HomeMy WebLinkAboutRIVER VIEW GOLF COMPANY - NOVATION OF LEASE 1974i
~ - ~
NOVATION OF LEASE
THIS NOVATION executed in duplicate at Santa Ana,
California, this 11th day of P~iarch 1974, between
the CITY OF.SANTA ANA, a chartered municipal corporatior_,
t
hereinafter called "LESSOR," and RIVER VIEW GOLF, a Calif-
ornia corporation, hereinafter called "LESSEE."
RECITALS
~_. On November 2, 1964, the parties hereto entered into
a lease of certain real property in the City of Santa Ana
along the southeasterly boundary of the Santa Ana River chan-
nel north of 17th Street for the construction and operation
of a golf course on said property.
2. An a«endrnent to said lease was executed by *.~he parties
on November 21, 1966, to allow ingress and egress over a small
portion of the leasehold for the purposes described therein.
3. LESSEE has subsequently, by lease dated September
?, 1969, obtained a leasehold interest from Orange Coanty Flood
Control District in land adjacent to the premises owned b_y
LESSOR and has expanded its operation to an 18 hole golf course
using the combined property under both leases.
4. The parties hereto have agreed that the aforementior_ed
lease of November 2, 1964 and the amendment thereto dated ATovem-
ber 21, 1966 should be extinguished, each party surrendering
its rights thereunder, a.nd should be completely rer~laced with
the new lease agreement contained herein.
?\'4k ~,
t
~ ~ ,~
l
`* ~~p
i ~
LEASE
AGREEMENT
In consideration of the mutual promises, covenants and condi-
tions herein, the parties agree as .follows:
1. DESCRIPTION OF PREMISES: LESSOR hereby leases to
LESSEE, and LESSEE hires from LESSOR on the terms and condi-
tions hereinafter set forth, that certain property of_ the CITY
OF SATTTA ANA lying between the Santa Ana River Channel on the
Northwest and Alona Park and Alona Street Park Subdivision on
the Southeast, except for portions of said property heretofore
leased by the CITY OF SANTA ANA to SANTA ANA CHAPTER IZAAK
WALTON LEAGUE OF AMERICA, INC. Said real property is more
particularly described as follows:
Beginning at the most 4~Iesterly corner of Lot 64, Tract
No. 2122, as shown on a map thereof recorded in Book 61,
Pages 49 and 50, Miscellaneous Maps, Records of Orange
County, California, said Westerly corner of Lot 64 being
the most Southerly corner of the property described in
the revised Lease to the Izaak Walton League; thence,
following along the boundary of said revised Lease, the
following courses: N. 64° 43' 22" ~~?., 146.2?. feet; thence
N. 22° 43' 40" E., 200.00 feet; thence N. 50° 49' S5" E.,
75.92 feet; thence S. 89° 54' 05" E., 40,00 feet to the
Southwesterly corner of the BoY Scout Lot described in
Deed to the Kiwanis Club of Santa Ana and recorded in
Book 2826, Page 166, Official Records o.f~Orange County,
California; thence, along said Boy Scout Lot N. 22° 00'
00" E., 102,60 feet and S. 89° 54' 05" E., 124.74 feet
to the Southwesterly corner. o.f Lot 45, Tract No. 1608,
as shown on a Map thereof recorded in Book 48, Pages 21,
22 and ?_3, i•?iscellaneous Traps, Records of Orange County,
California; thence N. 3?.° 08' 32" E., along Lot lines o.f_
said Tract No. 1608, ]_071.06 feet to the angle point in
the Northerly line of Lot 30 of said Tract No. 1608, said
angle point being the Northeasterly end of the line des-
cribed in that certain quitclaim Deed from the Orange
County flood Control District to the City of Santa A~za,
~j
2 "~~ i
i • ~
recorded in Book 6106, Pages 9, 10 and 11, Official Re-
cords of Orange County, California; thence, in a general
Southwesterly direction, following along the line des-
cribed in said Quitclaim Deed to an intersection with the
Iorthwesterly prolongation of that certain course having
a bearing of South 62 1/2° East,-in the Deed to Towner
Manufacturing Company recorded March 13, 1946 in Book
1399, Page 362, Official Records of Orange County,
California; thence Southeasterly, along said prolongation,
to the most Northerly corner of the property described
in said Deed to Towner P~Ianufacturing Company; thence
northeasterly, in a direct line, to the most Westerly
corner of that certain property conveyed ~o the City of
Santa Ana, California, as described in Book 2516, Page
264, Official Records of Orange County, California; thence
Northeasterly, along the Northwesterly line of said pro-
perty conveyed to the City of Santa Aria, 780.00 feet, more
or less, to an intersection with the Northwesterly prolon-
gation of the Southwesterly line of Lot 185, Tract No.
1724, as shown on a r2ap thereof recorded in Book 51, Pages
24, 25 and 26, Miscellaneous rZaps, Records of Orange County,
California; thence S. 53° 58' 44" E., along said prolonga-
tion, 102.75 feet to the Westerly corner of said Lot 185,
Tract No. 17?.4; thence Northeasterly, along Subdivision
lines 571.72 feet to the most Testerly corner of Lot 64,
Tract r1o. 2122, and the point of_ beginning.
Above described property outlined on Map attached hereto,
marked "Exhibit A."
2. TERM: The term of the within lease sh-all be for
twenty-five (25) years, commencing on the 21st day of August,
1961, and ending on the 20th day of August, 1986.
3. RENT: LESSEE agrees to pay and LESSOR agrees to
accept as rent for the leased property for the term of said
lease the following sums:
A. During the nine (9) years beginning on the 21st day
of August, 1962, and ending on the 20th day of August, 1971
three percent (30) of the gross business done by LESSEE on
all sales and services, excepting food and merchandise.
B. During the period August 21, 1971, to Z~uqust 20,
1973, four percent (40) of the gross business as defined
3
'~~"`~ ~'
..~`r
• •
hereinabove.
C. During the period August 21, 1973, to August 20,
1981, four percent X40) of one-half of the gross combined
business, excepting food and merchandise, done by LESSEE on
all sales and services derived from the entire operation con-
ducted on the property subject to this lease and the property
subject to that certain lease between LESSEE and the Orange
County Flood Control District dated September 2, 1969. In
addition, two percent (.2%) of the gross receipts from the
sale of beer and/or wine anywhere on the combined golf course
property.'
D. During the next five (5) years thereafter, five
percent (5%) of one-half of the gross combined business as
defined hereinabove. In addition, two percent (20) of beer
and/or wine sales as described hereinabove.
E. Notwithstanding sub-paragraphs A and B above, LESSEE
agrees to pay in total rent for the years 197?. and 1973, the
sum of Six Thousand t$6,000.00) Dollars each year.
F. Notwithstanding sub-paragraphs C and D, above, when-
ever any portion of the entire golf course is unplayable or
unused as a result of river flooding or f_or any other reason,
the rental percentage otrerwise applicable to one-half of the
gross combined business as defined above and payable to LES-
SOR shall be applied to the tota7_ of fees charged for play
on any portion of the combined golf course which remains play-
able or used, irrespective of the ownership of the prema_ses
on which said portions lie.
~ ,~~
4 ,,..•~~
i •
~. Said amounts of rent herein provided for shall be
due as follows:
(1) All rental payments for the period from August ?.l,
1961 through December 31, 1973 are now due and payable.
LESSOR'*agrees to credit to LESSEE as payments for said
period under. this lease all rental payments made by
LESSEE for said period under the prior aforementioned
lease, and LESSEE agrees promptly to remit any balance
for said period now owing, in the manner and form provided.
(2) From and following January 1, 1974, and thereafter,
rent shall become due monthly, in the manner and form
herein provided, on or before the 20th day of the month
following the due date of said payment.
(3) All rental payments hereunder shall be paid in
lawful money of the United States of America or by
check or draft to the order of "CITY OF SANTA ANA" and
mailed or delivered to LESSOR'S Director of Finance
at the City Hall, Santa Ana, California.
H. LESSOR shall have the right at all reasonable times
to inspect LESSEE'S books and records pertaining to its opera-
tions on the lease property. Not later than February 15th of each
/////
/////
/////
/////
/////
5
• •
year during the term of this lease, LESSEE, at -its own cost,
shall furnish to LESSOR a complete audit of its operations dur-
ing the preceding fiscal year ending November 30th prepared by
an accountant licensed by the State of California.
