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HomeMy WebLinkAbout10-03-2017 Item 7 Report Third Amendment to Lease Boys and Girls ClubCITY OF NATIONAL CITY, CALIFORNIA COUNCIL AGENDA STATEMENT "" .ETING DATE: October 3, 2017 AGENDA ITEM NO. 7 ITEM TITLE: Resolution of the City Council of the City of National City authorizing the Mayor to execute the Third Amendment to the Lease by and between the City and the Boys and Girls Club of Greater San Diego, Inc., consenting to a sublease between the Boys and Girls Club and Integrity Charter School for the city - owned land and building located at 1430 "D" Avenue in National City. PREPARED BY: Gregory Rose Property Agent PHONE: 619 336-4266 EXPLANATION: (Please see attached background report). DEPARTMENT: Housing & Economic Dev • pment 4 - APPROVED B FINANCIAL STATEMENT: ACCOUNT NO. APPROVED: u{�'�! Finance APPROVED: MIS The Boys and Girls Club will use the revenue from the sublease to offset direct costs of their programs. However, in the event the lease income is greater than the operational and programming expenses, the City shall be entitled to the net income, if any, up to the amount of the sublease. ENVIRONMENTAL REVIEW: The Third Amendment to the Lease is not considered a project as defined by the California Environmental Quality Act (CEQA), and is therefore not subject to CEQA. ORDINANCE: INTRODUCTION: FINAL ADOPTION: STAFF RECOMMENDATION: Approve the resolution. BOARD / COMMISSION RECOMMENDATION: N/A ATTACHMENTS: 1. 'Background Report 2. Third Amendment to Lease keSo/ fiah A/a, 2014 - Attachment No. 1 Background Report In 2011, the City of National City and the Boys and Girls Club ("BAGC") entered into a 20-year lease agreement for use of the City -owned land and building located at 1430 "D" Avenue for the purposes of maintaining a clubhouse and promoting the physical, mental, and moral well-being of the boys and girls of National City, and for boys and girls in the immediate vicinity. On August 16, 2011 the City Council adopted Resolution 2011-183, which approved the 20-year lease agreement with BAGC. The BAGC pays one dollar per year for rent. Second Amendment to 20-Year Lease Agreement According to section six of the 20-year lease agreement with the City, any subletting requires the City's prior written consent. In order to assist BAGC with their operating costs, the City entered into an agreement (Second Amendment) allowing two (2) temporary and non-exclusive sub -lessees, Integrity Charter School ("Integrity") and Episcopal Community Service ("ECS"), onto the city -owned land and building located at 1430 D Avenue. Both Integrity and ECS agreed to share the land and facility with BAGC and pay monthly rent directly to the BAGC: The Second Amendment also entitled the City to the net income from the subleases, if any; up to the amount of the two subleases. Moreover, the Second Amendment gave the City the option to require BAGC to operate and maintain the future Kimball Park Skate Park. If exercised, the City would coordinate with BAGC to develop a secure facility, which would allow BAGC to control access. The first sublease with Integrity was entered into on July 1, 2014, for a two (2) year term with a one (1) year option td extend. Integrity uses six (6) identified classrooms for kindergarten through second grade. Furthermore, the sublease provided Integrity with access to the BAGC's bathrooms, computer lab, and gymnasium. The base monthly rent was $5,000 per month for the ten (10) months the site was in use, which conformed as closely as possible to the school schedule, of the National City School District. In addition to the monthly rent, Integrity paid BAGC $30 per' student for those students who were not eligible in the after - school program. Summary of lease terms: • $5,000 per month to the BAGC 2 years with a 1 year option, $30 to the BAGC for every non after -school program eligible student Third Amendment to the Lease The Third Amendment would approve a new sublease between BAGC and Integrity. The lease is•for a five (5) year term with a two (2) year option' to extend. The proposed base monthly rent is $6,000 per month'payable morithly, in advance, on the fir'st,day of each month for the period of five (5) years. Upon the anniversary of each year of the term of this Third Amendment, the Base Rent shall increase by two percent (2%) per annum over the prior year's Base Rent. Summary of sublease terms: • $6,000 per month with a 2% per annum increase to the BAGC • 5 years with a 2 year option ' Recommendation Staff recommends approving the