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HomeMy WebLinkAbout2002-09-10; Housing & Redevelopment Commission; 351; Lease Agreement for use of Agency-Owned PropertyHOUSING AND REDEVELOPMENT COMMISSION - AGENDA BILL I LE# 351 DEPT. HD. - TITLE: ITG. 9-10-02 REDEVELOPMENT AGENCY-OWNED PROPERTY LEASE AGREEMENT FOR USE OF CARLSBAD CITY ATTY. IEPT. WRED 2707 STATE STREET CITY MGR Y RECOMMENDED ACTION: ADOPT Resolution No. 358 , authorizing the execution of a lease agreement with Goldcoast Specialty Foods to lease the Carlsbad Redevelopment Agency property located at 2787 State Street for the purposes of operating a gourmet retail market and warehouse operation. ITEM EXPLANATION: On November 20, 1997, the Carlsbad Redevelopment Agency assumed ownership of the property located at 2787 State Street. The site was acquired by the Redevelopment Agency with the intent of facilitating development of a new commercial project on the site as well as other properties at the corner of Grand Avenue and State Street at a future date. Staff has been working on conceptual plans for the new redevelopment project, and has hired a consultant to help with further development of the project. There remain several additional steps that must be taken before the new commercial development can be initiated on this site. The additional steps include, but are not limited to, 1) continued discussions and agreements with North County Transit District regarding the joint development of parking facilities; 2) the selection of a private developer for the proposed project; 3) further development of the project plans; and 4) processing of all necessary discretionary and building permits. Staff currently estimates that it will take at least two (2) years before the proposed redevelopment project can be initiated for construction purposes. In 1998, the Redevelopment Agency entered into a five year lease with Beach Sleep Furniture to operate from the building until the new redevelopment project could be initiated. Unfortunately, the furniture store was not as successful as the owner desired. Therefore, the lease was terminated by the owner/lessee approximately two and one half years into the lease. The building was made available again for a short term lease in August, 2001. Due to the size of the building (nearly 10,000 sq ft) and the short term nature (only two years) of the lease, it has been difficult to find an appropriate tenant for the building. The building has remained vacant for the past year. Fortunately, however, a new tenant has now been identified for the building and is ready to move forward to execute a two year lease for the subject building. The new proposed tenant is Goldcoast Specialty Foods. They currently operate a wholesale dessert business in Oceanside. Goldcoast would like to expand its operations into a retail business within Carlsbad. Staff believes that Goldcoast will be an excellent tenant for the State Street building and will bring an exciting retail business to the Village Area. Goldcoast intends to operate a gourmet market in the front portion (fronting on State Street) of the building, and continue a warehouse operation within the back portion of the building. With the assumption that the business will be successful, every effort will be made to incorporate this new business into the commercial development proposed for the site. Staff has negotiated the attached lease agreement between the Carlsbad Redevelopment Agency and Goldcoast Specialty Foods. The agreement requires final approval by the Housing and Redevelopment Commission. If approved, lease payments shall begin December 1, 2002. I Page 2 of AB # 351 The new tenant will be completing tenant improvements within the next couple of months and open for business no later than December 1,2002. Execution of the attached lease agreement will allow use of the State Street property for retail purposes while staff continues efforts to facilitate new commercial development at and around the site. The lease will also allow the Agency to recover some of the acquisition costs related to the original purchase of the property. Per Redevelopment Law, the Agency is permitted to “rent, maintain, manage, operate, repair and clear real property purchased for the purposes of redevelopment”. Therefore, staff continues to believe that it is appropriate for the Agency to enter into a lease agreement with Goldcoast Specialty Foods. Staff is recommending approval of the lease agreement as presented and attached to this report. Environmental Review The Planning Director has determined that the activity, which is a continuation of an allowable land use pursuant to the Carlsbad Village Redevelopment Area Master Plan and Design Manual and does not require discretionary approval, is not subject to review under the California Environmental Quality Act, pursuant to 15061 (b)(3) of the CEQA Guidelines. FISCAL IMPACT The proposed lease will result in total rental income of $145,500 for the two year period of the lease. If optional lease extensions are granted, additional revenue will be received for a one to three year period. To date, the Redevelopment Agency has received a total of $313,816 in lease revenue related to the subject building. It is important also to note that the previous tenant made over $100,000 in improvements to the building which brought it into compliance with existing building code requirements for a retail operation. This was a financial benefit to the Agency. The proposed rental rate is ninety cents (go$) per square foot for the retail space (2000 square feet total) and fifty-five cents (55$) per square foot for the warehouse space (7750 square feet total). Staff believes that the rental rate proposed in the subject lease agreement is consistent with the market for the size of the subject building (nearly 10,000 square feet) and is appropriate for the very short termhnterim nature of the proposed lease. Based on the current market and the short term lease period, a staff determination has been made that the proposed lease provides for a market rate rental structure and that there is no rental subsidy being provided by the Redevelopment Agency. EXHIBITS: 1. Housing and Redevelopment Commission Resolution No. 358 . 