HomeMy WebLinkAbout2020-05-12; City Council; ; Guidelines for Considering City Lease Rent Deferral Requests and Consideration of City Lease Rent Deferral Requests for Chapters Café and New Village Artssubcommittee is to discuss and identify options for economic revitalization in response to the
COVID-19 emergency for consideration by the full City Council.
Based on a recommendation from the Ad Hoc City Council Economic Revitalization
Subcommittee, on April 21, 2020, City Council adopted a resolution authorizing the creation of
the Economic Recovery and Revitalization Initiative which, in part, directed staff to return to
the City Council to present guidelines for considering rent deferral requests in a manner that
will ensure consistency and fairness in any relief granted, and to consider specific rent deferral
requests for Chapters Cafe and New Village Arts (Resolution No. 2020-068).
Staff is recommending that the City Council consider and approve a set of guidelines for
considering all city lease rent deferral requests, and that the City Council approve specific rent
deferral requests from Chapters Cafe and New Village Arts for up to six months.
Guidelines for Considering City Lease Rent Deferral Requests
Supporting the financial stability of all city tenants during this time of economic uncertainty is
critical to the continued stability of each individual business. The city receives approximately
$55,000 in total monthly rent from nine lessees, or $660,000 a year.
The proposed guidelines (Attachment A to Exhibit 1) try to balance the need for immediate
assistance for city tenants, most of whom are struggling with reduced business and closures,
with the needs of the city in meeting its fiduciary and legal duties. The guidelines are to be used
by the city manager in considering and making recommendations on all city lease rent deferral
requests. All rent deferral recommendations from the city manager would need to be reviewed
and approved by the City Council. All rent deferral requests granted would require an
associated lease amendment or rent deferral agreer:nent that would need to be approved by
the City Council.
Rent Deferral Request Recommendations for Chapters Cafe and New Village Arts
On March 19, 2020, Chapters Cafe requested temporary forgiveness of rent payments due to
financial hardships as a result of the COVID-19 safety declarations, including the full closure of
the Carlsbad City Library and the associated cafe (Exhibit 2). Similarly, on March 31, 2020, New
Village Arts requested temporary forgiveness of rent payments due to financial hardships
caused by the safety declarations, until such a time that it could re-open the business to the
public (Exhibit 3).
Chapter's Cafe pays $1,230.75 per month under its lease. A deferral of Chapter's Cafe's rent
payments for up to six-months would total $7,385 in deferred rent. Similarly, New Village Arts
pays $500 per month under its lease. A deferral of New Village Art's rent payments for up to six
months would total $3,000 in deferred rent.
Consistent with the proposed guidelines, the city manager is recommending that Chapters Cafe
be granted temporary deferral of rent payments for up to six months to be paid back over the
balance of the remaining initial lease term, with no interest or late charges. If the full amount of
rent deferral is not repaid by the end of the initial lease term, a 3% compounding interest
charge would be applied to the balance of the amount due. The city manager is also
May 12, 2020 Item #4 Page 2 of 10
recommending that New Village Arts be granted temporary deferral of rent payments for up to
six months, to be paid back over a twelve-month period beginning in January 2021, with no
interest or late charges. If the full amount of rent deferral is not repaid by the end of the
twelve-month period beginning in January 2021, a 3 % compounding interest charge will be
applied to the balance of the amount due.
As detailed above, all rent deferral recommendations from the city manager, including Chapters
Cafe and New Village Arts, would need to be reviewed and approved by the City Council. All
rent deferral requests granted would require an associated lease amendment or rent deferral
agreement that would need to be approved by the City Council.
Fiscal Analysis
The fiscal impact of the proposed item is approximately as follows:
Monthly rent rate Six months' rent deferral
Chapters Cafe $1,230.75 $7,384.50
New Village Arts $500.00 $3,000.00
TOTAL RENT DEFERRAL $1,730.75 $10,384.50
Next Steps
If the Guidelines for Considering City Lease Rent Deferral Requests are approved by the City
Council, the city manager will analyze tenant rent deferral requests using the guidelines and
make a recommendation to City Council for its review and consideration. Staff will update the
City Council on the status of city lease rent deferral requests, including the number of tenants
participating as well as the total amount of rent deferred.
