HomeMy WebLinkAbout2/6/2002 - STAFF REPORTS (22) DATE: FEBRUARY 6, 2002
TO: CITY COUNCIL
FROM: DIRECTOR OF REDEVELOPMENT
APPROVAL OF LEASE WITH KURT &ANA HAGGSTROM ON THE PALM SPRINGS
TENNIS CENTER, 1300 EAST BARISTO ROAD
RECOMMENDATION:
It is recommended that the City Council approve the Lease on the Palm Springs Tennis
Center, a City-owned facility, with Kurt &Ana Haggstrom, the current operators of the
Plaza Racquet Club at the Palm Springs Hilton Resort.
SUMMARY:
This lease is for the Palm Springs Tennis Center on Baristo Road, which has been
without a contract operator since February, 2001. The proposed lessees are currently
the operators of the Plaza Racquet Club at the Palm Springs Hilton Resort. Mr.
Haggstrom has been at that location for 19 years and has significant membership.
However, that operation is being displaced by the redevelopment of the property.
Moving a well-known, experienced operator to the City's Tennis Center seemed to
solve several problems: the retention of a well-established business in the community,
and securing quality management and operation for the City's facility. Although the
lease does not cover all of the City's cost in the facility, it is not considered a "below
market" lease because tennis operations in the Coachella Valley are typically
subsidized by hotels or country clubs, as project amenities. Staff is confident in the
future success and quality of the Haggstrom's operation.
BACKGROUND:
City staff have negotiated a new Tennis Center lease with Kurt and Ana Haggstrom, the
current operators of the Plaza Racquet Club at the Palm Springs Hilton Resort, Mr.
Haggstrom is an experienced operator and tennis pro, having successfully run the Plaza
Racquet Club in its current location for over nineteen years.
The Plaza Racquet Club will close this year, as part of the redevelopment activities in
Section 14; specifically, the development of a new casino. Staff negotiated the relocation
of the operators to the Tennis Center as a cost-effective way of meeting the Agency's and
Tribe's relocation obligations under Redevelopment Law.
In order to be competitive in terms of the lease and ensure the long-term success of the
Center, the lease with the Haggstroms will cover about half of the cost of operating and
maintaining the Center on an annual basis. The overall operation and maintenance cost
of the Center— including utilities, water, and landscape maintenance — is approximately
$1,500 per month. However, the City has always subsidized the operation to be able to
offer a quality tennis facility to the residents and hotel guests in the community.
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Staff is proposing bringing the Tennis Center up to a much higher level of quality. The
side-by-side comparison between the Plaza Racquet Club and the Tennis Center has
highlighted many of the Center's shortcomings. Staff is proposing the City make a
substantial commitment to upgrading the facility to ensure its continued success and as
part of the Haggstrom lease. Nevertheless, when only half of the annual operational cost
is covered by the lease, it is difficult for staff to recommend that the City fully fund all of the
capital improvements and upgrades that are necessary. The City has requested of the
Tribe, through its annual distribution of funds to the community, the amount of$50,000 to
cover a portion of the capital improvements, in orderto bring it up to a first class facility that
benefits the entire community. The necessary improvements are as follows:
Absolutely Necessary Improvements: Total Estimated Cost$51,270
These are the minimum improvements necessary to create some of the feeling of a first-
rate tennis facility, such as the Plaza Racquet Club. The lease obligates the City to
construct only these improvements priorto the commencement of the lease;these are also
the improvements for which the City has applied to the Tribe for funding. Other
improvements are only required to be constructed in the second year and after,though the
intent is to construct as much as possible prior to the move-in date, especially if the Tribe
does commit to funding these necessary improvements.
All windscreens need to be replaced with non-see-through, non-permeable material to
reduce dust on the courts and increase privacy. The City now has "park"windscreens vs.
"resort" windscreens. The contractor's recommendation is to have solid vinyl on the end
returns and open mesh on the other sides, for 23,100 total square feet. The Contracto 's
estimate is $.70/s.f., or$16,170 total.
All the fences need to be painted green. The Tennis Center fences are currently the
normal silver metallic. The new color would be either green or black (recommended by
the contractor) electropaint. Estimated cost is $2,500 per court x 9 courts = $22,500.
The lights need to be replaced and the light standards lowered to 18'for improved lighting.
The Tennis Center has the same number of poles as the Plaza Racquet Club and the
same wattage fixtures, but the lighting is inferior. If the Haggstroms are able to take the
fixtures from the Plaza Racquet Club, the cost of replacing the fixtures would be about
$200 per pole for 48 poles. Estimated cost: $9,600,
Court surfacing repair. The City spent about $20,000 two years ago resurfacing the
courts. There are a couple of areas that have some water damage from the adjacent
landscaping irrigation. The cost of repairing these spots is approximately$3,000.
Second Tier Improvements: Total Estimated Cost$66,300
Interior fences between courts need to be lowered. The interior fences, from the first light
pole to the last light pole, is a distance of 80 feet. These fences are currently 6' (with a
portion at 10') that would be lowered to (replaced by) 3 %' to 4'. Cost is to be determined
by contractor quote, but is about $10 per linear foot. Total estimated cost = $4,800,
Pro shop area to be remodeled and updated, and the bathrooms need to be modernized
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and upgraded and showers added. Security also needs to be added to the building to
reduce the chance of break-in and theft (laminated security glass), as well as a "keypad"
gate lock to allow play after hours or in the summer while maintaining the overall security
at the facility. These new upgrades would create a "club" atmosphere and would allow
players to take a shower after play. Staff's estimates right now is that the cost of the
building improvements could approach $30,000, with the security upgrades another
$7,500. Total estimated cost: $37,500.
Benches with awnings between courts. The ideal would be to put one between each two
courts, or two per 3-court cluster (6 total). Cost per bench with awning and water
dispenser: $2,000. Total cost= $12,000.
The Tennis Center sign would need to be replaced with a larger, upgraded sign. The
current sign is quite small and inadequate for a destination facility. While we don't know
what the final signage would be, all of our parks are going to large, pre-cast concrete
signs. The cost of Baristo Park sign was $10,000.
Future Improvements
Center Court. A stadium court would make the center more competitive for large events.
There is some community interest in raising money for this court, and there may be the
possibility for outside funds to be raised for the expansion of the center. Estimated cost
of center court: $140,000.
In conclusion, the City is facing $51,270 in absolutely necessary improvements to the
center to get it upgraded before the new lease commences, with another $66,300 in
needed improvements following right after. The City has applied for $50,000 from the
Tribe, but if they are able to contribute more — say, $75,000 — the second tier
improvements will come on line much more quickly and the quality of the facility will
improve more dramatically.
(JO N §/RArYMMgN' D
Bede elopment D' for
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APPROVED: _tea
City Manage
ATTACHMENTS:
1. Tennis Center Lease
aOA3
LEASE
By and Between
THE CITY OF PALM SPRINGS
and
Kurt &Ana Haggstrom
[Single-Tenant Building/Multi-Year Lease]
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DAY
TABLE OF CONTENTS
1.0 LEASE SUMMARY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
2.0 TERM . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
2.1 Initial Term . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
2.2 Option Term . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
2.3 Time . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
2.4 Force Majeure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
2.5 Termination By Landlord . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
2.6 Holding Over . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
3.0 RENTAL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
3.1 Monthly Rental . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
3.2 Percentage Rental . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
3.3 Cost of Living Adjustment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
3.4 Additional Rental . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
3.5 Real Property Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
3.6 Personal Property Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
3.7 Utilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
3.8 Late Payment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
3.9 Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
3.10 Security Deposit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
4.0 USE OF THE PREMISES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
4.1 Permitted Use . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
4.2 Prohibited Uses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
4.3 Compliance with Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
4.4 Signs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
4.5 Hours of Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
4.6 Charitable Leases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
4.7 Rules and Regulations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
4.8 Downtown Business Improvement District . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
5.0 ALTERATIONS AND REPAIRS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
5.1 Alterations and Fixtures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
5.2 Maintenance and Repair . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
5.3 Free from Liens . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
5.4 Construction Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
6.0 INSURANCE AND INDEMNIFICATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
6.1 Insurance Provided by Landlord . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
6.2 Insurance Provided by Tenant . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
6.3 Indemnification of Landlord . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
7.0 ABANDONMENT AND SURRENDER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
7.1 Abandonment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
7.2 Surrender of Lease . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
8.0 DAMAGE AND DESTRUCTION OF PREMISES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
9.0 ASSIGNMENT AND SUBLETTING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
10.0 DEFAULT AND REMEDIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
10.1 Default by Tenant . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
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10.2 No Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
10.3 Landlord's Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
11.0 CONDEMNATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
12.0 MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
12.1 Entry and Inspection . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
12.2 Estoppel Certificate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
12.3 Jurisdiction and Venue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
12.4 Partial Invalidity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
12.5 Successors in Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
12.6 No Oral Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
12.7 Authority . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
12.8 Relationship of Parties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
12.9 Nondiscrimination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
12.10 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
12.11 Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
12.12 Exhibits and Addenda . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
EXHIBIT "A" LEGAL DESCRIPTION OF THE DEMISED PREMISES
EXHIBIT "B" PLOT PLAN OF DEMISED PREMISES
EXHIBIT "C" ESTOPPEL CERTIFICATE
EXHIBIT "D" RULES AND REGULATIONS
EXHIBIT "E" CONSTRUCTION OBLIGATIONS
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LEASE
THIS LEASE ("Lease") is made and entered into this day of
, 2002, by and between the CITY OF PALM SPRINGS, a municipal
corporation ("Landlord"), and Kurt & Ana Haggstrom, d/b/a Plaza Racquet Club ("Tenant").
1.0 LEASE SUMMARY. Certain fundamental lease provisions are presented in this
Section and represent the agreement of the parties hereto, subject to further definition and
elaboration in the respective referenced Sections and elsewhere in this Lease. In the event of any
conflict between any fundamental lease provision and the balance of this Lease, the latter shall
control. References to specific Sections are for convenience only and designate some of the
Sections where references to the particular fundamental lease provisions may appear.
1.1 Demised Premises. The "Demised Premises" shall refer to that certain
real property located in the County of Riverside, State of California, as more particularly described
in Exhibit"A" hereof together with the improvements located thereon and as depicted on the Plot
Plan attached as Exhibit "B" hereof.
Section 2.1). 1.2 Lease Commencement Date. October 1, 2002. Term: 5 years. (See
Section 2.2) 1.3 Extension Options. Two options for a term of two years each. (See
1.4 Monthly Rental. $750 per month for the months of September through
May; $375 per month for June, July, and August. (See Section 3.1).
1.5 Security Deposit. $ N/A . (See Section 3.10).
1.6 Use of Demised Premises. Operation of a Tennis Center.
(See Section 4.1).
1.7 Tenant's Address for Notices.
Kurt & Ana Haggstrom
2063 Ramitas Way
Palm Springs, CA 92262
Telephone: 760.323.8997
1.8 If Section 4.6 of this Lease relating to charitable leases is applicable,
please mark here . If Section 4.6 is applicable, the fair market rental value of the Demised
Premises is $
2.0 TERM.
2.1 Initial Term. The initial term of this Lease shall commence on the date
specified in Section 1.2 ("Commencement Date") and shall continue for the period specified
therein unless earlier terminated as provided herein.
2.2 Option Term. Tenant is given the option(s) to extend the term on all of
the provisions contained in this Lease for the period specified in Section 1.3 ("extended term")
following the expiration of the initial term or any other extended term properly exercised
hereunder, by giving notice of exercise of the option ("option notice") to Landlord at least one
hundred twenty(120)days but not more than six(6)months before the expiration of the initial term
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or any other extended term properly exercised hereunder. Provided that, if Tenant is in default
on the date of giving the option notice, the option notice shall be totally ineffective, or if Tenant is
in default on the date the extended term is to commence, the extended term shall not commence
and this Lease shall expire at the end of the initial term or properly exercised extended term.
2.3 Time. Time is of the essence of this Lease.
2.4 Force Maieure. If either party hereto shall be delayed or prevented from
the performance of any act required hereunder by reason of acts of God, strikes, lockouts, labor
troubles, inability to procure materials, restrictive governmental laws or regulations or other cause
without fault and beyond the control of the party obligated (financial inability excepted),
performance of such act shall be excused for the period of the delay and the period for the
performance of any such act shall be extended for a period equivalent to the period of such delay,
provided such party provides the other party written notice of such event within ten (10) days of
the commencement of the delay; provided, however, nothing in this Section shall excuse Tenant
from the prompt payment of any rental or other charge required of Tenant hereunder except as
may be expressly provided elsewhere in this Lease.
2.5 Termination By Landlord. Landlord shall have the right to terminate this
Lease effective on any anniversary of the Commencement Date, with or without cause, by
providing Tenant with at least sixty (60) days' advance written notice. If Landlord terminates this
Lease pursuant to this Section, Landlord shall pay Tenant the unamortized portion of the
Improvement Costs that are amortized pursuant to Section 5.1. If Landlord terminates this Lease
as provided in this Section, Tenant hereby waives any right to receive any other compensation
from Landlord, including, but not limited to, the value of Tenant's leasehold interest, loss of
goodwill and relocation benefits, inverse condemnation or the taking of property and Landlord
shall have no obligation to pay Tenant therefor.
2.6 Holding Over. Any holding over after the expiration of the term of this
Lease, with the consent of Landlord, express or implied, shall be construed to be a tenancy from
month to month, cancellable upon thirty (30) days written notice, and at a rental equal to one
hundred fifty percent(150%)of the last applicable Monthly Rental and upon terms and conditions
as existed during the last year of the term hereof.
3.0 RENTAL.
3.1 Monthly Rental. Tenant shall pay to Landlord, during the term of this
Lease from and after the Commencement Date as monthly rental ("Monthly Rental") for the
Demised Premises the sum specified in Section 1.4 hereof, which sum shall be paid in advance
on the first day of each calendar month. In the event the Commencement Date does not occur
on the first day of a calendar month, the Tenant shall pay the rental for the fractional month on
the Commencement Date on a per diem basis (calculated on a thirty-day month). All rental to be
paid by Tenant to Landlord shall be in lawful money of the United States of America and shall be
paid without deduction or offset, prior notice or demand at the address designated in Section
12.10 hereof.
