City may need to review First Street restaurant lease

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Pictured above is a file photo of the city of Seal Beach-owned restaurant building that used to house the River's End Cafe. The status of the project to upgrade the property and turn it over to new tenants was on the latest City Council agenda.

City Attorney Craig Steele said Seal Beach should take another look at the lease agreement for the First Street restaurant building during Monday’s City Council meeting.

District Five Councilwoman Sandra Massa-Lavitt expressed unhappiness with the course the project has taken and placed responsibilities for delays on the future tenants of the city-owned restaurant building.

In related news, Beach House restaurant project manager and partner David Coe confirmed that he and his partners would need a coastal permit to develop the property.

According to Coe, they were applying for a full liquor license for the new restaurant that he and his business partners are planning to open at the former location of the River’s End Cafe.

In March 2018, the previous City Council approved an agreement between the city of Seal Beach and Bay City LLC (not to be confused with the Bay City Partners) to lease the restaurant building at 15 First Street that used to house River’s End Cafe.

At the time, District Four Councilwoman Schelly Sustarsic cast the sole dissenting vote against the lease.

The partners in Bay City LLC are businessman Coe, real estate agent Rosie Ritchie and former O’Malley’s on Main owner Brian Kyle.

The city has been working on making the building ready for the new tenants so they can begin remodeling work to open the new restaurant, which is to be called the Beach House.

Under the lease agreement, the city does not currently receive rent on the property from the Beach House owners.

Coe said the California Coastal Commission rejected their application for an exemption on Feb. 9. He said they looked forward to taking on this “hurdle.”

Ritchie submitted an application for an exemption to the Coastal Commission on Sept. 13, 2018. In the application, she wrote that there would be “no development” and that the footprint of the project would remain the same.

Coe told the council that Coastal rejected the exemption request for a restaurant that has been in existence since 1972.

According to Interim Community Development Director Crystal Landavazo, who had briefly looked at the CCC’s rejection, the state agency felt that a permit was needed because the location was not a residence.

Coe also said the footprint would remain the same in response to a question from District Three Councilman Michael Varipapa.

Michael Varipapa said, “The big question for residents is, ‘when can we eat on the sand here?’”

According to Coe, they were looking at three to four month’s of construction to renovate the property.

District One Councilman Joe Kalmick asked about the status of the business’s Alcoholic Beverage Control license application.

According to Coe, ABC was waiting for them to get to a certain point in time, including getting permits from the Coastal Commission. Sustarsic said it seemed to her that the community had been hopeful that the restaurant would open last summer. She said she was a little concerned with the time the project was taking.

“I experience your frustration,” Coe said. Coe said the amenity, apparently meaning the restaurant, needed to be open not just for the Beach House owners but for everyone.

Massa-Lavitt asked if they had applied for a conditional use permit to sell hard liquor.

Interim Community Development Director Crystal Landavazo said the CUP application had been filed with the city. According to Landavazo, it had not yet come before the Planning Commission.

Varipapa asked if the city’s obligations were completed.

Public Works Director Steve Myrter said the Southern California Edison connection was complete and the city had the grease trap in place.

“That leaves the roof,” he said.

“The roof’s the last item,” he said.

Varipapa asked when the rent begins. According to City Attorney Steele, the rent date in the lease agreement had passed and the city’s obligations toward the property hadn’t worked out either. He said there would have to be a second look at the lease.

“My guess is that it will have to come back to council,” he said.

Massa-Lavitt looked at Coe and said, “We’re not happy.”

Mayor Thomas Moore advised Coe to work with city staff rather than deal directly with the Coastal Commission.

Massa-Lavitt said she had been asking questions about this matter for a long time.

Massa-Lavitt expressed the opinion that the problems with moving the project forward were in part because the restaurant owners had not been working with city staff.

Coe said he was not sure he could agree with her comment. However, he assured her they would work with city staff.

The city’s lease with the owner of River’s End Cafe expired in April 2017. The city took possession of the restaurant building on Feb. 27, 2018, the day after the council directed staff to seek bids to remodel the building.

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