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HomeMy WebLinkAbout2014 CON American Outdoor Advertising - Lease Site for Signage - Amendment #3THIRD AMENDMENT TO THE LEASE AGREEMENT BETWEEN THE CITY OF NATIONAL CITY AND AMERICAN DIGITAL OUTDOOR, L.P. This THIRD AMENDMENT to the Lease Agreement is entered into this 1st day of April 2014, by and between the City of National City, a municipal corporation ("CITY"), and American Digital Outdoor, L.P. ("AO"). RECITALS A. The CITY and AO entered into a Lease Agreement on April 3, 2012 ("the Lease"), for the lease of a vacant parcel of land identified as assessor's parcel number 562 220 41 00, located between the 30th Street cul-de-sac and Interstate 5. B. The Lease sets forth terms and conditions whereby AO will install, operate, and maintain a single -faced digital billboard. C. The parties entered into an Amendment to the Lease in June 2012, to extend the time to obtain Caltrans and City permits. D. The parties entered into a Second Amendment to the Lease Agreement, dated October 30, 2012, to allow for a north facing digital display to be built as part of the originally contemplated structure which would provide opportunities for a more visible gateway and greater revenue generation. E. The Second Amendment contained a re -opener regarding the appropriate amount of base monthly rent, as the current rent contemplated a single -faced message center. F. AO now seeks to re -open the appropriate amount of the base rent and amend the Lease and Second Amendment to modify the Section 3 and Schedule 1 to include a base monthly rent for the north facing digital display and clarify the additional Business Revenue Share is 33% of Annual Net Revenue less the Base Monthly Rent paid for that year. NOW, THEREFORE, the parties hereto agree to amend the Lease and Second Amendment, as follows: 1. Section 3(a)(2) of the Lease: The references to Monthly Rent in Section 3(a)(2) shall be replaced with Percentage Rent. Percentage Rent shall have the meaning set forth in Schedule 1, as stated in this Third Amendment. 2. Section 3(b) of the Lease is restated in the entirety to read: Business Revenue Share. In addition to the Monthly Rent payment, AOA shall pay a business revenue share. AOA shall make this payment on the last day of the thirteenth month following the Initial Term, on an annual basis in arrears. The business revenue share shall be calculated as set forth in Schedule 1, and shall be the greater of (i) one-third (1/3) of the Annual Net Revenue less the Annual Rent or (ii) the Annual Rent. By way of example, if July 1, 2012 is the commencement of the Initial Term, then the business revenue share would be payable on July 31, 2013 and would cover the time period of July 1, 2012 through June 30, 2013. 3. Schedule 1 of the Lease is amended by replacing the section entitled "AOA shall pay Business Revenue Sharing (as referenced in Section 3), in addition to Monthly Rent, as follows ... 3 = BRS" with the following: AOA shall pay Business Revenue Sharing (as referenced in Section 3), in addition to Monthly Rent, as follows: AOA shall pay thirty-three percent (33%) of the Annual Net Revenue for both the North and South Faces, as applicable (the "Percentage Rent") less the total Annual Rent paid under this Lease for that year. Should the Annual Rent exceed the Percentage Rent for that year, no further amounts shall be due City for that year, nor shall there be any carry-over credit for future Percentage Rent. As an example, if the Annual Net Revenue for a given year is $1,000,000, then AOA shall pay Business Revenue Sharing to City as follows: $333,000 as Percentage Rent (33% of the Annual Net Revenue) less the credited amount of $141,996 as the Annual Rent already paid to the City for that same year, for a total Business Revenue Share of $191,004. As another example, if the Annual Net Revenue for a given year is $250,000, then AOA shall pay Business Revenue Sharing to City as follows: $82,500 as Percentage Rent less the Annual Rent credit of $102,000 (already paid), for a total Business Revenue Sharing of $0 because the Annual Rent exceeds the Percentage Rent. The Percentage Rent shall be calculated on an annual basis in arrears. 