3.2 Percentage Rental.
(a) In addition to the Monthly Rental hereinabove agreed to be paid by
Tenant, Tenant shall and will pay to Landlord at the time and in the manner herein
specified an additional rental (sometimes referred to herein as "percentage rental") a sum
equal to the difference between (A) the product of the Percentage Rental Rate specified
in Section 1.4 above, times the amount of Tenant's gross sales made in, upon, or from the
Demised Premises during each month of the term hereof, less (B) the aggregate amount
of the Monthly Rental previously paid by Tenant for said month.
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(b) Within fifteen(15)days after the end of each calendar month of the
term hereof, commencing with the fifteenth (15th) day of the month following the
Commencement Date, and ending with the fifteenth (15th) day of the month next
succeeding the last month of the Lease term, Tenant shall furnish to Landlord a statement
in writing, certified by Tenant to be correct, showing the total gross sales made in, upon,
or from the Demised Premises during the preceding calendar month (or fractional month
at the beginning of the term if the Commencement Date is other than the first day of a
month), and shall accompany each such statement with a payment to Landlord equal to
said percentage of the total monthly gross sales made in, upon, or from the Demised
Premises during each calendar month, less the Monthly Rent for each such calendar
month (or fractional month, if applicable), if previously paid.
(c) The term "gross sales" as used herein means the total gross
receipts of all goods, wares and merchandise sold and leased including the actual charges
for all services performed by Tenant and fees charged by Tenant and by anyone including
any subtenant, licensee or concessionaire in, at, from, or arising out of the use of the
Demised Premises, whether wholesale or retail, whether for cash or credit, or otherwise,
and including the value of all consideration other than money received for any of the
foregoing, without reserve or deduction or inability or failure to collect, including but not
limited to sales, leases and services. Each installment or credit sale shall be treated as
a sale for the full price in the month during which such sale is made, irrespective of
whether orwhen Tenant receives payment therefor. Gross sales shall include any amount
allowed upon any"trade-in,"the full retail price of any merchandise delivered or redeemed
for trading stamps or coupons and all deposits not refunded to purchasers. Gross Sales
shall not include sales taxes, so-called luxury taxes, consumers excise taxes, gross
receipts taxes and other similar taxes now or hereafter imposed upon the sale of
merchandise or services, but only if collected separately from the selling price of
merchandise or services and collected from customers.
(d) The Tenant shall keep at the Demised Premises (and shall require
any permitted subtenant to keep at the Demised Premises) full, complete and proper
books, records and accounts of its daily gross sales, both for cash and on credit, at any
time operated in the Demised Premises. The Landlord and its agents and employees shall
have the right at any and all times, during regular business hours, to examine and inspect
all of the books and records of the Tenant, including any sales tax reports pertaining to the
business of the Tenant conducted in, upon, orfrom the Demised Premises, for the purpose
of investigating and verifying the accuracy of any statement of gross sales and to cause
an audit of the business of Tenant to be made by a certified public accountant of
Landlord's selection. If the statement of gross sales previously made to Landlord shall be
found to be inaccurate, then and in that event, there shall be an adjustment and one party
shall pay to the other on demand such sums as may be necessary to settle in full the
accurate amount of said percentage rental that should have been paid to Landlord forthe
period or periods covered by such inaccurate statement or statements. If said audit shall
disclose an inaccuracy of greater than three percent(3%) errorwith respect to the amount
of gross sales reported by Tenant for the period of said report, then the Tenant shall
immediately pay to Landlord the cost of such audit; otherwise, the cost of such audit shall
be paid by Landlord.
3.3 Cost of Living Adiustment. Upon each anniversary date of the
Commencement Date or if the Commencement Date is not on the first day of a month, then on
the first day of the next calendar month, the Monthly Rental shall be adjusted in proportion to
changes in the Consumer Price Index. Such adjustment shall be made by multiplying the original
Monthly Rental by a fraction, the numerator of which is the value of the Consumer Price Index for
the calendar month three (3) months preceding the calendar month for which such adjustment is
to be made and the denominator of which is the value of the Consumer Price Index for the same
calendar month immediately prior to Commencement Date. For example, if the adjustment is to
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occur effective October 1, 2003, the index to be used for the numerator is the index for the month
of July 2003 and the index to be used for the denominator is the index for the month of March
preceding the Commencement Date. However, in no event shall the rent be reduced below the
Monthly Rental in effect immediately preceding such adjustment. The"Consumer Price Index"to
be used in such calculation is the Consumer Price Index,All Urban Consumers (All Items), for the
Los Angeles-Anaheim-Riverside Metropolitan Area, published by the United States Department
of Labor, Bureau of Labor Statistics (1982-84 = 100). If both an official index and one or more
unofficial indices are published, the official index shall be used. If said Consumer Price Index is
no longer published at the adjustment date, it shall be constructed by conversion tables included
in such new index.
3.4 Additional Rental. For purposes of this Lease, all monetary obligations
of Tenant under this Lease, including, but not limited to, insurance premiums, property taxes,
maintenance expenses, late charges and utility costs shall be deemed to be additional rental.
3.5 Real Property Taxes. In addition to all rentals herein reserved, Tenant
shall pay, at the election of Landlord, either directly to the taxing authority or to Landlord, annual
real estate taxes and assessments levied upon the Demised Premises (including any possessory
interest taxes), as well as taxes of every kind and nature levied and assessed in lieu of, in
substitution for, or in addition to, existing real property taxes. Such amount shall be paid on the
date that is twenty (20) days prior to the delinquent date or, if Landlord receives the tax bill, ten
(10) days after receipt of a copy of the tax bill from Landlord, whichever is later. Even though the
term of this Lease has expired and Tenant has vacated the Demised Premises, when the final
determination is made of Tenant's share of such taxes and assessments, Tenant shall
immediately pay to Landlord the amount of any additional sum owed.
3.6 Personal Property Taxes. During the term hereof Tenant shall pay prior
to delinquency all taxes assessed against and levied upon fixtures, furnishings, equipment and
all other personal property of Tenant contained in the Demised Premises, and when possible
Tenant shall cause said fixtures, furnishings, equipment and other personal property to be
assessed and billed separately from the real property of Landlord.
3.7 Utilities. Tenant shall pay before delinquency all charges forwater, gas,
heat, electricity, power, sewer, telephone service, trash removal and all other services and utilities
used in, upon, or about the Demised Premises by Tenant or any of its subtenants, licensees, or
concessionaires during the term of this Lease.
3.8 Late Payment. Tenant hereby acknowledges that late payment byTenant
to Landlord of rental or other sums due hereunder will cause Landlord to incur costs not
contemplated by this Lease, the exact amount of which is extremely difficult to ascertain. Such
costs include, but are not limited to, processing and accounting charges. Accordingly, any
payment of any sum to be paid by Tenant not paid when within five (5) days of its due date shall
be subject to a five percent (5%) late charge. Landlord and Tenant agree that this late charge
represents a reasonable estimate of such costs and expenses and is fair compensation to
Landlord for its loss suffered by such late payment by Tenant.
3.9 Interest. Any sum to be paid pursuant to the terms of this Lease not paid
when due shall bear interest from and after the due date until paid at a rate equal to three percent
(3%) over the reference rate being charged by Bank of America, N.A. from time to time during
such period so long as the rate does not exceed the maximum non-usurious rate permitted by law
in which case interest shall be at the maximum non-usurious rate allowed by law at the time the
sum became due.
3.10 Security Deposit. Tenant contemporaneously with the execution of this
Lease, has deposited with Landlord the sum specified in Section 1.5 hereof, receipt of which is
hereby acknowledged by Landlord, said deposit being given to secure the faithful performance
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by the Tenant of all terms, covenants, and conditions of this Lease by the Tenant to be kept and
performed during the term hereof. Tenant agrees that if the Tenant shall fail to pay the rent herein
reserved or any other sum required hereby promptly when due, said deposit may, at the option
of the Landlord (but Landlord shall not be required to) be applied to any rent or other sum due and
unpaid, and if the Tenant violates any of the other terms, covenants, and conditions of this Lease,
said deposit may, at Landlord's option, be applied to any damages suffered by Landlord as a
result of Tenant's default to the extent of the amount of the damages suffered.
Nothing contained in this Section shall in any way diminish or be construed as
waiving any of the Landlord's other remedies as provided in Section 10.0 hereof, or by law or in
equity. Should the entire security deposit, or any portion thereof, be appropriated and applied by
Landlord for the payment of overdue rent or other sums due and payable to Landlord by Tenant
hereunder, then Tenant shall, on the written demand of Landlord, forthwith remit to Landlord a
sufficient amount in cash to restore said security deposit to its original amount, and Tenant's
failure to do so within five (5) days after receipt of such demand shall constitute a breach of this
Lease. Should Tenant comply with all of the terms, covenants, and conditions of this Lease and
promptly pay all of the rental herein provided for as it falls due, and all other sums payable by
Tenant to Landlord hereunder, said security deposit shall be returned in full to Tenant at the end
of the term of this Lease, or upon the earlier termination of this Lease as specified herein except
in the event the Demised Premises are sold as a result of the exercise of any power of sale under
any mortgage or deed of trust, in which event this Lease shall be automatically amended to delete
any reference to this Section and Tenant shall be entitled to immediate reimbursement of its
security deposit from the party then holding said deposit.
4.0 USE OF THE PREMISES.
4.1 Permitted Use. The Landlord hereby leases to Tenant and Tenant hires
from Landlord the Demised Premises with appurtenances as defined herein, for the purpose of
conducting thereon only the use specified in Section 1.6 of this Lease and for no other use.
4.2 Prohibited Uses. Tenant shall not sell or permit to be kept, used,
displayed or sold in or about the Demised Premises (a) pornographic or sexually explicit books,
magazines, literature,films orotherprinted material, sexual paraphernalia, orothermaterial which
would be considered lewd, obscene or licentious, (b) any article which may be prohibited by
standard forms of fire insurance policies, or (c) any alcoholic beverages unless expressly
permitted by Section 1.6 hereof. Tenant shall not use, or permit to be used, the Demised
Premises or any part thereof for the installation or on-premises use of any vending machine,
gaming machine or video or arcade game unless expressly permitted by this Lease.
4.3 Compliance with Laws. Tenant shall, at his sole cost and expense,
comply with all of the requirements of all municipal, state and federal authorities now in force or
which may hereafter be in force pertaining to the use of the Demised Premises, and shall faithfully
observe in said use all municipal ordinances, including, but not limited to, the General Plan and
zoning ordinances, state and federal statutes, or other governmental regulations now in force or
which shall hereinafter be in force. Tenant's violation of law shall constitute an incurable default
underthisLease. The judgment of any court of competentjurisdiction, or the admission of Tenant
in any action or proceeding against Tenant, whether Landlord be a party thereto or not, that
Tenant has violated any such order or statute in said use, shall be conclusive of that fact as
between the Landlord and Tenant.
Tenant shall not engage in any activity on or about the Demised Premises that
violates any Environmental Law, and shall promptly, at Tenant's sole cost and expense, take all
investigatory and/or remedial action required or ordered by any governmental agency or
Environmental Law for clean-up and removal of any contamination involving any Hazardous
Material created or caused directly or indirectly by Tenant. The term "Environmental Law" shall
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mean any federal, state or local law, statute, ordinance or regulation pertaining to health, industrial
hygiene or the environmental conditions on, under or about the Demised Premises, including,
without limitation,(i)the Comprehensive Environmental Response,Compensation and Liability Act
of 1980 ("CERCLA"), 42 U.S.C. Sections 9601 et seq.; (ii) the Resource Conservation and
Recovery Act of 1976("RCRA"), 42 U.S.C. Sections 6901 et seq.; (iii)California Health and Safety
Code Sections 25100 et seq.; (iv) the Safe Drinking Water and Toxic Enforcement Act of 1986,
California Health and Safety Code Section 25249.5 et seq.; (v) California Health and Safety Code
Section 25359.7; (vi) California Health and Safety Code Section 25915; (vii) the Federal Water
Pollution Control Act, 33 U.S.C. Sections 1317 et seq.; (viii) California Water Code Section 1300
et seq.; and (ix) California Civil Code Section 3479 et seq., as such laws are amended and the
regulations and administrative codes applicable thereto. The term"Hazardous Material"includes,
without limitation, any material or substance which is (i) defined or listed as a "hazardous waste",
"extremely hazardous waste", "restrictive hazardous waste" or "hazardous substance" or
considered a waste, condition of pollution or nuisance under the Environmental Laws; (ii)
petroleum or a petroleum product or fraction thereof; (iii) asbestos; and/or(iv) substances known
by the State of California to cause cancer and/or reproductive toxicity. It is the intent of the parties
hereto to construe the terms "Hazardous Materials" and "Environmental Laws" in their broadest
sense. Tenant shall provide all notices required pursuant to the Safe Drinking Water and Toxic
EnforcementAct of 1986, California Health and Safety Code Section 25249.5 et seq. Tenant shall
provide prompt written notice to Landlord of the existence of Hazardous Substances on the
premises and all notices of violation of the Environmental Laws received by Tenant.
4.4 Signs. Tenant shall not place or permit to be placed any sign that is not
in compliance with the sign ordinance of the Landlord upon the exterior or in the windows of the
Demised Premises. Any sign not constructed in accordance therewith shall be immediately
removed by Tenant and, if said sign is not removed by Tenant within ten (10) days of written
notice from Landlord to Tenant, then Landlord may remove and destroy said sign withoutTenant's
approval and without any liability to Tenant.
4.5 Hours of Business. Subject to the provisions of Section 8.0 hereof,
Tenant shall continuously during the entire term hereof conduct and carry on Tenant's business
in the Demised Premises and shall keep the Demised Premises open for business and cause
Tenant's business to be conducted therein during the usual business hours of each and every
business day as is customary for businesses of like character to be open for business in the
county in which the Demised Premises are located. In no event, however, shall such hours of
being open for business be less than (a) 9:00 a.m. through 6:00 p.m. at least five days perweek
or(b) the hours of 70% of the number of tenants in the Demised Premises; provided, however,
that this provision shall not apply if the Demised Premises should be closed and the business of
Tenant temporarily discontinued therein on account of strikes, lockouts, or similar causes beyond
the reasonable control of Tenant. It is the intention of Landlord that the Demised Premises be
open during evening hours to promote business in the City of Palm Springs and, therefore,Tenant
shall participate in any program established by Landlord to provide evening shopping and
entertainment, which program may be administered by the Downtown Business Improvement
District or such other entity that may be designated by the Landlord.