Environmental Evaluation (CEQA)
Pursuant to Public Resources Code Section 21065, this action does not constitute a "project"
within the meaning of the California Environmental Quality Act in that it has no potential to
cause either a direct physical change in the environment, or a reasonably foreseeable indirect
physical change in the environment, and therefore does not require environmental review .
Exhibits
1. City Council resolution
2. Chapters Cafe rent deferral request
3. New Village Arts rent deferral request
May 12, 2020 Item #4 Page 3 of 10
RESOLUTION NO. 2020-083
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CARLSBAD,
CALIFORNIA, APPROVING GUIDELINES FOR CONSIDERING CITY
LEASE RENT DEFERRAL REQUESTS AND APPROVING A CITY LEASE
RENT DEFERRAL REQUEST FOR CHAPTERS CAFE
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
Exhibit 1
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,
including prohibiting gatherings of 10 or more people and strongly discouraging non-essential
gatherings of any size, and (c) all other applicable orders and directives associated with COVID-
19;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 with the 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, or 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, pursuant to the ERRI, staff is recommending that the City Council consider
and approve a set of guidelines for considering all city lease rent deferral requests; and
WHEREAS, the proposed guidelines in Attachment A are to be utilized by the city
manager in considering and making recommendations to the City Council on all city lease rent
deferral requests; and
May 12, 2020 Item #4 Page 4 of 10
WHEREAS, the guidelines attempt to balance the need for immediate assistance for city
tenants, most of whom are struggling with reduced business and closures, with the needs of the
city in meeting its fiduciary and legal duties; and
WHEREAS, the proposed program provides immediate relief to qualifying city tenants by
deferring rent payments for up to a six-month period; and
WHEREAS, all rent deferral recommendations from the city manager would need to be
approved by the City Council and any rent deferrals granted would require an associated lease
amendment or rent deferral agreement that would need to be approved by the City Council; and
WHEREAS, the city manager recommends that Chapters Cafe be granted temporary
deferral of rent payments for up to six months to be paid back over the balance of the remaining
initial lease term, with no interest or late charges, unless the full amount of rent deferral is not
repaid by the end of the initial lease term, in which case a 3% compounding interest charge
would be applied to the balance of the amount due; 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. The City Council approves the guidelines in Attachment A for considering city lease rent
deferral requests.
3. The City Council authorizes the city manager to negotiate and return to the City Council
with a lease amendment or rent deferral agreement for approval that grants Chapters Cafe a
temporary deferral of rent payments for up to six months to be paid back over the balance of
the remaining initial lease term, with no interest or late charges, unless the full amount of rent
May 12, 2020 Item #4 Page 5 of 10
deferral is not repaid by the end of the initial lease term, in which case a 3% compounding
interest charge would be applied to the balance of the amount due.
PASSED, APPROVED AND ADOPTED at a Regular Meeting ofthe City Council of the City of
Carlsbad on the 12th day of May 2020, by the following vote to wit:
AYES:
NAYS:
ABSENT:
Hall, Blackburn, Bhat-Patel, Schumacher.
None.
None.
MATT HALL, Mayor
ATTEST:
May 12, 2020 Item #4 Page 6 of 10
Attachment A
GUIDELINES FOR CONSIDERING CITY LEASE RENT DEFERRAL REQUESTS
The guidelines attempt to balance the need for immediate assistance for city tenants with the
needs of the city in meeting its fiduciary and legal duties. The guidelines are to be utilized by the
city manager in considering and making recommendations on all city lease rent deferral requests.
All rent deferral recommendations from the city manager would need to be reviewed and
approved by the City Council. All rent deferral requests granted would require an associated
lease amendment or rent deferral agreement that would need to be approved by the City
Council.
Minimum Conditions Applicable to All Tenants Seeking Rent Deferral
The city manager will analyze tenants independently and balance the following factors on a case-
by-case basis in determining whether a recommendation to the City Council for rent deferral
relief is appropriate:
(1) The tenant is in good standing with the city and is expected to remain a tenant in good
standing throughout the term of the lease deferral period. The criteria to determine
whether a tenant is in "good standing" are: (i) maintenance of the leasehold in good
condition, free of deferred maintenance; (ii) prompt payment history prior to
March 4, 2020; (iii) compliance with the non-rent provisions of the current lease,
including use provisions, insurance requirements, and regulatory permitting
requirements; and (iv) maintenance of accurate financial records that are accessible
to the city.