Third Amendment to the 20-year lease agreement, which would allow the new sublease agreement with Integrity. Attachment No. 2 THIRD AMENDMENT TO LEASE This Third Amendment to the Lease, ("Third Amendment") is effective as of October 3, 2017 between the BOYS & GIRLS CLUBS OF GREATER SAN DIEGO,a California nonprofit corporation ("Lessee" or the "Club") and INTEGRITY CHARTER SCHOOL ("Integrity" or "Sub -Tenant") (each a "party and collectively the "parties"). RECITALS A. The Club leases the real property located at 1430 "D" Avenue, National City, California, 91950, County of San Diego, State of California (the "Property", sometimes referred to as the "Payne Family Branch") from the City of National City (the "City"). B. Pursuant to the Lease between the Club and the City, the Club is granted the right to sublet the Premises, but only with the prior written consent of the City. Therefore, the effectiveness of this Third Amendment is expressly made contingent upon,the Club's receipt of the City's written consent C. The Club and Integrity executed a Sublease effective July 1, 2014, which Sublease was approved by the City. D. The parties now desire to execute a new, Sublease to replace the instrument dated July 1, 2014, which has expired. NOW, THEREFORE, in consideration of the mutual promises and covenants contained herein and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows: 1. Section 1.1 The Terms: The Term of the Sublease shall be as follows: 1.1.1 Term. The term ("Term") of this Third Amendment commences on October 3, 2017 ("Commencement Date") and ends at 11:59 p.m., on October 3, 2022, unless sooner terminated under the terms of the Sublease. 1.1.2 Option. Sub -Tenant shall, provided the Sublease is in full force and effect and Sub -Tenant is not in default under any of the terms and conditions of the Sublease, have the option to extend this Sublease for a term of two (2) years on the same terms and conditions set forth in the Sublease except as modified by the terns, covenants and conditions as set forth below: a. If Sub -Tenant elects to exercise the option, then Sub -Tenant shall provide Club with written notice no earlier than the date which is twelve (12) months prior to the expiration of the Term of the Sublease, as amended, but no later than the date which is six (6) months prior to the expiration of the Term of the ,Sublease. If Sub -Tenant fails to provide such notice,, Sub -Tenant shall have no further or additional right to extend or renew the Term of the Sublease. Thud Amendment to Lease Page 1 of 3 Attachment No. 2 b. This option is not transferable. The parties hereto acknowledge and agree that they intend that the aforesaid option to extend this Sublease shall be "personal" to Sub -Tenant as set forth above and that in no event will any assignee or Sublessee have any rights to exercise the aforesaid option to extend. Sub -Tenant shall have no further right to extend the term of the Lease. 2. Section 2.1: The Base Rent shall be modified as follows: 2.1 Base Rent. Sub -Tenant chsll pay to the Club Base Rent as minimum monthly rent, without deduction, setoff, prior notice, or demand the sum of $6,000 per month, payable monthly, in advance, on the first day of each month for the period of five (5) years. The Base Rent for any partial month, including but not limited to October, 2017, shall be prorated on the basis of a thirty (30) day month. Base Rent and any increase thereof, as provided below, shall be paid in lawful money of the United States to the Club at the address set forth on the signature page of this Third Amendment or to such other person or at such other place as the Club may designate in writing. Upon the anniversary of each year of the Term of this Third Amendment, the Base Rent shall increase by two percent (2%) per annum over the prior year's Base Rent, payable as set forth above. By way of example, on October 3, 2018 the Base Rent chr111 be increased by two percent (2%) for a total Base Rent of $6,120 per month. 3. Ratification and Confirmation. Except as provided herein, the terms and conditions of this Third Amendment, as referenced above shall remain unchanged and unaffected. 4. Conflict. In the event of any conflict or inconsistency between the provisions of this Third Amendment, except as to the Term and Base Rent as provided above, the provisions of the Sublease dated July 1, 2014 shall control in all respects. 