HomeMy WebLinkAboutItem No. 22 - License Agreement with Jack's Bar-B-QCity Council Agenda Report
City of Lake Elsinore 130 South Main Street
Lake Elsinore, CA 92530
www.lake-elsinore.org
File Number: ID# 21-442
Agenda Date: 12/14/2021 Status: Approval FinalVersion: 1
File Type: Council Consent
Calendar
In Control: City Council / Successor Agency
Agenda Number: 23)
License Agreement with Jack’s Bar-B-Q
Authorize the City Manager to execute a License Agreement with Jack ’s Bar-B-Q for the use of
City-owned vacant and unimproved lots located at Assessor Parcel Numbers (APNs) 375-350-007, 009
and 038 for the purposes of access, parking, recreational uses and outdoor storage in such final form
as approved by the City Attorney.
Page 1 City of Lake Elsinore Printed on 12/14/2021
REPORT TO CITY COUNCIL
To: Honorable Mayor and Members of the City Council
From: Jason Simpson, City Manager
Prepared By: Justin Kirk, AICP, Assistant Community Development Director
Date: December 14, 2021
Subject: License Agreement – Jack’s Bar-B-Q
Recommendation
Authorize the City Manager to execute a License Agreement with Jack’s Bar-B-Q for the use of
City-owned vacant and unimproved lots located at Assessor Parcel Numbers (APNs) 375-350-
007, 009, and 038 for access, parking, recreational uses, and outdoor storage in such final form
as approved by the City Attorney.
Background
In 1986, the City acquired Numbers (APNs) 375-350-007, 009, and 038 from the Federal
Emergency Management Administration, which had acquired the properties from private parties
following a flood event in 1985.
In closed session discussions a couple of years ago, the City Council engaged in negotiations for
the sale and/or use of the City parcels to Jack’s Bar-B-Q (Jack’s) as part of the project creating
an economic opportunity pursuant to applicable state law. Following those discussions, the City
temporarily allowed use of the City Parcels for parking and hospitality-related amenities for
patrons of the restaurant. Both parties have determined that a definitive agreement is appropriate
to guide the Licensee’s ongoing use of the City Parcels.
Location/Setting
The proposed License Agreement would allow for the use of City-owned properties fronting W.
Lakeshore Drive and extending to the waters of Lake Elsinore, adjacent to the east and west of
Jack’s Parcel as depicted in Attachment B. The properties are vacant and unimproved.
Discussion
Jack’s is located within the Lakeshore zoning district which permits by right the operation of a
restaurant. The proposed License Agreement would permit the use of the City-owned properties
for access, parking (including car club gatherings), recreational uses (fire pits and Parachute
landing), and outdoor storage, consistent with previous Council direction. Use of the property for
parking and other ancillary uses is permissible according to applicable restrictions. Additionally,
the proposed License Agreement incorporates specific elements to address ongoing operations
in a manner consistent with the City’s Municipal Code and both parties’ understanding.
License Agreement Jack’s Bar-B-Q
December 14, 2021
Page 2
The proposed License Agreement would promote public use and enjoyment of the Lake and
enhance community economic opportunities offered in connection with the operation of one of the
few commercial uses on the Lake. By fostering the commercial viability of the use on the Lake,
the License Agreement is consistent with and advances one of the City’s Dream Extreme 2040
plan anchors by broadening Lake Elsinore’s appeal as a tourist destination (Strategy 1. B), helping
to activate the waterfront (Strategy 3. A)
Fiscal Impact
The proposed License Agreement incorporates an annual license fee payment of $3,916.00 for
the first year. Annual adjustments of the fee will be tied to the CPI and will be capped at 3%. The
City engaged Development Management Group, Inc. to provide information and professional
recommendation(s) regarding the City of Lake Elsinore leasing land adjacent to Jack’s. Based
upon the recommendations provided, the City elected to incorporate the annual fee. This fee was
calculated by applying a Capitalization Rate of 6% (meaning a return on investment to the City
based on the theoretical value of the “usable” land, to derive the annual fee, further information
related to his calculation can be found in the Attachment C.
Attachments
A – Draft License Agreement
B – Location Map
C – License Agreement fee analysis.
Jack's Bar-B-Q LA - Attachment A 1
RIGHT OF ENTRY AGREEMENT AND LICENSE
(CITY PROPERTIES ADJACENT TO JACK’S BAR-B-Q)
THIS RIGHT OF ENTRY AGREEMENT AND LICENSE (CITY PROPERTIES
ADJACENT TO JACK’S BAR-B-Q) (“License”) is entered into as of January 1, 2022 (“Effective
Date”) by and between the CITY OF LAKE ELSINORE, a municipal corporation (“City), and
JACK’S BAR-B-Q LLC, a California limited liability company (“Licensee”).
