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1997-10-14 City Council
City of Palo Alto Manager’s Report ¯ ATTENTION: POLICY AND SERVICES COMMITTEE FROM: AGENDA DATE: CITY MANAGER OCTOBER 14, 1997 DEPARTMENT: ADMINISTRATIVE SERVICES CMR: 372:97 SUBJECT:REQUESTING DIRECTION ON WHETHER STAFF SHOULD ENTER INTO NEGOTIATIONS WITH THE ALBERT~L. SCHULTZ JEWISH COMMUNITY CENTER TO EXTEND TIrE LEASE FOR THE CITY-OWNED TERMAN SITE AND TO AMEND THE TIMING REQUIRED BY THE LEASE AND THE SPECIFIC PLAN FOR THE PUBLIC REVIEW PROCESS (655 ARASTRADERO ROAD) REQUEST: The Albert L. Schultz Jewish Community Center (JCC) is requesting the term of the lease of the City-owned Terman Site at 655 Arastradero Road be extended ten years prior to the expiration of the existing twenty-five year lease. RECOMMENDATIONS: Direction is requested from Council as to whether staff should enter into negotiations with the JCC at this time and if so, how the existing lease can be amended to address issues related to the timing of the public review process. POLICY IMPLICATIONS: An early extension of the City’s lease with JCC would necessitate an amendment to the Terman Specific Plan, requiring Council and P.!anning Commission approval. The amendment would modify the public review process that was established at the time the Specific Plan and the original lease were created. BACKGROUND: In 1978, following the closure of the Terman Middle School and notice by the Palo Alto Unified School District (PAUSD) of its intent to consider selling the 22- acre Terman site to the City, several community groups expressed interest in and concern over future use of CMR:327:97 Page 1 of 5 the site. The Palo Alto Housing Corporation (PAHC) and the Jewish Community Center (JCC) developed a joint proposal for a mixed use of the site, which included senior and low- incoming housing and a community center. The residents from the nearby area formed a coalition to express their concerns about reuse of the site. On August 6, 1979, the Council indicated its interest in purchasing the Terman site individually or as part of a joint venture with other groups. On April 7, 1980, the Council ~ccepted the concept for a mixed use of the site and directed staffto work with the PAHC, the JCC, and the Terman community (the Terman .Working Group) to finalize a package for such mixed use. On June 15, 1981, the Council accepted the "Final Report: Agreements of the Terman Working Group" (Report) and directed staff to prepare a Specific Plan. In accordance with the provisions of the Report, on January 12, 1982, Council entered into a lease/purchase agreement for the Terman site’with the PAUSD. On May 3, 1982, Council adopted the Specific Plan for the Yerman site. Major elements of the Specific Plan included use and operation by the JCC of all school buildings except two of the wings; operation of two of the wings by the City for library and other community programs; allocation of 4+ acres for 80 to 92 units of assisted housing; and operation of the remainder of the site (10+acres) for public recreational benefit by the City. The JCC was to open to the public, on a fee or membership basis, and there was to be public access to the Terman and Gunn pools. Elements of the Terman plan related to the JCC operation included the following: The initial term of the lease was to be not less than 15 years, with a longer term, up to maximum of 25 years, depending upon the value of the tenant improvements made by the JCC to the site during the first five years of its operation of the Site. o The JCC lease was to be renewable at the option of the JCC if there had been substantial compliance by the JCC with all conditions of the lease and the use permit concerning the JCC’s use of the Terman site. Before renewing the lease, the City was to hold a public hearing to determine if there had been substantial compliance with the lease and use permit. However, to protect the JCC from unfounded allegations of non-compliance, the only matters which could be reviewed by the City at the public hearing were to be allegations of non- compliance which had been preceded by a formal complaint filed with the City, contemporaneously with the allegedly non-complying event. The need for a public hearing and the requirement of filing a formal complaint before any allegations could be considered at the public hearing were to be made known, in an appropriate manner, to the Terman area residents two and four years before termination of the initial JCC lease. CMR:327:97 