4. LESSEE is hereby granted an option to renew this
lease f_or an additional period of twenty-five (?.5) years
commencing on the 21st day of August, 1986, and ending on the
20th day of August, 2011. This option may be exercised by the
giving of a notice in writing of the intention to exercise the
same between July 1, 1985, and January 1, 1986. Said notice
shall be served on the Clerk of the Council and on the City
Manager of LESSOR.. If this option be exercised, LESSEE agrees
to pay and LESSOR agrees to accept as rent for the leased
property for the new term the following sums:
A. During the first ten (10) years, six percent (G o)
of the gross business done by LESSEE on all sales and services,
excluding food and merchandise plus two percent (2%) of beer
and%or wine sales as described in paragraph 3, provided, how-
ever, that if LESSEE also exercises an option to renew that
certain lease with the Orange County Flood Control Distrir_t
dated September 2, 1969, the rental to LESSOR hereunder shall
be six percent (60) of one-half of the gross combined business,
excepting food and merchandise, as described in paragraph 3
hereof, plus two percent {2~) o.f beer and/or wine sales.
B. During the next ten (10) years, seve~~ percent (7~) of
6
~ 1
~°'
~ •
the gross business as defined next hereinabove, or of one-half
of the gross combined business, as provided in sub-paragraph A
immediately above, plus, in either case two percent (2~) of
beer and/or wine sales.
C. During the last five (5) years, eight percent (8%)
of said gross business as defined next hereinabove, or of one-
half of the gross combined business, as provided in sub-paragraph
A in this paragraph 4, plus, in either case two percent (20)
of beer and/or wine sales.
All of the terms of this lease shall apply to said option
period.
5. USE OF PROPERTY: The leased property shall be used
only for a clubhouse, golf course, driving range and putting
greens. Golf and related sporting good items and equipment
may be sold and food and drink may be served to the public,
but the sale of alcoholic beverages other than beer and/or
wine is prohibited.
Execution by LESSEE and Novel B. James of "Agreement
Granting Permit to Pass over Land" and passage over city pro-
perty under said agreement from the northwesterly end of 22nd
Street to the rear of Lot 1F32 of Tract No. 1274, as per map
recorded in Book 51, pages 24, 25 and 26, o_f Miscellaneous
AZaps in the office of the County Recorder of Orange County,
State of_ California is hereby declared an authorized use of
the leasehold property.
6. COMPLIANCE WITH STATUTES AND ORDINANCES: LESSEE agrees
that in its use and occupancy of the leased property it will com-
7 ~ ~ ~°,
• •
ply with all applicable laws, rules, statutes, regulations and
ordinances of all governmental bodies whose authority extends
to the leased property or to any business conducted upon the
leased property.
7. TAXES: LESSEE agrees to pay when due all taxes levied
upon or assessed against LESSEE'S property situated in or upon
the leased premises and upon LESSEE'S possessory interest in the
real estate hereinabove described.
8. MECHANIC'S LIENS: LESSEE agrees to keep the demised
premises free from all claims of persons, firms or corporations,
who, at the request of LESSEE or its contractor, furnish labor
or material to or far the benefit of .the leased property. LESSOR
may at any time post and keep posted on said premises, appro-
priate notice of non-responsibility for protection against such
claims.
9. REPAIRS: LESSEE agrees at its own cost and expense to
keep and maintain the leased property and all structures it has
placed thereon in good condition and repair, including the
watering and landscaping of said golf course. Failure on the
part of LESSEE to maintain the plantings, landscaping, and struc-
tures herein referred to in good condition and repair will be
grounds for cancellation of .this lease if not. corrected within
six (6J months after notice so to do served by LESSOR on LESSEE,
it being the desire of LESSOR that said property shall contribute
to the beauty of the City and provide an attractive recreational
area f_or the citizens of Santa Ana.
8
,,: , ,
• •
Any buildings or structures constructed or erected on said
premises shall be and remain the property of LESSEE and upon
any termination of this Lease, it shall have the right to remove
said structures within thirty (30) days of such termination. In
the event that said structures are removed, LESSEE shall place
the portions of the premises underlying said bia.ildings or struc-
tures in a level condition and shall remove therefrom any and
all concrete and metal. In the event that LESSEE does not re-
move said buildings or structures within thirty (30) days after
any termination of this lease, said buildings and structures
shall revert to and become the property of the LESSOR.
LESSEE agrees that, upon any termination, extension or
renewal of this lease, it will, as a condition precedent to
the right to remove buildings and structures constructed or
erected by it, as provided in this paragraph number 9, con-
struct a driveway from the garage located on Lot 182 of_ Tract
No. 1724, as per map recorded in Book 51, page 24, 25 and 26,
of Miscellaneous Maps in the office of the County Recorder of_
Orange County, State of California, to a public street to pro-
vide ingress and egress, and construct a fence completely along
the northwesterly lot line of said lot, said line being the
rear of said lot cehich is contiguous to the boundary line of
the property leased to LESSEE. It shall be understood that the
curbcut and driveway shall make said Lot 182 comply with all
the single family residence requirements.
10. UTILITIES: LESSEE shall pay for all water, gas, heat,
a
^'`~
J~'
._/
•
•
light, power, telephone service, and ail other service supplies
to the said premises when the same become due.
11. DESTRUCTION OF OR DAMAGE TO LEASE PROPERTY: If, by
earthquake, flood, or other similar calamity, or by fire, act
of war, act of God, or other similar cause, the buildings to be
erected by LESSEE on the leased property are destroyed or damaged
to a substantial degree, and if, within six (6) months after the
date when such destruction or damage occurs, LESSEE has not
commenced their repair or construction, LESSOR may terminate
this lease by written notice to LESSEE. If so terminated,
LESSEE shall, at his own cost and expense, forthwith remove the
damaged buildings and structures and shall be otherwise re-
leased from all obligations under this lease.
12. ASSIGNP~iENT OR SUBLETTING: LESSEE shall not have the
right to assign nor sublet this lease or grant any concession
thereunder without the prior written consent of the City Council
of the CITY OF SANTA ANA.
Execution of "Agreement Granting Permit to Pass over Land"
between LESSEE and Novel B. James, granting permission to pass
over city property from the northwesterly end of ?2nd Street
to the rear of Lot 182, more fully described in paragraph 5
hereof, is not deemed to be an assignment or subletting, nor
the granting of any concession under this lease, as prohibited
by this paragraph.
13. BANKRUPTCY: An adjudication that LESSEE is a bank-
rupt shall automatically terminate this lease and all rights
10 ~ _,~~
~~
• •
of LESSEE under_ this lease. If (a) a receiver (apart from a
bankruptcy proceeding) is appointed to take possession of all
or substantially all of the assets of LESSEE, or if (b) LESSEE
shall make a general assignment for the benefit of_ creditors,
and if such appointment or assignment continues for a period
of thirty (30) days, then LESSOR, at its election, may terminate
this lease and all rights of LESSEE under this lease, and it
shall not be necessary for LESSOR to give notice to LESSEE of
such ternlination.
14. FORECLOSURE: It is agreed, however, that in event
the rights under this lease are used as security for any loan
or the repayment or replacement of any loan, the proceeds of
which were used to develop and improve the property let hereby
fOr Elie limited purposes set forth in this lease, and said
lender desires to foreclose said loan for non payment thereof
or to accept an assignment of this lease in lieu of such fore-
closure, then and in that event, said lender or a purchaser
from said lender will be accepted as lessee in lieu of_ the
LESSEE named herein, and such foreclosure sale or assignment
shall not terminate this lease.
l5. DEFAULT: Except as provided in Paragraph 13 (relating
to bankruptcy, etc.), a default in the performance of_ any promise
of or of any obligation imposed upon LESSEE shall .not constitute
a breach of this lease unless LESSEE fails to cure such default
within six (6) months after written notice of_ default has been
served by LESSOR, except that failure to cure a default in a
payment of rent shall constitute a breach of this lease if such
11 .~ .
~" ~~
default is not cured within five (5) days after written notice
of default has been served.
16. HOLDING OVER: If LESSEE with the consent of_ LESSOR
continues in the possession of the leased property after the
expiration of~ the term of this lease or any extension under the
option herein granted, then LESSEE shall be deemed to be holding
the leased property on a month to month tenancy subject to all
the provisions of this lease, and the rent during such period
of holding over shall be as determined by LESSOR through its
City Council.
17. NOTICES: All notices to be given to either party clay
be given in writing personally or by depositing the same in the
United States mail, postage prepaid, and addressed to LESSEE
at the said premises whether or not LESSEE has departed from,
abandoned or vacated the premises, and to LESSOR at City Hall,
Santa Ana, California.
