HomeMy WebLinkAboutItem No. 04 Lease Agreement 112 S. Main StreetText File
City of Lake Elsinore 130 South Main Street
Lake Elsinore, CA 92530
www.lake-elsinore.org
File Number: ID# 17-102
Agenda Date: 3/14/2017 Status: Consent AgendaVersion: 1
File Type: AgreementIn Control: City Council
Agenda Number: 4)
Page 1 City of Lake Elsinore Printed on 3/9/2017
REPORT TO CITY COUNCIL
To:Honorable Mayor and Members of the City Council
From:Grant Yates, City Manager
Date:March 14, 2017
Subject:Lease Agreement – 112 S. Main Street
Recommendation
It is recommended that the City Council approve the Lease Agreement in substantially the
form attached and authorize the City Manager to execute the Agreement in such final form as
approved by the City Attorney.
Background
The storefront adjacent to Code Enforcement (commonly known as 112 South Main Street) is
available for lease. The space is approximately 1,024 square feet and the owner has offered to
lease it to the City for $1.46 per SF for an initial 5 year term with an option to renew for an
additional 5 years. On February 28, 2017, the City Council directed staff to bring the proposed
lease agreement forward to the March 14, 2017 City Council meeting.
Discussion
The proposed $1.46 per SF equates to approximately $1,495 monthly rent and approximately
$17,940 annually. Rent would adjust annually by CPI. The space is immediately available and
is in need of improvement. The City can take immediate possession and proceed with space
planning and improvements following City Council approval and execution of the Lease
Agreement. A budget and schedule for improvements will be available once the scope of
improvements is completed.
Fiscal Impact
The funding for the lease and improvements will come from the General Fund budget.
Exhibits
A -Vicinity Map
B -Lease Agreement
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LEASE AGREEMENT
(112 S. MAIN STREET)
THIS LEASE AGREEMENT (112 S. MAIN STREET)(“Lease”), is made as of March
1, 2017 (“Effective Date”) by and between Joe and Sue Zahabi, husband and wife (collectively
as “Landlord”) and the City of Lake Elsinore, a municipal corporation (“City”). City and
Landlord are hereinafter sometimes referred to individually as “Party” and collectively as the
“Parties.”
RECITALS
A. Landlord owns an undivided one-third interest in certain real property and improvements
commonly known and numbered as 108, 110 and 112 S. Main Street, Lake Elsinore,
California 92530 and more particularly described as APN 373-151-022-2. Landlord has
exclusive possessory interest in premises commonly known as 112 S. Main Street (“Leased
Premises”).
B. The Leased Premises consists of approximately 1,024 square feet of rentable space subject to
verification by City upon the “Commencement Date” as hereinafter defined.
C. City desires to lease the Leased Premises from Landlord for purposes of expanding City Hall
and Landlord desires to lease the Leased Premises to City for such purposes in accordance
with the terms and conditions set forth in this Lease.
NOW, THEREFORE,in consideration of the foregoing and of the mutual promises and
covenants hereinafter set forth, it is hereby agreed by and between the Parties that:
1. Term.
A. Original Term. Landlord hereby leases the Leased Premises to City, and City hereby leases
the same from Landlord for five (5) years (“Term”) beginning March 1, 2017 (“Commencement
Date”) and ending midnight February 28, 2022, unless terminated earlier as hereinafter provided
(the “Term”). Except as otherwise specifically stated in this Lease, references to the “Term”
shall include the original Term and any Extension Term, other renewal or holdover thereof.
B. Option to Extend. City shall have one (1) option to extend the Term for a period of five (5)
years (the “Extension Term”), provided that at the time of such election and at the expiration of
the existing term, City is not then in an uncured default under any of the terms of provisions of
the Lease. City shall exercise its option by giving written notice of City’s intent to exercise its
option to Landlord at least thirty (30) days prior to the expiration of the Term.
