Agreement - DRL Properties, LLC - -1- 4880-1037-9968v1
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LEASE
(7601 Monterey Street)
THIS LEASE, dated June 1, 2024 (“Effective Date”), is entered into by and between DRL
PROPERTIES, LLC, a California limited liability company (“Landlord”), and THE CITY OF GILROY, a
California municipal corporation (“Tenant”).
1. PREMISES. Landlord hereby leases to Tenant and Tenant hereby hires from Landlord the
entire parking area described on Exhibit A attached hereto (“Premises”). The Premises are located at 7601
Monterey Street, in the City of Gilroy, County of Santa Clara, State of California.
2. LEASE TERM.
2.1 Term. The term of this Lease (“Term”) shall commence on the Effective Date
(which shall sometimes also be referred to herein as the “Commencement Date”) and expire, unless sooner
terminated in accordance with the terms and conditions of this Lease, on the date that is twelve (12) full
calendar months after the Commencement Date. Notwithstanding the foregoing, this Lease shall be subject
to termination as elsewhere provided in this Lease. “Lease Termination” shall mean the expiration or sooner
termination of this Lease.
3. RENT. Tenant agrees to pay monthly base rent (“Base Rent”) to Landlord in the amount
of $5,000 per month (on the first day of each month) commencing on the Commencement Date .
Notwithstanding the foregoing and/or anything to the contrary set forth in this Lease, Landlord and Tenant
each acknowledge and agree that the Lease is an “absolute gross” Lease and, anything in this Lease to the
contrary notwithstanding, Tenant is not obligated to pay any operating expenses or taxes, insurance and/or
other costs relating to the management, operation and/or ownership of the Premises and/or Project, it being
the intent of the parties that Tenant’s payment of Base Rent shall be Tenant’s sole monetary obligations
under this Lease.
4. CONDUCT OF BUSINESS BY TENANT. Tenant may use the Premises for parking and
other legal uses.
5. MAINTENANCE, REPAIRS, AND ALTERATIONS.
5.1 Maintenance and Repair. During the Term of this Lease or any extension thereof,
Landlord shall not be responsible for the maintenance or repair of any portion of the Premises, and Tenant
shall be responsible for correcting and paying for any and all damage or injury to the Premises, at its sole
cost and expense. Tenant shall pay to Landlord any costs incurred by Landlord to correct damage or injury
for which Tenant is responsible pursuant to the prior sentence not later thirty (30) days after receiving
Landlord’s invoice for such costs. Landlord will paint the exterior of the Building during the first year of
the Term.
5.2 Tenant’s Responsibility for Maintenance and Repair. Tenant shall, during the
Term or any extension thereof, keep in good order, condition and repair the entire Premises.
5.3 Condition Upon Surrender. On Lease Termination, Tenant shall surrender the
Premises to Landlord in substantially the condition as when received by Tenant under this Lease, ordinary
wear and tear and casualty and condemnation excepted.
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6. REPAIRS AND RESTORATION. Landlord shall have no obligation to rebuild, restore
or repair all or any portion of the Premises in the event of any damage or destruction thereto from any cause.
If at any time during the Term the Premises are damaged to the extent such damage interferes with Tenant’s
continued use of the Premises, Tenant may terminate this Lease by giving written notice of termination to
Landlord.
7. EMINENT DOMAIN.
7.1 Automatic Termination. If the entire Premises, or so much of either as to make the
Premises not reasonably adequate for the conduct of Tenant’s business in Tenant’s reasonable judgment
shall be taken under the power of eminent domain, this Lease shall automatically terminate as of the date
on which the condemning authority takes possession.
7.2 Rent Abatement. If a portion of the Premises is taken by power of eminent domain
which does not result in a termination of this Lease, then this Lease shall continue in full force and effect
as to the part of the Premises not so taken. There shall be no abatement of Rent payable hereunder and
Tenant shall have no claim against Landlord for any damage suffered by Tenant by reason of any taking of
the Premises under the power of eminent domain other than by Landlord.
7.3 Condemnation Award. Any award for any taking of all or any part of the Premises
under the power of eminent domain other than by Landlord shall be the property of Landlord, whether such
award shall be made as compensation for diminution in value of the leasehold or for taking of the fee. In
no event shall Landlord be obligated to make any repairs or perform any restoration or other work required
as a result of a taking. Nothing contained herein, however, shall be deemed to preclude Tenant from
obtaining, or to give Landlord any interest in, any award to Tenant for loss of or damage to Tenant’s trade
fixtures and removal of personal property and Tenant’s moving expenses.