5. Incorporation of Recitals. Recital provisions set forth above are an integral part of this Agreement and are by this reference incorporated herein as though set forth in full. BOYS & GIRLS CLUBS OF GREATER SAN DIEGO y Sherlock, President/CEO O. Box 178569 San Diego, CA 92177 Third Amendment to Lease Page 2 of 3 Attachment No. 2 INTEGRITY CHARTER SCHOOL By: ris1� (Print name) 701 National City Boulev National City, CA 91950 Director CONSENTED TO BY THE CITY OF NATIONAL CITY By: Ron Morrison, Mayor APPROVED AS TO FORM AND CONTENT Angil Morris -Jones City Attorney Q:\LBBlral estatelBoys' and Girls' Cluhllntegrity Charter School -National City -Payne BnocgVTH1RD AMENDMENT TO LEASE 06272017-6.wpd Third Amendment to Lase Page 3 of 3 RESOLUTION NO. 2017 — RESOLUTION OF THE CITY COUNCIL OF THE CITY OF NATIONAL CITY AUTHORIZING THE MAYOR TO EXECUTE THE THIRD AMENDMENT TO THE LEASE BY AND BETWEEN THE CITY AND THE BOYS AND GIRLS CLUB OF GREATER SAN DIEGO, INC., CONSENTING TO A SUBLEASE AGREEMENT BETWEEN THE BOYS AND GIRLS CLUB AND INTEGRITY CHARTER SCHOOL FOR THE CITY -OWNED LAND AND BUILDING LOCATED AT 1430 "D" AVENUE IN NATIONAL CITY WHEREAS, on August 16, 2011, City Council adopted Resolution 2011-183, to enter into a 20-year Lease Agreement with the Boys and Girls Club of Greater San Diego, Inc., ("BAGC") for the lease of the City -owned land and building located at 1430 "D" Avenue for the annual cost of $1 for the purpose of maintaining a clubhouse to promote the physical, mental, and moral well-being of the boys and girls within National City, and for boys and girls in the immediate vicinity; and WHEREAS, in recognition of a $1,000,000 contribution from L. Robert Payne, BAGC requested approval from the City to rename the National City Branch of the Boys and Girls Club to the Bob Payne Family Branch; and WHEREAS, on May 7, 2013, the City Council adopted Resolution No. 2013-62, entering into the First Amendment to the Lease Agreement approving the renaming of the National City Branch to the Bob Payne Family Branch and to allow for the exterior signage to be changed to reflect the new name, to wit: Boys & Girls Clubs Bob Payne Family Branch; and WHEREAS, to assist the Boys and Girls Club with their operating costs, on August 5, 2014, the City Council adopted Resolution No. 2014-112 authorizing a Second Amendment to the Agreement consenting to a Sublease Agreement between the BAGC and Integrity Charter School ("Integrity"), and a second Sublease between the BAGC and Episcopal Community Services to allow subletting of the City -owned land and building located at 1430 "D" Avenue; and WHEREAS, BAGC's 2014 Sublease Agreement with Integrity Charter School for the City -owned land and building located at 1430 "D" Avenue in National City provides for a base rent of $5,000 per month, plus $30 per student for those students who are not eligible for the after -school program, for the 10 months Integrity is using the site; and WHEREAS, the term of the Sublease was for two (2) years with an option to extend for one (1) additional year; and WHEREAS, the Third Amendment to the Sublease between BAGC and the City of National City provides for the City's consent to a new Sublease Agreement between BAGC and Integrity for the City -owned land and building located at 1430 "D" Avenue for a term of five (5) years, with an option to extend for two (2) additional years, and a base rent of $6,000 per month that increases by two percent (2%) annually. NOW, THEREFORE, BE IT RESOLVED, that the City Council of the City of National City hereby authorizes the Mayor to execute the Third Amendment to the Lease Agreement by and between the City of National City and the Boys and Girls Clubs of Greater San Diego, Inc., consenting to a new Sublease Agreement between BAGC and Integrity Charter Resolution No. 2017 — Page Two School for a term of five (5) years, with an option to extend for two (2) additional years, and a base rent of $6,000 per month that increases by two percent (2%) annually. PASSED and ADOPTED this 3rd day of October, 2017. Ron Morrison, Mayor ATTEST: ' Michael R. Dalla, City Clerk ' APPROVED AS TO FORM: Angil P. Morris -Jones City Attorney RESOLUTION NO. 2017 —187 RESOLUTION OF THE CITY COUNCIL OF THE CITY OF NATIONAL CITY AUTHORIZING THE MAYOR TO EXECUTE THE THIRD AMENDMENT TO THE LEASE BY AND BETWEEN THE CITY AND THE BOYS AND GIRLS CLUB OF GREATER SAN DIEGO, INC., CONSENTING TO A SUBLEASE AGREEMENT BETWEEN THE BOYS AND GIRLS CLUB AND INTEGRITY CHARTER SCHOOL FOR THE CITY -OWNED LAND AND BUILDING LOCATED AT 1430 "D" AVENUE IN NATIONAL CITY WHEREAS, on August 16, 2011, City Council adopted Resolution 2011-183, to enter into a 20-year Lease Agreement with the Boys and Girls Club of