2. Hold Over.
Any holding over after the expiration of the Term shall create a month-to-month tenancy that
either Party may terminate by giving written notice to the other Party at least thirty (30) days
prior to the intended termination date subject to applicable laws. Rent shall be at the rate equal
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to the rent for the immediately preceding month, payable in advance. All other terms and
conditions of this Lease shall remain in full force and effect.
3. Rent.
City shall pay monthly rent to Landlord in the amount of One Thousand Four Hundred Ninety
Five Dollars ($1,495) calculated at the rate of $1.46 per rentable square foot (rounded to the
nearest dollar). Commencing March 1, 2018 and each March 1st thereafter during the Term, the
monthly rent paid to Landlord shall be subject to an annual increase commencing on March 1 of
each year during the Term, such annual increase to be based on the Consumer Price Index (CPI)
percentage change as reported by the Bureau of Labor Statistics for the Los Angeles-Riverside-
Orange County Area for the previous 12 month period of ending January 31.
Each rent payment shall be due in advance on the first day of each calendar month during the
Term and shall be delinquent on the tenth of the month.
If any installment of rent due from City is not received by Landlord within ten days of the due
date, City shall pay Landlord a One Hundred Dollars ($100) late fee.
Rent payments shall be made to Landlord at Landlord’s address set forth in Section 18 or at such
other place designated by written notice from Landlord.
4. Security Deposit.
City agrees to pay Landlord a “Security Deposit” in the amount of One Thousand Five Hundred
Dollars ($1,495) due and payable on or before the Commencement Date. The Security Deposit
shall be held by Landlord without liability for interest and as security for the performance by
City of City’s covenants and obligations under this Lease, it being expressly understood that the
Security Deposit shall not be considered an advance payment of rental or a measure of
Landlord’s damages in case of default by City. Landlord may, from time to time, without
prejudice to any other remedy, use the Security Deposit to the extent necessary to make good any
arrearages of rent or to satisfy any other covenant or obligation of City hereunder. Following any
such application of the Security Deposit, City shall pay to Landlord on demand the amount so
applied in order to restore the Security Deposit to its original amount. If City is not in default at
the termination of this Lease, the balance of the Security Deposit remaining after any such
application shall be returned by Landlord to City. If Landlord transfers its interest in the
Premises during the term of this Lease, Landlord may assign the Security Deposit to the
transferee and thereafter shall have no further liability for the return of such Security Deposit.
5. Use
The Leased Premises shall be used by City as an interim expansion of City Hall and will be used
for City personnel and related City purposes.
6.Sublease and Assignment.
City shall have the right without Landlord’s consent, to assign this Lease to any subsidiary or
entity controlled by the City. Except as set forth above, City shall not sublease all or any part of
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the Leased Premises, or assign this Lease in whole or in part without Landlord’s consent, such
consent not to be unreasonably withheld or delayed.
7. Repairs and Maintenance.
A. During the Term, Landlord shall maintain the roof, foundation, exterior walls and the major
building systems, electrical, plumbing and water systems, but excluding the heating ventilation
and air conditioning (HVAC).
B. City shall be responsible, at City expense, for the HVAC and non-major repairs (less than
$1,000) necessary to maintain and repair non-major systems and interior improvements.
8. Alterations and Improvements.
City, at City’s expense, shall have the right to remodel, redecorate, and make additions,
improvements and replacements of and to all or any part of the Leased Premises from time to
time as City may deem desirable, provided the same are made in a workmanlike manner and
utilizing good quality materials. City shall have the right to install an interior passageway
between the Leased Premises and the adjacent premises (currently under lease by the City) in
order to integrate and access the Leased Premises with City Hall. City shall have the right to
place and install personal property, trade fixtures, equipment and other temporary installations in
and upon the Leased Premises, and fasten the same to the premises. All personal property,
equipment, machinery, trade fixtures and temporary installations, whether acquired by City upon
the Commencement date or placed or installed on the Leased Premises by City thereafter, shall
remain City’s property free and clear of any claim by Landlord. City shall have the right to
remove the same at any time during the Term provided that all damage to the Leased Premises
caused by such removal shall be repaired by City at City’s expense.
