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HomeMy WebLinkAbout1984 CC RESO 14,288RESOLUTION NO. 14,288 RESOLUTION AUTHORIZING EXECUTION OF A LEASE AND OPERATING AGREEMENT BETWEEN THE CITY OF NATIONAL CITY AND AMERICAN GOLF CORPORATION BE IT RESOLVED by the City Council of the City of National City that the Mayor is hereby authorized to execute that certain Lease and Operating Agreement between the City of National City and American Golf Corporation for the Las Palmas Municipal Golf Course. PASSED and ADOPTED this 3rd day of April, 1984. ATTEST: r- LEASE AND OPERATING AGREEMENT for LAS PALMAS MUNICIPAL GOLF COURSE between THE CITY OF NATIONAL CITY and AMERICAN GOLF CORPORATION Prepared by: DONALD F. McLEAN, JR. City Attorney THE CITY OF NATIONAL CITY 1243 National City Blvd. National City, CA 92050 (916) 477-1181 INDEX 1. PROPERTY LEASED 1 2. USE OF PREMISES 1 3. TERM 2 4. RENT 2 5. CAPITAL IMPROVEMENTS 8 6. TAXES 9 7. UTILITIES 10 8. REPAIRS AND ALTERATIONS '10 9. MAINTENANCE 11 10. CONTROLLED PRICES 12 11. DAMAGE AND RESTORATION 13 12. OUIET ENJOYMENT 13 13. DEFAULT 13 14. INSURANCE 14 15. ASSIGNMENT AND SUBLETTING 15 16. NAME CHANGE 15 17. FREE GOLF LESSONS 15 18. PLACE OF CONSTRUCTION OF THIS LEASE 15 19. SERVICES TO BE AVAILABLE 15 20. EFFECT OF REQUEST FOR PROPOSAL AND SUBMITTED PROPOSAL 17 21. WATER RIGHTS 18 22. DAMAGES 19 23. RESERVATION OF RIGHT OF RE-ENTRY 19 LEASE AND OPERATING AGREEMENT FOR LAS PALMAS MUNICIPAL GOLF COURSE THIS AGREEMENT, dated , 1984, hereinafter called "this Lease" is executed by the CITY OF NATIONAL CITY, a municipal corporation, hereinafter referred to as "Landlord", and AMERICAN GOLF CORPORATION, hereinafter referred to as "Tenant". 1. PROPERTY LEASED 1.1 Real Property (Premises) Landlord hereby leases to Tenant and Tenant hires from Landlord the improved real property, hereinafter called "the Premises", located in National City, State of California, known as Las Palmas Golf Course, described in Exhibit "A", attached hereto, and made a part hereof. Not withstanding any other provision of this Lease, Landlord expressly reserves and retains unto itself, successors, and assigns all rights in and to all minerals, oil, gas and other hydrocarbons located in or beneath leased Premises, provided, that no lease shall be executed or drilling rights granted which permit drilling on the fairways or golf course proper. 2. USE OF PREMISES Tenant hereby covenants and agrees that the Premises shall be used only and exclusively for the purpose of operating thereon a public golf course, driving range, club house, restaurant and bar for the dispensing of food and alcoholic or non-alcoholic beverages, the furnishing of golf lessons, a golf pro shop, and related uses customarily associated therewith. Landlord hereby expressly reserves and retains the right to define other uses customarily associated with the operation of said golf course. In no event shall Tenant use the herein Premises, nor any portion thereof, for any other purpose than that hereabove set forth, unless Tenant shall first have had and obtained the written.approval of Landlord to so do. 1 3. TERM The term of this Lease shall be for five (5) years, provided that all of the Tenant's responsibilities are fully complied with. In the event Landlord should notify Tenant of a failure to comply with any of Tenant's responsiblities as noted in this Lease, or its Exhibits, and Tenant fails to rectify such failure within sixty (60) days, and such failure continues thereafter, the Landlord may terminate this Lease. Provided Tenant has fully complied with all the obligations contained in this Lease, Tenant will have the option to extend this Lease at the end of the initial term for seven 5-year terms by the giving to Landlord written notice of such desire six (6) months before the end of the particular term in question. Landlord reserves the right to offer to Tenant, in consideration for the successful performance of the period of this Lease, two additional 5-year option periods. Tenant agrees that the Landlord shall at its sole discretion, decide whether or not said option periods shall be offered to Tenant. 