To: MAYOR AND CITY COUNCIL
From: GREG KAPOVICH, WATERFRONT & ECONOMIC DEVELOPMENT DIRECTOR
TITLE
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APPROVE A LEASE WITH HDOS (HOT DOG ON A STICK) ACQUISITION, LLC FOR THE PREMISES AT 206 FISHERMAN’S WHARF FOR THE TERM DECEMBER 3, 2024 TO DECEMBER 2, 2029
ADOPT BY TITLE ONLY RESOLUTION NO. CC-2412-109, A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF REDONDO BEACH, CALIFORNIA, LEASING CERTAIN PROPERTY TO HDOS ACQUISITION, LLC
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EXECUTIVE SUMMARY
In 1995, the City of Redondo Beach (City) purchased the Fisherman’s Wharf Leasehold which includes the 200 block of Fisherman’s Wharf. The leasehold is comprised of several buildings that total approximately 13,000 square feet of leasable space. The space at 206 Fisherman’s Wharf (Premises) is approximately 240 square feet in size.
The proposed lease with HDOS Acquisition, LLC (Hot Dog on a Stick) will allow for a 60-month term for the space and includes an option to terminate with a 12-month prior written notice. Rent to the City’s Harbor Tidelands Fund for the lease is the minimum of $720, or 10% of gross sales, whichever is greater.
BACKGROUND
In 1995, the City purchased the Fisherman’s Wharf Leasehold from the Redondo Horseshoe Pier Company containing the buildings from 200 to 250 Wharf on the Redondo Beach Pier. The approximately 13,000 square feet of leasable space is made up of retail, restaurant, and entertainment uses.
The location was previously occupied by Craig’s Hot Dog on a Stick, an independent and locally operated business that was not affiliated with the national corporation also named Hot Dog on a Stick. Craig Reidt had successfully operated the business on a day-to-day basis for decades but recently retired and vacated the tenant space.
The City has negotiated a new lease with Hot Dog on a Stick, which is under the umbrella organization of FAT Brands, Inc., a leading global franchising company that strategically acquires, markets, and develops fast-casual, quick-service, casual dining, and polished casual dining concepts around the world. The proposed lease would effectively retain the sales of corn dogs on the pier. The tenant will take the Premises as-is and will be responsible for utilities and all other improvements to the space and is currently in discussion with City staff regarding permits for interior improvements and exterior signage.
The proposed lease carries a 60-month term with a minimum monthly rent of $720, or approximately $3 per square foot, which is consistent with other similar leases in the waterfront. The monthly rent paid to the City will be the greater of the minimum monthly rent, or 10% of monthly gross sales. The monthly rent increases by 3% on the anniversary date for each year the lease remains in effect. The lease is guaranteed by Hot Dog on a Stick, and a security deposit of $1,000 will be kept on file.
COORDINATION
The Resolution and lease documents were reviewed and approved as to form by the City Attorney’s Office.
FISCAL IMPACT
Lease revenue from the property will accrue to the City’s Harbor Tidelands Fund. The proposed lease will result in a minimum monthly rent of $720 for the first lease year, or 10% of monthly gross sales, whichever is greater, with an annual increase to the base rent of 3% each year thereafter. Over the 60-month term of the lease, revenue to the Tidelands Fund will be a minimum of $45,871.
APPROVED BY:
Mike Witzansky, City Manager
ATTACHMENTS
• Reso - No. CC-2412-109 Leasing Certain Property to HDOS Acquisition, LLC
• Agmt - Lease Between the City of Redondo Beach and HDOS Acquisition, LLC