DATE: March 26, 2025
TO: Honorable Mayor and City Councilmembers
FROM: Public Works Department
TITLE: AMENDMENT 3 TO THE PERCENTAGE LEASE AGREEMENT WITH SEASIDE RESTAURANT GROUP, INC., DBA THE TIN FISH RESTAURANT
RECOMMENDATION
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Staff recommends that the City Council approve Amendment 3 to the Percentage Lease Agreement with Seaside Restaurant Group, Inc., dba The Tin Fish Restaurant, for the leased premises at 302 North The Strand, extending the term of the agreement from June 1, 2025 to May 31, 2027, for a two-year minimum total revenue of $127,034; and authorize the City Manager to execute the amendment.
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BACKGROUND AND ANALYSIS
On May 16, 2012, the City entered into a Percentage Lease Agreement with Mr. Chil Nae No (Agreement) to operate a food concession at 302 North The Strand.
The City Council approved Amendment 1 on May 18, 2022 and Amendment 2 on April 10, 2024, extending the term through May 31, 2024. On February 13, 2025, Seaside Restaurant Group, Inc. (Lessee) was assigned to the Agreement.
Lessee desires to provide ongoing concession services, but due to the pending Pier Bridge Reconstruction Project and anticipated construction, the Lessee has requested an extension of the Agreement for an additional two years at the City’s calculated property lease payment rate, including a one-year extension option.
The monthly rent shall remain the minimum rent or the percentage rent of six percent of gross sales, whichever is higher. The minimum rent is increased annually by four percent. The current monthly minimum rent is $4,990, which shall be increased to $5,189 on June 1, 2025. The pending construction is estimated to begin within three (3) years. Lessee will be required to vacate premises during such time; however, the Agreement provides that Lessee will take back possession of the newly constructed space when cleared for occupancy. At such time, staff will bring another amendment to extend the lease term and define leased space and maintenance of premises.
FISCAL IMPACT
|
Description |
Minimum Annual Amount |
2-Year Term Total Revenue Amount |
Revenue Account |
|
Tin Fish Minimum Rent Revenue |
$62,271 |
$127,034 |
PM R&L - City 1101.4351 |
The amendment will result in minimum revenue over the extended two-year term of approximately $127,034 and will be deposited into account no. 1101.4351. Additional percentage revenue will be realized based on a percentage of the gross sales in excess of the minimum rent, which is estimated at $26,568 annually, based on the prior two-year average of percentage income received.
COMMISSION OR COMMITTEE REPORT
Does not apply.
CITY ATTORNEY’S ANALYSIS
The referenced documents have been reviewed by the City Attorney and approved as to form.
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Prepared by: Julie Cook, Property Agent II
Reviewed by: Hamid Bahadori, Public Works Director
Submitted by: Jonathan Borrego, City Manager
ATTACHMENTS:
1. Staff Report
2. Amendment No. 3
3. Rent Adjustment Calculation