4. Section 6 of the Second Amendment is amended to read as follows: In addition to the Monthly Rent of $8,500 AOA pays for the existing south face per Schedule 1 of the Lease, AOA shall pay a Base Rent for the North Face in the amount of $3,333 per month. The Monthly Rent for both faces shall be $11,833. The Base Rent for the North Face shall commence on the first day of the first month after the North Face Message Display is able to accept commercial advertising, but shall be no later than August 1, 2014. 5. Schedule 1 of the Lease is amended by replacing the section entitled "AOA shall pay Monthly Rent ... in advance, as set forth in Section 3" with the following: AOA shall pay Monthly Rent as follows: Third Amendment to Agreement (2014) a. South Facing Digital Display: Base Rent for the south facing digital display is $8,500 per month. Annual Rent for this face shall be $102,000 (one -hundred two -thousand dollars) per year. The first 60 months shall be paid in advance, as set forth in Section 3. b. North Facing Digital Display: Base Rent for the north facing digital display is $3,333 per month. Annual Rent for this face 2 City of National City and American Digital Outdoor, LP shall be $39,996 (thirty-nine thousand nine hundred ninety-six dollars) per year. c. Total Monthly Rent: The Monthly Rent for the north and south facing digital displays shall total $11,833 (eleven -thousand eight hundred thirty-three dollars) per month. d. Total Annual Rent: Commencing June 1, 2014, the total annual rent for both the north and south facing digital displays shall total $141,996 (one -hundred forty-one thousand nine - hundred ninety-six dollars) per year. 6. Upon approval of this Third Amendment, AOA shall pay the City the first five years (60 months) of the Base Rent for the North Face in the amount of $200,000 (two -hundred thousand dollars). 7. Each and every term of the Lease, Amendment, and Second Amendment shall remain in full force and effect, except for the amendments contained herein. IN WITNESS WHEREOF, the parties hereto have executed this Third Amendment to the Agreement on the date and year first above written above. CITY OF NATIONAL CITY By: on Morrison, Mayor 'PROVED AS TO FORM: 1 Claudia Gcitua Silva City Attcrn-y AMERICAN DIGITAL OUTDOOR, L.P. By: Tom LeClair, Managing Partner Third Amendment 3 City of National City and to Agreement (2014) American Digital Outdoor, LI' RESOLUTION NO. 2014 — 40 RESOLUTION OF THE CITY COUNCIL OF THE CITY OF NATIONAL CITY AUTHORIZING THE MAYOR TO EXECUTE THE THIRD AMENDMENT TO THE LEASE AGREEMENT BETWEEN THE CITY OF NATIONAL CITY AND AMERICAN DIGITAL OUTDOOR, LP WHEREAS, the City and American Digital Outdoor, LP ("AO") entered into a Lease Agreement on April 3, 2012 ("the Lease"), for the lease of a vacant parcel of land identified as assessor's parcel number 562 220 41 00, located between the 30th Street cul-de- sac and Interstate 5; and WHEREAS, the Lease sets forth terms and conditions whereby AO will install, operate, and maintain a single -faced digital billboard; and WHEREAS, the parties entered into an Amendment to the Lease in June 2012, to extend the time to obtain Caltrans and City permits; and WHEREAS, the parties entered into a Second Amendment to the Lease Agreement, dated October 30, 2012, to allow for a north facing digital display to be built as part of the originally contemplated structure which would provide opportunities for a more visible gateway and greater revenue generation; and WHEREAS, the Second Amendment contained a re -opener regarding the appropriate amount of base monthly rent, as the current rent contemplated a single -faced message center; and WHEREAS, AO now seeks to re -open the appropriate amount of the base rent and amend the Lease and Second Amendment to modify Section 3 and Schedule 1 to include a base monthly rent for the north facing digital display, and to clarify the additional Business Revenue Share is 33% of Annual Net Revenue, less the Base Monthly Rent paid for that year. NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of National City that the Mayor is hereby authorized to execute the Third Amendment to the