City Council
Report
City Council Meeting: January 24, 2023
Agenda Item: 5.H
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To: Mayor and City Council
From: David Martin, Director, Administration
Subject: Approval of Modification of Concession Agreement for Perry's Cafe and Beach Rentals
Recommended Action
Staff recommends that the City Council:
1. Find that the action to execute a First Modification of Concession Agreement #10960 entered into between the City and Perry’s Beach Café and Rentals (“Concessionaire”), as set forth in recommendation No. 2, is categorically exempt pursuant to Section 15301 of the California Environmental Quality Act (CEQA) Guidelines.
2. Authorize the City Manager to negotiate and execute a First Modification of Concession Agreement #10960 (CCS) to allow for full alcohol service at four beach concession locations subject to Concessionaire’s procurement of local and state regulatory approvals.
Summary
Concessionaire, operating as Perry’s Beach Café, requests the City, as the landlord, modify the Concession Agreement to allow full alcohol (beer, wine and distilled spirits) at all four concession locations, subject to local and state regulatory approvals.
Currently the Concessionaire is allowed to sell beer and wine at two of the four beach concessions. The concessions are located at 930 Pacific Coast Highway, 2600 Ocean Front Walk, 1200 Pacific Coast Highway, and 2400 Ocean Front Walk. The latter two concession locations currently serve beer and wine. The modification would support the economic viability of the operation and respond to customer expectation for a range of beverage options with a meal.
Discussion
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On October 22, 2019, Council authorized the City Manager to negotiate and enter into a concession agreement with Chaos Enterprises d.b.a. Perry’s Beach Café and Rentals to operate four concessions along the Santa Monica State Beach offering food, retail and rentals. Council approved the term of the agreement to be 10 years with one fiveyear extension option at an annual minimum rent of $300,000 (adjusted annually by CPI) or 8% of gross sales, whichever is higher. The approved terms also permitted the Concessionaire to serve beer and wine from at least one location upon receiving regulatory approvals. The executed Concession Agreement specified that the sale of beer and wine would be allowed at two locations -- 1200 Pacific Coast Highway and 2400 Ocean Front Walk. In addition, the Concessionaire would be allowed to serve distilled spirits at private catered rentals.
The Concessionaire received the required licenses and permits from local and state regulatory and licensing agencies and has been serving beer and wine for over a year as part of their regular restaurant operations at the 1200 Pacific Coast Highway and 2400 Ocean Front Walk locations, and full liquor at private catered rentals when closed to the public. The Concessionaire has operated in compliance with all alcohol related conditions and there have been no reportable incidents involving alcohol service at either location. The Concessionaire servers and managers have completed the Responsible Beverage Service Training program, which is mandated by the California Department of Beverage Control (“ABC”) to provide servers with the knowledge and tools needed to ensure responsible alcohol service and consumption. Furthermore, conditions outlined within the Concession Agreement and the City’s alcohol exemption permit requires that alcohol service be incidental to the sale and service of food.
The addition of beer and wine beverages to the two locations has been important in generating new revenues, but in the face of significantly rising food and labor costs across all four outlets, the Concessionaire believes that full alcohol service at all four locations will help to further improve revenues given that achieving pre-Covid profitability is still a challenge. The inclusion of alcoholic beverages as part of its menu offerings also responds to customer expectation for a variety of beverage choices with their meal.
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For many restaurants, alcohol sales emerged as one of the major contributors to help them stay afloat during the pandemic. Many governmental entities, including the City of Santa Monica, permanently loosened certain restrictions on restaurants serving alcohol as part of its business recovery strategy.
Environmental Review
The project is exempt from CEQA pursuant to Section 15301 of CEQA. Section 15301 exempts Class 1 projects from CEQA, which include the “the operation, repair, maintenance, permitting, leasing, licensing, or minor alteration of existing public or private structures, facilities, mechanical equipment, or topographical features, involving negligible or no expansion of existing or former use”. This project involves a negligible expansion of an existing use as it consists of modifying a concession agreement to allow for expanded alcohol service, subject to regulatory approvals, and would not necessitate the expansion of the building footprints beyond the existing area that would result in a physical impact. Therefore, the project qualifies for a Class 1 exemption.
Past Council Actions
Meeting Date Description
October 22, 2019
(Attachment A)
Original award of Concession to Chaos Enterprises d.b.a.
Perry’s Café and Rentals
Financial Impacts and Budget Actions
There is no financial impact or budget action necessary as a result of the recommended actions for FY 2022-23. However, it is anticipated that the proposed modification may result in additional percentage rent revenues in future years. Staff will adjust revenue budgets accordingly as part of the FY 2023-25 biennial budget process. 4 of 4
Prepared By: Elana Buegoff, Pier Administrator
Approved Forwarded to Council
Attachments:
A. Staff Report 10/22/2019
B. Oaks Form (Chaos Enterprises Inc)