October 2021 – Special Committee Meeting Minutes
Sunny Dunes Steering Committee Meeting Minutes
October 25, 2021
Chairman: Michael C., Co-Chair: Michael K., Secretary: Helen B., Treasurer: Meredith J., Accountant: Sari.,, Auditor: Michael S., GSR: Leonard L., Grapevine: Kent B., Historian: Mark C., Intergroup: Bruce K;, Supplies: Mike H, Telephone and meeting List: Tommy R., Webmaster: Todd S., Online Meeting Coordinator: Michael P.
Meeting Called to Order at 6:30 pm by Michael Crosby – Chair
Review of Issue at hand: Membership vote to determine Sunny Dunes Location:
No Roll Call was taken. Membership Count to the best of my Ability: Zoom Participants: 20. In-room Participants: 72
Context provided by Michael C – Chair
“Our current lease expired at the end of June 2021 and we were told a few months before the expiration that the landlord would not be renewing our lease. They said they were planning to level the building and build a fast-food restaurant.
A committee was formed to search for a new space that took place over the summer. Thank you all who helped in that process. The space in Canyon Plaza represented by Ocean Properties seemed to be the best fit with Sunny Dunes and we began negotiations. On August 9 we received a Lease Proposal outlining the rent costs and lease terms. We subsequently countered that offer on September 23. After numerous attempts and long delays to get an answer from them, we reached out again on Oct 14 and received an email about their moving forward with completing the lease applications WITHOUT any mention of our counter offer. Marie from the office said she would look into it and still has yet to provide us with an answer.
At the beginning of the search it became clear the old ways of a “signature and a handshake” would not be adequate for us to enter a new lease agreement, which Gerard did more than 7 years ago. Not only is this no longer the norm, it has the potential for disaster for the individual signing the lease. Moving forward it was time Sunny Dunes applied for non-profit corporate status so that any legal documents can be handled through the corporation and not an individual, and also to enjoy the other benefits of becoming a non-profit. AKA Clubhouse.
A Planning Committee is working diligently on the application for the non-profit. The document and the articles of incorporation are in their final phases of development and will be forwarded to our attorney for review and preparation for submission to the State. Before we submit to the State, we will bring the documents to the Steering Committee meeting for all members to review. We anticipate the application to take approximately 2-3 more months for approval. The state is a little bit quicker but we have a federal hurtle that we have to jump which will take months – but once the state application is submitted then we have some leverage as we will be then in a pending status.
In the middle of all this, our current landlord let us know they would be able to offer us a 2-year extension. Given we are in the middle of creating the non-profit corporation, staying in the current space for 2 years seemed worth entering into negotiations. It would give us time to complete that process and look at possibly renting a building from the City of Palm Springs at a very substantially reduced rate as a nonprofit corporation, Sunny Dunes Inc., or even potentially buy our own building.
The negotiations with Canyon Plaza East (Mor furniture ) have been slow in the coming and we still do not know if they have accepted our counter offer.
Current Landlord, Pacific Castle
Under a new 2-year, approximately 1850 sq ft, the base rent would remain the same $2616.96, however, they will be adding in the Triple Net (NNN-a percentage of costs toward Common Area Maintenance, Taxes, and Insurance of the entire complex) which come to approximately $795 = $3411.96 / month. (This is our increase) In addition, within this 2-year period they have the ability to relocate us or terminate the lease with a 135 day notice. Further expanded at meeting: “we will have a 135 day notice to relocate or to leave. They will relocate us if possible). The rental increase would be 3% annually.
Question interjected: would they cover the cost of relocation: Answer: spoke with ryan schnell: I would put you in a larger space if need be without raising the rent. He was very clear that he did not want to lose us – for good reason: 7 years of being paid on time and through Covid when we were not even using the room. Advised Ryan that we were nervous about the 135 day notice. Ryan reassured that there was “nothing on the books” that we are considering putting into this space. He also stated that if a large corporation like Star Bucks or In-Out Burger would take months and months to get into the space which would push us well into that 2 year lease ending.
AS IS- nothing needed to be done.
NEW LEASE at Canyon Plaza East
The new lease of 8 years 2 months, approximately 1530 sq ft., the base rent would be $2,295 + $717 (triple net NNN) = $3012. The rental increase would be 5% annually. Clarification of rental increase is 5 cent a foot annually.
In the counter-offer we asked for $1995 base rent plus triple net, and instead of an 8-year lease, we asked for a 4-year lease with a 4-year renewal option. $2712.00/ month
Landlord will build a wall between F101 and F102
Landlord will build one bathroom. The cost for a second bathroom would be on us. Landlord will stub out electrical, water, and waste lines for the new break room on the rear wall. The cost for the new kitchen and storage closet and cabinetry would be on us. The rental increase would be 5% annually. Clarification 5 cent per square foot annually. We do not know what the costs for adding a second bathroom or the new kitchen would cost along with the building of the storage closet and extra cabinetry. But we anticipate approximately $5,000 -$15,000?” Clarification $5,000-$20,000 Guestimate.
The reason we bring this tonight – to make a decision to stay or go. 15 minutes discussion, we will call on people to come to the computer to ensure that zoom and in room participants can participate.
Discussion: Planned 15 minutes discussion.
