HomeMy WebLinkAboutStaff Report 1301City of Palo Alto (ID # 1301)
City Council Staff Report
Report Type: Consent Calendar Meeting Date: 2/7/2011
February 07, 2011 Page 1 of 8
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Title: Approval of Art Center Renovation Agreements
Subject: Approval of a Construction Funding Agreement in an Amount Up to $2
Million between the City of Palo Alto and the Palo Alto Art Center Foundation
For Upgrades to the Palo Alto Art Center Renovation Project (PF-07000, Art
Center Electrical and Mechanical Upgrades); Approval of Amendment No. Three
to Contract No. C08126592 between the City of Palo Alto and the Palo Alto Art
Center Foundation to extend the term of the agreement and increase the scope
of work to Permit Reimbursement in an Amount Not to Exceed $142,432
From: City Manager
Lead Department: Community Services
Recommendation
Staff recommends that Council:
1.Approve and authorize the City Manager or designee to execute a construction
funding agreement between the City of Palo Alto and the Palo Alto Art Center
Foundation in substantially the form of Attachment A that establishes the financial
responsibilities of both parties as related to capital improvements of the Palo Alto Art
Center.
2.Approve and authorize the City Manager or designee to execute Amendment No.
Three to Contract No. C08126592 with the Palo Alto Art Center Foundation in
substantially the same form as Attachment B to extend the term of the agreement
from March 31, 2010 to June 1, 2011 and to increase the scope of work to include
design for Deferred Maintenance Improvements and bid services in an amount not to
exceed $142,432.
Background
The Palo Alto Art Center Foundation (Foundation) has played an integral role in the support and
operation of the Palo Alto Art Center (PAAC) since its inception in 1973. On October 4, 2010,
this longstanding relationship was reinforced through the adoption of a public/private partnership
agreement (CMR:350:10).
This construction funding agreement represents more than a decade worth of work, discussion,
and Council action toward the goal of a renovated Palo Alto Art Center facility. Beginning with
a January 19, 1999 letter to the Council, the Foundation confirmed its intent to initiate
discussions on the subject of a public/private partnership to renovate and expand the Palo Alto
Art Center in order to leverage the City’s deferred maintenance funds
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The 28,000 square foot Art Center facility and its building infrastructure and systems have not
been significantly upgraded since the facility was constructed in 1951 as Palo Alto’s City Hall.
The only major repairs made to the facility have been seismic improvements in 1987. In 1999,
the Palo Alto Art Center Foundation began to address the need for renovations proactively by
focusing on two programmatic concerns and facility challenges: 1) the need for upgrades to the
gallery spaces of the Art Center to support the popular exhibition program, and 2) the need for
additional children’s art classrooms and program space to meet the demand in the community. In
March, 1999, the Palo Alto City Council approved a proposal from the Palo Alto Art Center
Foundation to explore the development of a public/private partnership that would make possible
a capital campaign to expand and renovate the Art Center.
Master Planning Process
In March 2000, the Foundation received $50,000 from the David and Lucile Packard Foundation
and the Non-Profit Facilities Fund to conduct a facility master planning process that was
matched by $50,000 from the City. The resulting Palo Alto Art Center Programming Report was
completed in 2001 (CMR:438:01) by architect David Robinson. This programming report
detailed the use of Art Center spaces as defined by current program needs and outlined an
improvement plan addressing the Art Center’s most critical facility requirements.
In August 2001, a Joint Site Planning Committee was convened with the goal of developing a
site design that would allow the Main Library and the Art Center to expand while addressing the
limitations and opportunities offered by the site, neighborhood considerations, and the desires of
community stakeholders. In September 2001, the Art Center Foundation received a second
$50,000 grant request from the David and Lucile Packard Foundation that was matched by the
City (CMR:226:02). Using these funds, the Foundation contracted with the Mark Cavagnero
Associates in association with SWA Group to develop the joint site plan. The resulting Site
Planning Study for the Palo Alto Main Library and Art Center was completed on February 8,
2002. A Public Draft EIR of the site was prepared for the City of Palo Alto by Thomas Reid
Associates and completed on April 17, 2002.
In 2002, Mark Cavagnero Associates continued work on the master plan and conceptual design
for the Palo Alto Art Center and site. All plans, reports, and surveys were reviewed and approved
by City boards and commissions. The plan was completed on June 14, 2002 and approved by
Council. A Memorandum of Understanding was approved unanimously by Council at its July 15,
2002 meeting (CMR:340:02), describing the City’s commitment to contribute $5M to fund a
fund set up through a public/private partnership over five years. This MOU was intended to go
into effect upon successful passage of a library bond measure in November, 2002. However, the
bond measure was ultimately unsuccessful.
In the spring of 2003, the Foundation Board unanimously voted to commit to the implementation
of the master plan for the Art Center. Supported by a $10,000 grant from the Non-Profit Finance
Fund, the Foundation worked with fundraising and organizational development consultants to
prepare for the possibility of a future capital campaign.
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In 2005, the Foundation contracted with Mark Cavagnero Associates to develop a phased
approach to complete the master plan. The first phase of building renovations included creation
of a Children’s Wing, improvements to the existing gallery space, and the replacement of
mechanical and electrical systems. Based on cost estimates developed by Mack 5, the
Infrastructure Management Plan allocation for the Art Center Electrical & Mechanical Upgrade
(Capital Improvement Program Project PF-07000) was readjusted.
Foundation’s Capital Campaign and Letter of Intent
In 2006, the Foundation Board gave final approval to move forward with a capital campaign to
raise funds for the Foundation portion of the project. In June 2006, the Foundation contracted
with Netzel Associates to conduct a capital development feasibility study. Netzel presented its
report to the Foundation Board on October 16 and the Board voted to accept Netzel’s
recommendation to move forward with the capital campaign for the Art Center renovation. The
Foundation Board then hired Netzel as its capital campaign counsel. At its December 13, 2006
meeting, the Foundation Board voted to conduct a 26-month capital campaign to raise the
necessary funds.
On April 10, 2006, a colleague’s memo was approved by the City Council directing City staff to
work with the Art Center Foundation in drafting a Memorandum of Understanding to expand and
renovate the Art Center as a public/private partnership, committing $1.74M from the City’s
Infrastructure Improvement program.
On July 9, 2007, the Foundation formally approached the City to create a public/private
partnership for the renovation of the Art Center with a Letter of Intent that was approved by
Council (CMR:288:07). This Letter outlined mutually acceptable terms and conditions for the
collaboration between the City and the Foundation for construction of improvements and
alterations to the Art Center.
In September 2007, the Foundation entered into an agreement with Mark Cavagnero Associates
to: design the project through schematic design and design development, submit preliminary
estimates of construction costs based on schematic design, prepare construction documents, and
assist in the awarding and preparation of contracts for construction.
Design Agreement
In March 2008, the Council approved a Design Agreement with the Foundation, in the amount of
$290,000, allowing for the City’s payment to the Foundation of the City’s portion of the
schematic design, design development, construction documents, bid, and construction phases of
the project (CMR:107:08). The City’s financial responsibility, as specified in Capital
Improvement Project PF-07000 (Art Center Electrical and Mechanical Upgrades), is to replace
original mechanical and electrical equipment and systems to meet current occupancy need,
provide code compliance, and optimize operation and energy efficiency.
On December 15, 2008, Council approved Amendment No. One to Contract Number C08126592
with the Foundation in the amount of $78,580 for the Planning and Design Phase for the
Renovation and Capital Improvements to the Palo Alto Art Center, Capital Improvement
Program Project PF-07000. Amendment No. One addressed scope increases to the design
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development phase due to new green building requirements, accessibility and seismic code
requirements, hazardous materials testing and removal, and determination of the extent of
required electrical system upgrades (CMR:465:08).
On March 16, 2009, Council approved Amendment No. Two to Contract Number C08126592
with the Foundation in the amount of $6,249 for a Total Not to Exceed Amount of $374,829 for
the Development of Construction Documents for the Renovation and Capital Improvements to
the Palo Alto Art Center, Capital Improvement Program Project PF-07000 (CMR:168:09). This
Amendment requested an increase of $6,249 along with the reallocation of $72,500 previously
designated for bid and construction phase services to be applied to additional services funding
for completion of the construction document phase only. This brought the total City expense
through the construction documents phase to $374,829. These costs were related to the increased
project scope identified during the design development phase. Amendment No. Two also
changed the scope of the agreement between the City of Palo Alto and the Foundation to include
design services only, and exclude any payment for bid and construction phase services. In
addition, the Amendment extended the term of the agreement from March 31, 2009 to March 31,
2010 to allow time for the completion of construction documents.