4. RENT Tenant shall pay Landlord annual rent during the term of this Lease for the Premises and equipment as provided in paragraph 1 hereinabove (regardless of the condition of any equip- ment, the depreciation and obsolescence of which has been taken into account in determining the total rent for the original Lease), said annual rent to be net above, real and/or personal property taxes, as follows: A. During the term of this Lease, the annual rent shall be the greater of either the minimum rent hereinafter set forth for the periods stated or the percentage of gross sales stated in this paragraph. In no event shall any annual rental payment be less than the following: 2 1) Years 1 through, and including 8, $25,000.00 per year, with the first year rental due in advance on the date of execution of this Lease. 2) Years 9 through, and including 10, $36,000.00 per year (providing the Lease is renewed as herein provided); 3) Years 11 through, and including 15, $48,000.00 per year (providing the Lease is renewed as herein provided); 4) Years 16 through, and including 25, $60,000.00 per year (providing the Lease is renewed as herein provided); 5) Years 26 through, and including 40, $72,000.00 per year (providing the Lease is renewed as herein provided). Beginning upon execution of this Lease and continuing through the end of the eighth (8th) year of this Lease, the percentages shall be as follows: 1) Sales from greens fees, cart rentals and driving range - five percent (5%) of gross income; 2) Sales of food and beverages - five percent (5%) of gross income; 3) Sales from the Pro Shop - five percent (5%) of gross income. Beginning with the ninth (9th) year and continuing through the end of the tenth (loth) year of this Lease, provided the Lease is renewed as herein provided, the per- centagesshall be as follows: 1) Sales from greens fees, cart rentals and driving range - six percent (6%) of gross income; 2) Sales of food and beverages - five percent (5%) of gross income; 3) Sales from the Pro Shop - five percent (5%) of gross income. Beginning with the eleventh (llth) year and continuing through the end of the fifteenth (15th) year of this Lease, provided the Lease is renewed as herein provided, the percentages shall be as follows: 3 1) Sales from greens fees, cart rentals and driving range - seven percent (7%) of gross income; 2) Sales of food and beverages - five percent (5%) of gross income; 3) Sales from the Pro Shop - five percent (5%) of gross income. Beginning with the sixteenth (16th) year and continuing through the end of the twenty-fifth (25th) year of this Lease, provided the Lease is renewed as herein provided, the percentages shall be as follows: 1) Sales from greens fees, cart rentals and driving range - eight percent (8%) of gross income; 2) Sales of food and beverages - six percent (6%) of gross income; 3) Sales from Pro Shop - six percent (6%) of gross income. Beginning with the twenty-sixth (26th) year and continuing through the end of this Lease, provided the Lease is renewed as herein provided, the percentages shall be as follows: 1) Sales from greens fees, cart rentals and driving range - ten percent (10%) of gross income; 2) Sales of food and beverages - six percent (6%) of gross income; 3) Sales from Pro Shop - six percent 6%) of gross income. B. For each and every year during the term hereof commencing upon execution of this Lease, Tenant shall pay the amount specified hereinabove as annual minimum rent for the year concerned in twelve (12) equal monthly installments, in advance, on the first day of each and every month. C. For each and every calendar quarter or frac- tion thereof during the term of this Lease, Tenant shall pay to Landlord on or before the last day of the next succeeding month, 4 the sum of money determined by deducting the sum of the monthly minimum rents for such preceding calendar quarter from the percentage rent calculated for each preceding quarter. In no event, however, shall the monthly rent to be paid by Tenant to Landlord be less than the minimum rental herein specified. On or before January 31 of each year, the total amount of percentage rent for the previous calendar year shall be computed and, in the event that the total amount of rentals paid for such calendar year is not equal to the percentage rental payable pursuant to the foregoing formula for such calendar year, then, Tenant shall pay any deficiency to Landlord within thirty (30) days after such deficiency is determined. In the event that the total amount of rentals paid for any calendar year exceeds both the annual minimum rental and the percentage rental payable pursuant to the foregoing formula for such calendar year, Tenant shall receive a credit equivalent to such excess, which may be