City Council
Report
City Council Meeting: March 24, 2026
Agenda Item: 4.K
1 of 8
To: Mayor and City Council
From: Oliver Chi, City Manager, Office of Economic Development Subject: Approval of Lease Agreement with California Roadhouse, Inc. for 256 Santa Monica Pier
Recommended Action
Staff recommends that City Council:
1. Adopt a finding of categorical exemption pursuant to Section 15301 of the California Environmental Quality Act (CEQA) Guidelines
2. Authorize the City Manager to negotiate and execute a Lease Agreement with California Roadhouse, Inc. for 256 Santa Monica Pier.
Summary
After a competitive assessment process consistent with the City’s Pier leasing guidelines – which included engagement and review by the Santa Monica Pier Corporation Board (SMPC) – staff is recommending that the City Council authroize a lease with California Roadhouse for the property idetnified as 256 Santa Monica Pier (256 SMP). Of note, California Roadhouse was selected in part due to their commitment to reviving live music and ability to quickly activate the space within after lease execution.
Discussion
The City engaged California Realty Group (CRG) to initiate a competitive leasing process for 256 SMP to attract high-quality tenants aligned with the strategic goals of the SMPC as outlined in the Pier Leasing Guidelines. CRG created the marketing brochure (Attachment A) and marketed the opportunity on LoopNet, CoStar, National Retail Email, Local Broker Email Marketing, National Broker List, and to the City’s Pier 2 of 8
Leasing interest list. There were over 100 inquiries, dozens of tours, and 9 submittals by the deadline of July 10, 2025.
Timeline of Key Activities
• Broker Received Nine Proposals by Deadline: July 10, 2025 • First-Round Evaluation (9 Teams): July 17, 2025
• Second-Round Evaluation (5 Teams): August 27, 2025
• Third-Round Interviews (2 Teams): September 2 & 4, 2025 • Pier Leasing Committee – September 29, 2025
• Pier Corporation Board – December 15, 2025
• Commence Lease Negotiation – December 16, 2025
The two finalists, Mixue and California Roadhouse, demonstrated strong financial capacity, a clear business vision, and willingness to provide temporary activation during permitting. Both were invited to present on:
• Business concept
• Team qualifications and capacity
• Temporary activation strategy
• Minimum term requirements
• Construction timeline
• Anticipated opening date
Ultimately, California Roadhouse stood out as the best fit as their vision aligns with Santa Monica’s music and culinary culture. The dining menu offers hearty and healthy options: ranging from traditional burgers and steaks to vegan and gluten-free options along with smoothies, coffee, and craft beer. The team includes seasoned restauranteurs and music professionals with deep ties to the Santa Monica community.
California Roadhouse emphasized its commitment to reviving live music at the Pier and can start temporary activation within weeks of lease execution. In addition, they are expected to have minor downtime with primarily renovation in the kitchen, enhancements to the acoustics and monitor displays, and (furniture, fixtures, and equipment (“FF&E”) upgrades.
3 of 8
Proposed Terms:
The table below outlines the key terms and conditions of the proposed Lease as agreed to in concept by the City and California Roadhouse.
PREMISES 256 Santa Monica Pier
TENANT California Roadhouse, Inc.
USEABLE SF Approx 4,112 SF (3,039 SF interior + 1,073 SF patio) TERM Five (5) Year Initial Term + Five (5) Year Option to Extend* *contingent upon completion of tenant improvements within City approved construction schedule.
RENT Six months following the commencement date, tenant’s rent would be $26,728 monthly ($6.25/SF interior + exterior) subject to annual Consumer Price Index (CPI) adjustments, plus NNN. Base rent shall be subject to an annual increase of three (3%) percent.
CAM Tenant would pay Common Area Maintenance (CAM)
charges at a rate of $10.66 per square foot annually.
Beginning July 1, 2027, CAM will adjust every two years based on CPI, with increases capped at no less than 3%
and no more than 6% annually.