Lease Agreement between the City of National City and American Digital Outdoor, LLP, to amend the Lease and Second Amendment to modify Section 3 and Schedule 1 to include a base monthly rent for the north facing digital display, and to clarify the additional Business Revenue Share is 33% of Annual Net Revenue, less the Base Monthly Rent paid for that year. Said Third Amendment to the Lease Agreement is on file in the office of the City Clerk. PASSED and ADOPTED this 1st day of April, 2014. ATTEST: i4e1Jt1u Michael R. Dalla, Cify Clerk Ron Morrison, Mayor RO D AS TO FORM: u.ia '1� citua Silva City Att Passed and adopted by the Council of the City of National City, California, on April 1, 2014 by the following vote, to -wit: Ayes: Councilmembers Cano, Morrison, Natividad, Rios, Sotelo-Solis. Nays: None. Absent: None. Abstain: None. AUTHENTICATED BY: RON MORRISON Mayor of the City of National City, California A City C rk of the City of National City, California By: Deputy I HEREBY CERTIFY that the above and foregoing is a full, true and correct copy of RESOLUTION NO. 2014-40 of the City of National City, California, passed and adopted by the Council of said City on April 1, 2014. City Clerk of the City of National City, California By: Deputy CITY OF NATIONAL CITY, CALIFORNIA COUNCIL AGENDA STATEMENT MEETING DATE: April 1, 2014 *ITEM TITLE, AGENDA ITEM NO. 9 Resolution of the City Council of the City of National City authorizing the Mayor to execute the Third Amendment to the Lease Agreement American Digital Outdoor, LP PREPARED BY: Claudia G. Silva PHONE: Ext. 4222 EXPLANATION: The City and American Digital Outdoor, LP ("AO"), entered into a Lease Agreement o • Aril 3, 2012 ("the Lease"), for the lease of a vacant parcel of land identified as assessor's parcel num.er 562 220 41 00, located between the 30th Street cul-de-sac and Interstate 5. The Lease sets forth terms and conditions whereby AO will install, operate, and maintain a single -faced digital billboard. The parties entered into an Amendment to the Lease in June 2012, to extend the time to obtain Caltrans and City permits. The parties entered into a Second Amendment to the Lease Agreement, dated October 30, 2012, to allow for a north facing digital display to be built as part of the originally contemplated structure which would provide opportunities for a more visible gateway and greater revenue generation. The Amendment also contained a re -opener regarding the appropriate amount of base monthly rent, as the current rent contemplated a single -faced message center. AO now seeks to re -open the appropriate amount of the base rent and amend the Lease and Second Smendment to modify Section 3 and Schedule 1 to include a base monthly rent for the north facing igital display and clarify the additional Business Revenue Share is 33% of Annual Net Revenue less the Base Monthly Rent paid for that year. DEPARTMENT: APPROVED BY• rney FINANCIAL STATEMENT: APPROVED: Finance ACCOUNT NO. APPROVED: MIS N/A ENVIRONMENTAL REVIEW: N/A ORDINANCE: INTRODUCTION: FINAL ADOPTION: STAFF RECOMMENDATION: Adopt resolution. BOARD / COMMISSION RECOMMENDATION: N/A ATTACHMENTS: Oroposed Third Amendment to the Lease Agreement THIRD AMENDMENT TO THE LEASE AGREEMENT BETWEEN THE CITY OF NATIONAL CITY AND AMERICAN DIGITAL OUTDOOR, L.P. This THIRD AMENDMENT to the Lease Agreement is entered into this 1st day of April 2014, by and between the City of National City, a municipal corporation ("CITY"), and American Digital Outdoor, L.P. ("AO"). RECITALS A. The CITY and AO entered into a Lease Agreement on April 3, 2012 ("the Lease"), for the lease of a vacant parcel of land identified as assessor's parcel number 562 220 41 00, located between the 30th Street cul-de-sac and Interstate 5. B. The Lease sets forth terms and conditions whereby AO will install, operate, and maintain a single -faced digital billboard. C. The parties entered into an Amendment to the Lease in June 2012, to extend the time to obtain Caltrans and City permits. D. The parties entered into a Second Amendment to the Lease Agreement, dated October 30, 2012, to allow for a north facing digital display to be built as part of the originally contemplated