deducted by Tenant from the next percentage rental payment, if any, due under this Lease, and if no percentage rental payment is due, then such excess may be deducted by Tenant from the minimum rent for the month next succeeding the end of the calendar year in which such excess rent was paid. 4.1 Furnishing Statement of Gross Income. Tenant shall submit to Landlord on or before the 20th day of each and every calendar month following a calendar quarter (excluding the first year of the term hereof) at the place then fixed for the payment of rent, together with the remittance of percentage rent, a written statement signed by Tenant or a person duly authorized by Tenant, and certified to be accurate by a licensed certified public accountant, showing in accurate detail the amount of gross income of the preceding calendar quarter, and shall submit to Landlord on or before the 60th day following the end of each year at the place then fixed for the payment of rent, a statement signed by Tenant, or a person duly authorized by Tenant, showing in accurate detail the amount of gross income during the preceding year and the sales tax return filed by Tenant 5 with the State. The statements referred to herein shall be in such form and style and contain such details and breakdown as Landlord may reasonably determine. 4.2 Accounting Records. A. In order to be able to verify statements fur- nished Landlord in case of dispute, Tenant agrees to install and maintain, to the standard of accepted accounting and auditing practices, an appropriate set of bookkeeping records, during the term of this Lease and for a period of twenty-four (24) months after termination thereof, in the County of San Diego or the South- ern California area. B. Books and accounts hereinabove required shall be kept or made available at the said golf course or elsewhere within the County of San Diego, or the Southern California area and Landlord shall have the right at any and all reasonable times to examine and audit the same, within restriction. 4.3 Cost of Audit. A. In the event of a dispute as to the accuracy of the monthly or annual statements, and such dispute requires an audit to resolve the dispute, and there is found to be a dis- crepancy of five percent (5%)or more of rent due, the party proved to be incorrect shall pay all costs and fees of conducting said audit. B. In the event Tenant fails or refuses to make available its original books and records of account as hereinabove provided at the said Premises or within the territorial limits of the County of San Diego, Tenant agrees to pay Landlord ALL necessary expenses incurred by Landlord in obtaining said books and records and in conducting any audit at the location where said books and records of account are maintained, notwithstanding which party proved to be incorrect. 6 4.4 Lease Year Defined. A. "Lease Year" shall mean each period of twelve (12) consecutive calendar months commencing on the execution of this Lease and ending three hundred sixty-five (365) days later (except during those years referred to as "Leap Years", which shall consist of three hundred sixty-six (366) days), which falls within the term of this Lease. Said "Lease Year" may be changed by written agreement of the parties hereto. B. Each Lease Year shall constitute a separate accounting period for the purpose of computing percentage rent, and gross income for any one Lease Year shall not be carried back or forwarded into any other Lease Year. C. In the event this Lease is terminated, as hereinafter provided, prior to the end of the Lease Year, that short period shall be subject to appropriate pro -ration. 4.5 Gross Income. A. There shall be excluded from gross income or deducted therefrom, if previously included: 1) Cash refunded or credit allowed on returns by customers, but not exceeding in any one instance the selling price of the item in question. 2) Sales taxes, excise taxes, gross receipts taxes, and other similar taxes now or hereafter imposed upon the sale of food, beverages, merchandise or services paid by Tenant to the taxing authority whether added to or included in the selling price. 3) Sales of trade fixtures or personal property to be replaced by Tenant which are not stock -in - trade. 7 4) Income paid for golf lessons directly to instructor by student over which Tenant has no control. 