2. Lease Agreement between Carlsbad Redevelopment Agency and Goldcoast Specialty Foods. 1 2 3 4 5 6 7 a 9 1c 11 12 13 14 15 16 17 18 19 2c 21 22 23 24 25 26 27 28 HOUSING AND REDEVELOPMENT COMMISSION RESOLUTION NO. 358 A RESOLUTION OF THE HOUSING AND REDEVELOPMENT COMMISSION OF THE CITY OF CARLSBAD, CALIFORNIA AUTHORIZING EXECUTION OF A LEASE AGREEMENT BETWEEN GOLDCOAST SPECIALTY FOODS AND THE CARLSBAD AT 2787 STATE STREET FOR THE PURPOSES OF OPERATING A GOURMET RETAIL MARKET AND WAREHOUSE OPERATION. REDEVELOPMENT AGENCY TO LEASE AGENCY-OWNED PROPERTY LOCATED WHEREAS, the Carlsbad Redevelopment Agency assumed ownership of the property located at 2787 State Street, originally known as the Bauer Lumber Building, on November 20,1997; and, WHEREAS, the subject site was acquired by the Redevelopment Agency with the intent of facilitating development of a new commercial project on the site as well as other properties at the corner of Grand Avenue and State Street at a future date; and, WHEREAS, it is anticipated that it will be approximately two years before the Agency will be able to initiate construction of the new proposed commercial development at the subject site; and, WHEREAS, there is a need within the community to make use of the buildinglproperty for retail purposes until such time at which new commercial development may occur at the site; and WHEREAS, California Redevelopment Law permits the Agency to rent, maintain, manage, operate, repair and clear property purchased for the purposes of redevelopment; and WHEREAS, based on the current market and the short term lease period for use of the subject property, a determination has been made that the proposed lease provides for a market rate rental structure and that there is no rental subsidy being provided by the Redevelopment Agency. NOW, THEREFORE, BE IT RESOLVED by the Housing and Redevelopment Commission of the City of Carlsbad, California, as follows: ! II 1. That the above recitations are true and correct. llll 2. The Commission hereby determines that the building located at 2787 State Street, and owned by the Redevelopment Agency, shall be leased for a gourmet retail market and warehouse operation to Goldcoast Specialty Foods for a two year period according to the terms set forth in the attached lease, provided as Exhibit 2. I .. .I . ., 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 'age 2 of Reso. # 358 3. The Commission hereby authorizes the Chairman c )f the Housing and Redevelopment Commission to execute the approved lease agreement between the Carlsbad Redevelopment Agency and Goldcoast Specialty Foods for lease of the Agency-owned property located at 2787 State Street, in substantially the form presented to the Commission and subject to approval of the City Attorney, who serves as legal Counsel to the Carlsbad Redevelopment Agency. PASSED, APPROVED AND ADOPTED at a snecial meeting of the Housing and ledevelopment Commission of the City of Carlsbad, California on the 10th day of SEPTEMBER ,2002 by the following vote to wit: AYES: Commissioners Lewis, Kulchin, Finnila NOES: Commissioner Hall ABSTAIN: None ABSENT: Commissioner Nygaard CLAUDE A. LEWIS, Chairman 2 .i 1 CARLSBAD REDEVELOPMENT AGENCY LEASE TO GOLDCOAST SPECIALTY FOODS OF PROPERTY LOCATED AT 2787 STATE STREET CARLSBAD, CALIFORNIA 92008 2181 State Street Lease Agreement Final Revisions: 8/9/02 Carlsbad Redevelopment Agency 1 LEASE AGREEMENT THIS LEASE AGREEMENT, made and entered into this /3T& day of Sep7s&A@f, 2002, by and between the Carlsbad Redevelopment Agency, hereinafter called “Lessor,” and Tom Cowden, of Goldcoast Specialty Foods, a sole proprietor, hereinafter called “Lessee,” without reference to number or gender, for property located at 2787 State Street, Carlsbad, California, 92008. WITNESETH: WHEREAS, the Carlsbad Redevelopment Agency is the owner of the real property located at 2787 State Street, Carlsbad, California, 92008; and WHEREAS, Lessee desires use of said Lessor premises to operate a business (as defined below); NOW, THEREFORE, it is understood and agreed by and between the parties hereto as follows, to wit: TO HAVE AND TO HOLD said leased premises for the term of this lease and upon the conditions as follows: 1. TERM: The term of the lease shall be for a period of two (2) years commencing on December 1, 2002, and ending on November 30, 2004. Provided tenant has completed any necessary improvements and obtained approval from the Housing and Redevelopment Director to occupy said premises prior to the commencement date stated herein, Lessee shall be entitled to conduct business prior to commencement date. Upon the expiration of this lease, the Lessee shall have the option to extend the term for three (3) additional one (1) year periods at the discretion of the Lessor, upon the same terms and conditions stated herein, except for the increase in rent as set forth in Section 2(b). Lessee must exercise this option in writing at least 120 days prior to the lease terms expiration. 2. RENT: (a) As and for the rent, Lessee agrees to pay to Lessor the sum of six thousand sixty-two dollars and fifty cents ($6,062.50) per month for the two years of the lease. Lease payments shall begin as of December 1, 2002. On or before December 1, 2002, the first payment of $6,062.50 per month will be paid and all subsequent payments shall be payable in advance on or before the first day of each and every month during the term of this Agreement. (b) Rent shall be delivered to the Finance Department of the City of Carlsbad at 1635 Faraday Avenue, Carlsbad, California, 92008. The designated place of payment and filing may be changed at any time by Lessor upon ten (10) days written notice to Lessee. Lessee assumes all risk of loss if payments are made by mail. 2787 State Street Lease Agreement Final Revisions: 8/9/02 Carlsbad Redevelopment Agency n (c) In the event Lessee is delinquent in remitting the rent due in accordance with the rent provisions of this lease, then the rent not paid when due shall bear interest at the rate of Ten Per Cent (10%) per annum from the date due until paid. Provided, however, that the Executive Director of Carlsbad Redevelopment Agency