DATE: June 24, 2022
TO: Council Airport Committee
FROM: Director of Public Works
SUBJECT: Raja Indian Cuisine – New Ground Lease
RECOMMENDATION
That the Council Airport Committee (CAC) reviews this report and provides comments and a recommendation to Council to move forward with a new ground lease with Raja Indian Cuisine.
SUMMARY
Raja Indian Cuisine entered into an assignment in 2002 for the leasehold previously held by Manzella’s Seafood Loft after the latter decided to sell their leasehold interest. The restaurant is located at 1275 West Winton Avenue and encompasses 60,437 square feet.
The current lease agreement expires in January 2023. However, the principals of the restaurant desire to enter into a new lease agreement with the following deal points:
35-year lease term
Increase of rent amount to $5,540.06 per month
A series of interior and exterior capital upgrades
BACKGROUND
The parcel of land is located on the south side of the Airport at 1275 West Winton Avenue and encompasses 1.4 acres. The property was originally leased to Manzella’s Seafood Loft restaurant in 1972. However, in 2002, the Manzellas sold their restaurant and leasehold interest to Makhan Bains and Ravinder Singh.
Now known as Raja Indian Cuisine, the restaurant’s business primarily focuses on catering, with limited walk-in traffic.
DISCUSSION
The lease term commenced on February 1, 1973 and ends on January 31, 2023. However, the principals have requested a new long-term lease. The leasehold is 60,437 square feet, or approximately 1.4 acres and contains a building for the restaurant and outdoor parking.
The following revisions are proposed, as well as an extensive list of capital improvements.
General Terms
The new lease will have a term of thirty-five years
The new lease will take effect upon the first day of the month after full execution of the agreement Rent will increase to $5,540.06 per month; the current rent amount is $1,510.93 monthly or $18,131.16 per year Capital Improvements
Exterior Improvements
A new tower feature in the front along with a covered entrance to building with new vestibule and storefront glass The installation of ornate light fixtures
New signage
New siding, trim, and paint
Improvements to monument sign
Resurfacing and re-striping of parking lot
New landscaping
New double sliding doors and storefront windows
Interior Improvements
Removal of raised floor in buffet area
Removal and installation of new floor tiles
New floor baseboards
Removal and installation of new bar and cabinetry
Remodeling of men’s and women's restrooms, which will include new tile flooring, baseboards, shelving and cabinets, stalls and toilets, light fixtures, and paint Complete repainting of interior of restaurant and banquet hall Upgraded interior building columns
New light fixtures and chandeliers
Correction of all previous code violations, including stairs/landing, second floor office space, and storage area Removal of DJ booth and improvements to all electrical items in order to meet existing codes
ECONOMIC IMPACT
Raja Indian Cuisine will provide employment opportunities for skilled workers during the construction of the above noted capital improvements.
FISCAL IMPACT
As noted above, Raja Indian Cuisine is currently paying $1,510.93 per month, or $18,131.16 per year. Under the terms of the new lease, the monthly amount would increase to $5,540.06 per month, or $66,480.70 annually; this new rate reflects the existing non-aeronautical rate charged to all aviation-related tenants of $1.10 per square foot, per year. This amount would remain the same until January 2023, where, along with the other land leases, it will be adjusted by the CPI and by no more than seven percent; this “capping” of the CPI at seven percent is included with other land leases at the Airport. Assuming the maximum rate of 7%, the monthly rent would increase to $5,927.86 or $71,134.37 annually by January 2023. Therefore, the cumulative, maximum net annual increase by January 2023 over the current amount of $18,131.16 per year would be $53,003.21 ($71,134.37 minus $18,131.16).
STRATEGIC ROADMAP
This agenda item pertains to development at the Airport and does not directly relate to any of the six priorities outlined in the Council’s Strategic Roadmap.
SUSTAINABILITY FEATURES
The Airport is committed to developing projects that are environmentally responsible.
Therefore, staff will ensure than the work scope incorporates features that are in line with the City’s sustainability guidelines.
PUBLIC CONTACT
The agenda and staff report for this item have been posted on the City’s website and distributed to interested parties. In addition, Airport staff have held numerous meetings with Raja Indian Cuisine over the past year to finalize the terms of the new lease.
NEXT STEPS
If approved by the CAC, staff will forward this item to Council for their approval in September 2022.
Prepared by: Doug McNeeley, Airport Manager
Recommended by: Alex Ameri, Director of Public Works
Approved by:
Kelly McAdoo, City Manager