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SECOND AMENDMENT TO LEASE AGREEMENT – THE IG GROUP, LLC OPERATING AS SLATER’S 50/50 City Council January 10, 2023Public Utilities Department RiversideCA.gov2
SITE MAP
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1. On July 2, 2018, the City entered into a 10-yearLease Agreement with The IG Group, LLC operating asSlater’s 50/50.2. On July 7, 2020, the City entered into a 1stAmendment which:a) Amended the total square footage of the suite from 5,700 to 5,982;b) Amended the Tenant Improvement (TI) allowance from $108.95 to $156.27 persquare foot, for a total of $934,807;c) Adjusted the Rent Commencement date from May 22, 2019 to August 22,2019;d) Memorialized the Landlord’s Delivery of Possession on August 22, 2018; ande) Amended the Tenant’s Due Diligence period from 270 days to 365 days fromthe date of Landlord’s Delivery.BACKGROUND RiversideCA.gov4
3. Slater’s opened their doors later than expected:a) Anticipated opening date of Summer/Fall 2020.b) Actual opening date of May 18, 2021.4. The delay of the opening was due to:a) Major construction delays associated with the Tenant’scontractor;b) COVID-19 mandatory restrictions; andc) Difficulty hiring staff due to labor shortage.BACKGROUND 12/29/2022
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5. On Tuesday, May 10, 2022, Ivan Garcia of The IGGroup submitted a written proposal to the City forconsideration on how to better align the rentcommencement start date with date they opened.6. Because Slater’s 50/50 did not open its doors prior toCOVID-19, they were not eligible for State PPPfunding, which other restaurants received to helpsurvive.BACKGROUND RiversideCA.gov6
Staff has reviewed the proposed Second Amendment to the Lease Agreement and recommends the terms summarized below: 1. Basic Lease Information:a) Section 11. Tenant’s Proportionate Share of Building: 4.78%b) Section 11: Tenant’s Proportionate Share of Retail Area Common Area: 28.78%2. Term: January 1, 2021 through December 31, 2036.3. Rent Commencement Date: Section 2.1.1., amended from August 22, 2019 toJanuary 1, 2021.4. Amortization of Past Due Rent: Section 3.8 is added, with both parties agreeingto amortize unpaid rent from January 1, 2021 – May 31, 2021 into a new 15-yearterm ($14,955.00 Rent + $2,392.80 CAM) = $17,347.80 x 5 Months = $86,739.00.PROPOSED 15-YEAR LEASE TERMS 12/29/2022
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5. Amortization of Tenant Improvement: Section 3.7.1 is added with bothparties agreeing to amortize the entire balance of the $250,000.00 inadditional Tenant Improvements provided by the Landlord to Tenantunder Section 3.7 into the new 15-year term of the lease with a fourpercent interest rate added to the Base Rent.6. Tenant’s Share of Common Area Maintenance Costs: Tenant agrees topay the Landlord its proportionate share of all Building Area and RetainArea Common Area Maintenance Costs (“CAM” or “CAM Charges”).CAM Charges are currently estimated at Forty Cents ($0.40) per squarefoot.7. Rules and Regulations (Exhibit “B”): is amended and replaced in itsentirety and replaced with the attached Exhibit “B.”PROPOSED 15-YEAR LEASE TERMS CONT.
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8. Base Rent Schedule (Triple Net Lease):PROPOSED 15-YEAR LEASE TERMS CONT.
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9. Options to Extend: The monthly base rent for the Tenant’s two (2)5-year options to extend will be 105% of the previous years’ rent.Each subsequent year will be increased by 2% on each yearlyanniversary of the Rent Commencement Date.10.Broker: Pursuant to the existing Exclusive Authorization to LeaseAgreement with NKF, City to pay NKF a leasing commission equalto 2.5% of the lease consideration in the amount of $28,460.99 .11. Other: All other terms of the original lease shall remain unmodifiedand in full force.PROPOSED 15-YEAR LEASE TERMS CONT.
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Strategic Priority 3 – Economic OpportunityGoal 3.3 – Cultivate a business climate that welcomes innovation, entrepreneurship, and investmentCross-Cutting ThreadsSTRATEGIC PLAN ALIGNMENT
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That the City Council:1. Approve the Second Amendment to the Lease Agreementwith The IG Group, LLC operating as Slater’s 50/50 to extendthe Lease Agreement to a 15-year term from January 1, 2021,through December 31, 2036, and adjust the RentCommencement date from August 22, 2019, to January 1,2021; and2. Authorize the City Manager, or designee, to execute theSecond Amendment, including making minor, non-substantivechanges, and to sign all documents and instruments necessaryto complete the transaction.RECOMMENDATIONS