shall have the right to waive for good cause any interest payment upon written application of Lessee for any such delinquency period. (d) There shall be no increase in the monthly lease payment for the two-year lease period. If extensions to this lease are granted by Lessor, the rent shall be increased by the sum of 4% per rentable square foot for the term of the extension. Any extensions beyond the third year will be held at the third year extension lease rate. (e) Lessee agrees to pay a Security Deposit in the amount of one month’s rent or six thousand, sixty-two dollars and fifty cents ($6,062.50) to be paid upon execution of this lease agreement. Lessee shall submit the Security Deposit in the form of a cashier’s check simultaneously, and or in conjunction with signed lease agreement. Lessor shall not cash nor deposit said Security Deposit until lease agreement is signed by Lessor, resulting in the full execution of this agreement. Security Deposit shall be held in an interest bearing account (at the same rate the City of Carlsbad earns on its money) in which upon expiration of this lease, Lessee shall retain all interest accrued over said lease term. Lessor shall not be required to keep the Security Deposit separate from its general accounts. (f) If Lessee fails to pay Rent, or otherwise defaults under this lease, Lessor may use, apply or retain all or any portion of said Security Deposit for the payment of any amount due Lessor or to reimburse or compensate Lessor for any liability, expense, loss or damage which Lessor may suffer or incur by reason thereof. If Lessor uses or applies all or any portion of said Security Deposit, Lessee shall within ten (10) days after written request therefore deposit monies with Lessor sufficient to restore said Security Deposit to the full amount required by this Lease. If the Base Rent increases during the term of this Lease, Lessee shall, upon written request from Lessor, deposit additional monies with Lessor so that the total amount of the Security Deposit shall at all time bear the same proportion to the increased Base Rent as initial Security Deposit bore to the initial Base Rent. 3. USE: Lessee agrees that the leased premises shall be used only and exclusively for retail and wholesale food and beverage sales and for no other purposes whatsoever without the written consent of Lessor. 4. EARLY TERMINATION: Lessee or Lessor shall have a right to terminate lease by first giving ninety (90) days written notice to the other party and payment of twenty-five thousand dollars ($25,000.00) for penalty of early termination. In the event either party exercises the option of early termination, the party seeking termination shall pay fifty percent (50%) or twelve thousand five hundred dollars ($12,500.00) at the time written notification of lease termination is given and shall pay the remaining fifty percent (50% 2187 State Street Lease Agreement Carlsbad Redevelopment Agency Final Revisions: 8/9/02 3 of the penalty payment or twelve thousand five hundred dollars $12,500.00) upon expiration of said 90 day notification period. Any security deposit shall be applied toward and deducted from the second penalty payment of twelve thousand five hundred dollars (12,500.00) if not otherwise applied towards delinquencies or other lessee obligations. Lessor may exercise its right of early termination for the sole purpose of proceeding with its master plan for redevelopment. 5. IMPROVEMENTS: (a) Lessee may, at its own expense, make additional interior alterations or changes in the leased premises or cause to be built, made or installed thereon any structures, machines, appliances, utilities, signs or other improvements necessary or desirable for the use of said premises and may alter and repair any such structures, machines or other improvements; provided, however, that no alterations and changes shall be made and no structures, machines, appliances, utilities, signs or other improvements shall be made, built or installed, and no major repairs thereto shall be made except upon obtaining all necessary prior approvals from Lessor and proper permits from the City of Carlsbad. (b) Lessee shall be responsible for manufacturing and installation of signage in accordance with the signage regulations set forth within the Carlsbad Village Redevelopment Master Plan and Design Manual. Lessee further agrees that no banners, pennants, flags, eye-catching spinners or other advertising devices, nor any temporary signs shall be permitted to be flown, installed, placed, or erected on the premises except in accordance with the City of Carlsbad Village Redevelopment Master Plan and Design Manual. 6. OWNERSHIP; REMOVAL; SURRENDElURESTORATION: (a) Ownership. Subject to Lessor’s right to require removal or elect ownership as hereafter provided, all alterations and utility installations made by Lessee shall be the property of the Lessee, but considered a part of the premises. Lessor may, at any time, elect in writing to be the owner of all or any specified part of the Lessee owned alterations and utility installations. Unless otherwise instructed per Paragraph 6(b) hereof, all Lessee owned alterations and utility installations shall, at the expiration or termination of this Lease, become the property of Lessor and be surrendered by Lessee with the premises (b) Removal. By delivery to Lessee of written notice from Lessor not later than sixty (60) days prior to the end of the term of this Lease, Lessor may require that any or all Lessee owned alterations or utility installations be removed by the expiration or termination of this Lease. Lessor may require the removal at any time of all or any part of any Lessee owned alterations or utility installations made without the required consent. 