5. CAPITAL IMPROVEMENTS 5.1 Improvements. During the first twelve (12) months, or sooner, of the Lease, Tenant agrees to make certain improvements to course. The precise description of these capital improvements are listed in Exhibit "B" attached hereto and made a part hereof (hereinafter called "improvements"). 5.2 Landlord Approval. The plans and specifications for any construction, repair, renovation or modification on premises having a value of $10,000.00 or more, in such detail as may be required by Landlord, shall be submitted to Landlord for its approval prior to the commence- ment of any work and all such work shall be in accordance with such approved plans. Tenant shall provide Landlord with one set of reproducible As -Built plans for all construction, repair, restor- ation or modification on the premises that has a value in excess of $10,000.00. 5.3 Landlord's Obligation. Landlord agrees to reimburse Tenant for capital improvements made by Tenant to course a sum of $200,000.00 as follows: A. $40,000.00 1) When all rough grading (including drain- age) has been completed. B. $90,000.00 1) When all fine grading has been completed; and 2) Irrigation system is operational; and 3) Greens, Tees and Fairways have been seeded. C. $25,000.00 1) When Driving Range has been completed. MIME "4 8 D. $30,000.00 1) When Clubhouse is completed; and 2) Parking Lot has been repaired; and 3) Trees have been planted. E. $15,000.00 1) When course is completed and open for play. When Landlord is notified by Tenant that one of the above (A, B, C, D, and E) portions of the total capital improve- ments has been completed by Tenant, Landlord will inspect and approve said work and will pay to Tenant the appropriate sum due within thirty (30) days of Tenant's original notification. Both Landlord and Tenant agree that under no circumstances will Land- lord's contribution exceed $200,000.00. 5.4 Bonds. Prior to the commencement of any construction costing in excess of $10,000.00, except where such work is carried on by Tenant's employees, Tenant shall furnish evidence satisfactory to Landlord that Tenant is financially able to pay the contractor, workmen and materialmen and shall furnish, if requested by Landlord, to the Landlord a bond in an amount, in form, and with surety acceptable to Landlord, naming Landlord and Tenant as obligees and insuring completion of the proposed work free and clear of all liens, without cost to Landlord. In the event Landlord so requests in writing, Tenant agrees to bond the improvements during the first year of the term of this Lease. 6. TAXES 6.1 Personal Property Taxes Tenant shall be responsible for the payment before delinquency of property taxes levied on the equipment or other facilities as may be installed in or on the premises. 9 6.2 Possessory Interest Tax. A. Tenant shall be responsible for the payment before delinquency of all possessory interest taxes levied against the demised Premises. B. Anything herein contained to the contrary notwithstanding, Tenant shall have the right in good faith, at its sole cost and expense, to contest the amount or legality of any said possessory interest taxes on or attributable to the Pre- mises, including the right to apply for the reduction thereof, and Landlord shall cooperate fully with Tenant in connection therewith, provided, however, Tenant shall prosecute any such contest with due diligence, and shall, forthwith upon the final determination thereof, pay the amount of said possessory interest taxes on or attributable to the Premises as so determined together with any interest, penalties, costs and charges which may be payable in connection therewith. C. If any said possessory interest taxes on or attributable to the Premises are payable in installments, Landlord agrees to execute and join with Tenant in the execution of any application or other instrument which may be necessary to permit the payment thereof in such installments, and in such event Tenant shall pay and be liable hereunder only for the installments or portions of installments thereof which are payable during the Lease term and any interest due thereon. 