DATE: November 17, 2015
SUBJECT:
Title
ORDINANCE GRANTING 12-YEAR, 13-DAY(S) LEASE WITH ONE, 5-YEAR OPTION AND ONE, 4-YEAR OPTION TO EXTEND EXPIRING ON DECEMBER 31, 2036 TO SAN DIEGO REFRIGERATED SERVICES, INC. FOR REFRIGERATED AND WAREHOUSE SERVICES AT THE TENTH AVENUE MARINE TERMINAL
Body
EXECUTIVE SUMMARY:
In July 2000, the Board granted San Diego Refrigerated Services, Inc. (SDRS) a lease with the District to operate a cold storage facility at the Tenth Avenue Marine Terminal (TAMT), providing on-terminal cold storage service to the District's refrigerated cargo customers. The current lease has been amended four times, including extending the original lease term, eliminating a requirement for additional capital investment, and reducing the Minimum Annual Guarantee (MAG). The current lease term expires on June 30, 2025.
In 2007, SDRS had reductions in their break-bulk operations which reduced the throughput based on metric tonnage of goods imported through SDRS. At the same time, SDRS began to handle more of the Dole container cargo in the refrigerated storage facility. The District and SDRS disputed the applicability of Dole cargo as it relates to SDRS's MAG obligation under the lease. This dispute in the MAG led to several years of litigation and eventual mediation between the District and SDRS.
In 2010, the District and SDRS filed suit against one another. In July 2012, the District engaged in formal mediation with SDRS through the Judicial Arbitration and Mediation Services (JAMS). Mediations took place on June 29, 2012 and July 2, 2012 before mediator Mr. Alexander Polsky. Settlement terms were reached and the parties executed a Stipulation for Settlement Agreement (Stipulation) approved by the Board.
Pursuant to the Stipulation, the District negotiated a new lease with SDRS (see Attachment A for proposed lease), including:
* Increased flat land rent starting in year two of $475,000 annually with Consumer Price Index...
Click here for full text