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Muskegon City Commission
Commission Meeting Date: February 11, 2020 Title: 1601 Beach Lease Amendment
Submitted By: LeighAnn Mikesell Department: Development Services
Brief Summary: Staff is requesting approval of an amendment to the existing lease and option
agreements with 1601 Beach LLC to extend the boundary of the land being leased for The Deck at
Pere Marquette Park and to modify the area to which 1601 Beach LLC has an option and first right
of refusal to develop, lease, or purchase.
Detailed Summary: The owners of 1601 Beach LLC are planning an expansion to their restaurant,
The Deck. The expansion is south of the existing building and will include a patio and additional
bar space to accommodate more patrons. In order to proceed with the expansion, the lease
agreement needs to be modified to account for the additional land associated with the expansion.
The city took the opportunity to clarify the option area with the owners and make requested
adjustments.
Amount Requested: None Amount Budgeted: N/A
Fund(s) or Account(s): N/A Fund(s) or Account(s): N/A
Recommended Motion '.'
Approve the amendment to the lease and option agreement with 1601 Beach LLC at Pere
Marquette Park and authorize the mayor and clerk to sign.
Check if the following Departments need to approve the item first:
Police Dept. D
Fire Dept. D
IT Dept. □
For City Clerk Use Only:
Commission Action:
FIRST AMENDMENT TO LEASE
This First Amendment to Lease ("Amendment") is entered into by and between City of
Muskegon ("City"), a Michigan municipal corporation, and 1601 Beach, LLC, a Michigan limited liability
company ("LLC").
RECITALS
A. The City, as ground lessor, and LLC, as ground lessee (referred to in such Lease as
"Harris"), are party to that certain Ground Lease dated December 10, 2013 (the "Lease"}, pursuant to
which LLC currently leases the real property located in the City of Muskegon, County of Muskegon,
Michigan, commonly referred to as 1601 Beach Street, Muskegon, Michigan (Parcel No. 61-24-205-739-
0001-20}, which is referred to as the "Premises" in the Lease. LLC owns the building, physical
improvements, equipment and fixtures located at the Premises, and operates a restaurant business at the
Premises commonly known as "The Deck".
B. LLC now desires to expand its restaurant operations and make additional physical
improvements, alterations, and additions to the building and surrounding property, substantially in
accordance with the plans attached to this Amendment as Exhibit A and with those plans prepared by
Concept Design Studios, Inc. (Project #0791-19) dated October 28, 2019 (together, the "Expansion").
C. In order to complete the proposed Expansion, the LLC needs to lease additional land
adjacent to the Premises from the City, such that the total area leased from the City shall be that area
depicted on the attached Exhibit B and legally described on the attached Exhibit B-1 (the "Expanded
Premises"), which shall be all of the property commonly known as 1601 Beach Street, Muskegon,
Michigan (Parcel No. 61-24-205-739-0001-20), and a portion of the parcel of real property commonly
known as 1651 Beach Street, Muskegon, Michigan (Parcel No. 61-24-205-734-0001-00).
D. The City and LLC now wish to amend the Lease to expand the land leased to LLC to
include all of the Expanded Premises. Capitalized terms not defined herein shall have the meanings of
capitalized terms in the Lease.
AGREEMENT
NOW, THEREFORE, in consideration of mutual covenants and conditions contained herein and
for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged,
the City and LLC agree the Lease is amended as follows:
1. Expansion of Leased Premises. The Lease is hereby amended to provide that as of the
Effective Date of this Amendment, the Premises leased by the City to LLC pursuant to the Lease shall
instead be the Expanded Premises as depicted on Exhibit B hereto and described on Exhibit B-1 hereto.
All references to the "Premises" and the "leased premises" in the Lease shall hereafter refer to the
"Expanded Premises", and Exhibit Band Exhibit B-1 to this Amendment shall replace Exhibit A to the
Lease. There shall be no increase or other change to the rent charged to LLC under the Lease.