RECITALS
A. City desires to encourage and promote public recreational activities at Lake
Elsinore by supporting local hospitality businesses that cater to recreational users.
B. Licensee operates a restaurant with inside dining and other ancillary outside
hospitality related amenities commonly known as “Jack’s Bar-B-Q” and hereinafter referred to as
the “Restaurant.” The Restaurant building is generally located on real property with a common
address of 1604 W. Lakeshore Drive and otherwise identified as Assessor Parcel Number (“APN”)
375-351-028 (hereinafter “Jack’s Restaurant Parcel”). Jack’s Restaurant Parcel is depicted on
the Map attached hereto as Exhibit A and incorporated herein.
C. Licensee controls, pursuant to a lease with the underlying property owner, the
Restaurant Parcel and one adjacent parcel fronting the waters of Lake Elsinore, APN 375-351-
040, hereinafter referred to as “Jack’s Lakefront Parcel.” Jack’s Lakefront Parcel is depicted on
Exhibit A.
D. City is the owner of a parcel fronting W. Lakeshore Drive and extending to the
waters of Lake Elsinore, adjacent to and west of the Restaurant Parcel and Jack’s Lakefront
Parcel and otherwise identified as APN 375-350-007, hereinafter referred to as the “City West
Parcel.” The City is also the owner of a parcel adjacent to the east of Jack’s Restaurant Parcel
and otherwise identified as APN 375-350-038 which serves as a place for Restaurant patrons to
park and is hereinafter referred to as the “City Parking Lot Parcel.” Finally, the City is also the
owner of a parcel adjacent to and east of Jack’s Lakefront Parcel and otherwise identified as APN
375-350-009, hereinafter referred to as the “City Lakefront Parcel.” The City West Parcel, the City
Parking Lot Parcel and the City Lakefront Parcel are collectively referred to as the “City Parcels”
and are depicted on Exhibit A.
E. Pursuant to a previous agreement between the City and License, City has allowed
Licensee to use the City Parcels for parking and hospitality related amenities for patrons of the
Restaurant but the parties have determined that a definitive agreement is needed to guide the
harmonious use of the City Parcels and the Restaurant operations.
F. City finds that the uses of the City Parcels as provided herein do not interfere with,
but rather will contribute to the safety and convenience of the general public in the use and
enjoyment of, and the enhancement of recreational experiences available within the City and that
the Permitted Uses and Activities (as defined in Section 5.a) are compatible with the general
recreational plans for Lake Elsinore.
G. Licensee desires to obtain from the City a License in order to conduct the Permitted
Uses and Activities within the City Parcel in accordance with the terms and conditions set forth
herein.
Jack's Bar-B-Q LA - Attachment A 2
NOW THEREFORE, based on the foregoing and the promises, covenants and
undertakings contained in this License, and for other good and valuable consideration, the receipt
and adequacy of which are hereby acknowledged, the City and Licensee agree as follows:
1. Term.
a. License Term. This License shall be effective beginning January 1, 2022
through December 31, 2031 (“License Term”). Except as otherwise specifically
stated in this License Agreement, references to the “License Term” shall
include any Extension Term as provided in Section 1.b.
b. Option to Extend. Licensee shall have two (2) options to extend the License
Term for a period of five (5) years each (each, an “Extension Term”), provided
that at the time of such election and at the expiration of such existing term
Licensee is not then in an uncured default under any of the terms or provisions
of the License Agreement. Licensee shall exercise the option by giving written
notice of Licensee’s intent to exercise its option to City at least one hundred
eighty (180) days prior to the expiration of the License Term.
2. Fees and Adjustments.
a. License Fee. Licensee shall pay an annual license fee to the City in the
amount of $3,916 (the “License Fee”), provided, however, that such License
Fee shall be subject to adjustment as provided in Section 2.b. The License
Fee shall be due and payable no later than the first day of each year during
the License Term.
The first License Fee payment shall be delivered no later than three (3) days
following the Effective Date. All subsequent License Fees to be paid by
Licensee to City shall be paid in advance on the first day of each year. License
Fee payments shall be made payable to the City of Lake Elsinore and
delivered to:
City of Lake Elsinore
c/o Department of Administrative Services
130 South Main Street
Lake Elsinore, CA 92530
b. Adjustment of License Fee. The License Fee set forth in Section 2.a shall be
adjusted on the first (1st) anniversary of the Effective Date (that is, the
beginning of License Year 2 of the License Term) (the “Adjustment Date”).
The License Fee will be adjusted to reflect the percentage increase, if any (but
not any decrease) in the Index (as defined below) from the final Index
published before the Effective Date through the final Index published before
the Adjustment Date, provided however, that the annual percentage increase
shall in no event exceed three percent (3%). City shall notify Licensee of the
adjustment to the License Fee, in writing, as soon as reasonably possible.