structure which would provide opportunities for a more visible gateway and greater revenue generation. E. The Second Amendment contained a re -opener regarding the appropriate amount of base monthly rent, as the current rent contemplated a single -faced message center. F. AO now seeks to re -open the appropriate amount of the base rent and amend the Lease and Second Amendment to modify the Section 3 and Schedule 1 to include a base monthly rent for the north facing digital display and clarify the additional Business Revenue Share is 33% of Annual Net Revenue less the Base Monthly Rent paid for that year. NOW, THEREFORE, the parties hereto agree to amend the Lease and Second Amendment, as follows: 1. Section 3(a)(2) of the Lease: The references to Monthly Rent in Section 3(a)(2) shall be replaced with Percentage Rent. Percentage Rent shall have the meaning set forth in Schedule 1, as stated in this Third Amendment. 2. Section 3(b) of the Lease is restated in the entirety to read: Business Revenue Share. In addition to the Monthly Rent payment, AOA shall pay a business revenue share. AOA shall make this payment on the last day of the thirteenth month following the Initial Term, on an annual basis in arrears. The business revenue share shall be calculated as set forth in Schedule 1, and shall be the greater of (i) one-third (1/3) of the Annual Net Revenue less the Annual Rent or (ii) the Annual Rent. By way of example, if July 1, 2012 is the commencement of the Initial Term, then the business revenue share would be payable on July 31, 2013 and would cover the time period of July 1, 2012 through June 30, 2013. 3. Schedule 1 of the Lease is amended by replacing the section entitled "AOA shall pay Business Revenue Sharing (as referenced in Section 3), in addition to Monthly Rent, as follows ... 3 = BRS" with the following: AOA shall pay Business Revenue Sharing (as referenced in Section 3), in addition to Monthly Rent, as follows: AOA shall pay thirty-three percent (33%) of the Annual Net Revenue for both the North and South Faces, as applicable (the "Percentage Rent") less the total Annual Rent paid under this Lease for that year. Should the Annual Rent exceed the Percentage Rent for that year, no further amounts shall be due City for that year, nor shall there be any carry-over credit for future Percentage Rent. As an example, if the Annual Net Revenue for a given year is $1,000,000, then AOA shall pay Business Revenue Sharing to City as follows: $333,000 as Percentage Rent (33% of the Annual Net Revenue) less the credited amount of $141,996 as the Annual Rent already paid to the City for that same year, for a total Business Revenue Share of $191,004. As another example, if the Annual Net Revenue for a given year is $250,000, then AOA shall pay Business Revenue Sharing to City as follows: $82,500 as Percentage Rent less the Annual Rent credit of $102,000 (already paid), for a total Business Revenue Sharing of $0 because the Annual Rent exceeds the Percentage Rent. The Percentage Rent shall be calculated on an annual basis in arrears. 4. Section 6 of the Second Amendment is amended to read as follows: In addition to the Monthly Rent of $8,500 AOA pays for the existing south face per Schedule 1 of the Lease, AOA shall pay a Base Rent for the North Face in the amount of $3,333 per month. The Monthly Rent for both faces shall be $11,833. The Base Rent for the North Face shall commence on the first day of the first month after the North Face Message Display is able to accept commercial advertising, but shall be no later than August 1, 2014. 