At the time the Design Agreement between the City and the Foundation was initiated, the
Foundation intended to manage the project through all phases of design and construction. The
City’s portion of the consultant fees for all phases of the project included schematic design,
design development, construction documents, bid and construction administration and was
awarded with that agreement. During design development, the City’s portion of the project scope
became a larger percentage of the overall project, and more technically involved. As a result of
this change, the Foundation’s and City’s staffs recommended that, and received Council approval
for, the City managing the bid and construction phases (CMR:168:09). Subsequently, City staff
determined that it would be more prudent and efficient for the Foundation to maintain its
agreement with the architects for the bid documentation—this would ensure that the project
could continue in a timely manner, preventing unnecessary delays. The City would then initiate
its own agreement with the architect for the construction administration phase of the project.
Construction Funding Agreement
Implicit in these decades-long actions and communications has been the development of a
Construction Funding Agreement whereby the Foundation will contribute a sizable amount of
money to fund a large portion of the renovations and upgrades. The terms of the Foundation’s
funding and the duties and obligations of the parties during the bid and construction phases are
set forth in this Construction Funding Agreement (Attachment A).
Similar agreements have been developed for the Friends of Heritage Park for the design,
construction and installation of playground facilities and other improvements at Heritage Park
and for the Friends of Lytton Plaza Park for the design, construction, and installation of
improvements at Lytton Plaza. This agreement differs from these agreements in that the City will
manage the bid and construction of the project. A precedent to this agreement can be found in the
agreement between the City of Palo Alto and the Palo Alto Library Foundation and the Friends
of the Palo Alto Library for funding the Palo Alto Children’s Library Improvements and
Expansion Project (CMR:142:04).
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Discussion
Art Center Facility Improvements:
The City and the Foundation acknowledge each other’s needs to make various building
improvements to the Art Center facility and recognize the financial and logistical benefits to
coordinate and execute these building improvements together under one project. The City’s
scope of work includes mechanical, electrical, and accessibility upgrades to the facility, while the
Foundation’s scope of work includes the creation of a Children’s Wing and an upgrade of the
exhibition galleries. While the scope of City-sponsored work differs from the Foundation-
sponsored work, both Parties agree that it will be more efficient, cost-effective, and less
disruptive to the community to have the work completed concurrently.
In addition to the abovementioned electrical, mechanical and Children’s Wing improvements,
the City will also now add deferred-maintenance items to the project such as a new roof, new
gutters, new downspouts, seismic upgrade to roofing envelope, exterior painting, new carpets,
additional interior painting, termite treatment and dry rot repairs, new window safety glazing,
and exterior lighting improvements. While these items will increase the design and construction
fees, they will result in an overall cost-savings by including them as part of a larger project and
by making these repairs now, when the construction climate is favorable. It will also eliminate
future construction disruption to the Art Center. The additional design costs for deferred
maintenance related items are marginal enough that it can be absorbed into the original CIP
project, PF-07000. The roof, which is the most costly of the deferred maintenance items, had
been scheduled for replacement in FY2013-2014, shortly after completion of the Art Center
rehabilitation project. Funding for the roof will be moved from CIP PF-14001 ($200,000) into
PF-07000. The original funding for the roof replacement was underestimated. Roofing
replacement is now estimated at $320,000. The balance of the roof replacement and funding for
other, non-roofing items, would be paid from the Infrastructure Reserve. Staff plans to return to
Council at the time of construction to request that these additional funds be transferred into the
project, if needed. The unfunded cost is estimated at $560,000, which includes a seismic upgrade
to the roof that was not originally included in the CIP PF-14001, Roofing Replacement. The
seismic work is desirable in order to provide better protection for the building and its occupants
and will be easier to accomplish now that the roofing is part of a larger project. In addition, the
City will be adding a 1% for public art as part of the overall Art Center renovation project. The
current package will be used for permitting in order to expedite timing, with the deferred
maintenance items being added to the package as revisions.
Temporary Main Library:
The Art Center auditorium was identified as the preferred location for a temporary library during
the renovation of the adjacent Main Library (CMR:435:10). The auditorium was not part of the
Art Center improvement project, but will have improved lighting, carpeting and other amenities
added as part of the temporary library work. Combining the library’s auditorium upgrade with
the rest of the Art Center project will result in a better price for the auditorium work and will not
involve the disruption of shutting off the auditorium for temporary library conversion work
shortly after opening the new Art Center. Having the same electricians, painters and other trades
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for both the auditorium and the Art Center work will result in a better work product and require
less staff oversight than managing two separate contractors.
In order to keep pace with the Art Center construction schedule, design contingency funds from
the Main Library will be used to pay for the initial design of the temporary Main Library. Staff
will return at a later date with a contract amendment with Group 4 Architecture to secure
additional funding for the auditorium work so that the Main Library contingency fund can be
reimbursed.
Construction Funding Agreement
The Construction Funding Agreement (Attachment A) facilitates the Foundation’s funding of a
significant portion of the capital costs for the project and outlines the administrative, reporting,
and financial requirements of both parties. The Construction Funding Agreement between the
City and the Foundation provides that the City will pay 73.1% of the construction costs and the
Foundation will pay 26.9%, modified in several ways. First, the Foundation share shall not
exceed $2,000,000. Second, any change orders (additional, unforeseen work) exceeding $25,000
shall be paid by the party whose project portion to which the change order relates, with the
overriding qualification that the Foundation share not exceed $2,000,000. As outlined in this
Agreement, the City will manage the construction project. Construction management services
have also been added to the cost-sharing agreement due to staffing shortfalls related to the
Measure N Library and Community Center bond project workload. The City’s portion of the
funding for the renovation was approved in the 2006-07 budget (Capital Improvement Program
Budget, Art Center Electrical and Mechanical Upgrades, PF-07000) and currently has
$3,856,000 of funding appropriated. The Foundation has successfully raised $1,250,000 and has
a business plan to raise the additional funds required for the Foundation’s portion of the Project
by the completion of construction. The Foundation currently has $2,000,000 on hand in capital
and other funds.
In order to ensure successful communications throughout construction, this agreement requires
the Foundation to establish an Administrator to coordinate all matters related to the agreement.
As the project manager, the City will provide quarterly reports to the Foundation’s Administrator
outlining the work performed and the amounts paid by the City to contractors, consultants, and
other third parties in conjunction with the project. As outlined in this agreement, the Foundation
will participate with the City in establishing the minimum contractor qualifications for the
project.
Amendment No. Three to Contract No. C08126592:
This Amendment (Exhibit B) extends the timeline and expands the scope of the Design
Agreement between the Foundation and the City. Because Amendment No. Two expired in
March 2010, extending the agreement terms to June 1, 2011 ensures the contract remains current.
Construction documents for the project are currently undergoing plan check as part of the
Building Permit issuance process. Scope of the design work needs to be expanded to include
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design for the Deferred Maintenance aspects of the project. As outlined in the Agreement, this
expense will be incurred by the City. In addition, scope of the design work needs to be expanded
to include bid documentation. As outlined in the Agreement, this expense will be split between
the City and the Foundation based upon the cost-sharing ratio determined in the Construction
Funding Agreement.
Timeline, Resource Impact, Policy Implications, Environmental Review (If
Applicable)
Resource Impact:
Funds for this project are available in the Capital Improvement Program Project PF-07000, Art
Center Electrical and Mechanical Upgrades. In addition, $200,000 in funding will be transferred
into the project from PF-14001, Roofing Replacement, as part of the mid-year budget process .
Staff may return to council at the time of the award of the construction contract in order to cover
any increased costs due to the inclusion of deferred maintenance items into the project.
Policy Implications:
This agreement is consistent with and furthers the intention of Comprehensive Plan Policy C-1:
Encourage the creation of partnerships within the Mid-Peninsula or the greater Bay Area to seek
effective solutions to shared problems and community service needs and Program B-3: On an
ongoing basis, evaluate opportunities for City involvement in public/private partnerships
including public investment in infrastructure and other improvements, siting of public art, and
modification of land use regulations and other development controls and L-61: Promote the use
of community and cultural centers, libraries, local schools, parks, and other community facilities
as gathering spaces. Ensure that they are inviting and safe places that can deliver a variety of
community services during both daytime and evening hours.
Adding deferred maintenance to the project is consistent with the City’s goal to reduce the
infrastructure backlog. Deferred maintenance items from the Art Center will be removed from
the City’s backlog list by the Infrastructure Task Force.
Timeline:
Staff relocation to the Lucie Stern Center basement and other locations throughout the City is
expected to occur in the Spring of 2011, followed shortly thereafter by the removal of any
hazardous materials. Construction on the major renovations, including the temporary library in
the auditorium, is expected to begin in the summer of 2011 and be completed in the summer of
2012. Construction on the Main Library is expected to begin at the end of 2012, shortly after the
opening of the new Mitchell Park Library and Community Center.
Environmental Review:
The proposed project is subject to environmental review under provisions of the California
Environmental Quality Act (CEQA). An Environmental Impact Report was adopted June 24,
2002 for the Newell/Embarcadero Civic Facilities Expansion Program, which includes this
proposed project.