2787 State Street Lease Agreement Final Revisions: 8/9/02 Carlsbad Redevelopment Agency 4 (c) SurrenderlRestoration. Lessee shall surrender the premises by the expiration date or any earlier termination date, with all of the improvements, parts and surfaces thereof broom clean and free of debris, and in good operating order, condition and state of repair, ordinary wear and tear expected. . “Ordinary wear and tear” shall not include any damage or deterioration that would have been prevented by good maintenance practice. Lessee shall repair any damage occasioned by the installation, maintenance or removal of trade fixtures, Lessee owned alterations and/or utility installations, furnishings, and equipment installed by or for Lessee and the removal, replacement, or remediation or any soil, material or groundwater contaminated with hazardous substance (as defined in Paragraph 23) by Lessee. Trade fixtures shall remain the property of Lessee and shall be removed by Lessee. The failure by Lessee to timely vacate the premises pursuant to this Paragraph 6 (c) without the express written consent of Lessor shall constitute a holdover under the provisions of Paragraph 32 below. 7. PARKING: Lessee understands there is no private parking available on the subject property. Lessee further understands that execution of this lease agreement in no way constitutes the granting of exclusive use of public parking adjacent to the property. 8. RIGHT TO ENTER PROPERTY: Upon execution of this lease agreement, Lessee shall be granted access to the premises to initiate, construct and complete any desired tenanthuilding improvements as outlined in Section 5 of this lease. 9. REPRESENTATIONS AND INDEMNITIES OF BROKER RELATIONSHIPS: Lessee and Lessor each represent and warrant to the other that it has had no dealings with any person, firm, broker or finder in connection with this Lease, and that no person, firm, broker or finder is entitled to any commission or finder’s fee in connection herewith. Lessee and Lessor do each hereby agree to indemnify, protect, defend and hold the other harmless from and against liability for compensation or charges which may be claimed by any such unnamed broker, finder or other similar party by reason of any dealings or actions of the indemnifying Party, including any costs, expenses, or attorney’s fees reasonably incurred with respect thereto. 10. WAIVER OF RELOCATION BENEFITS: Lessee understands this lease agreement is entered into for a specified period of time in order to provide interim use of the property, until such time as the Lessor chooses to develop the property in accordance with the Carlsbad Village Redevelopment Master Plan. Lessee therefore agrees to waive any and all relocation benefits defined in the California Relocation Assistance Law (Government Code, Section 7260, et, a,). 2787 State Street Lease Agreement Carlsbad Redevelopment Agency Final Revisions: 8/9/02 5 11. LIENS: (a) Lessee agrees that it will at all times hold Lessor free and harmless and indemnify it against all claims for labor or materials in connection with improvements, repairs, or alterations on the lease premises, including the costs of defending against such claims, and reasonable attorney’s fees incurred therein. (b) In the event that any lien or levy of any nature whatsoever is filed against the lease premises or the leasehold interests of the Lessee there, the Lessee shall, upon written request of Lessor, deposit with Lessor a bond conditioned for the payment in full of all claims upon which said lien or levy has been filed. Such bond shall be acknowledged by Lessee as principal and by a corporation, licensed by the Insurance Commissioner of the State of California to transact the business of a fidelity and surety insurance company, as surety. Lessor shall have the right to declare this lease in default in the event the bond required by this paragraph has not been deposited with the Lessor within ten (10) days after written request has been delivered to Lessee. 12. LEASE ENCUMBRANCE: Lessee understands and agrees that it cannot encumber the lease, leasehold estate and the improvements thereon by a deed of trust, mortgage or other security instrument. If any deed of trust, mortgage or other security instrument that encumbers the lease, leasehold estate and the improvements thereon is entered into by Lessee, Lessor shall have the right to declare this lease in default. 13. ASSIGNMENT-SUBLEASE: Lessee shall not assign or transfer the whole or any part of this lease or any interest therein, nor sublease the whole or any part of the leased premises, nor contract for the management or operation of the whole or any part of the leased premises, nor permit the occupancy of any part thereof by any other person or business entity, nor permit transfer of the lease by merger, consolidation or dissolution, without the prior written consent of Lessor, first had and obtained in each instance. 14. DEFAULT (a) It is mutually understood and agreed that if any default be made in the payment of rental herein provided or in the performance of the covenants, conditions, or agreements herein (any covenant or agreement shall be construed and considered as a condition), or should Lessee fail to fulfill in any manner the uses and purposes for which said premises are leased as above stated, and such default shall not be cured within ten (10) days after written notice thereof if default is in the performance of the use obligation provisions pursuant to Paragraph 16 of this lease, or thirty (30) days after written notice thereof if default is in the payment of rent, or in the performance of any other covenant, condition and agreements (any covenant or agreement shall be construed and considered as a condition), Lessor shall have the right to immediately terminate this lease; and that in the event of such termination, 2787 State Street Lease Agreement Final Revisions: 8/9/02 Carlsbad Redevelopment Agency 6 Lessee shall have no further rights hereunder, the Lessee shall thereupon forthwith remove all personal property from said premises and shall have no furtherright to claim thereto, and Lessor shall immediately thereupon, without recourse to the courts, have the right to reenter and take possession of the leased premises. Lessor shall further have all other rights and remedies as provided by law, including without limitation the right to recover damages from Lessee in the amount necessary to compensate the Lessor for all the detriment proximately caused by the Lessee’s failure to perform his obligations under the lease or which in the ordinary course of things would be likely to result there from. (b) In the event of the termination of this lease pursuant to the provisions of this paragraph, Lessor shall have any rights to which it would be entitled in the event of the expiration or sooner termination of this lease. 