18. WATER: LESSEE may, if it so desires, drill a water
well on the premises and install such pumping equipment at the
well site as is reasonably required, all of the foregoing,
plus maintenance and operation thereof, to be done at LESSEE'S
sole cost and expense, and it may use the water produced there-
from for irrigation purposes only. LESSOR makes no representa-
tions as to the quality or quantity of water which can be pro-
duced from drilling on said premises. LESSEE shall pay promptly
any pump or extraction tax due for water produced. LESSEE shall
obtain from the CITY OF SANTA ANA through its Water Department
such water service as shall be required for domestic purposes,
all in accordance with the rules, .regulations and ordinances
12
~ i ~,.-~
~' .~ s
• ~
of the Water Department and the CITY OF SANTA ANA. LESSOR will
charge, and LESSEE will pay for such domestic water service
delivered through said Water Department at the same rates that
LESSOR'S Water Department charges other municipal departments
for water service.
19. INSURANCE:
A. LESSEE shall keep at his own cost and expense
public liability insurance covering all of its operation, the
liability under such insurance to be not less than $300,000.00
for any one person injured, $500,000.00 for any one accident,
and $25,000.00 for property damage. These policies shall
insure the contigent liability o.f_ LESSOR and are to be placed
with LESSOR.
B. LESSEE at his own cost and expense shall keep
all buildings and structures erected on the leased premises
adequately insured for fire and extended coverage, malicious
mischief and vandalism. A loss payable clause shall be in-
cluded in favor of LESSOR as its interest may appear.
20. RESERVATION: LESSOR reserves the right to drill
water wells and to construct, reconstruct, repair, maintain
and operate pumping equipment and pump houses at the well sites
and such pipelines, conduits and drains as LESSOR may require
in, on and through the real property let hereby. LESSOR agrees
to drill said wells and to construct said equipment, structures,
and lines iri unimproved locations so as not to interfere with
structures, tees, and greens of LESSEE and so as to cause a
minimum interference with LESSEE'S fairways b_y locating at or
13
~~ . ~°~,
s
• •
near the edge of such fairways, and to cause a minimum of inter-
ference with the operation of said golf course, but LESSOR re-
serves the right to cross said fairways where LESSOR decides it
is necessary to do so.
LESSOR reserves the right to enter the property at any
reasonable time for the purpose of inspecting the same and to
make repairs to any of LESSOR'S installations on the property,
levees, trap-gate drains, or any lines or structures.
21. NOTICE TO LESSEE OF OIL AND GAS FIGHTS JUDG?Y[ENT:
LESSOR directs LESSEE'S attention to the case of Towner
Pdanufacturing Company, a partnership, v.s. City of Santa Ana, a
corporation, et al'., No. 109866, in the Superior Court of the
State of California for the County of Orange, and to the Judg-
ment therein entered in Judgment Book 96, Page 174, on r~iay 21,
1964, which said litigation resulted in the recognition of oil
and gas rights under a portion o.f the land let hereby and
reserves the right to enter f_or the purpose of exploring and
developing the same. LESSOR believes that it has good title
to the property herein described, subject to this reservation
of underground hydrocarbons which exists on the southerly por-
tion of said property, but LESSOR cannot be bound by a warranty
of its title.
22. BINDING ON SUCCESSORS: All of the provisions of
this lease and the covenants and conditions herein contained
sha7.1 apply to and bind the heirs, successors, executors,
administrators and assigns of all the parties hereto; and all
of the parties hereto shall be -jointly and severally liable
hereunder.
14 ._ ~
•' r , +
C~
IN WITNESS WHEREOF the parties hereto have cause this
Instrument to be executed by the proper officers of each who
were thereunto duly authorized and each party has hereunto
affixed its seal.
ATTEST: CITY OF SANTA ANA, a municipal
corporation,
~..,...
By
C ERK OF THE CO NCIL YOR
RIVER VIEW GOLF, a California
corporation,
.~ .~:f
By ~~oy ~, Lewis
Title ,,, retary / Tr~,eas,, .= er
By. enneth amen`
~'
Title Vice -President
A
~~,...
gy ~Fiovel~~ m~
Title President
I5
~..
'; . `i
~.
,,4.
APPROVED AS TO FORA4:
s
i~iarch 14 , 1974
I~ir. ~vovel t3. James, President
ttiverview Balf Corporation
1800 Kest 22nd Street
Santa Ai~a, California
AG~t:LP~1E,dT FUR LLASL OF CITY-OI9v1;D PROPERTY FOR GULF COURSE
At its Adjourned Regular Meeting held on P~iarch 11, 197~I,
%ouiicil approved tiie subject agreement.
Enclosed is a copy of the fully executed dacurnent for your
files.
Please call me at 834-4906 if 1 ~tiay provide additional
assistance to you iii this matter.
Carlially,
FLC1i?i:rC I. ~IALOi'JE
CL,ERl~ OF THE COUNCIL
Enclosure
.~~ - ~®V~
-~~,: _Cit~_Manager
~~:-,~;~_ _ Assistant_~_ C'.ity M_-anager
f -
Date.sTslrillarY ~ ~ 1974
` _ RE~UEST_ FROM NOVEL B ._ JAMES_ TO__ CH$N_GE__MF'T'HOD OF AT,C'iTT,ATTNG rROSS __
ai•c>> ~:: ~:
RECEIPTS FOR PAYMENT OF RENT TO ONE-HALF OF THE TOTAL SALES AND SERVICES
FROM THE EXPANDED GOLF COURSE.
BACKGROUND
In August of 1961, the City of Santa Ana entered into an agreement
with Novel B. James for lease of City owned property now known as
River View Golf Course. This property is between the Santa Ana River
and Alona Park, lying north of 17th Street and south of Memory Lane.
In September of 1969, another lease was entered into between Novel B.
James and the Orange County Flood Control District for the purpose
of expanding the then existing 9-hole golf course to the present 18-
hole course. This property under the jurisdiction of the Orange County
Flood Control District is adjacent to the City owned property and lies
generally within the Santa Ana River channel from approximately 21st
Street to about 1/4 mile north of Memory Lane.
A letter dated January 26, 1973 was received from Mr. Novel B. James
explaining the reason why he converted the Santa Ana River channel to
a turf golf course to be used in conjunction with City owned property.
This letter further requests that "rent charged be changed to (one-half)
of present requirement...". Novel B. James further requests that the
City of Santa Ana "remove the restriction for sale of beer and wine"
from the existing agreement.
COMPARISON OF FACILITIES
A comparison of the elements comprising the City leasehold and the
County leasehold is presented below:
City Leasehold
County Leasehold
38 acres
8 holes
rest rooms
club house
pro shop
144 stall parking lot
86 acres
10 holes
none
none
none
none
• ~
City Manager
Page 2
driving range driving range possible because of
County addition
cart rental cart rental
12 year history of successful
operation
potential risk due to flooding
COMPARISON OF TERMS
A review and comparison of the City leasehold and the County leasehold
are presented below:
The City lease provides that rent shall be based on gross business,
excepting food and pro shop sales of golfing supplies, clothing, equip-
ment and similar merchandise.
Under the County lease, income upon which percentage rentals are based
includes all items upon which the City receives rent in addition to
deposits in any pay telephone or coin operated vending machine, fair
rental value of office space, and other facilities used for purposes
other than the business proposed, and that portion of the pro shop sales
of golfing supplies, clothing, equipment, and similar merchandise above
the average annual sales of $54,000. Furthermore, under the County lease
agreement, rent shall be charged as a percentage of restaurant and cock-
tail bar operations.
Since a major portion of the leased land from the County is in the Santa
Ana River and subject to flooding, a provisions has been made that should
golf holes located within the leased land of the County become unplay-
able for a period in excess of 7 consecutive days because of water flow-
ing in the Santa Ana River or because of construction undertaken to
repair flood damage or destruction or to modify or improve flood control
or water conservation facilities, income produced by business operations
on or from the River View Golf Course during such periods shall not be
included in the gross receipts for the purpose of calculating percent-
age rental payable to the County.
The County leasehold agreement has a minimum annual rental of $2,400,
whereas the City agreement has no minimum annual rental.
~~ ~~ ~ ~ ~~
City Manager
Page 3
EXISTING RENTAL PERCENTAGES
Below is shown in two columns the percentage rental charged by both
the City and the County as well as the approximate date when the per-
centage amount under each agreement changes.
