City of Santa Monica
California

Staff Report
3899

Approval of Modification to Agreement with Chez Jay to provide exclusive concession services for Tongva Park

Information

Department:Economic Development Division, Housing and Economic DevelopmentSponsors:
Category:03. Consent Calendar

Recommended Action

Recommended Action
Staff recommends that the City Council authorize the City Manager to negotiate and execute a first modification to Lease Agreement #7640 (RAS) with Jay’s Tavern, Inc., doing business as Chez Jay, to provide exclusive concession services for Tongva Park and extend the lease term with two, five-year options resulting in a term of up to 15 years (to 2032). All other terms and conditions of the lease remain unchanged.

Staff Report Body

Summary

The City-owned property at 1657 Ocean Avenue contains a Santa Monica Historic Landmark building adjacent to Tongva Park, operating as Chez Jay restaurant. The restaurant has been in operation in Santa Monica since 1959.  The existing lease between the City and the restaurant does not currently permit Chez Jay to provide concession services to Tongva Park. Staff recommends a lease modification to permit Chez Jay to provide exclusive concession services for the sale of food. Under the proposed modification, the City would have the ability to specify operating hours and menu options for the restaurant’s to-go service to ensure that they are convenient to park patrons and participants in special events. Concession services would enhance the visitor experience for future City-sponsored programming in Tongva Park and be consistent with the City’s vending ordinance in Chapters 6.16 and 6.36 of the Municipal Code.

Discussion

The concept of an outdoor café complementary to Tongva Park was originally envisioned in the Civic Center Specific Plan (CCSP). In 2011, with the loss of redevelopment funds, the design of Tongva Park was modified to preserve the 1657 Ocean Avenue building in an as-is condition with minor improvements involving construction of a small pathway and installation of landscaping between the business and the park.  In 2012, Chez Jay, using its own funds, initiated the creation of an outdoor dining patio area to enhance the business and its connection to the park. In 2017, Chez Jay completed construction of a 600-square-foot, outdoor patio including furniture, fixtures, and equipment.  On June 13, 2017, Council approved an Amended and Restated Lease Agreement with Chez Jay to update the description of the leased premises to include the newly constructed outdoor patio area, memorialize the additional rent due for the expanded lease area, and establish a five-year lease term. In 2019, staff began discussions with Chez Jay to consider the concept of concessionaire services for Tongva Park.

 

The City has a longstanding practice of using concession agreements for a variety of City-owned facilities at the beach, Pier, and Main Library. The concessions provide important amenities to the public including food, beverages, and bike/equipment rentals.  Under the proposed concession arrangement for Tongva Park, Chez Jay would be the exclusive concessionaire responsible for selling food, beverages, and snacks to patrons of Tongva Park to coincide with park hours of operation and City-sponsored community events occurring at the park. The concession arrangement would support the CCSP goals to incorporate amenities that support recreational activities at Tongva Park. Staff seeks Council’s authorization to negotiate and execute a first modification to the Amended and Restated Lease Agreement with Chez Jay that adds the following terms and conditions:

·         Designate Chez Jay as Tongva Park’s exclusive concessionaire during the term of the lease.

·         Require Chez Jay to exercise its best efforts to promote healthy and sustainable food practices including offering a selection of beverages with no added sugar, purchasing products from local farmers dedicated to sustainable agriculture, and providing California food products that are as pure and natural as possible.

·         Require Chez Jay to provide a children’s menu that includes healthy food and beverage items.

·         Require Chez Jay to allocate and spend one percent of gross sales revenues annually on replacing worn furniture, fixtures, and equipment on or relating to the outdoor patio area that will be used by Chez Jay for the provision of concession services, as needed.

 

To date, Chez Jay has invested a total of $205,000 to complete renovations to accommodate a take-out kitchen, walk-up order window, access door to the take-out-counter service area, accessible ramps, ADA-compliant bathroom, and equipment and supplies necessary to operate a take-out food service.  Labor and ongoing supplies costs are estimated to total approximately $100,0000 annually to operate a to-go program concurrent with regular restaurant operations. Given the current and on-going financial commitment by Chez Jay, staff recommends a lease extension to allow the restaurant to recapture its investments.  Provided that Chez Jay is in full compliance with the concession requirements, staff recommends that the restaurateur have the option to extend the lease for two, five-year options. All remaining provisions of the existing lease agreement would remain the same, including the percentage sales provisions that apply to the interior dining area and outdoor dining patio.  As a result, the City would receive the same percentage of sales made at the to-go window as it receives on interior-dining-area sales, in furtherance of the exclusive concessionaire agreement.

Staff believes that the grant to Chez Jay of the exclusive concessionaire right did not require a competitive process for two reasons.  First, the grant of the right was part of a set of negotiated modifications to an existing lease which required significant commitments from Chez Jay.  Chez Jays commitments relate not only to the to-go operation that will provide the concession services, but also to its overall operations, including its commitment to healthy and sustainable food practices, its commitment to provide a childrens menu with healthy options, and its commitment to spend annually on improvements to its outdoor patio that serves as the connection to the park.  Second, even if the Citys purchasing requirements were considered to apply, pursuant to SMMC 2.24.250(b), Chez Jay possesses a unique ability or capability to provide the concession services as it is the only restaurant with a physical connection to the park, through its outdoor patio.

 

Past Council Actions

Meeting Date

Description

06/13/17 (Attachment A)

Amended Restated Lease Agreement for 1657 Ocean Avenue

 

Financial Impacts and Budget Actions

There is no immediate financial impact or budget action necessary as a result of the recommended action. Revenues are deposited in account number 01160001.414000.