Manhattan Beach Country Club Lease Could Bring City $1 Million More A Year

MANHATTAN BEACH, CA — Manhattan Beach could receive more than $1 million in additional annual rent under a proposed agreement with the operator of the Manhattan Country Club that would also clear the way for a major redevelopment, nearly double the private club's membership limit and potentially extend its lease on city-owned land until 2082.

The City Council is scheduled to consider the agreement Wednesday, Nov. 4, as part of a renegotiation of three existing leases covering the country club, an adjacent office building and parking spaces near Manhattan Village Field. Under the proposed lease, Bay Club's combined annual rent would rise from approximately $671,000 to $1,681,770, an increase of $1.01 million, or roughly 151%.

The agreement would replace a decades-old rental structure that city officials say has failed to keep pace with changes in the club's business, while accommodating plans to demolish an aging office building and construct new recreational facilities. If approved, the new lease would take effect Jan. 2, 2027, with annual rent increases tied to inflation.

A $1 Million Annual Increase

According to the City Council staff report, Manhattan Beach currently receives approximately $570,000 annually from the country club, $59,000 from an adjacent office building and $42,000 for 50 parking spaces near Manhattan Village Field. Those payments are calculated under separate agreements, including a country club lease that combines fixed rent with percentages of revenue from tennis tournaments, food and beverage sales, and retail and office rentals.

However, the existing formula does not account for membership dues, which city officials identify as the club's primary revenue source. As the club's operations have evolved, the city's rental income has remained relatively flat. The proposed agreement would consolidate all three leases into a single fixed-rent arrangement, with annual adjustments based on the Consumer Price Index. Those increases would be no less than 2% and no greater than 5%, regardless of the actual inflation rate.

City officials estimate the revised terms would generate approximately $505,000 more than budgeted in fiscal 2027, which ends June 30, with the higher payments beginning in January. Total lease revenue for that fiscal year is projected at approximately $1.18 million, rising to an estimated $1.7 million in fiscal 2028. The city's financial consultant, Keyser Marston Associates Inc., also examined how inflation could affect rental income over the longer term.

Under a scenario assuming annual adjustments of 3%, rent could reach approximately $8.3 million annually by 2082. The consultant estimated that scenario would produce an additional $16.8 million in revenue over the full lease term compared with the existing agreements. Those figures are projections rather than guaranteed returns, and the longer-term estimates depend on Bay Club exercising its lease extension options.

City staff said the fixed-rent approach would provide more predictable revenue while reducing the potential for disputes over how the club's various income streams are calculated.

Membership Expansion And New Pool Facilities

The proposed lease would also accommodate a substantial expansion of the Manhattan Country Club, which has occupied the city-owned property along Parkview Avenue for more than four decades. The club's existing membership cap of 1,400, including 50 corporate memberships, could increase to as many as 2,757. The actual maximum would remain subject to parking availability and conditions established by the Planning Commission.

The expansion is linked to plans to demolish the existing three-story office building at 1334 Parkview Avenue and replace it with a new private swimming pool and related amenities. The Manhattan Beach Planning Commission approved the redevelopment May 13 through Resolution No. PC 26-04, contingent upon City Council approval of an amended lease.

City officials said the office building has become less attractive as a commercial property because of an abundance of available office space along the Rosecrans Avenue corridor. At the same time, country clubs have increasingly shifted toward fitness, wellness and family-oriented recreational amenities. Bay Club's redevelopment plans reflect those changes, replacing office space with facilities intended to support a larger membership and a broader range of recreational activities.

The proposed lease also preserves the city's ability to terminate the portion of the agreement covering the 50 parking spaces with six months' notice, subject to the lease's provisions.

A Potential Lease Extension Through 2082

The agreement would initially run from Jan. 2, 2027, through Jan. 1, 2044, matching the expiration date of the existing leases. Bay Club would then have two consecutive 15-year extension options and a further eight-year option, potentially extending the agreement through Jan. 1, 2082.

The property has been leased for private recreational and commercial use since 1981, when the original lessee developed the country club and office building. The office and country club agreements were separated in 2001 to allow the properties to be transferred independently. In 2017, the leases were transferred to Bay Club following its acquisition of the country club and office building interests, with the city receiving a 1% transfer fee under the existing provisions.

Negotiations over the latest agreement followed City Council closed-session discussions Sept. 15, Oct. 6 and Oct. 20. City representatives, assisted by Keyser Marston Associates, subsequently negotiated the revised terms with Bay Club. Beyond the financial changes, the agreement would update insurance and indemnification requirements and incorporate the redevelopment and membership conditions approved by the Planning Commission.

Council To Consider Agreement Wednesday

The proposal appears as Item 5 on the City Council's Nov. 4 agenda, with city staff recommending adoption of Resolution No. 26-0109 and authorization for City Manager Talyn Mirzakhanian to execute the agreement. The item is on the consent calendar, meaning it could be approved with other items in a single vote unless a council member requests separate consideration.

City staff determined that additional public outreach was not required for the lease proposal. Officials also concluded that the project was adequately covered by a previously adopted exemption under the California Environmental Quality Act, requiring no further environmental documentation. The City Attorney has approved the agreement as to form.

The council meeting begins at 6 p.m. Wednesday in the City Council Chambers, 1400 Highland Ave., with remote participation available through Zoom. Approval would mark a significant change in the city's longstanding relationship with Bay Club, substantially increasing revenue from publicly owned land while allowing the private club to expand its facilities and potentially remain on the property for another 55 years.