7.4 Sale Under Threat of Condemnation. A sale by Landlord to any authority having
the power of eminent domain, either under threat of condemnation or while condemnation proceedings are
pending, shall be deemed a taking under the power of eminent domain for all purposes under this Article.
Each party waives the provisions of California Code of Civil Procedure Section 1265.130 allowing either
party to petition the Superior Court to terminate this Lease in the event of a taking.
8. DEFAULTS. REMEDIES.
8.1 Defaults. The occurrence of any one or more of the following events shall
constitute a default hereunder by Tenant:
8.1.1 The failure by Tenant to make any payment required by this Lease as and
within ten (10) days after receiving written notice from Landlord that such payment is past due.
8.1.2 The failure by Tenant to timely observe or perform any of the express or
implied covenants or provisions of this Lease to be observed or performed by Tenant within thirty (30) days
after receipt of written notice from Landlord; provided, however, that if the nature of such default
reasonably requires more than thirty (30) days to cure, the Tenant shall be entitled to such additional time
as may be reasonably necessary.
8.2 Remedies. Upon a default, Landlord shall have the following remedies, in addition
to all other rights and remedies provided by law or otherwise provided in this Lease, to which Landlord
may resort cumulatively or in the alternative:
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8.2.1 Landlord may continue this Lease in full force and effect, and this Lease
shall continue in full force and effect as long as Landlord does not terminate this Lease, and Landlord shall
have the right to collect Rent when due. No act by Landlord other than giving written notice to Tenant
shall terminate this Lease. Acts of maintenance, efforts to relet the Premises or the appointment of a receiver
on Landlord’s initiative to protect Landlord’s interest under this Lease shall not constitute a termination of
Tenant’s right to possession.
8.2.2 Landlord may terminate this Lease and Tenant’s right to possession of the
Premises at any time (i) if such default is in the payment of Rent and it is not cured within five (5) days
after written notice from Landlord, or, (ii) with respect to the defaults referred to in Paragraphs 12.1.1, or
12.1.4, if such default is not cured within thirty (30) days after written notice from Landlord; provided,
however, that if the nature of Tenant’s default is such that more than thirty (30) days are reasonably required
for its cure, if Tenant does not commence to cure the default within the thirty (30) day period or does not
diligently and in good faith prosecute the cure to completion within a reasonable time thereafter, or (iii)
with respect to a default described in Paragraph 12.1.3, upon delivery to Tenant of not less than ten (10)
days prior written notice of termination, or (iv) with respect to a default specified in Paragraph 12.1.5, if
such default is not cured within the respective time specified in that paragraph. The parties agree that any
notice given by Landlord to Tenant pursuant to this Paragraph 12.2.2 shall be sufficient notice for purposes
of California Code of Civil Procedure Section 1161 and Landlord shall not be required to give any
additional notice in order to be entitled to commence an unlawful detainer proceeding. On termination,
Landlord has the right to remove all of Tenant’s personal property, signs and trade fixtures and store same
at Tenant’s cost and to recover from Tenant as damages:
8.2.2.1 The worth at the time of award of unpaid Rent and other sums
due and payable which had been earned at the time of termination; plus
8.2.2.2 The worth at the time of award of the amount by which the
unpaid Rent and other sums due and payable which would have been payable after termination until the
time of award exceeds the amount of such Rent loss that Tenant proves could have been reasonably avoided;
plus
8.2.2.3 The worth at the time of award of the amount by which the
unpaid Rent and other sums due and payable for the balance of the Term after the time of award exceeds
the amount of such rental loss that Tenant proves could be reasonably avoided; plus
8.2.2.4 Any other amount necessary to compensate Landlord for all the
detriment proximately caused by Tenant’s failure to perform Tenant’s obligations under this Lease, or
which, in the ordinary course of things, would be likely to result therefrom; plus
8.2.2.5 Such other amounts in addition to or in lieu of the foregoing as
may be permitted from time-to-time by the laws of the State of California.
