Apple Inns, Inc Reimbursement Agreement 20230809

Home

REIMBURSEMENT AGREEMENT THIS REIMBURSEMENT AGREEMENT (this “Agreement”) is entered into as of August 9, 2023 by and between the City of San Leandro, a California municipal corporation ("City"), and Apple Inns, Inc., a California corporation (“Lessee”). City and Lessee are collectively referred to herein as the “Parties.” RECITALS A. Lessee is the owner and operator of the Marina Inn hotel (the “Hotel”), located at 68 Monarch Bay Drive, San Leandro, California (the “Property”). Lessee leases the Property from City pursuant to a Ground Lease entered into between the City and Lessee that was approved by the City of San Leandro City Council on April 2, 1984, and executed April 5, 1984 (the “Lease”). B. The Lease provides for the construction, establishment, and operation of a first- class hotel and other uses incidental thereto, and sets forth the rental rate and other requirements with respect to payment of taxes and charges, improvements, maintenance, management and promotion of the Property, Lessee’s conduct of business, review by other agencies, insurance and indemnity and other matters. C. City and Lessee are also parties to a “Settlement Agreement” dated as of July 11, 2017, which states that the parties commit to conduct good faith negotiations to extend the term of the Lease to be at least equivalent to the term of any lease City enters for a future hotel in City’s Shoreline project. The Settlement Agreement further provides that such good faith negotiations shall include a discussion of capital improvements to be made by Lessee to the Property. D. Pursuant to the Settlement Agreement, City and Lessee entered into a First Amendment to Lease, dated September 18, 2017, which extended the term of the Lease by five years. The term of the Lease expires fifty-five years after the first day of the twelfth month after the date of approval of the Lease by City, which is March 31, 2040 (the “Term”). E. City and Lessee now desire to negotiate terms of a Second Amendment to Lease, which may include an extension of the Term of the Lease and capital improvements to be made by Lessee to the Property (“Second Amendment”). F. More information is needed in order to appropriately evaluate the proposed terms of the Second Amendment and determine their appropriateness, market feasibility and mitigation measures that will need to be made to ensure continued operation of a hotel. G. Expert analysis and recommendation of such additional information is needed in order to advise both parties to help negotiate, draft and approve the Second Amendment. H. With respect to the City’s sale or lease of facilities in the Marina and Park Area of the City, Section 2-7-210 of the City Municipal Code provides that “the City may charge participating parties application, commitment, financing and other fees, in order to recover all administrative and other costs and expenses incurred in the exercise of the powers and duties conferred by this Chapter.” DocuSign Envelope ID: C06F5183-C6CA-48E2-AC7D-882CAEC2E603