4.6 Charitable Leases. The provisions of this Section are required by
Resolution No. 14527 of the City Council and shall only apply if so indicated in Section 1.8.
Tenant hereby represents and warrants to Landlord that Tenant is exempt from federal income
taxation pursuant to Internal Revenue Code Sections 501(c)(1) and/or 501(c)(3)and that Tenant's
use of the Demised Premises as specified in Section 1.6 is a tax exempt function. Tenant hereby
acknowledges that the Monthly Rent is below fair market rental rates and that the fair market rental
value of the property is as specified in Section 1.8. Prior to the execution of this Lease, Tenant
has provided Landlord with a proposed social program for which the Tenant intends to use the
Demised Premises ("Program"), On each anniversary of the Commencement Date, Tenant shall
submit to Landlord a report, in a form and content satisfactory to Landlord, setting forth Tenant's
progress in meeting the provisions of the Program during that year. If Landlord is not satisfied with
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the Tenant's performance, Landlord may terminate this Lease upon thirty (30) days advance
written notice to Tenant or increase the Monthly Rent to the fair market rental for the Demised
Premises as specified in Section 1.8(increased pursuant to Section 3.3, if applicable). If Landlord
elects to terminate this Lease, Landlord shall pay Tenant the unamortized portion of the
Improvement Costs which are amortized pursuant to Section 5.1. If Landlord elects to terminate
this Lease as provided in this Section, Tenant hereby waives any right to receive any other
compensation from Landlord, including, but not limited to,the value of Tenant's leasehold interest,
loss of goodwill, relocation benefits, inverse condemnation, or the taking of property and Landlord
shall have no obligation to pay Tenant therefor.
4.7 Rules and Regulations. Tenant shall faithfully observe and comply with
the rules and regulations that Landlord shall from time to time promulgate and/or modify. The
rules and regulations, if any, are attached hereto as Exhibit "D" ("Rules and Regulations"). Any
amendment or modification of the Rules and Regulations shall be binding upon the Tenant upon
delivery of a copy of such amendment or modification to Tenant. Landlord shall not be
responsible to Tenant for the nonperformance of any said rules and regulations by any other
tenants or occupants. The Rules and Regulations shall apply and be enforced as to all tenants
in the Demised Premises on a uniform basis.
5.0 ALTERATIONS AND REPAIRS.
5.1 Alterations and Fixtures. Tenant shall not make,or sufferto be made,any
alterations to the Demised Premises, or any part thereof, without the prior written consent of
Landlord, and any alterations to the Demised Premises, except movable furniture and trade
fixtures, shall become at once a part of the realty and shall at the expiration or earlier termination
of this Lease belong to Landlord. Tenant shall not in any event make any changes to the exterior
of the Demised Premises. Any such alterations shall be in conformance with the requirements of
all municipal,state,federal, and other governmental authorities, including requirements pertaining
to the health, welfare or safety of employees or the public and in conformance with reasonable
rules and regulations of Landlord. Landlord may require that any such alterations be removed
prior to the expiration of the term hereof. Any removal of alterations or furniture and trade fixtures
shall be at Tenant's expense and accomplished in a good and workmanlike manner. Any damage
occasioned by such removal shall be repaired at Tenant's expense so that the Demised Premises
can be surrendered in a good, clean and sanitary condition as required by Section 5.2 hereof.
Any and all fixtures and appurtenances installed by Tenant shall conform with the requirements
of all municipal, state, federal, and governmental authorities including requirements pertaining to
the health, welfare, or safety of employees or the public. Upon completion of construction of the
alterations, Tenant shall submit to Landlord evidence satisfactory to Landlord of the cost of said
alterations("Improvement Costs"). The Improvement Costs shall be amortized overthe remaining
initial term of this Lease on a straight line basis for the purposes specified in Sections 2.5 and 4.6.
5.2 Maintenance and Repair. Tenant shall, subject to Landlord's obligations
hereinafter provided, at all times during the term hereof, and at Tenant's sole cost and expense,
keep, maintain and repair the Demised Premises, and other improvements within the Demised
Premises in good and sanitary order, condition, and repair (except as hereinafter provided)
including without limitation, the maintenance and repair of any store front, doors, window
casements, glazing, heating and air conditioning system, plumbing, pipes, electrical wiring and
conduits. Tenant shall also at its sole cost and expense be responsible for any alterations or
improvements to the Demised Premises necessitated as a result of the requirement of any
municipal, state or federal authority. Tenant hereby waives all right to make repairs at the
expense of Landlord, and Tenant hereby waives all rights provided for by the Civil Code of the
State of California to make said repairs. By entering into the Demised Premises, Tenant shall be
deemed to have accepted the Demised Premises as being in good and sanitary order, condition
and repair, and Tenant agrees on the last day of said term or sooner termination of this Lease to
surrenderthe Demised Premises with appurtenances,in the same condition as when received and
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in a good, clean and sanitary condition, reasonable use and wear thereof and damage by fire, act
of God or by the elements excepted. Tenant shall periodically sweep and clean the sidewalks
adjacent to the Demised Premises, as needed.
Landlord shall maintain in good repair the exterior walls, roof and sidewalks.
Tenant agrees that it will not, nor will it authorize any person to, go onto the roof of the building
of which the Demised Premises are a part without the prior written consent of Landlord. Said
consent will be given only upon Landlord's satisfaction that any repairs necessitated as a result
of Tenant's action will be made by Tenant at Tenant's expense and will be made in such a manner
so as not to invalidate any guarantee relating to said roof. Landlord shall not be required to make
any repairs to the exterior walls, roof and sidewalks unless and until Tenant has notified Landlord
in writing of the need for such repairs and Landlord shall have had a reasonable period of time
thereafter to commence and complete said repairs.
5.3 Free from Liens. Tenant shall keep the Demised Premises free from any
liens arising out of any work performed, material furnished, or obligation incurred by Tenant or
alleged to have been incurred by Tenant.
5.4 Construction Obligations. Landlord and Tenant agree to construct the
improvements to the extent shown on the attached Exhibit "E" (Landlord's Work" and "Tenant's
Work," as applicable) at each party's sole cost and expense.
6.0 INSURANCE AND INDEMNIFICATION.
6.1 Insurance Provided by Landlord. Landlord shall maintain fire and
extended coverage insurance throughout the term of this Lease in an amount equal to at least
ninety percent (90%) of the replacement value of the building containing the Demised Premises,
together with such other insurance, coverages and endorsements as may be required by
Landlord's lender, or as Landlord may determine in its sole discretion. Tenant hereby waives any
right of recovery from Landlord, its officers and employees, and Landlord hereby waives any right
of loss or damage (including consequential loss) resulting from any of the perils insured against
as a result of said insurance. Tenant agrees to pay to Landlord its pro rata share of the cost of
said insurance to be determined by the relationship that the gross floor area of the Demised
Premises bears to the total gross leasable floor area of the building or buildings for which such
policy relates.
6.2 Insurance Provided by Tenant.
(a) Food Preparation. Tenant, if involved in food preparation and sales
as a cafe, restaurant, or similar use, and/or food takeout service, shall install at Tenant's
expense any fire protective systems in grill, deep fry, and cooking areas which are required
by city, county, and state fire ordinances, and such system when installed shall qualify for
full fire protective credits allowed by the fire insurance rating and regulatory body in whose
jurisdiction the Demised Premises are located.
(b) Tenant to Provide Personal Property Insurance. Tenant, at its
expense, shall maintain fire and extended coverage insurance written on a per occurrence
basis on its trade fixtures, equipment, personal property and inventory within the Demised
Premises from loss or damage to the extent of their full replacement value and shall
provide plate glass coverage.
(c) Tenant to Provide Liability Insurance. During the entire term of this
Lease, the Tenant shall, at the Tenant's sole cost and expense, but for the mutual benefit
of Landlord and Tenant, maintain comprehensive general liability insurance insuring
against claims for bodily injury, death or property damage occurring in, upon or about the
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Demised Premises and on any sidewalks directly adjacent to the Demised Premises
written on a per occurrence basis in an amount not less than either (i) a combined single
limit of ONE MILLION DOLLARS ($1,000,000.00) for bodily injury, death, and property
damage or(ii) bodily injury limits of$250,000.00 per person, $500,000.00 per occurrence
and $500,000.00 products and completed operations and property damage limits of
$100,000.00 per occurrence and $250,000.00 in the aggregate; provided, however, if
Landlord so elects Landlord may provide such insurance and, in such event, Tenant
agrees to pay its pro rata share of the cost of said insurance on the same basis as
provided in Section 6.1 above.
(d) Tenantto Provide Worker's Compensation Insurance. Tenantshall,
at the Tenant's sole cost and expense, maintain a policy of worker's compensation
insurance in an amount as will fully comply with the laws of the State of California and
which shall indemnify, insure and provide legal defense for both the Tenant and the
Landlord against any loss, claim or damage arising from any injuries or occupational
diseases occurring to any worker employed by or any persons retained by the Tenant in
the course of conducting Tenant's business in the Demised Premises.
(e) General Provisions Applicable to Tenant's Insurance. All of the
policies of insurance required to be procured by Tenant pursuant to this Section 6.2 shall
be primary insurance and shall name the Landlord, its officers, employees and agents as
additional insureds. The insurers shall waive all rights of contribution they may have
against the Landlord, its officers, employees and agents and their respective insurers. All
of said policies of insurance shall provide that said insurance may not be amended or
cancelled without providing 30 days priorwritten notice by registered mail to the Landlord.
Prior to the Commencement Date or such earlier date as Tenant takes possession of the
Demised Premises for any purpose; and at least 30 days prior to the expiration of any
insurance policy,Tenant shall provide Landlord with certificates of insurance orappropriate
insurance binders evidencing the above insurance coverages written by insurance
companies acceptable to Landlord,licensed to do business in the state where the Demised
Premises are located and rated A:VII or better by Best's Insurance Guide. In the event the
Risk Manager of Landlord("Risk Manager")determines that(i)the Tenant's activities in the
Demised Premises creates an increased or decreased risk of loss to the Landlord, (ii)
greater insurance coverage is required due to the passage of time, or (iii) changes in the
industry require different coverages be obtained, Tenant agrees that the minimum limits
of any insurance policy required to be obtained by Tenant may be changed accordingly
upon receipt of written notice from the Risk Manager; provided that Tenant shall have the
right to appeal a determination of increased coverage by the Risk Manager to the City
Council of Landlord within ten (10) days of receipt of notice from the Risk Manager.
Landlord and Tenant hereby waive any rights each may have against the other on account
of any loss or damage occasioned by property damage to the Demised Premises, its
contents,or Tenant's trade fixtures, equipment, personal property or inventory arising from
any risk generally covered by insurance against the perils of fire, extended coverage,
vandalism, malicious mischief, theft, sprinkler damage, and earthquake sprinkler leakage.
Each of the parties, on behalf of their respective insurance companies insuring such
property of either Landlord or Tenant against such loss,waive any right of subrogation that
it may have against the other. The foregoing waivers of subrogation shall be operative
only so long as available in California and provided further that no policy is invalidated
thereby.
6.3 Indemnification of Landlord. Tenant, as a material part of the
consideration to be rendered to Landlord under this Lease, hereby waives all claims against
Landlord for damage to equipment or other personal property, trade fixtures, leasehold
improvements, goods, wares, inventory and merchandise, in, upon or about the Demised
Premises and for injuries to persons in or about the Demised Premises, from any cause arising
at any time. Tenant agrees to indemnify the Landlord, its officers, agents and employees against,
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and will hold and save them and each of them harmless from, any and all actions, suits, claims,
damages to persons or property, losses, costs, penalties, obligations, errors, omissions or
liabilities, (herein "claims or liabilities") that may be asserted or claimed by any person, firm or
entity arising out of or in connection with the negligent performance of the work, operations or
activities of Tenant, its agents, employees, subcontractors, or invitees, provided for herein, or
arising from the use of the Demised Premises or the parking and common areas by Tenant or its
employees and customers, or arising from the failure of Tenant to keep the Demised Premises in
good condition and repair, as herein provided, or arising from the negligent acts or omissions of
Tenant hereunder, or arising from Tenant's negligent performance of or failure to perform any
term, provision covenant or condition of this Lease, whether or not there is concurrent passive or
active negligence on the part of the Landlord, its officers, agents or employees but excluding such
claims or liabilities arising from the sole negligence or willful misconduct of the Landlord, its
officers, agents or employees, who are directly responsible to the Landlord, and in connection
therewith:
(a) Tenant will defend any action or actions filed in connection with any
of said claims or liabilities and will pay all costs and expenses, including legal costs and
attorneys' fees incurred in connection therewith;
(b) Tenant will promptly pay any judgment rendered against the
Landlord, its officers, agents or employees for any such claims or liabilities arising out of
or in connection with the negligent performance of or failure to perform such work,
operations or activities of Tenant hereunder; and Tenant agrees to save and hold the
Landlord, its officers, agents, and employees harmless therefrom;
(c) In the event the Landlord, its officers,agents or employees is made
a party to any action or proceeding filed or prosecuted against Tenant for such damages
or other claims arising out of or in connection with the negligent performance of or failure
to perform the work, operation or activities of Tenant hereunder, Tenant agrees to pay to
the Landlord, its officers, agents or employees, any and all costs and expenses incurred
by the Landlord, its officers, agents or employees in such action or proceeding, including
but not limited to, legal costs and attorneys' fees.
7.0 ABANDONMENT AND SURRENDER.
7.1 Abandonment. Tenant shall not vacate or abandon the Demised
Premises at any time during the term of this Lease; and if Tenant shall abandon, vacate or
surrender the Demised Premises or be dispossessed by process of law, or otherwise, any
personal property belonging to Tenant and left on the Demised Premises shall be deemed to be
abandoned, at the option of Landlord, except such property as may be mortgaged to Landlord.
7.2 Surrender of Lease. The voluntary or other surrender of this Lease by
Tenant, or a mutual cancellation thereof, shall not work a merger, and shall, at the option of
Landlord, terminate all or any existing subleases or subtenancies, or may, at the option of
Landlord, operate as an assignment to it of any or all of such subleases or subtenancies.