Greater San Diego, Inc., ("BAGC") for the lease of the City -owned land and building located at 1430 "D" Avenue for the annual cost of $1 for the purpose of maintaining a clubhouse to promote the physical, mental, and moral well-being of the boys and girls within National City, and for boys and girls in the immediate vicinity; and WHEREAS, in recognition of a $1,000,000 contribution from L. Robert Payne, BAGC requested approval from the City to rename the National City Branch of the Boys and Girls Club to the Bob Payne Family Branch; and WHEREAS, on May 7, 2013, the City Council adopted Resolution No. 2013-62, entering into the First Amendment to the Lease Agreement approving the renaming of the National City Branch to the Bob Payne Family Branch and to allow for the exterior signage to be changed to reflect the new name, to wit: Boys & Girls Clubs Bob Payne Family Branch; and WHEREAS, to assist the Boys and Girls Club with their operating costs, on August 5, 2014, the City Council adopted Resolution No. 2014-112 authorizing a Second Amendment to the Agreement consenting to a Sublease Agreement between the BAGC and Integrity Charter School (Integrity"), and a second Sublease between the BAGC and Episcopal Community Services to allow subletting of the City -owned land and building located at 1430 "D" Avenue; and WHEREAS, BAGC's 2014 Sublease Agreement with Integrity Charter School for the City -owned land and building located at 1430 "D" Avenue in National City provides for a base rent of $5,000 per month, plus $30 per student for those students who are not eligible for the after -school program, for the 10 months Integrity is using the site; and WHEREAS, the term of the Sublease was for two (2) years with an option to extend for one (1) additional year; and WHEREAS, the Third Amendment to the Sublease between BAGC and the City of National City provides for the City's consent to a new Sublease Agreement between BAGC and Integrity for the City -owned land and building located at 1430 "D" Avenue for a term of five (5) years, with an option to extend for two (2) additional years, and a base rent of $6,000 per month that increases by two percent (2%) annually. NOW, THEREFORE, BE IT RESOLVED, that the City Council of the City of National City hereby authorizes the Mayor to execute the Third Amendment to the Lease Agreement by and between the City of National City and the Boys and Girls Clubs of Greater San Diego, Inc., consenting to a new Sublease Agreement between BAGC and Integrity Charter Resolution No. 2017 —187 Page Two School for a term of five (5) years, with an option to extend for two (2) additional years, and a base rent of $6,000 per month that increases by two percent (2%) annually. PASSED and ADOPTED this 3rd day of October, 2017. ATTEST: i/ Michael R. Dalla, ity Clerk APPROVED AS TO ORM: ones City Attor n orrison, ' ayor 0 Passed and adopted by the Council of the City of National City, California, on October 3, 2017 by the following vote, to -wit: Ayes: Councilmembers Cano, Mendivil, Morrison, Rios. Nays: Sotelo-Solis. Absent: None. Abstain: None. AUTHENTICATED BY: RON MORRISON Mayor of the City of National City, California City erk of the Cijf 'ational City, California By: Deputy I HEREBY CERTIFY that the above and foregoing is a full, true and correct copy of RESOLUTION NO. 2017-187 of the City of National City, California, passed and adopted by the Council of said City on October 3, 2017. City Clerk of the City of National City, California By: Deputy 0 THIRD AMENDMENT TO LEASE This Third Amendment to the Lease, ("Third Amendment") is effective as of October 3, 2017 between the BOYS & GIRLS CLUBS OF GREATER SAN DIEGO, a California nonprofit corporation ("Lessee" or the "Club") and INTEGRITY CHARTER SCHOOL ("Integrity" or "Sub -Tenant") (each a "party and collectively the "parties"). RECITALS A. The Club leases the real property located at 1430 "D" Avenue, National City, California, 91950, County of San Diego, State of California (the "Property", sometimes referred to as the "Payne Family Branch") from the City of National City (the "City"). B. Pursuant to the Lease between the Club and the City, the Club is granted the right to sublet the Premises, but only with the prior written consent of the City. Therefore, the effectiveness of this Third Amendment is expressly made contingent upon the Club's receipt of the City's written consent. C. The Club and Integrity executed a Sublease effective July 1, 2014, which Sublease was approved by the City. D. The parties now desire to execute a new Sublease to replace the instrument dated July 1, 2014, which has expired. NOW, THEREFORE, in consideration of the mutual promises and covenants contained herein and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows: 1. Section 1.1 The Terms: The Term of the Sublease shall be as follows: 1.1.1 Term. The term ("Term") of this Third Amendment commences on October 3, 2017 ("Commencement Date") and ends at 11:59 p.m., on October 3, 2022, unless sooner terminated under the terms of the Sublease. 