HomeMy WebLinkAbout2025-07-15; City Council; Resolution 2025-162Exhibit 1
RESOLUTION NO. 2025-162
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CARLSBAD,
CALIFORNIA, APPROVING A LOAN AGREEMENT IN THE AMOUNT OF
$500,000 AND A FIRST AMENDMENT TO THE LEASE AGREEMENT WITH NEW
VILLAGE ARTS, INC. FOR THE CITY-OWNED PROPERTY AT 2787 STATE
STREET, AUTHORIZING THE CITY MANAGER TO EXECUTE THE LOAN
AGREEMENT AND FIRST AMENDMENT TO THE LEASE AGREEMENT, AND
APPROPRIATING $500,000 FROM THE GENERAL FUND RESERVE
WHEREAS, the City is the owner of that real property situated at 2787 State Street, Carlsbad,
California, consisting of approximately 9,400 square feet of commercial building space, designated as
Assessor Parcel Number 203-295-01 and 02 (“Premises”); and
WHEREAS, since 2006, New Village Arts (NVA) has operated a performing arts theater at the
Premises under successive lease agreements approved by the City Council; and
WHEREAS, on July 27, 2021, the City Council approved a new ten-year lease agreement with
NVA, with two five-year extension options authorized by Resolution No. 2021-182, as well as a
construction and reimbursement agreement under which the city agreed to reimburse NVA up to
$573,000 for certain tenant improvements, including $103,000 toward solar installation and $470,000
for exterior improvements; and
WHEREAS, NVA subsequently completed extensive renovations to the Premises at a total cost
exceeding $3 million, funded in part by a $893,259 commercial loan with Endeavor Bank; and
WHEREAS, on Oct. 7, 2024, NVA was awarded a $625,000 matching grant from the Prebys
Foundation, contingent upon successfully raising an equivalent amount by Dec. 31, 2025, with the
combined funds intended to fully retire the building renovation debt; and
WHEREAS, on Oct. 30, 2024, NVA formally requested city assistance in the form of a loan to
retire its remaining building renovation debt; and
WHEREAS, on Jan. 28, 2025, the City Council adopted Resolution No. 2025-028, appointing the
City Manager, or designee, as real estate negotiator to negotiate a loan agreement and modified
lease terms; and
WHEREAS, NVA will tender payment in the amount of $393,259 to Endeavor Bank by July 31,
2025, which will reduce the remaining loan balance to $500,000; and
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WHEREAS, city staff have negotiated a Loan Agreement with NVA that includes the following
key terms:
•The City will provide a $500,00 loan to NVA at 3% annual interest, with interest-only
payments of approximately $1,250 per month from July 1, 2025, through Jan. 31, 2026;
•Upon receiving proof of NVA’s payment to Endeavor Bank in the amount of $393,259,
which is due by July 31, 2025, the City will disburse the $500,000 loan proceeds directly to
Endeavor Bank to retire NVA’s building renovation debt.
•Through a capital fundraising campaign, NVA intends to raise $250,000 by Dec. 31, 2025,
to be matched with the Prebys Foundation grant by Jan. 31, 2026. The $500,000 in raised
and matched funds are to be used by NVA to repay the City’s $500,000 loan.
•Any remaining unpaid principal balance on the city’s $500,000 loan to NVA as of Jan. 31,
2026, shall be converted into a monthly lease payment obligation amortized over the
applicable term according to the schedule below:
Remaining Principal Balance Payment Term Interest Rate Estimated Monthly Rent
Up to $250,0000 5 Years 4% Up to $4,604.13
$250,001 - $500,000 12 Years 5% Up to $4,624.45
•NVA may prepay all or part of the balance at any time without penalty.
•NVA shall be required to submit monthly financial reports during the 2025 calendar year
to ensure transparency around NVA’s capital fundraising efforts and the financial
condition of NVA.
WHEREAS, the original lease agreement is being amended to, among other items, revise
sections related to maintenance and repair costs, such that NVA will now have the sole responsibility
for all maintenance and repair costs for the Premises, except for the fire alarm and sprinkler system
as well as sidewalks and parkways, for the remaining balance of the lease term; and
WHEREAS, city staff have determined that approval of the Loan Agreement and the First
Amendment to the Lease Agreement will protect the city’s long-term interests in the Premises,
ensure repayment of the loan principal and interest over time, and support the ongoing operation of
a valued cultural arts tenant in the Carlsbad Village; and
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WHEREAS, city staff is recommending that the City Council appropriate $500,000 from the
General Fund Reserve to fund the proposed loan.
NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Carlsbad, California, as
follows:
1.That the above recitations are true and correct.
2.The proposed action is categorically exempt from environmental review under CEQA
Guidelines Section 15301 because it involves the leasing, operation, maintenance and
minor alteration of existing facilities with negligible or no expansion of the existing or
former use. No exceptions to the categorical exemption as set forth in CEQA
Guidelines Section 15300.2 or Carlsbad Municipal Code Section 19.04.070(C) apply.
3.That the City Council has determined that New Village Arts provides a significant public
benefit to the community by supporting arts and culture in the Carlsbad Village area,
offering an alternative evening activity that encourages positive pedestrian traffic and
public interaction, and enhancing the Village’s retail and dining environment with a
cultural venue that otherwise would not exist in the area. Further, NVA’s use of the
Property as a theater and arts center is consistent with the goals of the Carlsbad
Village and Barrio Master Plan, which calls for uses that activate the Village through
placemaking strategies supporting arts and culture, including visual, musical, and
theatrical arts, and other public performances.
4.That the City Council hereby approves the Loan Agreement and the First Amendment
to Lease Agreement with New Village Arts, attached hereto as Attachment A and B
respectively, and authorizes the City Manager, or designee, to execute these
agreements on behalf of the City of Carlsbad and to take all actions necessary to
implement them, including minor or clerical modifications as approved by the City
Attorney.
5.That the City Council hereby appropriates $500,000 from the General Fund Reserve to
fund the City’s loan to New Village Arts under the terms of the approved Loan
Agreement, to be used solely to retire the existing Endeavor Bank loan related to
tenant improvements at the Premises.
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6.That this Lease Amendment as well as the underlying Lease Agreement shall be
recorded in the Office of the Recorder of the County of San Diego pursuant to
California Government Code Section 37393.
7.That the City Manager, or designee, is authorized and directed to take all further
actions as necessary to carry out the purposes of this Resolution, including but not
limited to, ensuring NVA’s compliance with repayment, reporting, and maintenance
and repair obligations under the Loan Agreement and the First Amendment to the
Lease Agreement.
PASSED, APPROVED AND ADOPTED at a Regular Meeting of the City Council of the City
of Carlsbad on the 15th day of July, 2025, by the following vote, to wit:
AYES: Blackburn, Bhat-Patel, Acosta, Burkholder, Shin.
NAYS: None.
ABSTAIN: None.
ABSENT: None.
______________________________________
KEITH BLACKBURN, Mayor
______________________________________
SHERRY FREISINGER, City Clerk
(SEAL)
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Attachment A
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Attachment B
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