HomeMy WebLinkAbout2010-07-13; Housing & Redevelopment Commission; 424; NEW VILLAGE ARTS LEASEHOUSING AND REDEVELOPMENT COMMISSION
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Lease Agreement with New Village Arts
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RECOMMENDED ACTION:
Hold a public hearing to accept public comments and ADOPT Resolution No. 489
authorizing the execution of a lease agreement with New Village Arts to lease the Carlsbad
Redevelopment Agency property located at 2787 State Street for the purposes of operating a
performing arts theater and arts incubator program in the Village Redevelopment Area.
ITEM EXPLANATION:
On November 20, 1997, the Carlsbad Redevelopment Agency purchased the property located
at 2787 State Street in the Village Redevelopment Area. The site was acquired by the Agency
with tax exempt bond proceeds (approximately $500,000) and with the intent of facilitating
redevelopment of the site as well as other properties at the corner of Grand Avenue and State
Street at a future date. Since the date of acquisition, the Redevelopment Agency has been
developing a vision and plans for redevelopment of the subject site and surrounding area, and
attempting to pursue a redevelopment project. Unfortunately, a challenging economy over the
past few years has made it difficult to completely redevelop the site as desired. Therefore, the
Agency has pursued other economic development and redevelopment activities through
temporary use of the property in order to 1) prevent a further blighting influence created by the
presence of a vacant building in a key revitalization area; 2) test the market for an appropriate
use for the property, and 3) support economic development activities that provide for arts,
culture and entertainment opportunities in the Village. Retail tenants have not been successful
to date at this location. Therefore, the Redevelopment Agency intends to continue leasing the
building premises to New Village Arts for a performing arts theater and arts incubator program
as an economic development tool. Substantial exterior improvements are also intended to
enhance the area and to allow for the arts programs to grow and prosper in an affordable
manner.
Staff has exclusively negotiated the attached lease agreement between the Carlsbad
Redevelopment Agency and New Village Arts to allow for the theater and arts incubator
programs to continue at the State Street Building, and to allow for substantial exterior
improvements to the building. Per California Health and Safety Code Section
33431 (Redevelopment Law), the Agency may enter into a lease without public bidding but only
after a public hearing. New Village Arts was selected as the appropriate tenant due to its
experience and proven track record as a successful theater in Carlsbad. It also has successfully
operated the Arts Incubator Program within the subject building for the past year.
DEPARTMENT CONTACT: Debbie Fountain (760) 434-2815, debbie.fountain@carlsbadca.us
FOR CITYGLERKS
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Page 2 - NVA Lease
In addition, per California Health and Safety Code Section 33433, the Agency must provide a
report on the lease and its fiscal and other impacts. The required report is attached for review
and was made available for public inspection. The lease agreement requires final approval by
the Housing and Redevelopment Commission following a public hearing.
If approved, the lease shall be retroactive to July 1, 2010 and will have an initial term of three
(3) years with a required rental payment of one dollar ($1) per year. Additionally, the lease
provides for the Redevelopment Agency to construct exterior improvements to the subject
building with a total cost not to exceed $1.5 million. Upon completion of these improvements,
New Village Arts will be eligible for a five (5) year lease at a $48,000 annual rental payment.
Per California Health and Safety Code Section 33400(b), the Agency is permitted to "rent,
maintain, manage, operate, repair and clear real property purchased for the purposes of
redevelopment". Therefore, the Agency may enter into the noted lease agreement and allow
use of the building for a performing arts theater and arts incubator program while the Agency
continues its efforts to prepare for redevelopment of the site. The theater use and arts incubator
program are consistent with the Village Redevelopment Area Plan. Staff is recommending
approval of the lease agreement as presented and attached to this report.
ENVIRONMENTAL REVIEW
The Planning Department has conducted an environmental review of the project pursuant to the
Guidelines for Implementation of the California Environmental Quality Act (CEQA) and the
Environmental Protection Ordinance of the City of Carlsbad. As a result of said review, the
project has been found to be exempt from environmental review pursuant to Section 15301
Class 1 of the State CEQA Guidelines which exempts leasing of and/or alterations to existing
facilities where there is no expansion of use or structure.
FISCAL IMPACT:
Initially, the Agency will receive a $1 annual payment from New Village Arts for the initial term of
said lease. Upon completion of exterior improvements by the Redevelopment Agency at a cost
not to exceed $1.5 million, New Village Arts will make an annual rental payment of $48,000. It is
estimated that the total revenue to be received during the term(s) of the subject lease is
$240,000 over a five year period, and $480,000 if a five year extension is granted. New Village
Arts has a security deposit of $2,000 on record. New Village Arts shall be financially responsible
for all costs associated with any tenant interior improvements as well as interior building
maintenance and exterior signage. The attached resolution approves an appropriation of $1.5
million in tax increment funds for said exterior improvement project. There are sufficient funds
available to appropriate said tax increment funds to the improvement project.
EXHIBITS:
1. Housing and Redevelopment Commission Resolution No. 489
2. Section 33433 Redevelopment Report.
3. Lease Agreement between Carlsbad Redevelopment Agency and New Village Arts.
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on November 20,1997; and,
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RESOLUTION NO. 489
A RESOLUTION OF THE HOUSING AND REDEVELOPMENT COMMISSION
OF THE CITY OF CARLSBAD, CALIFORNIA AUTHORIZING EXECUTION
OF A LEASE AGREEMENT BETWEEN NEW VILLAGE ARTS AND THE
CARLSBAD REDEVELOPMENT AGENCY TO LEASE AGENCY-OWNED
PROPERTY LOCATED AT 2787 STATE STREET FOR THE PURPOSES OF
OPERATING A PERFORMING ARTS THEATER AND ARTS INCUBATOR
PROGRAM IN THE VILLAGE REDEVELOPMENT AREA
WHEREAS, the Carlsbad Redevelopment Agency purchased the State Street Building
and related property located at 2787 State Street, originally known as the Bauer Lumber Building,
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WHEREAS, the subject site was acquired by the Redevelopment Agency with the intent
of facilitating redevelopment of the site as well as other properties at the corner of Grand Avenue
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and State Street at a future date; and,
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WHEREAS, it is unknown as to when the Agency will be able to initiate redevelopment
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activities related to the subject site due to a poor economy and other extenuating circumstances;
and,
WHEREAS, there is a need within the community to make continued use of the subject
building/property for retail and/or entertainment purposes until such time at which a
redevelopment project may occur at the site to eliminate blight and/or blighting influences within
the Village Redevelopment Area; and
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benefit as well encourage a successful performing arts theater and arts incubator program in an
WHEREAS, there is a continuing need to test the consumer market for demand and
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ability to accommodate said theater and arts incubator space; and
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expansion of the arts incubator programs until such time as a redevelopment project may be
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WHEREAS, the Agency has determined that it is appropriate and necessary to enter into
the subject lease and to extend the use of the subject building for entertainment purposes and
implemented at said site; and
WHEREAS, California Health and Safety Code Section 33400(b) permits the Agency to
rent, maintain, manage, operate, repair and clear property purchased for the purposes of
redevelopment; and
WHEREAS, the Redevelopment Agency has exclusively negotiated with New Village
Arts to lease a portion of the subject building and operate a performing arts theater and arts
incubator program within the building; and
WHEREAS, based on the substantial nature of the tenant improvements completed to
date by New Village Arts that were required for the building to accommodate a theater venue and
arts incubator space and the short term lease period for use of the subject property, the Agency
determines that the property shall continue to be leased to New Village Arts for one dollar ($1)
per year which is consideration that is not less than the fair reuse value with the covenants and
conditions authorized by the subject lease for the initial term; and
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WHEREAS, upon completion of exterior improvements by the Carlsbad Redevelopment
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Agency, New Village Arts shall be required to increase its rental payment for said building
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premises; and21
WHEREAS, the Housing and Redevelopment Commission of the City of Carlsbad, on
the date of this resolution, held a duly noticed public hearing to consider the recommendations
and heard all persons interested in or opposed to the lease agreement between the Carlsbad
Redevelopment Agency and New Village Arts for use of the subject building for a performing
arts theater and arts incubator program; and
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WHEREAS, the Housing and Redevelopment Commission of the City of Carlsbad, on
the date of this resolution, considered the report on the lease as required per Section 33433 of the
California Health and Safey Code.
4 NOW, THEREFORE, BE IT RESOLVED by the Housing and Redevelopment
Commission of the City of Carlsbad, California, as follows:
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1. That the above recitations are true and correct.
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2. The Commission has reviewed the report required by Section 33433 of the California
Health and Safety Code and hereby determines that the building located at 2787 State
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13 3. That the subject lease will assist in the elimination of blight within the Village
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Street, and owned by the Carlsbad Redevelopment Agency, shall continue to benefit
the redevelopment area through its continued use for entertainment purposes and to
grow arts programs within the Village Area through a lease with the New Village Arts
for an initial three year period according to the terms set forth in the attached lease
agreement, provided as Exhibit 3, until such time as construction is completed on
exterior improvements to said building by the Agency at which time the lease will be
extended for a five year period subject to the terms set forth in said agreement.
Redevelopment Area by providing occupancy of a key building within the Village,
which otherwise would remain vacant, and a use that will add desired entertainment
and grow art programs in the area, and is consistent with the Village Redevelopment
Plan and Five Year Implementation Plan.
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4. That the consideration is not less than the fair reuse value of the building space with
the covenants and conditions and tenant improvements costs previously authorized
and/or required by the Agency to allow for use of the building according to the lease.18
That the Finance Director is hereby authorized to appropriate $1.5 million in Village
Tax Increment Funds for the design, permitting and construction (including costs for
construction management and contingency) of the exterior facade/storefront
renovations to said building premises as provided with the execution of the attached
lease.
6. That, upon execution of the attached lease, the Executive Director of the
Redevelopment Agency, or her designee, is hereby authorized to enter into or
recommend contracts for the design and construction of the exterior improvements.
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7. The Commission hereby approves said lease agreement and authorizes the Chairman
25 "of the Housing and Redevelopment Commission to execute the approved lease
agreement between the Carlsbad Redevelopment Agency and New Village Arts 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.
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PASSED, APPROVED AND ADOPTED at a Joint Special Meeting of the
Housing and Redevelopment Commission of the City of Carlsbad and the City Council
of the City of Carlsbad on the 13th day of July, 2010, by the following vote to wit:
AYES: Council Members Lewis, Kulchin and Blackburn.
NOES: Council Member Packard.
ABSENT: Council Member Hall.
UDE A. LEWIS, Chairman
ATTEST:
LISA HILDABRAND, Secretary
(SEAL)
SECTION 33433 REDEVELOPMENT REPORT
NEW VILLAGE ARTS THEATER
LEASE AGREEMENT
July 1, 2010
Lease Summary
The Redevelopment Agency shall lease the building premises at Agency-owned property located
at 2787 State Street to New Village Arts, a non-profit theatre and art incubator company, for
rent of one dollar ($1) per year for initially a three (3) year term (with a single two year
extension permitted at the discretion of the Agency) for the purposes of continuing a performing
arts theater and cultural business incubator within the Village Redevelopment Area. The annual
rent for said premises shall increase to $48,000 upon completion of exterior renovations by the
Carlsbad Redevelopment Agency, and the term of the lease shall be extended to five (5) years
with a single five (5) year extension permitted at the discretion of the Agency. A Business
Development Plan for the Village indicates a need for, and focus on, enhanced arts, culture and
entertainment opportunities within the Village Area. This particular location has not proved
financially successful for several prior retail tenants. Allowing the subject property to be used on
an interim basis as a performing arts theater and an arts and cultural business incubator will
allow the Agency to continue to test the success and benefit of additional arts, culture and
entertainment opportunities within the Village. It also provides an economic development tool to
allow cultural arts businesses to grow and expand their programs in a cost- friendly manner. A
copy of the proposed lease is attached for public review.
Fiscal Impacts
The cost of the lease agreement to the Agency and the estimated value of the lease are outlined
below for information purposes.
1. Cost to the Agency: The original land acquisition cost was $500,000 for the
approximately 9,400 square foot building at 2787 State Street. There are currently two (2)
leaseable spaces within the subject building. The rear space is approximately 6,300
square feet in size, and the front space is approximately 3100 square feet in size. The rear
space although larger than the front space has no street frontage or assigned parking, and
was initially an unimproved space typical of a warehouse or storage area for lumber
and/or related supplies. Its value at acquisition was estimated at approximately $240,000.
