CITY COUNCIL STAFF REPORT
Meeting: November 7, 2023
Subject
Hungry Jacks Corporation (Blue Pheasant) lease agreement, 22100 Stevens Creek Boulevard, Cupertino, CA 95014.
Recommended Action
Authorize the City Manager to execute a two-year lease agreement with three one-year options to extend with Hungry Jacks Corporation for 22100 Stevens Creek Boulevard, Cupertino, CA 95014 (Blue Pheasant).
Reasons for Recommendation
The Blue Pheasant Restaurant is situated on City of Cupertino owned land at 22100 Stevens Creek Boulevard, at the entrance to the Blackberry Farm Golf Course (see Attachment A for Vicinity Map). Within the same building, the City operates the Blackberry Farm Golf Course Pro-shop.
The restaurant is approximately 6,800 square feet and includes a kitchen, bar, banquet room, office, and restrooms. The restaurant also has the non-exclusive use of 92 parking spaces in the adjacent parking lot.
The Blue Pheasant has operated at this location since 1974 and has worked to ensure the restaurant operations minimize impacts to the surrounding neighborhood. The tenant’s operations were greatly impacted by the shelter in-place orders, but the tenant is up to date on all rent payments. Further, the tenant has been responsive to City requests.
The lease being presented was negotiated in late 2022 and early 2023 while the business impacts of Covid-19 protocols were still in question. However, the lease execution was put on hold due to the studies on the future usage of the Blackberry Farm Golf Course property. Now that the City Council has approved the ongoing golf course operations, and due to the information provided above, the City is offering a two-year lease, with three one-year options to extend at the City’s sole discretion.
The current lease with Hungry Jack’s Restaurant Corporation expired on June 30, 2021, and the lease has been continued on a month-to-month basis since that date, as provided for in the lease agreement.
On October 17, City Council authorized staff to proceed with making repairs to Blackberry Farm Golf Course, and through said action, confirming that the City intends to continue the golf course operations. Based on this action, the City is presenting an updated lease agreement with the Blue Pheasant for Council approval.
The updated lease contains the following substantive terms:
Base Rent of $6,715/month ($80,580/year) – (unchanged from current lease) Additional payment of 6% of gross sales (pre-covid revenues were approximately $30,000/year) – (unchanged from current lease) An initial two-year lease term, with three one-year extensions (each at City’s sole discretion to extend) Tenant’s maintenance and utility payment obligations
The lease is substantially equivalent to the lease agreement executed in 2013, with the addition of updated and strengthened legal language, including indemnifications for the City.
Sustainability Impact
No sustainability impact.
Fiscal Impact
The City receives $80,580 in base rent annually, plus six percent of the tenants’ gross sales (approximately $30,000 annually).
California Environmental Quality Act (CEQA)
This project is exempt from CEQA under CEQA Guidelines section 15301 (operation of an existing facility). _____________________________________
Prepared by: Chad Mosley, Director of Public Works
Reviewed by: Matt Morley, Assistant City Manager
Approved for Submission by: Pamela Wu, City Manager
Attachments:
A – Vicinity Map
B – Draft Lease Agreement