PERMITTED USE Subject to regulatory approvals, the premises would operate as a casual dining restaurant featuring American cuisine with vegan options, alcoholic and non-alcoholic beverages, smoothies, and coffee, together with a curated live music daily program.
The use also includes catering, take-out service, private events, limited branded merchandise sales, and minor
ancillary entertainment elements. Alcohol service will
require appropriate licensing, and the tenant must operate in a high-quality, reputable manner consistent with active Pier operations. Free live-music performances within the first month of lease commencement and will continue until active construction.
CONDITION As-Is.
TENANT IMPROVEMENTS / CITY
ADVANCE
The lease would provide for a one-time City capital
contribution of up to $500,000 (the “City Advance”) to fund eligible capital improvements and permanently affixed
furniture, fixtures, and equipment (FF&E). All purchases shall be made consistent with city purchasing policy. Funds 4 of 8
may be used only for approved capital improvements and
FF&E, including:
• Commercial kitchen systems
• HVAC, electrical, plumbing, and life safety upgrades
• Stage, sound, and lighting infrastructure
• Built-in bar improvements
• Structural or code-related improvements
• Associated architectural, engineering, and permitting costs
All City-funded improvements and FF&E would become
property of the City upon installation at the end of the lease.
Funds may not be used for working capital, inventory, food or beverage purchases, payroll (except construction labor), rent, utilities, debt service, or owner distributions.
Disbursement Structure
The City Advance will be disbursed in three stages:
1. $225,000 upon City approval of scope, budget, and
schedule
2. $225,000 upon documented expenditure of at least
$225,000
3. $50,000 retainage upon substantial completion, final inspection approval, and lien releases
Lease will include structured disbursement safeguards,
audit rights, and a five-year declining repayment (clawback) provision to protect public funds.
Worker Protections and Additional Conditions
Worker Protections
On February 10, 2026, the City adopted Ordinance Number 2847 (CCS), amending Santa Monica Municipal Code (SMMC) Chapter 4.66, Recall of Workers, to provide for recall of eligible workers laid off from hotels on City-owned property and eligible workers laid off from hospitality businesses located on the Santa Monica Pier, and adding SMMC Chapter 4.69, Retention of Workers, to provide for retention of workers for hospitality businesses on the Santa Monica Pier for a period of 90 days after a change in control of the business (the Worker Protection Ordinance). 5 of 8
The Worker Protection Ordinance became effective on March 12, 2026, and its provisions will be applicable to the lease on a going-forward basis. In the event of a change in control of the California Roadhouse, the successor employer will be required to retain the employees of the prior employer for a period of 90 days after the change in control. This approach is consistent with how ordinances are generally applied and case law, particularly given there are consequences for violation of the ordinance, including monetary damages. California courts have rejected attempts to apply ordinances retroactively when doing so would impose new liability for conduct occurring before enactment. See, e.g., City of Monte Sereno v. Padgett (2007) 149 Cal.App.4th 1530.
Hospitality workers were displaced when Rusty’s Surf Ranch, the prior tenant at 256 SMP, ceased operations in 2025, prior to the effective date of the Worker Retention Ordinance. Although these workers do not qualify for retention rights under the Worker Protection Ordinance, City staff and California Roadhouse propose negotiated lease provisions that provide a retention pathway for the former Rusty’s workers pursuant to conditions that are similar to those in the Worker Protection Ordinance by ensuring that eligible former employees receive a meaningful opportunity to return to work at the leased premises through a structured interview process and mandatory minimum hiring percentages tied to a defined hiring window. Workers who are rehired are guaranteed at least 90 days of employment, during which they may only be terminated for good cause, lawful cause, or a bona fide reduction in force. The provision also requires written job offers, objective retention standards, and detailed recordkeeping, allowing the City to monitor and verify compliance.
These measures create a comprehensive worker retention framework that meet the goals of the Worker Protection Ordinance by promoting employment continuity and supporting workforce stability while preserving operational flexibility for the tenant.