The front space is valued higher on a square footage basis due to its street frontage and
more extensive improvements, including air conditioning. Its value at acquisition was
estimated at approximately $260,000. Both spaces are currently leased to New Village
Arts for one dollar ($1) a year for a small (99 seat) theater and an arts incubator space.
The proposed lease allows for a continuation of these uses and the Agency's economic
development tool as related to the expansion of arts and cultural programs within the
Village. As noted above, there has been little success as of this date by retail businesses
at this location. To date, no retail business operator has completed its lease term in its
entirety for various reasons at the subject location. New Village Arts has proven to be
Section 33433 Redevelopment Report - NVA Lease
Page 2
successful in its efforts to bring live theater, new artists and new art programs to the
Village Area which in turn has generated additional customers for other Village
businesses. Therefore, the Agency believes that extending the lease with New Village
Arts will have continued benefit to the Village Area from an economic development
standpoint.
The property was purchased with tax exempt bond proceeds with the intent of facilitating
redevelopment of the site as well as other properties at the comer of Grand Avenue and
State Street at a future date. As of this date, there have been no relocation or demolition
costs to the Agency. To date, approximately $30,000 has been expended by the Agency
and/or City of Carlsbad to improve the building to allow for its use to benefit the Village
Redevelopment Area. Approximately $25,000 of the subject improvement cost was
allocated to the front space and $5,000 to the rear space. It is estimated that maintenance
costs for the exterior of the entire building are approximately $5,000 per year. The
Agency has agreed to make exterior improvements to the building in an amount not to
exceed $1.5 million over the next 3 to 5 years to enhance the appearance of the building
and to assist in the effort by New Village Arts to grow their programs and prestige in
order to make them more financially viable. The costs for all interior improvements and
maintenance shall continue to be the responsibility of New Village Arts, as the tenant.
2. Estimated Value of the Interest to be Leased at Highest and Best Use: Based on a
recent retail rental survey (May, 2010), the average per square foot market rent for retail
in the Village is currently $1.85. The highest and best use for the front space
(approximately 3100sf) has been considered retail and the appropriate rent would be
$1.85 per square foot per the noted study. This would equate to an annual retail rental rate
of approximately $69,000. However, as noted above, from an economic development and
business revitalization perspective, the Agency believes that the space is better utilized as
an arts incubator to encourage new arts, culture and entertainment opportunities within
the Village Area. The current proposed lease rate is one dollar ($1) per year for the arts
incubator space.
A survey of theater performance space rentals (May, 2010) indicates that $.60 to $.65 per
square foot would be an appropriate market rate rent for similar theater space in the San
Diego area. The rear space of the building premises has been improved for the purposes
of performing arts space. Therefore, the highest and best use of this space continues to be
a theater and $.60 to $.65 per square foot appears to be an appropriate rent for this space
per the noted study. This would equate to an annual theater rental rate of approximately
$46,000 to $49,000, with an average of approximately $48,000.
3. Estimated Value of the Interest with the Conditions of the Lease: New Village Arts
intends to continue to lease the subject space for the purposes of ongoing operation of a
performing arts theater and arts incubator in an effort to continue to develop new Arts,
Culture and Entertainment opportunities in the Village Redevelopment Area. This is
consistent with a Business Development Strategy approved for the Village Area a few
years ago and currently being implemented by the Agency. There will be rent of one
dollar ($1) per year charged for the arts incubator space, which is a rental rate that is
Section 33433 Redevelopment Report - NVA Lease
Page 3
below the estimated market value of $69,000 per year for a retail business. However,
because the arts incubator is an economic development and business revitalization tool
and in itself will not generate any type of revenue to support a lease payment, the Agency
has determined that the estimated reuse value of the subject property for the lease is no
more than $1. New Village Arts has agreed to pay for any required or desired tenant
(interior) improvements, and provide a deposit of $2000, plus provide the appropriate
insurance coverage for any damage caused to the building during their use. New Village
Arts is also responsible for all interior maintenance costs. Therefore, the ongoing
operational costs to the Agency to provide said arts incubator space is minimal.
For the theater space, there will be an annual one dollar ($1) rent charged to New Village
Arts for the first three to five years of the lease or until such time as the Redevelopment
Agency completes up to $1.5 million in exterior improvements to the building premises.
Upon completion of the noted exterior improvements, New Village Arts will begin
making an annual rental payment of $48,000 to the Agency, which is currently
considered to be a fair market rent for said theater space. Although the initial rent of $ 1 is
below the fair market rent for said theater space, the tenant (New Village Arts) has
expended nearly $345,000 to date to renovate the interior of the building premises and
has had a limited period (4 years) to date to amortize these substantial improvement
costs. The additional three to five years for the current lease at no rent will allow for full
amortization of the improvement costs paid by New Village Arts to date in an amount
comparable to the noted market rate rent. A total seven (7) year lease period allows for an
improvement amortization rate of approximately $49,300 per year, which exceeds the fair
market rent value. The Agency has determined that the reuse value of the theater space
for the additional three (3) year lease is $1 due to the substantial tenant improvements
made to date. New Village Arts, however, will continue to pay for any required or desired
additional tenant improvements, and provide a deposit of $2000, plus provide the
appropriate insurance coverage for any damage caused to the building during their use.
New Village Arts is also responsible for all interior maintenance costs. Therefore, the
ongoing operational costs to the Agency to provide said theater space during the subject
three year lease terms remains nominal.
The Redevelopment Agency (property owner) and New Village Arts (tenant) have agreed
that the Agency will complete up to $1.5 million in exterior improvements to the subject
building premises. Upon completion of said improvements, New Village Arts will
receive a lease extension for five (5) additional years and will begin making an annual
payment of $48,000 for said theater space which as noted above is currently considered a
market rate rent. There will be no increase in rent for the Arts Incubator Space. The rent
for this space will remain at $ 1 for the reasons outlined above.
Impact on Blight Elimination
It is the Agency's opinion that the lease of the subject space within the subject property will
assist in the elimination of blight within the Village Redevelopment Area by:
Section 33433 Redevelopment Report - NVA Lease
Page 4
1. Eliminating the negative land use impacts of having a vacant, abandoned space/building
in close proximity to the commuter rail station and in a critical redevelopment focus area
by ensuring the continued existence of an appropriate use within the building.
