SR-07-11-1978-11DSanta Monica, California July 5, 1978
TO: Mayor and City Council
FROM: City Staff
SUBJECT: Santa Monica Pier Lease, Gladstones A Fish
Introduction
//
JUL 1 1 9979
This report covers the proposed lease between the City and the owner
of the restaurant presently in the Santa Monica Canyon called "Gladstones
4 Fish" to be located on the Pier in an area that is now not in use
and is in a deteriorated condition. This report gives a survey of the
background for such a lease, analyses its effect, outlines the action
taken by the Landmarks Commission and the Architectural Review Board,
and recommends the City Council approve the lease as negotiated by
the City Staff.
Background
As part of its overall plan of development of the Santa Monica Pier, the
City Staff has sought to bring high quality fish food at reasonable
prices to the Pier, and at the same time to repaisand maintain the
pilings and decking of the pier. When approached by Mr. Robert Morris,
owner of "Gladstones 4 Fish ", the location known as "Fisherman's Warf"
was suggested, as it combines an excellent view, ample parking located
immediately adjacent, with a portion of the pier that is badly in
need of repair. The existing restaurant in Santa Monica Canyon would no
longer be called "Gladstones 4 Fish ". Its established clientele and
business with sales over $ 1,500,000 annually would be completely moved
to the Pier. As with previously negotiated leases, all pier structural
repairs, all building and furnishing costs will be advanced by thellessee.
The location has not been used by the public for several years, since
the advanced state of deterioration of the pilings and decking has required
this portion of the pier be closed to the public. 11
_ e.1
-2- 1
Lease Terms
Term: 25 years with two 5 year options.
Rental: 8% of gross sales, with a minimum guarantee of
fifty thousand dollars per year.
Pier Repair: Paid by lessee, to be fully repaid out of
Additional Percentage Rental after the City has received its
minimum guarantee.
Rental Off -set: In return for the contruction of a new
restaurant on the Pier, and the addition to the City of an
established business which is estimated to be an investment
of $ 700,000. by the lessee, the City has proposed a rental
off -set of all rent after the minimum of $ 50,000. has been
paid each year until the costs of the repairs to the pier,
stringers, and decking has been recaptured by the lessee.
City retains right of approval on cost of repairs.
Once this amount, estimated to be $150,000.,has been recouped,
the lessee will pay 4% of gross sales to the City, while having
an off -set of 4 %for a period of six years from the date of
obtaining a Certificate of Occupancy, or until an additional
$ 300,000. has been recaptured, whichever comes first. This is esti-
mated by staff to be approximately 64% of the total investment of
the lessee, but puts a premium on the ability of the lessee in
the early stages of the lease to promote sales and enlarge the
business.
Parking: Although not a part of the lease, an agreement has
been worked out whereby the lessee will have the exclusive
use of 60 parking spaces between the hours of 4:OOpm and 2:OOam
only. These will be paid for monthly in advance, at a rate
of half the normal parking rate, $ .50 each space each day, or
-3-
$10,950.00 per year. These spaces will be
supervised by the personnel of the restaurant and available
to their valet parking system. During the day, when the\City
has its highest use of parking spaces on the pier, they will
be available to the general public.
Landmarks Commission: On June 20, 1978 the City Landmark's
commission voted a Certificate of Appropriateness for the
proposed restaurant since the site is on a designated City Landmark.
Architectural Review Board: On June 21, 1978 the Architectural
Review Board voted its approval.
Income to the City: From an area that presently is unuseable
to the public, and brings no revenue to the City, a minimum
of $ 50,000. per year rental will be guaranteed to the City,
while estimated revenues - -- although dependent upon actual
sales - -- are projected in the first six years to be $ 404,000.
Lease Terms analysis
The initial benefit to the City is to effect repair of a portion
of the Pier 60 feet by 90 feet at no outlay of City monies whatsoever.
This is estimated to be in the $ 150,000. range, and will provide
the base for a high quality anchor tenant to a part of the Pier
that has long sat unused and rotted. Another outstanding benefit
to the City is the obtaining of an established business in the
$ 1,500,000 sales per year range with 112 employees and 250 seats,
with its tax revenue as well as its rental revenue, as opposed
to a new business with an uncertain future. This restaurant has been
in operation and has shown a successful record over the past
five years.
In so far as possible, city staff has followed City Council policy
with regard to lease terms, as formerly approved in the Pier Standard
-4-
Lease, and in the leases of the Boathouse, Moby's Dock, and
Captain Jack Knight's one variation from these leases is the
six year limitation to the rental off -set, the additional year
being necessary to allow the lessee to recapture up to a 64%
maximum. This lessee has a history of successful operation and
growth in the last five years -- 44% annual growth average -- and
City Staff feels this warrants an additional year of rental off --set
in todays competative market for established operations.
