Administrative
Report
H.7., File # 23-7226 Meeting Date: 11/21/2023
To: MAYOR AND CITY COUNCIL
From: GREG KAPOVICH, WATERFRONT & ECONOMIC DEVELOPMENT
DIRECTOR
TITLE
ADOPT BY TITLE ONLY RESOLUTION NO. CC-2311-120, A RESOLUTION OF THE CITY
COUNCIL OF THE CITY OF REDONDO BEACH, CALIFORNIA, LEASING CERTAIN PROPERTY
TO KING HARBOR CANTINA, LLC, A CALIFORNIA LIMITED LIABILITY COMPANY APPROVE THE LEASE WITH KING HARBOR CANTINA, LLC FOR THE PREMISES AT 207 NORTH HARBOR DRIVE, REDONDO BEACH, CA FOR A MONTHLY MINIMUM RENT OF $3,000, OR 8% OF TOTAL GROSS SALES, WHICHEVER IS GREATER, AND THE TERM NOVEMBER 21, 2023 THROUGH NOVEMBER 20, 2027
EXECUTIVE SUMMARY
In May 2014, the City completed its purchase of the Redondo Beach Marina leasehold, which includes stand-alone restaurants, a marina, a large surface parking lot, and a public boat hoist. King Harbor Cantina, LLC is seeking a new lease for the building at 207 N. Harbor Drive (Premises). Prior to 2023, the building served as the location for Samba by the Sea restaurant. King Harbor Cantina, LLC intends to utilize the space for food, beverage, and alcohol services. The leased space totals 10,200 square feet.
The proposed lease is for a 4-year term and the period November 21, 2023 through November 20, 2027. Minimum rent to the City’s Harbor Uplands Fund begins at a rate of $3,000 per month, or 8% of total gross sales, whichever is greater. The minimum rent is subject to a 3% increase each year.
BACKGROUND
In 2023, the Samba by the Sea Restaurant terminated its lease, leaving the space at 207 N. Harbor Drive vacant. King Harbor Cantina, LLC intends to utilize the space for food, beverage, and alcohol services, all of which must be consistent with the municipal code, as well as all State, Federal, and Coastal Commission regulations.
The proposed 4-year lease term would commence on November 21, 2023 and extend to November 20, 2027. The proposed lease includes a minimum monthly rent of $3,000. Additionally, the minimum rent is subject to a 3% increase each year.
If 8% of total gross sales exceed the minimum monthly rent, then the City would receive 8% of gross sales in lieu of the minimum monthly rent. Total gross sales include all goods, tickets, memberships, wares, and services sold in or from the Premises by the Tenant, its permitted subtenants (if any),
H.7., File # 23-7226 Meeting Date: 11/21/2023
wares, and services sold in or from the Premises by the Tenant, its permitted subtenants (if any), licensees, agents, or concessionaires, whether for cash or on credit (whether collected or not), including the gross amount received by reason of orders taken on the Premises although filled elsewhere, and whether made by any of the foregoing parties or vending machines.
The tenant will be required to obtain approval from the City for any proposed tenant improvements in addition to obtaining any associated licenses and permits from any required or necessary agencies.
The lease also includes 12 employee parking passes without fee.
COORDINATION
The Waterfront and Economic Development Department coordinated with the City Attorney’s Office on the preparation of the lease document.
FISCAL IMPACT
Lease revenue from the property will accrue to the City’s Harbor Uplands Fund. Rent will begin on November 21, 2023 at a rate of $3,000 per month, or 8% of gross sales, whichever is greater. Over the 4-year term of the lease, revenue to the Uplands Fund will be a minimum of $150,611.
APPROVED BY:
Mike Witzansky, City Manager
ATTACHMENTS
· Reso - No. CC-2311-120 - King Harbor Cantina LLC, 207 N. Harbor Drive · Lease with King Harbor Cantina, LLC - 207 N. Harbor Drive