City Rental
Aug. 21, 1962 to Aug. 20, 1971 - 3%
Aug. 21, 1971 to Aug. 20, 1972 - 4%
Aug. 21, 1972 to Aug. 20, 1973 - 4%
Aug. 21, 1973 to Aug. 20, 1974 - 4%
Aug. 21, 1974 to Aug. 20, 1975 - 4%
Aug. 21, 1975 to Aug. 20, 1976 - 4%
Aug. 21, 1976 to Aug. 20, 1977 - 4%
Aug. 21, 1977 to Aug. 20, 1978 - 4%
Aug. 21, 1978 to Aug. 20, 1979 - 4%
Aug. 21, 1979 to Aug. 20, 1980 - 4%
Aug. 21, 1980 to Aug. 20, 1981 - 4%
Aug. 21, 1981 to Aug. 20, 1982 - 5%
Aug. 21, 1982 to Aug. 20, 1983 - 5%
Aug. 21, 1983 to Aug. 20, 1984 - 5~
Aug. 21, 1984 to Aug. 20, 1985 - 5%
Aug. 21, 1985 to Aug. 20, 1986 - 5%
Aug. 21, 1986 to Aug. 20, 1987 - 6%
Aug. 21, 1987 to Aug. 20, 1988 - 6%
Aug. 21, 1988 to Aug. 20, 1989 - 6%
Aug. 21, 1989 to Aug. 20, 1990 - 6%
Aug. 21, 1990 to Aug. 20, 1991 - 6%
Aug. 21, 1991 to Aug. 20, 1992 - 6%
Aug. 21, 1992 to Aug. 20, 1993 - 6%
Aug. 21, 1993 to Aug. 20, 1994 - 6%
Aug. 21, 1994 to Aug. 20, 1995 - 6%
Aug. 21, 1995 to Aug. 20, 1996 - 6%
Aug. 21, 1996 to Aug. 20, 1997 - 7%
County Rental Rates
Jan. 1972 to Dec. 1972 - 2%
Jan. 1973 to Dec. 1973 - 2%
Jan. 1974 to Dec. 1974 - 2%
Jan. 1975 to Dec. 1975 - 2%
Jan. 1976 to Dec. 1976 - 2%
Jan. 1977 to Dec. 1977 - 3%
Jan. 1978 to Dec. 1978 - 3%
Jan. 1979 to Dec. 1979 - 3%
Jan. 1980 to Dec. 1980 - 3%
Jan. 1981 to Dec. 1981 - 3%
Jan. 1982 to Dec. 1982 - 4%
Jan. 1983 to Dec. 1983 - 4%
Jan. 1984 to Dec. 1984 - 4%
Jan. 1985 to Dec. 1985 - 4%
Jan. 1986 to Aug. 1986 - 4%
Aug. 1986 to Aug. 1987 - 5%
Aug. 1987 to Aug. 1988 - 5%
Aug. 1988 to Aug. 1989 - 5%
Aug. 1989 to Aug. 1990 - 5%
Aug. 1990 to Aug. 1991 - 5%
Aug. 1991 to Aug. 1992 - 5%
Aug. 1992 to Aug. 1993 - 5%
Aug. 1993 to Aug. 1994 - 5%
Aug. 1994 to Aug. 1995 - 5%
Aug. 1995 to Aug. 1996 - 5%
Aug. 1996 to Aug. 1997 - 6%
"~, .. }~ Y
City Manager
Page 4
Aug. 21, 1997 to Aug. 20, 1998 - 70
Aug. 21, 1998 to Aug. 20, 1999 - 70
Aug. 21, 1999 to Aug. 20, 2000 - 7%
Aug. 21, 2000 to Aug. 20, 2001 - 70
Aug. 21, 2001 to Aug. 20, 2002 - 7%
Aug. 21, 2002 to Aug. 20, 2003 - 70
Aug. 21, 2003 to Aug. 20, 2004 - 7%
Aug. 21, 2004 to Aug. 20, 2005 - 7%
Aug. 21, 2005 to Aug. 20, 2006 - 70
Aug. 21, 2006 to Aug. 20, 2007 - 8%
Aug. 21, 2007 to Aug. 20, 2008 - 8%
Aug. 21, 2008 to Aug. 20, 2009 - 80
Aug. 21, 2009 to Aug. 20, 2010 - 8%
Aug. 21, 2010 to Aug. 20, 2011 - 80
LEGAL OPINION
Aug. 1997 to Aug. 1998 - 6°s
Aug. 1998 to Aug. 1999 - 6%
Aug. 1999 to Aug. 2000 - 60
Aug. 2000 to Aug. 2001 - 60
Aug. 2001 to Aug. 2002 - 60
Aug. 2002 to Aug. 2003 - 6%
Aug. 2003 to Aug. 2004 - 60
Aug. 2004 to Aug. 2005 - 6%
Aug. 2005 to Aug. 2006 - 6%
Aug. 2006 to Aug. 2007 - 6%
Aug. 2007 to Aug. 2008 - 6%
Aug. 2008 to Aug. 2009 - 60
Aug. 2009 to Aug. 2010 - 6%
Aug. 2010 to Aug. 2011 - 60
Opinion #73-52 prepared August 13, 1973 states in paragraph 4 that
"the City is not legally limited in its ability to reduce the percent-
age rate by such amendment, provided it receives at least some benefit
in the amended version which it does not currently have. Although it
may be argued that an amendment which does nothing than lower the interst
rate constitutes a gift of public funds or property, this would not be
the case if the amendment also served to extend the "gross business"
upon which the rent is computed to cover total receipts from the entire
golf course. Any amendment which served to simplify or render more de-
finite the accounting procedure by which the City verifies the amount
of rent due would constitute legal consideration for the City's agree-
ment to reduce the percentage rate."
RECOMMENDATION
It is recommended that the City Council consider the letter of under-
standing dated December 19, 1973 (attached) and determine policy
regarding:
A. Establishment of $6,000 as the base annual amount of rent
payable to the City of Santa Ana for 1972 and 1973.
~~
wr .. ~~' i
City Manager
Page 5
r 1
B. Change method of calculating gross receipts to a basis
which the City's percentage applies to one-half of the
total sales and services (excluding foods and merchandise)
from the expanded course. Also, when the river is flooded
or otherwise not utilized for playing golf, the percentage
applicable to the City will apply to the total green fees
collected during the period of reduced area playing.
C. Authorize the sale of beer and wine on leased premises
and provide that 2% of the gross receipts from this kind
of sales be paid to the City, in addition to the amount
in B above.
D. Effective January 1, 1974, change the date for reporting
of gross receipts from quarterly to monthly, with payment
to be made to the City by the 20th of the following month
of activity.
If the City Council concurs in the above items then it is recommended
that the City Attorney be directed to revise the existing agreement
between the City of Santa Ana and River View Golf.
,~C-'~ ~ ~,2-z ~
G. David Tayco ,~
~,-'`'~;
._ ,,
t.
Attachment
~.~ ~, z,~,~.,~,..~~~ ~~,~.., ~ `tit
~_.~~~
~~
M~~tVDUM
..
To: _ _ __ _~inance Director
P--, ,r,. _Thomas_J,__Andrusky _______
Date December 27 , 197 3 ._
:?~bjeet: ___. PROPOSE~2-CgANCES TO THE_$~~IE$~I~EW _.C~~F___COURSE LEASE
Attached is the original letter to Novel James dated December 19,
1973 outlining proposed changes to the golf course lease at
Riverview. The City Manager and Mr. James have signed an agree-
ment to the proposed changes. Please review the proposed changes
and then if it meets with your satisfaction, please sign in the
appropriate place and get the original letter back to me on
Monday, December 31, 1973.
Thomas J. Andrusky
Assistant City Manager
TJA/am
Attachment
7 +r
.t' , /"'
C~Y OF SANTA AN~
CITY MANAGER'S (JFFICE
~0 CNIC CENTER PILAZA • SANTA ANA • CALIFORNIA 9701
December 19, 1973
Mr. Novel B. James, President
River View Golf
1800 W. 22nd Street
Santa Ana, California 92706
Dear Mr. James:
In accordance with our discussion on December 18, 1973,
I have itemized below, the understandings and modifi-
cations that are proposed to be made to the River View
Golf, lease (8-21-61), in consideration of the expanded
course and the addition of leasehold on Santa Ana River
bed and Orange County Floor Control property.
A. Establish $6,000 as the base annual amount for
1972 and 1973.
B. Change method of calculating gross receipts to a
basis upon which the city's percentage applies to
one-half of the total sales and services (excluding
foods and merchandise) from the expanded course.
Also, when the river is flooded or otherwise not
utilizable for playing golf, the percentage appli-
cable to the City will apply to the total green
fees collected during the period of reduced area
playing.