ATTACHMENTS:
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Attachment A Art Center Construction Funding Agreement (DOC)
Attachment B Amendment No 3 to Contract with Art Center Foundation (DOC)
Prepared By:Karen Kienzle, Manager Art Center
Department Head:Greg Betts, Director, Community Services
City Manager Approval: James Keene, City Manager
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CONSTRUCTION FUNDING AGREEMENT BETWEEN THE CITY OF
PALO ALTO AND THE PALO ALTO ART CENTER FOUNDATION FOR
UPGRADES TO THE PALO ALTO ART CENTER RENOVATION PROJECT
THIS AGREEMENT (“Agreement”) dated, ______, 2011 (the “Effective Date”),
is entered into by and between the CITY OF PALO ALTO, a California chartered municipal
corporation (the “City”) and the PALO ALTO ART CENTER FOUNDATION, a corporation
organized under the Nonprofit Public Benefit Corporation Law of the State of California (the
“Foundation”) (individually, a “Party” and, collectively, the “Parties”), in reference to the
following facts and circumstances:
RECITALS
A.CITY owns and operates the Palo Alto Art Center, an approximately
28,000-square foot building and surrounding premises, located at 1313 Newell Road, Palo Alto,
California (collectively, the “Facility”).
B. The Parties have had a long history of collaboration and partnership. The
Foundation has played an integral role in the support and operation of the Palo Alto Art Center
since its inception in 1973. The most recent expression of partnership is contained in the
Public/Private Partnership Agreement approved by the City Council on October 4, 2010.
C.The Parties mutually desire to make improvements and upgrades to the
Facility with the City managing the construction project and the Foundation funding a significant
portion of the Work.
D.The CITY has identified needed infrastructure upgrades and renovations
for the Facility including seismic upgrades; plumbing, electrical, and mechanical upgrades;
improved facilities for persons with disabilities; deferred maintenance; lighting; and interior
painting work (the “City-Sponsored Work”). In addition, the Foundation has identified certain
improvements that would further enhance the community benefit of the Facility. This work
includes renovation of the sculpture garden; modification of classrooms, kitchen and hallway to
create a children’s wing; installation of specialty equipment and millwork; construction of a
children’s entry courtyard, parking and outdoor classroom; lighting upgrades in galleries, lobby
and meeting room; and floor finishes in various locations (collectively “Foundation-Sponsored
Upgrades”). The Parties agree that it will be more cost effective and less disruptive to the
community if this additional work is performed in conjunction with the City-Sponsored
infrastructure work. The City-Sponsored Work proposed by the City and the Foundation-
Sponsored Upgrades described in this paragraph shall be collectively identified in this
Agreement as the “Project” and summarized in Exhibit A. A more detailed description of the
City-Sponsored Work and Foundation-Sponsored Upgrades is contained in Exhibit F. The work
to be performed and the materials to be incorporated into the Facility are referred to as the
“Work.”
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E. Capital Improvement Program Project, Art Center Electrical and
Mechanical Upgrades, PF-07000, was approved with the 2006-07 budget and currently has
$3,856,000 of funding appropriated. The infrastructure elements contained in the approved CIP
are included in the Project.
F.FOUNDATION has successfully raised One Million Two Hundred Fifty
Thousand Dollars ($1,250,000) and has pledge receivables and unrestricted cash sufficient to pay
the additional $750,000 required for the Foundation’s portion of the Project by April 2012.
G. Pursuant to an agreement dated on or about September 27, 2007, as amended,
the Foundation retained Mark Cavagnero Associates (“MCA”) to prepare, among other things,
detailed construction drawings for the Project (the “Design Contract”). A copy of the Design
Contract (including all amendments thereto) is attached as Exhibit B. In accordance with an
agreement between City and Foundation dated March 10, 2008, the City funded a portion of the
design work (the “Design Cost Sharing Agreement”);
H.In accordance with Chapter 2.30 of the Palo Alto Municipal Code, the
City plans to publicly bid the Project;
I.CITY and FOUNDATION desire to enter into this Agreement to set forth
the terms and conditions for funding and management of the construction phase of the Project.
AGREEMENT
NOW, THEREFORE, in consideration of the foregoing recitals and the following
covenants, terms, conditions and provisions, the Parties agree:
SECTION 1.RECITALS
1.1. Incorporation. The above recitals are hereby incorporated into this Agreement.
SECTION 2.TERM
2.1 Duration. This Agreement shall commence on the Effective Date and shall
continue until the later of (1) the completion of the construction of the Project or (2) December 1,
2012, unless terminated earlier pursuant to Section 5 (“Termination”).
2.2 Project Schedule. The Parties agree that the Project will proceed in accordance
with the schedule of milestones set forth in Exhibit D attached to this Agreement (the “Project
Schedule”). The City promptly shall notify the Foundation of any delays in meeting the Project
Schedule.
SECTION 3.RESPONSIBILITIES OF FOUNDATION
3.1 Assignment of Design Contract. The Parties anticipate that the Foundation shall
continue to retain MCA to perform services under the existing Design Contract following the
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execution of this Agreement. Such services would expand the existing scope of work for which
the Foundation has retained MCA (i.e., completion of the construction drawings) to include the
preparation of bid documentation and related services (the “Additional MCA Bid Services”) and
revisions to the construction drawings to cover work that the City shall perform related to
deferred maintenance of the Facility (the “Additional MCA Deferred Maintenance Services”).
The Additional MCA Bid Services and the Additional MCA Deferred Maintenance Services are
referred to collectively as the “Additional MCA Services.” The Parties anticipate that the City
will reimburse the Foundation for the full cost of the Additional MCA Deferred Maintenance
Services. The Parties will share the costs of the Additional MCA Bid Services in proportion to
the Foundation’s Percentage Share and the City’s Percentage Share set forth in Section 6 of this
Agreement. Upon not less than 10 days written request by the City, FOUNDATION shall assign
to the City its rights to all existing plans and specifications prepared by MCA and all warranty
rights and claims that it may have against MCA under the Design Contract (the “Assigned
Rights”). The assignment of the Design Contract shall be in the form of Exhibit E to this
Agreement. Notwithstanding such assignment, the Foundation shall continue to have the right
and opportunity to participate in meetings and other communications between the City and MCA
staff regarding the Project and to provide input to the City. If this Agreement is terminated in
accordance with Section 5, then the City shall assign all of its rights under the Design Contract
back to the Foundation.
3.2.Construction Contribution. Subject to the terms and conditions in this
Agreement, FOUNDATION shall make a contribution (the “Foundation’s Contribution”) to the
CITY to fund the construction costs and construction services associated with the Foundation-
Sponsored Upgrades (the “Foundation’s Project Costs”) in accordance with the initial Project
budget set forth on Exhibit F to this Agreement (the “Initial Project Budget”). The Foundation’s
Contribution shall be in an amount not to exceed $2,000,000, and shall be paid to CITY in
accordance with the Deposit Schedule set forth in Exhibit C of this Agreement. Project
construction costs are all those costs incurred by the CITY in connection with the Project during
the construction phase, including, but not limited to: labor, equipment and materials costs
associated with demolition and construction; utility permit and inspection fees; specialized
inspection and testing services and other specialized consultant services. Construction services
are the construction administrative and construction management services described in Section
4.2. Construction costs shall not include the costs of CITY employees assigned to work on the
Project. FOUNDATION shall be responsible for the Project construction costs related to the
Foundation-Sponsored Upgrades, as set forth in the Initial Project Budget. Notwithstanding
anything in this Agreement to the contrary, in no event shall the Foundation’s share of the cost of
the Project exceed Two Million Dollars ($2,000,000) (the “Foundation’s Maximum
Contribution”). If the Foundation’s Project Costs exceed the Foundation’s Maximum
Contribution, the parties reserve the right to amend this Agreement to permit an additional
contribution by the Foundation. In addition, if there are delays in completing any of the
milestones set forth in the Project Schedule that were targeted to be completed prior to the date
that the Foundation is required to pay any installment of the Foundation’s Contribution, then the
date for such contribution shall be extended by a like number of days.
3.3. Evidence of Funds Available. No later than forty five (45) calendar days prior to
the date set for CITY Council award of a construction contract for the Project, FOUNDATION
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shall provide evidence satisfactory to the CITY Manager of the funds the organization has on
hand for the Project. The Parties agree that a current bank statement stating the Foundation's
funds on hand shall satisfy this requirement.
