HomeMy WebLinkAbout2024-07-16; City Council; Resolution 2024-169RESOLUTION NO. 2024-169
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CARLSBAD, CALIFORNIA,
APPROVING THE RATIFICATION OF THE FIFTH AMENDMENT TO THE RETAIL
LEASE AGREEMENT WITH HOUSE MARTEL, LLC TO EXTEND THE LEASE
AGREEMENT FOR A PERIOD OF FIVE YEARS FOR THE CHAPTERS CAFE AT THE
CARLSBAD CITY LIBRARY, EXTENDING THE PAYOFF DATE OF THE DEFERRED
RENT PAYMENTS UNTIL THE END OF THE AMENDED TERM AND AUTHORIZING
THE CITY MANAGER TO EXECUTE THE LEASE AMENDMENT AND TO ACT ON
BEHALF OF THE CITY OF CARLSBAD IN ALL FUTURE DECISIONS AND ACTIONS
NECESSARY TO IMPLEMENT THE AMENDMENT
WHEREAS, on Aug. 2, 2018, the city and House Martel, LLC (Chapters Cafe}, entered into a
Retail Lease Agreement for the property located at 1775 Dove Lane, Carlsbad, California, 92011
(Premises}, consisting of approximately 700 square feet of commercial building space located within
the Carlsbad City Library (Lease} (Resolution No. 2018-136}; and
WHEREAS, on Jan. 29, 2019, the city and Chapters Cafe entered into Amendment No. 1 to the
Lease, extending the required business opening date ninety-days, from August 2, 2018, to April 30,
2019 (Resolution No. 2019-010}; and
WHEREAS, on Oct. 6, 2020, the city and Chapters Cafe entered into Amendment No. 2 to the
Lease, deferring rental payments for up to nine months from May 1, 2020, to Jan. 31, 2021
(Resolution No. 2020-198}; and
WHEREAS, on Feb. 9, 2021, the city and Chapters Cafe entered into Amendment No. 3 to the
Lease, deferring rental payments for up to an additional six months from Feb. 1, 2021, to Aug. 31,
2021 (Resolution No. 2021-039}; and
WHEREAS, on Aug. 16, 2022, the city and Chapters Cafe entered into Amendment No. 4 to the
Lease, amending the base rent to $9,000 per year, the annual percentage rent to 12% of all gross
sales above the rent breakpoint of $75,000 per year not to exceed $5,000 per year, and establishing
the deferred rent in the amount of $30,823 to be paid by April 29, 2024 (Resolution No. 2022-203};
and
WHEREAS, Chapters Cafe has reduced its deferred rent from $30,823 to approximately
$22,524 since August 2022 and will completely remit payment of its deferred rent by April 29, 2029;
and
WHEREAS, Chapters Cafe has continued to maintain its leasehold in good condition and
complied with all other terms of its lease; and
RATIFICATION OF AMENDMENT NO. 5 TO RETAIL LEASE AGREEMENT
This Ratification of Amendment No. 5 to Retail Lease Agreement ("Amendment") is
entered into as of , , 2024, by and between the CITY OF CARLSBAD, a
California municipal corpo tion ("Landlord") and House Martel, LLC, a California limited liability
company ("Tenann 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 for the property located at 1775 Dove Lane, Carlsbad, CA 92011 , consisting of
approximately 750 square feet of commercial building space located within the Carlsbad City
• . library ("Lease").
WEREAS, on Jan. 29, 2019, the Landlord and Tenant entered into Amendment No. 1 to
the Lease, extending the business opening date ninety days, from August 2, 2018, to April 30,
2019; and
WHEREAS, on Oct. 6, 2020, the Landlord and Tenant entered into Amendment No. 2 to
the Lease, deferring rent payments for up to nine months, from May 1, 2020, to Jan. 31 , 2021;
and
WHEREAS, on Feb. 9, 2021, the Landlord and Tenant entered into Amendment No. 3 to
the Lease, deferring rent payments for up to six additional months, from Feb. 1, 2021, to Aug. 31 ,
2021; and
WHEREAS, on Aug. 16, 2022, the Landlord and Tenant entered into Amendment No. 4
to the Lease, amending the Base Rent to $9,000 per year, the annual Percentage Rent to 12%
of all gross sales above the rent breakpoint in an amount not to exceed $5,000 per year, and
establishing the Deferred Rent in the amount of $30,823 to be paid by April 29, 2024; and
WHEREAS, the parties desire to exercise the Extension Option to extend the Agreement
for a period of five (5) years; and
WHREAS, the initial term of the Lease expired on April 29, 2024, and the Tenant has
continued to operate and use the leased premises; and
WHEREAS, the Tenant has requested the parties extend the term of the amended
Agreement for an additional five years ending on April 29, 2029; and
WHEREAS, the City Council has determined it is in the Landlord's best interest to extend
the term of the amended Agreement for an additional five years; and
WHEREAS, the Landlord and tenant agree to extend the Deferred Rent Period to allow
payment of Deferred Rent during the extension term period, ending on April 29, 2029; and
WHEREAS, all capitalized terms used in this Amendment, unless otherwise specified,
shall have the same meaning as the capitalized terms used in the Lease.
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NOW, THEREFORE, for valuable consideration, the receipt and adequacy of which are
expressly acknowledged, Landlord and Tenant agree as follows:
AGREEMENT
1. Article 1: Basic Lease Provisions: Subsections 1.3 Term and Rent Commencement and
1.5(b) Deferred Rent of the Lease are hereby deleted in their entirety and replaced with the
following language:
1.3 Term and Rent Commencement. The term of the Lease shall be for a period of five
(5) years commencing on April 30, 2024, and ending on April 29, 2029. For purposes of
the approval and execution of the final five-year extension option, the City Manager, or his
designee, is hereby authorized to act on behalf of the City of Carlsbad
1.5 (b) Deferred Rent. Notwithstanding the provisions in Article 1 of the Lease, Tenant
may continue to defer payment of past due Base Rent for the period commencing May 1,
2020, and continuing through April 29, 2029, in the aggregate amount of approximately
$22,524 ("Deferred Rent"). Tenant shall pay Landlord the Deferred Rent no later than April
29, 2029. 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) Failure to Comply. If Tenant fails to timely comply with Sections 1.4 or 1.5
of this Lease, as amended, 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.
(2) 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.
(3) 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.
2. Article 3: TERM: Subsections 3.2 Extension Options of the Lease are hereby deleted in
their entirety and replaced with the following language:
3.2 Extension Option. N/A
3. All other provisions of the Agreement will remain in full force and effect.
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4. All requisite insurance policies to be maintained by the Tenant pursuant to the
Agreement will include coverage for this Amendment.
5. The individuals executing this Amendment and the instruments referenced in it on behalf
of Lessee each represent and warrant that they have the legal power, right and actual authority
to bind Lessee to the terms and conditions of this Amendment.
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