2. Use of Expanded Premises. The Expansion proposed by LLC, including all alterations,
structural changes, and additional structures and improvements to the Expanded Premises and buildings
thereon, is approved by the City, provided that LLC will comply with all laws, local ordinances, and lawful
police and health regulations applicable to the use of the Expanded Premises. The additional buildings,
structures and all fixtures, partitions, equipment, trade fixtures, alterations, improvements, or changes
installed by LLC shall be and remain owned by LLC, subject to the terms set forth in the last paragraph of
Section 7 of the Lease. The City will put LLC into possession of the Expanded Premises for the full term
of the Lease, together with any renewal options.
1
In addition to the use of the Expanded Premises, the Lease is hereby amended to provide that
LLC will also have the non-exclusive use of the land between the above-described Expanded Premises
and Beach Street, throughout which LLC shall be permitted to make such landscaping alterations,
improvements, and additions from time to time as it reasonably desires, subject to any necessary City
approval and/or any requ ired permits.
3. Real Estate Taxes. Pursuant to Section 12 of the Lease, LLC is responsible for paying
all real estate taxes and assessments , both general and special , imposed by federal , state or local
governmental authority, or any other taxing authority having jurisdiction over the Premises, against the
land, buildings and all other improvements. LLC shall continue to be responsible for payment of all real
estate taxes and assessments imposed against the Expanded Premises; provided, however, LLC shall
only be responsible for payment of a pro rata portion of any real estate taxes and assessments imposed
against 1651 Beach Street (Parcel No. 61-24-205-734-0001-00) and the buildings and improvements
thereon, with such pro rata portion equal to the portion (in square feet) of 1651 Beach Street included in
the Expanded Premises and actually leased by LLC, divided by the total area (in square feet) of 1651
Beach Street, as reasonably determined by the parties.
4. Ownership. By execution of this Amendment, the City hereby consents to and approves
the prior transfer of ownership interest in LLC.
5. Full Force and Effect. This Amendment shall become effective as of the date on which
both parties have executed this Amendment as set forth below ("Effective Date") . Except as specifically
modified by this Amendment, the Lease is unmodified and shall continue in full force and effect.
6. Counterparts. This Amendment may be signed in one or more counterparts, each of
which shall be deemed to be an original, with the same effect as if the signatures on this Amendment and
each of the counterparts were on the same Instrument. Electronic copies and signatures sent in PDF
format shall be treated as originals.
The parties hereto have duly executed this Ame me t to. be effective as of the Effective Date.
LESS Beach,LLC
Name: hen J awron Name: Fred Scharmer
Title: Mayor
Date: d::-1q ,, dD,2D ~}!~: M8a~!1 4/20
~ .=-~ f y~ ('9"-
Nae: Ann Marie Meisch
Title: City Clerk
Date: a---!9- c)-U:W
[First Amendment to Lease]
2
Exhibit A
Proposed Expansion Plans
(')I !• MUSKEGON FRED SCHARMER
I'I }l!Exiii~M~U~S~K~E~G~O~N~C~O~U~N~TY~,;M~IC~H~l~G;A::N'
EXISTING CONDITIONS & REMOVALS PLAN - - - - -.-,-___jf!~;~;~~;::::::::j~j:::_j
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1601 BEACH STREET 49441
CITY OF MUSKEGON, MICHIGAN
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FRED SCHARMER
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MUSKEGON, MICHIGAN 49441
; ; LANDSCAPE PLAN -•-~-- 231-740-4329
Exhibit B
Depiction of Expanded Premises
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LEASE DESCRIPTION (2020)
LAND IN THE CITY OF MUSKEGON, COUNTY OF MUSKEGON, AND THE STATE OF MICHIGAN BEING PART OF BLOCKS 738 AND 739 REVISED ~
CITY OF MUSKEGON PLAT OF 1903 AS RECORDED IN LIBER 3 OF PLATS PAGE 71, MUSKEGON COUNTY RECORDS MORE PARTICULARLY
DESCRIBED AS COMMENCING AT THE SOUTHWEST CORNER OF LOT 1 BLOCK 758 PLAT OF CENTRAL LAND CO'S SUB-DIVISION AS RECORED
IN BOOK 3 OF PLATS PAGE 84, MUSKEGON COUNTY RECORDS
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'Rx SO 100
THENCE S61°33'31"W 474.79 FEET;'
THENCE N41 °08'36"W 80.03 FEET TO THE PLACE OF BEGINNING OF THIS EASEMENT; P'""S--.....J
SCALE IN FEET
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THENCE CONTINUING N41°08'36"W 270.00 FEET;
THENCE S46°42'37"W 138.00 FEET;
THENCE S48°19'49"E 284.59 FEET;
THENCE N39°08'12"E 103.79 FEET MORE OR LESS TO THE POINT OF BEGINNING.