15. BANKRUPTCY: In the event Lessee becomes insolvent, makes an assignment for the benefit of creditors, files a petition in bankruptcy or becomes the subject of a bankruptcy proceeding, reorganization, arrangement, insolvency, receivership, liquidation, or dissolution proceedings, or in the event of any judicial sale of Lessee’s interest under this lease, Lessor shall have the right to declare this lease in default. 16. USE OBLIGATION: Lessee shall actively and continuously use and operate the premises for the limited particular exclusive use as expressly provided for the Use Paragraph 3 of this lease, except for failure to so use caused by acts of God. Lessee, however, shall not and is expressly prohibited from using the premises for any other purpose or use whatsoever, whether it is purported to be in addition to or in lieu of the particular exclusive use expressed in said Use Paragraph 3. 17. MAINTENANCE AND REPAIR: (a) As part of the consideration for the leasing thereof, Lessee agrees to assume full responsibility for the interior operation, maintenance, including painting, and repair of the premises, throughout the term and without expense to the Lessor. Lessee will perform all interior maintenance, repairs and replacements, including glass, necessary to maintain and preserve the premises in a good, safe, healthy and sanitary condition satisfactory to Lessor and in compliance with all applicable laws. Lessee further agrees to provide approved containers for trash and garbage and to keep premises free and clear of rubbish and litter, or any other fire hazards. Lessor shall be responsible for all exterior maintenance, including roof repairs. Notwithstandmg, Lessor shall not be required at any time to maintain or to make any improvements or repairs whatsoever on or for the benefit of the leased premises. (b) For the purpose of keeping the premises in a good, safe, healthy and sanitary condition, Lessor shall have the right but not the duty, to enter, view, inspect, determine the condition of and protect its interests in, the premises. If 2787 State Street Lease Agreement Final Revisions: 8/9/02 Carlsbad Redevelopment Agency 18. TAXES inspection discloses that the premises are not in the condition described, Lessee must perform the necessary maintenance work within ten (10) days after written notice from Lessor. Further, if at any time during the term of the lease for the premises Lessor determines that the premises are not in the condition described, Lessor may require Lessee to file and pay for a faithful performance bond, to assure prompt correction without additional notice. The amount of this bond shall be adequate, in Lessor’s opinion, to correct the unsatisfactory condition. The rights reserved in this section shall not create any obligations or increase any obligations for Lessor elsewhere in this Lease. AND UTILITIES: Lessee shall not be responsible for payment of any property taxes associated with the premises. Property taxes, if any, shall be paid solely by the Lessor. However, this lease may result in a taxable possessory interest. Lessee agrees to and shall pay before delinquency all possessory taxes and assessments of any kind assessed or levied upon Lessee or the leased premises by reason of this lease or of any buildings, machines, or other improvements of any nature whatsoever erected, installed or maintained by Lessee or by reason of the business or other activities of Lessee upon or in connection with the leased premises. Lessee shall also pay any fees imposed by law for licenses or permits for any business or activities of Lessee upon the leased premises or under this lease, and shall pay before delinquency any and all charges for utilities at or on the leased premises. If Lessee fails to pay said possessory taxes, Lessor may declare default in accordance with Paragraph 14. Lessee shall be responsible for payment of all utilities, including but not limited to security alarm, trash, water, gas and electricity. 19. CONFORMANCE WITH RULES AND REGULATIONS: Lessee agrees that in all activities on or in connection with the leased premises and in all uses thereof, including the making of any alterations or changes and the installation of any machines or other improvements, it will abide by and conform to all ordinances, rules and regulations prescribed by the City of Carlsbad, including, but not limited to, sign regulations and requirements for outdoor display set forth within the Carlsbad Village Redevelopment Master Plan and Design Manual, and any applicable laws, including those of the County Health Department, the State of California and Federal Government, as any of the same now exist or may hereafter be adopted or amended. 20. NON-DISCRIMINATION Lessee agrees not to discriminate against any person or class of persons by reason of sex, color, race, religion, or national origin. If the use provided for in this lease allows the Lessee to offer accommodations or services to the public, such accommodations or services shall be offered by the Lessee to the public on fair and reasonable terms. 21. PARTIAL INVALIDITY If any term, covenant, condtion, or provision of this lease is held by a coufl of competent jurisdiction to be invalid, void or unenforceable, the remainder of the provisions hereof shall remain in full force and effect and shall in no way be affected, impaired, or invalidated thereby. 2787 State Street Lease Agreement Final Revisions: 8/9/02 Carlsbad Redevelopment Agency 8 22. HOLD HARMLESS: Lessee shall defend, indemnify, and hold harmless Lessor, its officers and employees against causes of action, liability, damage, and expense of any kind, including reasonable attorney’s fees, or injury to or death of any person or persons, including without limitation Lessee, its employees, and invitees resulting directly or indirectly from granting and performance of this lease or arising from the use and operation of the leased premises or any defect in any part thereof. 