3.4 Selection of Administrator. FOUNDATION shall designate a person to serve as
the organization’s administrator for purposes of this Agreement (“Administrator”). The
Administrator shall be the agent of the Foundation and in such capacity shall be responsible for
receipt of all notices under this Agreement, causing funds to be deposited with CITY in
accordance with the Deposit Schedule, and coordinating on behalf of the Foundation all matters
related to this Agreement. Upon request, the Administrator shall have the right to receive copies
of all material communications by and among the City, the construction manager, the
construction administrator, the contractor and other consultants and contractors retained in
connection with the Project. FOUNDATION shall provide CITY in writing within fifteen (15)
calendar days of the Effective Date of this Agreement, or such later date as may be agreed to in
writing by all the parties, with the name and contact information for the person the organization
has designated as the Administrator for purposes of this Agreement. The selection of and
authority of the Administrator to act on behalf of the organization shall be evidenced by a
corporate resolution or other official documentation of an action of the Board of Directors, a
copy of which shall be provided to the City. The Foundation may elect to replace the
Administrator by giving written notice to the City at least ten (10) days before the effective date
of such replacement. Such notice shall state the name and contact information of the
replacement Administrator.
3.5 Deposit of Funds with CITY. The Administrator shall deposit funds with the City
for the construction costs and construction services related to the Foundation-Sponsored
Upgrades as set forth in Exhibit C. The deposits shall be made in the form of a wire transfer,
cashier’s check or other financial instrument acceptable to CITY. CITY shall hold the
Foundation’s funds in a segregated interest-bearing account that is not commingled with other
funds and shall only use such funds for construction costs associated with Foundation-Sponsored
Upgrades as listed above. All interest accruing on such funds shall belong to the Foundation.
CITY shall provide the Administrator with quarterly reports of the expenditures of the funds
deposited pursuant to this Section as described in Section 4.4 below. Any modification to
Exhibit C must be approved by the City Council.
SECTION 4.RESPONSIBLITIES OF CITY
4.1 Project Initiation and Completion. CITY agrees to use commercially reasonable
and good faith efforts to initiate construction of the Project by April, 2011 and to complete the
Project by April, 2012 in accordance with the Project Schedule. FOUNDATION acknowledges
and agrees that the Project schedule may be adversely impacted by delays related to factors
outside CITY’s control, including, but not limited to design review, completion of design and
construction drawings, changes in scope, and unforeseen conditions discovered while carrying
out the Project.
4.2 Construction Services.
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4.2.1 Construction Phase Services. City shall contract with Mark Cavagnero
Associates (MCA) for construction services during the bid, construction and close
out phases (“Construction Phase Services”). Foundation shall be responsible to
pay for its share of such Construction Phase Services based in accordance with
the Foundation’s allocated percentage set forth in Section 6. The City will
withdraw the FOUNDATION’S share of the Construction Phase Services from
the funds on Deposit. The City will pay the City’s share of Construction Phase
Services based in accordance with the City’s allocated percentage as set forth in
Section 6.
4.2.2 Construction Management Services. City shall contract with a qualified
firm to provide construction management services during the bid, construction
and close out phases for the on-going daily management and oversight of the
project. The Foundation shall have the right to confer with the City and to provide
input on the construction management firm that is selected, and the City shall
consider such input in good faith. Foundation shall be responsible to pay for its
share of construction management costs based on the percentage allocated to the
Foundation in accordance with the allocation percentage set forth in Section 6.
The City will withdraw the FOUNDATION’S share of the construction
management services from the funds on Deposit. The City will pay the City’s
share of construction management costs based in accordance with the City’s
allocated percentage as set forth in Section 6.
4.3 Project Construction.
4.3.1 Contractor Qualifications. City shall compile a list of minimum contractor
qualifications and bidding requirements and shall submit the list and such requirements to
FOUNDATION for review and comment prior to releasing the bid. The City shall grant
the Foundation a period of not less than ten (10) days after receipt of such qualifications
and requirements during which time the Foundation may review and comment on the
bidding qualifications and requirements. City will consider in good faith the
Foundation’s requests for changes to the bidding qualifications and requirements, and
shall incorporate all reasonable changes requested by the Foundation with respect to such
qualifications and requirements.
4.3.2 Bidding; Selection of Bidder; Construction Contract. Following
finalization of the bidding qualifications and requirements, CITY shall bid the Project in
accordance with the requirements of the Palo Alto Municipal Code. FOUNDATION
acknowledges and understands that the CITY is required to solicit bids for Project
construction and to award the construction contract to the lowest responsive and
responsible bidder. Following the closing of the period during which bids may be
submitted, the City shall notify the Administrator of the names of all contractors who
have submitted bids and shall provide the Foundation with copies of such bids.
Thereafter, at a date and time mutually acceptable to the Parties, the City’s Project
Manager and the Administrator shall meet to review the bids. The Administrator shall
have the right to be accompanied at the meeting by construction, design or similar
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representatives of the Foundation’s choice. The Administrator and such representatives
shall have the right to provide input to the City with respect to the bids, including input
regarding whether the bids of the bidding contractors satisfy the bidding qualifications
and requirements and which of the contractor’s is the lowest responsive and responsible
bidder. The City shall consider in good faith the Foundation’s input regarding the bids
and shall thereafter decide which contractor will be selected as the lowest responsive and
responsible bidder for the Project in accordance with the requirements of the Municipal
Code. The City shall award a Construction Contract in substantially the same form as
Exhibit G. The Foundation and its officers, directors, and employees shall be named as
additional insured parties and indemnitees under the Construction Contract to the same
extent as the City is so named. The City shall cause the Contractor to construct the
Project in accordance with the approved plans and specifications and the Construction
Contract.
4.3.3 Project Changes. As used in this Agreement, the term “change order” shall mean a
written instrument, signed by the City and the Contractor, stating their agreement upon all of the
following: (i) any change in the scope of work; (ii) the amount of the adjustment, if any, in the
guaranteed maximum price (or other compensation to be paid to the Contractor), and (iii) the
extent of the adjustment, if any, in the contractual time period set forth in the General Contract
for completion of the work. If a change or changes in Project design or construction materials,
equipment or methods are required for any reason (as reasonably determined by the City), such
changes shall be documented by a written change order, and City shall review and approve (after
consultation with the Foundation and receipt of the Foundation’s consent, to the extent required
by this Agreement) all change orders for the Project. For all changes related to the Foundation’s
scope of the Project, or any changes that will have a material effect on the program functionality
or aesthetic appearance of any portion of the City-Sponsored Work, CITY shall provide the
Administrator with prior written notice describing the Project change, the reason for the change,
and the cost of the change. The notice shall specify the time period in which the Foundation’s
input or approval is needed. The City shall use best efforts to provide at least 5 business days for
Foundation response. However, the Parties acknowledge that certain change orders of an
emergency nature may need immediate action and that, with respect to such changes, the City
may give less than 5 business days’ notice to the Foundation. If the change is a cost increase
related to the Foundation-Sponsored Work or would have an adverse effect on the program
functionality or aesthetic appearance of the Project, CITY shall obtain approval from
Administrator prior to authorization of work except as provided in the immediately preceding
sentences of this paragraph. The Foundation’s approval right shall only apply to the program
functionality and aesthetic aspects of the change order request and such approval shall not be
unreasonably withheld. The Foundation shall use best efforts to respond within the time period
requested by the City (which time periods shall be consistent with the preceding provisions of
this Section 4.3.3) and if the Foundation does not respond within the time period specified in the
notice, the City will have the right to act on the change order without Foundation authorization.
In addition, the Foundation shall have the right to propose reasonable changes to the scope of the
Foundation-Sponsored Upgrades if the Foundation determines during the course of construction
that such changes are necessary or appropriate; the City shall consider such requests in good
faith and shall endeavor to implement any such changes.
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Subject to the terms and conditions set forth in this Agreement, the Parties’ shall bear the cost of
change orders as set forth in Section 6 of this Agreement. If the cost of change orders for
Foundation Sponsored Upgrades exceeds 25% of the Foundation’s Project Costs, the parties
reserve the right to renegotiate the Foundation’s Maximum Contribution.
The City shall establish and implement a change order control system. The City (either directly
or through the Construction Manager) shall recommend necessary or desirable changes to the
Work and shall manage the change order process by reviewing the requests for changes,
negotiating the Contractor's and subcontractors' proposals, and if it determines that a change
order is warranted, submitting recommendations to the Foundation. The City shall keep the
Foundation informed of all change order requests, whether initiated by the City or the
Contractor, and provide the Foundation with copies of all documentation relating to any change
orders upon request.
4.4.Reporting. The City shall establish, implement and keep full and detailed
accounts and exercise such controls as may be necessary for proper financial management under
this Agreement and the Construction Contract. Such accounting and control systems shall be
consistent with generally accepted accounting principles, consistently applied. Without limiting
the foregoing, The CITY shall keep records of all funds advanced by the Administrator pursuant
to this Agreement and of all expenditures of such funds. CITY shall submit quarterly reports (or
more or less frequently as may be agreed to in writing by the parties) to the Administrator. The
reports shall describe the work performed and amounts paid by the CITY to contractors,
consultants and other third parties in connection with the construction of the Project during the
previous quarter. CITY shall provide the Administrator with a reasonably detailed final report of
all Project construction expenditures within sixty (60) days of completion of the Project, as
evidenced by recording of a Notice of Completion for the Project, or earlier termination of this
Agreement.
