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Home My WebLink About1997-06-02 City Council (23)City of Palo Alto City Manager’s Report TO:HONORABLE CITY COUNCIL FROM:CITY MANAGER DEPARTMENT:ADMINISTRATIVE SERVICES AGENDA DATE: JUNE 2, 1997 CMR:244:97 SUBJECT:GOLF COURSE RESTAURANT, 1875 EMBARCADERO ROAD, BUDGET AMENDMENT ORDINANCE TO REIMBURSE TENANT FOR REPAIRS TO THE BUILDING AND CITY OWNED EQUIPMENT, AS WELL AS FUNDING FOR ADDITIONAL REPAIRS REOUEST: The report requests Council approval of the attached Budget Amendment Ordinance (BAO) in the amount of $54,000, to provide funds needed for maintenance and repair of the City’s golf course restaurant facility, and repair and replacement of City-owned restaurant equipment. RECOMMENDATIONS: Staff recommends that Council approve the attached BAO in the amount of $54,000 to: 1) provide funds to reimburse R&T Restaurant Corporation (R&T), the City’s restaurant tenant,. for expenditures necessary for maintenance and repairs made to the City’s Golf Course restaurant facility; 2) repair and replace City-owned restaurant equipment; 3) allow the City to own all the restaurant equipment essential to the function of the facility; and 4) add new equipment and upgrade certain services. POLICY IMPLICATIONS: This recommendation does not represent a changeto existing City policy. CMR:244:97 Page 1 of 4 EXECUTIVE SUMMARY: On April 25, 1980, Council approved a lease with Hazard, Inc. for operation of the Golf Course Coffee Shop. The lease required the tenant to keep and maintain the premises and all improvements of any kind in good condition and in substantial repair, to the satisfaction of the City. At the time of the lease, the kitchen equipment and the tables and chairs furnished by the City were approximately two years old (CMR:228:0). On October 15, 1996, after a public bid process, Council awarded a lease/option for the Golf Course restaurant with R&T (CMR:413:96). On November 1, 1996, the City entered into a one-year lease with R&T to provide interim restaurant services during the lease/option period. The former tenant, Hazard Inc., was scheduled to vacate the premises on October 31, 1996, in order to allow R&T to begin providing food services the next day, November 1, ¯ 1996. In order to ensure a seamless transition, the City committed to provide a restaurant facility in good working condition. Unfortunately, when Hazard Inc. vacated the restaurant, it removed equipment essential to the operation of the restaurant, left without paying its utility bills, and caused a considerable amount of damage to the premises. Additionally, Hazard had not adequately maintained the City-owned restaurant equipment. Several items were left inoperable or in need of repair. The equipment had also experienced significant wear and tear due to 19 years of use. Despite the damage to the facility and the poor condition of the equipment, R&T was able to start providing restaurant services, at a reduced level, on the. second day, November 2, 1996. In order to become fully operational, R&T was forced to do a massive cleanup, and contract for pest control services, as well as undertake repair of the refrigerators, the disposal, the dishwasher, and the room-divider, at a total cost of $16,083. In addition, R&T replaced 43 of the 51 recessed lights. R&T had also negotiated with Hazard Inc. for the purchase of its existing steam table and menu marquee. However, when Hazard Inc. vacated the property, the steam table and the menu marquee were removed. It took R&T 60 days to construct a new custom steam table and menu marquee. R&T also purchased a new ice machine. Staff is recommending the City purchase the new steam table, menu marquee and ice machine, at a total cost of $17,936, and that they become part of the City-provided equipment. This would eliminate any future disputes between tenants and delays in providing service to the City’s restaurant customers. The maintenance work that still needs to be completed for the facility to be in good condition and fully operational includes painting the interior, installation of a vent for the bar refrigerator (to meet current Building Code requirements); installation of new window blinds; and replacement of the current recessed light bulbs with longer-lasting bulbs. The amount needed to complete this maintenance, work totals $5,600. CMR:244:97 Page 2 of 4 Finally, staff recommends funding of$14,300 for the installation of a grease interceptor (to meet current Building Code requirements), installation of a separate water line (to make utility billing easier and more accurate), repair of damage to the flooring in the restaurant kitchen area, and replacement of the alarm system. Litigation against Hazard’s