23. HAZARDOUS SUBSTANCES: The term “Hazardous Substance” as used in this Lease shall mean any product, substance, or waste whose presence, use, manufacture, disposal, transportation, or release, either by itself or in combination with other materials expected to be on the premises, is either: (i) potentially injurious to the public health, safety or welfare, the environment or the premises, (ii) regulated or monitored by any government authority, or (iii) a basis for potential liability of Lessor to any governmental agency or third party under any applicable statue or common law theory. Lessee shall not cause or permit any Hazardous Substance to be spilled or released in, on, under, or about the premises (including through the plumbing or sanitary sewer system) and shall promptly, at Lessee’s expense, take all investigatory and/or remedial action reasonably recommended, whether or not formally ordered or required, for the cleanup of any contamination of, and for the maintenance, security and/or monitoring of the premises or neighboring properties, that was caused or materially contributed to by Lessee, or pertaining to or involving any Hazardous Substance brought onto the premises during the term of this Lease, by or for Lessee, or any third party. 24. SUCCESSORS IN INTEREST: Unless otherwise provided in this lease, the terms, covenants and conditions herein shall apply to and bind the heirs, successors, executors, administrators, and assigns of all the parties hereto, all of whom shall be jointly and severally liable hereunder. 25. EASEMENTS: (a) This lease and all rights given hereunder shall be subject to all easements and rights-of-way now existing or heretofore granted or reserved by Lessor in, to or over the leased premises for any purpose whatsoever, and shall be subject to such rights-of-way for reasonable access, sewers, pipelines, conduits and such telephone, cable television, telegraph, light, heat or power lines as may from time to time be determined by Lessor to be necessary. (b) Lessor agrees that such easements and rights-of-way shall be so located and installed as to produce a minimum amount of interference to the business of Lessee. 26. INSURANCE: Lessee shall maintain insurance acceptable to Lessor in full force and effect throughout the term of the lease. The policies for said insurance shall, as a minimum, provide the following forms of coverage: 2787 State Street Lease Agreement Final Revisions: 8/9/02 Carlsbad Redevelopment Agency 9 (a) Comprehensive General Liability - (covering premises and operations in the amount of not less than One Million Dollars ($1,000,000) combined single limit. This policy shall cover any injury or damage, including death, suffered by any party, for any act, committed by anyone, including Lessor. (b) Property Insurance - Lessee shall obtain and maintain insurance coverage on all of Lessee’s personal property, trade fixtures, and Lessee owned alterations and utility installations. Such insurance shall be full replacement cost coverage with a deductible of not to exceed $1,000.00 per occurrence. The proceeds from any such insurance shall be used by Lessee for the replacement of personal property, trade fixtures and Lessee owned alterations and utility installations. Lessor will be responsible for providing coverage for the structure itself, exclusive of the items required to be covered by Lessee’s insurance policy. (c) Business Interruption - Lessee shall obtain and maintain loss of income and extra expense insurance in amounts as will reimburse Lessee for direct or indirect loss of earnings attributable to all perils commonly insured against by prudent lessees in the business of Lessee or attributable to prevention of access to the premises as a result of such perils. (d) Evidence of Insurance - Certificates and endorsements in a form acceptable to Lessor evidencing the existence of the necessary insurance policies shall be kept on file with Lessor during the entire term of this lease. All insurance policies shall be primary coverage, and will name Lessor as an additional insured, protect Lessor against any legal costs in defending claims and will not terminate without written notice to Lessor. All insurance companies providing coverage pursuant to this agreement must meet City’s minimum standards and be licensed to do business in California. (e) Lessor shall retain the right at any time to review the coverage, form, and amount of the insurance required hereby. If, in the opinion of the Lessor, the insurance provisions in this lease do not provide adequate protection for Lessor andor for members of the public using the leased premises, Lessor may require Lessee to obtain an insurance sufficient in coverage, form and amount to provide adequate protection. Lessor’s requirements shall be reasonable but shall be designed to assure protection from and against the kind and extent of risk, which exist at the time a change in insurance is required. (0 Lessor shall notify Lessee in writing of changes in the insurance requirements and, if Lessee does not deposit certificates/endorsements evidencing acceptable insurance policies with Lessor incorporating such changes within sixty (60) days of receipt of such notice, this lease shall be in default without further notice to Lessee, and Lessor shall be entitled to all legal remedies. 2787 State Street Lease Agreement Carlsbad Redevelopment Agency Final Revisions: 8/9/02 10 The procuring of such required policies of insurance shall not be construed to limit Lessee’s liability hereunder, nor to fulfill the indemnification provisions and requirements of this lease. Notwithstanding said policies of insurance, Lessee shall be obligated for the full and total amount of any damage, injury, or loss caused by negligence or neglect connected with this lease or with the use or occupancy of the leased premises. Lessee agrees not to use the premises in any manner, even if use is for purposes stated herein, that will result in the cancellation of any insurance Lessor may have on the premises or on adjacent premises, or that will cause cancellation of any other insurance coverage for the premises or adjoining premises. Lessee further agrees not to keep on the premises or permit to be kept, used, or sold thereon, anything prohibited by any fire or other insurance policy covering the premises. Lessee shall, at its sole cost and expense, comply with any and all requirements, in regard to premises, of any insurance organization necessary for maintaining fire and other insurance coverage at reasonable cost. 27. WARRANTIES-GUARANTEES-COVENANTS: Lessor makes no warranty, guarantee, covenant, including but not limited to covenants of title and quiet enjoyment, or declaration of any nature whatsoever, concerning the condtion of the leased premises, including the physical condition thereof, or any condition which may affect the leased premises, and it is agreed that Lessor will not be responsible for any loss, damage or costs which may be incurred by Lessee by reason of any such condition or conditions. 