4.5 Refunds. If, following completion of the Project, a portion of the amount(s)
advanced to CITY by the Administrator remains unexpended and unencumbered, the CITY shall
return such amount to the Administrator within thirty (30) days after issuance of the final report
pursuant to Section 4.4 above. If the Agreement is terminated as provided in Section 5 below,
Foundation shall be entitled to a refund of their unexpended construction cost, plus a
proportionate share of the balance of shared expense (calculated as provided in Section 6 below),
if any, of the deposits made pursuant to Exhibit C of this Agreement.
4.6 Communications. The City shall keep the Administrator reasonably apprised of
the progress of the Project and any significant events regarding the Project, including the bidding
process, the drafting and negotiating of the Construction Contract, any requests for change
orders, and the construction and close-out of the Project. The Administrator shall be given the
opportunity to attend bi-weekly project meetings with the Contractor, Construction Manager and
City. The Administrator shall communicate any Project input directly to the City and shall not
direct the Contractor or Construction Manager.
4.7 Compliance with Law; Unforeseen Work. The City Sponsored Work includes the
deferred maintenance items set forth in Exhibit F. In addition, the City will comply with all
applicable federal, state and local laws and City department requirements that are implicated by
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the construction of the Project. The City (and not the Foundation) shall be responsible for
defects, deferred maintenance, or other problems at the Facility that are discovered during the
construction of the Project and that must be addressed for any of the following reasons, all of
which shall be part of the City-Sponsored Work: (a) public health and safety or (b) applicable
law requires such conditions to be corrected or otherwise addressed, including without limitation
any costs and expenses associated with the inspection, testing, abatement, containment, removal,
transportation or remediation of hazardous materials that may be discovered during the course of
construction of the Project or that otherwise exist at the Facility, and any costs associated with
compliance with the Americans With Disability Act; (c) dry rot; and (d) termites or other pests.
Nothing in this paragraph shall require the City to perform any work except if such work is
required for the reasons set forth in Sections 4.7 (a) [public health and safety] or (b) [required by
law] of this Agreement. The City will address and correct any such conditions at the City’s sole
cost and expense in a timely manner in coordination with the Project’s construction. For the
purposes of this Agreement, the term “hazardous materials” includes any materials that relate to
the environment or health and human safety or that otherwise defined as hazardous or toxic
under any applicable laws, including but not limited to asbestos and asbestos-containing
materials.
4.8 Permit Fees. Except for Utility permit fees, as part of the City-Sponsored Work, the City
shall be solely responsible for all permit, inspection and similar fees (including plan check fees,
inspection fees, building permit fees and similar fees) relating to the Project, including without
limitation those relating to the Foundation-Sponsored Upgrades. In accordance with City Policy
and Procedure 1-25 regarding Public/Private partnerships, the respective parties shall be
responsible for the utility permit fees attributable to their portion of the Work.
4.9 Other Project Costs. The City shall be responsible for the costs relating to the
Commissioning agent, hazardous materials assessment and remediation, moving, testing and
inspection fees; however, these costs shall not be included for purposes of calculating the cost
share ratio in Section 6.1.
SECTION 5.TERMINATION
5.1 Termination Prior to Award of Construction Contract. FOUNDATION, through
the Administrator, may terminate this Agreement with or without cause at any time prior to the
City’s execution of the Construction Contract for the Project by delivering to the City ten (10)
days advance written notice of election to terminate. The City shall notify the Foundation at
least fifteen (15) days prior to its execution of the Construction Contract that it intends to execute
the Construction Contract. City through the City Manager may terminate this Agreement with or
without cause at any time prior to execution of the Construction Contract for the Project by
delivering to the Administrator ten (10) days advance written notice of election to terminate,
provided that such termination right only may be exercised in either of the following events: (1)
the lowest responsive and responsible bid for construction of the Project exceeds the construction
budget established for the Project; or (2) the City Council, in its sole discretion, has determined
for any reason that construction of the Project should not proceed.
5.2 Termination After Award of Construction Contract. Following execution of the
Construction Contract for the Project, CITY may terminate this Agreement upon ten (10) days
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notice to the Administrator for the following, and only the following, reasons: (1) the estimated
Project costs, as reasonably determined by the CITY, have increased by more than 15% of the
maximum amounts budgeted for the Project by CITY or (2) in the case of a Force Majeure Event
that the City reasonably determines will result in a delay in completing the Project of more than
12 months beyond the originally anticipated completion date or cost increases of more than 15%
of the maximum amounts budgeted for the Project by CITY. Estimated Project costs shall be
determined as the sum of the Construction Contract price, any approved change orders, and any
anticipated change orders that are required to complete the Project. “Force Majeure Event” shall
have the meaning set forth in Section 10. In case of termination under this Section 5.2,
FOUNDATION shall remain responsible for its share of, and CITY may use the funds on deposit
to pay for, the Foundation’s share of construction costs, Construction Phase services and
Construction Management services incurred through the time of termination.
SECTION 6.CALCULATION OF PROPORTIONATE FUNDING
6.1 The Parties have prepared the Initial Project Budget attached to this Agreement as
Exhibit F in an effort to set forth their good faith estimates of the total cost of the Project and the
allocation of such costs between the City (i.e., with respect to the City-Sponsored Work) and the
Foundation (with respect to the Foundation-Sponsored Upgrades), including a contingency
amount of 15% of the anticipated cost of the Work. For purposes of this Agreement and except
as may be modified under Section 6.2 or 6.5, City’s Percentage Share is 73.1% and Foundation’s
Percentage Share is 26.9% as defined by the ratio in Exhibit H of each party’s summary
estimated construction costs including deferred maintenance items as listed in Exhibit F.
6.2 Following receipt of the bids pursuant to Section 4.3, the parties shall work
together to make any necessary or appropriate adjustments or revisions to the amounts allocated
between the City and the Foundation in the Initial Project Budget and shall negotiate in good
faith to agree on such adjustments which may affect the cost sharing ratio described in Section
6.1. If the Parties reach agreement on such allocation, then the revised budget shall supersede
the Initial Project Budget and become the “Project Budget,” and, if necessary, the cost share ratio
shall be modified. If the parties elect not to modify the allocations or are unable to reach
agreement on how to allocate, the cost share ratio set forth in Section 6.1 shall apply. Any
change to the cost share ratio shall be reflected in a written amendment to this Agreement. The
Foundation shall be solely responsible for the costs included within the scope of the Foundation-
Sponsored Upgrades, and the City shall be solely responsible for the costs included within the
scope of the City-Sponsored Work.
6.3 Change Orders.
6.3.1 Change Orders Under $25,000. To the extent that any change orders are
required in connection with the Project, if the change order is $25,000 or less, the
Foundation will pay the Foundation’s Percentage Share and the City will pay the City’s
Percentage Share as described in Section 6.1.
6.3.2 Change Orders Over $25,000. If the change order is in excess of $25,000,
the Foundation shall bear 100% of the cost of all change orders that relate solely to the
Foundation-Sponsored Upgrades, and the City shall bear 100% of the cost of all change
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orders that relate solely to the City-Sponsored Work To the extent that any change
order in excess of $25,000 relates in part to the Foundation-Sponsored Upgrades and in
part to the City-Sponsored Work, the Parties shall work in good faith to determine an
appropriate allocation of the costs of such change order. If the Parties are unable to agree
on such allocation, then the Foundation will pay the Foundation’s Percentage Share and
the City will pay the City’s Percentage Share as described in Section 6.1.
6.4 The Foundation shall be responsible for the Foundation’s Percentage Share of any
shared construction-related costs, including but not limited to construction administrative
services set forth in Section 4.2.1 and construction management services in Section 4.2.2. The
City shall be responsible for the balance of such shared costs.
6.5 The Parties acknowledge that the actual construction of the Project will be
undertaken as a single work of improvement and that during the course of construction it may be
difficult to determine whether portions of the Work at any given time relates solely or primarily
to the Foundation-Sponsored Upgrades or to the City-Sponsored Work. Accordingly, except
with regard to any costs for Work specifically allocated to the City as provided in Section 4.7
(which shall be paid for solely by the City), Section 4.9 (other project costs) and Section 4.3.3
and Section 6.3 with regard to change orders that are specifically allocated to the City or to the
Foundation in accordance with those sections, each disbursement of funds made by the City to
the Contractor or to pay for any other authorized Project expenses shall be allocated between the
City and the Foundation in proportion to the Foundation’s Percentage Share and the City’s
Percentage Share, as the case may be, without regard to whether the disbursement in question
relates solely or primarily to the Foundation-Sponsored Upgrades or the City-Sponsored Work.
If the parties desire to adjust the cost sharing ratio to allocate a lesser percentage to City-
Sponsored Work, this Agreement can be so amended upon approval by the City Manager.
