DATE: December 28, 2020
SUBJECT:
Title
ORDINANCE GRANTING A 23-YEAR TERM EXTENSION FOR A NEW 40-YEAR LEASE BETWEEN THE SAN DIEGO UNIFIED PORT DISTRICT AND SUNROAD MARINA PARTNERS, L.P. FOR THE SUNROAD RESORT MARINA LOCATED AT 955 HARBOR ISLAND DRIVE, IN THE CITY OF SAN DIEGO
Body
EXECUTIVE SUMMARY:
Sunroad Marina Partners, L.P. (Sunroad) has a 50-year lease with the District that commenced on February 1, 1987 and expires on January 31, 2037. There is approximately 17 years of term remaining on the existing lease. Sunroad operates a 600-slip marina (Sunroad Resort Marina) at 955 Harbor Island Drive, in the City of San Diego (Attachment A - Location Map).
In September 2019, Sunroad submitted a request for a lease term extension to extend the lease by 23 years. This request requires replacing the existing lease with a new lease containing updated lease provisions for a total term of 40-years.
Board of Port Commissioner's (Board) Policy No. 355 (BPC 355) states:
"The District should utilize the lease extension process to (a) promote investment in leasehold improvements, (b) encourage development, and (c) update out-of-date leases"
Consistent with BPC 355, staff has negotiated a market-based lease term extension for a new 40-year lease including the District's most current lease provisions. As consideration for the lease term extension, Sunroad would be required to either (1) obtain term through proposed qualified capital investment per BPC 355, as may be approved by the Board in its sole and absolute discretion, or (2) pay a purchase of term fee required for any term not earned through approved capital investment, if any, at the end of lease year 6. Any proposed capital investment must be presented to the Board for its consideration before the end of lease year 5 and any approved capital investment, if any, must be completed by the end of lease year 8. Board approval of a capital investment in the leasehold would include the description of all a...
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