C. Authorize the sale of beer and wine on leased
premises and provide that 2% of the gross receipts
from this kind of sales be paid to the city, in
addition to the amount in B above.
D. Effective January 1, 1974, change the date for
reporting of gross receipts from quarterly to
monthly, with payment to be made to the city by the
20th of the following month of activity.
~o
~; ,# ~~
L'
•
Mr. Novel B. James, President
December 19, 1973
Page 2
To schedule time of January 7, .1974 for City Council
consideration of these changes, please indicate your
approval as quickly as possible by signing below
and returning this copy to me or the City Manager,
in order that lease modifications can be included in
the Council review packet. A duplicate copy is
enclosed for your file.
Very truly yours,
-,
t -~~ z
~~
~_._.__ ~
City Manage -' : /~ ~/
Santa Ana
.` .~ ,
Novel B. James
President a' ~ °~
River View Golf
,:;
arry Shaffer
Director of Finance
Santa Ana
G/
OFFICE OF THE CITY ATTORNEY
OPINION NO. 73-52
AUGUST 13, 1973
SUBJECT: Computation of rent due to City pursuant to
lease of Riverview Golf Course land to
Novel James.
REQUESTED BY: Assistant to City Manager
OPINION BY: James A. Withers, City Attorney
BY: Richard E. Lay, Deputy City Attorney
QUESTION: Where the lease of land by the City calls
for payment of 4/ of the '°gross business'°
as rent and limits the use of the leased
premises to a nine-hole golf course, and
where the lessee subsequently acquires
adjacent land which he uses to add on an
additional nine holes to the golf course,
how is the rent due to the City to be
computed?
ANSWER: The City should require as rent 4/ of "gross
business" with "gross business," insofar as
it pertains to the golf course, being an
amount equal to the number of paying customers
times the price charged for nine holes of
gol$, irrespective of how many of such cus-
tomers pay for 18 holes. This is in additio°z
to any other income from activities c-onducte~.i
wholly within the leased premises, such as
the driving range and putting green.
anrnr_veTC .
The present lease of Riverview Golf Course, dated
November 2, 1964, and running until August 20, 1986, calls fox•
rental payments based upon a stated percentage of the '"gross
business done by Lessee on all sales and services, excluding
food and merchandise." The percentage is set forth in an
increasing time scale and is currently at 4%. The lease
also provides that the property shall be used only far a
clubhouse, nine hole golf course, driving range, and rutting
greens.
Some two years ago, the lessee acquired other property
adjacent to the property leased from Santa Ana whi.cl~ he ~~as
.~~ ~ .~ •
developed to use as
course. In charging
the lessee currently
for eighteen holes.
•
an additional nine holes to the golf
customers for the use of the golf course,
charges $2.50 for nine holes and $5.00
The lessee has apparently requested that he only be
required to pay 2/ of his gross receipts. Since the percentage
is set by the terms of the lease, however, it cannot be altered
except by councilmanic action, by way of amendment or by a
new lease.
However, the real question presented by the lessee's
request pertains not to the percentage rate but to the concept
of "gross business." The question is whether this term ex-
tends to income derived from that portion of the golf course
which is not part of the land leased by the City. The questions
of the proper measurement of rent is thus not a matter of
altering the terms of the agreement but one of interpreting
the agreement in view of changed conditions to determine what
those terms require. As such it is an administrative matter
within the powers of the City Manager.
In the case of percentage lease, such as is involved
here, the question of what constitutes "gross business" or
"gross income" or "gross receipts" is not established by any
rule of law or accounting practice but depends upon the
intent of the parties as expressed in the agreement, and as
such is a question of fact for a trial court. .Lawrence Barker,
Inc., v. Briggs (1952) 39 Cal 2d 654, 248 P2d 897. Those
few cases which deal with the question of whether income from
activities occurring outside the leased premises is to be
included in computation of rent are collected in 170 ALR at
p. 1130, 38 ALR 2d at pp 1121-23.
Examining the Riverview lease agreement, it appears
that the "business" which is contemplated as forming the
basis of the rent computation was the nine-hole golf course
to which the use of the leased property was limited, in
addition to such operations as the driving range and putting
green. Any extension of the concept of "gross business"
to cover the income derived from charges for the use of the
additional nine holes in the non-leased property would result.
in a "windfall" for the City.
While it may be true that the actual transaction of
purchasing the use of these additional nine holes occurs on
the City-leased portion, the lease agreement does not contain
any specific statement that the rent is to be based on gross
sales "on, in, or from" or "obtained in'° the leased premises,
such as served to sustain the landlord's interest in off-
premise activities in Gambol-Skogmo, Inc. v. McNair Rea_Zty Co.
(1951, D.C. Mont.) 98 F. Supp 440 and Mutual Life Ins. Co. v.
2
,~ • ~ •
Tailored Woman, Inc. (1953) 283 App. Div. 173, 126 NY 5 2d 573.
Likewise, there is apparently no question here of the
tenant diverting the business from the leased portion to the
unleased portion such as occurred in Cissna Loan Co. v Baron
(1928) 149 Wash. 386, 270 P 1022. The City can protect itself
against any such possible diversion of business by requiring
that total receipts from all customers who pay for only nine
holes of golf are included within the "gross business" accounts
irrespective of where on the golf course the nine holes are
actually played.
It therefore appears that the equitable measure of
rent due to the City, and the one which a court would be most
likely to declare if the lessee were to bring an action for
declaratory relief, is as follows: the City is entitled to
4/ of the "gross business" of the lessee on the understanding
that "gross business" includes all receipts, other than for
food or merchandise, for all activities, such as the driving
range and putting green, conducted entirely within the leased
premises, and, as to the use of the golf course itself, an
amount equal to the number of customers multiplied by the
price charged for nine holes of golf. It is therefore re-
commended that the City accept any tender of rent which con-
forms to this computation.
In view of the obiigation imposed by the lease agree-
ment upon the lessee to furnish an audit of his operations,
the burden would also rest upon him to establish through
such audit that the "gross business'° as interpreted above is
less than the total gross receipts of the entire golf course
operation. If he fails to do so the City would be entitled
to demand rent based upon total receipts.
In the event that the City and the Lessee desire any
other method of computing the rent, this should be accomplished
by amendment of the lease. In this respect, it may be noted
the City is not legally limited in its ability to reduce the
percentage rate by such amendment, provided it receives at
least some benef it in the amended version which it does not
currently have. Although it might be argued that an amend-
ment which does nothing more than lower the interest rate
constitutes~f gift of public funds or property, this would
not be the case if the amendment also served to extend the
"gross business" upon which the rent is computed to cover
total receipts from the entire golf course. Any amendment
which served to simplify or render more definite tYie accounting
procedure by which the City verifies the amount of rent due
would constitute legal consideration for the City's agreement
to reduce the percentage rate.
Furthermore, even a unilateral reduction of the percen-
tage rate would not necessarily be void, since Chartered ca.ties
such as Santa Ana are not under the strict Constitutional pro-
hibition against gifts of public fur_ds which applies to state
.1 ~• r ~ +
agencies and general law cities. Cal Const. Art. 13, Section
25. Mullins v. Henderson (Ct of App's 1946) 170 P2d 118, 129.
Except for such specific limitations on the city's control
over public funds and property as are contained in its Charter,
the only limitation appears to be that the funds or property
must be disposed of for a "public purpose", and the courts
are very deferential to councilmanic determinations that a
public purpose exists, striking them down only if the council's
discretion is shown to be unquestionably abused. City of Roseville
'v. Tulles (1942) 131 P2d 395.
It is therefore submitted that the City Council is
effectively free to amend the lease agreement, including the
percentage rates, in such manner as it deems appropriate.
James A. Withers
City Attorney
By ; ~,..
Richard E. Lay
Deputy City Attorney
JAW:REL:po
4
a w
June f, 1973
MEMO TO: CITY i~iAJAGF.R
FROI~i: P.SSISTArIT TO CITY MAPdAGER
SUBJECT: REQUEST FROM rOVEL JAr~S TO REVISE i,EASE AGi2.Z_.E=ak:i~T
Wi^1'ri CITY OF SAi3TA Alit
RECO~iblE~IDATIO:~
It is recvi~nEndec~ that ttie City Council revise the curr4nt agree-
SAeZit y.tiri?c~ra tail Cyty C~ S~ it2t ?~-Z23 and ~i n°r ~Y~arm t~^i f tL? r,rr~q; nn
the followincr:
{1) Income upon trhich percentage rentals are based shall
include all incoMe of River Vies Golf received from
sale or rendition of serviczs, aCiT'ii3.S5i0AS, entrt~,
rental and other fees of any nature or kir_~a, t=~::c~sits
in an ~ n ated ven~:ir~ ~; a::~.:.~.' i _ ~:~,
fair ren a~ v 1 „n of off ice space , anu other ~a~.' .: ~ :_.5
,_. .