Licensee acknowledges that the amount of such increase and written notice
thereof may not be available until sometime after the Adjustment Date.
Therefore, Licensee shall continue to make the annual License Fee payments
to City until written notice of the newly calculated License Fee is received by
Licensee. No later than ten (10) days following receipt by Licensee of such
Jack's Bar-B-Q LA - Attachment A 3
written notice, Licensee shall pay to City the amount of the increase reflected
in such written notice for each year from the Adjustment Date to the date of
receipt by Licensee of such written notice. For purposes of this Section,
“Index” means the Consumer Price Index – Riverside-San Bernardino-Ontario
– All Urban Consumers – All Items (2017=100), as published by the United
States Department of Labor, Bureau of Labor Statistics.
3. License. Provided that all of the terms and conditions of this License are fully
satisfied, the City hereby grants to Licensee a non-assignable license to conduct the Permitted
Uses and Activities upon the City Parcels. The Permitted Uses and Activities shall only be
conducted from the City Parcels described herein. The Licensee shall operate the Permitted
Uses and Activities in accordance with all applicable laws, ordinances, resolutions, policies and
rules governing the use of Lake Elsinore. Licensee shall not permit any offensive activity to be
carried on upon any portion of the City Parcels. The License is subject to all liens, encumbrances,
covenants, conditions, restrictions, rights, rights of way, dedications and other matters of title
(whether or not of record) existing on the date of this License.
4. License Conditions. Licensee agrees to comply with the following conditions:
a. Permitted Uses and Activities.
i. Parking. Licensee is permitted to use the City Parking Lot Parcel for
general parking for Restaurant patrons. General patron parking is
prohibited on City West Parcel (portion fronting the Lake), Jack’s Lakefront
Parcel and the City Lakefront Parcel, provided that Licensee may use
utilize such parcels temporarily for parking for gatherings of car clubs
(limited to 8 hours) or for special events pursuant to a Special Event Permit
as provide for in Section 4.c.iii.
ii. Use of Fire Pits. Beginning on the Effective Date, all fire pits within City
West Parcel (portion fronting the Lake), Jack’s Lakefront Parcel, and the
City Lakefront Parcel shall be replaced and/or retrofitted with “smokeless”
fire pits (e.g., Solo Stoves, Breeo, Blue Ski). Use of the fire pits are subject
to the following conditions:
1. No more than eight (8) fire pits are allowed at the site, provided that
additional fire pits may be authorized by the City Manager.
2. Fuel used in the fire pits is strictly limited to hardwood varieties (e.g.,
oak, cherry, walnut) and preferably kiln dried. To the extent that
Licensee sells firewood, such wood shall be a recognized hardwood
variety and kiln dried.
3. Burning of trash, refuse, landscape clipping, driftwood, softwood
varieties (e.g., pine, Douglas fir) is prohibited. Licensee shall post
signs, prominently displayed near each fire pit, containing this
prohibition.
4. Fire pits shall be cleaned following each use and maintained in
good and operable condition throughout the License Term.
iii. Parachute Landing Area. Licensee shall be allowed to use the areas of the
City West Parcel and the City Lakefront fronting the shoreline, in
Jack's Bar-B-Q LA - Attachment A 4
conjunction with Jack’s Lakefront Parcel (hereinafter collectively as the
“Parachute Landing Area”), for purposes of a landing area for parachuting.
Use of the Parachute Jumping Area is subject to the following conditions:
1. The Parachute Landing Area will be used exclusively by advance
jumpers, generally military related, for training exercises.
2. Licensee will not announce or otherwise publicize in advance a
planned jump into the Parachute Landing Area.
3. Licensee shall secure the Parachute Landing Area prior to the
jumpers landing and ensure that there are no public spectators
within the Parachute Landing Area.
4. Licensee shall, no less than 48 hours prior to a planned jump, notify
the City’s Community Services Director ("Director") of the planned
jump and request the Director’s approval. If the Director
determines, in the Director’s reasonable discretion, that the use of
the Parachute Landing Area by jumpers would in any way
constitutes a threat to the health, safety and welfare of the public,
the Director shall deny the request for the planned jump and the
Licensee shall promptly notify the jumpers’ representative and
cancel the jump.
iv. Outdoor Storage. Licensee shall be allowed to use a portion of the City
West Parcel directly adjacent to the Restaurant for temporary storage,
provided that any temporary storage facility shall be discrete and
substantially camouflaged from view from Lakeshore Drive and otherwise
in compliance with the Lake Elsinore Municipal Code. Licensee shall
immediately cease use of any nearby parcels that are not the subject of the
License Agreement for storage or any other unpermitted purposes and
such storage equipment/facilities shall be removed prior to the Effective
Date.
b. Maintenance of City Parcels. With respect to the use of the City Parcels,
Licensee is subject to the following conditions:
i. No building or permanent structure is permitted on the City Parcels.
