RESOLUTION NO. 23-
Resolution of the City Council of the City of Hercules Authorizing the city manager to execute a lease amendment with lotus organic llc TO MODIFY PAYMENT PROVISIONS for operation of a full service restaurant and bar located at 1991 railroad avenuein hercules, california WHEREAS, the improved real property known as 1991 Railroad Avenue in Hercules, California (Property) is owned by the City of Hercules; and WHEREAS, the City rehabilitated the existing structure located on the Property and converted it for use as a full service, sit-down restaurant and bar; and WHEREAS, on or about December 17, 2013, the Hercules City Council authorized execution of a Lease Agreement with Moses and Sam Abu Gosh (“Lease”) to operate Leila’s By The Bay restaurant at the Property (attached hereto and incorporated by reference herein); and WHEREAS, on or about March 24th, 2015, the City Council approved the transfer of the existing Lease from Moses and Sam Abu Gosh to Lotus Organic LLC through its authorized representative, Mohammed Azam (Tenant) for the continued operation of Leila’s By The Bay restaurant; and WHEREAS, the original ten (10) year lease expires April 1, 2024, unless extended pursuant to the provisions of Section 2.2 of the Lease, or pursuant to City Council direction; and WHEREAS, pursuant to Section 3(d) of the existing Lease, Tenant is required to pay City rent on the 1st day of each month; and WHEREAS, over the past several years Tenant has on multiple occasions been in default of the lease terms by making irregular rent payments, causing the City to issue Demand Letters/Notices of Default demanding payment of back rent and putting Tenant on notice of default of the Lease terms; and WHEREAS, the City Council on November 9th, 2021, authorized the City Manager to enter into a Letter of Understanding (“LOU”) to provide Tenant the opportunity to continue operations at the Property pursuant to a payment plan and conditioned on Tenant meeting all Lease terms and conditions going forward; and WHEREAS, after the Parties entered into the LOU in December 2021, Tenant continued to make irregular rent payments, resulting in the Parties negotiating at the direction of the City Council a Second Letter of Understanding (“Second LOU”) specifying additional measures required by Tenant in order for City to not pursue a Default or take possession of the Property or otherwise seek to terminate the lease, said Second LOU having been executed by the Parties in 2022; and WHEREAS, despite specific requirements for timely payment of rent and other express conditions as contained in the Lease, the LOU and Second LOU, Tenant has continued a pattern of irregular rent payments, requiring City Staff to spend considerable time preparing and sending Notices of Default and Notices of Late Payment; and WHEREAS, on October 24, 2023, the City Council gave direction to staff to work with Tenant to amend the Lease in order to address the issue of late rent payments, specifically directing that all past due amounts, including interest and penalties, be paid in full prior to entering into a Lease Amendment, that all future payments be made by Direct Deposit, that penalties for late payment be increased, that the interest charged for any rent not paid on time be increased, and that the two, five year extensions be forfeited as a consequence of any future late or missed payments; and WHEREAS, on November 11, 2023, staff met with Mr. Azam to discuss the proposed amendments to the Lease, and Mr. Azam was in agreement with the terms of the proposed Lease Amendment.
NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Hercules that the City Council hereby authorizes the City Manager to execute a Lease Amendment with Lotus Organic LLC to provide additional conditions for the operation of a full service restaurant and bar at 1991 Railroad Avenue, as specified in the 2023 Lease Amendment, attached hereto and incorporated by reference herein.
The foregoing Resolution was duly and regularly adopted at a regular meeting of the City Council of the City of Hercules held on the 14th of November 2023, by the following vote of the Council:
AYES:
NOES:
ABSENT:
____________________________
Alex Walker-Griffin, Mayor
ATTEST:
Eibleis Melenez, City Clerk
Attachment 1