1999-0525_BOYS & GIRLS CLUBS OF CAPISTRANO VALLEY_Staff Memo MEMORANDUM May 25, 1999
TO: George Scarborough, City Manager
Al King, Director of Community Services
FROM: John Shaw, City Attorney
SUBJECT: Boys & Girls Club Lease
Attached is the final draft of the Boys & Girls Club Lease which has been reviewed and
approved by Erik Friess of Nossaman, Guthner Knox & Elliott.
c: Cheryl Johnson, City Clerk (w/attach.)
REAL PROPERTY LEASE
This Real Property Lease (the "Agreement") is entered into this day of
' 1999, by and between the City of San Juan Capistrano (hereinafter
"City"), and Boys & Girls Club of Capistrano Valley, a non-profit corporation, (hereinafter
"Lessee").
RECITALS:
WHEREAS, Lessee desires to lease certain real property from City to construct and
operate a Boys and Girls Club facility, and
WHEREAS, City and Lessee have previously entered into a memorandum of
understanding dated August 18, 1998 providing for certain terms and conditions governing
the timing of the commencement of the lease and the operation of the Club facility,
NOW, THEREFORE, City and Lessee hereby mutually agree as follows:
Section 1. Lease of Premises.
City hereby leases to Lessee and Lessee hereby leases from City, in accordance with
the terms of this Agreement, that certain vacant real property situated in the City of San Juan
Capistrano, County of Orange, State of California, more particularly described in Exhibit
"A", attached and incorporated herein by reference. The real property described in Exhibit
"A" and shown on the Site Plan, attached and incorporated herein by reference as Exhibit
"B", is hereinafter called the "Premises". The Premises consists of approximately Eleven
Thousand (11,000) square feet of land and is located adjacent to City's Community Center
facility.
Section 2. Purposes of the Leasehold.
(a) Construction of Lessee's Facility. The purpose of this lease is to enable
Lessee to acquire sufficient land to construct and operate a non-profit Boys & Girls Club
facility (the "Facility"). The site plan layout for the Facility is set forth in the Site Plan
attached as Exhibit "B".
(b) Timing of the Construction of the Facilitu. Lessee agrees to commence
construction of the Facility by not later than September 1, 1999. Completion of the Facility
shall occur by not later than August 1, 2001.
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(c) Permitted Uses of the Facility. Once completed, Lessee's Facility shall
be used solely and exclusively to provide recreational and other social programs to persons
within the City consistent with Lessee's Articles of Incorporation, By-Laws, and other
relevant regulations. Other permitted uses are those as set forth in Exhibit "C," attached and
incorporated herein by reference. In the event that Lessee desires to expand these permitted
uses, then Lessee shall make formal application to the City Council for authorization to
expand uses.
Lessee covenants and agrees to use the Premises for the above-specified
purposes and to diligently pursue said purposes throughout the term hereof. In the event that
Lessee fails to use the Premises for said purposes, or uses the Premises for purposes not
expressly authorized herein, the Lessee shall be deemed in default under this Agreement and
subject to the termination provisions of section 5 of this Agreement. Lessee shall not use the
Premises in any manner which disturbs the quiet enjoyment and use of the adjacent
community center, gymnasium, or Sports Park Complex.
Lessee further covenants and agrees not to use, or permit the use of, the
Premises or any portion of the Premises in any manner or for any purpose that is in any way
in violation of any valid law, statute, ordinance or regulation of the United States, the State
of California, the City of San Juan Capistrano, or any other federal, state, county, or local
governmental agency, body or entity with applicable legal jurisdiction.
(d) Condition and Maintenance of Facili1y and Improvements. Lessee shall
assume full responsibility and costs for the maintenance of the Premises and Facility
throughout the term of this Agreement. Lessee shall take all necessary action to maintain and
preserve the Premises in a decent, safe, healthy and sanitary condition satisfactory to Lessee
and in compliance with all applicable laws. In addition, the parties intend to enter into a
memorandum of understanding to further define specific obligations with respect to common
area maintenance.
Section 3. Lessee's Funding of Project as Condition Precedent to Effective Date of
Leasehold.
(a) Funding in Place As a Condition Precedent. This lease shall not become
legally effective until such time as Lessee has presented written proof to City that: (a) it
raised sufficient funding to finance one hundred percent (100%) of the estimated cost of the
project, or such lesser amount as determined by the Office of the City Manager, and (b)
secured a legal commitment for at least a one million dollar ($1,000,000) back up
construction loan from a bona fide commercial bank lender.