7. UTILITIES Tenant shall pay before delinquency all charges for water, gas, heat, air cooling, electricity, power, telephone, pump taxes and other utility services used on or serving the Pre- mises during the Lease term. 8. REPAIRS AND ALTERATIONS 8.1 Repairs. A. Tenant acknowledges that it is acquiring the Premises'.solely in reliance on its own investigation thereof that 10 no representations, warranties or statements have been made by Landlord concerning the condition of fitness thereof, and that by taking possession of the Premises and equipment, Tenant accepts same in their present condition, "as is". B. Landlord agrees to assist Tenant with silt removal. The nature and extent of Landlord's obligation to "assist" Tenant with silt removal shall be as agreed upon between the parties in memorandums executed by Landlord's and Tenant's authorized representatives, but in no event, will Landlord's obligation exceed the equivalent in labor and materials, of 100 man days of Public Works crew effort, with a value of approximately $8,000 to $16,000 annually, at cost in 1984 dollars. C. Landlord shall not be obligated to make repairs, replacements or additions of any kind whatsoever to the Premises, including the building thereon and the equipment, facilities and fixtures therein contained, which Premises, building, sewer lines, cesspool plumbing, piping, wiring, equipment, facilities and fix- tures shall, at Tenant's sole expense, be kept, repaired, maintained, replaced, or added to at all times by Tenant in good order and in sanitary and safe condition and repair. 9. MAINTENANCE In connection with the maintenance and condition of the golf course, Landlord and Tenant may form a Monitoring Board at Landlord's sole discretion. The Monitoring Board will be com- posed of three persons: one selected by the Landlord and one by Tenant. Those two persons will select a third from an approved list of highly qualified golf course architects and/or maintenance persons. This Board will meet once a month, or as often as necessary, to review the condition of the golf course. The Monitoring Board will have the power to make recommendations as to better mainten- ance. The Monitoring Board will act upon a majority rule. In the event these recommendations are not complied with, Landlord may terminate this Lease, said failure to follow the Monitoring Board's recommendation being declared to be a material breach of the Lease. 11 10. CONTROLLED PRICES 10.1. Tenant shall at all time maintain a complete list or schedule of the prices charged for all goods or services, or combinations thereof, supplied to the public on or from the Premises hereby demised whether the same are supplied by Tenant or by Tenant's subleasee, assignees, concessionaires, permittees or licensees. Said prices shall be fair and reasonable, based upon the following two (2) considerations. First, the property herein demised is intended to serve a public use and to provide needed facilities to the public at fair and reasonable cost. Second, that Tenant is entitled to a fair and reasonable return upon Tenant's investment pursuant to this Lease. 10.2. All fees charged to patrons at the demised Premises will be comparable to those fees charged by comparable competing Southern California public golf courses for similar goods and services and facilities. As of date of execution of this Lease, Tenant suggests and Landlord agrees that green fees and cart fees will be as follows: Green Fees 9 Holes 18 Holes Weekdays $ 3.50 $ 5.00 Seniors & Juniors (weekdays) 3.00 4.00 Seniors & Juniors (weekends) 3.50 after 12 noon 5.00 Weekends 4.50 8.00 Seniors & Juniors mo. ticket 15.00 weekdays & weekends Plus $1.00 for each 9 holes played. after noon. For purposes of this Section, "seniors" shall mean all persons 60 years old or older, and "juniors" shall mean all persons 16 years old or younger. Carts 6.00 11.00 10.3. Tenant agrees to honor monthly player cards outstanding as of the date of this Lease. 12 10.4 Tenant further agrees that changes in green fees, prices or policies will first require the approval of Land- lord, which approval shall not be unreasonably withheld. 11. DAMAGE AND RESTORATION 11.1 Duty to Restore. If the improvements on the Premises are par- tially or totally damaged by fire or any other casualty so as to become partially or totally untenable, this Lease shall not terminate and said improvements shall be rebuilt by Tenant with due diligence at Tenant's expense. Tenant shall insure said im- provements, pursuant to Section 14 hereinbelow. 12. QUIET ENJOYMENT Subject to the provisions of this Lease and conditioned uponperformance of all of the provisions to be performed by Tenant hereunder, Landlord shall secure to Tenant during the Lease term the quiet and peaceful possession of the Premises and all rights and privileges appertaining thereto. 