet to
the building housing the Playland Arcade at a cost of $30,151.95. He
plans ancadditional investment of approximately $60,000 to renovate
the facade of the building, as well as to restore the floor. In
return for this investment he is asking for either a ten year.lease
extention or a five year lease extention with a five year option,
plus a rental percentage decrease to off -set his investment.
M
SEP 2 6 1978
-2-
Lease Terms.
Term: Ten Years from current -lease termination ( 6/30/81 ).
Rental
Proposed 020% of all sales; $52,500 yearly minimum.
Existing .015% of all sales; $35,316 yearly minimum.
As a unique operation the Arcade does not fit into a
category with the other businesses on the Pier. It has a comparatively
high gross sales ( See exhibit "A" ), relatively low labor and
maintenance costs, and provides a comparatively high return. Because
of the expansion of the Arcade and the accompanying addition for new
game machines, the Arcade's gross revenues should continue to rise.
Consequently, it is the opinion of Staff that the City's percentage
rental for the Arcade lease should be raised from 15 pc-r cent to 20
percent.
The recent expansion and anticipated renovation to the
Arcade and Mr. Gordon's record as a responsible pier businessman
indicate that this lease term should be extended ten years beyond
June 30, 1981.
Rental Off -Set
In return for the $30,000 addition to the Arcade building
and the 60,000 additional anticipated facade renovation, city has
proposed a rental off -set of z the new percentage rent (10 %) after the
nQw minimum of $52,500 per year has been paid '.each year to a maximum
of five years or until one- half,of Mr. Gordon's City audited
restoration expense has been recaptured.
_3_
Recommendation
It is the recommendation of the Staff that City Council approve
the addendum to the lease and direct the City Manager to execute
the appropriate documents which would raise the percentage rental
to twenty per cent and extend the term 10 years from the expiration
of the current lease ( 6/30/81 ).
Exhibit "A" Staff Projection of Arcade Sales, Rents, and Improvements
recapture.
"B" Mr. Gordon's Proposal
"C" Lease Addendum with Maps.
Prepared by Jeremy Ferris
Peter Kipp
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Joyce Snider
City Clerk
CITY
MONICA SANTA
CALIFORNIA
1685 Main Street, Santa Monica, Ca. 90401
Telephone (213) 393 -9975
October 5, 1978
Mr. George Gordon
dba Gordon Enterprises - Playland Arcade
350 Santa Monica Pier
Santa Monica, California 90401
Subject: Contract No. 3097(CCS)
Lease Addendum: George Gordon
dba Gordon Enterprises - Playland Arcade
Dear Mr. Gordon:
At its meeting held September 26, 1978, the City Council
approved the subject lease addendum and authorized. the
City Manager to execute the contract documents on behalf
of the City.
Please sign the two attached agreements, retain one copy
for your records,.and return the original fully executed
document to the office of the City Clerk.
By: Ann Shore
Assistant City Clerk
JS: AS: jj
cc: Department of Entertainment Facilities
Exhibit B
z,4
Agenda Item 6 -N; Presented at this time was a recommendation for
extension of a lease for Playland Arcade on the Santa Monica Pier.
After discussion Councilmember Scott moved to approve the addendum
extending the lease for Playlan Arca e -,on the Santa Monica Pier
amended to raise the percentage rental from 20 percent to 25 percent.
Second by Mayor Pro Tempore Cohen. The motion failed by the following
vote:
Council Vote: Affirmative: Councilmembers Cohen, Scott
Negative: Councilmembers Bambrick, Reed, Trives,
van den Steenhoven, Swink
Councilmember van den Steenhoven moved to approve the addendum extending
tale lease or Playlan Arca e on Santa Monica Pier, as recommended, by
award of Contract No. 3097(CCS). Second by Councilmember Trives. The;
motion was approved by the following vote:
Council Vote: Affirmative Trives, van eden BSteenhoven, Swinkeed,
Negative: Council member Scott
CITY COUNCIL MINUTES - SEPTEMBER 26, 1978
Contra
Playl.