200 S. Anaheim Blvd.
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Anaheim, CA 92805
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www.anaheim.net
SUCCESSOR AGENCY AGENDA REPORT
City of Anaheim
ECONOMIC DEVELOPMENT DEPARTMENT
DATE: JANUARY 10, 2023
FROM: ECONOMIC DEVELOPMENT DEPARTMENT
SUBJECT: TERMINATION OF SUB-SUBLEASE AGREEMENT BETWEEN
THE CITY ACTING AS THE ANAHEIM SUCCESSOR AGENCY
TO THE FORMER ANAHEIM REDEVELOPMENT AGENCY
AND AMERICAN SPORTS CENTER (ASC-ANAHEIM, LLC) FOR
PROPERTY LOCATED AT CLAUDINA WAY NORTH OF
INTERSTATE 5 AND EAST OF SOUTH ANAHEIM BOULEVARD
ATTACHMENT (Y/N): ITEM # 01
RECOMMENDATION:
That the City Council, acting as the Successor Agency to the Anaheim Redevelopment Agency, By Motion:
1. Terminate the Sub-Sublease Agreement dated March 1, 2011, between ASC- Anaheim, LLC and the former Anaheim Redevelopment Agency due to nonpayment of rent and failure to perform pursuant to the agreement, and authorize the City Manager, or his designee, to provide notice of termination to ASC-Anaheim, LLC.
2. In the event that ASC-Anaheim, LLC fails to surrender and vacate the property and improvements pursuant to the terms of the Sub-Sublease after the City’s issuance of the notice of termination, authorize the City Attorney to pursue all remedies available under the law including, but not limited to, commencing unlawful detainer proceedings as necessary to regain possession of the property.
DISCUSSION:
On March 22, 2011, the Anaheim Redevelopment Agency approved and authorized the execution of a Sub-Sublease Agreement (Sub-Sublease) between ASC-Anaheim, LLC (ASC) and the former Anaheim Redevelopment Agency for property located at Claudina Way north of Interstate 5 and east of South Anaheim Boulevard. The Sub-Sublease grants ASC the right to use the property for parking lot purposes pursuant to a sublease agreement the City has with Katella Operating Properties II, LLC. The Sub-Sublease term is 15 years, with two five-year extension options.
ASC was a one of a kind venue for volleyball and basketball in the City. The approximately 100,000 square foot facility located at 1500 S. Anaheim Boulevard housed approximately 57 indoor volleyball courts and two (2) indoor soccer fields. The center drew local athletes and sports talent from throughout the state and nation for practice and tournaments. Additionally, the center houses the training location for the Termination of Sub-Sublease Agreement with ASC-Anaheim, LLC January 10, 2023
U.S. Men’s and Women’s National Volleyball Teams. ASC was significantly impacted by the COVID-19 pandemic and, as a result, their business model was significantly impacted. A reduced facility of approximately 10 courts is now owned and operated by Open Gym Premier as a subsidiary.
No lease payments have been received since March 2022 and ASC has been non- responsive to past-due notices. The rent started at $25,000 per month ($300,000 annually) with an annual 3% increase every July 1st. The current monthly rent is now $34,605.83 and the outstanding balance is approximately $308,428.74. Additionally, the 2011 agreement required open court time for the community that ASC did not provide.
Should City Council move to terminate the Sub-Sublease Agreement, a notice of termination will be provided to ASC-Anaheim, LLC by staff. In the event, ASC Anaheim, LLC fails to surrender and vacate the property, staff is requesting that the City Council also authorize the City Attorney’s Office to commence unlawful detainer proceedings as necessary to regain possession of the property.
IMPACT ON BUDGET:
Terminating the Sub-Sublease Agreement will cease the loss of lease revenue and allow for opportunities to enter into a new revenue generating sub-sublease. Any costs related to the unlawful detainer proceedings to regain possession of the property will be borne by the Successor Agency.
Respectfully Submitted,
Sergio M. Ramirez
Economic Development Director
Attachments:
1. Site Map
2. Sub-Sublease Agreement dated March 1, 2011 between ASC-Anaheim, LLC and the Anaheim Redevelopment Agency