(2) The tenant provides evidence demonstrating the need for the rent deferral was
caused by the COVID-19 pandemic state of emergency. The evidence may include
documents showing the tenant's business was closed or its business operations were
modified because of COVID-19 public health orders and the closure or modification
resulted in a significant decrease in gross revenues.
(3) The long-term viability of the tenant's business.
(4) The remaining term on the tenant's lease agreement.
(5) Whether the tenant has applied for and received funds from a state or federal aid
program for which the tenant qualifies (tena.nts who have applied for state or federal
assistance are eligible, but may not also apply to the city for rent deferral to cover
costs for which they have already received state or federal assistance).
After considering the above factors, the city manager may recommend to the City Council
approval of one of the following methods of rent relief:
(1) Temporary deferral of rent payments for up to a six-month period to be paid back over a
twelve-month period beginning in January of the next calendar year with no interest or
late charges. If the full amount of rent deferral is not repaid within 12 months, a three
May 12, 2020 Item #4 Page 7 of 10
Attachment A
percent (3%) compounding interest charge will be applied to the balance of the amount
due.
(2) Temporary reduction in rent payments below the rent payment amounts specified in the
lease for up to a six-month period fo be paid back over a twelve-month period beginning
in January of the next calendar year with no interest or late charges. If the full amount of
rent deferral is not repaid within 12 months, a three percent (3%) compounding interest
charge will be applied to the balance of the amount due.
(3) Temporary deferral of rent payments for up to a six-month period to be paid back over
the balance of the remaining initial lease term with no interest or late charges. If the
full amount of rent deferral is not repaid by the end of the initial lease term, a three
percent (3%) compounding interest charge will be applied to the balance of the amount
due.
Rent deferral requests beyond 6 months, or from tenants who have already received a temporary
rent reduction, will be evaluated by the city manager under these guidelines and a
recommendation will be presented to the City Council for its review and consideration.
May 12, 2020 Item #4 Page 8 of 10
Tammy Cloud-McMinn
From: Curtis Jackson
Sent:
To:
Thursday, May 7, 2020 8:35 AM
Curtis Jackson
Subject: FW: Chapters rent suspension
-----Original Message-----
From: Lisa Martel
Sent: Thursday, March 19, 2020 11:34 AM
To: Fiona Everett <Fiona.Everett@carlsbadca.gov>
Subject: Chapters rent suspension
Hi Fiona,
I hope all is well with you and your family. I know this isn't a big priority right now but I thought I'd initiate the
conversation. Would it be possible to suspend the accumulating rent fees while the cafe and the library are
closed?
~usa
CAUTION: Do not open attachments or click on links unless you recognize the sender and know the content is
safe.
1
Exhibit 2
May 12, 2020 Item #4 Page 9 of 10
( City of
Carlsbad
Memorandum
May 12, 2020
To:
From:
Honorable Mayor Hall and Members of City Council
Sheila Cobian, City Clerk Services Manager
Geoff Patnoe, Assistant City Manager
All Receive -Agenda Item # '-/
For the Information of the:
CITY COUNCIL
Date S/ l'r CA ✓cc:::::_
CM ./ACM . ./DCM (3)........----
Via
Re: Additional Materials Regarding Staff Report Item #4 -Guidelines for Considering City
Lease Rent Deferral Requests and Consideration of City Lease Rent Deferral Requests
for Chapters Cafe and New Village Arts
This memorandum provides additional materials regarding the staff report for the May 12, 2020 City
Council Meeting Item #4 -Guidelines for Considering City Lease .Rent Deferral Requests and
Consideration of City Lease Rent Deferral Requests for Chapters Cafe and New Village Arts.
Exhibit 1 {Resolution) paragraph 5, referenced an Attachment A-Guidelines for Considering City Lease
Rent Deferral Requests. The attachment was inadvertently not included in the published staff report.