Questions/Comments brought forward:
1) Question: Robert C – Could we get an idea of what 300 sq feet less- looks like as compared to this room? Response from Chair: Removing the coffee making section at the back of the room being the difference in space.
2) Question: Robert C. – In regards to the donation of $30,000 what happens to that? Response: Chair – This would go to what ever costs we incur to move. And if we don’t move? It will stay where it is.
3) Comment: Rick – Because of the interactions we have had with Canyon Plaza to date we can assume that the way they have presented themselves is how they will present as landlords in the future.
4) Question: Kathleen: What is the relationship with our current Landlord, has it been a good relationship —- this will give us an idea of how they are going to act in the future? Response from Chair: I talked with them today and had a very good conversation. I reached out to him last week – and within an hour he responded. I reached out today and he responded immediately. What has the relationship been historically? Chair deferred to Gerard – previous chair: there are pros and cons, during Covid and asked for rent reduction he said our accountant would have to submit his own financials, his income, SS# etc. They weren’t that pleasant at the time – I’m not saying that is unusual, just saying that it was difficult. In the spring our lease was coming up and it took a couple of months to get the information from them that we would not be renewed, they were not forthcoming. But we are here now. The question now is – do we want to take the chance on the 4 and ½ month notice to leave. Either landlord will do what they are going to do.
5) Question: Ken – Since the current landlord is giving us an option of 2 year lease with the option of Landlord giving us a 135 day notice to move/relocate; will we have the same 135 day notice to move, should we find a better option. Response from Chair: No. We would be held to the 2 year lease.
6) Question: Mike H. Does the new Landlord know we are not yet fully incorporated as a non profit? Response: Michael C – New Landlord has expressed willingness to work with us once the application is submitted to the state as a pending incorporation/nonprofit status.
7) Comment: Smokey – Why re-invent the wheel? If we have communication with the Landlord here let’s continue those negotiations. With the new folks, we don’t know what were getting into and what we have to spend. The next conversation – we have been here 7 years and we have had Thanksgiving, Christmas, and marathon meetings because of the privacy of the back parking lot. In the other space we only have a huge parking lot, even if we put up tents, it won’t be cozy comfortable and private like what we have here. Also states it is time to start planning our Thanksgiving and Christmas Celebrations.
8) Question: John – Will the new place pay for the flooring and the changes? Response: Michael K – they will pay for the flooring, the rest we will pay for and they have a people that they are working with that we can utilize for the work that will need to be done and paid for by us. They are willing to do all the construction and handling to make it easy for us.
9) Question: Richard – Will our current landlord negotiate for a reduction in rent or the removal of the triple net costs. Response: Michael C – We asked for rent reduction and for an increase in the notice to quit and they said No, this is their offer, they have finished their negotiations with us.
10) Comment: Michael K – I like the new space but there are so many unknowns. Basically – we are deciding if we want 2 years with an 800 increase over what we have been paying and the possibility of getting thrown out with a 135 day notice.
11) Comment: Shay – Staying here makes the most sense; especially if we are going to apply for 501C, we might later be able to do a Capitol drive to move to a bigger space, maybe we’ll take over the other half! We want a bigger space not less space. We want a clubhouse that have separate rooms where club members can stay after meetings, to meet with sponsees, to have a cup of coffee and have fellowship, get a book, do step work, sit with a sponsee. Response from Chair – in conversation with Ryan, Landlord and stated “we have been eyeing this place next store to expand into. This thing has been sitting here empty since the beginning, and it could be utilized. Ryan indicated they would be open to that.
12) Comment/Clarification CoChair: just a couple of things – but the for the purpose of clarity: Ryan told us there is nothing on the books – but they were in talks about this, speculation was in/out burger, Starbucks is opening new stores with a restaurant in it – the first one is in ps by world gym complex. So even though he’s saying there is nothing on the books
they are in talks and we know money talks. Very early but we did reach out to the City. We did write a letter of request. If in fact we decide as a group to proceed with this The current landlord has indicated that there is no other Company at this time “on the books” for consideration for our space – however it is known there are talks about Starbucks opening a new restaurant like coffee shop.
13) Comment/Clarification of CoChair: there is early discussion and letter sent to City to look at an agreement for space as a not for profit when this paperwork is completed.
The cost for some non profits has been $1/year. We do not know if City has locations. Staying here for the 2 years gives us a bridge of time to look deeper into other options. 14) Comment: Gerard: Staying in place is simpler. There is nothing we need to do except sign a form.
15) Question: Jeff – Do we know if the price per square foot that we are currently paying and the cost of what we are considering are both within the norm of what other commercial spaces are charging. Responses from multiple areas: there has been no formal study but this seems to be market rate.
16) Question: Fred – Can we buy this building? Response – chair: this building is not for sale.
17) Question: Woman – Does the Gay Community Center have room for us? Response – Chair – NO, we have exhausted all of the options we have at this time.
Chair called for any last questions, new thoughts/Questions? None noted.
Motion to move to a vote by Kevin
Seconded by Smokey
Vote to stay at Sunny Dunes under a 2 year lease with a 135 day notice to quit or be relocated – Motion carried unanimously. No Nays.
Motion Carries to stay in Place with 2 year lease.
Meeting is adjourned with Serenity Prayer at 7:05 PM