Administrative
Report
H.21., File # 23-6482 Meeting Date: 10/17/2023
To: MAYOR AND CITY COUNCIL
From: GREG KAPOVICH, WATERFRONT & ECONOMIC DEVELOPMENT DIRECTOR TITLE
ADOPT BY TITLE ONLY RESOLUTION NO. CC-2310-106, A RESOLUTION OF THE CITY
COUNCIL OF THE CITY OF REDONDO BEACH, CALIFORNIA, LEASING CERTAIN PROPERTY
TO HEESHUK CHANG, AN INDIVIDUAL, DBA BOARDWALK CANDY
APPROVE A LEASE WITH HEESHUK CHANG, AN INDIVIDUAL, DBA BOARDWALK CANDY, FOR THE PREMISES AT 124 INTERNATIONAL BOARDWALK FOR THE TERM OCTOBER 17, 2023 THROUGH OCTOBER 16, 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 tenant space at 124 International Boardwalk has been occupied by Boardwalk Candy since 2008, with a month-to-month term since 2012. The original owner has retired and sold the business.
The proposed lease is with Heeshuk Chang, the new owner of the business, and eliminates the month-to-month term in favor of a sixty (60) month 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 is the minimum monthly rent of $1,000, or 12% of gross sales, whichever is greater.
BACKGROUND
Boardwalk Candy has occupied the space at 124 International Boardwalk since 2008 and has been operating on a month-to-month term since 2012. The owner of Boardwalk Candy has retired and sold the business to Heeshuk Chang. The City has negotiated a new lease with Heeshuk Chang (Tenant), for the 400 square-foot space.
The space will be accepted “as is” by the Tenant. The proposed lease carries a sixty-month term with a minimum monthly rent of $1,000, or approximately $2.50 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, or 12% of monthly gross sales. The minimum monthly rent increases by 3% on the anniversary date for each year the lease remains in effect.
The lease is personally guaranteed by Suk Jun Chang and a security deposit of $1,000 will be kept on file. The City retains the right to terminate the lease with a twelve-month written notice.
H.21., File # 23-6482 Meeting Date: 10/17/2023
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 $1,000 for the first lease year with an annual increase of 3% to the base rent. Over the sixty-month term of the lease, revenue to the Uplands Fund will be a minimum of $63,709.56.
APPROVED BY:
Mike Witzansky, City Manager
ATTACHMENTS
· Reso - No. CC-2310-106, Lease Certain Property to Heeshuk Chang, dba Boardwalk Candy · Agmt - Lease Between the City of Redondo Beach and Heeshuk Chang, dba Boardwalk Candy