Administrative
Report
H.9., File # 23-5846 Meeting Date: 5/2/2023
To: MAYOR AND CITY COUNCIL
From: GREG KAPOVICH, WATERFRONT & ECONOMIC DEVELOPMENT DIRECTOR TITLE
APPROVE A LEASE AMENDMENT WITH BARLEY VIBES, LLC., DBA BARLEY VIBES, FOR THE PREMISES AT 136 AND 132 INTERNATIONAL BOARDWALK FOR A MONTHLY AMOUNT OF $4,987.50 WITH AN ANNUAL 3% BASE RENT INCREASE FOR THE TERM MAY 2, 2023 THROUGH MAY 1, 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 an amendment to the January 10, 2023 lease with Barley Vibes, LLC. dba Barley Vibes (Tenant) for the space at 136 International Boardwalk and 132 International Boardwalk to accommodate a 750 square-foot expansion of the existing tenant space. The current space measures 1,300 square feet in size and the new expanded size of the tenant space is approximately 2,050 rentable square feet.
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 revenue to the City’s Harbor Uplands Fund is the greater of the minimum monthly rent of $4,987.50, or 10% of gross sales.
BACKGROUND
In September 2021, a five-year lease was approved with Barley Vibes, LLC for 136 International Boardwalk for approximately 1,000 rentable square feet. Barley Vibes specializes in classic American food, such as made-to-order sandwiches, hamburgers, small-batch craft beer and wine and features live music. In January 2023, a new five-year lease was approved with Barley Vibes for the same location but for an expanded footprint of 1,300 rentable square feet. The Tenant was able to add 300 square feet to the premises due to the downsizing of a neighboring tenant space at 134 International Boardwalk. The expansion of 136 International Boardwalk triggered the requirement to seek a new Conditional Use Permit and associated Coastal Development Permit, which were both approved at the November 14, 2022 Harbor Commission Meeting.
The proposed amendment with Barley Vibes will further expand its premises by adding 750 square feet from 132 International Boardwalk which was previously occupied by King Harbor Brewing Company. King Harbor Brewing Company closed in late 2022, making the 750 square-foot space available for use by Barley Vibes. King Harbor Brewing Company had previously obtained the necessary Conditional Use Permit and alcohol license to sell alcohol within the space. Conditional Use Permits run with the land and are not tied directly to a specific tenant. As a result, Barley Vibe’s
H.9., File # 23-5846 Meeting Date: 5/2/2023
Use Permits run with the land and are not tied directly to a specific tenant. As a result, Barley Vibe’s expansion into the space does not require a new Conditional Use Permit and ownership need only update the alcohol license with ABC to transfer the license to sell alcohol within the space. The proposed amendment will modify the following lease terms from the existing lease:
· Rentable square footage will increase from 1,300 to 2,050 · Expiration date will change from January 9, 2028 to May 1, 2028 · Minimum monthly rent will increase from $2,925.00 to $4,987.50 · Security deposit will increase from $2,925.00 to $4,987.50 · All other terms from the existing lease remain in effect and unchanged Barley Vibes is owned by Joe Smith, who will remain the personal guarantor of the lease. The proposed amendment carries a sixty-month term with a minimum monthly rent of $4,987.50. The monthly rent paid to the City will be the greater of the minimum monthly rent of $4,987.50, or 10% of gross sales. The minimum monthly rent increases by 3% on the anniversary date for each year the lease remains in effect. The City retains the right to terminate the lease with a twelve-month written notice.
Under the lease, Tenant accepts the property “as is” and will be responsible for interior improvements, including the possible removal of the interior non-loadbearing wall which currently separates the existing Barley Vibe space at 134 International Boardwalk and the proposed expansion area at 136 International Boardwalk. The Tenant must also seek any City or Los Angeles County code compliance resulting from any interior modifications or improvements made by the Tenant. It is also anticipated that the owners of Barley Vibes plan to make future improvements to the expanded storefront by taking advantage of the International Boardwalk Storefront Improvement Program.
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 $4,987.50 for the first lease year with an annual increase of 3% to the base rent. However, if the value of 10% of the total gross sales for any given month exceeds the minimum rent of $4,987.50, the City would receive the 10% gross sales amount. Over the five-year term of the lease, revenue to the Uplands Fund will be a minimum of $317,753.
APPROVED BY:
Mike Witzansky, City Manager
ATTACHMENTS
· Proposed Amendment Between the City of Redondo Beach and Barley Vibes, LLC · Existing Lease Between the City of Redondo Beach and Barley Vibes Brewing, January 10, 2023
· Original Lease Between the City of Redondo Beach and Barley Vibes Brewing, September 21, 2021