TITLE
Recommendation to authorize City Manager to execute all documents necessary for the Second Amendment to Lease No. 20968 between the City of Long Beach (Landlord) and the Hansen Bypass Trust, the Hansen Marital Trust, and the C and D Hansen Revocable Trust (collectively, Tenant) for the continued leasing of City-owned property at 25 39th Place adjacent to the Belmont Brewing Company. (District 3)
DISCUSSION
On August 8, 1989, the City Council authorized the execution of Lease No. 20968 (Lease) with James A. Brennan and Berton J. Simon, original tenant, and a sublease with Belmont Brewing Company, Inc. (a subsidiary of Tenant), for a 25-year term, for approximately 1,600 square feet of City-owned property located at the southern end of 39th Place, for use as outdoor seating (Patio), in connection with Tenant’s adjacent restaurant and “brewpub” operation. Subsequent modifications of the Lease included the expansion of the Patio and various assignments of the leasehold interest. The Patio currently totals 2,248 square feet representing approximately 29.3 percent of the total restaurant area. The Lease is scheduled to terminate on September 30, 2014.
Under the terms of the Lease, Tenant pays percentage rent in the amount of 5 percent of food sales, 3 percent of alcohol sales, and 10 percent of other sales. In no event, shall the total annual amount paid to City be less than the guaranteed Minimum Annual Rent (MAR), which is presently at $33,773.
With less than two years remaining on the existing term, Tenant has requested an extension of the Lease for business planning purposes. Given its location and that no alternative use is foreseen in the next seven years, staff recommends a 5-year extension of the Lease, subject to an immediate market value increase in the rent. Negotiations between City and Tenant coupled with an appraisal of the Patio, identified the market rental value for the leasehold interest at $39,115 per year.
A proposed S...
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