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Home My WebLink About2020-10-06; City Council; Resolution 2020-198RESOLUTION NO. 2020-198 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CARLSBAD, CALIFORNIA, APPROVING A SECOND AMENDMENT TO THE RETAIL LEASE AGREEMENT WITH HOUSE MARTEL, LLC TO DEFER RENT FOR UP TO NINE MONTHS DUE TO COVID-19 AND AUTHORIZING THE CITY MANAGER TO EXECUTE THE SECOND AMENDMENT FOR THE CHAPTERS CAFÉ LOCATED WITHIN THE CARLSBAD CITY LIBRARY AT 1775 DOVE LANE. WHEREAS, on Aug. 2, 2018, the city and House Martel, LLC (Chapters Café), entered into that certain Lease Agreement (Agreement) for the property located at 1775 Dove Lane, Carlsbad, California (Premises) consisting of approximately 750 square feet of commercial building space located within the Carlsbad City Library (Resolution No. 2018-136); and WEREAS, on Jan. 29, 2020, the city and Chapters Café entered into Amendment No. 1 to the Lease, extending the required business opening date ninety-days, from 180 days to 270 days from the August 2, 2018 (Resolution No. 2019-010); and WHEREAS, as a result of the COVID-19 pandemic, many city lease tenants are experiencing a decline in their businesses or have been required to temporarily close their businesses, in whole or in part, to comply with (a) executive orders, including California Executive Order N-33-20, (b) public health orders from the County of San Diego Public Health Officer, and (c) all other applicable orders and directives associated with COVID-19 (Safety Declarations); and WHEREAS, On March 19, 2020, Chapters Café requested temporary forgiveness of rent payments due to financial hardships as a result of COVID-19 Safety Declarations, including the full closure of the Dove Library and the associated café; and WHEREAS, as a result of the COVID-19 pandemic, on April 7, 2020, the City Council created the Ad Hoc City Council Economic Revitalization Subcommittee (Subcommittee) with the Oct. 6, 2020 Item #4 Page 3 of 14 goal of identifying options for economic revitalization due to the COVID-19 emergency for consideration by the full City Council; and WHEREAS, based on recommendations from the Subcommittee, on April 21, 2020, the City Council approved the Economic Recovery and Revitalization Initiative (ERRI). The ERRI included several measures to support COVID-19 economic response, recovery and revitalization, one of which includes city lessee relief (Resolution No. 2020-068); and WHEREAS, on May 12, 2020, the City Council approved the guidelines for considering city lease rent deferral requests, and approved a city lease rent deferral request for Chapters Café to defer rent for up to six months (Resolution No. 2020-083); and WHEREAS, the City Council adopted guidelines provided guidance on rent deferral requests beyond six-months, with such requests to be evaluated by the city manager for recommendation and presentation to the City Council for its review and consideration; and WHERAS, Chapter Café is now requesting to extend the rent deferral period an additional three months, for a rent deferral period totaling nine months (May 1, 2020 to Jan. 31, 2021) because Chapters Café relies upon library patrons as their source of income and Dove Library has not yet fully reopened to the public; and WHEREAS, the City Council accepts and adopts the City Manager's determination that the rent deferral relief requested is consistent with the guidelines adopted pursuant to Resolution No. 2020-083; and WHERAS, this request is based on the ongoing impacts of COVID-19, which include the initial closure and subsequent reduced patronage of the Dove Library since March 16, 2020; and Oct. 6, 2020 Item #4 Page 4 of 14 WHEREAS, Chapters Café has 31 months remaining on their lease agreement, has maintained their leasehold in good condition, has been timely with their rent up until their closure due to COVID-19 and the closure of the Dove Library, and have satisfied all other terms of the lease agreement; and WHEREAS, the Second Amendment will provide immediate relief to Chapters Cafe by deferring rent payments for up to nine-months (May 1, 2020 to Jan. 31, 2021), with the balance of the deferred rent to be paid back over the balance of the remaining term of the lease agreement; and NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Carlsbad, California, as follows: 1. The above recitations are true and correct. 