Page 2 of 5 The term of the renewed lease (if renewed) was be equal to the term of the initial lease. On July 1, 1982, the City and the JCC entered into a twenty-five year lease for the majority of the City-owned former Terman buildings, which incorporated these elements. The lease also specifies that the public hearing shall be held within three months after City receipt of the JCC notice to extend the lease. DISCUSSION: The JCC is proposing to invest $1.5 to $2 million to refurbish the Terman facility and, in order to ensure this investment is recovered, has formally requested the term of its lease with the City be extended (Attachmentl): The City’s lease with the JCC did not specify a time period when the option to renew was to be requested, except that it must be no later than nine months prior to the end of the lease term. However, the requirement for a 2- and 4-year notice to residents assumed that the JCC’s request to extend the lease would come no sooner than 5 years before the lease terminates. The JCC’s request, dated July 24, 1997, is being submitted approximately 10 years prior to the expiration of the existing lease, prompting staff to return to Council to request direction on whether staff should proceed with the negotiations and, if so, what the public review process should be. The advantages to entering into discussions with the JCC to extend the lease now are: 1) there would be an early assessment of JCC’s compliance with the lease terms and conditions; 2) an opportunity to negotiate new lease terms that could resolve problems, such as parking and traffic circulation; and 3) the Terman Community Center facility would be refurbished. The disadvantages are that the public process assumed that there would be a least two years for the public to provide written assessment of JCC compliance or lack of compliance with the conditions of the lease, and there also would have been at least 20 years of experience to base that assessment on. Over the last fifteen years, staff is not aware of any instances where the JCC has not complied with the conditions of the lease. Today most neighborhood concerns are related to parking and traffic circulation issues, which can be attributed to the popularity of the facility and the 700 to 800 daily users. Lack of parking and competition with the full-service JCC were cited in CMR:432:96 as two of the reasons the City-sponsored classes at Terman did not succeed. Should Council direct staff to enter into negotiations with the JCC, staff proposes that the lease and Terman Specific Plan be amended so the neighbors within a ½ mile radius of the Terman facility receive a six-month public notice, rather than a 2- and 4-year notice, to provide any written complaints as to JCC’s non-compliance with the terms and conditions of the lease, prior to public hearings on the amendment to the Specific Plan and lease. Staff CMR:327:97 Page 3 of 5 also recommends that the lease amendment include the requirement that the public hearing be held within eighteen months, rather than 3 months, after receipt of the JCC’s intent to extend the lease (July 24, 1997). The existing provisions and proposed amendments to the lease and the Terman Specific Plan relating to the timing of the public review process are shown in Attachments 2 and 3. Staffbelieves these modifications would meet the intent of the initial public review process. Under the current conditions, four and two years prior to the end of the lease, the public residing within a ½ mile radius of the Terman Facility would receive notice that they had the opportunity to submit formal written complaints if they felt the JCC was not in compliance with the terms of its lease. All written complaints would have to be submitted 60 days prior to a Council Public Hearing. Under the staff-suggested revised public review process, the public would have only six months to submit formal written complaints, but there would be two public hearings. One public hearing would be .before the Planning Commission to discuss revisions to the Terman SpecificPlan, and one public hearing would be before the Council to discuss both the amendments to the Terman Specific Plan and the lease. Council direction to begin negotiations and go forward with the proposed amendments would result in the following sequence of events: Immediately following Council approval, staff would begin negotiations with the JCC and would mail notices to residents within a ½ mile radius of the Terman site informing them