2. Eliminating the negative visual impact of an outdated and "visually tired" building in the
Village through substantial exterior improvements.
3. Testing the customer market for the most appropriate land use for the property to assist
with implementation plans for ultimate redevelopment of the site at some future date.
4. Assist with efforts to reduce evening crime in the Village by providing an alternate
evening activity that will encourage more positive pedestrian traffic and public
interaction in the area.
5. Assist in the effort to revitalize the retail and dining environment by providing for the
creation of new arts, culture and evening entertainment opportunities which currently do
not exist within the area.
Summary
The subject lease provides the Redevelopment Agency with a continuing opportunity to
determine if there is an ongoing market demand for additional arts, culture and entertainment
businesses within the Village Area. Both the theater and arts incubator program are desired by
the business community as an economic development and business revitalization or stimulus tool
for the Village Area. The theater and arts incubator program are both aimed at creating a place
where cultural arts can grow and flourish, and potentially becoming a catalyst for development
of a larger Arts District and other related businesses. Use of the subject building at a reduced rate
for the noted arts incubator is best considered as an investment in the future of the Village Area
as efforts continue to stimulate the economy, and to revitalize and redevelop the Area. The lease
for operation of the theater assist both as an economic development tool for the City and
Redevelopment Agency, and also allows the theater to grow its programs and prestige within the
arts community in an affordable manner.
CARLSBAD REDEVELOPMENT AGENCY
LEASE TO
NEW VILLAGE ARTS THEATRE
OF PROPERTY LOCATED AT
2787 STATE STREET
CARLSBAD, CALIFORNIA 92008
SI
2787 State Street
New Village Arts Theatre/Arts Incubator
and
Carlsbad Redevelopment Agency
LEASE AGREEMENT
THIS LEASE AGREEMENT ("Agreement") is made and entered into this day of
July 1, 2010, by and between the Carlsbad Redevelopment Agency, hereinafter called "Lessor,"
and New Village Arts, a California non-profit corporation, hereinafter called "Lessee," for
property located at 2787 State Street, Carlsbad, California, 92008.
RECITALS
WHEREAS, the Carlsbad Redevelopment Agency is the owner and Lessor of the real property
improved with an approximately 9400 square foot commercial building located at 2787 State
Street, Carlsbad, California, 92008, hereinafter "Building Premises"; and
WHEREAS, the Carlsbad Housing and Redevelopment Commission is supportive of arts
programs in the Carlsbad Village; and
WHEREAS, Lessee desires to continue to lease from Lessor a total of 6,300 square feet in the
rear of the Building Premises for the purposes of live theater performances, and 3,100 square feet
in the front of said Building Premises for the operation of an arts incubator for visual and
performing cultural arts; and
WHEREAS, Lessor and Lessee desire to have Exterior Improvements constructed or installed at
the Building Premises to update its appearance, to ensure a quality arts facility for the public, and
to assist in the growth of the New Village Arts theater and incubator programs within said
facility; and
WHEREAS, Lessor has agreed to provide funding in an amount not to exceed $1.5 million to
design, manage and construct Exterior Improvements to said Building Premises; and
WHEREAS, Lessee may improve and will maintain the interior of the Building Premises,
including all interior improvements and installations; and
WHEREAS, Lessee's rental payment will increase according to this Agreement upon completion
of Exterior Improvements to be made by Lessor.
NOW, THEREFORE, it is understood and agreed by and between Lessor and Lessee as follows:
1) INITIAL LEASE TERM: The initial term of the lease ("Initial Lease Term") shall be for a
period of three (3) years commencing on July 1, 2010 and ending on June 30, 2013, or until
New Village Arts/Agency Lease
July 2010
Page 2
such time as the agreed upon Exterior Improvements to the Building Premises as defined in
Section 11 hereof are completed, whichever occurs first. At Lessor's sole discretion, Lessee
may extend the Initial Lease Term for one (1) additional two (2) year period, upon the same
terms and conditions stated herein. Lessor will only consider a request for extension if
Lessee has complied with all terms and conditions of this Agreement and Lessee submits a
written request for the extension at least ninety (90) days prior to expiration of the Initial
Lease Term.
2) INITIAL LEASE TERM RENT: Lessee agrees to pay to Lessor the sum of one dollar
($1.00) per year for the Initial Lease Term and for the two (2) year extension of the Initial
Lease Term, if granted by Lessor ("Rent"). Rent shall be paid in advance, commencing upon
execution of this Agreement by both parties. 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. There shall be no increase in the annual Rent until such time as the Exterior
Improvements provided for in Section 11 of this Agreement are completed, as evidenced by
the filing of a Notice of Completion for the project ("Completion Date"). On the Completion
Date for the Exterior Improvements, the rent shall be increased as set forth in Paragraph 4
below.
3) POST EXTERIOR IMPROVEMENTS LEASE TERM: Upon completion the Exterior
Improvements provided for in Section 11 of this Agreement and receipt by Lessor of the first
annual rent payment for a New Lease Term, the term of the lease, if not yet expired, will
extend to a period of five (5) years, commencing on the Completion Date of said Exterior
Improvements ("New Lease Term"). At Lessor's sole discretion, Lessee may extend the
New Lease Term for one (1) additional five (5) year period, which extension request will
only be considered by Lessor if Lessee has complied with all terms and conditions of this
Agreement.
4) POST EXTERIOR IMPROVEMENTS RENT: Upon completion of the Exterior
Improvements provided for in Section 11 of this Agreement, Lessee agrees to pay the sum of
forty-eight thousand dollars ($48,000) per year for each year of the New Lease Term, due in
advance, on the anniversary of the Completion Date ("Rent"). The initial payment for the
New Lease Term shall be due no later than ten (10) days following the Completion Date and
on the anniversary of the Completion Date every year thereafter. If any annual Rent payment
is not received by Lessor when due, Lessee shall pay as additional rent to Lessor a late
charge equal to ten percent (10%) of such overdue amount, compounded annually, plus any
attorney fees incurred by Lessor by reason of Lessee's failure to pay rent and/or other
charges when due hereunder. Rent payments shall be delivered in accordance with section
two of this Agreement.