13. DEFAULT 13.1 Notice and Remedies. In the case of Tenant's failure to pay rent or any other monetary obligation of Tenant hereunder, Tenant shall have a period of 60 days after notice thereof from Landlord to cure such monetary default. In the case of Tenant's failure to perform any of Tenant's other obligations under this Lease, or any part theroef, when due or called for hereunder, Tenant's shall have a period of 60 days after notice from Landlord specifying the nature of Tenant's default within which to cure such default; provided that if the nature of a non -monetary default is such that it cannot be fully cured within said 60 day period, Tenant shall have such additional time as may be reasonably necessary to cure such default so long as Tenant proceeds promptly after service of Landlord's notice and proceeds diligently at all times to compelte said cure. If Tenant fails to comply with the fore- going provisions, Tenant shall be deemed to be in breach of this Lease, and Landlord with or without further notice or demand of any kind may at its option: 13 A. , Terminate Tenant's right to possession of the Premises and equipment because of such breach and recover from Tenant all damages allowed under Section 1951.2 of the Califor- nia Civil Code, including, without limitation, the worth at the time of the award of the amount by which the unpaid rent for the balance of the term after the time of award exceeds the amount of such rental loss for the same period that Tenant proves could be reasonably avoided, or B. Not terminate Tenant's right to possession because of such breach, but continue this Lease in full force and effect; and in that event (1) Landlord may enforce all rights and remedies under this Lease, including the right to recover the rent and all other charges due hereunder as such rent and other charges become due hereunder, and (2) Tenant may assign its interest in this Lease with Landlord's prior written consent, which consent shall not be unreasonably withheld. 14. INSURANCE Tenant shall keep or cause to be kept insured for the mutual benefit of the Landlord and Tenant with an insurance company reasonably acceptable to Landlord, all building and structures located on or appurtenant to the Premises against loss, or damage by fire and such other risks as are now or hereafter included in an "extended coverage endorsement" in common use for commercial structures, including vandalism and malicious mischief. Such policies shall be in an amount equal to eighty percent (80%) of the insurable value of such buildings and structures, and Landlord shall be named in said policy as an additional named insured. Said policies shall provide that Landlord shall receive at least ten (10) days notice prior to cancellation or termination thereof. Tenant shall deliver to Landlord upon execution hereof a copy of such policies. Tenant shall secure and maintain at its own expense during the term of this Lease comprehensive public liability in- surance with combined single limit coverage in the amount of 14 $500,000.00 per person and $1,000,000,00 per occurrence. The coverage of Tenant's liability insurance shall be primary and in addition to any carried by Landlord. Said insurance shall be in a company or companies satisfactory to Landlord and shall designate Landlord as an additional insured thereunder and shall provided for thirty (30) days notice to Landlord prior to cancella- tion or termination thereof. Tenant shall furnish evidence satis- factory to Landlord that such insurance has been obtained and that premiums have been paid as required. 15. ASSIGNMENT AND SUBLETTING Tenant shall not sublet or assign any portion or interest in this Lease without first obtaining the written consent of the Landlord. Landlord shall have right to approve all sub -tenants and their contracts. 16. NAME CHANGE It is agreed by both parties that when the course is re -opened for public play the name of the course will be changed from Las Palmas Golf Course to National City Municipal Golf Course. 17. FREE GOLF LESSONS Tenant agrees to offer during the first five (5) year term of this Lease a free golf lesson program for the citizens of National City that is acceptable to both parties. 18. PLACE OF CONSTRUCTION OF THIS LEASE This Lease is made and entered into in National City, California, and is to be performed in National City, California. In the event of any dispute, disagreement, or action arising under this Lease, the proper place for the determination of such dispute, disagreement or action is National City, California. 