8.0 DAMAGE AND DESTRUCTION OF PREMISES. In the event of(a) partial or total
destruction of the Demised Premises during the term of this Lease which requires repairs to the
Demised Premises, or(b)the Demised Premises being declared unsafe or unfit for occupancy by
any authorized public authority for any reason other than Tenant's act, use or occupation, which
declaration requires repairs to the Demised Premises, Landlord shall forthwith make said repairs
provided Tenant gives to Landlord thirty (30) days written notice of the necessity therefor. No
such partial destruction (including any destruction necessary in order to make repairs required by
any declaration made by any public authority) shall in anyway annul or void this Lease except that
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Tenant shall be entitled to a proportionate reduction of Monthly Rental while such repairs are
being made, such proportionate reduction to be based upon the extent to which the making of
such repairs shall interfere with the business carried on by Tenant in the Demised Premises.
However, if during the last two (2) years of the term of this Lease the Demised Premises are
damaged as a result of fire or any other insured casualty to an extent in excess of twenty-five
percent (25%) of the then replacement cost (excluding foundations), Landlord may within thirty
(30)days following the date such damage occurs terminate this Lease by written notice to Tenant.
If Landlord, however, elects to make said repairs, and provided Landlord uses due diligence in
making said repairs, this Lease shall continue in full force and effect, and the Monthly Rental shall
be proportionately reduced while such repairs are being made as hereinabove provided. Nothing
in the foregoing to the contrary withstanding, if the Demised Premises or said building is damaged
or destroyed at any time during the term hereof to an extent of more than twenty-five percent
(25%) of the then replacement cost (excluding foundations) as a result of a casualty not insured
against, Landlord may within thirty(30) days following the date of such destruction terminate this
Lease upon written notice to Tenant. If Landlord does not elect to terminate because of said
uninsured casualty, Landlord shall promptly rebuild and repair the Demised Premises and/or the
building and the Monthly Rental shall be proportionately reduced while such repairs are being
made as hereinabove provided. If Landlord elects to terminate this Lease, all rentals shall be
prorated between Landlord and Tenant as of the date of such destruction. In respect to any
partial or total destruction (including any destruction necessary in order to make repairs required
by any such declaration of any authorized public authority) which Landlord is obligated to repair
or may elect to repair under the terms of this Section, Tenant waives any statutory right it may
have to cancel this Lease as a result of such destruction.
9.0 ASSIGNMENT AND SUBLETTING. Tenant shall not assign this Lease or sublet
the Demised Premises, or any interest therein,without the priorwritten consent of Landlord,which
consent shall not be unreasonably withheld. For purposes of this Lease, an assignment shall be
deemed to include the transfer to any person or group of persons acting in concert of more than
twenty five percent (25%) of the present ownership and/or control of Tenant, taking all transfers
into account on a cumulative basis. Landlord may withhold its consent to an assignment or
sublease to a proposed assignee or sublessee, and Tenant agrees that Landlord shall not be
unreasonable for doing so, unless all the following criteria are met: (a) The proposed assignee's
or sublessee's general financial condition, including liquidity and net worth, verified by audited
financial statements prepared by a Certified Public Accountant in conformity with Generally
Accepted Accounting Principles is equal to or greater than that of Tenant; (b) the proposed
assignee or sublessee has a demonstrated merchandising capability equal to or greater than that
of Tenant as to the use for which the Demised Premises are leased; (c) the proposed assignee
or sublessee is morally and financially responsible; and (d) the failure of tenant's use of the
Demised Premises to fit the business plan of Landlord to promote tourism to the City of Palm
Springs. Any such assignment shall be subject to all of the terms and conditions of this Lease and
the proposed assignee shall assume the obligations of Tenant under this Lease in writing in form
satisfactory to Landlord. The proposed assignee shall simultaneously provide to Landlord an
estoppel certificate in the form described in Section 12.2 hereafter. Consent by Landlord to one
assignment, subletting, occupation or use by another person shall not be deemed to be a consent
to any subsequent assignment, subletting, occupation or use by another person. Any assignment
or subletting without the prior written consent of Landlord shall be void, shall constitute a material
breach of this Lease, and shall, at the option of Landlord, terminate this Lease. Neither this Lease
nor any interest therein shall be assignable as to the interest of Tenant by operation of law.
Landlord shall be under no obligation to consider a request for Landlord's consent
to an assignment until Tenant shall have submitted in writing to Landlord a request for Landlord's
consent to such assignment together with audited financial statements of Tenant and the
proposed assignee, a history of the proposed assignee's business experience and such other
information as required by Landlord to verify that the criteria for assignment as set forth herein are
met. If Landlord approves such assignment, Tenant shall pay to Landlord one-half (1/2) of any
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204117
consideration received by Tenant for such assignment. In addition, if Landlord determines that
the Monthly Rent payable to Landlord under this Lease is less than the fair market rental value,
as determined by Landlord, Landlord shall have the right to condition its approval to an
assignment or subletting on the increase of Monthly Rent to the fair market rental value.
10.0 DEFAULT AND REMEDIES.
10.1 Default by Tenant. In addition to the defaults described in Section 9.0
hereinabove, the occurrence of any one or more of the following events shall constitute a default
and breach of this Lease by Tenant: (a) the failure to pay any rental or other payment required
hereunder to or on behalf of Landlord more than three (3) days after written notice from Landlord
to Tenant that Tenant has failed to pay rent when due; (b) the failure to perform any of Tenant's
agreements or obligations hereunder(exclusive of a default in the payment of money)where such
default shall continue for a period of thirty (30) days after written notice thereof from Landlord to
Tenant which notice shall be deemed to be the statutory notice so long as such notice complies
with statutory requirements; (c)the vacation or abandonment of the Demised Premises by Tenant;
(d) the making by Tenant of a general assignment for the benefit of creditors; (e) the filing by
Tenant of a voluntary petition in bankruptcy or the adjudication of Tenant as a bankrupt; (f) the
appointment of a receiver to take possession of all or substantially all the assets of Tenant located
at the Demised Premises or of Tenant's leasehold interest in the Demised Premises; (g)the filing
by any creditor of Tenant of an involuntary petition in bankruptcy which is not dismissed within
sixty (60) days after filing; or (h) the attachment, execution or other judicial seizure of all or
substantially all of the assets of Tenant or Tenant's leasehold where such an attachment,
execution or seizure is not discharged within sixty (60) days. Any repetitive failure by Tenant to
perform its agreements and obligations hereunder, though intermittently cured, shall be deemed
an incurable default. Two (2) breaches of the same covenant within a sixty (60) day period, a
notice having been given pursuant to (a) or(b) above for the first breach, or three (3) of the same
or different breaches at any time during the term of this Lease for which notices pursuant to (a)
or (b) above were given for the first two (2) breaches shall conclusively be deemed to be an
incurable repetitive failure by Tenant to perform its obligations hereunder.
In the event of any such default or breach by Tenant, Landlord may at any time
thereafter,without further notice or demand, rectify or cure such default, and any sums expended
by Landlord for such purposes shall be paid by Tenant to Landlord upon demand and as
additional rental hereunder. In the event of any such default or breach by Tenant, Landlord shall
have the right (i) to continue the lease in full force and effect and enforce all of its rights and
remedies under this Lease, including the right to recover the rental as it becomes due under this
Lease, or (ii) Landlord shall have the right at any time thereafter to elect to terminate the Lease
and Tenant's right to possession thereunder. Upon such termination, Landlord shall have the right
to recover from Tenant:
(i) The worth at the time of award of the unpaid rental which had been
earned at the time of termination;
(ii) The worth at the time of award of the amount by which the unpaid rental
which would have been earned after termination until the time of award exceeds the
amount of such rental loss that the Tenant proves could have been reasonably avoided;
(iii) The worth at the time of award of the amount by which the unpaid rental
for the balance of the term after the time of award exceeds the amount of such rental loss
that the Tenant proves could be reasonably avoided; and
(iv) Any other amount necessary to compensate the Landlord for all the
detriment proximately caused by Tenant's failure to perform its obligations under the lease
or which in the ordinary course of things would be likely to result therefrom.
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The "worth at the time of award" of the amounts referred to in subparagraphs (i)
and (ii) above shall be computed by allowing interest at three percent (3%) over the prime rate
then being charged by Bank of America, N.A. but in no event greater than the maximum rate
permitted by law. The worth at the time of award of the amount referred to in subparagraph (iii)
above shall be computed by discounting such amount at the discount rate of the Federal Reserve
Bank of San Francisco at the time of award plus one percent (1%), but in no event greater than
ten percent (10%).
As used herein "rental"shall include the Monthly Rental, percentage rental equal
to the average percentage rental paid or payable by Tenant for the last twelve(12)months or such
lesser period as Tenant has been open for business, other sums payable hereunder which are
designated"rental"or"additional rental"and any other sums payable hereunder on a regular basis
such as reimbursement for real estate taxes.
Such efforts as Landlord may make to mitigate the damages caused by Tenant's
breach of this Lease shall not constitute a waiver of Landlord's right to recover damages against
Tenant hereunder, nor shall anything herein contained affect Landlord's right to indemnification
against Tenant for any liability arising prior to the termination of this Lease for personal injuries or
property damage, and Tenant hereby agrees to indemnify and hold Landlord harmless from any
such injuries and damages, including all attorney's fees and costs incurred by Landlord in
defending any action brought against Landlord for any recovery thereof, and in enforcing the
terms and provisions of this indemnification against Tenant.
Notwithstanding any of the foregoing, the breach of this Lease by Tenant, or an
abandonment of the Demised Premises by Tenant, shall not constitute a termination of this Lease,
or of Tenant's right of possession hereunder, unless and until Landlord elects to do so, and until
such time Landlord shall have the right to enforce all of its rights and remedies under this Lease,
including the right to recover rent, and all other payments to be made by Tenant hereunder, as
they become due. Failure of Landlord to terminate this Lease shall not prevent Landlord from later
terminating this Lease or constitute a waiver of Landlord's right to do so.
10.2 No Waiver. Acceptance of rental hereunder shall not be deemed awaiver
of any default or a waiver of any of Landlord's remedies.
10.3 Landlord's Default. Landlord shall not be in default unless Landlord fails
to perform obligations required of Landlord within a reasonable time, but in no event later than
thirty (30) days after written notice by Tenant to Landlord and to the holder of any first mortgage
or deed of trust covering the Premises whose name and address shall have theretofore been
furnished to Tenant in writing, specifying wherein Landlord has failed to perform such obligation;
provided, however,that if the nature of Landlord's obligation is such that more than thirty(30)days
are required for performance then Landlord shall not be deemed in default if Landlord commences
performance within a(30)day period and thereafter diligently prosecutes the same to completion.
In no event shall Tenant have the right to terminate this Lease as a result of Landlord's default and
Tenant's remedies shall be limited to damages and/or an injunction.
11.0 CONDEMNATION. In the event a condemnation or a transfer in lieu thereof
results in a taking of any portion of the Demised Premises, Landlord may, or in the event a
condemnation or a transfer in lieu thereof results in a taking of twenty-five percent(25%) or more
of the Demised Premises, Tenant may, upon written notice given within thirty(30) days after such
taking or transfer in lieu thereof, terminate this Lease. Tenant shall not be entitled to share in any
portion of the award and Tenant hereby expressly waives any right or claim to any part thereof.
Tenant shall, however, have the right to claim and recover, only from the condemning authority
(but not from Landlord), any amounts necessary to reimburse Tenant for the cost of removing
stock and fixtures. If this Lease is not terminated as above provided, Landlord shall use a portion
of the condemnation award to restore the Demised Premises.
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Oc.L/
12.0 MISCELLANEOUS.
12.1 Entry and Inspection. Tenant shall permit Landlord and his agents to
enter into and upon the Demised Premises at all reasonable times for the purpose of inspecting
the same or for the purpose of maintaining the Demised Premises as required by the terms of this
Lease or for the purpose of posting notices of nonliability for alterations, additions or repairs, or
forthe purpose of placing upon the property in which the Demised Premises are located any usual
or ordinary "For Sale" signs or any signs for public safety as determined by Landlord. Landlord
shall be permitted to do any of the above without any rebate of rent and without any liability to
Tenant for any loss of occupation or quiet enjoyment of the Demised Premises thereby
occasioned. Tenant shall permit Landlord, at any time within six(6) months prior to the expiration
of this Lease, to place upon the Demised Premises any usual or ordinary "For Lease" signs, and
during such six(6)month period Landlord or his agents may, during normal business hours, enter
upon said Demised Premises and exhibit same to prospective tenants.
12.2 Estoppel Certificate. If, as a result of a proposed sale, assignment, or
hypothecation of the Demised Premises or the land thereunder by Landlord, or at any other time,
an estoppel certificate shall be requested of Tenant, Tenant agrees, within ten (10) days
thereafter,to deliver such estoppel certificate in the form attached hereto as Exhibit"C"addressed
to any existing or proposed mortgagee or proposed purchaser, and to the Landlord. Tenant shall
be liable for any loss or liability resulting from any incorrect information certified, and such
mortgagee and purchaser shall have the right to rely on such estoppel certificate and financial
statement.
12.3 Jurisdiction and Venue. The parties hereto agree that the State of
California is the proper jurisdiction for litigation of any matters relating to this Lease, and service
mailed to the address of tenants set forth herein shall be adequate service for such litigation. The
parties further agree that Riverside County, California is the proper place for venue as to any such
litigation and Tenant agrees to submit to the personal jurisdiction of such court in the event of such
litigation.
12.4 Partial Invalidity. If any term, covenant, condition or provision of this
Lease is held by a court of competent jurisdiction to be invalid, void, or unenforceable, the
remainder of the provisions hereof shall remain in full force and effect and shall in no way be
affected, impaired or invalidated thereof.
12.5 Successors in Interest. The covenants herein contained shall, subject to
the provisions as to assignment,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.
12.6 No Oral Agreements. This (i) Lease covers in full each and every
agreement of every kind or nature whatsoever between the parties hereto concerning this Lease,
(ii)supersedes any and all previous obligations, agreements and understandings, if any, between
the parties, oral or written, and (iii) merges all preliminary negotiations and agreements of
whatsoever kind or nature herein. Tenant acknowledges that no representations orwarranties of
any kind or nature not specifically set forth herein have been made by Landlord or its agents or
representatives.