5) SECURITY DEPOSIT: Lessee agrees to maintain the Security Deposit in the amount of two
thousand dollars ($2,000) currently in place for the existing lease term expiring June 30,
2010, during the Initial Lease Term and the New Lease Term and any extensions of either
New Village Arts/Agency Lease
July 2010
Page3
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lease term. The Security Deposit shall continue to be held by Lessor in an interest bearing
account (at the same rate the Carlsbad Redevelopment Agency earns on its money). Upon
expiration of this Agreement, Lessee shall be entitled to all interest accrued over the lease
term(s). Lessor shall not be required to keep the Security Deposit separate from its general
accounts. 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 and/or may 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 Agreement,
6) USE: Lessee agrees that the rear 6,300 square feet of the Building Premises shall be used
exclusively for the operation of the New Village Arts Theater live theater, and that the front
3,100 square feet of the Building Premises shall be used exclusively for operation by the
New Village Arts Theatre of an arts incubator for visual and performing cultural arts,
including rehearsal, gallery, educational and other arts related programs, and for no other
purpose whatsoever without the written consent of Lessor. Lessee shall not, and is expressly
prohibited from, using the Building 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. Lessee
shall actively and continuously use and operate the premises for the limited particular
exclusive use as expressly provided for herein, except for failure to do so caused by acts of
God.
7) ANNUAL REPORTING: In the final month of any lease term, Lessee shall submit an
annual financial statement declaring all expense reimbursement and revenue of any kind
received from the participants in the incubator arts programs or from the public attending
those programs, an annual incubator arts program goals statement, and an annual report
summarizing the prior year's incubator arts program accomplishments and its economic
impact on the Carlsbad Village area.
8) EARLY TERMINATION: Lessor or Lessee shall each have a right to terminate this
Agreement by first giving two (2 years) written notice to the other party. Upon termination
by either party, Lessee shall remain responsible for all Rent and other charges owing on the
date of termination as well as any late payment charges accruing thereafter. Upon early
termination the annual Rent for the New Lease Term and any extension thereof may be
prorated for any portion of a year. Such prorated Rent for any unused portion of the lease
term shall be refunded to Lessee unless Lessee is in default of this Agreement, in which case
any Rent or other charges owing by Lessee may first be deducted and applied to the unpaid
debt by Lessor.
9) INTERIOR IMPROVEMENTS: Lessee shall be responsible for all required interior
improvements to the Building Premises, including but not limited to electrical, plumbing,
partition walls, restroom facilities, and any entries or exits necessary to comply with
applicable building and fire code requirements. Subject to Lessor approval, Lessee may, at
New Village Arts/Agency Lease
July 2010
Page 4
its own expense, also make additional interior modifications or additional improvements to
the Building Premises, including the addition of structures, machines, appliances, utilities, or
other improvements necessary or desirable for the use of said Building Premises; provided,
however, that no modifications or additional improvements shall be made added, and no
major repairs to any building improvements shall be made except upon obtaining all
necessary prior approvals from Lessor and proper permits from the City of Carlsbad.
10) SIGNAGE: Lessee shall be responsible for manufacturing and installation of signage in
accordance with the sign regulations set forth within the Carlsbad Village Master Plan and
Design Manual and the City of Carlsbad Municipal Code. Lessee agrees that no banners,
pennants, flags, 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 Master Plan and Design Manual and the City of Carlsbad Municipal Code.
11) EXTERIOR IMPROVEMENTS:
a) Lessor shall be responsible for design, permitting, and construction costs, including
construction management and contingency funds, for the exterior facade/storefront
renovation improvements to the Building Premises and any related Exterior
Improvements such as a new roof, or air conditioning equipment. ("Exterior
Improvements") up to a maximum payment of one million five hundred thousand dollars
($1.5 million). The Exterior Improvements to be made will be determined by Lessor
after consultation with Lessee.
b) The design and permitting process for said Exterior Improvements will be initiated by
Lessor upon execution of this Agreement. Construction of all approved Exterior
Improvements will be initiated once the design and permitting process is completed, but
in no event sooner than thirty (30) days following receipt by Lessor of a letter of
commitment from Lessee documenting that a minimum of two hundred thousand dollars
($200,000) is held by Lessee in an account earmarked for operational reserve for the
purpose of making the required Rent payments set forth in Paragraph 4 hereof.
12) OWNERSHIP; REMOVAL; SURRENDER/RESTORATION: Unless otherwise instructed,
all Lessee owned modifications and utility installations shall, at the expiration or termination
of this Agreement, become the property of Lessor and be surrendered by Lessee with the
Building Premises, except for trade fixtures which shall be owned and removed by Lessee.
Lessor may, for any reason, require removal of said modifications and utility installations, in
which case Lessor shall provide Lessee with a written notice requiring that any or all Lessee
constructed modifications or utility installations be removed by the expiration or termination
of this Agreement not later than sixty (60) days prior to the end of the lease term. Lessor
may require the immediate removal at any time of all or any part of any modifications or
utility installations made without the required consent. 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 excepted. "Ordinary wear and tear" shall not
New Village Arts/Agency Lease
July 2010
PageS
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, modifications and/or utility installations, furnishings, and
equipment installed by or for Lessee and the removal, replacement, or remediation of any
soil, material or groundwater contaminated with hazardous substance (as defined in
Paragraph 29) by Lessee. The failure by Lessee to timely vacate the Building Premises
pursuant to this paragraph without the express written consent of Lessor shall constitute a
holdover under the provisions of Paragraph 37 below.
13) NAMING RIGHTS FOR BUILDING: Lessee shall retain all naming rights for the Building
Premises for the term of the lease, subject to final name approval by Lessor. Upon expiration
of the lease or early termination of said lease according to Paragraph 8, the authority granted
to Lessee for naming rights shall also expire. Lessor is under no obligation to retain the
Building Premises name(s) upon expiration or early termination of said Agreement.
14) PARKING: Lessee understands there is no on-site parking available on the Building
Premises. Lessee further understands that execution of this Agreement in no way constitutes
the granting of exclusive use of public parking adjacent to the Building Premises.