Parking availability has been the most difficult agreement to
reach, since in every other part of theCity parking for a good
restaurant is free. On the Pier in the evenings, the City derives
a much lower amount of revenue than from its daytime operation.
Therefor the daytime arrangement worked out for this lease gives
the City control and makes these spaces available to the general
public. This use returns by far the largest amount of parking
revenue. In the evening hours from 4:00pm to 2:00am under this
arrangement a guarantee of $10,950 per year for 60 spaces will
boost City income, while reserving valet parking spaces for the
restaurant at no charge to the customer.
An analysis of the off -set provisions indicates that, depending
upon gross sales, the lessee will recapture all the initial outlay
for the Pier pilings and decking by the end of the second year. This
then allows the City to increase its return from the property
from the guaranteed minimum ($ 50,000.) to 4% of gross sales
for the following four years to an estimated total of $ 404,000 while
the lessee is limited to a maximum recapture of $ 300,000 after
return of the pier repair costs.
-5-
Alternatives
Not applicable.
Recommendation
It is the recommendation of the city staff that the City Council
approve the attached lease with Mr. Robert Morris dba Gladstones 4
Fish, and authorize the City Manager to execute the appropriate
documents.
Exhibit "A" Standard Pier Lease
"B" Lease Map
"C" Revenue Projections
"D" Gladstones Original Proposal, including menu
prepared by: Jeremy Ferris
Peter Kipp
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GIADSTON -9
4 EXHIBIT D
FISH
May 22, 1978
Mra.Peter Kipp
Facilities Business Mgr,
276 Santa Monica Pier
Santa Monica, Calif, 90401
Dear Mr® Kipp,
The following is a tentative proposal regarding the relo-
cation of Gladstone's 4 Fish from its present location at
146 Entrada Drive, Santa Monica Canyon to the Santa Monica
Pier. I propose to locate the new restaurant on the south-
westerly corner presently unoccupied and physically inspected
by us last week. It is my understanding the aforementioned
portion of the pier has not as yet been retrofitted to ex-
isting standards and would have to be before construction
of the new restaurant.
Gladstone's 4 Fish is a fresh seafood restaurant whose vo1-
ume in 1977 exceeded $1,300,000 in sales and in the year
1978 will gross in excess of $1,600,000. 1 believe that we
are well recognized in the community and I feel that Glad -
stone's 4 Fish would be a great asset for the Santa Monica
Pier.
7 <1e fwmda (hiw. Sawn M,, we Caw,.Cz�A02
GLADSTOY
4
FISH (2)
May 22, 1978
Mr. Peter Kipp
Facilities Business Mgr.
276 Santa Monica Pier
Santa Monica, Calif. 90401
I plan to convert the existing Gladstone's 4 Fish location
into a steak restaurant similar to the operation of the old
Ted's Grill. I believe by having control of the Entrada
Drive location, I will be able to transfer a majority of
Gladstone's customers to the pier and at the same time ob-
tain additional customers.
The_square_ footage requirement for the new restaurant is
approximately sixty five hundred (6500) square feet plus
use of an area for valet parking which would entail the
loss of six (6) existing parking spaces.
Using the approximate figure of $150,000 in needed pier
improvements prior to constructing the new Gladstone, my
total capital investment will be in excess of $700,000. I
prop6se to finance and complete the retrofitting of that
portion of the pier being discussed in this proposal and
totally fund and construct the entire restaurant package
146 Ernmdn I M,,. S,mm ?UnPa Cm,i , . C3.'1 012
May 22, 1978
Mr. Peter Kipp
Facilities Business Mgr.
276 Santa Monica Pier
Santa Monica, Calif. 90401
(3)
myself. I suggest a thirty (30) year lease with some op-
tion to renew for some period at a minimum rent to the City o`=
of Santa Monica of $50,000 per year against four (4) per
cent of sales until such time as I have recouped my initial
capital investment at which time the city would receive.
eight (8) per cent of gross sales.
Example; $150,000 gross sales would equal $6,000 per month
rent payment to the City of Santa Monica repre-
senting the four (4) per cent.
In addition, another $6,000 representing four (4)
per cent would be repaid to Gladstone's 4 Fish as
capitalization fund recap.
on the basis of $150,000 per month in gross sales, the Cap-
italization fund recap would be totally repaid to Gladstone's
within nine and three quarter years, however I believe that
with inflation, larger facilities and An increased volume of
sales, the time element would be closer to five years an&at
that point the City of Santa Monica would begin to receive a
full eight (8) per cent of gross sales. of course, during this
146 Fnt,.dz Drlre, Santa Mmka Canyon Ca_ 90402
GLADSM S
4
FISH (4)
May 22, 1978
Mr. Peter Kipp
Facilities Business Mgr®
276 Santa Monica Pier
Santa Monica, Cal if. 90401
period of recap for Gladstone`s, the City of Santa Monica
would have received rent in the amount of $700,000.