1.1.2 Option. Sub -Tenant shall, provided the Sublease is in full force and effect and Sub -Tenant is not in default under any of the terms and conditions of the Sublease, have the option to extend this Sublease for a term of two (2) years on the same terms and conditions set forth in the Sublease except as modified by the terms, covenants and conditions as set forth below: a. If Sub -Tenant elects to exercise the option, then Sub -Tenant shall provide Club with written notice no earlier than the date which is twelve (12) months prior to the expiration of the Term of the Sublease, as amended, but no later than the date which is six (6) months prior to the expiration of the Term of the Sublease. If Sub -Tenant fails to provide such notice, Sub -Tenant shall have no further or additional right to extend or renew the Term of the Sublease. Third Amendment to Lease Page 1 of 3 b. This option is not transferable. The parties hereto acknowledge and agree that they intend that the aforesaid option to extend this Sublease shall be "personal" to Sub -Tenant as set forth above and that in no event will any assignee or Sublessee have any rights to exercise the aforesaid option to extend. Sub -Tenant shall have no further right to extend the term of the Lease. 2. Section 2.1: The Base Rent shall be modified as follows: 2.1 Base Rent. Sub -Tenant shall pay to the Club Base Rent as minimum monthly rent, without deduction, setoff, prior notice, or demand the sum of $6,000 per month, payable monthly, in advance, on the first day of each month for the period of five (5) years. The Base Rent for any partial month, including but not limited to October, 2017, shall be prorated on the basis of a thirty (30) day month. Base Rent and any increase thereof, as provided below, shall be paid in lawful money of the United States to the Club at the address set forth on the signature page of this Third Amendment or to such other person or at such other place as the Club may designate in writing. Upon the anniversary of each year of the Term of this Third Amendment, the Base Rent shall increase by two percent (2%) per annum over the prior year's Base Rent, payable as set forth above. By way of example, on October 3, 2018 the Base Rent shall be increased by two percent (2%) for a total Base Rent of $6,120 per month. 3. Ratification and Confirmation. Except as provided herein, the terms and conditions of this Third Amendment, as referenced above shall remain unchanged and unaffected. 4. Conflict. In the event of any conflict or inconsistency between the provisions of this Third Amendment, except as to the Term and Base Rent as provided above, the provisions of the Sublease dated July 1, 2014 shall control in all respects. 5. Incorporation of Recitals. Recital provisions set forth above are an integral part of this Agreement and are by this reference incorporated herein as though set forth in full. BOYS & GIRLS CLUBS OEQiREATER SAN DIEGO By: Third Amendment to Lease D Sherlock, President/CEO P.O. Box 178569 San Diego, CA 92177 Page 2 of 3 INTEGRITY CHARTER SCHOOL B ush, (Print name) 701 National City Boulevard National City, CA 91950 Director CONSENTED TO BY THE CITY OF NATIONAL CITY By: Morrison, Mayor APPROVED AS City A -Jones rney FORM AND CONTENT Q:\LBB\real estate\Boys' and Girls' Club\Integrity Charter School -National City -Payne Brancg\THIRD AMENDMENT TO LEASE 06272017-6.wpd Third Amendment to Lease Page 3 of 3 CITY OF NATIONAL CITY Office of the City Clerk 1243 National City Blvd., National City, California 91950 619-336-4228 Michael R. Della, CMC - City Clerk October 12, 2017 . Mr. Danny Sherlock, President/CEO P.O. Box 178569 San Diego, CA 92177 Dear Mr. Sherlock, On October Yd. 2017, Resolution No. 2017-187 was passed and adopted by the City Council of the City of National City, authorizing execution of a Third Amendment to the Lease with the Boys & Girls Clubs of Greater San Diego. We are enclosing for your records a certified copy of the above Resolution and a fully ' executed original Amendment. Sincerely, Michael R. Dalla, CMC City Clerk Enclosures