15) RIGHT TO ENTER PROPERTY: Upon execution of this Agreement, Lessee shall be
granted continued access to the Building Premises for operation of the New Village Arts
Theatre and arts incubator and to initiate, construct and complete any desired interior
building improvements as outlined in Paragraph 9 of this Agreement.
16) REPRESENTATIONS AND INDEMNITIES OF BROKER RELATIONSHIPS: Lessor
and Lessee each represent and warrant to the other that it has had no dealings with any
person, firm, broker or finder in connection with this Agreement, and that no person, firm,
broker or finder is entitled to any commission or finder's fee in connection herewith. Lessor
and Lessee 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
Lessor or Lessee, including any costs, expenses, or attorneys' fees reasonably incurred with
respect thereto.
17) WAIVER OF RELOCATION BENEFITS: Lessee understands this Agreement is entered
into in order to provide an interim use of the Building Premises, until such time as Lessor
chooses to develop the property in accordance with the Carlsbad Village Master Plan. Lessee
therefore agrees to waive any and all relocation benefits defined in the California Relocation
Assistance Law (Government Code, Section 7260, et seq.) after having had the opportunity
to consult with legal counsel about potential entitlements. Lessee agrees that it will at all
times hold Lessor and the City of Carlsbad free and harmless and indemnify it against all
claims for relocation benefits arising from this Agreement or any use of the Building
Premises, including the costs of defending against such claims, and attorneys' fees incurred
therein.
New Village Arts/Agency Lease
July 2010
Page 6
18) LIENS: Lessee agrees that it will at all times hold Lessor and the City of Carlsbad free and
harmless and indemnify them against all claims for labor or materials in connection with
interior improvements, repairs, or alterations on the Building Premises, including the costs of
defending against such claims, and reasonable attorney fees incurred therein. In the event
that any lien or levy of any nature whatsoever is filed against the Building Premises or the
leasehold interest of the Lessee, 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, and in accordance with the
City of Carlsbad's bonding requirements. Lessor shall have the right to declare this
Agreement 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.
19) LEASE ENCUMBRANCE: Lessee understands and agrees that it cannot encumber the
Agreement, leasehold estate or the improvements thereon by a deed of trust, mortgage or any
other security instrument. In the event of such encumbrance by Lessee, Lessor shall have the
right to declare this Agreement in default.
20) ASSIGNMENT-SUBLEASE: Lessee shall not assign or transfer the whole or any part of
this Agreement or any interest therein, by merger, consolidation, dissolution or otherwise,
nor sublease the whole or any part of the Building Premises, nor contract for the management
or operation of the whole or any part of the Building 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,
in each instance.
21) DEFAULT: It is mutually understood and agreed that if any default be made in the payment
of Rent 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 Building
Premises are leased as above stated, and such default shall not be cured within thirty (30)
days after written notice thereof if default is in the performance of the use or maintenance
obligation provisions pursuant to Paragraphs 6 and 23 of this Agreement respectively, or ten
(10) days after written notice thereof, if default is in the payment of Rent, or in the
performance of any other covenant, condition or agreement, Lessor shall have the right to
immediately terminate this Agreement; and that in the event of such termination, Lessee shall
have no further rights hereunder, the Lessee shall thereupon forthwith remove all personal
property and trade fixtures from said Building Premises and shall have no further right or
claim thereto, and Lessor shall immediately thereupon, without recourse to the courts, have
the right to reenter and take possession of the Building 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 its obligations under the
Agreement. In the event of the termination of this Agreement pursuant to the provisions of
New Village Arts/Agency Lease
July 2010
Page 7
17
this paragraph, Lessor shall have any rights to which it would be entitled in the event of the
expiration or early termination of this Agreement.
22) 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
proceeding, or in the event of any judicial sale of Lessee's interest under this Agreement,
Lessor shall have the right to declare Lessee in default of this Agreement.
23) MAINTENANCE AND REPAIR: As part of the consideration for this Agreement, Lessee
agrees to assume full responsibility for the interior operation and maintenance of the
Building Premises throughout the lease term and, without expense to the Lessor. Lessee will
perform all interior maintenance repairs and replacements, including painting, plumbing and
electrical, glass repair, and maintenance of air conditioning equipment, necessary to 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 the Building Premises free and clear of rubbish and litter,
or any other fire hazards. Lessor shall be responsible for exterior maintenance excepting for
the upkeep of air conditioning equipment, but including roof repairs. 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, and inspect to determine the condition of and protect its
interests in the Building Premises. If inspection discloses that the Building Premises are not
in satisfactory condition, Lessee must perform the necessary maintenance work within thirty
(30) days after written notice from Lessor. Further, if at any time during the term of the
Agreement Lessor determines that the Building Premises are not in satisfactory condition,
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 of Lessor elsewhere in this Agreement.
24) TAXES AND UTILITIES: This Agreement may result in a taxable possessory interest.
Lessee shall be solely responsible for payment of said taxes associated with its occupancy of
the Building Premises, if any. Lessee agrees to and shall pay before delinquency all
possessory taxes and assessments of any kind assessed or levied upon Lessee or the Building
Premises by reason of this Agreement or of any structures, 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 Building Premises.
Lessee shall also pay any fees imposed by law for licenses or permits for any business or
activities of Lessee upon the Building Premises or under this Agreement, and shall pay
before delinquency any and all charges for utilities at or on the Building Premises. If Lessee
fails to pay said possessory taxes or assessments, Lessor may declare Lessee in default in •
accordance with Paragraph 21 of this Agreement. Lessee shall be responsible for payment of
all utilities, including but not limited to security alarm, trash, water, gas and electricity.
New Village Arts/Agency Lease
July 2010
PageS
25) CONFORMANCE WITH RULES AND REGULATIONS: Lessee agrees that in all
activities on or in connection with the Building Premises and in all uses thereof, including the
making of any modifications 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 Lessor and the City of Carlsbad, including, but not limited to, sign
regulations and requirements for outdoor display set forth within the Carlsbad Village Master
Plan and Design Manual and the City of Carlsbad Municipal Code, and any applicable laws,
including those of the County Health Department, the State of California and the Federal
Government, as any of the same now exist or may hereafter be adopted or amended.
