DATE: October 9, 2018
SUBJECT:
Title
ORDINANCE GRANTING AN AMENDED, RESTATED AND COMBINED LEASE WITH BARTELL HOTELS, A CALIFORNIA LIMITED PARTNERSHIP, TO COMBINE THE BEST WESTERN ISLAND PALMS AND ISLAND PALMS WEST LEASES, UPDATE LEASE PROVISIONS, AND EFFECTIVELY EXTEND THE TERM OF THE BEST WESTERN ISLAND PALMS LEASE BY 9 YEARS AND 5 MONTHS FOR AN EXTENSION FEE OF $1.4 MILLION
Body
EXECUTIVE SUMMARY:
Bartell Hotels, a California limited partnership (Bartell Hotels) operates the Best Western Island Palms which has a 50-year lease1 (BW Lease) with the District at 2051 Shelter Island Drive for a 97-room hotel and marina which expires in 2048. Bartell Hotels also operates the Island Palms West which has a 50-year lease2 (IP Lease) with the District at 1901 Shelter Island Drive (Attachment A - Location Map) for a 125 guest room hotel which expires in 2058. The two hotels are dependent on each other as they operate as one hotel and each contain essential facilities for the operations of the other.
Richard Bartell, President and CEO of Bartell Hotels, submitted a request on May 1, 2017 to purchase 9 years and 5 months of lease term for the BW Lease. The BW Lease commenced on December 1, 1998 and terminates on November 30, 2048. Richard Bartell's intent for purchasing 9 years and 5 months of lease term is to make the BW Lease coterminous with the neighboring leasehold, IP Lease, which expires on April 30, 2058. Staff conducted analysis to calculate the purchase of term fee based on the District practices outlined in Board Policy No. 355 which resulted in a fee of $1.4 million to extend the BW Lease for an additional 9 years and 5 months. The District has prepared an amended, restated and combined lease (ARC Lease) that combines the BW Lease and the IP Lease since the two leases would now be coterminous and the properties operate as one hotel. The ARC Lease includes updated lease provisions, including 2.5% participation in both refinance and sale proceeds, u...
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