Inc. was considered, but staff decided not to pursue it, due to the age of the equipment and lack of periodic review of the facility over the years by City staff. Staffdid, however, retain Hazard’s $2,000 security deposit, as well as a payment made to the City by R&T in the amount of $9,734, which had been due Hazard as an agreed upon reimbursement forthe value of the remaining life of a newly installed carpet. (The security deposit .will be used to offset some of the costs of interior painting and the carpet reimbursement was applied to unpaid utility bills.) Staff is in the process of contracting for semi-annual inspections of the facility and the equipment to make sure the tenant is providing proper maintenance, so the equipment will be repaired or replaced on a timely basis. The total cost for the work needed in order for the facility to be considered in good working condition, and to meet current Building Code requirements, is approximately $54,000. A breakdown of the maintenance, repairs, new equipment and other costs is attached as Exhibit A. FISCAL IMPACT: The attached Budget Amendment Ordinance requests funds in the amount of $54,000 from the General Fund Budget Stabilization Reserve. ENVIRONMENTAL IMPACT ASSESSMENT: Repair, maintenance or reconstruction of existing improvements qualifies as a Class 1 category exemption under section 15301 of the California Environmental Quality Act. ATTACHMENT: Budget Amendment Ordinance Exhibit A CMR:244:97 Page 3 of 4 PREPARED BY: William W. Fellman, Manager, Real Property DEPARTMENT HEAD APPROVAL: CITY MANAGER APPROVAL: CC: R&T Restaurant Corporation Harrison Assistant City Manager Acting lervices Fleming ity Manager Related CMRs: CMR:228:0 CMR:413:96 CMR:244:97 Page 4 of 4 Exhibit A Golf Course Expenses l.Work completed by R&T (tenant) to date: A. General Clean-up B. Refrigerator repairs C. Disposal & Dishwasher D. Wall Divider repair E. Pest Control $3,100 9,912 1,316 1,400 355 $16,083 2.Equipment purchased by R&T to be added to City inventory A. Steam Table B. Menu Marque C. Ice Machine $11,336 4,200 2,400 $17,936 3.Work to be completed by R&T: A. Interior Painting B. Vent for Bar Refrigerator C. Window Blinds- estimate D. Lighting Interior 1,500 600 900. 2,600 $5,600 4.Work to be done by City: A. Install seperate tenant water line $ 1,500 B.Grease Intercepter C.Alarm System D.Parking lot lighting E.Repair Damage to restaurant floor 7,500 3,500 300 1 500 Total (Rounded) $14,300 $54,000 ORDINANCE NO. ORDINANCE OF THE COUNCIL OF THE CITY OF PALO ALTO AMENDING THE BUDGET FOR THE FISCAL YEAR 1996-97 TO PROVIDE AN ADDITIONAL APPROPRIATION FOR REPAIR AND MAINTENANCE AND PURCHASE OF EQUIPMENT AT THE CITY’S GOLF COURSE RESTAURANT FACILITY WHEREAS, pursuant to the provisions of Section 12 of Article III of the charter of the City of Palo Alto, the Council on June 24, 1996 did adopt a budget for fiscal year 1996-97; and WHEREAS, on November i, 1996, Council entered into a lease with a new tenant (R & T Restaurant Corporation) for the Golf Course restaurant, having terminated the prior lease for the. premises with Hazard, Inc.; and WHEREAS, in order to ensure a seamless transition, the City committed to provide a restaurant facility in good working condition; and WHEREAS, when Hazard Inc., the former tenant, vacated the restaurant, it removed equipment essential to the operation of the restaurant and caused a considerable amount of damage to the premises; and WHEREAS, funds are needed to: allow the City to purchase equipment replacement essential to the function of the facility; add new equipment; and to reimburse R&T Restaurant Corporation for expenses incurred for repair and maintenance Of the City’s Golf Course restaurant facility;’ and WHEREAS, City Council authorization is needed to amend the 1996-97 budget as hereinafter set forth. NOW, THEREFORE, the ~ouncil of the City of Palo Alto does ORDAIN as follows: SECTION i. The sum of Fifty Four Thousand Dollars ($54,000) is hereby appropriated to non-salary expenses in the Property Management Functional Area in the Administrative Services Department, and the Budget Stabilization Reserve is correspondingly reduced. SECTION 2. This transaction, will reduce the Stabilization Reserve from $24,546,993 to $24,492,993. Budget ~. As specified in Section 2.28o080(b) of the Palo Alto Municipal Code, a two-thirds vote of the City Council is required to adopt this ordinance. SECTION 4° This project is exempt from the provisions of California Environmental Quality Act pursuant to section 15301 (repair or replacement of existing facilities) of the CEQA guidelines. SECTION 5 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 Acting Director, Admini s trat ive Services Department