9. Insurance.
A. Landlord shall maintain fire and extended coverage insurance on the Leased Premises in such
amounts as Landlord shall deem appropriate. City shall be responsible, at its expense, for fire and
extended coverage insurance on all of its personal property, including removable trade fixtures,
located in the Leased Premises.
B. City and Landlord shall, each at its own expense, maintain a policy or policies of
comprehensive general liability insurance with respect to the respective activities of each on the
Leased Premises with the premiums thereon fully paid on or before due date, issued by and
binding upon some insurance company approved by Landlord, such insurance to afford
minimum protection of not less than $1,000,000 combined single limit coverage of bodily injury,
property damage or combination thereof. Landlord shall not be required to maintain insurance
against thefts within the Leased Premises.
10. Utilities.
City shall pay all charges for water, sewer, gas, electricity, telephone, trash and other services
and utilities used by City on the Leased Premises during the Term unless otherwise expressly
agreed in writing by Landlord. In the event that any utility or service provided to the Leased
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Premises is not separately metered, Landlord shall pay the amount due and separately invoice
City for City’s pro rata share of the charges. City shall pay such amounts within fifteen (15) days
of invoice.
11.Signs.
City shall have the right to place on the Leased Premises, at locations selected by City, any signs
which are permitted by applicable zoning ordinances. City shall repair all damage to the Leased
Premises resulting from the removal of signs installed by City.
12. Entry.
Landlord shall have the right to enter upon the Leased Premises at reasonable hours to inspect
the same, provided Landlord shall not thereby unreasonably interfere with City’s business on the
Leased Premises.
13.Parking.
Except as expressly provided to the contrary herein or by applicable laws and regulations, during
the Term, City shall have the exclusive use of the automobile parking areas, driveways, and
footways on the Leased Premises.
14.Damage and Destruction.
If the Leased Premises or any part thereof or any appurtenance thereto is so damaged by fire,
casualty or structural defects that the same cannot be used for City’s purposes, then City shall
have the right within ninety (90) days following damage to elect by notice to Landlord to
terminate this Lease as of the date of such damage. In the event of minor damage to any part of
the Leased Premises, and if such damage does not render the Leased Premises unusable for
City’s purposes, Landlord shall promptly repair such damage at the cost of the Landlord. In
making the repairs called for in this paragraph, Landlord shall not be liable for any delays
resulting from strikes, governmental restrictions, inability to obtain necessary materials or labor
or other matters which are beyond the reasonable control of Landlord. City shall be relieved from
paying rent and other charges during any portion of the Term that the Leased Premises are
inoperable or unfit for occupancy, or use, in whole or in part, for City’s purposes. Rent and other
charges paid in advance for any such periods shall be credited on the next ensuing payments, if
any, but if no further payments are to be made, any such advance payments shall be refunded to
City. The provisions of this paragraph extend not only to the matters aforesaid, but also to any
occurrence which is beyond City’s reasonable control and which renders the Leased Premises, or
any appurtenance thereto, inoperable or unfit for occupancy or use, in whole or in part, for City’s
purposes.
15.Default.
If default shall at any time be made by either Party, and if said default shall continue for thirty
(30) days after written notice thereof by the non-defaulting Party without correction thereof then
having been commenced and thereafter diligently prosecuted, the non-defaulting Party may
declare this Lease ended and terminated by giving written notice of such intention. The non-
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defaulting Party shall have, in addition to the remedy of termination, any other right or remedy
available, either in law or equity, including the City’s right to cure a Landlord default deduct the
cost thereof from the next accruing installment or installments of rent payable hereunder until
City shall have been fully reimbursed for such expenditures, together with interest thereon at a
rate equal to the lesser of twelve percent (12%) per annum or the then highest lawful rate. If this
Lease terminates prior to City’s receiving full reimbursement, Landlord shall pay the
unreimbursed balance plus accrued interest to City on demand. The non-defaulting Party shall
use reasonable efforts to mitigate its damages.