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City acknowledges that Lessee has arranged for a construction loan of up to $1,300,00
from American Sterling Bank. City hereby agrees to guarantee the repayment of said loan
in the event of a default by Lessee. Lessee agrees, however, to expend at least $300,000 of
its current cash on hand as first dollars in toward payment of construction progress payments
as construction on the project begins. In addition, it is the intent of the parties that a
$500,000 federal grant shall be expended for construction costs at such time that the federal
grant is made available to the Lessee.
(b)Limitations on Lender's Security Interest. Lessee shall insure that any loan
documents with its commercial lender will allow City to assume title to the improvements
and take over the remaining loan balance then owed to the bank in the event of default by
Lessee on its bank loan. Accordingly, Lessee covenants to require its lender to subordinate
its lien rights against Lessee in the event of a loan default.
Section 4. Term and Termination of Lease.
(a) Term.. This lease shall be for a term of twenty (25) years from date of
its execution. City grants an option to Lessee to extend this Agreement for an additional 25
year period on the same terms and conditions as set forth in this Agreement providing: i) that
Lessee delivers a written notice to City requesting an exercise of the option to renew at least
180 days prior to the termination of the Agreement, and ii) that City's City Council has not
made a finding and determination at any time 30 days prior to the twenty five year term that
Lessee has demonstrated a consistent pattern of non-compliance with the terms and
conditions of this Agreement over the life of the lease.
(b) Special Termination Provisions, Failure to Commence Use. In addition
to all other remedies available to it, City may terminate Lessee's tenancy upon written notice
given at any time if Lessee fails to commence to construct the buildings and facilities shown
on the Site Plan and Land Use entitlements within two (2) years, or to commence actual use
of the Premises for the authorized uses within four(4)years from the date of commencement
of the tenancy. Termination of tenancy shall not be construed as a waiver of other remedies.
(c) Abandonment by Lessee. In the event that Lessee breaches this
Agreement and abandons the Premises, or terminates the use thereof for a period of sixty
(60) days in any one hundred and twenty (120) day time period, the Lessee's tenancy shall
terminate. Termination of tenancy shall not be construed as a waiver of other remedies.
(d) Quitclaim of Lessee's Interest. On termination of this lease for any
reason, Lessee shall deliver to City a quitclaim deed in recordable form quitclaiming all its
rights in and to the Premises, including the constructed facilities, subject to the terms of
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Section 3. Lessee or its successor-in-interest shall deliver the same within five (5) days after
receiving written demand therefor. City may record such deed only on the expiration or
earlier termination of this Agreement. If Lessee fails or refuses to deliver the required deed,
the City may prepare and record a notice reciting Lessee's failure to execute this lease
provision and the notice will be conclusive evidence of the termination of this Agreement
and all Lessee's rights to the Premises.
(e) Surrender of Premises. At the expiration or earlier termination of
Lessee's tenancy, Lessee shall surrender the Premises to City free and clear of all liens and
encumbrances, except those resulting from City activity, or liens and encumbrances which
existed on the date of the execution of this Agreement by City. The Premises, when
surrendered by Lessee, shall be in safe and sanitary condition, free from hazardous or toxic
waste or material, environmental pollution or other contamination and shall be in as good
condition as at the commencement of this Agreement, absent normal wear and tear.
(f) Time of Essence. Time is of the essence of all the terms, covenants,
conditions and provisions of this Agreement.
Section 5. Performance and Default Requirements.
(a) Qperational Issues. In the event that the Lessee experiences significant
operational problems, including but not limited to a lack of proper facilities maintenance, a
consistent pattern of unresolved conflicts between City and Lessee, significant decline of
program participation below established goals, and unreasonable and unresolved police calls
pertaining to Lessee's Club Facility, then the City Council of City reserves the right to
consider initiating a process for the possible assumption by City of interim day-to-day Lessee
Club management for the purpose of insuring successful performance of the Lessee's Club
youth program.
The process shall be:
(1) The City Council of City may call for a hearing after giving written
notice to Lessee for the purpose of requesting a Panel Review for any of the above-stated
operational problems.
"Panel Review" is defined to mean a Panel, consisting of two (2)
members of the City Council, two (2)members of the Club's Board of Directors, and two (2)
members of the Capistrano Unified School District, which shall conduct one or more
meetings in compliance with the Brown Act in review of the question put to it by the City
Council.
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(2) If, after conducting a hearing, the City Council votes by simple
majority of its entire membership to initiate a Panel Review, then a written statement of the
issue shall be transmitted to the Panel for review.
(3)The Panel may elect to recommend to the City Council and the Club
that the management be assumed, or not assumed by the City, or, in the alternative,
recommend other appropriate courses of action.
(4) Thereafter, the matter shall be heard by the City Council as soon as
reasonably practicable. The Council shall not vote to assume the day-to-day management
in the event that the Panel recommends against such an assumption of management.