The City Advance
The City’s financial contribution in the amount of $500,000 (the “City Advance”) to fund eligible capital improvements and FF&E would serve valid and legitimate public 6 of 8
purposes. These purposes include, without limitation: (i) activation of publicly owned property; (ii) stimulation of local economic activity; (iii) generation of sales and other tax revenues; (iv) creation and retention of employment opportunities; (v) enhancement of neighborhood amenities and visitor-serving uses; and (vi) long-term occupancy, activation, and responsible stewardship of the Premises. Tenant’s receipt of the City Advance would be expressly conditioned upon the tenant’s continuous operation of its restaurant business at the leased premises and the ongoing provision of economic and community benefits to the City.
Recommendation and Next Steps
The following findings support the recommendation that Council approve the proposed five-year lease term, with an additional five-year extension option, in accordance with Section 7.5 of the Pier Leasing Guidelines.
I. The proposed project will provide an exceptional opportunity to fulfill a goal or objective of the Pier Guiding Principles and will enhance the unique character and the viability of the Pier.
California Roadhouse proposes to reinvigorate the Pier’s live music scene and restore an important experiential element consistent with the Pier’s historic vibrancy. Based on the current tenant inventory outlined in the Pier Leasing Guidelines, California Roadhouse would serve as the only dedicated live music venue on the Pier. This distinctive use enhances the Pier’s identity, diversifies its offerings, and strengthens its long-term economic and cultural viability as a destination for residents and visitors alike.
II. The proposed project will require substantial capital investment and provide an exceptional return opportunity to the City.
The City Advance would enable substantial, long-term improvements that exceed cosmetic upgrades. The investment ensures that the space is modernized, 7 of 8
energy-efficient, and positioned for sustained success. Importantly, receipt of the City Advance would be expressly conditioned upon California Roadhouse’s continuous operation of its restaurant and live music business at the leased premises and the ongoing provision of measurable economic and community benefits to the City. This structure protects the public’s investment while aligning the tenant’s performance with the City’s long-term objectives.
III. The proposed project will enhance the mix of uses on the Pier while remaining consistent with its unique character.
California Roadhouse will introduce a dynamic blend of dining and entertainment that expands the Pier’s existing mix of uses. The menu will feature a wide range of offerings, including:
• Traditional favorites such as steak and potatoes
• Smoothies and coffee service
• Vegetarian and vegan options
Live music programming creates an experiential destination that complements the Pier’s visitor-serving focus. This combination of culinary diversity and entertainment programming reinforces the Pier’s identity as a lively, inclusive, and community-oriented environment.
IV. The proposed project will provide significant enhancement to the visitor experience at the Pier.
California Roadhouse intends to partner with School of Rock to host student performances on its stage, providing young musicians with meaningful performance opportunities while creating engaging programming for visitors.
These performances will initially serve as temporary activation during permitting and transition then evolve into permanent weekend morning programming upon full operation. This initiative strengthens community ties, supports youth arts 8 of 8
education, and enhances the Pier as a destination that celebrates local talent and intergenerational engagement.
Environmental Review
The lease agreement is exempt from California Environmental Quality Act (CEQA) pursuant to Section 15301 (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. Therefore, the lease of the existing property at 256 Santa Monica Pier is exempt from CEQA.
Financial Impacts and Budget Actions
The recommended action is estimated to result in an increase of $325,000 annually in rent to the Pier Fund. If approved, the revenue adjustments will be included in the FY 2026-27 Budget that will be proposed for adoption in June.
Prepared By: Wendy Siao, Senior Development Analyst
Approved Forwarded to Council
Attachments:
A. 256 SAMO Pier Flyer (Final)
B. 2025_Pier LeasingGuidelines_Approved
C. Levine Act Disclosure CAR
D. Oaks Intiative CAR
E. PW SB7 SB854 CAR
F. ADD-TO: Oaks Initiative Notice - California Roadhouse Inc_