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HomeMy WebLinkAbout1998-09-22 City Council (13)City of Palo Altq City Manager’s Repor TO:HONORABLE CITY COUNCIL FROM:CITY MANAGER DEPARTMENT: CITY MANAGER’S OFFICE DATE:SEPTEMBER 22, 1998 CMR:368:98 SUBJECT:REQUEST FOR APPROVAL OF AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF PALO ALTO AMENDING THE BUDGET FOR THE FISCAL YEAR 1998-99 TO PROVIDE ADDITIONAL APPROPRIATION OF $542,223 TO ACQUIRE LEASED SPACE AND COVER ASSOCIATED SUPPORT COSTS FOR A ONE-STOP DEVELOPMENT CENTER AT 285 HAMILTON REPORT IN BRIEF This report requests Council approval of a lease and Budget Amendment Ordinance (BAO) to create a Development Center at 285 Hamilton Avenue. After receiving authorization from Council to search for space, staff has considered many possible locations and has identified the space at 285 Hamilton Avenue as ideal for a mini Development Center. The creation of such a center is a key strategy to streamlining the process for residents and businesses seeking to build in Palo Alto. By acquiring this space and implementing a Development Center, the City will accomplish many important improvements in customer service and staff efficiency. CMR:368:98 Page 1 of 10 RECOMMENDATION Staff recommends that the City Council: Direct staff to implement a Development Center o Authorize the Mayor to execute the lease of 6,212 square feet at 285 Hamilton Avenue for a term not to exceed eight years and three months and a rental cost of $3.95 triple net (NNN) per square foot, plus $0,70 per square foot for support costs (property tax, insurance, assessment, building maintenance, gas, water, sewer and garbage) for a total annual lease cost (i.e. rent plus support costs) of $346,630, not including electricity and janitorial services. Approve a Budget Amendment Ordinance in the amount of $542,223 from the Budget Stabilization Reserve and Utilities Funds to cover one-time moving, furniture, equipment, security deposit and network hook-up costs ($311,537) and eight months of expense in ~1998-99 for lease payments (i.e. rent and support costs of $231,086), electric utilities ($7,000) and janitorial services ($17,600). BACKGROUND Origin of Development Center Concept In 1994, the City Council directed staffto explore ways to streamline the process for providing permits and entitlements to residents and businesses seeking to build in Palo Alto. A task force of representatives from Planning, Building Inspection, Public Works, Fire and Utilities, as well as selected designers and businesses was created. This task force worked from 1994 to 1996 and identified a variety of aspects in the current permitting and entitlement processes that could be improved upon. The initial report of the task force was issued in April 1996 (CMR:215:96) and was later consolidated into a list of over 60 action items. This list of action items called for improvements in the following areas: early education of applicants; facilitation of plan routing; elimination of plan review steps; co- location of.customer services; determination of permit status; and streamlining of response to permitting, planning and inspection. In addition, the consolidated action plan called for a general improvement in customer service and an increase in standardization. As staff considered the Various action items, it became clear that two overarching strategies would facilitate their implementation and the overall improvement of the permitting and entitlement processes. These strategies are the creation of a Development Center and the implementation of an automated permit tracking system. Staff is currently in the final phase of making a recommendation to Council on the acquisition of a permit tracking system. This staff report transmits staff’s recommendations regarding the creation of a Development Center. CMR:368:98 Page 2 of 10 Space Planning At the same time that the Permit Streamlining Committee. was discussing the creation of a Development Center, staff was directed by the City Manager to develop a strategy to address the issue of overcrowdingin City facilities, until a Public Safety facility could be constructed. The findings and recommendations of this committee have been communicated to Council in two previous staff reports (CMR:204:98 and CMR:307:98). As reported to Council in July 1998, a survey of current space conditions found a "space deficit" in the Civic Center of approximately 21,000 square feet, if space was allocated to employees according to industry guidelines. (These guidelines suggest appropriate square footage per employee for various types of occupational classifications.) Extreme overcrowding was found for several work groups, including the City Attorney’s Office, Information Technology, Accounting, Revenue Collections, Purchasing, Planning, Building and Public Works. In response to this overcrowding, staff recommended (CMR:307:98) that Council direct staff to: acquire space for Utilities Engineering on Elwell Court (close to the Municipal Services Center); renovate Level A space for accessible file and document storage; .and seek leased space for an off-site Development Center (previously referred to as a one-stop permit center). An off-site center was recommended since the "donut" shaped layout of the Civic Center and the building’s current overall crowded conditions made it infeasible to create a Development Center