Harbor Commission directs staff to negotiate new lease with Moby Dick's at Stearns Wharf

The Santa Barbara Harbor Commission voted unanimously Jan. 22 to recommend that waterfront staff negotiate a new lease with Moby Dick's for 6,190 square feet at 220 Stearns Wharf and return a draft for commission review and recommendation to the City Council.

Waterfront Business Manager Cesar Barrios told the commission the proposed standard term for large food-service tenants is 10 years with two five-year options. Base rent will be set by competitive market rates and will include annual increases tied to the consumer price index. The lease would include percentage rent that decreases as sales rise: 10% of gross receipts up to $5,000,000; 9% for $5,000,001–$8,000,000; 8% for $8,000,001–$10,000,000; and 7% above $10,000,000 for a lease year.

Barrios said the city would maintain piles, pile caps and the building’s foundation while the tenant would be responsible for the building shell, roof and interior improvements. He described a required annual inspection clause and said the city would terminate the existing long-term lease and move the tenant to month-to-month status during negotiations — a mechanism his office and the city attorney recommended to create a legal delineation between the old and new lease.

Commissioners pressed staff on the timeline, the risk of moving a tenant to month-to-month, historical rent and sales figures, and whether extensions should be automatic. Barrios said current base rent is “just over $20,000 a month” and that the restaurant’s gross sales have been in the roughly $3,000,000-per-year range. He also told commissioners staff will work to build performance benchmarks or guarantees of capital improvements into the lease so extensions are earned rather than automatically granted.

Carl Hutter, identified as president and CEO of Moby Dick’s, said the Community Environmental Council became a majority owner through a prior owner's charitable donation and that the restaurant invested about $1,000,000 in an oyster bar as phase one of a broader renewal plan. New management representatives (Logan Goldberg and Omar) introduced themselves and said they plan further investments.

Commissioner Cohen moved the recommendation and the commission voted unanimously to direct staff to negotiate terms and return a draft lease to the commission and City Council for approval.

Next steps: staff will terminate the current lease (moving the tenancy to month-to-month), negotiate a new lease consistent with the commission’s direction, and bring a draft back for review before forwarding to council.