Temporary shade structures, picnic tables and relocatable fire pits
complying with Section 4.a.ii may be utilized in additional to temporary
storage facilities in compliance with Section 4.a.iv.
ii. Licensee shall maintain the City Parcels free of trash and debris at all times.
iii. No overnight storage is permitted on the City Parcels.
iv. Licensee shall not impede reasonable cross-access by the public along the
shoreline of Lake Elsinore. Accordingly, to the extent that Licensee cordons
off the City West Parcel (at its western boundary) and the City Lakefront
Parcel (along its eastern boundary), such obstructions shall terminate five
(5) feet before reaching the waterline.
v. Under no circumstances shall Licensee place any obstruction or allow any
obstruction to exist within the waters of Lake Elsinore. In the event that the
Jack's Bar-B-Q LA - Attachment A 5
Lake level is rising such that Licensee’s picnic equipment, temporary
facilities or fire pits are threatened with inundation, Licensee shall
immediately relocate such items to higher ground.
c. Miscellaneous Terms of License.
i. Licensee shall provide the Director with written verification of insurance in
accordance with the requirements set forth in Section 17. Written
verification of insurance updates shall be submitted without inquiry, prior to
the ending of the existing insurance coverage term.
ii. Licensee shall notify the Director in writing, at least thirty (30) days in
advance, of any special event request and, to the extent applicable as
determined by the Director, obtain a Special Events Permit in accordance
with applicable provisions of the City’s Municipal Code.
iii. City reserves the right to close the Lake and/or beach without notice for
reasons of potential adverse health, safety and other unforeseen
situations. Under no circumstances shall City be required to compensate
Licensee as a result of such a closure. The City may or may not temporarily
relocate operations depending on the conditions of the health or safety
concern.
7. Liens. Licensee shall not suffer or permit to be filed or enforced against City
Parcels any mechanics’, laborers’, materialmen’s, contractors’, subcontractors’ or any other liens
arising from any work performed or caused to be performed by the Licensee as a result of the use
of the City Parcels by the Licensee or the public. Licensee shall pay all such liens before any
action is brought to enforce the same against City Parcels. City shall have the right to post and
maintain on the City Parcels such Notices of Non-responsibility as desired by City or as may be
provided by law.
8. Suspension of Permitted Uses and Activities. City may, in the exercise of its
discretion, suspend operation of the Permitted Uses and Activities on the City Parcels when the
City deems Licensee’s operation of the Permitted Uses and Activities as failing to follow the
requirements as set forth in Section 4 and/or otherwise needlessly endangering the public’s health
and safety.
9. Inspections. The City hereby reserves the right to enter upon the City Parcels at
any time to inspect, investigate, and survey the City Parcels, any equipment, and the Permitted
Uses and Activities as deemed necessary for administration and enforcement of the terms of this
License, or to determine the need for any actions necessary for operation of the Permitted Uses
and Activities as provided herein.
10. Independent Contractor. It is understood that Licensee shall act as and be an
independent contractor and shall not act as an agent or employee of the City. Licensee
acknowledges that the use provided hereunder is intended by City to result in the access to and
enjoyment in the particular water-related activities conducted. Licensee has the sole responsibility
for ensuring that the activities are conducted in a reasonable and prudent manner.
11. Compliance with Laws. Licensee shall comply with all applicable federal, state and
local laws, codes, ordinances and regulations. Licensee shall not have any outstanding charges
with any local, state, or federal regulatory agencies.
Jack's Bar-B-Q LA - Attachment A 6
12. Permits. Licensee represents and warrants to City that it has all licenses, permits,
qualifications, insurance and approvals which are legally required of Licensee. Licensee
represents and warrants to City that Licensee shall, at its sole cost and expense, keep in effect
or obtain at all times during the License Term, any licenses, permits, insurance and approvals
which are legally required of Licensee. Licensee shall also maintain a City of Lake Elsinore
business license.
13. No Interest in Real Property Estate. Licensee understands and agrees that the
License granted herein is a license and not lease; confers only permission to occupy and use the
City Parcels described for prescribed purposes in accordance with the terms and conditions
hereinafter specified without granted or reserving to Licensee any interest or estate therein; the
expenditure of capital and/or labor in the course of use and occupancy thereunder shall not confer
any interest or estate in the in the City Parcel by virtue of such use, occupancy and/or expenditure
of money thereon; and it is the intention of the parties to limit the right of use granted herein to a
personal, revocable and assignable privilege of use in the City Parcel for the License granted
herein.