Please find attached the Guidelines for Considering City Lease Rent Deferral Requests.
Attachments:
A. Guidelines for Considering City Lease Rent Deferral Requests
cc: Scott Chadwick, City Manager
Celia Brewer, City Attorney
Gary Barberio, Deputy City Manager, Community Services
Curtis Jackson, Real Estate Manager
Attachment A
GUIDELINES FOR CONSIDERING CITY LEASE RENT DEFERRAL REQUESTS
The guidelines attempt to balance the need for immediate assistance for city tenants with the
needs of the city in meeting its fiduciary and legal duties. The guidelines are to be utilized by the
city manager in considering and making recommendations on all city lease rent deferral requests.
All rent deferral recommendations from the city manager would need to be reviewed and
approved by the City Council. All rent deferral requests granted would require an associated
lease amendment or rent deferral agreement that would need to be approved by the City
Council.
Minimum Conditions Applicable to All Tenants Seeking Rent Deferral
The city manager will analyze tenants independently and balance the following factors on a case-
by-case basis in determining whether a recommendation to the City Council for rent deferral
relief is appropriate:
(1) The tenant is in good standing with the city and is expected to remain a tenant in good
standing throughout the term of the lease deferral period. The criteria to determine
whether a tenant is in "good standing" are: (i) maintenance of the leasehold in good
condition, free of deferred maintenance; (ii) prompt payment history prior to
March 4, 2020; (iii) compliance with the non-rent provisions of the current lease,
including use provisions, insurance requirements, and regulatory permitting
requirements; and (iv) maintenance of accurate financial records that are accessible
to the city.
(2) The tenant provides evidence demonstrating the need for the rent deferral was
caused by the COVID-19 pandemic state of emergency. The evidence may include
documen1ts showing the tenant's business was closed or its business operations were
modified because of COVID-19 public health orders and the closure or modification
resulted in a significant decrease in gross revenues.
(3) The long-term viability of the tenant's business.
(4) The remaining term on the tenant's lease agreement.
(5) Whether the tenant has applied for and received funds from a state or federal aid
program for which the tenant qualifies (tena_nts who have applied for state or federal
assistance are eligible, but may not also apply to the city for rent deferral to cover
costs for which they have already received state or federal assistance).
After considering the above factors, the city manager may recommend to the City Council
approval of one of the following methods of rent relief:
(1) Temporary deferral of rent payments for up to a six-month period to be paid back over a
twelve-month period beginning in January of the next calendar year with no interest or
late charges. If the full amount of rent deferral is not repaid within 12 months, a three
Attachment A
percent (3%) compounding interest charge will be applied to the balance of the amount
due.
(2) Temporary reduction in rent payments below the rent payment amounts specified in the
lease for up to a six-month period to be paid back over a twelve-month period beginning
in January of the next calendar year with no interest or late charges. If the full amount of
rent deferral is not repaid within 12 months, a three percent (3%) compounding interest
charge will be applied to the balance of the amount due.
(3) Temporary deferral of rent payments for up to a six-month period to be paid back over
the balance of the remaining initial lease term with no interest or late charges. If the
full amount of rent deferral is not repaid by the end of the initial lease term, a three
percent (3%) compounding interest charge will be applied to the balance of the amount
due.
Rent deferral requests beyond 6 months, or from tenants who have already received a temporary
rent reduction, will be evaluated by the city manager under these guidelines and a
recommendation will be presented to the City Council for its review and consideration.
Tammy .Cloud-McMinn
From:
Sent:
To:
Kristianne Kurner <kristianne@newvillagearts.org>
Tuesday, May 12, 2020 2:51 PM
City Clerk
All Receive -Agenda Item# __j__
For the Information of the:
CITY COUNCIL
Dat~CA v cc ✓
Gt• ·/'fao1 12~-
Cc:
Subject:
Curtis Jackson; Richard Schultz; Gary Barberio; Alex Goodman; Bob Lin; Scott White
Item #4 for tonight's City Council Meeting
Attachments: NVA Letter Carlsbad City Council May 2020.pdf
Please find the attached letter in response to Item #4 on the City Council Agenda for May 12, 2020.
Thank you so much for the consideration and support. Feel free to reach out to me at the number below with any
questions.