26) NON-DISCRIMINATION: Lessee agrees not to discriminate against any person or class of
persons by reason of sex, color, race, religion, or national origin in the use provided for in
this Agreement allows the Lessee. Any such accommodations or services shall be offered to
the public by Lessee on fair and reasonable terms.
27) PARTIAL INVALIDITY: If any term, covenant, condition, or provision of this Agreement
is held by a court 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.
28) HOLD HARMLESS: Lessee shall defend, indemnify, and hold harmless Lessor, the City of
Carlsbad, and their officers, officials, and employees from liability, damage, and expense of
any kind, including reasonable attorneys' fees, arising from all claims or causes of action of
any kind including but not limited to injury to or death of any person or persons, including
Lessee, its employees, and invitees resulting directly or indirectly from the granting and
performance of this Agreement or arising from the use and operation of the Building
Premises or any defect in any part thereof.
29) 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 or the City of Carlsbad 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
Building 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 by Lessor, the City of Carlsbad or any other regulatory authority, whether or
not formally ordered or required, for the cleanup of any contamination of, and for the
maintenance, security and/or monitoring of the Building Premises or neighboring properties,
that was caused or contributed to by Lessee, or pertaining to or involving any Hazardous
Substance brought onto the premises during the term of this Agreement, by or for Lessee, or
any third party.
New Village Arts/Agency Lease
July 2010
Page 9
30) EASEMENTS: This Agreement and all rights given hereunder shall be subject to all
easements and rights-of-way now existing or heretofore granted or reserved by Lessor or the
City of Carlsbad in, to or over the Building 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. 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
operations of Lessee.
31) INSURANCE: Lessee shall obtain and maintain for the duration of this Agreement and any
and all amendments, insurance against claims for injuries to persons or damage to property
which may arise out of or in connection with use of the Building Premises and provision of
services by Lessee. The insurance will be obtained from an insurance carrier admitted and
authorized to do business in the State of California. The insurance carrier is required to have
a current Best's Key Rating of not less than "A-V". The policies for said insurance shall, as a
minimum, provide the following forms of coverage:
i) Comprehensive General Liability - Covering premises and operations in the amount
of not less than One Million Dollars ($1,000,000) combined single limit per
occurrence for bodily injury, personal injury and property damage. If the submitted
policies contain aggregate limits, general aggregate limits will apply separately under
this Agreement or the general aggregate will be twice the required per occurrence
limits.
ii) Property Insurance - Lessee shall obtain and maintain insurance coverage on all of
Lessee's personal property, trade fixtures, modifications and utility installations. Such
insurance shall be full replacement cost coverage with a deductible of not to exceed
one thousand dollars ($ 1,000.00) per occurrence. The proceeds from any such
insurance shall be used by Lessee for the replacement of personal property and trade
fixtures as well as modifications 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.
iii) 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 Agreement. All insurance policies shall be
primary coverage, and will name Lessor and the City of Carlsbad as an additional
insured, protect Lessor and the City of Carlsbad against any legal costs in defending
claims and will not terminate without thirty (30) days' written notice to Lessor.
iv) 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 Lessor, the insurance provisions
in this Agreement do not provide adequate protection for Lessor and the City of
Carlsbad, and/or for members of the public on the Building Premises, Lessor may
require Lessee to obtain an insurance policy sufficient in coverage, form and amount
New Village Arts/Agency Lease
July 2010
Page 10
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.
v) Lessor shall notify Lessee in writing of changes in the insurance requirements and, if
Lessee does not deposit certificates and endorsements evidencing acceptable
insurance policies in a form acceptable to Lessor incorporating such changes within
thirty (30) days of receipt of such notice, Lessee shall be in default of this Agreement,
without further notice to Lessee, and Lessor shall be entitled to all legal remedies.
vi) 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 Agreement. 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 Agreement or with the use or occupancy
of the Building Premises.
vii) Lessee agrees not to use the Building 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 Building Premises or on adjacent premises, or that will cause cancellation
of any other insurance coverage for the Building Premises or adjoining premises.
Lessee further agrees not to keep on the Building Premises or permit to be kept, used,
or sold thereon, anything prohibited by any fire or other insurance policy covering the
Building Premises. Lessee shall, at its sole cost and expense, comply with any and all
requirements, in regard to the Building Premises, of any insurance organization
necessary for maintaining fire and other insurance coverage at reasonable cost.
32) WARRANTIES-GUARANTEES-COVENANTS: Lessor makes no warranty, guarantee, or
covenant, including but not limited to covenants of title and quiet enjoyment, or declaration
of any nature whatsoever, concerning the condition of the Building Premises, including the
physical condition thereof, or any condition which may affect the Building 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.
33) DAMAGE TO OR DESTRUCTION OF PREMISES: In the event of damage or destruction
by fire, the elements, acts of God, or any other cause, to twenty five percent (25%) or less of
the improvements located within the Building 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
Building Premises for the purposes required by this Agreement. Repair, replacement or
reconstruction of improvements within the Building 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 (more than 25% of improvements) except to the extent the loss is
covered by insurance required to be carried by Lessee pursuant to Paragraph 31 of this
New Village Arts/Agency Lease
July 2010
Page 11
Agreement (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
Agreement shall terminate. Rent shall not be abated during the repair period, except to the
extent that Lessor is compensated by Lessee's insurance for rental loss. Lessor shall be
entitled to any insurance proceeds and other compensation for the loss.
34) QUITCLAIM OF LESSEE'S INTEREST UPON TERMINATION: Upon termination of this
Agreement 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 Building 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 deliver such deed and said notice
shall be conclusive evidence of the termination of this Agreement and of all right of Lessee
or those claiming under Lessee in and to the demised Building Premises.
35) PEACEABLE SURRENDER: Upon the expiration of this Agreement or sooner termination
or cancellation thereof, as herein provided, Lessee will peaceably surrender said Building
Premises to Lessor in as good a condition as said Building Premises were in at the date of
this Agreement, or the Completion Date of any Exterior Improvements if made, ordinary
wear and tear excepted. If the Lessee fails to surrender the Building Premises at the
expiration of this Agreement 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.
36) WAIVER: Any waiver by Lessor of any breach by Lessee of any one or more of the
covenants, conditions, or agreements of this Agreement 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 Agreement, 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 Agreement be construed in any manner changing the terms hereof or so as 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.