in the Civic Center. Locating the Development outside of City Hall would not only ensure more adequate space for the Center, but would also free up space for severely overcrowded programs and workgroups remaining in City Hall. The staff report explained that staff would explore two altematives for the Development Center - a mini center in the Downtown area or a full-service, maxi center elsewhere in Palo Alto - with the choice between the two depending on the square footage, location and cost of space available. Although the maxi Center is the preferred, long-term solution, both options were seen to offer important advantages. The advantage to a center in the Downtown was identified as proximity to the Civic Center and its staff, support functions and meeting spaces. The advantage to a center elsewhere in the City was the greater likelihood to find larger spaces at lower square foot rates, thus allowing more staff to be co-located and a fuller range of services to be provided. Council directed staff to explore these two options subject to the following parameters: a) b) Up to 7,000 square feet in the Downtown at a per square foot lease cost not to exceed $4.50 NNN plus $0.40-$0:60 per square foot for support costs, or Up to 14,000 square feet in an area of Palo Alto other than Downtown at a per square foot lease cost not to exceed $3.60 NNN, plus $0.40-$0.60 per square foot for support costs. CMR:368:98 Page 3 of I0 DISCUSSION Since Council approved the recommendations in CMR:307:98 in July 1998, a variety of locations have been considered for a Development Center. A suitable space has been located at 285 Hamilton Avenue in accordance with the parameters set in option a) above. Directly across the street from City Hall, this space will provide the City with an excellent opportu.nity to implement a Development Center and achieve many. of the permit streamlining objectives identified by staff. A description of the space and the associated costs at 285 Hamilton Avenue, as well as the other spaces considered, is provided below. Analysis of Leased Space Options As a possible maxi Development Center, 15,958 square feet on East Bayshore Road was considered and rejected. Although the rent ($3.20 per square foot, full service) met the Council-approved requirements, the parking was inadequate, the layout required extensive and prohibitively expensive remodeling, and the distance of the facility from the Civic Center was a drawback. In addition four locations were considered for a mini Development Center. A space of 10,000 square feet was located in the downtown area for lease at $3.25 per square foot NNN. However, the owner would not enter into a lease longer than three years. This was not acceptable, as staff had determined that a lease of eight years was needed, given projections regarding the timeline for completing the new Public Safety facility. Should this new facility result in the vacation of the current Police wing, this space would not be available for other uses, including the creation of an on-site Development Center, for approximately eight years. Other spaces were considered for a mini Development Center in the downtown area. At one location, a new facility would have been built and offered at $3.30 per square foot NNN. However, at approximately 5,000 square feet, the space was determined to be too small to accommodate the staffand services associated with a mini center and had significant parking problems. Likewise, another space offered at $3.50 per square foot, was found to be too small. In addition, the owner of this space was not willing to offer a lease longer than five years. Analysis of Proposed Lease Space at 285 Hamilton Avenue The space available at 285 Hamilton Avenue meets the primary criteria for the creation of a mini Development Center set forth by staff. Located at the comer of Bryant and Hamilton, the site has approximately 6,2i2 square feet on the ground floor and is ideal for a mini Development Center. It is close to City Hall which will promote continued close communication between staff in the Development Center and the Civic Center. In addition, this proximity provides easy access to City Hall parking. The space has sufficient square footage, an appropriate layout and the convenience of a ground floor location. The Lessor, JMA Properties, will grant the City an allowance of $6.00 per square foot ($37,272) for tenant improvements. The property is in excellent condition and represents a higher quality facility than the other locations considered. The work space will require only minor tenant CMR:368:98 Page 4 of 10 improvements, such as painting and re-carpeting. Fifteen on-site parking spaces are available. However, because of the cost of $125 per space per month and easy access to Civic Center parking, parking at the Civic Center is preferred. Staff has negotiated a lease with a term of eight years and three months, commencing on November 1, 1998. (See Attachment A for a summary of lease conditions.) Rent will be based on a per square foot cost of $3.95 NNN. The City will also reimburse the Lessor for expenses, including property tax, insurance, assessment, building maintenance, gas, water, sewer and garbage at a square foot cost of $0.70. The City will be responsible for electric utilities and janitorial services and ongoing maintenance and repair at an estimated cost of $875 per month and $2,200 per month respectively. A refundable security deposit equal to one month’s rent ($24,537) will be required. These and other costs are further discussed in the Resource Impact section of this report. At $4.65 per square foot, the total lease cost per square foot (rent plus support services) at 285 Hamilton Avenue is below the $4.90~$5.10 range approved by Council. However, since the City will be responsible for its own electric utilities and janitorial services, the effective cost will be nearly $5.15 per square foot. This will result in a total cost to occupy the space that slightly exceeds the parameters authorized by Council in July 1998 by approximately $3,500 per year. Development Center Vision The purpose of a Development Center is to provide a single point of contact for members of the public seeking building permits, general planning and zoning information and other development services to complete a regulated construction-related project. As stated in the Background section of this report, a Development Center is seen as critical to the improvements in customer service and staffefficiencies called for in the permit streamlining planning process. The objectives of a Development Center include: Increase convenience to the public by having building plans checked and permits issued at one location rather than multiple locations in City Hall. Make more efficient use of staff resources by providing close proximity to all staff involved in building plan checking, permit issuance and inspections. Provide the public with a clear process for acquiring various types of development permits. Improve communication among development review staff from different departments involved in the plan check and general permitting process by providing a physical arrangement where staff can be in close proximity. Improve communication between City staff and the public on matters related to development regulations and procedures. Many cities have created one-stop permit or development centers in order to provide increased customer service and staff efficiency. Staff have Visited several of these centers CMR:368:98 Page 5 of 10 in Santa Clara, San Mateo and Alameda Counties to gather information and ideas to help in Palo Alto’s creation of a Development Center. (Photographs of some of these centers are included in Attachment B.) In addition, staff from Building, Planning, Fire, Utilities and Public Works have analyzed existing work flows and issues and are in the process of finalizing the configuration of staff and services to comprise a Development Center. The parameters under which the Center will be created are outlined below. Typical permits to be handled by, and services to be provided at, the mini Development Center proposed in Palo Alto will include: O 0 0 ® 0 All plan reviews and permits currently issued by Building Inspection Services. All building-related Fire Department permits and approvals and simple, over- the-counter plan reviews (this does not include hazardous material and fire protection permits) Encroachment permits Street opening permits Certificates of Compliance Flood zone screening Utility plan review, approvals and load information Information on zoning, planning, historic preservation, single family reviews, etc. Submission of all planning development review applications, including historic Single family plan review Permit approval for one-stop zoning plan checks Minor, staff level Architectural Review Board, use and occupancy permits Temporary use permits Approximately 30 staff members will be relocated to the mini Development Center. The staff to be housed at the Center will include staff from Building Inspection, Planning, Public Works, Fire and Utilities. The space allocation possible in a 6,212 square foot mini Development Center includes only those individuals who need to be available to the general public and carry out the functions necessary for the operation of the Center. Due to space limitations, the Center will not include all personnel included in the development review process nor will it include managers or supervisors for all staff, or the hazardous materials inspectors. There will be challenges to be met from the perspective of central records, since many files, maps and plans are not electronically accessible at this time. Staff will consider how to address the need for greater electronization of the application process in the context of the implementation of the permit tracking system.and/or in the 1999-2001 budget process. Despite the challenges that may result from sharing files and documents between the Development Center and the Civic Center, staff feels that any inconveniences to staff will be outweighed by the improvements in customer service that the mini Development. Center would make possible. Furthermore, the creation of a mini Development Center represents meaningful progress in the City’s long-term commitment to improve the development CMR:368:98 Page 6 of 10 process. The physical configuration of the mini Developmem Cemer will be designed by space planning consultants hired by the City in the context of the Civic Center space planning process. The photos included in Attachmem B are intended to provide an illustration of how a Developmem Cemer might look. One of the most visible attractions of the Development Cemer will be its physical layout. The customer service area will be