12.7 Authority. In the event that Tenant is a corporation or a partnership, each
individual executing this Lease on behalf of said corporation or said partnership, as the case may
be, represents and warrants that he or she is duly authorized to execute and deliver this Lease
on behalf of said corporation or partnership, in accordance with a duly adopted resolution of the
Board of Directors, if a corporation, or in accordance with the Partnership Agreement, if a
partnership, and that this Lease is binding upon said corporation or partnership in accordance with
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20Aace
its terms. Tenant represents and warrants to Landlord that the entering into this Lease does not
violate any provisions of any other agreement to which Tenant is bound.
12.8 Relationship of Parties. The relationship of the parties hereto is that of
Landlord and Tenant, and it is expressly understood and agreed that Landlord does not in any
way or for any purpose become a partner of Tenant in the conduct of Tenant's business or
otherwise, or a joint venturer with Tenant, and that the provisions of this Lease and the
agreements relating to rent payable hereunder are included solely for the purpose of providing a
method whereby rental payments are to be measured and ascertained.
12.9 Nondiscrimination. Tenant herein covenants by and for itself, its heirs,
executors, administrators and assigns and all persons claiming under orthrough it, and this Lease
is made and accepted upon and subject to the following conditions: That there shall be no
discrimination against or segregation of any person or group of persons on account of race, sex,
marital status, color,creed, national origin orancestry, in the leasing,subleasing,transferring, use,
occupancy, tenure or enjoyment of the Demised Premises herein leased, nor shall the Tenant
itself, or any person claiming under or through it, establish or permit any such practice or practices
of discrimination or segregation with reference to the selection, location, number, use or
occupancy of tenants, lessees, sublessees, subtenants or vendees in the Demised Premises.
12.10 Notices. Wherever in this Lease it shall be required or permitted that
notice and demand be given or served by either party to this Lease to or on the other, such notice
or demand shall be given or served in writing and shall not be deemed to have been duly given
or served unless in writing, and personally served or forwarded by certified mail, postage prepaid,
addressed, if to Landlord, to City of Palm Springs, P.O. Box 2743, Palm Springs, California,
92263,Attn: City Manager, and if to Tenant, as specified in Section 1.7. Either party may change
the address set forth herein by written notice by certified mail to the other. Any notice or demand
given by certified mail shall be effective one (1) day subsequent to mailing.
12.11 Waiver. No delay or omission in the exercise of any right or remedy by
a nondefaulting party shall impair such right or remedy or be construed as a waiver. A party's
consent to or approval of any act by the other party requiring the party's consent or approval shall
not be deemed to waive or render unnecessary the other party's consent to or approval of any
subsequent act. Any waiver by either party of any default must be in writing and shall not be a
waiver of any other default concerning the same or any other provision of this Lease.
12.12 Exhibits and Addenda. The Exhibits and Addenda attached to this Lease
are made apart hereof as if fully set forth herein. In the event of a conflict between the terms and
provisions of an Addenda and the terms and provisions of this Lease, the terms and provisions
of the Addenda shall prevail.
IN WITNESS WHEREOF, the parties have duly executed this Lease together with the
herein referred to Exhibits which are attached hereto, on the day and year first above written in
Palm Springs, California.
ATTEST: CITY OF PALM SPRINGS, a
municipal corporation
By: By:
City Clerk City Manager
"LANDLORD"
REVIEWED AND APPROVED
-15-
ao�}a!
BURKE WILLIAMS & SORENSEN
By:
David J. Aleshire, Esq.
City Attorney
By:
Its:
By:
Its:
'TENANT'
-16-
EXHIBIT "C"
ESTOPPEL CERTIFICATE
Tenant:
Landlord: CITY OF PALM SPRINGS, a
municipal corporation
Date of Lease:
Demised Premises:
To:
The undersigned hereby certifies as follows:
1. The undersigned is the tenant ("Tenant") under the above-referenced lease
("Lease") covering the above-referenced premises ("Demised Premises").
2. The Lease constitutes the entire agreement between landlord under the Lease
("Landlord") and Tenant with respect to the Demised Premises and the Lease has not been
modified, changed, altered or amended in any respect except as set forth above.
3. The term of the Lease commenced on 20 and,including
any presently exercised option or renewal term, will expire on , 20 .
Tenant has accepted possession of the Demised Premises and is the actual occupant in
possession thereof and has not sublet, assigned or hypothecated its leasehold interest. All
improvements to be constructed on the Demised Premises by Landlord have been completed and
accepted by Tenant and any tenant construction allowances have been paid in full.
4. As of this date, to the best of Tenant's knowledge, there exists no breach or default,
nor state of facts which, with notice, the passage of time, or both, would result in a breach or
default on the part of either Tenant or Landlord. To the best of Tenant's knowledge, no claim,
controversy, dispute, quarrel or disagreement exists between Tenant and Landlord.
5. Tenant is currently obligated to pay Monthly Rent in installments of
$ per month, and such monthly installments have been paid not more than one
month in advance. In addition, the Lease requires Tenant to pay percentage rent each month in
the amount of percent(_%) and percentage rent has been paid through
19 . To the best of Tenant's knowledge, no other rent has been paid in advance and Tenant
has no claim or defense against Landlord under the Lease and is asserting no offsets or credits
against either the rent or Landlord. Tenant has no claim against Landlord for any security or other
deposits except $ which was paid pursuant to the Lease.
6. Tenant has no option or preferential right to lease or occupy additional space within
the Property of which the Demised Premises are a part. Tenant has no option or preferential right
to purchase all of any part of the Demised Premises nor any right or interest with respect to the
Demised Premises other than as Tenant under the Lease. Tenant has no right to renew or
extend the term of the Lease except as set forth in the Lease.
7. Tenant has made no agreements with Landlord or its agent or employees
concerning free rent, partial rent, rebate of rental payments or any other type of rent or other
concession except as expressly set forth in the Lease. yA�
EXHIBIT "C"
TO LEASE
8. There has not been filed by or against Tenant a petition in bankruptcy, voluntary
or otherwise, any assignment for the benefit of creditors, any petition seeking reorganization or
arrangement under the bankruptcy laws of the United States, or any state thereof, or any other
action brought under said bankruptcy laws with respect to Tenant.
9. All insurance which Tenant is required to maintain under the Lease has been
obtained by Tenant and is in full force and effect and all premiums with respect thereto have been
paid.
Dated this day of 19_
By:
Its:
EXHIBIT "C" o2o " a .�
TU T-PA¢F
EXHIBIT "D"
RULES AND REGULATIONS
1. All loading and unloading of goods shall be done only at the times, in the areas and
through the entrances reasonably designated for such purposes by Landlord.
2. The delivery or shipping of merchandise, supplies and fixtures to and from the
Demised Premises shall be subject to such rules and regulations as in the reasonable judgment
of Landlord are necessary for the proper operation of the Demised Premises or of the Property
generally.
3. All of Tenant's refuse and rubbish shall be removed to central trash bins located in
the Property, at Tenant's sole cost and expense.
4. No radio ortelevision or other similardevice audible outside the Demised Premises
shall be installed without obtaining in each instance the written consent of Landlord. No aerial
shall be erected on the roof or exterior walls of the Demised Premises or on the grounds of the
Property without first obtaining in each instance the written consent of Landlord which consent
shall not be unreasonably withheld or delayed. Any aerial so installed without such written
consent shall be subject to removal without notice at any time.
5. No loudspeakers, televisions, phonographs, radios or other devices shall be used
in a manner so as to be heard or seen outside of the Demised Premises without first obtaining in
each instance written consent of Landlord.
6. The outside sidewalks and loading areas immediately adjoining the Demised
Premises shall be kept clean and free from dirt and rubbish by Tenant to the reasonable
satisfaction of Landlord, and Tenant shall not place or permit any obstructions or merchandise in
such areas, except to the extent specifically permitted by the provisions of Tenant's Lease.
7. Tenant shall not burn any trash or garbage of any kind in or about the Demised
Premises or the Property generally.
8. Tenant will not allow animals, except seeing-eye dogs, in, about or upon the
Demised Premises.
9. Tenant shall not use, and shall not allow anyone else to use,the Demised Premises
as a habitation. Such prohibition shall include, without limitation, sleeping, eating or bathing.
10. Tenant shall not place any rubbish or other matter outside any building within the Property,
except in such containers as are authorized from time to time by Landlord.
11. Tenant shall keep all window displays in a clean and orderly fashion. If merchandise is to
be shown in the window displays, such merchandise shall be changed at least every other month.
Landlord shall have the right to require the removal or change of any window display it finds, in
its sole and absolute judgment, unattractive or objectionable.
EXHIBIT "D"
TO LEASE
;24�9/f a�
EXHIBIT "E"
CONSTRUCTION OBLIGATIONS
Both parties agree that the schedule of improvements to the Center is dependent upon the receipt
of funds from sources other than the City of Palm Springs.
Prior to Commencement of Lease
These are the minimum improvements necessary to create some of the feeling of a first-rate
tennis facility, such as the Plaza Racquet Club.
All windscreens need to be replaced with non-see-through, non-permeable material to reduce dust
on the courts and increase privacy. This is one of the highest priorities, as the City now has"park"
windscreens vs. "resort"windscreens. The contractor's recommendation is to have solid vinyl on
the end returns and open mesh on the other sides, for 23,100 total square feet. The Contractor's
estimate is $.70/s.f., or$16,170 total.
All the fences need to be painted green. The Tennis Center fences are currently the normal silver
metallic, which creates the wrong impression with serious tennis players. The new color would
be either green or black(recommended by the contractor)electropaint. Estimated cost is$2,500
per court x 9 courts = $22,500.
The lights need to be replaced and the light standards lowered to 18' for improved lighting. The
Tennis Center has the same number of poles as the Plaza Racquet Club and the same wattage
fixtures, but the lighting is inferior. If the Haggstroms are able to take the fixtures from the Plaza
Racquet Club, the cost of replacing the fixtures would be about $200 per pole for 48 poles, or
though with the age of the electrical system that cost is likely to be somewhat higher. Estimated
cost: $9,600,
Court surfacing repair. The City spent about$20,000 two years ago resurfacing the courts,which
are actually in pretty good shape. The exception is a couple of areas that have some water
damage from the adjacent landscaping irrigation. The cost of repairing these spots is
approximately$3,000.
Second Year Improvements
Interior fences between courts need to be lowered. The interior fences, from the first light pole
to the last light pole, is a distance of 80 feet. These fences are currently 6' (with a portion at 10')
that would be lowered to (replaced by) 3 % to 4'. There are two interior fences in each cluster of
three courts. Cost is to be determined by contractor quote, but is estimated to be about$10 per
linear foot. Total estimated cost = $4,800.
Pro shop area to be remodeled and updated, and the bathrooms need to be modernized and
upgraded and showers added. Security also needs to be added to the building to reduce the
chance of break-in and theft (laminated security glass), as well as a "keypad" gate lock to allow
play after hours or in the summer while maintaining the overall security at the facility. The City
spent $15,000 two years ago replacing the water-damaged ceiling and repairing the roof, but
these new upgrades would create more of a "club" atmosphere and would allow players to take
a shower after play. Our estimates right now is that the cost of the building improvements could
approach $30,000, with the security upgrades another$7,500. Total estimated cost: $37,500.
EXHIBIT "E"
TO LEASE
Benches with awnings between courts. The ideal would be to put one between each two courts,
or two per 3-court cluster (6 total). Cost per bench with awning and water dispenser: $2,000.
Total cost = $12,000.
Parking lot may need to be repaved or slurried. Not right away, but a new slurry would be only
$2,000 and would make the parking lot look much better. The City's Streets crews can absorb this
in their workload.
The Tennis Center sign would need to be replaced with a larger, upgraded sign. The current sign
is quite small and inadequate for a destination facility. While we don't know what the final signage
would be, all of our parks are going to large, pre-cast concrete signs. The cost of Baristo Park
sign was $10,000.
Future Improvements
Center Court.
EXHIBIT "E"
TO LEASE
�d� a �
EXHIBIT "F"
LEASE MODIFICATIONS
Section 3.2, Percentage Rental, does not apply.
Section 3.5, Real Property Taxes, does not apply.
Section 3.7, Utilities, shall read as follows:
Tenant and Landlord shall share the cost of utilities used in, upon, or about the Demised
Premises byTenantorany of its subtenants, licensees, or concessionaires during the term
of this Lease, in the following manner:
Water. Landlord shall pay the first$300 of the water bill;Tenant shall pay all water
charges over$300.
Electricity. Landlord shall pay the first$300 of the electric bill; Tenant shall pay all
electric charges over$300.
Gas and Heat. Landlord shall pay the first$300 in gas costs; Tenant shall pay all
electric charges over$300.
Sewer. Landlord shall absorb sewer costs.
Telephone. Tenant shall pay all telephone charges, including monthly service, long
distance, installation or initiation, and maintenance and repairs.
Trash Removal. Trash removal services are provided by the City's franchised
waste hauler at no charge.
Section 3.9, Interest, does not apply.
Section 3.10, Security Deposit, does not apply.
Section 4.5, Hours of Business, shall read:
Hours of Business. Subject to the provisions of Section 8.0 hereof, Tenant shall
continuously during the entire term hereof conduct and carry on Tenant's business in the
Demised Premises and shall keep the Demised Premises open for business and cause
Tenant's business to be conducted therein during the usual business hours of each and
every business day during the Tenant's Operating Season from October 1 through June
1 as is customary for businesses of like character to be open for business in the Coachella
Valley. In no event, however, shall such hours of being open for business be less than (a)
9:00 a.m. through 6:00 p.m. at least five days per week.
Section 4.6, Charitable Leases, does not apply.