The Club shall be given a full opportunity to address the City Council
regarding this matter prior to the City Council making a final determination on the issue.
(5) In the event that the City Council unilaterally votes to assume the
day-to-day management of the Club on an interim basis and consistent with the steps set
forth herein, the City shall then deliver notice to the Club within twenty-four (24) hours of
such decision. The Club shall then take immediate steps to coordinate with City.
In the event that the Club does not comply with this subsection, then the
leasehold shall be deemed to be void and forfeited by the Club.
(b) Default. If Lessee shall fail to comply with any of the terms, covenants
or conditions of this Agreement, City shall serve a written notice of default upon Lessee.
Lessee shall cure such default within thirty (30) days, providing such default can be
reasonably cured within thirty (30) days. If the default requires more time to cure, then
Lessee shall commence the cure within thirty (30) days' notice of the default and complete
the cure within a reasonable period of time as specified by the City notice of default. If the
Lessee still has not cured the default, then City may, at its option, and without further notice
or demand, terminate this Agreement and enter upon the Premises and take possession
thereof, and remove any and all persons therefrom with or without process of law.
Section 6. Rent.
In consideration of the public benefits Lessee will provide to the community, no rent
shall be required for this leasehold.
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•
Section 7. Insurance and Indemnity.
(a) Insurance Requirements. Lessee shall maintain at all times during the term
of this lease satisfactory general liability and premises liability insurance in the amount of
not less than One Million Dollars ($1,000,000) and reasonable fire insurance in a form
acceptable to the Office of the City Attorney. City shall be named as an additional named
insured. Other terms and conditions, including cancellation provisions and endorsement
forms, shall be reviewed and approved by the Office of the City Attorney.
(b)Indemniri. Lessee shall indemnify, save and defend City, its elected and
appointed officials, and employees harmless from and against any and all claims, demands,
suits, actions and proceedings, of any kind or nature, for damages to property or injuries to
or death of any persons arising out of Lessee's actions and activities as Lessee of the subject
Premises.
City shall indemnify, save and defend Lessee, its directors and employees,
harmless from and against any and all claims, demands, suits, actions and proceedings, of
any kind or nature, for damages to property or injuries to or death of any persons due solely
to the performance of any action by City under this Lease.
Section 8. Improvements/Liens/Encumbrances and Related Matters.
(a)Nature and Quality of Improvements. Lessee shall, at Lessee's sole rost and
expense, construct or cause to be constructed on the Premises the building and facilities
described in the Site Plan in the manner and according to the terms and conditions specified
herein. Lessee shall construct the building project for the permitted use herein, subject to
prior receipt of applicable city land use permits. Minor, technical deviations between the
plans and specifications and in field construction activity shall not be deemed to constitute
a breach of this Agreement. However, Lessee shall insure that it will coordinate with its
contractor and city staff to insure that the final construction is satisfactorily consistent with
Lessee's plans and specifications for the Facility.
Lessee agrees that its contractor shall provide faithful performance and labor
and materials bonds equal to one hundred percent (100%) of the cost of the project. In
addition, Lessee shall insure that its contractor maintains general comprehensive liability
insurance in an amount of at least One Million Dollars ($1,000,000) combined single limit.
The bonds and the insurance shall both be pre-approved by the Office of the City Attorney.
The project shall be constructed in accordance with all valid laws, ordinances,
regulations and orders of all federal, state, county, or local governmental agencies or entities
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having jurisdiction over said Premises, including City, provided, however, that any structure
or other improvement erected on said Premises, including the building project, shall be
deemed to have been constructed in full compliance with all such valid laws, ordinances,
regulations, and orders when a valid final certificate of occupancy entitling Lessee and
tenants of Lessee to occupy and use the structure or other improvement has been duly issued
by the Building Department of the City. All work performed on said Premises pursuant to
this lease or authorized by this lease shall be done in a good, quality manner and only with
new materials of good quality and high standard.
(b) Utilities. Lessee agrees to order, obtain, and pay for all utilities and service
and installation charges in connection with the development, occupation and operation of the
leased Premises. Lessee shall, at Lessee's sole cost and expense, construct or cause to be
constructed all facilities necessary to provide utilities, including but not limited to, telephone,
electric, gas, water, sewer and cable television service to the Premises. All utility service
lines shall be placed underground unless otherwise permitted by City. Lessee shall be
responsible for payment of all applicable utility service, connections, standby or other fees,
rates or charges.
(c) Liens. Lessee shall not, directly or indirectly, create, incur, assume or
suffer to exist any mortgage, pledge, lien, charge, encumbrance or claim on or with respect
to all or any portion of the Premises without the prior written consent of City.
