City Council
Report
City Council Meeting: February 13, 2024
Agenda Item: 5.D
1 of 4
To: Mayor and City Council
From: Jenny Rogers, Recreation and Arts Director, Recreation and Arts Department Subject: Approval of Modification of Concession Agreement for Back on the Beach Café
Recommended Action
Staff recommends that the City Council:
1. Adopt a finding that the modification 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 #11238 (CCS) to allow for full alcohol service at Back on the Beach Café subject to Concessionaire’s procurement of local and state regulatory approvals.
Summary
Back on the Beach Café leases a restaurant space at 445 Pacific Coast Highway located adjacent to the Annenberg Community Beach House. They now request the City, as the landlord, modify its Concession Agreement to allow full alcohol (beer, wine, and distilled spirits) at Back on the Beach Café, subject to local and state regulatory approvals. Currently, Back on the Beach Café is allowed to sell beer and wine. The modification to expand to full alcohol will support the economic viability of the operation and respond to customer expectation for an expanded range of beverage options with a meal.
Discussion
Since 1989, Back on the Beach Café has provided daily year-round indoor and outdoor food service. In addition, Back on the Beach Café equips and maintains beach-related equipment such as rental of chairs, umbrellas, and boogie boards, 2 of 4
and sale of various sundries that provide for the health, enjoyment, and convenience of Annenberg Community Beach House (“Beach House”) visitors.
The restaurant is fully licensed and approved by the Los Angeles County Health Department, City of Santa Monica, and California Alcoholic Beverage Control Board (“ABC”). Through a permit approved by ABC and the Planning Commission in 2012, Back on the Beach Café was able to expand to include beer and wine service in its existing outdoor dining area. Back on the Beach Café’s prior agreement with the City to operate Beach House concessions expired on December 1, 2018 and was then under a month-to-month lease with the City pending the completion of the State Parks-required Request for Proposal (“RFP”) process and delays caused by the COVID-19 pandemic. The RFP was released in September 2021 and closed in October 2021. Two proposals were received, with Back on the Beach Café selected as the winning bidder.
On January 25, 2022, Council authorized the City Manager to negotiate and enter into a concession agreement with Back on the Beach Café to operate a concession on the Santa Monica State Beach offering food, retail, and rentals. Council approved the term of the agreement to be ten (10) years with one (1) five (5)-year extension option at an annual minimum rent of $200,000 (adjusted annually by CPI) or 8% of gross sales, whichever is higher. The approved terms also permitted Back on the Beach Café to serve beer and wine upon receiving regulatory approvals.
Back on the Beach Café received the required licenses and permits from local and state regulatory and licensing agencies and has been serving beer and wine as part of their regular restaurant operations. The restaurant has operated in compliance with all alcohol related conditions and there have been no reportable incidents involving alcohol service at either location. Servers and managers have completed the Responsible Beverage Service Training program, which is mandated by the ABC to provide servers with the knowledge and tools needed to ensure responsible alcohol service and consumption. Furthermore, conditions outlined within the Concession 3 of 4
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 has been important in generating new revenues, but in the face of significantly rising food and labor costs as well as the continuing challenge of achieving pre-pandemic profitability, the Concessionaire believes that full alcohol service will further improve revenues. For many restaurants, alcohol sales emerged as one of the major contributors to remain operational during the pandemic and many governmental entities, including Santa Monica, permanently eased certain restrictions on restaurants serving alcohol as part of its economic recovery strategy. The inclusion of alcoholic beverages as part of its menu offerings will also respond to customer expectation for a variety of beverage choices with their meals.
Environmental Review
The allowance for full alcohol at the Back on the Beach Café is categorically exempt from CEQA pursuant to Section 15301 (Class 1 - Existing Facilities) of the CEQA Guidelines. Section 15301 provides exemption for the operation, repair, maintenance, permitting, or minor alteration of existing public or private structures, facilities, mechanical equipment, or topographical features, involving negligible or no expansion of use beyond that existing at the time of the lead agency's determination. The allowance for alcohol would supplement the existing operations at the café and would not expand or materially change existing facilities or operations. Therefore, the modification to the agreement to allow alcohol is categorically exempt pursuant to Section 15301 of the CEQA Guidelines.
Past Council Actions
Meeting Date Description
January 25, 2022
(Attachment A)
Original award of Concession to Back on the Beach Café
4 of 4
Financial Impacts and Budget Actions
It is anticipated that implementation of the changes in the proposed modification may result in additional percentage rent revenues, which would be deposited in the Beach Fund at account 01430001.408780. If required, budget adjustments would be incorporated in the FY 2023-24 Year-End Budget and the FY 2024-25 Exception-Based Budget.
Prepared By: Claire Hester, Senior Administrative Analyst Approved Forwarded to Council
Attachments:
A. Staff Report BotB 01.25.2022
B. Oaks Initiative Notice Form_2024
C. Levine Act Disclosure BotB 02.05.2024
D. 02_Concession_Agreement_2022-FINAL w EXHIBITS EXECUTED 040722