Mr. Kipp, I hope that you and your superiors understand the
sincerity-,.,with which this offer is being made. I do not
take the prospect of investing $700,000 lightly. My life
has been one of which all my dollars have been earned one
at a time.
Regarding any financial background, please contact Joe Wal-
ling at the Santa Monica Bank.
Hoping that this has opened a path for further discussion,
I remain.
146 CUt,.& [hi,,, Santa %!,&k Can,..(a 90402
Piping i b%from r-r cfIktdrOnS
� T;,,
GladGsT�m Cqhoowa �:asttq'lew bnylan.d .�
cc�� 1.00 bowl 1,50 Cladsion6 cFamak
Gl ctsG6 cfamous Conv Island fabulous mxturi
m5h Chowder Avomb on,a bed a
cap .75 bowl 1.25 `- boston',5a64fmL1
'A Jayanose, Syed(
�p�e�i�ers nor, cooKed, Comber
Shrimp, 'Fresh�fs�
Shrimp Cocktail Willi/ 04,50Y 5"
Crab Cocktafl, 2,75
Sashfmt, Cio�p irw
A .Iayanese 5yecfaIcy of Seafood That is not ✓Y SartFFranCi sCO S
Cl 000kw, with our Soy Sauce,, Shell `Hill, and CF're
J Oysters 2.75 a Samb of Tomato
cFreshly shucked on the, ttalf shell ePeppers, seasoned wi
Ceviche, 2,50
,/t rinr�cican Specialty of crveshcFsh cmarinared 502/, i?U
m a bllend of Limes, Onions, andTomatoes. Lo witlu Garlic
Cftlrfnated CrUMCI Salmon 2,50
A C7 tone., .5 Cdalty eilf W � IGLYId ctak
Oysters �iockefeiler 3,75 ✓1 meal fit, for a. King)
prepared in The, fabulous %;w Orleans manner, CiTlaine lobster stei
®tAi b01 —fav �� rothhr`
e CGladstonnej
cf
rar s
everything inTYte, Kad , �e
includes choice, of Coney lslaad'�ish Chowder or '411 vn
Salad) Cole Slaw and choice of Gladstone `Potatoes cfce Tossed Green Salad ) Gladstone, Coney i
Cole, Slaw, Sourdoi
Live, Lobsters isy,weightyer oz..47� �feeJ Gl dsto e
`Mc, only good Looster fs a vz bstcr,
�;t ushedbyJEkr from1j"ain� to oar LobsTertank
Live,`Ro&, Crab 5,q5
crrom our tank -toour boflers fi,5ecotuls, TIM oil
m preserve, rltaL wonderful flavor,
Steamed Clams, 6,q5
,A Gladstone✓ Syecial . Steamed in our spee+al broth.
U w11'k✓v1
Sea �a55
,5hrfinp in Thb Shell 6.q5
Salkrkon�
Gladsronv Shrimp steamed toperfeetior in,
our speaal broth.,
Charcoal broiled
,teamed SmoKed ladC�tlaskanCod b,as
on a S1CWer
A Gladstone, Original for you Smoked ftsh lovers,
gfif'Nt`Kabob
Served yipfng hot,,
*Nrc, or' all our i
California Crab 'boil 515
-A aadsrone, original. Whole, steamed INC,
cFory U i
'Rock. Crab, steamed Gladstone Clams, drawn,
`buTier avid Ctarn brotlU.
C�larcoal '
Fisherman nave's Syeefal r
Tffnder, a"Ycl1,
,
Garlic, Cheese) cbread I00
Id ilulf Sl
— —
Not respon. (Mc,
`rood 5aW 5,q5
'.rab, Shrimp anal
ace,.
r 6A5
' Seafood that fs
YAM, Clams,
Scallops. Served
7.q5
lt,
>h combined in
.ions, and amen
irlfc avid Wine.,.
5.q5
A , iI,g5
Olt, 5mmied
Gladstone,) Clams
>l=r, Claa
toes or Cob of Corn,,
Include"
Hwe.l)ressing, or
' cffsly Chowder
L-rmd and but v,
)tcc,
C15) or CA Vegaablb,
7� included
1�65QuttC,
Tolle
6,q5
8.q,5
ps and 5hr(mp 7q5
7,95
fs}t,
d lubbers
Cif, 5t A) �'q5
4.qD
,r, or sstole.n artirlQS.