The “worth at the time of award” of the amounts referred to in Paragraphs 12.2.2.1 and 12.2.2.2 is
computed by allowing interest at the Stipulated Rate (defined in Paragraph 16). The ‘‘worth at the time of
award” of the amount referred to in Paragraph 12.2.2.3 is computed by discounting such amount at the
discount rate of the Federal Reserve Bank of San Francisco at the time of award plus one percent (1%).
8.2.3 No delay or omission of Landlord to exercise any right or remedy shall be
construed as a waiver of any such right or remedy or of any default by Tenant hereunder.
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8.2.4 Notwithstanding any other provision of this Lease, in no event shall
Tenant be liable for consequential damages, or loss of or interference with Landlord’s business, including
without limitation lost profits.
8.3 Default by Landlord. Landlord shall not be deemed to be in default in the
performance of any obligation required to be performed by it hereunder unless and until it has failed to
perform such obligation within thirty (30) days after written notice by Tenant to Landlord specifying
wherein Landlord has failed to perform such obligation; provided, however, that if the nature of Landlord’s
obligation is such that more than thirty (30) days are required for its performance then Landlord shall not
be deemed to be in default if it shall commence such performance within such thirty-day period and
thereafter diligently prosecute the same to completion.
8.4 Expenses of Prevailing Party. If either party incurs any expense, including
reasonable attorneys’ fees, in connection with any action or proceeding instituted by either party arising out
of this Lease, the party prevailing in such action or proceeding shall be entitled to recove r its reasonable
expenses including attorneys’ fees from the other party.
9. SIGNS. Tenant may place parking-related signage in or about the Premises.
10. OPTION TO EXTEND. Landlord hereby grants to Tenant one (1) option (“Option”) to
extend the term of the Lease for an additional twelve (12) months (“Option Period”) upon and subject to
the terms and conditions set forth in this Lease. The Option shall be exercised, if at all, by Tenant’s delivery
of written notice of exercise to Landlord. The Base Rent to be paid during the Option Period shall be
$5,000.
11. MISCELLANEOUS.
11.1 Time of Essence. Time is of the essence with respect to the performance of every
provision of this Lease.
11.2 Captions. The article and paragraph captions contained in this Lease are for
convenience only and shall not be considered in the construction or interpretation of any provision hereof.
11.3 Entire Agreement and Amendments. This Lease contains all of the agreements of
the parties hereto with respect to any matter covered or mentioned in this Lease, and no other agreement or
understanding pertaining to any such matter shall be effective for any purpose. No provision of this Lease
may be amended or added to except by an agreement in writing signed by the parties hereto or their
respective successors in interest.
11.4 Notice. Any notice required or permitted to be given hereunder shall be in writing
and may be served personally (which includes without limitation delivery by overnight courier services) or
by mail. All notices shall be sent to the following addresses:
Landlord: DRL Properties LLC
7211 Eagle Ridge Drive
Gilroy, CA 95020
Attn: David Leal
Tenant: City of Gilroy
735 Rosanna Street
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Gilroy, CA 95020
Attn: City Administrator
Any notice so given by mail shall be deemed effectively given three (3) days after being deposited in the
United States mail, registered or certified, postage prepaid and addressed as specified herein. Either party
may by written notice to the other specify a different address for notice purposes. Notwithstanding the
foregoing, any legal notices required to be sent by one party to the other (including without limitation, a
notice pursuant to California Code of Civil Procedure Section 1161) shall be delivered in the manner
required or allowed by law.
11.5 Holdover. This Lease shall terminate without further notice at the expiration of the
Term. Any holding over after Lease Termination with the consent of Landlord shall be construed to be a
tenancy from month to month, but otherwise on the same terms and con ditions set forth in this Lease. If
Tenant remains in possession of the Premises after Lease Termination without Landlord’s consent or fails
to surrender the Premises in the condition required by Paragraph 6.3, Tenant shall pay holdover monthly
Base Rent during such holdover period in the amount of two hundred percent (200%) of the Base Rent in
effect immediately before such holdover period, and Tenant shall indemnify, defend and hold Landlord and
Landlord’s employees, representatives and agents harmless from and against any claims, losses, damages,
judgments, expenses or liabilities (including without limitation attorneys’ fees) resulting from Tenant’s
failure to surrender the Premises in the required condition, including without limitation, any claims made
by any succeeding tenant based upon delay in the availability of the Premises, which obligations shall
survive Lease Termination.