14. Taxes. Licensee acknowledges that this License Agreement may create a
possessory interest of Licensee in and to the property of City, a tax-exempt public entity. Such
possessory interest may be subject to property taxation. In the event of such taxation, Licensee,
not City, shall be responsible for the payment of such taxes. This Section shall constitute
disclosure of the possibility of the taxation of Licensee’s interest, as said notice is contemplated
by Section 107.6 of the Revenue and Taxation Code of State of California. Notwithstanding the
foregoing, no property rights in the City Parcels, or right of possession thereof, is granted by this
License Agreement.
15. Indemnification; Waiver. Licensee agrees to indemnify and hold City and its
employees, officers, directors, agents and contractors (collectively, “City’s Representatives”)
harmless, and to defend City and the City’s Representatives with counsel reasonably satisfactory
to City, from and against any and all liabilities, losses, actions, damages, obligations, judgments,
costs and expenses (including, without limitation, attorneys’ fees) (collectively, “Liabilities”) which
City or any of the City’s Representatives may incur or suffer arising out of or in any manner
connected with (i) the use of City Parcels by Licensee or the public or (ii) the breach of or failure
of Licensee to perform any of Licensee’s covenants contained in this License.
16. Non-liability. To the fullest extent permitted by law, neither City nor any of the City’s
Representatives shall bear any responsibility for any Liabilities arising out of or in any manner
connected with any person’s use of City Parcels, and all persons using City Parcels do so
completely at their own risk.
17. Insurance Requirements. Licensee, at Licensee’s own cost and expense, shall
procure and maintain, for the duration of the contract, the following insurance policies:
a. General Liability Coverage. Consultant shall maintain commercial general
liability insurance in an amount not less than two million dollars ($2,000,000)
per accident and ($2,000,000) two million dollars general aggregate.
b. Automobile Liability Coverage. Consultant shall maintain automobile liability
insurance covering bodily injury and property damage for all activities of the
Consultant arising out of or in connection with the work to be performed under
this License, including coverage for owned, hired and non-owned vehicles, in
an amount of not less than one million dollars ($1,000,000) combined single
limit for each occurrence.
Jack's Bar-B-Q LA - Attachment A 7
c. Workers’ Compensation Coverage. Consultant shall maintain Workers’
Compensation Insurance and Employer’s Liability Insurance for his/her
employees in accordance with the laws of the State of California. In addition,
Consultant shall require each subcontractor to similarly maintain Workers’
Compensation Insurance and Employer’s Liability Insurance in accordance
with the laws of the State of California for all of the subcontractor’s employees.
Any notice of cancellation or non-renewal of all Workers’ Compensation
policies must be received by the City at least thirty (30) days prior to such
change. The insurer shall agree to waive all rights of subrogation against City,
its officers, agents, employees and volunteers for losses arising from work
performed by Consultant for City.
18. Amendment. This License may be amended, modified or terminated only by an
instrument in writing executed by Licensee and City agreeing to amend, modify or terminate this
License.
19. Survival. The obligations under this License shall survive the expiration of the
License and the License Term; provided, however, in no event shall Licensee have the right to
use City Parcels after the expiration of the License Term nor shall the public have the right to use
City Parcels for such an operation after such time.
20. Licensee Defaults. For the purpose of this License, the term "Default by Licensee"
shall mean the occurrence of any one or more of the following events:
a. Failure by Licensee to pay when due any payment of the License Fee or any
other sum of money payable under this License, provided that such failure shall
continue for a period of five (5) days after the date Licensee receives written
notice from City of such failure;
b. Failure by Licensee to pay any premium for insurance required under this
License, or any other sum required to be paid by Licensee pursuant to this
License provided that such failure shall continue for a period of five (5) days
after Licensee receives written notice from City of such failure or failure by
Licensee to maintain any insurance required under this License;
c. Commencement of any action or proceeding by or against Licensee under any
federal or state bankruptcy or insolvency law or other debtors relief law,
whether now or hereafter in force, including (but not limited to) any action or
proceeding to have Licensee declared bankrupt and any action or proceeding
seeking reorganization of Licensee or seeking an arrangement with all or some
of Licensee’s creditors, whether or not a trustee or receiver is appointed,
provided that such action or proceeding continues without dismissal for a
period of ninety (90) days after its commencement;
d. Appointment, either voluntarily or involuntarily, of a receiver, trustee, keeper,
or other person to take possession of all or substantially all of the assets of
Licensee, if such appointment and possession continues without dismissal for
a period of ninety (90) days after commencement;
e. Execution by Licensee of an assignment for the benefit of its creditors of all or
substantially all of its assets that are available by law for the satisfaction of
claims of judgment by creditors of Licensee; or
Jack's Bar-B-Q LA - Attachment A 8
f. Failure by Licensee to perform or comply with any other term, covenant, or
provision of this License including, but not limited to, the obligation to operate
the Permitted Uses and Activities, not cured within five (5) days after Licensee
receives written notice from City of the default (which notice shall specify the
particulars of such default), or, in the case of a default reasonably requiring
more than five (5) days to cure, not cured within a reasonable time after the
giving of such notice, provided that the curing of the default is commenced
within the five (5) day period after City gives Licensee notice of such default
and is diligently and in good faith pursued and executed to completion.