of the following: 1) the proposed amendments to the Specific Plan and lease relating to the to the timing of the public review process; 2) complaints regarding the JCC’s compliance with the terms of the lease must be submitted in writing within six months of the date of the notice; 3) public, hearings before the Planning Commission and Council will be held no later than January 24, 1999 (18 months from date of JCC’s letter) to consider the proposed amendments and to address any lease compliance concerns raised by residents through the written complaint process; 4) following completion of negotiations between the City and JCC and prior to the hearing dates, residents will be informed of any additional proposed changes to the Specific Plan or lease which result from the negotiations. The actual dates for the public hearings will be scheduled once staff has completed negotiations, but no later than January 24, i999. ALTERNATIVES: Reject the JCC request to extend the term of the lease at this time and comply with the original terms of the lease. FISCAL IMPACT: None. CMR:327:97 Page 4 of 5 STEPS FOLLOWING APPROVAL: Following Council direction to enter into negotiations with the JCC, staff will begin negotiations and mail a notice to residents informing them of the proposed amendments to the lease and Specific Plan and that any complaints regarding the JCC’s compliance with the lease must be submitted in writing within six months. Once negotiations are complete, staff will schedule the public hearings before the Planning Commission and the City Council (no later than January 24, 1999) and mail a second n~tice to residents informing them of the dates set for the public hearings and any additional proposed amendments to the lease and Specific Plan resulting from the negotiations. ATTACHMENTS: Attachment 1 Letter from Sanford Blovad, Executive Director of the Albert L, Shultz Jewish Community Center dated 7/24/97 Attachment 2 Existing Provisions and Proposed Amendment - Jewish Community Center Lease Attachment 3 Existing Provisions and Proposed Amendment - Terman Specific Plan PREPARED BY: William W. Fellman, Manager, Real Property DEPARTMENT HEAD APPROVAL: ’ )v-~w-~~" -- @ ~ ~ ) Meli~sa Cavallo Acting Director ~ ’ CITY MANAGER APPROVAL: CC: ity.Manager Sanford Blovad, Executive Director, Albert L. Schultz Jewish Community Center Marian Hill CMR:327:97 Page 5 of 5 July 24, 1997 ALBERT L. SCHULTZ JEWISH COMMUNITY CENTER 655 ARASTRADERO RD, PAL0 ALTO CALIFORNIA 94306-3838 Phone 415-493-9400 Fax 415-493-1187 EXECUTIVE COMMITTEE Ric Rudman President Pam LoebnerKathy Reback Joel Spolin Vice Presidents Nell WeissTreasurer Phyllis Koch Secretary Lorraine ShevellExecutive Director Sanford Blovad BOARD OF DIRECTORSEsther Behr Jean BozmanHank Cooper Diane Duerr-Levine Shelton EhrlichSadie Espar Phyllis Fisher Rita Giles Karen GouldMilt Grinberg Barbara Kirsch Nedra Klein Laurie LeventhaI-Belfer Laurie Peck Steve PecklerHarry Price Vladimir Rubashevsky Albert L. Schultz Lottie Solomon Irving Tapper Elinor Tuerk Paul WeissStanley Weithorn Fred Wiener A Beneficiary Agency of the South Peninsula Region Jewish Community Fede’,’a~lon United Way of Santa Clara County and JCCA. June Fleming City Manager City of Palo Alto 250 Hamilton Avenue Palo Alto~ CA 94301 This letter wil! serve ss a formal request to the City of Pz!o Alto for the early rene,-v~1 of the Albert L. Schultz Jev~ish Community Ce~ter’~ lease. As previously discussed, the purpose of this request is due to the fact that the JCC must cosmetically improve its current facility. We are initially planning to invest one-and-a-half to two mil~io~ dollars for the refurbishin~ of the facility and, therefore, we feel it is e~tremely important that the longevity of our lease be increased in order to preserve our investment. We do rea!~ze that the language in our current lease does present some challenges to our request. ] believe that through open negotiation and cooperation on ~ll sides that our request can turn ~to a win-w~ situation. Thank you fo~ loo .kin~ into this matter, and I am loo-ldn~ forward to hearing :t~om you concerning this possibility. Sincerely, San~ord Blovad , E.