19. SERVICES TO BE AVAILABLE 19.1. Management. The Tenant agrees that he will operate and manage the services and facilities offered in a first-class manner and comparable to their first-class concessions providing similar facilities' and services during the entire term of the Lease. Where such facilities are provided, Tenant agrees that he shall and 15 will maintain a high standard of service at least equal to that of other competing Southern California public golf courses, in- cluding the services of a class A PGA pro or another qualified professional who meets Landlord's reasonable requirements, as determined by the Landlord's Golf Course Committee in consulta- tion with Tenant, and to those prevailing in such areas for similar products and services and without discrimination. 19.2. Food Operations. Food operations shall be operated in such a manner as to maintain a Health Inspection Rating of "A". Food operations also shall be open and available during all hours of operation of the golf course and shall provide hot and cold food items on a full service basis during such hours of operation. Landlord agrees that Tenant shall obtain and keep current licenses as required for the on Premise sale and serving of alcoholic beverages. 19.3. Hours of Operation. The Tenant agrees that he will conduct business on the leased premises to conform with the published hours and days of operation as established, and in the best interest of the public, unless otherwise approved in writing by the Landlord. 19.4. Concession employees. Tenant will ensure that its employees shall at all times conduct themselves in a creditable manner, and they shall conform to all course rules, regulations and requirements, as well as all rules and regulations as hereafter may be promulgated or put into operation by the Landlord. The Tenant shall maintain a staff adequate to Landlord's satisfaction and administer all facilities located on said Premises. 19.5. Merchandise and Equipment. The Landlord retains the right to require the Tenant to discontinue sale or use of those items that are of a quality unacceptable to the Landlord. 16 19.6. Continued Occupancy. The Tenant covenants and agrees to, and it is the intent of this Lease that the Tenant shall, continuously and uninterruptedly during the term of this Lease, occupy and use the Premises for the purpose hereinabove specified, except while Premises are untenantable by reason of fire, flood, or other unavoidable casualty, and, in that event, Landlord shall be promptly notified by Tenant. 19.7. Inspections. Landlord may make an inspection of the leased Premises at any reasonable time for the protection of properties and in the best interest of the public. 19.8. Maintenance of Premises. Tenant agrees to maintain the Premises in first class condition, which shall include but not be less than the condition of said Premises at the time Tenant first occupies the same. Tenant shall give prompt notice to Landlord of any fire or damage that may occur from any cause whatsoever. Tenant shall, to the satisfaction of Landlord, keep and maintain the leased Premises and all improvements of any kind which may be erected, installed or made thereon by Tenant in good and sub- stantial repair and conditions, including painting, and shall make all necessary repairs and alterations thereto. Tenant expressly agrees to maintain the Premises in a safe, clean, wholesome and sanitary condition, to the complete satisfaction of Landlord and in compliance with all applicable law. Tenant further agrees to provide proper containers for trash and garbage and to keep the demised Premises, both land and water areas thereof, free and clear of rubbish and litter. Landlord shall have the right to enter upon and inspect the same Premises at any time for cleanliness and safety. 20. 'EFFECT OF REQUEST FOR PROPOSAL AND SUBMITTED PROPOSAL It being the desire and intent of the parties hereto that the spirit as well as the letter of this Lease be binding and enforceable, the Landlord's "Request for Proposal Municipal 17 Golf Course Maintenance and Operation City of National City, Calif- ornia", and Tenant's "Proposal for the Operation of the Municipal Golf Course" are hereby incorporated herein by reference only, the same as if fully set forth herein, and the provisions thereof shall be utilized in interpreting any provision of this Lease that comes into dispute. 