Agenda Report
Fullerton City Council
MEETING DATE: SEPTEMBER 20, 2022
TO: CITY COUNCIL / SUCCESSOR AGENCY
SUBMITTED BY: SUNAYANA THOMAS, INTERIM DIRECTOR OF COMMUNITY AND ECONOMIC DEVELOPMENT PREPARED BY: KIMBERLY HALL BARLOW, ASISTANT CITY ATTORNEY SUBJECT: REVISED SETTLEMENT AGREEMENT RELATING TO ENCROACHMENT REMOVAL AT 100 NORTH HARBOR BOULEVARD
SUMMARY
Consideration of a revised Settlement Agreement.
RECOMMENDATION
Approve revised Settlement Agreement between the City of Fullerton and Mario Marovic for Commonwealth and Harbor LLC, authorizing the City Manager to sign final agreement, in a form approved by City Attorney’s Office.
CITY MANAGER REMARKS
Mr. Marovic has requested changes since City Council approval of the Settlement Agreement on August 16, 2022. The City has worked through the requested changes. The attached draft agreement remains primarily consistent with the August 16, 2022 agreement with a few modifications. The critical timeline for the 100 North Harbor property to remove the encroachment remains July 2023. Some benchmark timelines have changed.
The other party has signed the new agreement. The City Manager believes this agreement will provide for the City Council goal to remove the encroachment in place since 2004.
PRIORITY POLICY STATEMENT
This item matches the following Priority Policy Statements:
Public Safety
Infrastructure and City Assets.
FISCAL IMPACT
No fiscal impact.
DISCUSSION
City Council adopted a resolution declaring the need for restoration of the full public right of way at 100 North Harbor Boulevard, Fullerton, California on August 16, 2022 and directed staff to provide notice of termination of the existing Site Lease Agreement and Encroachment Agreement. City Council also approved a draft Settlement Agreement with the property owner of 100 North Harbor Boulevard relating to encroachment removal at this location.
The property owner requested additional changes to the Settlement Agreement including extending some of the milestone dates and providing the property owner with the opportunity to terminate the agreement if he does not obtain a conditional use permit for the property following City Council approval of the Agreement. Staff has attached a redline comparison between the previously approved agreement and the agreement the property owner has now executed. Staff recommends City Council consider whether if finds the revised terms acceptable and direct staff accordingly.
Background
The City entered a “Site Lease Agreement and Encroachment Agreement” (the “Original Agreement”) with Intimate Inns of California, Inc. DBA Florentine’s Tuscany Club (“Prior Tenant”) in November 2004 to allow Florentine’s to use certain portions of the City’s sidewalk area on Commonwealth Avenue adjacent to the property (the “Encroachment Area”) for business purposes. The City made the agreement not with the property owner, but rather with the Prior Tenant. The City and the Prior Tenant enacted the “First Amendment to Encroachment License Agreement” (the “First Amendment”) on July 18, 2017. This report will refer to the Original Agreement and the First Amendment collectively as the “Agreement.” The Encroachment Area covers approximately 384 square feet.
Florentine’s closed in October 2020. To staff’s knowledge, the tenant has not paid the required rent for the leased area (approximately $485 per month) to the City. The Agreement terminates on May 30, 2023 by its terms. The Agreement is expressly made non-assignable except with the City’s consent. No party has sought such assignment. Further, the Agreement states that vacating the premises constitutes a material default. The City Attorney’s Office sent notice to the leaseholder and the property owner that the City has terminated the Encroachment Agreement and Site Lease Agreement and gave notice of the obligation to remove the encroachment following City Council actions on August 16, 2022.
The general terms of the revised Settlement Agreement include:
Marovic will pay all costs for design, materials, demolition and restoration of the public right-of way.
Staff has prepared a detailed Schedule of Performance with construction commencing no later than March 27, 2023 and completed no later than July 2023.
Marovic will provide a personal guarantee to ensure he will meet the full costs should any default in performance occur.
City will waive building fees and plan check and inspection fees.
Marovic will pay rent on the encroachment space monthly, until removed.
Either Marovic or the City can terminate the Settlement Agreement if the City ultimately denies the new CUP for the property or modifies in a way not agreeable to Marovic.
Attachments:
Attachment 1 – Revised Settlement Agreement
Attachment 2 – Redline Agreement
cc: City Manager Eric J. Levitt
100 North Harbor Settlement Agreement
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