The owner of the Shade Hotel proposed for the Redondo Beach harbor has asked to lease additional parking space on city-owned land because studies showed an underground structure would be too difficult to build so close to the water.
Zislis Boutique Hotels, owned by Mike Zislis, operator of the Shade Hotel in Manhattan Beach, has also asked the city for permission to increase the room count of the Redondo Shade from 45 to 54 to generate revenue to cover the cost of leasing the additional land.
Pete Carmichael, the city's waterfront and economic development director, recently told the City Council about the request and recommended approving it.
"This (hotel) will be a significant catalyst for the revitalization of the waterfront," he said.
In a staff report, Carmichael said the nine rooms and the parking lot lease would bring in an additional $2.8 million in revenue to the city in taxes and lease payments over 10 years.
Adding the extra space to Zislis's existing land lease will increase his base rent by $4,000, to a total of $17,000 per month, according to the lease amendment presented to the council.
The project, on the site of the former Red Onion restaurant on Harbor Drive, was originally proposed for 54 rooms in 2008 but later scaled back to 45 rooms to accommodate access to underground parking. Zislis has now asked to lease space for parking on the former Triton Oil parcel nearby.
The request was made after a study showed "challenging soil conditions (that) presented significant difficulty with subterranean parking on the site," according to the staff report.
The amendment would allow for the lease of 50 parking spaces on the 18,000-square-foot Triton parcel on the south side of the hotel property.
The proposed lease amendment would also move up the start of ground rent payments. Under the previous lease, Zislis did not have to pay rent until the hotel was operating. The amendment requires rental payments to begin April 1, 2013, regardless of the status of the project.
The amended lease also calls for demolition of the old Red Onion building by Feb. 1, 2013, and the start of construction by April 1. Zislis is allowed to delay construction up to three months at a cost of $10,000 per month.
The construction must be complete by Oct. 1, 2014. The amendment requires an additional payment of $25,000 per month for each month beyond this date that the project is not complete. Zislis would also reimburse the city $20,000 in consultant costs associated with the drafting of the amendment.
The council will consider final approval of the amended lease agreement at its Tuesday meeting, but no members voiced any objection to the deal. Councilman Bill Brand did express concern that an adjoining business, the Port Royal Yacht Club, uses some of the Triton parcel for parking of delivery trucks. He asked if Port Royal could be allowed one-hour parking on the Triton parcel.
Carmichael said that the Zislis lease agreement would not impact Port Royal's access to its leased area but that any side agreement on parking would have to be worked out later in negotiation with the city.
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