Administrative
Report
H.11., File # 24-1028 Meeting Date: 6/18/2024
To: MAYOR AND CITY COUNCIL
From: GREG KAPOVICH, WATERFRONT & ECONOMIC DEVELOPMENT
DIRECTOR
TITLE
ADOPT BY TITLE ONLY RESOLUTION NO. CC-2406-044, A RESOLUTION OF THE CITY
COUNCIL OF THE CITY OF REDONDO BEACH, CALIFORNIA, LEASING CERTAIN PROPERTY
TO EL CINCO DE MAYO MEXICAN FOOD LLC
APPROVE A LEASE WITH EL CINCO DE MAYO MEXICAN FOOD LLC FOR THE PREMISES AT 240 FISHERMAN’S WHARF FOR THE TERM JUNE 18, 2024 TO JUNE 17, 2029
EXECUTIVE SUMMARY
In 1995, the City of Redondo Beach purchased the Fisherman’s Wharf Leasehold which includes the 200 block of Fisherman’s Wharf. The leasehold is comprised of several buildings that total approximately 13,000 square feet of leasable space. The space at 240 Fisherman’s Wharf (Premises) is approximately 400 square feet and has accommodated a food-service use for decades.
The proposed lease with El Cinco De Mayo (Tenant) will allow for a new 60-month term for the space and includes an option to terminate the lease with a 12-month prior written notice. Rent to the City’s Harbor Tidelands Fund for the lease is the minimum of $1,000, or 10% of gross sales, whichever is greater.
BACKGROUND
In 1995, the City purchased the former Redondo Horseshoe Pier Company leasehold containing the buildings from 200 to 250 Wharf on the Redondo Beach Pier. The approximately 13,000 square feet of leasable space is made up of retail, restaurant, and entertainment uses.
El Cinco De Mayo was an existing restaurant at this location originally operated by Robert Borgese of Sapori Di Roma, whose lease has been terminated. The two brothers, Froylan T. Santiago Arellanes and Oscar P. Santiago Arellanez, have been successfully operating the restaurant on a day-to-day basis since August 2019. The City has negotiated a new lease with the tenant for the 400 square foot space.
The proposed lease carries a 60-month term with a minimum monthly rent of $1,000, or approximately $2.50 per square foot, which is consistent with other similar leases in the waterfront.
The monthly rent paid to the City will be the greater of the minimum monthly rent, or 10% of monthly gross sales. The monthly rent increases by 3% on the anniversary date for each year the lease
H.11., File # 24-1028 Meeting Date: 6/18/2024
remains in effect.
The tenant will take the Premises as-is and will be responsible for utilities and all other improvements to the space. The lease is personally guaranteed by Froylan T. Santiago Arellanes and Oscar P.
Santiago Arellanez, and a security deposit of $1,000 will be kept on file. The City retains the right to terminate the lease with the 12-month written notice.
COORDINATION
The Waterfront and Economic Development Department collaborated with the City Attorney’s Office for the preparation of the lease. The City Attorney’s Office has approved the associated documents as to form.
FISCAL IMPACT
Lease revenue from the property will accrue to the City’s Harbor Tidelands Fund. The proposed lease will result in a minimum monthly rent of $1,000 for the first lease year, or 10% of monthly gross sales, whichever is greater, with an annual increase to the base rent of 3% each year thereafter.
Over the 60-month term of the lease, revenue to the Tidelands Fund will be a minimum of $63,710.
APPROVED BY:
Mike Witzansky, City Manager
ATTACHMENTS
· Reso - No. CC-2406-044, Lease Certain Property to El Cinco De Mayo Mexican Food LLC · Agmt - Lease Between the City of Redondo Beach and El Cinco De Mayo Mexican Food LLC