(d) Encumbrr races. Lessee may encumber this Lease, its leasehold estate and
its improvements thereon by deed of trust, mortgage, chattel mortgage or other security
instrument to assure the payment of a promissory note or notes of lessee, upon the express
condition that the net proceeds of such loan or loans shall be devoted exclusively to the
purpose of developing and/or improving the leased Premises.
In addition, any such indebtedness shall be subject to the qualifications set
forth in Section 3(b) of this Agreement.
(e) Taxes. Except to the extent that Lessee is exempt from payment of
property taxes or possessory interest taxes, Lessee shall pay, before delinquency, all taxes,
assessments, and fees assessed or levied upon Lessee or the Premises, including the land, any
buildings, structures, machines, equipment, appliances, or other improvements of property
of any nature whatsoever erected, installed, or maintained by Lessee or levied by reason of
Lessee's activities related to the a Premises, including any licenses or permits.
(f) Signs. Lessee shall not erect or display any banners, pennants, flags,
posters, signs, decorations, marquees, awnings, or similar devices or advertising without the
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prior written consent of City. If any such unauthorized item is found on the Premises, Lessee
shall remove the items at its expense within twenty-four (24) hours of written notice thereof
by City, or City may thereupon remove the item at Lessee's cost. All signs located on the
Premises shall comply with the provisions of any City ordinance regulating signs.
Section 9. Ownership of Improvements.
(a) Title Ownership. Any and all buildings, facilities, and improvements
placed or erected on the Premises as part of said building project or otherwise under this
Agreement, as well as any and all other alterations, additions, improvements, and fixtures,
except furniture and trade fixtures, made or placed in or on said Premises by Lessee or
another person shall be considered the personal property of the Lessee and on expiration or
sooner termination of this Lease shall remain on said Premises and become, at City's option,
the property of City free of all liens and claims except as otherwise provided for in this
Agreement.
(b) Removal of Improvements. If City elects not to assume ownership of all
or any improvements, trade fixtures, structures and installations, City shall so notify Lessee
in writing thirty (30) days prior to termination or one hundred eighty (180) days prior to
expiration, and Lessee shall remove all such improvements, structures and installations as
directed by City at Lessee's sole cost on or before Agreement expiration or termination. If
Lessee fails to remove any improvements, structures, and installations as directed, Lessee
agrees to pay City the full cost of any removal.
(c) Repairs. If any removal of such personal property by Lessee results in
damage to the remaining improvements on the Premises, Lessee shall repair all such damage
to the same condition as existed immediately before such removal.
Section 10. No Assigginents.
Lessee shall not assign or hypothecate in any manner this Agreement without the
express written consent of City.
Section 11. Force Majeure.
If the performance by any party of its obligations or undertakings under this
Agreement is interrupted or delayed by any occurrence not occasioned by the conduct of
either party to this Agreement, whether that occurrence is an act of God or public enemy, or
whether that occurrence is caused by war,riot, storm, earthquake, or other natural forces, or
by the acts of anyone not a party to this Agreement, then that party shall be excused from any
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further performance for whatever period of time after the occurrence is reasonably necessary
to remedy the effects of that occurrence.
Section 12. General Provisions.
(a)Notices. All notices, demands, consents, or other communicaticns required
to be given under this Agreement shall be accomplished by fust class mail, postage prepaid,
and deposited in the U.S. mails, or personally served upon the other party at the address
identified below. The address for delivery of notice can be changed by either party by giving
written notice of the new address.
To City:
George Scarborough, City Manager
City of San Juan Capistrano
32400 Paseo Adelanto
San Juan Capistrano, CA 92675
To Lessee:
Mr. Jim Williams
Executive Director
Boys & Girls Club of Capistrano Valley
31371 El Camino Real
San Juan Capistrano, CA 92675
(b)Attorney's Fees. In the event any legal action or proceeding is commenced
to interpret or enforce the terms of, or obligations arising out of, this Agreement, or to
recover damages for the breach thereof, the party prevailing in any such action or proceeding
shall be entitled to recover from the non-prevailing party all reasonable attorney's fees, costs
and expenses incurred by the prevailing party.
(c) Entire Agreement. This Agreement contains the entire agreement of the
parties hereto with respect to the matters covered hereby, and no other previous agreement,
statement or promise made by any party hereto which is not contained herein shall be
binding or valid.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the
day and year first above written.
CITY OF SAN JUAN CAPISTRANO
By:
John Greiner, Mayor
ATTEST:
By:
Cheryl Johnson, City Clerk
APPROVED AS TO FORM:
By:
John R. Shaw, City Attorney
BOYS & GIRLS CLUB OF
CAPISTRANO VALLEY
By:
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