Administrative
Report
H.12., File # 22-5087 Meeting Date: 11/15/2022
To: MAYOR AND CITY COUNCIL
From: GREG KAPOVICH, WATERFRONT & ECONOMIC DEVELOPMENT DIRECTOR TITLE
ADOPT BY TITLE ONLY RESOLUTION NO. CC-2211-098, A RESOLUTION OF THE CITY
COUNCIL OF THE CITY OF REDONDO BEACH, CALIFORNIA, LEASING CERTAIN PROPERTY TO DOING IT WITH LOVE, INC., DBA TRADEWINDS & PINEAPPLE ALLEY, A CALIFORNIA
CORPORATION
APPROVE A LEASE WITH DOING IT WITH LOVE, INC. FOR THE PREMISES AT 142 AND 144 INTERNATIONAL BOARDWALK FOR A MONTHLY AMOUNT OF $3,172.50 AND THE TERM NOVEMBER 15, 2022 THROUGH NOVEMBER 14, 2027
EXECUTIVE SUMMARY
In July 2012, the City purchased the International Boardwalk leasehold and began the process of direct leasing to various tenants. This leasehold includes a narrow linear development of approximately 17,200 square feet. The City has negotiated a proposed lease with the new ownership of Tradewinds & Pineapple Alley (Tradewinds) for the space at 142 International Boardwalk, which is approximately 1,200 rentable square feet, and the space at 144 International Boardwalk, which is approximately 210 rentable square feet, for a total of 1,410 square feet. The new lease for the two spaces will replace the current lease with KM Inc. KM Inc.’s owner, John Kukawsky, is selling the Tradewinds business to Doing it With Love Inc. and has requested lease termination.
The proposed lease with Doing it With Love Inc. is for a five-year term with the City retaining the option to terminate the lease with a twelve (12) month prior written notice. Rental to the City’s Harbor Uplands Fund will amount to the greater of the minimum monthly rent of $3,172.50, or 10% of gross sales. Base rent will also increase by three percent on the first anniversary of the Commencement Date each year thereafter.
BACKGROUND
In July 2012, the City purchased the International Boardwalk leasehold and began the process of entering into direct leases with various tenants. The International Boardwalk is comprised of a very narrow and linear development along the east side of the Redondo Beach Marina - also referred to as Basin III. The approximately 17,200 square feet of space is largely used by retail and food and beverage businesses.
Tradewinds is a retail beach boutique that specializes in high quality Redondo Beach apparel, beach supplies and home décor. Tradewinds, under its current owner John Kukawsky (KM Inc.), has
H.12., File # 22-5087 Meeting Date: 11/15/2022
supplies and home décor. Tradewinds, under its current owner John Kukawsky (KM Inc.), has operated on the Boardwalk since 2016. In September 2019 the business expanded its retail operation to occupy the two locations listed above. Mr. Kukawsky is retiring and is selling the business to Doing it with Love, Inc., which is the owner and operator of the Treasure Chest in Hermosa Beach. The store, which specializes in souvenirs and beach supplies, has operated at 50 Pier Avenue since 1995. The new owner, Darren Eichorn, will be the personal guarantor. The existing Tradewinds lease will terminate when the new lease with Doing it with Love, Inc. commences. The proposed lease carries a five-year term with a minimum monthly rental amounting to $3,172.50, or approximately $2.25 per square foot, which is consistent with other similar retail leases in the waterfront and broader market. The monthly rent paid to the City will be the greater of the base rent of $3,172.50 or 10% of gross sales. Base rent will also increase by three percent on the first anniversary of the Commencement Date and annually thereafter. Under the proposed lease, the Tenant accepts the property “as is” with no further cost to the City. The City will retain the right to terminate the lease with a twelve-month written notice.
COORDINATION
The Waterfront and Economic Development Department collaborated with the City Attorney’s Office to prepare the lease.
FISCAL IMPACT
Lease revenue from the property will accrue to the City’s Harbor Uplands Fund. The proposed lease will result in a minimum monthly rent of $3,172.50 with an annual minimum of $38,070. Over the five -year term of the lease, revenue to the Uplands Fund will be a minimum of approximately $201,000.
APPROVED BY:
Mike Witzansky, City Manager
ATTACHMENTS
· Resolution No. CC-2211-098, Leasing Certain property to Doing it with Love, Inc. · Lease Between the City of Redondo Beach and Doing it with Love, Inc. · Lease Between the City of Redondo Beach and KM Inc., March 9, 2021