Exhibit B-1
Legal Description of Expanded Premises
LAND IN THE CITY OF MUSKEGON, COUNTY OF MUSKEGON, AND THE STATE OF MICHIGAN
BEING PART OF BLOCKS 738 AND 739 REVISED CITY OF MUSKEGON PLAT OF 1903 AS
RECORDED IN LIBER 3 OF PLATS PAGE 71, MUSKEGON COUNTY RECORDS MORE
PARTICULARLY DESCRIBED AS COMMENCING AT THE SOUTHWEST CORNER OF LOT 1 BLOCK
758 PLAT OF CENTRAL LAND CO'S SUB-DIVISION AS RECORED IN BOOK 3 OF PLATS PAGE 84,
MUSKEGON COUNTY RECORDS
THENCE S61°33'31"W 474.79 FEET;'
THENCE N41°08'36"W 80.03 FEET TO THE PLACE OF BEGINNING OF THIS EASEMENT;
THENCE CONTINUING N41 °08'36"W 270.00 FEET;
THENCE S46°42'37"W 138.00 FEET;
THENCE S48°19'49"E 284.59 FEET;
THENCE N39°08'12"E 103.79 FEET MORE OR LESS TO THE POINT OF BEGINNING.
OPTION AGREEMENT
This Option Agreement is made by and between the City of Muskegon, a Michigan
municipal corporation ("City"), and 1601 Beach, LLC, a Michigan limited liability company ("LLC"),
with reference to the following facts:
Background
LLC currently leases certain real property from City for operation of a restaurant business
commonly known as "The Deck" pursuant to that certain Ground Lease dated December 10, 2013,
as amended (the "Lease"). City owns the property adjacent to and surrounding the leased premises,
as depicted on Exhibit A and legally described on Exhibit B ("Option Property"). City desires to
grant LLC an option and right of first refusal to lease the Option Property according to the terms and
conditions set forth below.
Therefore, for good and valuable consideration, the parties agree as follows:
1. Grant of Option. City hereby grants to LLC an option and right of first refusal to
lease the Option Property (the "Option") consistent with the following terms:
a. City Desire to Develop, Lease, or Sell. If at any time City desires to
develop and/or lease or sell all or a portion of the Option Property for any purpose, the City
shall first send to LLC a copy of the request for proposals. LLC shall have the right for a
period of 60 days after receipt of the written request for proposals to propose a development
substantially similar to what is requested and on terms substantially similar to those
requested by City. City and LLC shall thereafter enter into mutually acceptable documents to
evidence their agreement to develop and/or lease or sell all or a portion of the Option
Property. If LLC fails to notify the City within the 60-day period, City may seek proposals from
other parties in accordance with the request for proposals originally provided to LLC. If City
materially modifies its request for proposals or otherwise desires to send a new request for
proposals, City shall first submit such modified or new request for proposals to LLC, giving
LLC the same right for a period of 60 days to propose a development substantially similar to
what is requested pursuant to the modified or new request for proposals, which shall be
accepted by City if submitted by LLC within such 60-day period.
