On Monday, March 12, the City Council approved a lease agreement between the city of Seal Beach and Bay City LLC (not to be confused with Bay City Partners), for the First Street restaurant building that used to house River’s End Cafe. The vote was 4-1 in favor of the lease. District Four Councilwoman Schelly Sustarsic cast the dissenting vote.
The new restaurant will be called The Beach House. The partners are David Coe, a Huntington Beach resident and businessman; Brian Kyle, former owner of the O’Malley’s on Main restaurant and Rosie Ritchie, a real estate agent and member of the Seal Beach Chamber of Commerce Board of Directors. (For more information about the new restaurant, see the statement from the owners in Letters to the Editor on page 6.)
Sustarsic said she voted against the lease because she was “not happy with some of the vagueness” in the lease.
Council members raised questions about the new restaurant’s hours of operations and the conditional use permit governing the sale of alcohol on the site. District One Councilwoman Ellery Deaton pointed out that CUPs run with the land and any changes would have to go through the Planning Commission.
Mayor Mike Varipapa, summarizing staff answers, said the hours of operation of the new business would be the old hours of operation set out in the conditional use permit.
Interim Director of Community Services Crystal Landavazo confirmed that was correct.
Recreation Manager Tim Kelsey, responding to questions from Sustarsic, said any activities outside the restaurant would require a special event permit.
Council members were also concerned about the word “reasonable” and the lease description of the new business as “primarily“ a restaurant.
City Attorney Craig Steele explained that those were standard legal terms.
Deaton was concerned that the lease referred to unamplified music when the city code allows amplified music. She did not want the issue coming back to the council.
City Attonrey Steele said the provision the new tenants agreed to was non-amplified.
Deaton also wanted to correct language in the lease that referred to a local organization as “Women of the Night.” The correct name of the group is Ladies of the Evening, which is better known by its initials LOTE. Steele said there was no need to go back to the tenant to correct the group’s name.
One of the partners in the new restaurant, David Coe, said he would prefer to have the lease current with the city’s music ordinance. Neither of his partners spoke to the council Monday night.
Prior to the meeting, Sustarsic, District Two Councilman Robert Moore and Seal Beach resident Robert Goldberg both asked who would be resonsible for cleaning the restrooms next to the restaurant.
According to staff replies to Moore and Sustarsic, the city has taken over cleaning the restrooms. “Over the last several years the care of the public restrooms has decined significantly and items in disrepair were not reported to the city.”
According to the rental agreement, the new owners will pay a flat rent of $6,700 a month for the First Street restaurant building. The rent will increase every 30 months at either 5 percent or the Consumer Price Index, depending on which is lower. Unlike the previous tenant, The Beach House will not share profits with the city.
According to the March 12 staff report, River’s End Cafe paid a base rent of $1,500 a month plus a percentage of receipts According to the report, the city’s revenue from River’s End is about $5,300 a month.
Mohammed Baghdadi of Westridge Commercial, Inc., said most tenants don’t like profit sharing. He also said the last agreement wasn’t working.
Goldberg raised concerns about the staff report’s assessment of the difference between the revenue received from the previous tenant and the revenue expected from the new tenants. He was particularly concerned about a significant drop off of revenue in recent years. According to a July 2016 State Lands Commission memo, River’s End revenue data from the city of Seal Beach showed that the city’s income from the restaurant business had decreased from January 2013 through May 2016.
However, City Treasurer/Finance Director Victoria Beatley said, the information in the State Lands Commission spread sheet included revenue from both River’s End Cafe and Ruby’s Diner.
As previously reported, Ruby’s Diner closed in January 2013.
According to Beatley, city staff left the name of Ruby’s Diner out of the revenue information that was provided to State Lands staff.
Since the meeting, Goldberg said, “I just find it disconcerting that this error was not readily apparent to our Finance Director in June 2016 when the SLC staff asked the City to explain the dramatic drop in 2013-2016 revenue specifically from the River’s End Cafe.”
The owners have indicated they are going to improve the building, as did Deaton and Mohammed Baghdadi of Westridge Commercinail, Inc., who spoke to the council about the project.
Deaton said the city was doing minimal improvements on the property. Baghdadi said the tenant would do everything inside the building.
Deaton said she appreciated the investment the tenant agreed to make. After the meeting, Kyle said a “tremendous” amount of work had to be done. “The whole place is going to be gutted,” Kyle said.
The day after the meeting, City Treasurer Beatley said the city will not be doing any interior work at all on the restaurant building.
On Feb. 26, the council authorized staff to seek bids for the renovation of the First Street restaruant building. According to the Feb. 26 staff report, the city’s portion of the renovations will include a structural assessment, new roof tiles, the installation of a grease interceptor, a new HVAC system and the main electrical panel. The city has budgeted $180,000 for the city’s renovations. According to the Feb. 26 staff report, $125,800 of the money for the project will come from money saved from the West End Pump Station improvement project.
Editor’s note: This article has been edited to correct the year in which the State Lands Commission memo was issued.