minutes of the JOINT San José city council
AND REDEVELOPMENT AGENCY BOARD
SAN JOSÉ, CALIFORNIA TUESDAY,
NOVEMBER 18, 2003
The Council of the City of San José convened
at 2:56 p.m. to hear Item 7.1 in a Joint Session with the Redevelopment Agency
Board in Council Chambers at City Hall.
Present: Council Members - Campos, Chavez, Chirco, Cortese, Dando, Gregory, LeZotte, Reed, Williams, Yeager; Gonzales.
Absent: Council Members - None.
JOINT REDEVELOMENT AGENCY/CITY COUNCIL ITEM
7.1 Recommendations:
(a) The City Council adopt a resolution accepting the summary of costs and findings of the Summary 33433 Report and the Estimated Reuse Valuation pursuant to the California Health and Safety Code Section 33433 for the lease of approximately 2,890 square feet at 88 South Fourth Street to BTN Restaurant, LLC (DBA Lee’s Sandwiches), making certain findings, and approving the lease; and
(b) The City Council and Agency Board approve a lease between BTN Restaurant, LLC (Tenant), and the Agency (Landlord) for the space located at 88 South Fourth Street, with a ten-year term and four five-year options;
(c) The City Council adopt a resolution authorizing the City Manager to execute a Certificate of Nondisturbance and Attornment and other documents necessary to effectuate the lease with BTN Restaurant, LLC (DBA Lee’s Sandwiches), under the terms of the Master Lease Between the City and the Agency.
CEQA: Resolution No. 68839, PP03-09-279 [CIVIC PLAZA]
Documents Filed: (1) Memorandum from from Redevelopment Agency Executive Director
Susan Shick, and City Manager Del Borgsdorf, dated November 18, 2003,
recommending adoption of said resolution and approval of said lease. (2)
Supplemental memorandum from Redevelopment Agency Executive Director Susan
Shick, dated November 18, 2003, recommending waiving the obligation that BTN
Restaurant, DBA, Lee’s Sandwiches provide a guaranty for its obligations under
the lease.
Discussion/Action: Council Member LeZotte asked if there will be space left for the Taco Ria, and Redevelopment Agency Executive Director Susan Shick replied Lee’s Sandwiches comprises approximately 2,500 square feet, and Staff is still working with the Taco Ria which will be adjacent to Lee’s, and including a breakfast facility on the corner. Council Member LeZotte stated the City will receive 3% of the annual gross sales above the threshold of $3.6 million, but upon review of the actual summary report, did not notice where Staff anticipates receiving any kind of money. Director Shick replied the City would not receive participation unless the restaurant does extraordinary well, and this percentage is to protect and benefit the City, if in fact there is a windfall that is successful beyond normal parameters. Council Member LeZotte asked why does Staff have a participation that is so out of the reach of the City participating. Redevelopment Agency Executive Director Susan Shick replied because of the credit Staff is providing, and also small restaurants are always fearful of participation formulas. She stated Staff believes the owners are paying a fairly recent and fair market value on lease, and the owners are putting all their investment in the property, but Staff felt that a participation formula basically gives the benefit of the doubt if they are extraordinary successful, and that is all the City requires protection from. She stated Staff believes the rest of the deal stands by itself, and is a reasonable transaction.
Council Member LeZotte asked whether anything is excluded in the gross sales. Director of Downtown Management Leslie Little replied according to the definition in the lease, there are typical certain exclusions such as refunds, returns, and comps that occur as the result of charity. Director Little stated there are very few exceptions, in fact, there will be some potential products in this facility that may go to other parts of the chain, and Staff did not exclude the sales of those from the gross sales. Council Member LeZotte asked if for instance, they sell baseball hats and tee shirts, are those are included, and Director Little replied yes, as are any other types of products in addition to the food.
Upon motion by Council Member Chavez, seconded by Vice Mayor Dando, the
lease between BTN Restaurant, LLC (Tenant), and the Agency (Landlord) for the
space located at 88 South Fourth Street, with a ten-year term and four
five-year options was approved and Resolution No. 71837, entitled “A Resolution
of the Council of the City of San José Accepting the Summary of Costs and
Findings of the Summary 33433 Report and the Estimated Reuse Valuation Pursuant
to the California Health and Safety Code Section 33433 for the Lease of
Approximately 2,890 Square Feet of Ground Floor Retail Space at 88 South Fourth
Street to BTN Restaurant, LLC (DBA Lee’s Sandwiches); Making Certain Findings;
and Authorizing the City Manager to Execute a Certificate of Nondisturbance and
Attornment with BTN Restaurant, LLC, Under the Terms of the Master Lease
Between the City and Agency”, was adopted. Vote: 11-0-0-0.
ADJOURNMENT
The Council of the City of San José and
Redevelopment Agency Board adjourned at 3:02 p.m. to convene in a Special Study
Session at the Health Building.
RON GONZALES, MAYOR
ATTEST:
DEANNA J. SANTANA, CITY CLERK