_ _. _--
uses: for purposes other than the 3~usiness ~~~cpc. ~:~~., ~:_:t_:
that ~ortion~'~~` i p sa es o go L lr~a ~ .~.:. ~.~..; ,
_ _
, ~.~__
clothing, e~ui~r,,e~it, acid similar ~`rc anc:ise . '~ ~i,~ av~x -
_
~
. _.... __ ,.. w ~ _ _----
age annual ,pro sY:op sales sea year 1c6 1~7i~ s.i._i?,.?
' not be considered in tiie percentage rentals . °' ~ ~~ av:~.~- c:~
'~~ `~'.""```-,~- annual pro shop r ~ g ~ ' ti y' ~- ~? ~-
:.tries clurira this ~~.v~. mar ~y4__ _cu ham
r ' w been $~~, 00~. Furti.crr..ore, gross receii~°ts Sii311, ~~c?.,~:'.;:;:
~~~"`~7 ,~, (~~ all sales and e;:cise La.~es payable to the i'~,.it~~~:~.1, ~~•~±__
,{ ,
C;ou.ity~ or ~_a:iicic>~:1 Governi:°~:nts as a c:iir4ct ~-t~:s..::t.t c•
~~~ ~
~" operations under this lease. ~~Lfun~s for c;°_o~:~ re-~urr.;~"
shall Le deducted fro~~i ttio current rosy recoi;~.ts uL.~:~.
:,-,
return. lad ~aebt
1!~sscs shall
not b c:ec::uct~:c~ ro:~i ti~,~
~ .:~`~ ~"~' ' ~"~ gross r~ccipts unaer ere City
fr~r,1 zest.aura:it and cocktail b lease agre~rttent. Inc;cra~~
ar operations sli 1
1 bc~
`
-''`~ L~ '~° .
~_:,~ ~ incluut~c.i within i r,co:~c: upon wh ich percentage r~_.tals
are b~~seu .
'.
;/
.
~'~ ~`~
~"~ -,fir-
/~ r~ ~
~- ~
~
~-~ c~~ ~ r") b~
i
~~,.~ c~ ~~~~-
-~
c
-
• ~ ~ -- -
Mr. Novel -James ;:_-_~-
Page 2 -
~-' `~~ {2j The City leasehold a reement shall .have
g a minimum annual
rental of $x,000.
(3) Rental rat shall reduced from 4$ to .'2'~`-'~'~°- ~~.m
2~ from Augu 1, 19 to August 1, 19?6
3$ from nugust 1976 dugust 1, 1981
4 $ from Au s t 1, '~
gu 1981 to ugust 1, 1986 ~'.~ r~~,.4-~ ~~ ,~
5~ from August 1, 86 to A ust 1, 1996 C~ ~9 ~-~-~~~-,,,.~
~ti`~`` ~~ ~ (~~ All rental a _ - - ?-~~~ .t ~ ~~,,~; ` ~;
p y~ts shall be made on a quarterly basis.~,,~
s` i E` ~ t ~~~,
~~~= ~,~- ~ (5j All of the above terr:.s to become effective august 1, 1~73~:'
(bj River View Golf shall pay to the City of Santa Pia all
,~~ rents now due and payable and all rents which shall become
I!, ~'~'"~'`~ payable in accordance with the existing rental ~:ercentage
~~
SACKGROUTJD
Pursuant to a request from t~ir, hovel James, the lease agreement
between the City of Santa Ana and River View Golf Course I:as been
reviewed, as well as the lease agree.*-tent between the 1?iver View
Golf Course anti the Orange County Flood Control District.
On January 26, 1973, a letter was receives from _~u . i:ovcl James
requesting that the rent charged P~iver View Golf Ca•~:.rs~~ by the
City of Santa A.za for the leases; property be reduced fYU:-~ ~ v cf
..~,,,,~ ti:e„.„gross to 2 ~ witr. r annual :aini.~a:a payment of ~2 , ~r ~~ v . ~ urtr:er-
~ riore, it is requesteu by ~.ovel Jaries gnat the City of~«~ita r}zz
revise the res~,xiction as sho~m on Page ~, Section a, ~~;.ich ^ro-
iiibits the sale of beer or other intoxicating liquors. ~t i.U
requested that the revision provide for the sale of b4~rvuL- :lot
other intoxicating 1ic~uors.
On February 26, 1973, a meeting was held between G. ,~a°v°isi L~yco
and Novel Ja~;es to review the physical site ansl discuss tine
rationale for the requested reduction in lease reat~:l r~.~cus,
and agrEe to ;:pursue the st:bjact of revising the existi..c; l~ ;o
between the City o~ Santa Ana and itiver View Gol~.
]Cn August of 1961, the City of Santa Ana entered into ur. ac~roe-
r;:ent with Aiovel James for file lease of River View Golf : ours~a
property lying adjacent to Alona Park. In September of 19ii9,
Mt. Novel James
Page 3
another lease was entered into between River View Golf Course
and the Orange County Flood Control District for the purpose
of expanding the then existing 9-hole golf course to tiie pre-
sent 18-hole course. This property under the jurisdiction of
the Orange County Flood Control District is west of aria adjacent
to the property leased by the City of Santa Ana. The i'lood
Control property lies generally within the Santa Ana River
channel from approximately 21st Street to about 1/4 mile north
of memory Lane .
COI~PARISOPI OF FACILITIES
A comparison of ttie City leasehold and the County leasehold is
presented below:
City T_,easehold County Leasehold
38 acres
8 holes
rest rooms
club house
pro shop
144 stall parking lot
86 acres
10 holes
none
none
none
none
driving range
cart rental
12 year history of successful
operation
CO•IPARISOiJ OF TERtLS
driving range possible beeausL of
County addition
cart rental
potential risk due to flooding
A review and corparison of the City leasehold and tlic County lea~~-
hold are presented below:
The City lease provides that during the nine years Lec;innii:g on
August 21, 1962 and ending on August 20, 1971, 3~ of tie e~ross
business done by itiver ViecT Golf Course on all sales and services,
excepting food and merchandise, shall Le paid to the City of S<-xr~'u~:
Ana as rent. During tre nest ten yoars (August 21, l~'~ 71 t2irou~rz
August 20, 1981) , 4~s of the gross uusiness, e:cepti::g food an;::
• •
Mr . Novel Jams
Page 4 _
merchandise, and during-the next five years (August 21, 1981
through August 20, 1986), 5~ of the gross business, excepting food
and merchandise has been agreed upon since the date of the first
agreement was modified to contain an option to renew for an ad-
ditional 25 years at increased rental rates beginning on August 21,
1936 for ten years at 6~, ten years at 7"s, and the last five ~•ear~~
to be at the rate of fi~ of gross business, excluding food anc-
-merchandise. i~ierchandise refers to pro shop sales of golfing
supplies, clothing, equips~.ent and similar aerchandise .
According to the County golf course lease, intone upan which percent-
age rentals are based includes all income of River View Gold received
from sale or rendition of services, admissions, entry, rental anti
other fees of any nature or ;:ind, deposits in any pay telephone or
coin operated vending rnachine, fair rental value of office sy~ace,
and other facilities used for purposes other than the business pro-
posed, and tt,at portion of the pro shop sales of golfing supplies,
clothing, equip.~ent, and similar merchandise. iiie average ann;xal
pro shop sales nor fiscal years 1966 through 1974 shall be con-
sidered in t~,e percentage rentals, The average annual pro shop
sales during this five year period has been $54,D00. Furthermore,
gross receipts shall exclude all sales and excise taxes payable
to Federal, States, County or municipal Govern*~ents as a direct
result of operations under this lease. Refunds for goods returned
shall be deducted from the current gross receipts upon return. mad
debt losses shall not be deducted from gross receipts under the
County lease agreement.
T:ie County leasehold agreement has a minimum annual rental of $ ti ; - ~~ G
whereas the City agreement has no riinir,:um.