6.6 Nothing in this Section 6 or elsewhere in this Agreement shall constitute a
commitment by the Foundation to be required to pay or otherwise be responsible for any
obligations in excess of the Foundation’s Maximum Contribution.
6.7 Within 90 days after the completion of the Project, the City shall prepare a final
accounting of setting forth the total costs of the Project, including all change orders, and the
respective contributions of the City and the Foundation. To the extent, if at all, that the actual
amount of the Foundation’s share of such costs as determined under this Agreement is less than
the funds paid or contributed by the Foundation, the City shall return such excess amount to the
Foundation within 30 days after such amount has been determined.
SECTION 7. WAIVER
7.1 The waiver by either Party of any breach or violation of any covenant, term, or
condition of this Agreement or of the provisions of the PAMC or other City law, rule or
regulation, will not be deemed to be a waiver of any such covenant, term, condition, or provision
or of any subsequent breach or violation of the same or any other covenant, term, condition, or
provision. The subsequent acceptance by either Party of any consideration which may become
due or payable hereunder will not be deemed to be a waiver of any preceding breach or violation
by the other Party of any other covenant, term, condition or provision.
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SECTION 8.ASSIGNMENT
8.1 The Foundation will not assign, transfer, or convey this Agreement and the
Exhibits without the express written approval of the City, and any such assignment, transfer or
conveyance without the approval of the City will be void and, in such event, at the City’s option,
this Agreement may be terminated upon reasonable notice to the Foundation.
SECTION 9.NONDISCRIMINATION
9.1 As set forth in Palo Alto Municipal Code section 2.30.510, FOUNDATION
certifies that in the performance of this Agreement, it shall not discriminate in the employment of
any person because of the race, skin color, gender, age, religion, disability, national origin,
ancestry, sexual orientation, housing status, marital status, familial status, weight or height of
such person. The Foundation acknowledges that it has read and understands the provisions of
Section 2.30.510 of the Palo Alto Municipal Code relating to Nondiscrimination Requirements
and the penalties for violation thereof, and agrees to meet all requirements of Section 2.30.510
pertaining to nondiscrimination in employment.
SECTION 10.FORCE MAJEURE
10.1 A Party will be temporarily excused from the performance or further performance
of any of its covenants or agreements or any terms or conditions that it is obligated to fulfill
hereunder and such Party’s nonperformance shall not be deemed an event of default under this
Agreement for any period to the extent that such Party is prevented, hindered or delayed for any
period of time from performing any of its covenants or agreements, in whole or in part, or any
term or condition it is required to perform or satisfy as a result of an act of God, war, civil
disturbance, court order, or other cause beyond that Party’s reasonable control. The Parties
hereby agree to use reasonable efforts to remedy the effects caused by the occurrence of the
event giving rise to a Party’s temporary nonperformance of its covenants or agreements or any
terms or conditions that it is obligated to fulfill hereunder. A Party will provide notice promptly
to the other Party to the extent that such Party relies on the provisions of this Section to
temporarily excuse its failure to perform any of its covenants or agreements or any terms or
conditions hereunder and shall state therein the facts giving rise to its inability to perform and
what actions that it intends to take to overcome such delay.
SECTION 11.AUDITS; INSPECTION OF RECORDS
11.1 The Foundation will maintain, or caused to be maintained by its accountant or
other agent, if any, books and records relating to funding of the Project subject of this Agreement
during the Term and for three (3) years thereafter. It will permit the City to inspect, audit and
copy, upon thirty (30) days’ prior written notice from the City at any reasonable time during the
Term and for three (3) years after the expiration or earlier termination of the Agreement, the
Foundation’s books and records pertaining to its obligations imposed by this Agreement. The
Foundation will retain such books and records at accessible locations and for at least three (3)
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years after the expiration or earlier termination of this Agreement, whichever occurs later. This
provision will survive the expiration or earlier termination of this Agreement.
11.2 The City will maintain, or caused to be maintained by its accountant or other
agent, if any, books and records relating to funding of the Project subject of this Agreement
during the Term and for three (3) years thereafter. It will permit the Foundation to inspect, audit
and copy, upon thirty (30) days’ prior written notice from the Foundation, at any reasonable time
during the Term and for three (3) years after the expiration or earlier termination of the
Agreement, the City’s books and records pertaining to its obligations imposed by this
Agreement. The City will retain such books and records at accessible locations and for at least
three (3) years after the expiration or earlier termination of this Agreement, whichever occurs
later. This provision will survive the expiration or earlier termination of this Agreement.
SECTION 12.INDEPENDENT CONTRACTOR
12.1 In the construction of the Project and the performance of other duties imposed
upon it by this Agreement, the Foundation acts at all times as an independent contractor and not
as an employee of the City. Nothing in this Agreement will be construed to establish a
partnership, joint venture, group, pool, syndicate or agency between the Parties. No provision
contained herein will be construed as authorizing or empowering either Party to assume or create
any obligation or responsibility whatsoever, express or implied, on behalf, or in the name of, the
other Party in any manner, or to make any representation, warranty or commitment on behalf of
the other Party. In no event will either Party be liable for (a) any loss incurred by the other Party
in the course of its performance hereunder, or (b) any debts, obligations or liabilities of the other
Party, whether due or to become due.
SECTION 13.REPRESENTATIONS AND WARRANTIES
13.1 On the Effective Date, each Party represents and warrants to the other Party that:
(A) it is duly organized, validly existing and in good standing under the laws of the jurisdiction
of its formation; (B) the execution, delivery and performance of this Agreement and the Exhibits
are within its powers, have been duly authorized by all necessary action and do not violate any of
its governing documents, any contracts to which it is a party or any law, rule, regulation, or
order; (C) this Agreement and the Exhibits and any other document executed and/or delivered in
accordance with this Agreement constitutes its legally valid and binding obligation enforceable
against it in accordance with its covenants, terms, conditions and provisions, subject to any laws
relating to bankruptcy, insolvency, and reorganization; (D) it has not filed and it is not now
contemplating the filing for bankruptcy protection and, to its knowledge, there is not an
involuntary proceeding threatened against it which would result in it being or becoming a debtor
under any bankruptcy law; (E) there is not pending or, to its knowledge, threatened against it or
any of its affiliates any legal proceedings that could materially adversely affect its ability to
perform its obligations under this Agreement and the Exhibits; and (F) no event of default or
potential event of default with respect to it has occurred and is continuing under this Agreement
and no such event or circumstance would occur as a result of its entering into or performing its
obligations under this Agreement and the Exhibits.
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SECTION 14.NOTICES
All notices, requests and approvals by a Party will be given, in writing, and delivered by personal
service, the United States Postal Service, express delivery service, or facsimile transmission, as
follows:
TO CITY:City of Palo Alto
City Clerk
P.O. Box 10250250 Hamilton AvenuePalo Alto, CA 94303
With a copy to City of Palo Alto
each of: P. O. Box 10250
250 Hamilton Avenue
Palo Alto, CA 94303
ATTN: Director, Palo Alto Art Center;
and the Manager, Facilities Maintenance and
Projects
TO FOUNDATION:Palo Alto Art Center Foundation
1313 Newell Road
Palo Alto, CA 94303
ATTN: Teri Vershel, Co-President
SECTION 16.DISPUTE RESOLUTION
16.1 If a dispute arises from or in connection with this Agreement, generally, or any
Exhibit, in particular (a “Dispute”), the parties shall each designate a representative to meet and
confer to promptly resolve the Dispute.
16.2 Nothing contained in this Agreement will prevent or otherwise restrict either
Party from pursuing its equitable rights, including injunctive relief and specific performance, in
the event of a material breach by the other Party.
SECTION 17.MISCELLANEOUS
17.1 This Agreement will be governed by and construed in accordance with the laws of
California and, as appropriate, the Charter, and the PAMC. The Parties will comply with
applicable laws in the exercise of their rights and the performance of their obligations under this
Agreement.
17.2 All covenants, terms, conditions and provisions of this Agreement, whether
covenants or conditions, will be deemed to be both covenants and conditions.
17.3 This Agreement represents the entire agreement between the Parties and
supersedes all prior negotiations, representations and contracts, written or oral, relating to the
subject matter of this Agreement. This Agreement may be amended by an instrument, in writing,
14
signed by the Parties. This Agreement may be executed in any number of counterparts, each of
which will be an original, but all of which together will constitute one and the same instrument.
17.4 All exhibits referred to in this Agreement are by such references incorporated in
this Agreement and made a part hereof. A reference to this Agreement will include a reference to
the applicable exhibit or exhibits hereto. The following exhibits are made a part of this
Agreement:
Exhibit “A” -- Description of Foundation and City-Sponsored Work
Exhibit “B” – Design Contract
Exhibit “C” -- Payment Schedule
Exhibit “D” – Project Schedule
Exhibit “E” – Form of Assignment of Rights Under Design Contract
Exhibit “F” – Initial Project Budget
Exhibit “G” – Construction Contract
Exhibit “H” – Cost Share Ratio
17.5 The Parties agree that the normal rule of construction to the effect that any
ambiguity is to be resolved against the drafting party will not be employed in the interpretation
of this Agreement and the Exhibits or any amendment thereto.