5. Schedule 1 of the Lease is amended by replacing the section entitled "AOA shall pay Monthly Rent ... in advance, as set forth in Section 3" with the following: AOA shall pay Monthly Rent as follows: Third Amendment to Agreement (2014) a. South Facing Digital Display: Base Rent for the south facing digital display is $8,500 per month. Annual Rent for this face shall be $102,000 (one -hundred two -thousand dollars) per year. The first 60 months shall be paid in advance, as set forth in Section 3. b. North Facing Digital Display: Base Rent for the north facing digital display is $3,333 per month. Annual Rent for this face 2 City of National City and American Digital Outdoor, LP shall be $39,996 (thirty-nine thousand nine hundred ninety-six dollars) per year. c. Total Monthly Rent: The Monthly Rent for the north and south facing digital displays shall total $11,833 (eleven -thousand eight hundred thirty-three dollars) per month. d. Total Annual Rent: Commencing June 1, 2014, the total annual rent for both the north and south facing digital displays shall total $141,996 (one -hundred forty-one thousand nine - hundred ninety-six dollars) per year. 6. Upon approval of this Third Amendment, AOA shall pay the City the first five years (60 months) of the Base Rent for the North Face in the amount of $200,000 (two -hundred thousand dollars). 7. Each and every term of the Lease, Amendment, and Second Amendment shall remain in full force and effect, except for the amendments contained herein. IN WITNESS WHEREOF, the parties hereto have executed this Third Amendment to the Agreement on the date and year first above written above. CITY OF NATIONAL CITY AMERICAN DIGITAL OUTDOOR, L.P. By: By: Ron Morrison, Mayor Tom LeClair, Managing Partner APPROVED AS TO FORM: Claudia Gacitua Silva City Attorney Third Amendment 3 City of National City and to Agreement (2014) American Digital Outdoor, LP RESOLUTION NO. 2014 — RESOLUTION OF THE CITY COUNCIL OF THE CITY OF NATIONAL CITY AUTHORIZING THE MAYOR TO EXECUTE THE THIRD AMENDMENT TO THE LEASE AGREEMENT BETWEEN THE CITY OF NATIONAL CITY AND AMERICAN DIGITAL OUTDOOR, LP WHEREAS, the City and American Digital Outdoor, LP ("AO") entered into a Lease Agreement on April 3, 2012 ("the Lease"), for the lease of a vacant parcel of land identified as assessor's parcel number 562 220 41 00, located between the 30th Street cul-de- sac and Interstate 5; and WHEREAS, the Lease sets forth terms and conditions whereby AO will install, operate, and maintain a single -faced digital billboard; and WHEREAS, the parties entered into an Amendment to the Lease in June 2012, to extend the time to obtain Caltrans and City permits; and WHEREAS, the parties entered into a Second Amendment to the Lease Agreement, dated October 30, 2012, to allow for a north facing digital display to be built as part of the originally contemplated structure which would provide opportunities for a more visible gateway and greater revenue generation; and WHEREAS, the Second Amendment contained a re -opener regarding the appropriate amount of base monthly rent, as the current rent contemplated a single -faced message center; and WHEREAS, AO now seeks to re -open the appropriate amount of the base rent and amend the Lease and Second Amendment to modify Section 3 and Schedule 1 to include a base monthly rent for the north facing digital display, and to clarify the additional Business Revenue Share is 33% of Annual Net Revenue, less the Base Monthly Rent paid for that year. NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of National City that the Mayor is hereby authorized to execute the Third Amendment to the Lease Agreement between the City of National City and American Digital Outdoor, LLP, to amend the Lease and Second Amendment to modify Section 3 and Schedule 1 to include a base monthly rent for the north facing digital display, and to clarify the additional Business Revenue Share is 33% of Annual Net Revenue, less the Base Monthly Rent paid for that year. Said Third Amendment to the Lease Agreement is on file in the office of the City Clerk. PASSED and ADOPTED this 1st day of April, 2014. Ron Morrison, Mayor ATTEST: APPROVED AS TO FORM: Michael R. Dalla, City Clerk Claudia Gacitua Silva City Attorney CITY OF NATIONAL CITY Office of the City Clerk 1243 National City Blvd., National City, California 91950 619-336-4228 phone / 619-336-4229 fax Michael R. Dalla, CMC - City Clerk April3, 2014 Mr. Tom LeClair American Digital Outdoor 1702 E. Highland #304 Phoenix, AZ 85016 Dear Mr. LeClair, On April 151, 2014, Resolution No. 2014-40 was passed and adopted by the City Council of the City of National City, authorizing execution of Amendment #3 to a Lease Agreement with American Digital Outdoor. 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