SR-12-13-1966- 900-003-10o
CITY OF SANTA MONICA I -64
-, mation
DATE: November 16, 1966
TO: The Honorable City Council
FROM: City Manager U
SUBJECT: Hotel Contract
Transmitted for your informal review is a contract offer for the construction
of an eight -story hotel which has been executed on behalf of Royal Inns of
America by Mr. Earl Gagosian, President. In addition to the proposed con-
tract document, other material attached 'includes:
a) A black and white photo reduction of a large colored rendering of
both the original 8 -story development and a future 10-story addition.
(The colored rendering is on display at the City Hall.)
b) A site allocation and landscape plan; the main, second and typical
floor plan for the original development and the initial parking plan,
The original structure will have accommodations to house 161 transient
guests and Section 3, 04 (page 11) of the Contract obligates the developer to
construct a 150 room addition within 18 calendar months after the close of
the fiscal year in which the annual gross receipts from room rentals have
equaled $3, 250. 00 per room.
The contract provides for a minimum annual ground rental of $30, 000 (com-
mencing when the building is occupied or not later than 18 months after contract
execution by the City) against 7 1/2% of all room rents and 31/o of all other gross
receipts from business conducted or transacted on the lease parcel. The
administration concurs with the developer's projections, which would indicate
an original annual ground rental of approximately $60, 000 per year for the
first unit. Developer's projections are generally as follows:
Description Gross Receipts % Amount
Room Rents $ 495,670 7 1/2 $ 37, 175
Restaurant 500,000 3 15,000
All other 330,000 3 9,900
Total Ground Rent $ 62,075
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To: The Honorable City Council
November 16, 1966
Other contract provisions which should be reviewed with special attention are:
Section
Page
Description
3.03
10
Security Deposit (on deposit now)
3.05
12
Lease Parcel uses
3.11
15
Repairs, Maintenance and Alterations
3.14
16
Construction Performance Bond
3.15
17
Continuing Performance Bond
3.16
17
Fire Insurance
4.05
22
City's Right to Subordination
4.06
22
Subordination of City's Interest
5.01
24
Title to Parcel Improvements
5.02
24
Improvements to Remain
5.08
27
Term of Lease
5.12
28
Partial Destruction of Parcel Improvements
6.09
32
New Lease and Agreement
The administration has discussed hotel construction on the city -owned site
(across from Civic Auditorium) with other potential developers over a period
of about two years. Those firms or individuals who have expressed a current
interest have been advised that the administration will recommend a developer
for City Council consideration December 13, 1966 from those executed pro-
posals which have been filed not later than December 5, 1966.
i
f
_PEI,I YzSCOTT`
City Mianager
PS/is
NOTE: In almost every instance, a real estate broker or brokers have
been associated with negotiations and have been advised of the
City Council Policy on the payment of real estate commissions.
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