17.6 In the event that an action is brought, the Parties agree that trial of such action
will be vested exclusively in the state courts of California or in the United States District Court
for the Northern District of California in the County of Santa Clara, State of California.
17.7 If a court of competent jurisdiction finds or rules that any provision of this
Agreement, the Exhibits, or any amendment thereto, is void or unenforceable, the unaffected
provisions of this Agreement, the Exhibits, or any amendment thereto, will remain in full force
and effect.
17.8 The term “day” means a calendar day, unless a “business day” is specified; for the
purposes of this Agreement, “business day” means a calendar day but it excludes any “Regular
Holiday” or “Other Special Day” referred to in PAMC Section 2.08.100 or any Friday that is
considered a ‘9/80’ day, when the City does not require employees, electing to work nine (9)
business days in a ten-business-days biweekly period, to work on such days.
17.9 The individuals executing this Agreement represent and warrant that they have the
legal capacity and authority to do so on behalf of their respective legal entities.
17.10 The City shall, to the fullest extent permitted by law, indemnify, defend and hold
harmless the Foundation and its officers, directors, employees, successors and assigns
(collectively, the “Indemnified Parties”) from and against all liabilities, claims, demands, debts,
controversies, judgments, awards, fines, damages, costs, losses and expenses, including without
limitation attorneys’ fees, disbursements and court costs, and all other consultant and expert fees
and costs (collectively, “Claims”) for (a) personal injury, death, or property damage arising from
the Project, (b) any claims of lien or stop notices asserted by any contractor, or (c) otherwise
relating to or arising from the design or construction of the Project. The duty to defend is
independent of and separate from the duty to indemnify and such duty to defend exists regardless
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of any ultimate liability of City or any Indemnified Party. Such defense obligation shall arise
immediately upon submission of any Claim by any Indemnified Party or written notice of such
Claim being provided to City. City’s indemnification obligation hereunder shall survive the
expiration or earlier termination of the Agreement until such time as it is determined by final
judgment that any Claim against the Indemnified Parties for such matters indemnified hereunder
are fully and finally barred as to the Indemnified Parties by the applicable statute of limitations.
17.11.Notwithstanding anything in this Agreement to the contrary, no director, officer,
employee or volunteer of the Foundation will have any personal liability under this Agreement.
SECTION 18. NON-APPROPRIATION
18.1. This Agreement is subject to the fiscal provisions of the Charter of the City of
Palo Alto and the Palo Alto Municipal Code. This Agreement will terminate without any penalty
(a) at the end of any fiscal year in the event that funds are not appropriated for the following
fiscal year, or (b) at any time within a fiscal year in the event that funds are only appropriated for
a portion of the fiscal year and funds for this Agreement are no longer available. The preceding
provisions of this Section 18.1 shall not excuse the City from using funds previously
appropriated for the Project. This section shall take precedence in the event of a conflict with
any other covenant, term, condition, or provision of this Agreement.
/ /
/ /
/ /
/ /
/ /
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IN WITNESS WHEREOF, the Parties by their duly authorized representatives have
executed this Agreement on the Effective Date.
APPROVED AS TO FORM:CITY OF PALO ALTO
_________________________________________________________________
Senior Asst. City Attorney City Manager
APPROVED:
PALO ALTO ART CENTERFOUNDATION
_________________________________________________________________
Director of Administrative Services President
_________________________________________________________________
Director of Community Services Chief Operating Officer
______________________________
Director of Public Works
Exhibit “A” - Description of Foundation and City-Sponsored Work
Exhibit “B” – Design Contract
Exhibit “C” - Payment Schedule
Exhibit “D” – Project Schedule
Exhibit “E” –Form of Rights Under Assignment of Design Contract
Exhibit “F” –Initial Project Budget
Exhibit “G” – Construction Contract
Exhibit “H” – Cost Share Ratio Calculation
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Exhibit A
DESCRIPTION OF FOUNDATION AND CITY-SPONSORED WORK
1. INTRODUCTION
The City of Palo Alto is upgrading the Art Center building, located at 1313
Newell Rd, Palo Alto, CA. The City’s scope of work includes replacement or retrofit of building
ventilation systems, electrical systems and distribution wiring, fire life safety systems, and
accessibility upgrades (as triggered by Title 24 provisions required by the aforementioned
upgrades) to the facility, while the Foundation’s scope of work includes the creation of a
Children’s Wing and an upgrade of the exhibition galleries. The project also includes
installation of energy saving systems/features.
In addition to the abovementioned electrical, mechanical and Children’s Wing
improvements, the City will also now add deferred-maintenance items to the project such as a
new roof, new gutters, new downspouts, seismic upgrade to roofing envelope, exterior painting,
new carpets, additional interior painting, termite treatment and dry rot repairs, new window
safety glazing and exterior lighting improvements.
2.SCOPE OF SERVICES
The project scope includes all labor, material and equipment. The following
contains a general description of the scope of work included in each element listed below.
Foundations Minor cutting and patching for plumbing work included in plumbing section.
Structure Roof framing diaphragm strapping and connection strengthening. Termite
treatment and dry-rot repairs.
Exterior enclosure Removal of existing windows/walls to accommodate new doors, infilling existing
window system with spandrel glass and CMU wall infill at various locations.
Window safety glazing upgrade to bottom windows in courtyard. Exterior
painting.
Roofing Roof replacement and seismic upgrade to roofing envelope. New gutters and
downspouts.
Interior division New interior partitions with gypsum board to both sides, doors, frames and
hardware.
Finishes New finishes at various locations, including ceramic tile at restrooms, resilient
flooring through, carpet, painted walls, painted gypsum board ceilings, and 2x2
concealed spline ceilings at various locations.
Equipment Equipment includes prefabricated toilet compartments and accessories, shelving
and millwork, cabinets and counter tops, chalkboards and insignia, amenities and
convenience items.
18
Vertical transportation Rework stairs, ramps and railings for ADA compliance.
Plumbing Demolition and re-pipe of waste and water service piping, new sanitary fixtures
with associated waste, vent and service piping, domestic cold and hot water
piping system.
HVAC Demolition of existing ceiling located AC units, condensing unit, boiler with
pumps, piping, ductwork and controls, including installation of new AHU and
ductwork. New air cooled chiller and CHW piping, new boiler and HHW.
Fire protection Repair and replacing of existing sprinkler heads.
Electrical Primary underground raceway, utility transformer, secondary underground
raceway, electrical service switchboard (NEMA 3R), re-feed existing
switchboard, motor connections, receptacles as required, maintain existing
receptacle system. New interior lighting.
Site work Landscaping, paving, drop off parking and site fencing. Irrigation improvements.
New children’s entrance walkway and courtyard. Sculpture garden concrete work
to match accessibility ramps.
Site Utilities Site lighting, electrical feeders, mechanical, and drainage.
Telecom New Telephone/data cabling
Fire Life Safety New fire alarm system and security system.
Abatement Hazardous Material Abatement
Building Certification LEED certification and Commissioning
19
Exhibit B
DESIGN AGREEMENT AND AMENDMENT ADD SERVICES
[To Be Inserted At Closing]
20
Exhibit C
PAYMENT SCHEDULE
Foundation shall deposit with City:
75 calendar days prior to scheduled award date of construction contract --$1,250,000
At Notice of Substantial Completion -- Lesser of $750,000 or balance of Foundation Project
Costs
TOTAL:$2,000,000 Maximum
21
Exhibit D
PROJECT SCHEDULE
Milestones:Approx. Date:
Pre-construction Phase (5 months):
Begin Prequalification of Contractors February 2011
Begin move-out of staff/materials March 2011
Begin hazardous material removal April 2011
Advertise for construction bids April - May 2011
Award of Construction Contract June 2011
Construction Phase (10-12 months):
Construction Start June 2011
Construction Completion April 2012
Move-back of staff/materials May 2012
Grand-opening June 2012
22
Exhibit E
FORM OF ASSIGNMENT OF RIGHTS UNDER DESIGN CONTRACT
ASSIGNMENT OF DESIGN CONTRACT RIGHTS
THIS ASSIGNMENT OF DESIGN CONTRACT RIGHTS (“Assignment”) is
executed and delivered effective as of ___________, by the PALO ALTO ART CENTER
FOUNDATION, a corporation organized under the Nonprofit Public Benefit Corporation Law of
the State of California (“Assignor”), for the benefit of the CITY OF PALO ALTO, a California
chartered municipal corporation (“Assignee”). All capitalized terms used in this Assignment
have the meaning given to such terms in that certain Construction Funding Agreement Between
the City of Palo Alto and the Palo Alto Art Center Foundation for Upgrades to the Palo Alto Art
Center Renovation Project dated _____________ (the “Agreement”).