b. Bona Fide Offer. If at any time City receives a bona fide written offer, which
City intends to accept, from any party to develop and/or lease or sell all or a portion of the
Option Property for any purpose, City shall send to LLC a copy of the offer and proposal
before accepting the bona fide written offer. LLC shall have the right for a period of 60 days
after receipt of the offer and proposal to either (i) propose an alternate development, which
the City must consider, or (ii) agree to develop and/or lease or purchase the same portion of
the Option Property referenced in the bona fide written offer for substantially the same use
as set forth in the proposed development and on lease terms (i.e. rental rate, length of term)
or purchase terms that are substantially the same or better than the terms specified in the
proposal, in which case City shall accept LLC's proposal and enter into mutually acceptable
documents with LLC to evidence their agreement. If LLC fails to make an election within the
60-day period, City may lease or sell the portion of the Option Property and permit
development to the other party pursuant to the bona fide written offer. If the Option Property,
or a portion thereof, is not thereafter developed and/or leased or sold pursuant to the terms
of the original bona fide written offer, City shall be required to comply with the terms of this
paragraph upon receipt of any new or modified bona fide written offers which the City intends
to accept.
c. Right to Propose. Nothing herein shall prevent LLC from presenting its own
proposal for the lease and development of all or a portion of the Option Property during the
1
term of the Lease. The City is not obligated however to consider the proposal if it has no
desire to develop or lease the property identified in the proposal at that time.
d. Survival of Option. If only a portion of the Option Property is developed
and/or leased in compliance with this Agreement, the Option and rights described above
shall remain in full force and effect to the extent of the remaining Option Property.
2. Term of Option. The term of this Option shall commence on the Effective Date and
shall continue until the first to occur of any of the following: (a) the termination of the Lease; (b) when
a majority interest of LLC is not owned by Michelle Harris, Fred Scharmer, or a combination thereof
(directly or indirectly, individually or in their personal grantor trusts), (c) transfer of the Lease to
another entity, except for a transfer to substantially the same owners of LLC, or (d) the execution of
a lease to a third party of all of the Option Property after full compliance with the terms of this
Agreement. After the termination as provided above, the parties shall execute and acknowledge any
documents necessary to release the rights contained in this Agreement. In the event a portion, but
not all, of the Option Property is leased to a third party after full compliance with the terms of this
Agreement, the rights under this Agreement shall only terminate to the extent of the Option Property
leased and shall remain in full force and effect with regard to the remainder of the Option Property.
3. Default. If City enters into a lease in conflict with this Agreement, LLC may, at its
option, have a court of competent jurisdiction declare this Agreement breached and order that the
lease is void. This provision shall not be construed to prevent specific performance of this
Agreement or of any of its terms by either party.
4. No Restriction of Rights. This Agreement shall not restrict City's right to grant utility
easements or grant a license to permit vendors to locate on the Option Property on a temporary
basis from May 1 through September 30, so long as no permanent structure is constructed or
allowed in the depicted area, and as long as the license to permit vendors is not in conflict with the
terms of the Lease or this Agreement. This Agreement shall not restrict or prohibit a lease of all or a
portion of the Option Property between City and LLC.
5. Notice. All notices or writings required or permitted under this Agreement shall be
deemed properly served if sent by certified mail, postage prepaid, to the last address previously
furnished by the parties hereto. Until hereafter changed by notice in writing, notices shall be sent to
the City at City Manager, City of Muskegon, 933 Terrace, Muskegon, Michigan 49440, and to LLC at
950 W. Norton, Suite 202, Muskegon, Michigan 49441.
6. Consideration. The consideration for this Agreement is the mutual exchange of the
rights given in this Agreement.
7. Recording of Memorandum. Following the execution hereof, at the request of
either party, City and LLC shall execute and cause to be recorded with the Muskegon County
Register of Deeds a memorandum hereof in form reasonably acceptable to City and LLC. All
recording charges and any stamp or similar tax shall be paid by LLC. Upon the expiration or earlier
termination of the Option, City and LLC shall cooperate to execute a recordable termination of same.
8. Miscellaneous.
a. Governing Law. This Agreement is executed in accordance with, shall be
governed by, and construed and interpreted in accordance with the laws of the State of
Michigan.