Under the County lease agreement, beginning January, 1972 a 2~ _;_<,~-
centage rental for the first five years will be charged against c v:~n
fees, pro shop services, driving range, equipment rental, v~:nuir~gy
machines, and all other income producing businesses except res'~~u--
rant type and cocktail bar operations and pro shop sales of goods
and merchandise shall be a 1~~ rental throughout the period cover~•~~~
by the lease ~Jiti1 the exclusion of the first $54 , 000 annual sa1F~s .
For t~.e nee:t five year period , 3 ~ gill be charged and 4 a theru~ tr.~ .
'rhe County lease extents until August 20, 1986. .Restaurant ana
cocktail bar operations shall re_*:iain at 2~ throughout the lease
period.
Under the County lease there is an option to renew for an adciitio~:_~1
25 years at 5$ for the first ten years and 6~ for each year ti;ereai.=ter_ .
-Mr, Novel .James
<~aqe 5
~~ince a major portion of the leased land from the County is in tYie
manta Ana River and .subject to flooding, a yrovision has been made
that should golz holes iocatedr within the leased land become unplay-
-able for a perio~: in excess of seven consecutive c?~ays because of
Mater flowing in the Santa Ana River or b~:cause of construction.
undertaken to repair floou damage or destruction or to modify or
.improve flood control or water conservation faciliries, inco~°c
produced by business operations on or from the River View Golf Co-~._s:~~
during such periods shall r+ot be .included in the dross receipts
-#or the purpose of calculating percentage rental.
CURI4ENT FZENTAL PrRCEi7TAGE5
Below is shoc-*n in twn columns the percentage rental charged by ~.ot:?'~
the City and ti`le County for the respective terms. It will be not~~c:
that the City's rental is, under the current agreer.:ent. 50ti ~.i~~~~~r
than the Co°.inty's r£~ntal rate up until the end of 197e. After 1576
The City's rental rate is i:etween 33 1/3~ (the difference betcreen
3$ and 4g} higher than the County's rate for the next five years
ending in 1931. s~egin.'~ing in 1981 through August of 198G, the
City's rate is 25° higher than the County's rate (tile difference
.between 4ti and ~a}. Both the City lease and t;-~e County lease
contain an option to renew in August of 1986. ,wring the first 10
years O~ ~11P ~~+ year r~I:ewa~., one City'S ;a~n is ~s7g t~i..t,gr tY'i.°..:^.
a--
the County's rate (tne difference between 3~ and G"~). During
the next 10 year period beginning in August of 199s through August
of 2006, -the City's rate ~,iou13 be approxirately 17 o hic;her t:~ari
the County's rate {the Difference between 5°: and 7-~) . lluri2~g tine
last five years of the lease beginning ir. F;ugust oY ZC)Oa ~i:r•.~~.c-
A~.agust of 2011, the City's rate woulii be 33 1/3~~ hic_,;or ~:ian tla
County's rate {the difference between 6$ anti 8 ~) .
tie above rates are shown in the following table:
City Rental _ Count~Y' ::c:n `alra
Aug. 21, 1962 to Aug. 20, 1971 - 3€
Aug. 2I, 1971 to Aug. 20, 1972 - ~~ .Jan. 1972 to ec. 197 -
Aug. 21, 1972 to Aug. [0, 1973 - 4~ Jan. 1973 to Dec. 197: - ~~
Aug. 2i, I973 to Aug. 20, 1974 - 4~ Jana T97~Y to y„~c. 197': -- ...~.
~.ug. 2I, 1974 to Aug. 20, 1973 - ~£~ Jan. 197:1 to Dec:. 197 - .~
Aug. il, ZS?3 to Aug. 20, 197G - 4~ Jan. 1:76 to ~Ec. 197 -
.. ~.
i Aug. 21, 1976 to Aug. 20, 1977 - 4$ Jan. 1977 to Dec. 1977 - 3
} Aug. 21, "1977 to Aug. 20, 397E - 4~ Jan. 1978 co ll~c. 197; - _~
Aug. 21, 1978 to Aug. 20, 1979 - 4~ Jan. 1979 to Dc::c. 1975 - 3~
i
• •
Mr. Novel James
.Page b
-Aug. 21, 1979 to Aug. 20, 1980 - 4$
Aug. 21, 1980 to Aug. 20, 1981 - 4~
Aug. 21, 1981 to Aug. 20, 1982-- 5~
Aug. 21, 1982 to Aug. 20, 1983 - 5$
Aug. 21, 1983 to Aug. 20, 1984 - 5~
Aug. 21, 1984 to Aug. 20, 1985 - 5~
Aug. 21, 1985 to Aug. 20, 1986 - 5~
Aug. 21, 1986 to Aug. 20, 198? - 6~
Aug. 21, 1987 to Aug. 20, 1988 - 6~
Aug. 21, 1988 to Aug. 20, 1989 - 6~
Aug. 21, 1989 to Aug. 20, 1990 - Gb
Aug. 21, 1990 to Aug. 20, 1991 - 6v
Aug. 21, 1991 to Aug. 20, 1992 - 6$
Aug. 21, 1992 to Aug. 20, 1993 - 6~
Aug. 21, 1993 to Aug. 20, 1994 - 6~
Aug. 21, 1994 to Aug. 20, 1995 - 6~
Aug. 21, 1995 to Aug. 20, 1996 - 6€
Auq. 21, 1996 to Aug. 20, 1997 - 7~
Aug. 21, 1997 to Aug. 20, 1998 - 7~
Aug. 21, 1998 to Aug. 20, 1999 - 7~
Aug. 21, 1999 to Aug. 20, 2000 - 7$
Aug. 21, 2000 to Aug. 20, 2001 - 7v
Aug. 21, 2001 to Aug. 20, 2002 - 7~
Aug. 21, 2002 to Aug. 20, 2003 - 7~
Aug. 21, 2003 to Aug. 20, 2004 - 7b
Aug. 21, 2004 to Aug. 20, 2005 - 7`~
Aug. 21, 2005 to Aug. 20, 2006 - 7~
Aug. 21, 2005 to Aug. 20, 2007 - 8~
Aug. 21, 2007 to Aug. 20, 2008 - 8v
Aug. 21, 2008 to Aug. 20, 2009 - 8~
Aug. 21, 2009 to Aug. 20, 2010 - 3ti
Aug. 21, 2010 to Aug. 20, 2011 - E;
P.DNTAL A:~OJ~ITS
Jan. 1980 to Dec. 1980 - 3is
Jan. 1981 to Dec. 1981 - 35
Jan. 1982 to Dec. 1982 - ~~4
Jan. 1983 to Dec. 1983 -
Jan. 19&4 to Dec. 1954 - ~'~:
Jan. 1985 to Dec. 1535 - ~=."`s
Jan. 1986 to Aug. 198G - 4
Aug. 198G to Aug. 1987 -
Aug. 19 8 7 to Aug . 19 f3 8 -
Aug. 1988 to Aug. 1939 -
Aug. 1989 to Aug. 1>93 - ~4~
Aug. 1990 to Aug. 1991 -
Aug . 19 91 to Aiig . 19 9.2 - 5 °;
Aug. 1992 to Aug. 1993 -
Aug. 1993 to Aug. 1994 - Su
Aug. 1994 to Aug. 1995 - 5U
Aug. 1995 to Aug. 1995 - 5=~
Aug. 1996 to Aug. 1997 - 53
Aug. 1997 to Aug. 1998 - ~`o
Aug. 1998 to Aug. 1999 - 6
Aug. 1999 to Aug. 2000 - 6s
Aug. 2000 to ~-~uct. 2001 - ~''
Aug. 2001 to A~~. 2002 - ~.
Aug. 2002 to ~xu:~. 2G+~;3 -
Aug. 2003 to :.u~7 2~~0 d - ; _
Aug . 2 0 0 4 to :-~uq . 2 ii u ~ - +:: '~
Aug. 2005 to :.u~:. 20JG - ~:-.
Aug. 200v to ruck . 2007 - „ _
Aug. 2007 to I~ur. 200i~ -
Aug. 2008 to t-~~~; . 2069 - s:: `s
Aug. 2009 to 3i.<~. 2010 - _ .
Aug . 2 010 to t'1uy . 2 01.;. - ~~ :,
On the next page is a table of the rental amounts paid to tic Ci':.~. ;~ `.
Santa Ana under tl~e existing lease since its inception iii 1°G1.