For good and valuable consideration, receipt of which is hereby acknowledged,
Assignor does hereby assign to Assignee: (1) all plans and specifications prepared by MCA in
connection with the Project (the “Plans”), (2) all present and future claims, causes of action and
other rights of any nature, whether in contract or in tort, that Assignor may have against MCA in
connection with the design of the Project, including without limitation all rights to insurance
proceeds with respect to the Design Contract; and (3) to the extent assignable, all warranties and
guarantees arising under the Design Contract (collectively, the “Assigned Rights”); provided,
however, that Assignor shall have jointly with Assignee the same rights assigned to Assignee
pursuant to this Assignment so that Assignor shall not be precluded from prosecuting any claim
that Assignor may have against MCA.
Assignor hereby covenants that it will, at any time and from time to time upon
written request from Assignee, execute and deliver to Assignee or its successors and/or assigns
any new or confirmatory instruments, and do and perform any other acts which Assignee or its
successors and/or assigns may request in order to fully transfer possession and control of the
Assigned Rights intended to be transferred and assigned hereby.
This Assignment shall be binding upon and inure to the benefit of Assignee and
its successors and assigns.
This Assignment may be executed in counterparts, each of which shall be deemed
an original, but all of which, taken together, shall constitute one and the same instrument.
THE ASSIGNED RIGHTS ARE TRANSFERRED AND ASSIGNED BY
ASSIGNOR ON AN “AS IS, WHERE IS” BASIS, AND WITHOUT ANY WARRANTIES
OF WHATSOEVER NATURE, EXPRESS OR IMPLIED, INCLUDING, WITHOUT
LIMITATION, ANY IMPLIED WARRANTIES OF MERCHANTABILITY AND
FITNESS FOR ANY PARTICULAR PURPOSE, WARRANTIES CREATED BY ANY
AFFIRMATION OF FACT OR PROMISE OR BY ANY DESCRIPTION OF THE
RIGHTS TRANSFERRED HEREUNDER, OR BY ANY SAMPLE OR MODEL
THEREOF, AND ALL OTHER WARRANTIES WHATSOEVER CONTAINED IN OR
CREATED BY THE CALIFORNIA UNIFORM COMMERCIAL CODE. SUCH
23
ASSIGNMENT AND TRANSFER IS SUBJECT TO ANY AND ALL RIGHTS OF MCA
AND ANY OTHER THIRD PARTIES IN AND TO THE ASSIGNED RIGHTS.
IN WITNESS WHEREOF, this Assignment is executed and delivered by the Assignor to
the Assignee as of the date first set forth above.
PALO ALTO ART CENTER FOUNDATION
By:_____________________________
Name:__________________________
Title:___________________________
24
Exhibit F
INITIAL PROJECT BUDGET
[To Be Inserted At Closing]
25
Exhibit G
CONSTRUCTION CONTRACT
[To Be Inserted At Closing]
26
Exhibit H
ART CENTER
PERCENTAGE SHARE CALCULATION
(Thousands of Dollars)
Total Cost City Portion Foundation
Portion
Phase 1
Construction
$3,785 $2,541 $1,244
Additive Alternates 118 106 12
Deferred
Maintenance
760 760 0
Special Testing &
Inspections
10 7 3
TOTAL $4,673 $3,414 $1,259
PERCENTAGE SHARE 73.1%26.9%
Note: The costs in this exhibit are taken from the January 25, 2011 Building Permit Set Cost
Estimate for Palo Alto Art Center prepared Mack5.
101216 jb 0130658 1
AMENDMENT NO. THREE TO CONTRACT NO. C08126592
BETWEEN THE CITY OF PALO ALTO AND THE PALO ALTO
ART CENTER FOUNDATION FOR THE DESIGN OF CAPITAL
IMPROVEMENTS RELATING TO THE RENOVATION OF THE
PALO ALTO ART CENTER
This Amendment No. Three to Contract No. C08126592 (“Contract”) is entered
into _____________, 2011 between the CITY OF PALO ALTO (the “City”) and the
PALO ALTO ART CENTER FOUNDATION (the “Foundation”) (individually, a
“Party” and, collectively, the “Parties”), in reference to the following facts and
circumstances:
RECITALS:
1.On March 10, 2008, the Parties entered into the Design of Capital
Improvements Relating to the Renovation of the Palo Alto Art Center agreement (the
“Design Agreement”).
2.On December 15, 2008, Council approved Amendment No. One to
Contract Number C08126592 with the Foundation in the amount of $78,580 for the
Planning and Design Phase for the Renovation and Capital Improvements to the Palo
Alto Art Center, Capital Improvement Program Project PF-07000. Amendment No. One
addressed scope increases to the design development phase due to new green building
requirements, accessibility and seismic code requirements, hazardous materials testing
and removal, and determination of the extent of required electrical system upgrades.
3.On March 16, 2009, Council approved Amendment No. Two to Contract
Number C08126592 with the Foundation in the amount of $6,249 for a Total Not to
Exceed Amount of $374,829 for the Development of Construction Documents for the
Renovation and Capital Improvements to the Palo Alto Art Center, Capital Improvement
Program Project PF-07000. Amendment No. Two also changed the scope of the
agreement between the City of Palo Alto and the Foundation to include design services
only, and exclude any payment for bid and construction phase services. In addition, the
Amendment extended the term of the agreement from March 31, 2009 to March 31, 2010
to allow time for the completion of construction documents.
4.The parties intend to enter into a Construction Funding Agreement
whereby the Foundation will contribute up to $2 Million to fund renovations and
upgrades to the Art Center;
5.The Parties wish to amend the Design Agreement to: (1) extend the term
of the Agreement from March 31, 2010 to June 1, 2011 to ensure the contract stays
current; (2) expand the scope of the design work to include design for deferred
maintenance aspects of the project whereby the expense will be incurred by the City; and
3) expand the scope of the design work to include bid documentation that will be split
between the City and the Foundation based upon the cost-sharing ratio determined in the
concurrent Construction Funding Agreement.
101216 jb 0130658 2
AGREEMENT:
NOW, THEREFORE, in consideration of the terms, conditions, and provisions of
this Amendment, the Parties agree, as follows:
SECTION 1. Section 2.1 of the Design Agreement is amended to read, as
follows:
“2.1 The term of this Design Agreement (the “Term”) shall commence on the
Effective Date and continue through June 1, 2011. If the completion of the design and
plan development phase of the Project is delayed for any reason beyond the reasonable
control of the Foundation, then subject to the preceding sentence, the Parties may agree,
in writing, to extend the Term on a month-to-month basis, in order to permit the
Foundation to complete the design and bid documentation phase of the Project.”
SECTION 2. Recital 6 is added to the Design Agreement to read as follows:
“6.The Foundation has entered into an agreement with the Architect to
perform the following additional services: (1) preparation of plans for additional deferred
maintenance task items as set forth in Exhibit A-1 which is attached and incorporated by
reference and (2) completion of construction drawings as set forth in Exhibit A-2.”
SECTION 3. Section 4.2 of the Design Agreement is amended to add the
following provisions:
“The City shall reimburse the Foundation for the costs incurred by the Foundation
in connection with the deferred maintenance scope described in Recital 6 in an amount
not to exceed $79,505 for fees associated with incorporation of the deferred maintenance
items into existing construction documents and not to exceed $30,000 for services
associated with HRB/ARB review of the additional services.
The City shall also reimburse the Foundation for its proportionate share of the
additional services related to completion of construction drawings described in Recital 6
in an amount not to exceed $45,043. For purposes of this Amendment No. 3, the City’s
proportionate share of the additional services for completion of construction drawings
shall be 73.1% percent.
The City shall pay such costs as invoiced by the Foundation. The Foundation’s
invoice shall include documentation in support of each installment payment request. The
required documentation will consist of the Architect’s invoices, as submitted to the
Foundation for payment, with documentation of all design and plan development services
rendered to that point in time, together with the Foundation’s proof of payment of such
invoices.”
SECTION 4.Except as they are herein modified, all other provisions of the
Design Agreement, including any exhibits and subsequent amendments thereto, shall
remain in full force and effect.
101216 jb 0130658 3
IN WITNESS WHEREOF, the Parties hereto have duly executed this
Amendment No. 2 on the day and year first written.
APPROVED AS TO FORM:
__________________________
Senior Asst. City Attorney
APPROVED:
__________________________
City Manager
__________________________
Director of Administrative Services
__________________________
Director of Community Services
___________________________
Acting Director of Public Works
CITY OF PALO ALTO
____________________________
Mayor
PALO ALTO ART CENTER
FOUNDATION
By:___________________________
Name:_________________________
Title:________________________
101216 jb 0130658 4
Exhibit A-1
Additional Services Agreement for Deferred Maintenance Work
Exhibit A-2
Additional Services Agreement for Bid Services