16.Quiet Possession.
Landlord covenants and warrants that upon performance by City of its obligations hereunder,
Landlord will keep and maintain City in exclusive, quiet, peaceable and undisturbed and
uninterrupted possession of the Leased Premises during the Term.
17.Condemnation.
If any legally, constituted authority condemns the Leased Premises which shall make the Leased
Premises unsuitable for leasing, this Lease shall cease when the public authority takes
possession, and Landlord and City shall account for rental as of that date. Such termination shall
be without prejudice to the rights of either party to recover compensation from the condemning
authority for any loss or damage caused by the condemnation. Neither party shall have any rights
in or to any award made to the other by the condemning authority.
18.Notice.
Any notice required or permitted under this Lease shall be deemed sufficiently given or served if
sent by United States certified mail, return receipt requested, addressed as follows:
If to Landlord to:
Joe and Sue Zahabi
If to City to:
City of Lake Elsinore
130 South Main Street
Lake Elsinore, California 92530
Attn: City Manager
Landlord and City shall each have the right from time to time to change the place notice is to be
given under this paragraph by written notice thereof to the other party.
19.Brokers.
City represents that City was not shown the Leased Premises by any real estate broker or agent
and that City has not otherwise engaged in, any activity which could form the basis for a claim
for real estate commission, brokerage fee, finder’s fee or other similar charge, in connection with
this Lease.
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20.Waiver.
No waiver of any default of Landlord or City hereunder shall be implied from any omission to
take any action on account of such default if such default persists or is repeated, and no express
waiver shall affect any default other than the default specified in the express waiver and that only
for the time and to the extent therein stated. One or more waivers by Landlord or City shall not
be construed as a waiver of a subsequent breach of the same covenant, term or condition.
21.Memorandum of Lease.
The Parties hereto contemplate that this Lease should not and shall not be filed for record, but in
lieu thereof, at the request of either Party, Landlord and City shall execute a Memorandum of
Lease to be recorded for the purpose of giving record notice of the appropriate provisions of this
Lease.
22.Headings.
The headings used in this Lease are for convenience of the parties only and shall not be
considered in interpreting the meaning of any provision of this Lease.
23.Successors.
The provisions of this Lease shall extend to and be binding upon Landlord and City and their
respective legal representatives, successors and assigns.
24.Consent.
Landlord shall not unreasonably withhold or delay its consent with respect to any matter for
which Landlord’s consent is required or desirable under this Lease.
25. Compliance with Law.
City shall comply with all laws, orders, ordinances and other public requirements now or
hereafter pertaining to City’s use of the Leased Premises. Landlord shall comply with all laws,
orders, ordinances and other public requirements now or hereafter affecting the Leased Premises.
26. Final Agreement.
This Lease terminates and supersedes all prior understandings or agreements whether verbal or
written on the subject matter hereof. This Lease may be modified only by a further writing that is
duly executed by both Parties.
27.Governing Law.
This Lease shall be governed, construed and interpreted by, through and under the Laws of the
State of California.
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IN WITNESS WHEREOF, the parties have executed this Lease as of the day and year first
above written.
CITY:
CITY OF LAKE ELSINORE
By:
Grant Yates, City Manager
ATTEST
By:
Susan Domen, City Clerk
APPROVED AS TO FORM
Leibold McClendon & Mann, P.C.
By:
Barbara Leibold, City Attorney
LANDLORD:
Joe Zahabi
Sue Zahabi
ACKNOWLEDGMENT OF LANDLORD’S RIGHT TO LEASE 112 S. MAIN STREET
BY OTHER OWNERS OF APN 373-151-022-2:
Name: Richard Kunstel Name: Jesus Gomez
_______ S. Main Street
`
Name: Veronica Gomez
________ S. Main Street