DATE: February 12, 2019
SUBJECT:
Title
A) ORDINANCE AUTHORIZING AMENDMENT NO. 2 TO THE SAN DIEGO UNIFIED PORT DISTRICT'S AMENDED, RESTATED, AND COMBINED LEASE WITH PACIFIC GATEWAY, LTD DBA SAN DIEGO MARRIOTT MARQUIS AND MARINA TO REPLACE FUTURE RENT REVIEWS WITH FIXED RENT INCREASES AND UPDATE CERTAIN LEASE TERMS.
B) ORDINANCE AUTHORIZING OPTION TO THE SAN DIEGO UNIFIED PORT DISTRICT'S AMENDED, RESTATED, AND COMBINED LEASE WITH PACIFIC GATEWAY, LTD DBA SAN DIEGO MARRIOTT MARQUIS AND MARINA FOR AN OPTION TO ADD TWENTY-TWO (22) YEARS TO THE LEASE TERM.
C) ORDINANCE AUTHORIZING OPTION TO THE SAN DIEGO UNIFIED PORT DISTRICT'S AMENDED AND RESTATED LEASE WITH MANCHESTER GRAND RESORTS, L.P. DBA MANCHESTER GRAND HYATT FOR AN OPTION TO ADD SIXTEEN (16) YEARS TO THE LEASE TERM.
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EXECUTIVE SUMMARY:
The District entered into Amended, Restated, and Combined Lease with Pacific Gateway, Ltd. dba San Diego Marriott Marquis and Marina, (Marriott Lease) (Attachment A) which is owned by Host Hotels & Resorts, LP (Lessee), on December 1, 1995, for a term of sixty-six (66) years. The Marriott Lease requires that percentage and minimum rents be reviewed and adjusted every ten (10) years. The first rent review occurred in 2006. The current rent review is for the period of December 1, 2016 to November 30, 2026.
Staff began negotiating with Lessee in May of 2016 and has agreed to terms for the current rent review period. Staff and Lessee have agreed to the following terms which, if approved, would update outdated terms and conditions in the Marriott Lease that created ambiguity in the rent review process and grant the District set rental increases in exchange for options for lease term extensions.
The updated terms would increase percentage rental rates through the remaining term of the Marriott Lease, eliminate future rent reviews, adjust minimum rent and update certain terms to District standard in exchange for granting an option to extend the Marriott Lease by twenty-...
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