Section 5.2, Maintenance and Repair, shall read:
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FAbruary 5, 2002
Via Hand Delivery
The Honorable Will Kleindicnst, Mayor Jeanne Reller-Spurgin, Mayor Pro Tern
City of Palm Springs City of Palm Springs
3200 Tahquitz Canyon Way 3200 Tanquim Canyon Way
Palm Springs, CA 92262 Palm Springs, CA 92262
Ran Oden, City Council Member Chns Mills, City Council Member
City of Palm Springs City of Palm Springs
3200 Tahquitz Canyon Way 3200 TahquiTz Canyon Way
Palm Springs, CA 92262 Palm Springs, CA 92262
Re: Tennis Center Proposal
pear Mayor Kleindienst and Council Members'
The City Council is facing an important decision relative to the use and future
utilization of its tennis facility an 13aristio Road. I don't think there's any question that this
facility has been under utilized for years and at a great cost to the City in terms of
maintenance and other financial requirements.
The City has before it two proposals. One by,Ana and Kurt Haggstrom which we
understand requires a substantial subsidy by the City of as much as several h indreds of
thousands of dollars over the term of the proposed lease agreement, versus a proposal
from Harold Matzner/The Tennis Club,which generates a positive cash flow for the City.
The$300,000 commitmentof the Tennis Club, a non-profit corporation, will 00 personally
guaranteed by Harold Metzner.
Lip until two years ago,tennis in this City was dead. Once renowned for its tennis,
the City has seen a decline in participation of this activity by its residents The failures of
i past lessees at this tennis facility, as well as a decline of the tennis racility at The Riviera,
and at The Tennis Club, enronicle ano verify triis empirical data. Harold Mataner,
embarked on a personal mission to restore ani revitalize tennis In Palm Springs. his goal
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02/05/02 15!13 FAX AGO 322 2107 SLOVAK BARON & EMPE'f 0002
vow oFPiC�,s of
i t3E571- BEST 6, KRIEGER l..t..P
' The Honorable Will Kleindienst, Mayor
Jeanne Reller-Spwrgin, Mayor Pro Tern
Ron 0den, C.ty Council Member
Chris Mills, City Council Member
City of Palm Springs
February$, 2002
Page 2
and objective was and is to create and facilitate an environment where not only tennis
thrives, but significant and sut3stanttve efforts are made to bang new players into the
game Mr- Matzner is keenly interested in expanding the youth program as well as
establishing an outreach to middle and older age individuals who may never have had the
pleasure of playing the game. He wants to create a national seniors' tournament at the
Palm Springs facility and to maintain and improve the facility's connection with the Palm
Springs High School tennis team and other youth organizations
The mission is strictly philanthropic, Mr. Matzner wants to develop Palm Springs
into a mecea for tennis. He wants Palm Springs to be known not as merely a casino town
but as a vanue for tennis as well. His track record over the last 24 months speaks for
itself. He has revitalized The Tennis Club, from an almost extinct tennis club with
revenues of$39 000.00,to a sold oyt and completely refurb'isheq facility that is vibrant with
tennis every day. Fle has pumped over $2 Million into The Tennis Club, including the
remodeling of Spencer's Restaurant, which is open for breakfast, lunch and dinner. The
Tennis Club is a complete success with current membership revenues of$250,000.00
annually and a wait list in excess of 100 people
Because The Tennis Clut)has only 11 courts, and a lonq wait list,the Tennis Center
on Baristo Road provides an ideal location for a symbiotic relationship between the two
clubs. Here, with Aria and Kurt Haggstrom as the directors of tennis, or some other
equally qualified individual, The Tennis Club could complement the existing public use of
the facilities with new members and infuse the atmosphere with the energy and attention
of national tennis tournaments and enhanced youth programs
From afinancial standpoint,it would be fiscally irresponsible for the City to approve
the proposal being recommended Ana and Kurt Haaastrom. That proposal requires the
City to subsidize the Haggsiroms in an emountthat is unclear, but may befrom$10.000.00
to $30.000.00 per year, plus the City may bear ultimate financial responsibility for some.
if not all, of the improvements that are needed to the facility.
As a caveat to dehneatinq the terms and conditions of the Metzner proposal, it is
important to note that Mr. Matzner submitted a formal proposal to the City on the Baristo
facility in March of fast year_ A copy of That proposal is attacheo herein for your quick
reference_ What is important to note about this proposal (aside from the fact that
Mr. Matzner has greatly improved on the financial aspects of it), is that the City failed
completely to respond positiveiy or negatively to the proposal arid left Mr. MazZnerwith the
it_1'A.TlO[n.'7\+o47Pv
02/05/02 15:14 FAX 760 322 2107 SLOVAZ BARON & EMT la OOJ
L, W Or FJC�:S OF
i BEST RE5T S, KRIEGFFR LLP
The Honorable Will Kleindicnst, Mayor
Jeanne Reiler-5purgin, Mayor Pro Tem
Ran Oden, City Council Member
Cnris Mills, City Council Member
City of Palm Springs
February 5, 2002
Page 3
distinct understanding that his proposal would be considered andthat ne would be advised
by the City if there was any plan with respect to the facility of any Kind. Unbeknownst to
Mr. Matzner, and with complete disregard for the representations made to nim,the City nas
apparently participated in behind the scenes negotiations wan Ana and Kurt Haggstrom,
who currently operate the Hilton Tennis Center. The City Staff was directed to work out
the terms and conditions of contract with Haggstrom despite[tie existence of the Metzner
proposal and the reality That Metzner and Tne Tennis Club haw invested over$2 Million
in tennis in Pairs Springs_ Neither the Council nor the Staff contacted Mr Matzner
concerning his proposal or to inquire as to whether acceptance of the Haggstrom proposal
could impact The Tennis Club negatively. Given the City's current financial problems, it
is hard to understand why a benefactor like Metzner, with a proposal that generates
positive cash flow for the City, was ignored.
Having said that, however, the situation can he salvaged on a win-win-win basis
The City can accept The Tennis Club proposal and include Haggstrom as part of the
package. Even if the City feels it is somewnal obligated to Haggstrom (though we
understand he has already been paid a substantial amount by the Agua Caliente andlor
Hilton for relocation expenses) iha City ceftainly ran, and historically has, imposed
conditions on individuals or entities as part of any City assistance package. In This case,
Tne City can require Haggstrom, if he grants to be a part of this facility, to accommodate
some of the few regyirements that Matzner and The Tennis Club have regarding a
standard set of rules, operating hours, and utilization of the courts py Tennis Club
members and the public at large_
The specifics of the Metzner/Tennis Club proposal areas follows-,
1. The tennis facility will be open to the punlic as it has peen historically The
hauNy rates presently in effect will remain in effect for the first year
Depending on circumstances, they could be increased in subsequent years,
2. The tennis facility will also have a club membership component to it, with
current members of the Plaza Racquet Club being accepted as continuing
members of this facility at The same rates that are currently being charged
by the Hilton. New members will be charged a higher fee Membership
cards will carry both names--Plaza Racquet Clup and Palm Springs Tennis
Clut;i 2.
3. Tne term of the lease will pe 5 years with an option far an additional 4 years.
F:MlJIl+A,wMc9nau9
02/05/02 15:14 FAX 760 122 2107 SLOVArt BARON & EMPEX Z 004
r
Hnw oFriccs or•
BEST REST F� KRIEGER LLF'
Tne Honorable Will Kleindienst, Mayor
Jeanne Roller-Spurgin, Mayor Pro Tem
Ron Qden, City Council Member
Chris Mills, City Council Member
City of Palm Springs
February 5, 2002
Page 4
4. The (Palm Springs Tennis Club Members Association will pay for the fir-sr
$100,000 of physical improvements to the facility lmprovemen[s may
mclude the installation of resort wind screens;fences would be repainted as
necessary;court lights worlld be improved as necessary; resurfacing courts
where necessary; Interior fences would be lowered as necessary; the pro
shop will be remodeled;the bathrooms modernized and upgraded; security
will be added to the pro shop building; benches will be provided between
courts; and new signage will be installed.
5 The PSTCMA would completely offset all maintenance costs for the facility
by paying rent of$4,000 per month, payable September tnror-igh July,
6 The lease will be in the name of the PSTCMA-
7- All financial obligations will be personally guaranteed by Harold Matzner,
President of the PSTCMA, and Chairman of the Board's Steering Committee-
8 The Palm Springs High School girls and boys teams witi pe able to use the
facility for training and as their home courts, and at no expense-
9 The PSTC mess and women's senior tournament will oe nationally
advertised in conjunction with the Bureau of Tourism- The tournament will
be played on all 20 courts that now will be available(including the i 1 courts
from the Palm Springs Tennis Club) These two toyrnaments will bring many
guests to Palm Springs hotels during the month of January that would riot
ordinarily be visiting our City-
10_ The Annual Palm Springs Stroke Center Tournament sponsored by me
PSTC will be played on all twenty courts that now will be available each
April. Every effort will he made to play all or part of other tournaments bn
these courts.
11. The facility signage,for at least the first year,will display the"plaza Racquet
Club and Palm Springs Tennis Club 2" logos.
12 The Fulton Hotel will continue to$end its tennis guests to tills facility. Every
effort will IDS made to attract the same support from the Wyndham, Hyatt,
Marquis and Spa Hotels.
R�r r�u;ausamv
02/OS/02 15:15 FAX 760 322 2107 SLOVAK BARON & EMPEY f{1J 005
u w aFFiccZ of
BEST BEST & KRIEGER LLR
j The honorable Will Kleindienst, Mayor
Jeanne Reller-Spurgin, Mayor Pro Tem
Ron Oden, City Council Member
Chris Mills, City Council Member
City cif Palm Springs
February 5, 2002
Page 5
13. The Palm Springs Tennis Club has donated $2,500 to the USA National
.Junior Tennis i-eague in the name of the City of Palm Springs. The program
was founded in 1968 by Charlie Pasarell and ArthurAshe The NJTL is now
a nationwide tennis program administered py the t15TA Its primary goal is
to introduce as many children as possiple to the lifetime sport of tennis and
to provide both tennis skills and social develnprnent. The facility will
participate in the Coachella Valley Chapter of the NJTL. Vve are committed
to providing free weekend tennis clinics sponsored dy ourteachirig pros and
other focal valley pros at no charge to participants
14. USTA or Desert League Team Tennis will be made available at this facility.
15, We will attempt to provide as many seniors and adults as posstbie the
opportunity to learn or re-learn how to play tennis. Tennis builds fitness and
self esteem It is a wonderful game for those in their later years
Senior group beginners or re-entry lessons (4 players maxrmum) will be
available Lo residents cf Palm Springs for as little as $5 per lesson.
ScnolarshipswillbeprovidedforThoserequiringfinancialaid. Thirtylessons
(3 times per week)will be recommended to beginners, and 15 or 20 lessons
for those players re-entering
16- The rules of the Palm Springs Tennis Clubwith respect Toconduct will apply
however, shirts without collars will be allowed.
17. A pro shop will be stocked and open daily.
18, For purposes of match making (the availability of players), it may be
advantageous quring certain summer months to combine the operations of
The Plaza Racquet Club and Palm Springs Tennis Club 2 with that of the
Palm Springs Tennis Club. If that should be the case, all matches will take
place at [he Palm Springs Tennis Ciup. Notwithstanding the above,
however,all public access to the Palm Springs Tennis Club 2 will remain the
same.
The City has an easy decision to make. There is only one legitimate way to vote
on tnizi 155ue, espnially given the financial difficulties the City currently finds itself in. fn
making this decision, the City should consider trio adverse impact that will result if The
Eui.m�cnnT�"c�u�
02;'nSi02 15:15 FAX 760 .122 210, SLO'tiAK BARON & E'MPEY Z 006
OFFICES 4F
BEST BEST o KRIEGER I_LP
The Honorable Will Kleindienst, Mayor
Jeanne Reller-Spurgin, Mayor Pro Tem
Han Oden, City Council Member
Chris Mills, City Council Member
City of Palm Springs
Fepruary 5, 2002
Page 6
Tennis Club saes not have use of this facility. Up until this time, that isswe has not been
a factor, despite the multimillion dollar investment The Tennis club has made in tennis in
Palm Springs over trio last 24 months- The proposal py MatzneriTennis Club for this
facility is not only in the best economic interest of the City, byt is in the best interests of
tennis.
Rejecting Mr. Matzner's proposal represents an outright assault on his efforts to
revitalize tennis in Palm Springs, as well as the image of Palm Springs overall. The City
is fortunate to have a benefactor like Harold Matzner in Its midst, and should ponder long
and hard before making a decision that could nave the effect of chilling Mr- Matzner's
interest in Palm Springs and City activities- Clearly, the City failed miserably with respect
to the initial Matzner proposal, put still has a cnance to do the right thing. Ana it's not
the right tning merely because of Matzner's involvement, but it's trie right thing for the
development of tennis in Palm Springs and certainly a "no brainar' from a financial
standpoint for the City of Palm Springs. Front and improvements of $100,000.00 to the
Citys property will be guaranteed by Mr. Matzner,and his proposal includes annual lease
payments that are$31,375.00 more than those proposed by Mr- and Mrs Haggstrorn In
total, the proposal appears to represent a financial commitment more tl1an $250,000.00
greater than the Haggstrom proposal.
For all of the above reasons, I am strongly recommending thatthe City not approve
the Haggstrorn subsidy proposal. With direction from the City, Mr- Matzner and the
HEiggstroms may well be able to work out the details of an ongoing relationship between
the Haggstroms and the Tennis Club. Regardless,the only economically rational proposal
for use of the Tennis Center faci Iity is this proposal by Mr. Matzner, I urge you to consider
its adoption at your first opportunity
Very truly yours,
Martin A, Mueller
of BEST 13EST& KRIEGER I-I-P
MAWea
cc Harold Mitzrier
M9.PIN7AM�i�s7g9
i 02/05/02 15:16 FAX 760 722 2107 SLOVAK BARON & EMPEY [a 007
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PSTGT_v1A
PALM SPRINGS TFINNIS CLUB MF- MBFRS
ASSOCIATION
P�•5��,.�T.••ni C46
lvLixrh 2f1,2001
14[r.IO:rrid Re•+117
City M"Wes
City of Palm Springs -
Ra P,cK Z743
Pabn Spsign CA 9=3
Dear 7 aA.-
As you map be==r,the Palm Spong Teanvs Club his enjoyed•Z=Ulablc xr=v-,ace duxisig the past fi w
year The Club.'Phich is located up agtinst the mwatams is the 1l stout Teatvs Club distgcy his a hold out
membenhiE a$1,000 mttiaticm fee sod a'c-;iftHst of mote than one buudied.