~ecutive Director The Honorable Joe Huber E~nily Harrison ATTACHMENT 2 Existing Lease Provisions Item VI, subparagraph A as taken from the Lease with the JCC approved by Council on June 2,1982. ’ dated July 1, 1982 as OPTION TO EXTEND A. Tenant shall have the option to extend this Lease for a term of years equal to the initial term as determined in accordance with Clause V. (TERM), subject to the following conditions: TENANT has, throughout the initial term of the Lease been in substantial compliance with the terms and conditions of this Lease and the Use Permit issued by LESSOR’S Zoning Administrator: and TENANT has submitted to LESSOR a written notice of TENANT’S desire to extend the Lease in accordance with this clause, on or before nine (9) months prior to the end of the LEASE term set forth in Clause V (TERM). TENANT’S substantial compliance with the terms and conditions of this Lease and the Use Permit shall be determined by LESSOR’S City Council subsequent to a public hearing held for the purpose of hearing testimony regarding TENANT’S compliance or lack of compliance. Should TENANT disagree with LESSOR’S City Council determination the matter shall be submitted to arbitration in accordance with Clause XXIII (ARBITRATION). Evidence or testimony, regarding allegations of TENANT’S non-compliance before LESSOR’S City Council and in any arbitration shall be limited to those matters where a formal written complaint against TENANT has been filed with TENANT and LESSOR’S City Manager, either by members of the public or by LESSOR’S staff. The public hearing shall be scheduled within three months of receipt of TENANT’S intent to extend the Lease. In order to be considered at said public hearing or in any arbitration, any such complaint must be submitted to TENANT and LESSOR, in writing, at least sixty days prior to the public hearing. LESSOR shall take reasonable steps to inform the residents within a one-half mile radius of PREMISES of the need for the public hearing prior to extension of this Lease and formal written complaint requirement at two (2) and four (4) years prior to the termination of the initial lease term. TENANT agrees to reimburse LESSOR for its reasonable and documented costs associated with such notice requirements. Proposed Amendment to Lease Proposed amendment to the July 1, 1982 lease between the City of Palo Alto and the Albert L. Schultz Jewish Community Center. The lease, Item VI, subparagraph A The public hearing shall be scheduled after a 6 month public review,process and within ~hree mom-hs eighteen, months of receipt of TENANT’S intent to extend the Lease¯ LESSOR shall take reasonable steps to inform the residents within a one-half mile radius of PREMISES of the need for the public hearing prior to extension of this Lease and formal written complaint requirement at "--’- ~"~ ~-" ~’ .... ~" ~ ...... p " "~-- Residentswill be given a six month periodto respondin Writing prior to the, City Council_pub!i6he~ing. ATTACHMENT 3 Existing Provision - Terman Specific Plan Item H. paragraph 1, sub-paragraph © as taken from the Terman Specific Plan adopted by the City Council on May 3, 1982. ’ © Before renewing the lease the City will hold a public hearing to determine if there has been substantial compliance with the lease and the use permit. However, to protect the JCC from unfounded allegations of non-compliance, the only matters which can be reviewed by the City at the public hearing will be allegations of non-compliance which have been preceded by a formal complaint filed, contemporaneously with the allegedly non-complying event, with the City. The need for a public hearing and the requirement of filing a formal complaint before any allegations can be considered a the public hearing will be made know, in some appropriate manner, to the Terman area residents for two (2) and four (4) years before termination of the initial JCC lease. ProposedAmendment - Terman Specific Plan The Terman Specific Plan Item H, paragraph 1, subparagraph © © Before renewing the lease the City will hold a public hearing to determine if there has been substantial compliance with the lease and the use permit. However, to protect the JCC from unfounded allegations of non-compliance, the only matters which can be reviewed by the City at the public hearing will be allegations of non-compliance which have been preceded by a formal complaint filed, contemporaneously with the allegedly non-complaint event, with the City. The need for a public hearing and the requirement of filing a formal complaint before any allegations can be considered at the public hearing will be made know, in some appropriate manner, to the Terman area residents for two,~.,...,""~ ,.,1,.,^-"~ ,.,,,.,~ ~’ .... ,,-,.,""" ycar~~._¢___ .___:_o.:__ ~.~.A :_:.:n, T,~,~, ....for sixmonth-peri0d prior to aCity Council public hearing