In the event of any Default by Licensee under this License that is not cured by Licensee within
any applicable grace period, and in addition to any and all other rights or remedies of City
hereunder, or as provided by law or in equity, City may exercise the following remedies at its sole
option:
g. Termination. In the event of any Default by Licensee, City shall have the right
to terminate this License and the License granted herein by giving Licensee
written notice of termination. No act by or on behalf of City (such as entry onto
the City Parcels by City to perform maintenance and efforts to seek another
Licensee), other than giving Licensee written notice of termination, shall
terminate this License. If City gives such notice, this License and the License
Term, as well as the license, right, and interest of Licensee under this License,
shall wholly cease and expire (except as to Licensee’s liability) on the date
specified in such notice as if such date were the expiration date of the License
Term without the necessity of re-entry or any other act on City’s part.
h. City shall be entitled to recover from Licensee, without limitation, as damages
any amount necessary to compensate City for all the detriment proximately
caused by Licensee’s failure to perform its obligations under this License, or
which in the ordinary course of things would be likely to result therefrom,
including, without limitation, attorneys’ fees and costs; provided, however, the
City shall have no right to consequential damages.
i. Right to Continue the License. City has the right, but not the obligation, to
continue this License in effect after a Default by Licensee, and may recover
License Fees when due for so long as City does not terminate this License.
Upon a Default by Licensee, City’s acts of preservation, efforts to find another
Licensee, or the appointment of a receiver to protect its interest under this
License shall not constitute a termination of Licensee’s License interest.
Notwithstanding the foregoing, three (3) or more (consecutive or otherwise) Defaults by Licensee
occurring within a 12-month period shall constitute an automatic default hereunder without any
further obligation on the part of City in any way and shall entitle City to immediately terminate this
License and the License granted herein by giving Licensee written notice of termination.
21. Default by City. For the purpose of this License, the term "Default by City" shall
mean the occurrence of any one or more of the following events:
a. Failure by City to provide access to the City Parcels;
b. Default or breach by City of any other term, covenant, or provision of this
License, other than providing necessary access to the City Parcels to the
Licensee, not cured within fifteen (15) days after City receives written notice
Jack's Bar-B-Q LA - Attachment A 9
from Licensee of the default (which notice shall specify the particulars of such
default), or, in the case of a default reasonably requiring more than fifteen
(15) days to cure, not cured within a reasonable time after the giving of such
notice, provided that the curing of the default is commenced within the fifteen
(15) day period after Licensee gives City notice of such default and is
diligently and in good faith pursued and executed to completion.
In the event of any Default by City under this License that is not cured by City within any applicable
grace period of 48 hours, Licensee shall have all other rights and remedies available hereunder,
or as provided by law or in equity, including the right to terminate this License or continue this
License in effect, and collect all damages directly and indirectly caused by the Default by City
(provided, however, Licensee shall have no right to consequential damages) and the right to
enforce specific performance of this License.
22. Entire Agreement; Exhibits. This License includes pages 1 through 10 and Exhibit
A which is attached hereto and incorporated by reference herein. This License constitutes the
complete exclusive statement of License between the City and Licensee. All prior written and oral
communications, including correspondence, drafts, memoranda, and representations, are
superseded in total by this License.
23. Construction. Headings in this License are for convenience only and are not part
of this License. When the context so requires, words in the masculine, feminine or neuter gender
shall include each other gender; and words in the singular or plural shall include each other.
Unless otherwise indicated, all references to paragraphs and subparagraphs are to this License.
This License is executed and delivered in the State of California and shall be construed and
enforced in accordance with and governed by the laws of the State of California.
24. Severability. In the event any portion of this License shall be declared by any court
of competent jurisdiction to be invalid, illegal or unenforceable, such portion shall be deemed
severed from this License and the remaining part of this License shall remain in full force and
effect, as fully as though such invalid, illegal and unenforceable portion had never been part of
this License.