37) NO RIGHT TO HOLD OVER: Lessee has no right to retain possession of the Building
Premises or any part thereof beyond the expiration or termination of this Agreement. In the
event that Lessee holds over, then the Rent shall be increased to two and one-half (21/2) times
the applicable rent amount immediately preceding the expiration or termination. Nothing
contained herein shall be construed as consent by Lessor to any holding over by Lessee.
New Village Arts/Agency Lease
July 2010
Page 12
38) ACCEPTANCE OF PREMISES: Lessee acknowledges that the Building Premises are in an
acceptable condition, and that Lessee does not hold Lessor responsible for any defects in the
Building Premises.
39) QUIET POSSESSION: Lessee shall at all times during the term of this Agreement occupy
the Building Premises quietly and not commit any act, waste or nuisance which disturbs the
public peace or the quiet enjoyment of any neighboring tenant or property owner.
40) SUCCESSORS IN INTEREST: Unless as otherwise provided in this Agreement, 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.
41) ENTIRE UNDERSTANDING: This Agreement 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 Building Premises and that this Agreement supersedes all prior negotiations,
discussions, obligations and rights of the parties hereto. No waiver, modification, or
amendment of this Agreement shall be valid unless it is expressly in writing and signed by
authorized representatives of the Lessor and Lessee. 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, express or implied, which is not
expressly contained in writing in this Agreement, and each party further acknowledges that it
has not executed this Agreement 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
Agreement.
42) TIME IS OF THE ESSENCE: Time is of the essence for each and all of the terms and
provisions of this Agreement.
43) 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 U.S.
Mail, service will be considered completed and binding on the party served.
TO LESSEE: TO LESSOR:
President or Managing Director Housing & Neighborhood Services Director
New Village Arts Theatre &
P.O Box 2565 Property Manager, City of Carlsbad
Carlsbad, California 92008 2965 Roosevelt Street, Suite B
Carlsbad, California 92008
New Village Arts/Agency Lease
July 2010
Page 13
J
Carlsbad, California 92008
LESSEE:
BY: ^
Stephen L'Heureux, President
New Village Arts Theatre
DATE:
Note: Signature of Lessee must be Notarized
and Authority to Bind attached
APPROVED AS TO FORM:
BY: ( yJ^gjg. r^-' r^eg_
RONALiyR. BALL, GENERAL COUNSEL
DATE: "> */1* -
LESS,
/ fj~ -' M^-i
Carlsbad Redi
New Village Arts/Agency Lease
July 2010
Page 14
ACKNOWLEDGMENT
STATE OF CALIFORNIA )
) ss.
COUNTY OF SAN DIEGO )
On July 6, 2010, before me, LUPE ORTEGA, the undersigned Notary Public, per-
sonally appeared Stephen M. L'Heureux, who proved to me on the basis of satisfactory evi-
dence to be the person whose name is subscribed to the within instrument, and acknowl-
edged to me that he executed the same in his authorized capacity, and that by his signature
on the within instrument the person, or the entity upon behalf of which the person acted,
executed the instrument.
I certify under PENALTY OF PERJURY under the laws of the State of California that
the foregoing paragraph is true and correct.
WITNESS my hand and official seal.
ni • • •
LUPE ORTEGA
Commission * 1846373
Notary Public • California
San Diago County
MV Comm. Ewrfras May 8,2013
Notary Public
VILLAGE
Kristianne Kurner
Executive Artistic Director
Alex Scollon
Managing Director
NVA / board officers
Stephen "Hap" L'Heureux
President
Michael Schumacher
Vice President
Gina McBride
Secretary
Kurt Filipovitch
Treasurer
NVA / board members
Joe Charest
Pat Farley
Tom Estok
Julie Norby
Julie Nygaard
Christine Pagan
Laura Segall
Norine Sigafoose
Charlie Wyatt
NVA /advisory board
David Brudney
Bobbie Hoder
Richard Kuranda
Ken Ryan
John Simons
At a specially held meeting of the board of directors
of New Village Arts, on July 6, 2010, the board of
directors voted in-favor of a resolution to accept the
City's and Redevelopment Agency's proposal
regarding the rehab of the facilities exterior and rent
payments and has authorized the president of New
Village Arts to sign the lease as presented by the
city.
Gina McBride
Secretary of the Board of Directors
New Village Arts
New Village Arts Theatre
2787 State St
Carlsbad, CA 92008
p: 760.433.3245
e: info@newvillagearts.org
w: www.newvillagearts.org
New Village Arts is a
501(c)(3) Non Profit Organization
New Village Arts
Lease Agreement
Debbie Fountain
July 13, 2010
Background
•Property purchased by Agency in 1997
•Intended for future redevelopment
•Retail not successful to date at location
•Desire to add ACE uses to the Village
•Theatre and Arts Incubator successful;
interested in longer terms lease & building
improvements
Key Terms of Lease
•Agency will improve the building exterior at a
cost not to exceed $1.5 million
•Agency will collaborate with NVA on the
design and phased construction
•Agency will lease the building to NVA initially
for $1 year for up to 3 years, with a possible 2
year extension
Key Terms
•Design & permitting of improvements will
begin upon execution of lease
•Exterior renovations will be initiated upon
demonstration by NVA that a minimum of
$200,000 is deposited for an operational
reserve to ensure rental payments
•Upon completion of exterior renovations and
first lease payment, the term of lease will
convert to 5 years
Key Terms
•5 year lease will require a set lease amount of
$48,000 per year.
–9400 square feet total
–6300 square feet for theatre (apprx. $.65sf)
–3100 square feet for arts incubator ($0 sf)
•Economic development activity; “growing” ACE uses
•NVA will retain naming rights for building
while lease is current; final approval by
Agency
Goals Achieved
•Update building for visual impact
•Continued use of building for a desired use
•Provide a quality example for property owner
investment in Village
•Assist with effort to reduce crime with
alternate evening entertainment
•Revitalize the retail and dining environment
with the creation of new ACE opportunities
Recommended Action
•Hold a public hearing to accept public
comments on the proposed lease & NVA as
tenant
•If acceptable following public hearing, adopt
Housing and Redevelopment Commission
Resolution No. 489 authorizing execution of
the lease agreement with NVA to lease the
agency-owned property at 2787 State Street
QUESTIONS??