File #: 2016-0476    Version: 1 Name:
Type: Action Item Status: Passed
File created: 8/10/2016 In control: Board of Port Commissioners
On agenda: 10/13/2016 Final action: 10/13/2016
Title: KONA KAI RESORT AND MARINA, LOCATED AT 1551 SHELTER ISLAND DRIVE, SAN DIEGO, CA A) RESOLUTION CONSENTING TO ENCUMBRANCE OF CAHUENGA ASSOCIATES II, DBA KONA KAI MARINA AND WESTGROUP KONA KAI LLC, DBA KONA KAI RESORT LEASEHOLD ESTATE BY $54,000,000 DEED OF TRUST IN FAVOR OF PRIME FINANCE, WITH CONDITIONS B) ORDINANCE GRANTING AMENDMENT NO. 1 TO LEASE WITH WESTGROUP KONA KAI LLC, DBA KONA KAI RESORT TO UPDATE OPTION TO COMBINE KONA KAI RESORT AND KONA KAI MARINA LEASEHOLDS, AND UPDATE CERTAIN LEASE PROVISIONS C) ORDINANCE GRANTING AMENDMENT NO. 2 TO LEASE WITH CAHUENGA ASSOCIATES II, DBA KONA KAI MARINA TO UPDATE CERTAIN LEASE PROVISIONS AND UPDATING RENT
Attachments: 1. 3. 2016-0476 Attachment A, 2. 3. 2016-0476 Attachment B, 3. 3. 2016-0476 Attachment C, 4. 3. 2016-0476 Attachment D, 5. 3. 2016-0476 Attachment E, 6. 3. 2016-0476A Draft Resolution., 7. 3. 2016-0476B Draft Ordinance, 8. 3. 2016-0476C Draft Ordinance
DATE: October 13, 2016

SUBJECT:
Title
KONA KAI RESORT AND MARINA, LOCATED AT 1551 SHELTER ISLAND DRIVE, SAN DIEGO, CA
A) RESOLUTION CONSENTING TO ENCUMBRANCE OF CAHUENGA ASSOCIATES II, DBA KONA KAI MARINA AND WESTGROUP KONA KAI LLC, DBA KONA KAI RESORT LEASEHOLD ESTATE BY $54,000,000 DEED OF TRUST IN FAVOR OF PRIME FINANCE, WITH CONDITIONS

B) ORDINANCE GRANTING AMENDMENT NO. 1 TO LEASE WITH WESTGROUP KONA KAI LLC, DBA KONA KAI RESORT TO UPDATE OPTION TO COMBINE KONA KAI RESORT AND KONA KAI MARINA LEASEHOLDS, AND UPDATE CERTAIN LEASE PROVISIONS

C) ORDINANCE GRANTING AMENDMENT NO. 2 TO LEASE WITH CAHUENGA ASSOCIATES II, DBA KONA KAI MARINA TO UPDATE CERTAIN LEASE PROVISIONS AND UPDATING RENT

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EXECUTIVE SUMMARY:

Cahuenga Associates II, dba Kona Kai Marina (Kona Kai Marina) has a 40-year lease1 (Marina Lease) with the District at 1551 and 1901 Shelter Island Drive for a 518-slip marina which expires in 2044. Westgroup Kona Kai, LLC, dba Kona Kai Resort (Kona Kai Resort) which is adjacent to Kona Kai Marina, has a lease2 (Resort Lease) with the District at 1551 Shelter Island Drive (Attachment A - Location Map) for a 129-guest room hotel, including a restaurant, spa, meeting space and parking. The Resort Lease has a 35-year term which expires in 2049, with a 15-year term extension upon completion of phase two of the renovation for a total term of 50 years. The Resort Lease includes an option to combine the Kona Kai Resort and Kona Kai Marina leaseholds (collectively Kona Kai) once certain conditions are met.

Kona Kai has requested District consent to a $54,000,000 loan with Prime Finance secured by a leasehold deed of trust. Staff has reviewed the terms of the loan in accordance with Board of Port Commissioners Policy No. 355 (BPC 355) and recommends the Board consent to the encumbrance of the Kona Kai leaseholds. Consistent with District practice, staff has prepared a lease amendment to the Resort Lease to update certain lease provisions to bring...

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