Administrative
Report
H.9., File # 23-5630 Meeting Date: 3/21/2023
To: MAYOR AND CITY COUNCIL
From: GREG KAPOVICH, WATERFRONT & ECONOMIC DEVELOPMENT DIRECTOR TITLE
ADOPT BY TITLE ONLY RESOLUTION NO. CC-2303-031, A RESOLUTION OF THE CITY
COUNCIL OF THE CITY OF REDONDO BEACH, CALIFORNIA, LEASING CERTAIN PROPERTY TO MI YOUNG KIM, AN INDIVIDUAL, DBA INTERNATIONAL ICE CREAM.
APPROVE A LEASE WITH MI YOUNG KIM, AN INDIVIDUAL, DBA INTERNATIONAL ICE CREAM FOR THE PREMISES AT 110 INTERNATIONAL BOARDWALK FOR A MONTHLY AMOUNT OF $1,147.50 WITH AN ANNUAL 3% BASE RENT INCREASE FOR THE TERM OF MARCH 21, 2023 THROUGH MARCH 20, 2028.
EXECUTIVE SUMMARY
In July 2012, the City purchased the International Boardwalk leasehold and began the process of direct leasing to various tenants. The International Boardwalk is comprised of a narrow linear development of approximately 17,200 square feet that is fronted by a public walkway. The City has negotiated a new lease with Mi Young Kim, owner of International Ice Cream (Tenant) for the space at 110 International Boardwalk for approximately 510 rentable square feet. International Ice Cream has been in operation at this location since 2014 and has been operating on a month-to-month term since 2019.
The proposed lease is for a sixty (60) month term with the City retaining the option to terminate the lease with twelve (12) months’ prior written notice. Rental to the City’s Harbor Uplands Fund is the greater of the minimum monthly rent of $1,147.50, or 9% of gross sales. The proposed lease requires the tenant to spend at least $1,000 on upgrades within ninety days of execution of the lease.
BACKGROUND
International Ice Cream has occupied the space at 110 International Boardwalk since 2014 and has been operating on a month-to-month term since 2019. The space measures 510 square feet and will be accepted “as is” by the Tenant. Terms of the lease require the tenant to spend a minimum of $1,000 on paint and other updates and improvements to the façade, signage and/or entrance to the premises within ninety days of full execution of the lease. Tenant must receive prior approval from Landlord regarding the proposed storefront improvements and must provide proof of expenditures for the completed project. The proposed lease carries a sixty month term with a minimum monthly rent of $1,147.50, or approximately $2.25 per square foot, which is consistent with other similar retail leases in the waterfront. The monthly rent paid to the City will be the greater of the minimum monthly rent of $1,147.50, or 9% of gross sales. The minimum monthly rent increases by 3% on the anniversary date for each year the lease remains in effect.
H.9., File # 23-5630 Meeting Date: 3/21/2023
The lease is personally guaranteed by the owner Mi Young Kim and a security deposit of $1,147.50 will be kept on file. The City retains the right to terminate the lease with twelve (12) months’ written notice.
COORDINATION
The Waterfront and Economic Development Department collaborated with the City Attorney’s Office on the preparation of the lease. The City Attorney’s Office has approved the document as to form.
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 $1,147.50 for the first lease year with an annual increase of 3% to the base rent. Over the five-year term of the lease, revenue to the Uplands Fund will be a minimum of $73,100.
APPROVED BY:
Mike Witzansky, City Manager
ATTACHMENTS
· Reso - No. CC-2303-031, Lease Certain Property to Mi Young Kim, dba International Ice Cream
· Proposed Lease Between the City of Redondo Beach and Mi Young Kim, dba International ice Cream
· Existing Lease Between the City of Redondo Beach and Mi Young Kim, dba International Ice Cream, May 6, 2014