DATE: September 12, 2018
SUBJECT:
Title
RESOLUTION CONSENTING TO A SUBLEASE BETWEEN LFS DEVELOPMENT, LLC, A DELAWARE LIMITED LIABILITY COMPANY, DBA INTERCONTINENTAL HOTEL AND GELATO & CO., A CALIFORNIA CORPORATION, DBA GELATO & FRIENDS, FOR A TEN (10) YEAR TERM WITH ONE (1) FIVE (5) YEAR OPTION, WITH CONDITIONS
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EXECUTIVE SUMMARY:
The San Diego Unified Port District (District) entered into a 66-year Lease1 (Lease) with LFS Development, LLC, (Lane Field South) on June 1, 2016 to operate a 400-room single-branded InterContinental Hotel located between Pacific Highway and North Harbor Drive, north of Broadway, in the City of San Diego. Lane Field South is requesting approval of a sublease with Gelato & Co. dba Gelato & Friends (Gelato & Friends) to operate a gelato shop within the hotel building. The proposed sublease with Gelato & Friends is a ten-year term with one five-year option to extend conditioned upon consent of the sublease by the District's Board of Port Commissioners (Board). The proposed sublease is consistent with the terms of the Lease and Board of Port Commissioners Policy No. 355 (BPC 355), and staff recommends the Board grant its consent.
RECOMMENDATION:
Recommendation
Adopt a Resolution consenting to a sublease between LFS Development, LLC, a Delaware limited liability company, dba InterContinental Hotel and Gelato & Co., a California corporation, dba Gelato & Friends, for a ten (10) year term with one (1) five (5) year option, with conditions.
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FISCAL IMPACT:
Lane Field South began paying minimum annual rent to the District in the amount of $231,378 on June 1, 2018. Once the hotel is operational, Lane Field South will begin paying percentage rent that ramps up annually for 24 years. The Gelato & Friends sublease is expected to generate approximately $1,440 in rent to the District in the first operational year, which will increase annually as Lane Field South's percentage rent escalates.
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