~ , ~ ~ 1 ~ , n
I~ir. Novel Sames
Page 7
Receipts from Amount Paid
Accounting Year Services Percentum to City
1961 $ fl 0$ $fl
19u2 $ 10,467,31 38 $ 314.fl2
1963 $ 57,944.21 3$ $1,738.32
1964 $ 85,933.23 38 $2,471.71
196 $ 87,669.27 3$ $2,630.08
196 6 $ 95,107.48 3$ $2,853.23
1967 $ 96,727.51 3~ $2,901.82
1968 $123,994.70 3$ $3,739.84
19b9 $137,743.81 3~ $4,132.61
1970 $150,217.26 3# $4,506.46
1971 $153,350.51 ** $5,128.75
** Three percent was paid u_~til August 20, 1971 Bien the rate was
increased according to the agrc:e-:~ent to 4 $ .
G , David `Payco
Assistant to City :>iarager
:.g
e
•
To, Cites Manager ,, s. Jan. 30, 1973
--
i=rem: Director of Finance
_ _. ~ ~
;;~;,~~~~: Riverview Golf Course
The basic lease terms including modification 11/2/64 and amendment 11/21/66
is summarized as follows:
I. Lease = (1) 25 yrs from 8/21/61 to 8/20/86 - 9 hole course & improvements to
be constructed at Lessee`s expense.
Terms
1. No rental required during 1st yr., 3% during next 9 yrs. on all
sales & services excluding foods & merchandise.
2. 4% next 10 yrs.
3. 5% next 5 yrs.
Plus insurance - See Article 19 - to protect City.
II. (2) Modification 11/2/64
(A) Granted on option to renew for 25 yrs. to 8/20/2011 w/notification
to City of intent to exercise between 7/1/85 & 1/1/86 - Serve
notice on City Clerk & City Manager
(B) Extended terms:
1. 6% first 10 yrs. - excluding food & merchandise
2. 7% next 10 yrs.
3. 8% next 5 yrs.
III. (3) Amendment 11/21/66
(A) Allow ingress & egress to single family residence of Novel B. James
& granting of easement therefore.
Gross receipts (exluding food & merchandise) and leasehold payments to the
City of Santa Ana from 1961 are as follows:
~~~
.W:~~_.
~:~ .~ :.
~,;
.'
' I
City Manager
-2-
Jan, 30, 1973
YEAR GROSS RECEIPT % AMOUNT PAID
1961 $ 0 $
1962 10,467.31 3 314.02
1963 57,944,21 3
1,738.32
1964 85,933.23 3 2,471.71
1965 87,669,27 3 2,630,08
1966 95,107.48 3 2,853.23
1967 96,727.51 3 2,901,82
1968 123,994.70 3 3,719.84
1969 137,753.81 3 4,132,61
1970 150,217,26 3
4,506.46
1971 153,350,51 3% to 8/20/71, then 4% 5,128,75
Mr, James also has a lease from the County giving him the expanded 18 hole
course and other possibilities. His lease with the County provides for
lease payments as follows on green fees, driving range, equipment rentals,
and vending machines:
2% 1 - 5 years
3% 6 - 10 years
4% 11 years etc. to 8/20/86, with option to renew for 25 yrs.
5% 10 years
6% 15 years
2% straight through on restaurant and cocktail bar; plus 12% on pro-shop goods
and merchandise, and including minimum monthly rental requirements.
It is my understanding that the County~s lease charges its full percentage
against any gross receipts that are generated from the joint properties. The
last time Novel and I discussed the lease arrangement with the City, he was
desirous of amending the lease with the City so that only one-half of the
total green fees generated from the expanded course would be reportable to the
City. This means that the joint properties would have had to double for the
City to maintain its rentals at the 1971 level, He did not have a projected
five year estimate for green fees and it was my opinion that the City would not
have as favorable a position as the Countyf if his pro osal w"`~''~`'
P t to the City
Council, You will notice that the 1971 gross was in excess of $153,000, which
means the City should get lease payments of (+) $6,000 in 1972,
Rge.Lundell, Deputy Treasurer, received the annual statement and lease payment
check from Mr. James on 1/26/73. Apparently this was the same day you talked
with him. Anyway, the gross receipts from Riverview and the lease payments
to the City is calculated as follows:
1st Quarter = $ 52,641.79 @ 4% $2,105.67
2nd, 3rd, & 4th. Quarter = $161, 424 , 51 @ 2% _ ~- --'-="-( --~-=
$3,228,49
$214, 066.30 $5, 334.16 ~r. ~> ' °'
~/
~f• I ~
City Manager
-3_
Jan, 30, 1973
I have asked Reg to not receipt for the above check until we get some answers
as to how the lease is to be modified, along with any revisions to the method
of reporting by the lessee. It is my feeling that the City should not get
less under its basic lease @ 4% for 1972 and thereafter than the 1971 gross
at 4% would have produced. Specific items and changes to the lease are
no doubt necessary to bring it up-to-date, however I am unable to come up
with a recommendation that will weaken the value of the basic lease to the City.
I suggested to Mr. James that the City might be agreeable to a lease
modification that would mark 1971 as a base year at 4% plus 10% annual increase
in gross (adjustable at the end of each 5 year period), He was not agreeable
to this idea and he and Mr, Thornton went into discussion. Evidently no
decision was reached.
.b ~
-v
Finance Director
City 2~ianager
January 26, 1973
RIVERVIEYd GOLF COURSE
Mr. Novel James contacted me on January 26 about the study which
was started last year under Mr. Thornton's direction to review
the current lease which the City has with him-with the Riverview
Golf Course operation. Mr. James indicated that several changes
are desired by him on this lease including permission to obtain
a beer license for the development of a new and expanded club-
house facility. iie has promised to forward me a written request
concerning the specific items which he would like adjusted in our
current lease. In the meantime wi11 you please continue the re-
view which you apparently started last year for Mr. Thornton of
our current lease operations and furnish me with any recommenda-
tions you might have concerning these matters.
Bruce C. Spragg
cc s PJove 1 Jame s
.-._;.,
> a..a
f„ . •
`~~uy ~o~F
•
"The Game of a Lifetime"
January 26, 1973
City Council
City of Santa Ana
Civic Center Mall
Santa Ana, California 92700
Attention: Mr. Bruce Spragg, City Manager
Gentlemen:
Pursuant to your request made this date and referring to conferences,
during past year, with your predecessor and the Director of Finance,
I submit the following requested amendments and/or changes to lease
dated 2nd day of November, 1964.
To begin with I offer an overview of our leaseholds developments and
activities.
Just as there was doubt of the success of our initial development (9 holes
opened in 1963) on City leasehold; doubt was expressed by lessors and
others on our plans to convert the Santa Ana River channel to a turfed
golf course. Although the future looks very promising, it, of course,
is unknown. We added 10 more holes and began an 18-hole operation
from County and City leaseholds on January 19, 1972. This was permit-
ted by lease dated 16th of September, 1969, with the Orange County Flood
Control District, adding 86 acres to our 38-acre City of Santa Ana leasehold.
The joint leasehold was sought for the following reasons (listed in order of
importance)
1) History indicates that an 18-hole operation has better
chance of continuing profitable than 9 holes.
(a) Many old customers had left us for "regulation"
18-hole operation.
(b) Exposure t:o main thoroughfares as "windows"
to business greatly needed for new customers
and location identity.
(c) Most of machinery used to maintain 9-hole course
would be adequate to maintain 18-hole operation.
~ ~ ~~ ~, ~~ s~` ,i i~~ ~ ~~ ; ,, it 4 ~) ~'I
1800 West 22nd Street, Santa Ana, Calif. 92706
Phone 543-1115 ~~~LLLddd
_ ~'
M., *~ .~-
t
~_~ - 2 -
City Council January 26, 1973
2) Officials of Orange County Flood Control District advised
writer that present County leasehold was under consideration
for leasing to competitive company.
3) River View Golf owners desire to develop river into useful,
greenbelt as complement to present golf course.
Requested lease changes and/or amendments:
1) Beginning with Page 2, Section 3, "RENT",
Paragraph "B" and throughout lease; to be changed
to reflect that on January 19, 1972, City leasehold
and County leasehold to be joined as common
leasehold; same be referred to hereafter as "Joint
Leasehold". Further, rent charge to be changed
to one-half (1/2) of present requirement with annual
minimum of twenty-four hundred dollars ($"2400.00).
2) Rent to be paid by the 20th of the following month of
activity.
3) Remove the restriction for sale of beer and wine
(leaving "other intoxicating liquors" prohibited) from
Page 3, Section 5 "USE OF PROPERTY".
As your lessee, these changes are of urgent need for River View Golf to
be competitive with municipally-owned Willowick just 1? blocks away.
Respectfully submitted,
.~
Novel B, James, President
River View Golf (A California corporation)
1800 West 22nd Street
Santa Ana, California 92706
~~