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AGENDA ITEM
March 11, 2014
TO: Honorable Mayor and
Members of the City Council
THRU: John W. Sibley
City Manager
FROM: Lisa Kim,
Economic evelopment Manager
ReviewedNer ed By:
City Manager
Finance Dire
To Be Presented By: Aa
n Schulze
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Plan/Environ
1. SUBJECT
Lease between the City of Orange and Ruby's Diner Orange Depot, LLC.
2. SUMMARY
Lease between the City of Orange and Ruby's Diner Orange Depot, LLC to operate Ruby's Diner
at the Santa Fe Depot Building located at 186 N. Atchison Street.
3. RECOMMENDED ACTION
1. Approve Lease between City of Orange and Ruby's Diner Orange Depot, LLC for 186 N.
Atchison Street; and
2. Authorize the Mayor and City Clerk to execute the Lease on behalf of the City.
4. FISCAL IMPACT
The City will receive annual lease rent in the amount of $78,000 during the first year of the
Lease.
5. STRATEGIC PLAN GOAL(S)
Be a fiscally healthy community
b. Analyze future fiscal needs and potential revenue opportunities
e. Create an environment to attract, retain and expand economic opportunities.
ITEM 1 3/11/14
6. GENERAL PLAN IMPLEMENTATION
Economic Development Goal 2.0: Cultivate a business environment that is conducive and
appealing to the commercial and retail industry, including smaller entrepreneurs.
Policy 2.4: Maintain adequate infrastructure, transportation systems, and physical conditions
that encourage retailers to invest in the City.
7. DISCUSSION and BACKGROUND
Background
In 1989, the Orange Redevelopment Agency (ORA) acquired the Santa Fe Depot Property, which
includes Veterans Memorial at Depot Park, the Orange Metrolink Station, and the historic Santa
Fe Depot Building (Depot Building). In an effort to preserve the historic Depot Building and
promote redevelopment activities, the ORA leased the Depot Building to Old Towne Brewing
Company in 1997 and Cask `N Cleaver in 2000. Cask `N Cleaver ceased operations in 2009 and
shortly thereafter, ORA entered into a lease with Ruby's Streamliner LLC (subsequently the
entity name was changed to Ruby's Diner Orange Depot, LLC) to operate a Ruby's Diner at the
Depot Building.
Discussion
In November 2013, the State Department of Finance approved the transfer of ten Successor
Agency assets identified for governmental use, which included the Santa Fe Depot Property. In
January 2014, the City accepted conveyance of the Successor Agency assets including the Santa
Fe Depot property and the existing lease between the Orange Redevelopment Agency and Ruby's
Diner Orange Depot, LLC. Recovery from the economic recession and site constraints continue
to be challenges for the Ruby's Diner operator. They have requested a lease adjustment to
percentage rents. With the City serving as landlord, a new lease has been negotiated to provide
for a new base rent and percentage rent structure. Below are the terms of the proposed lease
between the City of Orange and Ruby's Diner Orange Depot, LLC:
• Initial term: 12 years, plus three five -year options (total of 27 years)
• Lease rent: $78,000 annually ($6,500 monthly)
• Rent Adjustment: 3% every year
• Additional Rent: Tenant to pay 8% of gross sales over base as additional rent
• Sales Base: $1,818,000 in year two, to be increased by 1% per year
It is recommended that the City Council approve the Lease between the City of Orange and
Ruby's Diner Orange Depot, LLC. The lease rent revenue generated from Ruby's Diner Orange
Depot, LLC would be available to offset property maintenance costs associated with Veterans
Memorial at Depot Park and Orange Metrolink Station.
8. ATTACHMENTS
• Lease between City of Orange and Ruby's Diner Orange Depot, LLC
NASTAFF REPORTS\2014 \031114a_Ruby's Lease.doc
ITEM 2 3/11/14