11.6 Brokers. Tenant warrants and represents that it has had no dealings with any real
estate broker or agent in connection with the negotiation of this Lease. Tenant agrees to defend, indemnify
and hold Landlord and Landlord’s employees, representatives and agents harmless from and against any
and all claims, losses, damages, liabilities, judgments or expenses (including without limitation attorney’s
fees) arising out of or in connection with claims made by any broker or individual for commissions or fees
resulting from Tenant’s execution of this Lease, which obligations shall survive Lease Termination.
11.7 Acceptance. Delivery of this Lease, duly executed by Tenant, constitutes an offer
to lease the Premises, and under no circumstances shall such delivery be deemed to create an option or
reservation to lease the Premises for the benefit of Tenant. This lease shall only become effective a nd
binding upon full execution hereof by Landlord and delivery of a signed copy to Tenant.
11.8 Waiver. The waiver by either Party of any breach of any term, condition or
covenant of this Lease shall not be deemed to be a waiver of such provision or any subsequ ent breach of
the same or any other term, condition or covenant of this Lease. The subsequent acceptance of Rent
hereunder by Landlord shall not be deemed to be a waiver of any preceding breach at the time of acceptance
of such payment. No covenant, term or condition of this Lease shall be deemed to have been waived by
either Party unless such waiver is in writing signed by that Party.
11.9 Separability. If one or more of the provisions contained herein, except for the
payment of Rent, is for any reason held to be invalid, illegal or unenforceable in any respect, such invalidity,
illegality or unenforceability shall not affect any other provision of this Lease, but this Lease shall be
construed as if such invalid, illegal or unenforceable provision had not been contained herein.
11.10 Liens. Tenant shall pay for all labor and services performed for, and all materials
used by or furnished to Tenant or Tenant’s Agents and keep the Premises free from any liens arising out of
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work performed, materials furnished, or obligations incurred by Tenant or Tenant’s Agents with respect to
the Premises. Tenant shall indemnify, hold harmless and defend Landlord and Landlord’s employees,
representatives and agents from and against any liens, demands, claims, judgments, losses, liabiliti es,
damages, expenses or encumbrances (including all attorneys’ fees) arising out of any work or services
performed for or materials used by or furnished to Tenant or Tenant’s Agents with respect to the Premises.
Tenant shall do all things necessary to prevent the filing of any mechanic’s or other liens against the
Premises or any part thereof by reason of work, labor, services or materials supplied or claimed to have
been supplied to Tenant, or anyone holding the Premises, or any part thereof, through or under Tenant. If
any such lien shall at any time be filed against the Premises, Tenant shall either cause the same to be
discharged of record within ten (10) days after the date of filing of the same, or, if Tenant in Tenant’s
discretion and in good faith determines that such lien should be contested, Tenant shall furnish such security
as may be necessary or required to (a) prevent any foreclosure proceedings against the Premises during the
pendency of such contest, and (b) cause a mutually satisfactory title company to remove such lien as a
matter affecting title to the Premises. If Tenant shall fail to discharge such lien within such period or fail to
furnish such security, then, in addition to any other right or remedy of Landlord resulting from Tenant’s
said default, Landlord may, but shall not be obligated to, discharge the same either by paying the amount
claimed to be due or by procuring the discharge of such lien by giving security or in such other manner as
is, or may be, prescribed by law. Tenant shall repay to Landlord on demand all sums disbursed or deposited
by Landlord pursuant to the foregoing provisions of this Paragraph 20.10 including Landlord’s costs,
expenses and reasonable attorneys’ fees incurred by Landlord in connection therewith, with interest thereon
at the Stipulated Rate. Nothing contained herein shall imply any consent or agreement on the part of
Landlord to subject Landlord’s estate to liability under any mechanics’ or the lien law. Tenant shall give
Landlord adequate opportunity and Landlord shall have the right to post such notices of non-responsibility
as are provided for in the mechanics’ lien laws of California. Tenant’s obligations pursuant to this paragraph
shall survive Lease Termination.