2. That the City Manager is hereby authorized to execute this Second Amendment to the Retail Lease Agreement with Chapters Cafe, attached hereto as Attachment A, and to do so in full compliance with the terms and conditions expressed in the Agreement and to the satisfaction of the City Attorney. Oct. 6, 2020 Item #4 Page 5 of 14 1.F•-161Ft.14\„,,, PASSED, APPROVED AND ADOPTED at a Regular Meeting of the City Council of the City of Carlsbad on the 6th day of October, 2020, by the following vote to wit: AYES: Hall, Blackburn, Bhat-Patel, Schumacher. NAYS: None. ABSENT: None. MATT HALL, Mayor ATTEST: PY\Actv???p BARBARA ENGLESON, City Clerk (SEAL) Oct. 6, 2020 Item #4 Page 6 of 14 AMENDMENT NO. 2 TO RETAIL LEASE AGREEMENT This Amendment No. 2 to Retail Lease Agreement ("Amendment") is entered into as of 2020, by and between the CITY OF CARLSBAD, a California municipal corporation (Landlord') and House Martel, LLC, a California limited liability company (Tenant') and shall be effective and binding upon the parties as of the date of its execution by both parties. RECITALS WHEREAS, Landlord and Tenant are parties to a Retail Lease Agreement entered into as of August 2, 2018 ("Lease") for Premises located at the Carlsbad City Library at 1775 Dove Lane, California, CA 92011. WEREAS, on Jan. 29, 2020, the Landlord and Tenant entered into Amendment No. 1 to the Lease, extending the business opening date ninety-days, from 180 days to 270 days from August 2, 2018; and WHEREAS, due to the financial impact that the current Coronavirus (COVID-19) pandemic has had on Tenant, Tenant has requested that its obligation under the Article 1 of the Lease to pay Base Rent be deferred, and Landlord has agreed to allow such deferral, subject to the specific terms and conditions set forth in this Amendment. WHEREAS, all capitalized terms used in this Amendment, unless otherwise specified, shall have the same meaning as the capitalized terms used in the Lease. NOW, THEREFORE, for valuable consideration, the receipt and adequacy of which are expressly acknowledged, Landlord and Tenant agree as follows: RE EMENT 1. Deferred Rent. Notwithstanding the provisions in Article 1 of the Lease, Tenant may defer payment of Base Rent for the period commencing May 1, 2020 and continuing through January 31, 2021 (nine months), in the aggregate amount of $11,076.75 ("Deferred Rent"). The Deferred Rent will not be subject to interest or late charges or cause an event of default under Article 17 of the Lease, provided: 1.1. Commencing November 1, 2020, Tenant resumes paying Base Rent; and 1.2. Commencing February 1, 2021, Tenant repays the Deferred Rent in 31 consecutive monthly installments of $357.31 over the balance of the remaining initial Lease Term, which expires on July 31, 2023. 2. Failure to Comply. If Tenant fails to timely comply with Paragraph 1 of this Amendment, then (i) any unpaid Deferred Rent will become immediately due and payable and subject to 3% interest compounded monthly; and (ii) Landlord will have the right to pursue any available remedies under the Lease and/or applicable law. 3. Tenant Certification. By execution of this Amendment, Tenant certifies that Landlord has not defaulted in the performance of its obligations under the Lease and Tenant has no claim, defense, excuse or offset with respect to the Lease as it relates to COVID-19, or otherwise. Tenant further acknowledges and agrees that prior to executing this Amendment, Tenant has had an opportunity to discuss this Amendment with its legal counsel, tax professionals and financial advisors. 4. Confirmation. Except as modified by this Amendment, all provisions of the Lease shall remain in full force and effect. In the event of an irreconcilable conflict between the terms of the Lease and the terms of this Amendment, the terms in this Amendment shall control. Page 1 of 2 Oct. 6, 2020 Item #4 Page 7 of 14 LANDLORD: TENANT: CITY OF CA a California al corporation HOUSE MARTEL, LLC a California limited liability company By: By: anager Name: C2'3 191nr4:1 BY: ssistant City Attorney IN WITNESS WHEREOF, the parties have executed this Amendment as of the date first written above. Title: Dated: (454612:1) Dated: 6:4 APPROVED AS TO FORM: Celia A. Brewer City Attorney Page 2 of 2 Oct. 6, 2020 Item #4 Page 8 of 14