28. DAMAGE TO OR DESTRUCTION OF PREMISES: In the event of damage to or destruction by fire, the elements, acts of God, or any other cause, of the improvements located within the demised premises Lessee shall, within ninety (90) days, commence and diligently pursue to completion the repair, replacement, or reconstruction of improvements necessary to permit full use and occupancy of the demised premises for the purposes required by this lease. Repair, replacement or reconstruction of improvements within the demised premises shall be accomplished in a manner and according to plans approved by Lessor; provided, however, Lessee shall not be obligated to repair, reconstruct or replace the improvements following their destruction in whole or substantial part except to the extent the loss is covered by insurance required to be carried by Lessee pursuant to Paragraph 26 of this Lease (or would be covered whether or not such required insurance is actually in effect). If Lessee elects not to restore, repair or reconstruct as herein provided, then the Lease shall terminate. 29. QUITCLAIM OF LESSEE’S INTEREST UPON TERMINATION: Upon termination of this lease for any reason, including but not limited to termination because of default by Lessee, Lessee shall execute, acknowledge and deliver to Lessor within thirty (30) days after receipt of written demand thereof a good and sufficient deed whereby all right, title and interest of Lessee in the demised premises is quitclaimed to Lessor. Should Lessee fail or refuse to deliver the required deed to Lessor, Lessor may prepare and record a notice reciting the failure of Lessee to execute, acknowledge and 2787 State Street Lease Agreement Carlsbad Redevelopment Agency Final Revisions: 8/9/02 11 deliver such deed and said notice shall be conclusive evidence of the termination of this lease and of all right of Lessee or those claiming under Lessee in and to the demised premises. 30. PEACEABLE SURRENDER Upon the expiration of this lease or sooner termination or cancellation thereof, as herein provided, Lessee will peaceably surrender said premises to Lessor in as good condition as said premises were at the date of this lease, ordinary wear and tear expected. If the Lessee fails to surrender the premises at the expiration of this lease or the earlier termination or cancellation thereof, Lessee shall defend and indemnify Lessor from all liability and expense resulting from the delay or failure to surrender, including, without limitation, any succeeding Lessee’s claims based on Lessee’s failure to surrender. 31. WAIVER: Any waiver by Lessor of any breach by Lessee of any one or more of the covenants, conditions, or agreements of this lease shall not be nor be construed to be a waiver of any subsequent or other breach of the same or any other covenant, condition or agreement of this lease, nor shall any failure on the part of Lessor to require or exact full and complete compliance by Lessee with any of the covenants, conditions, or agreements of this lease be construed as in any manner changing the terms hereof or to prevent Lessor from enforcing the full provisions hereof. The subsequent acceptance of rent hereunder by Lessor shall not be deemed to be waiver of any preceding breach by Lessee of any term, covenant, or condition of this lease, other than the failure of Lessee to pay the particular rental so accepted, regardless of Lessor’s knowledge of such preceding breach at the time of acceptance of such rent. 32. NO RIGHT TO HOLD OVER Lessee has no right to retain possession of the premises or any part thereof beyond the expiration or termination of this lease. In the event that Lessee holds over, then the Base Rent shall be increased to one hundred fifty percent (150%) of the Base Rent applicable during the month immediately preceding the expiration or termination. Nothing contained herein shall be construed as consent by Lessor to any holding over by Lessee. 33. ACCEPTANCE OF PREMISES: (a) Upon occupancy, Lessor shall warrant the structural integrity of the building, that the roof of premises is free of any known leaks, electrical is in good working order; and plumbing is in good working order. (b) Lessee shall be entitled to have independent tests performed prior to execution of this lease to satisfy Lessee that the premises are in the condition warranted. (c) By signing this Lease, Lessee represents and warrants that it has independently inspected the premises and made all tests, investigations and observations necessary to satisfy itself of the condition of the premises. Lessee further acknowledges that premises are in the condition called for by 2187 State Street Lease Agreement Final Revisions: 8/9/02 Carlsbad Redevelopment Agency 12 this Lease, and that Lessee does not hold Lessor responsible for any defects in premises. 34. QUIET POSSESSION: Lessee will at all times during the terms of this Lease occupy the premises quietly and not commit any act, waste or nuisance which disturbs the quiet enjoyment of the property for the Lessor, public, any neighbor or other tenant of Lessor. 