11.11 Encumbrances. This Lease is subject and subordinate to ground and underlying
leases, mortgages, deeds of trust and other monetary liens (collectively “Encumbrances”) which may now
affect the Premises, to any covenants, conditions or restrictions of record, and to all renewals, modifications,
consolidations, replacements and extensions thereof; provided, however, if the holder or holders of any
such Encumbrance (“Holder”) shall require that this Lease be prior and superior thereto, within seven (7)
days after written request of Landlord to Tenant, Tenant shall execute, have acknowledged and deliver any
and all documents or instruments, in the form presented to Tenant, which Landlord or Holder deems
necessary or desirable for such purposes. Landlord shall have the right to cause this Lease to be and become
and remain subject and subordinate to any and all Encumbrances which are now or may hereafter be
executed covering the Premises or any renewals, modifications, consolidations, replacements or extensions
thereof, for the full amount of all advances made or to be made thereunder and without regard to the time
or character of such advances, together with interest thereon and subject to all the terms and provisions
thereof. Within ten (10) days after Landlord’s written request, Tenant shall execute any and all documents
required by Landlord or the Holder to make this Lease subordinate to any lien of the Encumbrance. If
Tenant fails to do so, then in addition to such failure constituting a default by Tenant, it shall be deemed
that this Lease is so subordinated to such Encumbrance. Tenant hereby attorns and agrees to attorn to any
entity purchasing or otherwise acquiring the Premises at any sale or other proceeding or pursuant to the
exercise of any other rights, powers or remedies under such Encumbrance so long as the Lease remains in
effect.
11.12 Landlord’s Right to Perform Tenant’s Covenants. If Tenant fails to make any
payment or perform any other act on its part to be made or performed under this Lease, Landlord may, but
shall not be obligated to and without waiving or releasing Tenant from any obligation of Tenant under this
Lease, make such payment or perform such other act to the extent Landlord may deem desirable, and in
connection therewith, pay expenses and employ counsel. All sums so paid by Landl ord and all penalties,
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interest and costs in connection therewith shall be due and payable by Tenant immediately on demand,
together with interest at the Stipulated Rate from date of payment by Landlord to the date of payment by
Tenant to Landlord, plus collection costs and attorneys’ fees. If Tenant damages the Premises, Tenant shall
have a reasonable opportunity to repair the damage and Landlord may not repair the damage and charge
Tenant for the repair unless Landlord gives Tenant thirty (30) days’ written notice, except that if such repair
would reasonably take more than thirty (30) days Landlord may not make the repair until such reasonable
time has run.
11.13 Tenant’s Remedy. If, because of a default by Landlord under this Lease, Tenant
recovers a money judgment against Landlord, such judgment shall be satisfied only out of the proceeds of
sale received upon execution of such judgment and levied thereon against the right, title and interest of
Landlord in the Premises and out of rent or other income from the Premises receivable by Landlord, and
neither Landlord, nor its employees, representatives or agents, shall be personally liable for any
deficiency. Neither Landlord’ s employees, agents, nor representatives, nor any other person or entity
other than Landlord, nor any of their respective assets, shall be liable for Landlord’ s breach of this Lease.
11.14 Exhibits. All exhibits, amendments, riders and addenda attached hereto are hereby
incorporated herein and made a part hereof.
11.15 Conditions. All agreements of Tenant contained in this Lease, whether expressed
as conditions or covenants, shall be construed to be both conditions and covenants, conferring upon
Landlord, in the event of a breach thereof, the right to terminate this Lease.
11.16 No Partnership or Joint Venture. Nothing in this Lease shall be construed as
creating a partnership or joint venture between Landlord, Tenant, or any other party, or cause Landlord to
be responsible for the debts or obligations of Tenant or any other party.
11.17 Construction. This Lease shall not be construed either for or against Tenant or
Landlord, but shall be construed in accordance with the general tenor of the language. This Lease shall be
construed in accordance with the laws of the State of California.
11.18 Joint and Several Liability. If Tenant consists of more than one (1) person or entity,
the obligations of each Tenant under this Lease shall be joint and several.
11.19 Certified Access Specialist. For purposes of Section 1938 of the California Civil
Code, Landlord hereby discloses to Tenant that, to Landlord’s actual knowledge, as of the Effective Date,
the Premises have not undergone inspection by a Certified Access Specialist (“CASp”). Pursuant to
California Civil Code Section 1938(e), Landlord hereby further discloses to Tenant the following: “A
Certified Access Specialist (CASp) can inspect the subject premises and determine whether the subject
premises comply with all of the applicable construction-related accessibility standards under state law.
