TITLE
Recommendation to authorize City Manager, or designee, to execute all documents necessary for the Sixth Amendment to Lease No. 14471 with Marina Drive, Long Beach, LP, a California limited partnership (Lessee), allowing for the early exercise of two, five-year extension options for the continued lease of City-owned property for a restaurant facility at 6550 Marina Drive. (District 3)
DISCUSSION
On February 6, 1980, the City of Long Beach (City) and the Rusty Pelican Restaurant, Inc., entered into a 40-year lease agreement, Lease No. 14471 (Lease), for the use and occupancy of City-owned real property at 6550 Marina Drive (Premises) (Exhibit A - Site Map). The Lease was subsequently assigned to Marina Drive Long Beach, LP, (Lessee), which recently entered into a sublease with San Pedro Fish Market (Sublessee).
The Lease expires on February 29, 2020, and has two available five-year renewal options. The Sublessee plans to make a considerable capital investment at the Premises, in excess of $3,000,000. To accommodate the Sublessee’s level of investment, the Lessee has requested an early exercise of the two remaining five-year renewal options. This would extend the term through February 28, 2030, and consequently also allow for Sublessee to extend its sublease with the Lessee.
Under the current Lease terms, the City receives 3 percent of gross receipts, with a minimum base rent of $8,638 per month. In 2017, the minimum base rent of $103,656 was paid to the City. Staff has negotiated an increase in Percentage Rent to 4 percent. Based on the Sublessee’s projected gross receipts, this could result in an estimated increase in rental revenue to $195,000 per year, which is $91,344 above the current minimum base rent.
Additionally, the current Lease provides non-exclusive use of up to 126 parking spaces for restaurant use. Parking studies for the proposed San Pedro Fish Market restaurant indicate a peak need far exceeding that number, particularly on weeken...
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