25. Controlling Law and Venue. This License and all matters relating to it shall be
governed by the laws of the State of California and any action brought relating to this License
shall be held exclusively in a state court in the County of Riverside. The Licenses contained herein
shall not be construed in favor or against either party, but shall be construed as if all parties
prepared this License.
26. Interest. Any amounts required to be paid by one party to the other party under this
License shall bear interest from the date due until paid at the lesser of the rate of ten percent
(10%) per annum or the highest rate permitted by applicable law.
27. Attorneys’ Fees. If any action is brought to enforce this License, the prevailing
party(s) shall be entitled to recover all costs and expenses of the action including reasonable
attorneys’ fees.
28. Mediation. The parties agree to make a good faith attempt to resolve any disputes
arising out of this License through mediation prior to commencing litigation. The parties shall
mutually agree upon the mediator and shall divide the costs of mediation equally. If the parties
are unable to agree upon a mediator, the dispute shall be submitted to JAMS/ENDISPUTE
("JAMS") or its successor in interest. JAMS shall provide the parties with the names of five
qualified mediators. Each party shall have the option to strike two of the five mediators selected
Jack's Bar-B-Q LA - Attachment A 10
by JAMS and thereafter the mediator remaining shall hear the dispute. If the dispute remains
unresolved after mediation, either party may commence litigation.
29. Entire Agreement. This License contains the entire agreement between the parties
concerning the subject matter of this License and supersedes any and all other prior agreements,
understandings, or negotiations concerning such subject matter.
30. Enforcement. Enforcement of this License may be by any proceeding in law or in
equity against any person or persons or entity or entities violating or attempting to violate any of
the provisions of this License, and any party enforcing this License may seek to enjoin or prevent
such violating party or parties from doing so, may seek to cause any violation to be remedied
and/or to recover damages for any violation.
31. Notices. All notices or other communications required or permitted under this
License shall be in writing and shall be delivered personally or sent by Untied States mail,
registered or certified, return receipt requested, postage prepaid, addressed as set forth below.
Notice shall be deemed communicated within 48 hours from the time of mailing if mailed as
provided in this section.
If to City: City of Lake Elsinore
Attn: City Manager
130 South Main Street
Lake Elsinore, CA 92530
If to Licensee: Jack’s Bar-B-Q LLC
Attn: Derek Carmichael
1604 W. Lakeshore Drive
Lake Elsinore, CA 92530
Any party may, by notice to the other, designate a different address for notices which shall be
substituted for that specified above. All notices and other communications given as provided in
this paragraph shall be effective upon receipt.
32. Counterparts. This License may be executed in two or more counterparts, each of
which shall be an original, but all of which shall constitute one and the same instrument.
33. Authority to Enter License; Administration. Licensee has all requisite power and
authority to conduct its business and to execute, deliver and perform the License. The individual
who has signed this License on behalf of the Licensee has the legal power, right, and authority to
make this License and to bind Licensee. The City Manager of the City shall execute and
administer this License on behalf of the City. The City Manager, or authorized representative,
shall have the authority to issue interpretations, waive provisions, enter into amendments and
extend the Initial Term of this License. Notwithstanding the foregoing, the City Manager may in
his/her sole and absolute discretion determine that any matter in connection with this License will
be presented to the City Council.
34. Prohibited Interest. Licensee maintains and warrants that it has not employed nor
retained any company or person, other than a bona fide employee working solely for Licensee, to
solicit or secure this License. Further, Licensee warrants that it has not paid nor has it agreed to
pay any company or person, other than a bona fide employee working solely for Licensee, any
fee, commission, percentage, brokerage fee, gift or other consideration contingent upon or
resulting from the award or making of this License. For breach or violation of this warranty, City
shall have the right to rescind this License without liability. For the term of this License, no
Jack's Bar-B-Q LA - Attachment A 11
member, officer or employee of City, during the term of his or her service with City, shall have any
direct interest in this License, or obtain any present or anticipated material benefit arising
therefrom.
IN WITNESS WHEREOF, the parties have executed this License on the day and year set
forth below.
“CITY”
CITY OF LAKE ELSINORE, a municipal
corporation
Date: _________________, 20__ By: ______________________________
Jason Simpson, City Manager
ATTEST:
__________________________
CITY CLERK
APPROVED AS TO FORM:
___________________________
CITY ATTORNEY
“LICENSEE”
JACK’S BAR-B-Q LLC, a California limited
liability company
Date: _________________, 20__ By: ______________________________
Derek Carmichael, Member
EXHIBIT A
EXHIBIT A
SITE MAP
Attachment “B” Location Map
Development Management Group, Inc.
