Loading...
HomeMy WebLinkAbout2006-05-03 STAFF REPORTS 2Q OFQpLM SQ? u ,n # k M cpq # q<,F , City Council Staff Report DATE: May 3, 2006 Consent Calendar SUBJECT: Request for Assignment of Lease — Heminger's Fudge and Chocolate Company FROM: David H. Ready, City Manager BY: Assistant City Manager—Administrative Services SUMMARY The City has heretofore entered into a lease agreement with Fredrick and Sharon Heminger to operate a fudge and chocolate store in the Village Green. The current owners of the store have indicated that they need to sell their business due to health reasons and have requested that the City assign the lease agreement, which expires in May 2015, to new owners. This action would approve the assignment of the lease agreement to John Flatley and Mahammad Haque as the proposed new owners of the fudge and chocolate store. RECOMMENDATION: 1. Adopt Minute Order No. approving the assignment of the lease agreement (Agreement No. 3525) with Heminger's Fudge and Chocolate Company located at 221 South Palm Canyon Drive. 2. Authorize the City Manager to execute, in a form acceptable to the City Attorney, an assignment agreement transferring the lease currently held by Fredrick and Sharon Heminger to John Flatley and Mahammad Haque. STAFF ANALYSIS: In 1995, the City entered into a lease agreement with Fredrick and Sharon Heminger to operate a fudge and chocolate shop in the Village Green. The initial term of this lease was for ten (10) years expiring on May 31, 2005. On March 18, 2005, the lease was extended for an additional ten (10) year term. On April 17, 2006, the City received correspondence from the Hemingers indicating that, due to health reasons, they have to sell their business and would like the City to assign the lease to prospective new owners. A copy of this correspondence is attached. Item No. 2 . Q. City Council Staff Report May 3, 2006 -- Page 2 Request for Assignment of Lease Article 21 of the lease agreement provides that the "tenant shall not assign the lease or sublet the Demised Premises, or any interest therein, without the consent of the Landlord (City), which consent shall not be unreasonably withheld." In considering whether to consent to an assignment, the Landlord (City) may request information about the proposed assignee, including history of the proposed assignee's business experience, financial information and other such information required by Landlord (City) to verify that the proposed assignee is both financially responsible and has the merchandising capability equal to or greater than the existing Tenant. The proposed assignees, John Flatley and Mahammad Haque, are local businessmen. Mr. Flatley and his family currently own and operate two high-end bed and breakfast inns in Northern California. Mr. Haque owned a coin-operated laundromat on Arenas Road from July 2004 through August 2005. :>taff has reviewed the financial information provided by the assignees and finds that they have sufficient assets to operate a business. In addition, the assignees have provided reference and credit information from a past landlord and several banking institutions which indicate that they have paid their rent timely and are financially stable. Mr. Flatley and Mr. Haque have indicated that they plan to operate the fudge and chocolate store in the same manner as the Hemingers and will continue the tradition of handmade confections. The name of the store will remain the same. If the City Council elects to assign the lease, the City, pursuant to Article 21, is entitled to any consideration paid to Tenant for such assignment and may adjust the monthly rental to fair market rental value. FISCAL IMPACT: If the lease is not assigned and the current tenant elects to abandon the demised premises, the City would lose approximately $1,300 in lease revenue per month. Tr L. Butzla istant City Manager David H. Ready, City MMgDag Atta ments: 1. Correspondence from Fredrick and Sharon Henninger dated April 17, 2006 2. Minute Order • Heminger's Palm Spring's Fudge & Chocolates 211 SOUTH Palm Canyon Drive Palm Springs, CA 92262-6310 760-285-9490 Honorable City Council 4-17-2006 City Hall 3200 E. Tahquitz Canyon Way Palm Springs, CA. 92263 Dear Honorable City Council Members, It is with mixed emotions that we respectfully request that you approve a transfer/assignment of our lease with the City. As you know, we have been downtown business people for nearly eleven years and have loved every moment. Working with downtown development, city economic development and city planners, riverside county health department and other merchants, the experience could • not have been better or more professional. Currently, we are forced to consider the sale of our business because of health reasons. We have been very fortunate to locate purchasers that are not only financially stable and historically successful but that have the desire and ability to continue our vision of an "old fashioned candy store" in downtown Palm Springs. They will continue our tradition of handmade items that have made us a destination for many of our wonderful visitors and locals alike. As we have gotten to know our purchasers we have been impressed with their integrity and diligence. We pray that you will approve this assignment/transfer immediately so that proper training and assistance can be effected for the new owners. We thank you in advance for your consideration, hopeful approval and for providing us an opportunity to establish a business in an exciting city at a time of development and growth. Fred anq Sharon Heminger, owners Hem in is Palm Springs Fudge & Chocolates MINUTE ORDER NO. APPROVE MINUTE ORDER NO. APPROVING THE ASSIGNMENT OF THE LEASE AGREEMENT (AGREEMENT NO. 3525) WITH HEMINGER'S FUDGE AND CHOCOLATE COMPANY LOCATED AT 221 SOUTH PALM CANYON DRIVE. --------------- I HEREBY CERTIFY that this Minute Order, approving the assignment of the lease agreement (Agreement Not 3525) with Heminger's Fudge and Chocolate Company located at 221 South Palm Canyon Drive was adopted by the City Council of the City of Palm Springs, California, in a meeting thereof held on the 3rd day of May, 2006. JAMES THOMPSON City Clerk