The Qub's MD local Season i Members have contributed mace ditto 11,000,000 dolls,to iunpcovemeac sad
special events at the 7VOWs Club in dw pavt 36 mo&th Alenabemup has quvdmplod and sacwbea-1up
xe n=e has Tintapled au the Pant tbxue year^ 'Many of the 7acn15wmwl Membta of the Te=4 Club ale
committed m the psserv25.on of the Clab as a cvmcmmity asset That cowsw ,tncat his kd to*e sport of
volunteerism and genematy-that is at the cote of tlaa tMwfonnatiuu of the Club&c-m its law palut in"97
to it's Feat successful runes t
The f„ ,P of tn=is lies in st a dnbClgpraP21i of new pleyeas We do nor have mom oa 0uv paeaent cletrn
courts tv bpetnte uV=Wgprograms itsf yO11QgPeOPlc.
We Understand that Levnao Gonas bas closed the uty-cw=d J.uOpet-tp, "Tice Tems Ctat! ' at 230C ,E.
Batista Rand- The Palm 5°85 Tetivos Club I embea'ISynncladon,of wbicEt I am Pnsid=%svocla like to
,KTtitc the m=dndcra)&(;oAas'thcneaynasle- on%hatptoperry.
The 4cWty would be renamed `The Palm Sp4ggs Tm wis Club Too [2)" Our primary fdcas would be the
develognaew of new prayers lbou0 junior Tmois Tzammg pmg cs- No attempt wa71 be made_to gtmerat-,
fn=rinl ptoftt from *k EwxRty. It vilL not be necessatp for the fatality to be pomribble In otdcx to be
snccessfitl, We have ax-02Ne to us the £ands r_ecessnT to 0saut gpexutiau of this Tennis 1^2dHT7 far tlae
rermdnder of the]rasa
• This t>rnais f2Cli%of enmse,wM be open w the public
• The Palm Spnnpp lax School team wa11 be able to use the fads ty fov ttuirang and is its home
caacb.
A five-dnp pmogem wa71 be nw2HAle at ata coat to the cehool sy--"=for the training of 70,tag people
Who ate bav;ug some ptoblt:= iu the leamiag unvivaoxucat and Sac whom simpir k-elhig better
above themselves away impxovo that ability to {noeicu Cffectroelp is a c1vc n v= lcamuag .
"wiT= ent V=3r of these 70'tgg pco¢le wM feel bentY about thcvmt! es as then:sl3lle m tcnais
inca"-4^
+ We m111. cz = a 5eaiof Womw'c Nsaon l Taumament W be held oa die twunly caatbis,ed courts
that now vM be available. The PSTC Men's Nafional Senior Taaxmarnets bilk he expanded. Their
two MUM[Uneots ws7l brngm%7 guests to Palm Sponge hott,le duARg dte swath of Jmmary
• Palm SpEings Trouts Chib tnerabtt molar^wM be handled on these nea tours,
• The avm7al"h*of public courts wR be markcted to hofels of all sizes,the corwemk=cente;cxc.
PO ,BOX Sera - PALM SPRINGS • CA 9226p,
PHaNn: 710,320.1404 • pAg; 740,922 2a43
02/05/02 15!17 FS 760 322 2107 SLOIAK BARON 8: EMPEF Z008
y NLw a+20,2001
The City Counca wM not be aslred to eabsidise The operations of this faciliry is any way dudag the ter_nx of
the lease However,in order m mmci m; the pumatU of this twi f ctity,it nwy be neeissary to iLnprovt
or eV and the pro,s Qp,the meds =d woweaM baehm=b,xmpzovc wdscuping and concert r =ia flag
courts to day: Wa Ind provide tpc first$50,000 of cqiiral impzncriacum The Cit)CnuneZ tvdl be asked 10
partidpate in additional iaTmvempaix,butlhat viA not lic,a condbioa of Liam lease
I would he pleased to appear befatt the City Coonrd an behalf of thu appHeation. Plcare htme Inaw if sad
wb.en lhatwould be cr i i2t
Sir1EeYH1q,
`° Harold�aimQr
President
PSTCA7A.
c� David Bamn,liobat.Reuv.Denis Pmpulam .
PSTCMA
PALM SPRINGS TENNIS CLUB MEMBERS
ASSOCIATION
P®bruary4,2002 Via Hand Delivery
The Honorable Ali 1 Kleindienst,Mayor
O�e�3p9�
City of Palm Springs v Fm 5 v'
3200 Tahquitz Canyon Way RECENEb
Palm Springs, California 92262
Jeanne Reller-Spurgin,Mayor Pro Tem
Ciry of Palm Springs
3200 Tahquirz Canyon Way
Palm Springs, California 92262
Ilan Oden, City Council Member
City of Palm Springs
3200 Tahquitz Canyon Way
Palm Springs, California 92262
Chris Mills, City Council Member
City of Palm Springs
3200 Tahquirz Canyon Way
Palm Springs, California 92262
Re: Tennis Center Proposal
Dear Mayor Kleindienst and Council Members:
The Palm.Springs 'Tennis Cub has enjoyed a remarkable membership and revenue rebirth
over the past few years, Mrrrrbership revenues at this non-profix Club had collapsed and
totaled only $39,000 in; 1997- faced with large operating losses, the Clubs managing agent,
TRICOM,was considering closing the Tennis Club and converting it into a typical "sign-up
in *l t lobby" type of small hotel experience. The tennis courts are owned by the 126-room
Palm Springs Tennis Club Hotel, a nearly sold out time-share ownership property By 1997,
a downturn in the popularity of tennis had virtually wiped out the membership roster and
revenues of every Palm Springs Tennis club. This condition has not changed. The length
of time xeqgized rp learn how to play tennis is the primary c 1pdt for this loss in
vopmj&riW.
The Palm Springs Tennis Club has managed to reverse this powerful negative trend on its
side of the Coachella Valley. The Club,which is located in a beautiful setting in the historic
Tennis Club district at the base of the San Jacinto'Mountains, now has a sold out
-2- February 5,2002
membership of 330, membership revenues of $250,000, a $1,000 initiation fee and a waiting
list of rate than one hundred. A total of 40 hotel guests also use the tennis facility on an
average day. IVL-mbetship revenue is now 6.5 times more Than it was in 1997. This Glib,
where Errol Flynn once frolicked with The beautiful Linda Christian, has regained its
greatness and ranks high among the prrmitrny tennis Clubs of America. The Palm Sprngs
Tennis Club has done wonders for the future of club tennis in palm Springs. The Chib's
playing strength is equal to or slightly stronger than Mission Hills in Md Valley and Indian
Wells in South'Valley. This is True despite The fact That Indian,Wells and N ission HIls have
approximately 25 courts each and the Palm Springs 'Tennis Club has only 11 courts.
The Palm Springs Tennis Cub needs additional courts„
The future of Tennis lies in the development of new players. We do not have room on our
present eleven courts to operate entry-level programs for adults, seniors and young people.
Re-entry programs for seniors and adults are equally important To the future of tennis in this
Valley and in this Nation,. For that reason in a letter dared March 20, 2001 to City Manager
David Ready, the Palm Springs Tennis Club Members Association presented a proposal
under which it would lease and improve The Tennis Center at 1300 Fast Baristo Road This
letter is a follow up to that request
The Palm Springs Tennis Club has shown than its leadership has the unique z arlmting and
Operating ability to "sell" and to "sustain" participation in the sport of tennis. The 330
members of the Palm Springs Tennis Club have contributed more than $2,000,000 and
thousands of man-]ours to improve and preserve This important community asset. The
spirit of volunteerism is at the core of the resurgence of the Club.
Tennis is an irnportaax recreational sport for palm Springs. However, it is also a very
important branding asset; Tennis imagery fits well with our background of palm trees,
desert sand and mountains.
In addition to the natural beauty of our city and desert, and our wonderful weather, palm
Springs will have an extremely large and first-class casino in the near future for tourism
uxagery. The Nortel International Film Festival is important balancing branding to pan aer
with the new Aqua Caliente Casino. So too is the image of Palm Springs as a Tennis
desrnation venue. "The palm. Springs Valley,, already has The highly respected Indian Wells
Masters Tournament for tennis spectators. Palm Springs (The City) can be effectively
branded as a tennis playing destination venue.
We believe That development of the Tennis Untet by the palm Springs Tennis Club
Members Association will create a facility that significantly increases the number of adulrs
and seniors regularly playing tennis in our City, The 'Tennis Qnter itself will become a
fac'litythat supports the image of Palm Springs as a destination venue for Tennis.
The proposal of the Palm Springs Tennis Club Members Association for the Tennis Cei:Lmr
is as follows;
L This tennis facility will, be open to the public. The hourly rates presently in effect
will remain in effect for the first year.
_3_ February 5,2002
2. The term of the lease will be five years,with an option for an additional four year.;.
3. 'n%e Palm Springs Tennis Cub 14embets Association will pay for the first $100,000
in improvements. Improvements would include the installation of resort isind
screens; fences would be repainted as necessary; court lights would be improved as
necessary; court resurfacing where necessary; interior fences would be lowered as
necessary; the pro-shop would be remodeled; the bathrooms modernized and
upgraded; security will be added to the pro-shop building, benches will be provided
between courts and a new sign will be installed.
4. The rental will he $4,000.00 per month, payable September through and including
June. The facility will.be in only limited operation during,July and August.
5. The lease will be in the name of the Palm Springs Tennis Club Members
.Association. Payments will be personally guaranreed by Harold Nfatzner, President
of the PSTCMA and Cbairrnnn of the Boards Tennis Steering Ctnrmitcce.
6. The Palm Springs Nigh School girls and boys teams will be able to use the facility for
training and as their home courts.
T The Annual PS'T.'C Men's and Women's Senior Toutnameut will be nationally
advertised in conjunction with the Bureau of Tourism. The Tournament wM be
played on all twenty courts that now will be available. These two tournaments will
bring many guests to Palm.Springs hotels during the month of January
S. The Annual Palm Springs Stroke Center Tournament sponsored by the PSTC will be
played an all twenty courts that now will be available each April. Every effort will be
made to play all or part of other tourna rnPnt, on these courts.
9. The facility will be signed far at least the fast year as the "Plaza Racquet Club &
Palm Springs Tennis Club 2".
10. The Mton Hotel will send all of its tennis guests to this facility. Efforts will be
.made to attract the same support from the Wyndham,the Hyatt and the Spa Hotels.
11. The Palm Springs Tennis Club has donated $2,500 to the USA National Juuior
Tennis League in the name of the City of Palm Springs. The program was founded
in 1968 by Charlie Pasarell and Arthur Ashe. The NJ IL is now a nationwide junior
tennis program administered by the USTA. Its primary goal is to introduce as many
children as possible to the lifetime sport of tennis and to provide both tennis skills
and social development. The facility will participate in the Coachella Valley chapter
of the I,JM We will provide free weekend tennis clinics sponsored by our teaching
pros and other local valley pros at no charge to participants.
12. T]STA or Desert League Team Tennis'will be made available at this facility.
—4— rebrvuy 5,2002
13. We will attempt to provide as many seniors and adults as possible the opportunity to
learn or to relearn how to play tennis. Many of our Palm Springs Tennis Qub
zmembets are in their 50'9, 60's, 70's and 80's. One is in his W& Tennis builds famcss
and self esteem It is a wonderful game for our later years. It reinforces the message
of sportsmanship, self-discipline and regard for others that is taught in USA Nf TL
tennis.
Senior group beginners or re-entry lessons (4 players maximum) wrll be available to
residents of Palm Springs for as little as S5.00 per lessor,_ Scholarships will be
provided for those requiting financial aid. Thing lessons (three times per week) will
be recommended to beginners,fifteen or twenty lessons for those players re-entering.
14. Current members of the Plaza Racquet Cub will be accepted as continuing
members of the plaza Racquet Club at the same rates that are currently being
charged by the IUtom. New members will be charged a higher fee. Mernbership
cards will catryboth names,Plaza Racquet Club and Palm Springs Tennis Qub 2.
15. The rules of the Palm Springs Tennis Club with respect to conduct wY7l apply, Shirts
without collars will be allowed.
16. A pro-shop will be stocked and open daily.
17. For the purpose of matchmalting, it may be advantageous, based on the availability
of players during certain summer months to combine the operations of the Plaza
Racquet Club and Palm Springs Tennis Club 2 with that of the Palm Springs Tennis
Club. If that should be the case, all matches wM take place at the Palm Springs
Tennis Club. public rights will be the same.
The Palm Springs Tennis Chub,Kurt Haggstmm Discussions
Several months ago, it became clear that the Idilton Hotel and the Spa Casino were
negotiating the sale of the property at which the Plaza Racquet Club is presently located.
That sale has been concluded. The sale was a normal transaction between two for-profnr
entities. C)Dndemmation was not involved, although the City had originally contemplated the
idea in a letter. Based on the probability of the sale of the property occurring, the Palm
Springs Tennis Club entered into discussions with Aftab Dada, Vice President General
Manager of the Milton Plotel. Those discussions focused on the PSTCMA and the Elton
jointly operating and renaming the"Tennis Center.
Kurt Haggstromn, current operator of the Milton Plaza Racquet Club, took part in those
discussions. The Paler Springs Tennis Club invited Kurt to be the operator of the renamed
Tennis Center under a fire-year contract. Under the tears of the contract,Kurt would give
all junior tennis lessons for the new facility as well as the existing Palm Springs Tennis Club
facility. He would also be given the opportunity to teach all beginner and re-entry group
lessons at the new facrlity. It should be noted that Kurt I-Lggstrom received a very
significant relocation payment from the Hilton/Spa. The business that Kurt is relocating is
really a tennis MidiT business rather than a tennis dub business. Mr.Haggstronn earns more
than $55,000 teaching tennis eight-months a year in Palm Springs. The total membership
—5— Februuy 5,2002
revenues of the Plaza Racquet Club after seventeen years of operation were only$9,000 uz
200L Of that amount I{urt received 50% or$4,500. 1-k would receive the same $4,500 in
the new club. He would also receive the saint 10% on the pro-shop sales that he receives
from the Hilton. It cost the Hilton Hotel $65,000 to maintain the Plaza Racquet dub. The
ITlron received less than $9,000 last year from Kurt, so the actual loss in operating the club
was approximately $35,000. It should also be pointed out that Kurt Haggstrom did not
really have a lease with the Hilton. It is true that there was a lease that would have expired
on January 31, 2003, but that lease contains a clause that gives the Idxlton the right to cancel
without cause on thirty days notice. A,tennis teaching business can be relocated in sev,_ral
other Palm Springs venues such as the Givenchy Motel, the Princess Hotel, the Racquet
Club, and the Riviera. There is also virtually no cost to relocating such a business. The 36
or so paying club ;members (36 X $250 � $9,000) would be welcome at several of these
clubs.
