To: MAYOR AND CITY COUNCIL
From: STEPHEN PROUD, WATERFRONT & ECONOMIC DEVELOPMENT DIRECTOR
TITLE
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ADOPT BY TITLE ONLY RESOLUTION NO. CC-2104-027, A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF REDONDO BEACH, CALIFORNIA, LEASING CERTAIN PROPERTY TO BOARDWALK WORLDWIDE, LLC, DBA THE DINGHY DELI, A LIMITED LIABILITY COMPANY
APPROVE A LEASE WITH BOARDWALK WORLDWIDE, LLC, DBA THE DINGHY DELI FOR THE PREMISES AT 160 INTERNATIONAL BOARDWALK FOR A MONTHLY AMOUNT OF $2,050.00 FOR THE TERM APRIL 6, 2021 - APRIL 5, 2026
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EXECUTIVE SUMMARY
In July 2012, the City purchased the International Boardwalk leasehold and began the process of direct leasing to various tenants. This International Boardwalk is comprised of a narrow linear development of approximately 17,200 square feet that is fronted by a public walkway. The City has negotiated a lease with Boardwalk Worldwide, LLC dba the Dinghy Deli for the space at 160 International Boardwalk, which is approximately 1,000 rentable square feet.
The proposed lease is for a five-year term with the City retaining the option to terminate the lease with a twelve (12) month prior written notice. Rental to the City’s Harbor Uplands Fund is the greater of the minimum monthly rent of $2,050.00 or 8% of gross sales. Minimum annual rent is $24,600.00.
BACKGROUND
In July 2012, the City purchased the International Boardwalk leasehold and began the process of entering into direct leases with various tenants. The International Boardwalk is comprised of a very narrow and linear development along the east side of the Redondo Beach Marina - also referred to as Basin III. The approximately 17,200 square feet of space is almost entirely prepared for retail and food and beverage uses.
Boardwalk Worldwide LLC, which operates The Slip at 120 International Boardwalk, is looking to open a new concept - the Dinghy Deli - at 160 International Boardwalk. The Dinghy Deli is a take-out deli/restaurant, which is a concept currently missing from the offerings on the International Boardwalk. With COVID-19 altering the standard modes of operation, a take-out food operation is well positioned to capitalize on the current economic climate.
The proposed lease carries a five-year term with a minimum monthly rent of $2,050.00, or approximately $2.05 per square foot - which is consistent with other similar restaurant leases in the waterfront and broader market. The monthly rent paid to the City will be the greater of the minimum monthly rent of $2,050.00 or 8% of gross sales. The minimum monthly rent increases to $2,250.00 in years two and three of the lease, and increases again to $2,317.50 in year four and $2,387.02 in year five. The percentage rent increases to 9% in year two of the lease and increase to 10% in year three and remains at that rate for the remaining term.
Under the lease, Tenant accepts the property “as is” with no further cost to the City. The City retains the right to terminate the lease with a twelve-month written notice. The lease is personally guaranteed by Rashel Mereness.
COORDINATION
The Waterfront and Economic Development Department collaborated with the City Attorney’s Office on this report. The City Attorney’s Office has approved the document as to form.
FISCAL IMPACT
Lease revenue from the property will accrue to the City’s Harbor Uplands Fund. The proposed lease will result in a minimum monthly rent of $2,050.00 with an annual minimum rent of $24,600.00. Over the five-year term of the lease, revenue to the Uplands Fund will be a minimum of $135,054.24.
APPROVED BY:
Joe Hoefgen, City Manager
ATTACHMENTS
Resolution No. CC-2104-027
Lease Between the City of Redondo Beach and Boardwalk Worldwide, LLC dba the Dinghy Deli