21. WATER RIGHTS The parties acknowledge the presence in the Premises of a producing water well. All rights to said well and its appur- tenant parts, and all rights to water appurtenant to said well, and to the demised Premises, shall remain the sole and exclusive property of the City of National City, and no rights and interests therein are conveyed by this Lease. During the term hereof, Tenant shall maintain said well in first class working order, making such repairs, and performing such maintenance as is reasonably necessary therefore, subject to the further right of the Landlord to inspect and test said well from time to time and require per- formance of such repair, maintenance'and restoration work as may be necessary to maintain said well in first class working order. During the term of this Lease, Landlord shall have the right to pump said water from said well to meet the demands of the Landlord as the same is determined by the Landlord in its sole discretion, paying to Tenant its actual out-of-pocket expense incurred by virtue of the Landlord's use of said well. Landlord reserves to itself, in its discretion, the right to enter upon the demised Premises and construct such other and further wells and related facilities, including storage facilities, pumps and transmission lines, and underground or overhead electric power systems, as the Landlord determines proper. Landlord retains the sole and exclusive right to sell water from the existing or future wells, to the extent there is water in excess of the Landlord's needs. Tenant may operate said wells to provide water solely for the use on the demised Premises for irrigation and domestic purposes, and for no other purposes. 18 22. DAMAGES Tenant assumes the risk of damage to its property, in- cluding leasehold hereby created resulting from any condition of the demised Premises including the fact the demised Premises are subject to inundation damage. Any loss or injury or damage suffered by Tenant as a result of the foregoing described conditions, including an inundation, or flood or storm damage, or damage from flowing of surface waters shall be at the sole risk and loss of Tenant. By executing this Lease, Tenant forever releases Landlord from any liability for damage due to any loss enumerated in this Lease; and waives any claim it may have against Landlord under the Constitution of the State of California and the United States of America for a taking or damaging of its property, commonly known as an inverse condemnation. 23. RESERVATION OF RIGHT OF RE-ENTRY Landlord reserves the right to re-enter upon the real property described in Exhibit "C" hereto for the purpose of con- structing and operating thereon a restaurant facility. If Land- lord elects so to act, then Landlord shall give Tenant notice of its election and shall within 30 days thereof meet with Tenant and negotiate in good faith, with Tenant, the terms and conditions of constructing and operating said restaurant facility, so as to minimize interference with Tenant's rights under this Lease. Landlord shall not do anything pursuant to this Section which will materially interfere with Tenant's rights hereunder, or mater- ially diminish Tenant's income hereunder. In exercising the rights reserved hereunder, Landlord and Tenant covenant to deal with each other in utmost good faith, so that the purposes of this Lease be achieved, and the Landlord's rights reserved hereunder be exercised to the benefit of the taxpayers of National City. IN WITNESS WHEREOF, the parties hereto have hereunto set their hands on the date first above stated. CITY OF.NATIONAL CITY AMERICAN GOLF CORPORATION By By ATTEST: By 19 By • EXHIBIT "A" City's Legal Description of Golf Course (-)Ty c4icviz r 77Mi !vF .JLEA JD C.s'FcC P ,S v.r orb AErc e/F 704. /T- W Elf r -1 ,ram �JEt� ErJ". EXHIBIT "B" SCHEDULE OF PROPOSED CAPITAL I11PROVEIIENTS 1984 Item: Estimated Cost: 1. Fairway S 50,000.00 2. Course Drainage 80,000.00 3. Irrigation System: A. B. C. Controllers Valves Sprinklers 4. Greens (9) 5. Tees (9) 6. Cart Paths 7. Trees 8. Clubhouse: A. Food & Beverage B. Pro Shop C. Cart Storage 140,000.00 63,000.00 27,000.00 20,000.00 10,000.00 70,000.00 9. Sand traps 10. Driving Range (including lights) 70,000.00 11. Parking Lot Repairs 15,000.00 12. Lake Repair 13. Putting Greens 14. Fencing 15. Landscaping 16. Misc. (including items: 9,12,13.14,5 15) 75,000.00 Total S620,000.00