larger and more comfortable. A larger counter will allow staff from different departments to work together, review multiple plans and imeract with customers. There will also be an area dedicated to primed materials and other resources that will provide customers with information on a range of developmem-related topics. Identification of Community Support The City has worked closely with the business community, developers and other members of the public as it has explored the creation of a Development Center. Members of the business community have stated that they believe the Development Center, by providing a range of information and assistance in a central place, will speed up the process of plan review and approval and will be a real improvement in customer service. The Palo Alto Chamber of Commerce has been involved and is an enthusiastic supporter of the Development Center concept. RESOURCE IMPACT Ongoing Costs Annual remal and support cost for 6,212 square feet at 285 Hamilton Avenue will be $383,530. The lease will begin on November 1, 1998, resulting in eight months of rent and support costs in fiscal year 1998-99, totaling $255,686. Thebreakdown of costs for a 12 month and an eight month period is provided below. Rent ($3.95 per square foot) Support costs ($0.70 per square foot) (taxes, insurance, assessment, general building maintenance, gas, water, garbage, sewer) Electric utilities Janitorial se~ices Total FY 1998-99 12months 8months $294,449 $196,299 $52,180 $34,787 $10,500 $7,000 ~$17,600 $383,529 $255,686 After FY 1998-99, remal costs will be part of the Planning and Community Environmem operating budget. CMR:368:98 Page 7 of 10 One-Time Costs One-time costs total $286,537 as outlined below: Office Furniture Development counter Equipment (photo copier, fax machine) Remodeling to make restrooms ADA accessible One month refundable security deposit Connection to the Fiber Ring and Civic Center PBX Telephone System Internal wiring and terminations for voice and data communications Moving expense Total FY 1998-99 $120,000 $2O,000 $5,000 $30,000 $24,537 $50,000 $30,000 7.o0o $286,537 Total Costs for Fiscal Year 1998-99 To cover first year total costs, approval of a Budget Amendment Ordinance (BAO) in the amount of $542,223 is requested. This amount covers eight months of rent and support costs for fiscal year 1998-99 and one-time expenses as detailed above. The BAO reflects a reduction of $506,979 from the Budget Stabilization Reserve and $35,244 from the rate stabilization reserves in the Electric, Water, Gas, and Wastewater Collection Funds. Cost Recovery_ Existing fees charged for services to be provided at the Development Center will result in the projected, annual revenue of $2.5 million. This revenue will cover 95% of the projected annual direct costs of operating the Center, including staff, associated operating expenses and the .General Fund portion of the Center’s rent. This calculation does not include administrative overhead, which is considered an indirect cost. These projections are estimates and may change based on actual experience and operational issues that will be worked out once the staff and service configuration have been finalized. The cost recovery estimate excludes the revenue and expenses associated with the Utilities staff who will be located at the Development Center since the Utility Funds will pay a prorated share of the rent. It should be noted that there is no new revenue projected at this time as a result of the establishment of the Development Center. The above cost recovery calculation reflects a reallocation of revenue generation from the Civic Center to the Development Center. Staff will review the cost recovery for the Development Center as the Center is implemented. If necessary, staff will identify opportunities for reasonable .fee adjustments in the context Of the 1999-2001 budget, in order to maintain at least 95% recovery of operating costs. CMR:368:98 Page 8 of 10 Future Resource Needs This staff report presents the costs to acquire leased space and to get this space set up as a Development Center. Due to the need to secure the lease of such a desirable space in a fast- paced real estate market, time to identify and quantify resource needs was limited. Consequently, the costs in this report represent staff’s best estimates of the resources needed to open the doors of the Development Center to the public. It is possible that the actual costs for the budgeted items will be less than projected. It is also possible that additional resource needs will be identified to maximize the Center’s effectiveness. These needs are likely to include a receptionist who can greet and direct customers, electronically scan applications and collect permit fees. Any additional resource needs will be brought to the Council for review either in conjunction with the opening of the Center or in the context of the 1999- 2001 budget process. POLICY IMPLICATIONS The recommendations in this report are consistent with existing City policy. The creation of a Development Center is consistent with Goal B-4, Policy B- 16 of the Comprehensive Plan, which states the City’s commitment to streamline the permit process in order to improve customer service and staff efficiency. TIMELINE It is anticipated that space designs will be developed by the consultant already retained by the City and be reviewed by City staff