economic development ◼ fiscal & economic analysis ◼ development management
_______________________________________________________________________________________________
41-625 Eclectic Street, Suite D-2 ◼ Palm Desert, CA 92260
Office: (760) 346-8820 ◼ Mobile: (760) 272-9136
michael@dmgeconomics.com ◼ www.dmgeconomics.com
MEMORANDUM
DATE: November 12, 2021
TO: Justin Kirk, Assistant Community Development Director
CC: David Mann, Deputy City Attorney
FROM: Michael Bracken, Managing Partner
RE: REAL PROPERTY NEGOTIATIONS: JACKS BBQ ADJACENT LAND
______________________________________________________________________________________________________
DMG, Inc. has been asked to provide information and professional recommendation(s) in regard to the City of Lake Elsinore leasing
land adjacent to Jack’s BBQ (1604 Lakeshore Drive Lake Elsinore, CA 92530) to Jack’s. The subject land would be used by Jack’s for
parking and casual outdoor enjoyment (outdoor seating to dine while viewing the lake itself). As a caveat, I am not a licensed real
estate appraiser and am using basic economist skills to provide a professional analysis and recommendation
As you might suspect, comparable transactions in this area are pretty thin and not many have occurred in recent years on the “finger
lots” around the lake. Jack’s operates on two (2) parcels that are privately owned shown in the Exhibit A as Parcels 7 and 102. Jack’s
desires to utilize what are considered parcels 6/101, 8 and 103 (numbers used for ease of identification). These three (3) parcels
total approximately 43,661.61 square feet.
DMG, Inc found five (5) land sales (vacant parcels) in the general area. All of these are on flatter (more usable property) just east of
the subject site (rather than a finger parcel leading to the lake):
Date of Sale Address (Approx.) Price Paid Square Footage
A. 1/3/20 1502 W. Heald $56,000 7,405
B. 1/16/20 210 Matich $52,000 9,147
C. 12/17/18 0 Mohr $25,000 8,276
D. 5/4/21 1 Lakeshore $105,000 23,086
E. 12/22/20 0 Fredrick $20,000 9,000
The average price paid per square foot of these parcels is $4.53.
To ascertain an approximate value of the subject land (parcels owned by the City adjacent to Jack’s), the following calculations are
utilized:
A. Gross land amount desired by Jack’s to lease: 43,661.61 square feet
B. Determination of “usable” land for business purposes would include a parking lot, potential area for a storage building
(temporary) and space for casual passive recreation (casual seating areas around fire pits)
C. As only a small portion of the land is located near Lakeshore and usable for parking (versus being on a downslope to the
lake) and the number of casual seating areas may be limited, DMG, Inc. is estimating that the total land utilized on a regular
basis will not exceed 1/3 of the gross amount. This would be about 14,408.33 square feet.
D. The theoretical value of the land to be actively used by Jack’s is about $65,270 ($4.53 x 14,408).
E. Applying a Capitalization Rate of 6% (meaning a return on investment to the City based on the theoretical value of the
“usable” land, the annual lease price would be about $3,916.
Kirk, Justin
Jack’s BBQ / City Property Lease Valuation Memo
November 12, 2021
Page 2 of 2
F. It should also be understood that business success relies on the adjacent land for parking and casual passive recreation and
that the business would likely suffer financially if this land were not made available.
G. The City does receive an amount equal to 2% of their gross (taxable) sales. While it is difficult to tell what future sales will
be (because past quarters had significant business interruption due to Covid-19), it is likely the business will do between
$500,000 and $750,000 per year (taxable). This translates to $10,000 to $15,000 per year in Sales & Use Tax to the City.
H. The operation of Jack’s also falls within stated City Council objectives to seek additional active use of the lake and
surrounding properties.
Recommendations to Consider
A. Request that Jack’s pay an amount equal to $3,916 (or similar) on an annual or quarterly basis in keeping with the
calculated valuation. This amount would adjust annually (increase or decrease by CPI with a cap of 3%.
B. Make appropriate findings that the business is meeting stated City goals to increase lake use, that the land has limited
economic value due to building and use restrictions and that the lease amount is made up for by Sales & Use Tax.
C. A hybrid of the above whereby the City assigned a lease amount $3,916 per annum (paid annually or quarterly) that
increases by CPI annually for a period equal to the lease period with a credit against the lease amount for taxable sales
above a certain amount. For example, for every dollar about $12,500 per year the City receives in Sales & Use Tax, a credit
against their land lease is made. This helps insure more accurate reporting of Sales & Use Tax.
D. The City likely has other lease provisions in regard to code compliance and could tie a lease amount forgiveness to
performance of those lease provisions.
Usually, I am not shy of making a recommendation, but in this case, the small dollar amount of the lease, the limited economic value
of the land for other uses and the stated goals to increase active use of the lake and desire for the user to maintain the property(ies)
to certain standards means any of the above could be supported.
Exhibit A