Crried Shrimp 6,q5 4
Gladstonescrisher 46(PllaMr 7q5 4
-A heaping platter of GoldenCried`Fish , Clartitis, Q
Scallops 4W 6utf 5hrfmyl
n
Visit) our fresh fish market,,,
.25
.50
.50
.50
••
vco
All ow, food 15 available, "Logo::
cmirlimum food mMccJ 0 400yerycrson�
We, acc��,pp>J ba nlerlcara
elllaster Charge and Cash, -
nl teas cU Cheel(s.
t Sales tax is ached toall items served in Chis room.
All items on our meett{{ are eartfully piepavW to order.
PIeASC. allow 5 1clenL. timb; Thdnk you.
'bueto weather Conditions and Lazy fishermen
same itutl5 on nc�, mrnu may nor- bc, availobtu.
b
cf pied CFl5h SpecialtleS
4
b
b
bdect&c,Oc wu- FpcowresU"ghtly
Q
`biyped i"vr own batter a+td Meru
TOW Gladstone c
Q
to cvfca(orL,.
Q
b
cirrIM ish�q)lr1rter 5.q5
b
cfrlcd 5mll0ps 6.q5
Q
cFried Clams 5.q5
Crried Shrimp 6,q5 4
Gladstonescrisher 46(PllaMr 7q5 4
-A heaping platter of GoldenCried`Fish , Clartitis, Q
Scallops 4W 6utf 5hrfmyl
n
Visit) our fresh fish market,,,
.25
.50
.50
.50
••
vco
All ow, food 15 available, "Logo::
cmirlimum food mMccJ 0 400yerycrson�
We, acc��,pp>J ba nlerlcara
elllaster Charge and Cash, -
nl teas cU Cheel(s.
t Sales tax is ached toall items served in Chis room.
All items on our meett{{ are eartfully piepavW to order.
PIeASC. allow 5 1clenL. timb; Thdnk you.
'bueto weather Conditions and Lazy fishermen
same itutl5 on nc�, mrnu may nor- bc, availobtu.
This wine was
Produced from a
blend of white wines
grown In Sonoma County,
and the Butte Creek Area
of Northern California
and was specifically
selected because its
character complements
our seafood dinners.
Ly ..m.... soumnu
more c
�1�SmmnLia.
CAB,re4 rrq. q
LE n l
cAl.n�d u: I BonLd Ly
U+rtr liy.unn IYineiy
1/ndd.Ln.g, cdlfor.Jn
dlvlml tYP +br I�uhmie
efil M 3.q5 Glass 1.00
Davis Bymon
Winery was founded
in the early 1960's and is
located southwest of
the town of Healdsburg,
Sonoma County, California.
This small winery
is noted for its
limited production
of premium wines.
evugto,.5wrtagc5, veprcmbas, regressions,Mfl.aTim, delflariorU,
our California Whice� Wine, UZ fl>Xu�ate,5 daily, buC� lease
IlWcVc, that wc, do have a great assortmwicJ.�A5K your' waite (l,
�ose,l�ines
6aruy cRose, l obert"oadavL 4.50 Colombard (hose 3.50
for W reason, `thu abode pp',, do rwu,� aYyly to 16, fol10w69
CI ed anal U?'rted vWncs.
Qed Mle5
Camay j5Wt4jolais 3.75 Cabernex� Sauviynon,Louis oCllartini 5.50
Zinfandel, 5utter fiome� 5.00 CabernetSauvignan,2�eaulieu� 6.00
din
l mported es
aerrrran White Wf u Italian,whiuz wfnes
Zeller 5chwar -7c, Kat? , a-W mew 6.00 5oavb,. -bolla.� 6.00
n1 fesyorter Goldtroepelitl ,-H. 5ichel q-00
l�'-or uxse� i�o5eW(ae5
q rfn h , W4it2, Wim ittiaTeus "Rose 'breyfus,4shby 5.50
CMRCor-� 'bl anc Villa e�, . MOM, 6.50
kTovilly Crui5C.,, J" 10.00 rreneh I cd Nines
Tk9lWy, CITlonteache;U, .Ta.do'C, 13.50 `(5ea�olat5 vit agc l J daC-" 600
Chamyp q�le�
Korbel ' 5rut, 6.00
cl'1'lumm's Cordon Rouge,tmD 16.00
`bow., (Per M--) 2700
AwJLor Stwm'beer,
1.50
-Do 5XX(4g ht) ,cmyt'co
1.50
San rravi5co, Ca.
./(shai, juaru
1.50
Guinness Scow, Ireland
iteinekm, (-bark &Light),
'N55,,AlcJ, 6ngglaad
1.50
ittolland
1.50
rbaks, Germany
1.50
Kronmbourg Ap -ranee,
1.50
Carlsburg (4g4tVbark),
San cMgueL, (Phil iyyines
1.50
Omnwrlc�
Coors, U.&A,
1.50
1.00
, 5chlitz Liy}tt
1.00