by mid to late November 1998. After construction documents have been developed and finalized, construction will begin and furniture and equipment will be ordered in early January 1999. It is projected that staff will move into the new Development Center in mid to late February 1999. ENVIRONMENTAL REVIEW Leasing of office space and the associated interior renovations are exempt from California Environmental Quality Act review. ATTACHMENTS Budget Amendment Ordinance Attachment A: Summary of Lease Conditions at 285 Hamilton Avenue Attachment B: Photographs of Various Development Centers PREPARED BY: Audrey Seymour, Senior Executive Assistant CMR:368:98 Page 9 of 10 CITY MANAGER APPROVAL: FLEMING Manager cc:Susan Frank, Palo Alto Chamber of Commerce Carl Guardino, Silicon Valley Manufacturing Group Randy Okamura, Pacific Bell Hal Mickelson, Hewlett-Packard John Northway, ~toecker & Northway Architects Kathleen Gwynn, Senior Coordinating Council Tony Carrasco, Carrasco & Associates Katherine Strehl, Lockheed Martin Mark Johnson, Varian Associates Brad Lopacinski, Varian Associates CMR:368:98 Page 10 of 10 ORDINANCE NO. ORDINANCE OF THE COUNCIL OF THE CITY OF PALO ALTO AMENDING THE BUDGET FOR THE FISCAL YEAR 1998-99 TO PROVIDE ADDITIONAL APPROPRIATION OF $542,223 TO ACQUIRE LEASED SPACE AND COVER ASSOCIATED SUPPORT COSTS FOR A ONE-STOP DEVELOPMENT CENTER AT 285 HAMILTON AVENUE WHEREAS, pursuant to the provisions of Section 12 of Article III of the Charter of the City of Palo Alto, the Council on June 22, 1998, did adopt a budget for fiscal year 1998-99; and WHEREAS, City~ Council directed staff to explore ways to streamline the process for providing permits and entitlements to residents and businesses seeking to build in Palo Alto; and WHEREAS, staff recommends creation of a one-stop Development Center; and WHEREAS, a suitable space has been located at 285 Hamilton Avenue which meets the Council-approved parameters as well as the primary criteria for the creation of a mini Development Center; and WHEREAS, the creation of a one-stop Development Center is estimated to be $542,223 ($255,686 for eight months of lease payments, $286,537 in one-time moving costs); and WHEREAS, City Council authorization is needed to amend the 1998-99 budget; and NOW, THEREFORE, the Council of the City of Palo Alto does ORDAIN as follows: SECTION 1 The sum of Five Hundred Forty Two Thousand Two Hundred Twenty Three Dollars ($542,223)is hereby appropriated to non-salary expenses in the Property Management Functional Area in the Administrative Services Department. SECTION 2. The appropriation authorized by Section 1 shall be funded as follows: a. The sum of Five Hundred Six Thousand Nine Hundred and Seventy Nine Dollars ($506,979) is hereby transferred from the General Fund Budget Stabilization Reserve. b. The sum of Thirty Five Thousand Two Hundred and Forty Four Dollars ($35,244) is hereby transferred from the reserve funds hereinafter described. The amounts so transferred are from the following reserve funds: Electric Rate Stabilization Reserve $16,213 Gas Rate Stabilization Reserve $7,754 Wastewater Collection Rate Stabilization $4,934 Reserve Water Rate Stabilization Reserve $6,343 SECTION 3. The appropriation transfers approved by Section 2 will reduce the following reserves: From:To: General Fund. Budget $15,667,044¯$15,160,065 Stabilization Reserve Electric Rate Stabilization $23,031,000 $23,014,787 Reserve Gas Rate Stabilization Reserve $10,935,972 $10,928,218 Wastewater Collection Rate $6,710,392 $6,705,458 Stabilization Reserve Water Rate Stabilization $6,243,860 $6,237,517 Reserve SECTION 4. As specified in Section 2.28.080(a) of the Palo Alto Municipal Code, a two-thirds vote of the City Council is required to adopt this ordinance. ~ECTION 5. This project has been determined to be categorically exempt under Section 15302 of the California Environmental Quality Act. SECTION 6. As provided in Section 2.04.350 of the Palo Alto Municipal Code, this ordinance shall become effective upon adoption. INTRODUCED AND PASSED: AYES: NOES: ABSTENTIONS: ABSENT: ATTEST:APPROVED: City Clerk Mayor APPROVED AS TO FORM:City Manager Senior Asst. City Attorney Director, Administrative Services Department S : \ASD \ BUDGET \ 9 8 9 9 BU-1 \ 9 9BAO-i’ WORD PERF \ ONESTOP. WPD ¯Attachment A Lease Summary 285 Hamilton Avenue Lessor: Lessee: Premises: Term: Rent: Operating Expenses: JMA Properties City of Palo Alto 285 Hamilton Avenue, first floor 6,212 square feet 8 years, 3 months (99 months) commencing no later than November 1, 1998 Base Rent of $3.95/square foot NNN ($24,537.40) per month) with an annual increase of .10/square foot. Lessee to reimburse Lessor for all expenses including property taxes, insurance, maintenance and assessments. Estimated cost is .70/square foot. Lessor Improvements: Repair & Maintenance Lessor to grant Lessee a Tenant Improvement allowance of $6.00 per square foot for the installation of paint and carpet. Lessor guarantees good condition of existing ceiling, lighting, roof, HVAC, plumbing etc. Lessee to provide janitorial and all ongoing repair and maintenance. Subletting: Security Deposit: Lessee must have Lessor’s permission to sublet any portion of the premises. Lessee to provide les;or with a security deposit equal to one-months rent upon execution of the lease by lessee. ATTACHMENT B Photographs of Various Development Centers