Master Lease Stockton City Center 16 LLC City

Master Lease – Stockton City Center 16, LLC City Council/Redevelopment Agency May 10, 2005 Agenda Item 9. 03

Master Lease o In March 2002, the Agency entered into a Disposition, Development and Loan Agreement (DDA) with Hotel Stockton Investors for a residential project. o The DDA provided the Agency the right to operate approximately 22, 000 square feet of retail space on the ground floor and rooftop terrace.

Master Lease o In April 2003, the Agency issued a Request for Qualifications (RFQ) for a firm to develop and lease the retail space at the Hotel Stockton and the B&M Building. o Atlas Properties was selected from the three responses which were received.

Master Lease o December 2004, the Agency approved a Memorandum of Understanding (MOU) with Atlas Properties which outlined the general terms under which they would lease and manage the retail space. o The MOU was used as the basis for the Master Lease. o The Master Lease is with Stockton City Center 26, LLC, and affiliate of Atlas Properties.

Master Lease o The basic terms of the lease are as follows: n A 24 -month option to lease the space. The lease may be exercised in increments of no less than 1, 000 square feet n Once exercised, the lease is for 25 years with two 5 -year options n Rent shall be $3. 00/square foot, plus 50% of Net Operating Income in excess of $360, 000/ year

Master Lease o Terms (cont. ) n Rent shall not be owed on space that is sub-leased at no cost with the Agency’s written approval n The Agency will be responsible for utility stub-ins and repairs to the structure n The Master Tenant (Stockton City Center 16) shall be responsible for all costs of operation, including utilities, maintenance, and taxes, except for costs associated with space sub-leased at no cost with Agency’s written approval

Master Lease o Terms – “White Tablecloth” Restaurant n The Agency shall pay soft and hard costs and for equipment for a “white tablecloth” restaurant, including approximately $27, 000 in design costs expended prior to the execution of the Master Agreement n The Master Tenant shall not be responsible for rent for the portion of the premises rented to the restaurant for the first five years of the Restaurant Lease

Master Lease o Atlas Properties has entered into a preliminary agreement with Paragary’s Restaurant Group for a full service bar and restaurant, consistent with the terms of the Master Lease.

Master Agreement o Recommendations n City Council: Adopt a resolution approving execution by the Redevelopment Agency of a Master Lease with Stockton City Center 16, LLC and making findings and approvals pursuant to the California Community Redevelopment Law in connection with the retail space at the Hotel Stockton n Redevelopment Agency: Adopt a resolution approving a Master Lease with Stockton City Center 16, LLC and making findings and approvals pursuant to the California Community Redevelopment Law in connection with the retail space at the Hotel Stockton

Master Lease – Stockton City Center 16, LLC City Council/Redevelopment Agency May 10, 2005 Agenda Item 9. 03