Although state law does not require a CASp inspection of the subject premises, the commercial property
owner or lessor may not prohibit the lessee or tenant from obtaining a CASp inspection of the subject
premises for the occupancy or potential occupancy of the lessee or tenant, if requested by the lessee or
tenant. The parties shall mutually agree on the arrangements for the time and manner of the CASp
inspection, the payment of the fee for the CASp inspection, and the cost of making any repairs necessary
to correct violations of construction-related accessibility standards within the premises.” Notwithstanding
the foregoing and/or anything to the contrary contained in this Lease, Landlord and Tenant hereby agree
and acknowledge that, in the event Tenant desires to obtain a CASp inspection, then:
(x) Tenant shall provide Landlord with no less than twenty (20) business days’ prior
written notice and, upon receipt of such notice, Landlord shall have the right to, among other things, (i)
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select the date and time at which such inspection shall occur, and (ii) have one (1) or more representatives
present during such inspection.
(y)Tenant hereby agrees and acknowledges that it shall (i) provide Landlord with a
copy of any and all findings, reports and/or other materials (collectively, the “CASp Report”) provided by
the CASp immediately following Tenant’s receipt thereof, (ii) at all times maintain (and cause to be
maintained) the CASp Report and its findings (and any and all other materials related thereto) confidential
and (iii) pay for the CASp inspection and CASp Report at Tenant’s sole cost and expense. If Tenant
receives a disability access inspection certificate, as described in subdivision (e) of California Civil Code
Section 55.53, in connection with or following any CASp inspection undertaken on behalf, or for the
benefit, of Tenant, then Tenant shall cause such certificate to be provided immediately to Landlord.
(z)If the CASp Report identifies any violation(s) of applicable construction -related
accessibility standards (“CASp Violation(s)”), Tenant shall immediately provide written notice to Landlord
of any and all such CASp Violation(s). In such event, Tenant shall, at Tenant’s sole cost and expense,
perform, or cause to be performed, any repairs, modifications and/or other work necessary to correct such
CASp Violation(s) (any such repairs, modifications and/or other work being collectively referred to herein
as the “CASp Work”). Tenant shall commence (or cause the commencement of) such CASp Work no later
than fifteen (15) business days after Landlord’s receipt of the CASp Report in accordance with the terms
and conditions of this Lease. Tenant shall diligently prosecute (or cause to be diligently prosecuted) to
completion all such CASp Work in a lien free, good and workmanlike manner, and, upon completion, obtain
an updated CASp Report showing that the Premises then comply with all applicable construction-related
accessibility standards. Any and all cost and expense associated with the CASp Work and/or the updated
CASp Report (which Tenant shall provide to Landlord immediately upon Tenant’s receipt thereof) shall be
at Tenant’s sole cost and expense.
Without limiting the generality of the foregoing, Tenant hereby agrees and acknowledges that: (i)
Tenant assumes all risk of, and agrees that Landlord shall not be liable for, any and all loss, cost, damage,
expense and liability (including, without limitation, court costs and reasonable attorneys’ fees) sustained as
a result of the Premises not having been inspected by a Certified Access Specialist (CASp); (ii) Tenant’s
indemnity obligations set forth in this Lease shall include any and all claims relating to or arising as a result
of the Premises not having been inspected by a Certified Access Specialist (CASp); and (iii) Landlord may
require, as a condition to its consent to any alterations, additions or improvements, that the same be
inspected and certified by a Certified Access Specialist (CASp) (following completion) as meeting all
applicable construction-related accessibility standards pursuant to California Civil Code Section 55.53.
11.20 Binding Effect. Subject to the provisions of Paragraphs 9 and 15, all of the
provisions hereof shall bind and inure to the benefit of the parties hereto and their respective heirs, legal
representatives, successors and permitted assigns.
[Signatures Appear on Following Page]
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IN WITNESS WHEREOF, the parties hereto have executed this Lease as of the date first stated
TENANT:
CITY OF GILROY,
a California municipal corporation
By:
Its: City Administrator
Date: May 31, 2024
above.
LANDLORD:
DRL PROPERTIES, LLC,
a California limited liability company
By:
Its: DRL Properties
Date: May 31, 2024
ATTEST:
City Clerk
APPROVED AS TO FORM:
City Attorney
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