35. ENTIRE UNDERSTANDING: This lease contains the entire and only understanding and agreement of the parties, and Lessee, by accepting the same, acknowledges that there is no other written or oral understanding or agreement between the parties with respect to the demised premises and that this lease supersedes all prior negotiations, discussions, &ligations and rights of the parties hereto. No waiver, modification, amendment or alteration of this lease shall be valid unless it is expressly in writing and signed by authorized persons of the parties hereto. Each of the parties to this lease acknowledges that no other party, nor any agent or attorney of any other party, has made any promise, representations, waiver or warranty whatsoever, expressed or implied, which is not expressly contained in writing in this lease, and each party further acknowledges that it has not executed this lease in reliance upon any collateral promise, representation, waiver or warranty, or in reliance upon any belief as to any fact not expressly recited in this lease. 36. TIME IS OF THE ESSENCE: Time is of the essence of each and all of the terms and provisions of this lease and this lease shall insure to the benefit of and be binding upon the parties hereto and any successors of Lessee as fully and to the same extent as though specifically mentioned in each instance, and all covenants, stipulations and agreements in this lease shall extend to and bind any assigns and sublessee of Lessee. 37. NOTICES: Notices given or to be given by Lessor or Lessee to the other may be personally serviced upon Lessor or Lessee or any person hereafter authorized by either in writing to receive such notice or may be served by certified letter addressed to the appropriate address hereinafter set forth or to such other address as Lessor and Lessee may hereafter designate by written notice. If served by certified mail, forty-eight (48) hours after deposit in the US. Mail, service will be considered completed and binding on the party served. TO LESSEE TO LESSOR Tom Cowden Goldcoast Specialty Foods Housing & Redevelopment Director 1023 S. Cleveland St. Oceanside, California 92054 Carlsbad Redevelopment Agency TOM COWDEN GOLDCOAST SPECIALTY FOODS AGENCY 2781 State Street Lease Agreement Final Revisions: 8/9/02 Carlsbad Redevelopment Agency 13 DATE: 8 /a l6.2 DATE: Note: Signatures of Lessee and Lessor must be Notarized. APPROVED AS TO FORM AND LEGALITY: BY Y A'ITORNEY DATE: 9- /2 -dz 2787 State Street Lease Agreement Carlsbad Redevelopment Agency Final Revisions: 8/9/02 CALIFORNIA ALL-PURPOSE ACKNOWLEDGMENT State of California Nameis1 01 Slgnsrlrl +roved to me on the basis of satisfactory 3 personally known to me evidence to be the person& whose name(# islare- subscribed to the within instrument and acknowledged to me that heishekey executed the same in hislheFUReir authorized capacity(iy), and that by hislkrkair signature# on the instrument the persow, or the entity upon behalf of which the person@$ acted. executed the instrument. TRle or Type of Document: 1 anS4 hRs. Document Date: &m.\ i+ 9. m0.2 Number of Pages: \ Y Signer@) Other Than Named Above: h!l n .- ree"nD.n Capacity(ies) Claimed by Signer Signer's Name: *OM&5 DW D-Qn &Individual U Corporate Officer - Title(?.): n Partner - 0 Limited fl General 0 Attornev-in-Fact fl Trustee. U Guardian or Conservator n Other: Signer Is Representing: All Receive September 5,2002 fiB ;tf 3 5-1 For the Information of the: TO: CITY MANAGER +moa -a FROM: HOUSING AND REDEVELOPMENT DIRECTOR INQUIRY FROM COUNCILMEMBER HALL ON LEASE AGREEMENT AND PERMIT REQUIREMENTS FOR NEW PROPOSED GOURMET MARKET AT 2787 STATE STREET The following report is provided to address the inquiry from Councilmember Hall on the lease agreement and permit requirements for the new gourmet food market (“State Street Market”) proposed for 2787 State Street (the old Bauer Lumber Building). On September 10,2002, the Housing and Redevelopment Commission will be asked to approve a Lease Agreement with Goldcoast Specialty Foods for an interim lease on the Redevelopment Agency-owned property at 2787 State Street. Attached is a copy of the agenda bill and proposed lease for more detailed information on that matter. The building at 2787 State Street has historically been used for retail purposes, which is a conforming land use under the Village Master Plan and Design Manual. The building may continue to be used for retail purposes with no requirement to process a redevelopment permit. Since no redevelopment permit requirement is triggered, the parking issue does not need to be addressed by the tenant or the Redevelopment Agency. This is the same situation that existed for Beach Sleep Furniture, the previous retail tenant. Staff had a considerable amount of contact from potential tenants that proposed businesses at the subject site which would have required changes in the land use and triggered the redevelopment permit requirement. They would have also required substantial tenant improvements. Due to the short term nature of the lease, staff indicated that these uses (such as a restaurant, a full-service gym, and a theater) were not appropriate at this time. The gourmet market is appropriate because it meets the current requirements and will result in a very nominal investment by the tenant at this time. The market is also a neededdesired use to the North State Street area. very exciting use which staff believes will complement existing uses in the Village, and specifically add a Building permits may be required if the tenant completes any improvements which trigger a requirement for such a permit. At this time, the tenant has proposed very minimal tenant improvements due to the fact that we are entering into only a two year lease. They will be painting the interior and installing some partitions, etc. However, they do not intend at this time to construct any new walls or make other substantial improvements to the building. They may add some plumbing and electrical which will require. appropriate building permits. From a noise standpoint, any compressors or generators will need to be properly screened and appropriate sound attenuation will be required. At this time, all equipment is proposed to be located within the interior of the building. Trash disposal will be the responsibility of the tenant. If there are any additional questions regarding the proposed use or permit requirements, please contact my office at X2935. CITY comcIL Dat C: City Attorney Community Development Director