With all best wishes,
Kristianne
KRISTIANNE KURNER
Founder/Executive Artistic Director
New Village Arts, Inc.
760.845.8020
www .newvillagearts.org
Important info from NVA:
COVID-19 has put a halt on our current productions. We will announce updates once we know more.
This is a detrimental time for the arts. Please click here to make a 100% tax-deductible donation to support NV A.
CAUTION: Do not open attachments or click on links unless you recognize the sender and know the content
is safe.
1
WVILLAGEAR
l<ristianne l<urner
Executive Artistic Director
Alex Goodman
Managing Director
· Robert I Lin
President
Sue Loftin
Vice-President
Mark Coulombe
Secretary
Mary l<err
Treasurer
Board Members at Larg1
Joan Cumming
Bob Dawson
Kristianne Kurner
Saundra Moton
Andrea Moriarty
Christy Rosa Mohler
Scott L. White. Form("r
President
NVA Advisory Board
Rosemary Eshelman, Chair
Ariel Bedell
Mark Caruana
Kathy Deering
Fred Deutsch
Haley DiDonato
Mea Hall
Walt & Sharon Hambly
Pat Hansen
Bobbie Hoder
Pat Hurley
Emma Jadhav
Chelsea Kaufman
Richard Kuranda
Cassie Langan
Linda Ledesma
Dr. Richard Lederer
Gina McBride
Julie Nygaard
Dr. Bob Ogle
Christine lleto Pangan
Justin Peek
Elizabeth Rhodes
Shari Roberts
De_bbie Rossi
Jay Sarno
Tom Sears
Alice Sievertson
Lorraine Wood
NVA is a 501/c)/3)
Non-Profit Organization
Tax ID #52-2320930
New Village Arts, Inc.
2787 State St.
Carlsbad, CA 92008
760.433.3245
info@newvillagearts.org
www.newvillagearts.org
5/12/2020
To Mayor Hall, City Council and City Staff:
We'd like to commend the City of Carlsbad council and staff for the exemplary job they have been doing
facing the COVID-19 pandemic. Our City has been a shining example of caring staff and volunteers
making meticulously thought-qut decisions and communicating those decisions in an open and
. available manner. We've been very proud to be part of this City.
In reference to the agenda item in front of the City Council tonight, New Village Arts would prefer to
continue to pay rent on a regular basis rather than take out a loan/deferral. We are most grateful for
the consideration of the staff and council on this matter.
New Village Arts looks forward to continuing to negotiate a long-term lease with the City of Car_lsbad for
the building located at 2787 State Street in the heart of Carlsbad Village. Having called the former Bauer
Lumber Yard home for over a decade, NVA staff, board of directors and stakeholders look forward to
investing in the property, in the near-and long-term, to continue to bring quality Arts and Culture
experiences to Carlsbad residents and visitors alike for a long time to come. Our goal is to complete
those negotiations in June of this year, and the City will be receiving our Letter of Intent by the end of
next week. We are hopeful that we will be able to return to our previous lease agreement of $1 per
year, so that NVA is able to put every available dollar into creating adventurous artistic experiences for .
our community.
It is our understanding that the City is planning to move forward this Fall with the previously approved
replacement of the West-facing wall and the roof. We hope to use this time of social distancing to plan
for the future and renovate our space, so that when we are able to return to regular public gatherings
NVA will continue to be able to fulfill our mission of providing a the home for artists, a community
forum, and a training ground for future art-makers and art-lovers.
New Village Arts is confident that we will be able to sustain the company through the pandemic.
Already, NVA has:
• Obtained the PPP loan;
• Received Business Interruption Insurance claim payout;
• Cut expenses from approximately $85,000_per month down to $25,000 per month;
• Created online artistic programming entitled New Virtual Arts;
• Continued work on two World Premiere theatre productions to be produced in the future,
bringing recognition and acclaim to Carlsbad;
• Begun to develop a financial plan that will take the organization through June of 2021.
We look forward to many more years of working together. Thank you for the consideration and support
of the arts in Carlsbad.
With best wishes and gratitude,
Founder and Executive Artistic Director
(760) 845-8020; kristianne@newvillagearts.org