2
b. Entire Agreement. This Agreement shall constitute the entire agreement,
and shall supersede any other agreements, written or oral, that may have been made or
entered into, by and between the parties with respect to the subject matter of this Agreement
and shall not be modified or amended except in a subsequent writing signed by the party
against whom enforcement is sought.
c. Binding Effect; Effective Date. This Agreement shall be binding upon, and
inure to the benefit of and be enforceable by, the parties and their respective legal
representatives, permitted successors and assigns. This Agreement shall be effective upon
the date on which both parties have executed this Agreement as set forth below ("Effective
Date").
d. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original as against any party whose
signature appears thereon, and all of which together shall constitute one and the same
instrument. This Agreement shall become binding upon the parties when one or more
counterparts, individually or taken together, shall bear the signatures of all parties.
e. Non-Waiver. No waiver by any party of any provision of this Agreement shall
constitute a waiver by such party of such provision on any other occasion or a waiver by
such party of any other provision of this Agreement.
f. Severability. Should any one or more of the provisions of this Agreement be
determined to be invalid, unlawful or unenforceable in any respect, the validity, legality and
enforceability of the remaining provisions of this Agreement shall not in any way be impaired
or affected.
g. Assignment or Delegation. Except as otherwise specifically set forth in this
Agreement, LLC shall not assign all or any portion of its rights and obligations contained in
this Agreement without the express prior written approval of City, which approval may be
withheld in City's sole discretion. LLC shall be permitted to assign its rights under this
Agreement to a legal entity controlled by LLC or one or both of its members.
h. Survival of Representations and Warranties. The representations,
warranties, covenants and agreements contained in this Agreement and in any instrument
provided for in this Agreement shall survive the Effective Date and continue in full force and
effect.
1601~rt~
The parties have executed this Agreement to be effective as of the Effective Date.
Cltyo!Mu gon
Name: Fred Scharmer
;t - 1q ,;)v ;)O
Title:M~,14/20
Date: _ _ _ _ _ _ _ __
~---~~" ~~( ~
Name: Ann Macie Meisch
Title: City Clerk
Date: ,z-- 1~ - dOrW
3
Exhibit A
Depiction of Option Property
fAf~Or/
Muskegon County
Property Viewer Map
Type a Map Title Here
Type a Note for the map print here
♦
Scale: 1 to 4,514
Notice: Muskegon County and Muskegon
County GIS makes no warranty, expressed or
implied, regarding the accuracy, completeness,
or usefulness of the information presented.
Muskegon County assumes no responsibility for
errors that arise from the use of this information.
MUSKEGON COUNTY
GIS
Map by Muskegon County GIS
141 E. Apple Ave, Muskegon, Ml 49445
P: 231-724-4458 F: 231-724-1129
www.muskegoncountygis.org
Printed from the Muskegon County
GIS Property Viewer
Map Printed 2/4/2020
Exhibit B
Legal Description of Option Property
LANDS IN THE CITY OF MUSKEGON, MUSKEGON COUNTY, STATE OF
MICHIGAN DESCRIBED AS BEING WEST OF BEACH STREET AND BEACH
STREET EXTENDED TO THE MUSKEGON LAKE CHANNEL, BEING BOUNDED ON
THE WEST BY LAKE MICHIGAN AND ON THE SOUTH BY A CONCRETE
WALKWAY BEGINNING ON THE WESTERLY SIDE OF BEACH STREET AT ITS
INTERSECTION WITH INDIANA AVENUE AND RUNNING SOUTHWESTERLY TO
LAKE MICHIGAN, AND ON THE NORTH BY THE MUSKEGON LAKE CHANNEL
THAT BEING A PART OF THE LAND COMMONLY KNOWN AS 1651 BEACH
STREET, PARCEL NO. 61-24-205-734-0001-00.
EXCLUDING ANY PORTION OF THE LANDS OWNED BY THE MICHIGAN
LIGHTHOUSE COVSERVANCY, PARCEL NO. 61-24-205-739-0001-101555 AS
LISTED IN THE MUSKEGON COUNTY GIS SYSTEM
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