The Plaza Racquet Club members are also very welcome at our new club at the Tennis
Center. So are W. &Mrs. Haggstrom. However, if Kurt chooses mot to manage and teach
at the new Plaza Racquet Club and Palm Springs Tennis Club 2, there are several
experienced tennis teachers who would @re that opportunity.
This proposal is far superior to the proposal presented by Kurt Haggstrom. In fact there
can be no comparison between the two. One involves a 100% any subsidized facility from
which a for-profit busatress takes all of the revenue. The Cary is left with an operating loss
of $40,000 yearly when it has insufficient reserves to fund that operating loss and no reason
to do so. To accept this proposal over the Palm.Springs Tennis Club Members Association
proposal,which generates $300,000 over five years and gives the City the money to carry the
fixed overhead of the facility, would represent a breach of the public trust and fiscal
irresponsibility.
We are not attempting to make money. Our sole interest is The social value of increased self-
esteem, fimess, self discipline, regard for others and sportsmanship that flow from tai nis
regardless of the age of the pargcipant
Sincerell,
Harold]vfatzner W
Chaitman of the Board's Tennis Steering Conunittee
President Palm Springs Tennis Club NEemher Association
cc Martin Mueller
David Ready
v// �i r ✓rli
PS 'TCMA
PALM SPRINGS TENNIS CLUB MEMBERS
ASSOCIATION
February 4, 2002 Via Band Delivery
REVISED FEBRUARY d,2002 (.Pages 4&5)
The Honorable Will HIeindienst, Mayor
City of Palm Springs
3200 Tahquitz Canyon Way
Palm Springs, California 92262
Jeanne Reffer-Spurgin, Mayor Pro Tern
City of Palm Springs
3200 Tahquitz Canyon Way
Palm Springs,rin 5P California 92262
Ron Oden, City Council Member
City of Palm Springs
3200 Tahquitz Canyon Way -
Palm Springs,California 92262
Chris Mills, City Council Member
City of Palm Springs
3200 Thhquitz Canyon Way
Palm Springs, California 92262
Re: Tennis Center Proposal
Dear Mayor Fleindienst and Council Members:
The Palm Springs Tennis Club has enjoyed a remarkable membership and revenue rebirth
over the past fear years. Membership revenues at this non-profit Club had collapsed and
totaled only$39,000 in 1997. Faced with large operating losses, the Club's managing agent,
TRICOM,was considering closing the Tennis Club and converting it into a typical"sign-up
in the lobby" type of small hotel experience. The tennis courts are owned by the 126-room
Palm Springs Tennis Club Hotel,a nearly sold out time-share ownership property. By 1997,
a downturn in the popularity of tennis had virtually wiped out the membership roster and
revenues of every Palm Springs tennis club. This condition has not changed. Ile lengtb
of time required to learn how to play tennis is the primary cLInrit for this loss in
popularity.
The Palm Springs Tennis Club has managed to reverse this powerful negative trend on its
side of the Coachella Valley. The Club,which is located in a beautiful setting in the historic aaY�— J
C l "
—2-- Fcbn=T G,2002
Tennis Club district at the base of the San Jacinto Mountains, now has a sold out
membership of 330,membership revenues of $250,000, a $1,000 initiation fee and a waiting
list of more than one hundred. A total of 40 hotel guests also use the tennis facility on an
average day. Membership revenue is now 6.5 times more than it was in 1997. This Club,
where Errol Flynn once frolicked with the beautiful Linda Christian, has regained its
greatness and ranks high among the premium tennis Clubs of America. The Palen Springs
Tennis Club has done wonders for the future of club tennis in Palm Springs. The Club's
playing strength is equal to or slightly stronger than Mansion Hills in Mid Valley and Indian
Wells in South Valley. This is true despite the fact that Indian Wells and Mission Hills have
approximately 25 courts each and the Palm Springs Tennis Club has only 11 courts.
The Palm Springs Tennis Club needs additional courts.
The future of tennis lies in the development of new players. We do not have room on our
present eleven courts to operate entry-level programs for adults, seniors and young people.
Rc-entry programs for seniors and adults are equally important to the future of tennis in
this Valley and in this Nation. For that reason in a letter dated March 20, 2001 to City
Manager David Ready, the Pahn Springs Tennis Club Members Association presented a
proposal under which it would lease and improve The Tennis Center at 1300 East Batisto
Road. This letter is a follow up to that request.
The Palm Springs Tennis Club has shown that its leadership has the unique marketing and
opetating ability to "sell" and to "sustain" participation in the sport of tennis. The 330
members of the Palm Springs 'Tennis Club have contributed more than $2,000,000 and
thousands of man-hours to improve and preserve this important community asset The
spirit of volunteerism is at the core of the resurgence of the Club.
Tennis is an important recreational sport for Pahn Springs. However, it is also a very
important branding asset. Tennis imagery fits well with out background of palm trees,
desert sand and mountains.
In addition to the natural beauty of out city and desert, and out wonderful weather, Palm
Springs will have an extremely large and first-class casino in the neat future for tourism
imagery. The Nortel International Film Festival is important balancing branding to partner
with the new Aqua Caliente Casino. So too is the image of Palm Springs as a tennis
destination venue. `°The Palm Springs Valley" already has the highly respected Indian Wells
Masters Tournament for tennis spectators. Palm Springs (the City) can be effectively
branded as a tennis playing destination venue.
We believe that development of the Tennis Center by the Palm Springs Tennis Club
Members Association will create a facility that significantly increases the number of adults
and seniors teguL%dy playing tennis in out City. The Tennis Center itself will become a
facility that supports the image of Palm.Springs as a destination venue for tennis.
The proposal of the Palm Springs Tennis Club Members Association for the Tennis Center
is as follows:
—3— Febxwary 6,2002
1. This tennis facility will be open to the public. The hourly rates presently in effect
will remain in effect for the first yeas.
2. The term of the lease will be five years,with an option for an additional four years.
3• The Palm Springs Tennis Club Members Association will pay for the first $100,000
m improvements. Improvements would include the installation of resort wind
screens; fences would be repainted as necessary-, court lights would be improved as
necessary; court resurfacing where necessary; interior fences would be lowered as
necessary; the pro-shop would be remodeled; the bathrooms modernized and
upgraded; security will be added to the pro-shop building, benches will be provided
between courts and a new sign will be installed.
4. The rental will be $4,000.00 per month, payable September through and including
June. The fatality will be in only limited operation during,July and August.
S. The lease will be in the name of the Palm Springs Tennis Club Members
Association. Payments will be personally guaranteed by Harold Matznet, President
of the PSTCMA and Chairman of the Board's Tennis Steering Committee.
6. The Pahn Springs High School girls and boys teams will be able to use the facility
for training and as their home courts.
7. The Annual PSTC Mces and Womees Senior Tournament will be nationally
advertised in conjunction with the Bureau of Tourism. The Tournament will be
played on all twenty courts that now will be available. These two tournaments will
bring many guests to Palm Springs hotels during the month of January_
8, The Annual Palm Springs Stroke Center Tournament sponsored by the PSTC will
be played on all twenty courts that now will be available each April. Every effort will
be made to play all or part of other tournaments on these courts.
9. The facility will be signed for at least the first year as the "Plaza Racquet Club &
Palm Springs Tennis Club 2".
10. The Hilton Hotel will, send all of its tennis guests to this fatality. Efforts will be
made to attract the same support from the Wyndham, the Myatt and the Spa Hotels.
11. The Palm Springs Tennis Club has donated $2,500 to the USA National Junior
Tennis Teague in the name of the City of Palm Springs. The program was founded
in 1968 by Charlie Pasarell and Arthur Ashe. The NJTL is now a nationwide junior
tennis program administeted by the USIA. Its primary goal is to introduce as many
children as possible to the lifetime sport of tennis and to provide both tennis skills
and social development. The facility will, participate in the Coachella Valley chapter
of the NJTL. We will provide free weekend tennis clinics sponsored by out
teaching pros and other local valley pros at no charge to participants.
12. USTA or Desert League Team Tennis will be made available at this facility.
—4— February 6,2002
13. We will attempt to provide as many seniors and adults as possible the opportunity to
learn or to relearn how to play tennis. Many of our Palm Springs Tennis Club
members ate in their 50's, 60's, 70's and $0 s_ One is in his 90's. Tennis builds fitness
and self esteem. It is a wonderful game for our later years. It reinforces the
message of sportsmanship, self-discipline and regard for others that is taught in
USA NJTL tennis.
Senior group beginners or re-entry lessons (4 players maximum) will be available to
residents of Palm Springs for as little as $5.00 per lesson. Scholarships will be
provided for those tequiring financial aid. 'Thirty lessons (three times per week) will
be recommended to beginners, fifteen or twenty lessons for those players re-
entering.
14. Current members of the Plaza Racquet Club will be accepted as continuing
members of the Plaza Racquet Club at the same rates that are currently being
charged by the Hilton. New members will be charged a higher fee. Membership
cards will carry both names,Pl=Racquet Club and Palm Springs Tennis Club 2.
15. The rules of the Palm Springs Tennis Club with respect to conduct will apply.
Shirts without collars will be allowed.
16. A pto-shop will be stocked and open daily.
17. For the purpose of matchmaking,it may be advantageous, based on the availability
of players during certain summer months to combine the operations of the Plaza
Racquet Club and Palm Springs Tennis Club 2 with that of the Palm Springs Tennis
Club. If that should be the case, all matches will take place at the Palm Springs
Tennis Club. Public rights will be the same.
The Palm Springs Tennis Club, Kurt Haggstrom Discussions—
Several months ago, it became clear that the Hilton Hotel and the Spa Casino were
negotiating the sale of the property at which the Plaza Itacquet Club is presently located.
That sale has been concluded. The sale was a normal transaction between two for-profit
entities. Condemnation was not involved, although the City had originally contemplated the
idea in a letter. Based on the probability of the sale of the property occurring, the Palm
Springs Tennis Club entered into discussions nth Aftab Dada, Vice President General
Manager of the Hilton Hotel. Those discussions focused on the PSTCMA and the Hilton
jointly operating and renaming the Tennis Center.
Kurt Haggstrom, current operator of the Hilton Plaza Racquet Club, took part in those
discussions. The Palm Springs Tennis Club invited Kurt to be the operator of the renamed
Tennis Center under a five-year contract, Kurt's income would increase under the PSTC
con cL Under the terms of the contract, Kurt would give all junior tennis lessons for the
new facility as well as the existing Palm Springs Tennis Club facility. T le would teach all adult
tennis lessons. He would also be given the opportunity to teach all beginner and re-entry
group lessons at the new facility. It should be noted that Kurt Haggstrom received a very
—5— February 6,2002
significant relocation payment from the Milton/Spa- The business that Kurt is relocating is
really a tennis tee business rather than a tennis club business. Mr. Haggstrom earns
more than $55,000 teaching tennis eight-months a year in Palm Springs. A portion of that
money comes from a tournament at the Club. He keeps 100% of the dollars from each
lessgrn and from the tournament The total membership revenues of the Plaza Racquet Club
after seventeen pears of operation were only$9,000 in 2001. Of that amount Kurt received
50% or $4,500. He would receive the same $4,500 in the new club. He would also receive
the same 90°a on the pro-shop sales that he receives from the Hilton. It cost the Hilton
Hotel$65,000 to maintain the Plaza Racquet Club. The Hilton received less than$9,000 last
year from Kurt, so the actual loss in operating the club was approximately $55,000. It
should also be pointed out that Kurt Haggstrom did not really have a lease with the Hilton.
It is true that there was a lease that would have expired on January 31, 2003, but that lease
contains a clause that gives the Hilton the right to cancel without cause on thirty days
notice. A tennis teaching business can be relocated in several. other Palm Springs venues
such as the Givenchy Hotel, the Princess Hotel, the Racquet Club,and the Riviera. There is
also virtually no cost to relocating such a business. The 36 or so paying club members (36
X$250 = $9,000) would be welcome at several of these clubs.
The Plaza Racquet Club members are also very welcome at our new club at the Tennis
Center. So are Mr &h ts. Haggstrom. However,if Kuit chooses not to manage and teach
at the new Plaza Racquet Club and Palm Springs Tennis Club 2, there are several
experienced tennis teachers who would like that opportunity.
This proposal is far superior to the proposal presented by Kurt Haggstrom. In fact there
can be no comparison between the two. One involves a 100% City subsidized facility from
which a for-profit business takes all of the revenue. The City is left with an operating loss
of $40,000 yearly when it has insufficient reserves to fund that operating loss and no reason
to do so. To accept this proposal over the Palm Springs Tennis Club Members Association
proposal,which generates $300,000 over five years and gives the City the money to carry the
fixed overhead of the facility, would represent a breach of the public trust and fiscal
irresponsibility.
We ate not attempting to make money. Our sole interest is the social value of increased
self-esteem, fitness, self-discipline, regard for others and spottsmanship that flow from
tennis regardless of the age of the participant.
Sincerely,
Harold Matzner
Chairman of the Board's Tennis Steering Committee
President Palm Springs Tennis Club Member Association
cc Martin Mueller
David Ready
MINUTE ORDER NO.
APPROVING A LEASE WITH KURT &ANA
HAGGSTROM OF PALM SPRINGS, CALIFORNIA
FOR THE OPERATION OF THE PALM SPRINGS
TENNIS CENTER AT 1300 EAST BARISTO
ROAD
I HEREBY CERTIFY that this Minute Order, approving a Lease with Kurt &Ana Haggstrom of
Palm Springs, California for the operation of the Palm Springs Tennis Center at 1300 East
Baristo Road, was adopted by the City Council of the City of Palm Springs, California, in a
meeting thereof held on the 6th day of February, 2002.
PATRICIA A. SANDERS
City Clerk