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HomeMy WebLinkAboutStaff Report 6501 City of Palo Alto (ID # 6501) City Council Staff Report Report Type: Action Items Meeting Date: 2/1/2016 City of Palo Alto Page 1 Summary Title: New Lease for Museum of American Heritage Title: Approval of a Twenty Five (25) Year Lease Agreement between the City of Palo Alto and Museum of American Heritage (MOAH) for the City Owned Property at 351 Homer Avenue, Palo Alto From: City Manager Lead Department: Administrative Services RECOMMENDATION Staff recommends that the City Council authorize the City Manager to negotiate and enter into a new twenty five (25) year lease agreement between the City of Palo Alto and Museum of American Heritage (MOAH) for the City owned property at 351 Homer Avenue, Palo Alto upon expiration of the current lease agreement in 2017. EXECUTIVE SUMMARY MOAH has been a part of Palo Alto for the past 25 years. As a significant destination for both residents and visitors, MOAH contributes to the community by enhancing Palo Alto’s reputation as a rich cultural destination, implementing a successful volunteer program, and providing both education and entertainment through a wide range of presentations, events and exhibits. Furthermore, MOHA has partnered with the City by providing the Learning Center space to local community groups and the City. MOAH has consistently been self-sufficient raising its funding needs through donations, membership fees, events, programming revenue, and endowment income. MOAH has never received any federal, state or municipal funding. The current locale of the museum is ideal in terms of the downtown location, accessibility to parking, and proximity to public transit. The existing lease between the City and MOAH will end on May 1, 2017. MOAH has requested a new twenty five (25) year lease. Staff has undertaken and completed the process required by the City’s Policy and Procedure (1-11/ASD), for leased use of City land and facilities. The approval of the new twenty five (25) year lease will allow MOAH to continue fund raising efforts for continuation of maintenance, modernization and planned improvements of the building in order to operate the museum and to continue its cultural and civic contributions for many years into the future. City of Palo Alto Page 2 BACKGROUND The Williams House was designed by noted architect Ernest Coxhead in 1906 and was completed in 1907. Dr. Williams, his wife Dora and daughters, Betty and Rhona, were the only family to ever live in the house and inhabit the property. Dr. Williams became known in the community by making his house calls via bicycle. In August of 1989, the City was notified that Rhona Williams had bequeathed her property and improvements, located at 351 Homer Avenue, to the City of Palo Alto. Under Ms. Williams’ last will and testament, dated July 27, 1987 and probated under case no. P-53194 in the Superior Court of Santa Clara County, California, the bequest of the Premises was subject to the condition that they it be used for park or cultural purposes, or a combination thereof and the Premises be named in memoriam to Ms. Williams’ parents, Dr. Thomas Williams and Dora Moody Williams. On January 13, 1992, the City accepted Ms. Williams’ bequest of the real property and improvements and directed the staff to prepare a Request for Proposal (RFP) to lease the site. In March 1992, the City commissioned a historic evaluation of the property and preparation of a Historic Resource Board report to guide future use of the property. Proposals were received from Peninsula Conservation Center and the Lace Museum. The negations were not successful and a second RFP was initiated in May of 1994 in which seven proposals and two letters of interest were submitted. In November of 1994, the selection committee recommended that the Council award an option to lease to the Museum of American Heritage. On November 14, 1994, Council approved awarding an option to lease to the Museum of American Heritage, with the award subject to the condition that the Museum selects the overall design team for the project. On December 4, 1995, Council approved the Museum of American Heritage’s revised proposal concept plan, including the retention and rehabilitation of the existing garage and the construction of a new education building and accessible restrooms of approximately 1,565 square feet. The Council directed staff to work with the applicant on a variance application for on-site parking requirements and to assist the applicant in exploring long term off-site parking arrangements; and also directed staff to complete negotiations for an option to lease with the Museum of American Heritage, based on the revised proposal dated October 4, 1995. On June 10, 1996, Council awarded MOAH an option to lease the Williams Property at 351 Homer Avenue for the purpose of developing and operating a park and museum open to public. Over the next year, the museum fulfilled the required conditions of the Lease Option including raising funds and obtaining the necessary City approvals for the rehabilitation of the garden and the building. On May 7, 1997, a twenty (20) year lease between the City and MOAH was executed and the rehabilitation project by MOAH was implemented. MOAH proceeded to undertake extensive repairs and restoration of the property. The main house and the original garage was repaired and rehabilitated. The Museum added a new educational building and accessible restroom of approximately 1,565 square feet. MOAH restored the property garden in City of Palo Alto Page 3 a manner consistent with the guidelines given by the Department of Interior regarding historical landscapes. In the past nineteen years, MOAH has provided the stewardship of this important City owned property. MOAH has been dedicated to preserve, restore and maintain the Williams House and to provide to programs, events, exhibits and lectures for residents and visitors. It is the place to go to see and experience the technological and social innovators of the past and to learn from their achievements. For additional historical information please refer to the list of previous CMRs on page three of this report. DISCUSSION On July 15, 2015, and later on October 5, 2015, MOAH requested (Attachment A) a new 25 year lease to extend the term of its existing lease with the City which is set to expire in May 1, 2017. The purpose of the extension is twofold: 1) It allows MOAH the foundation to continue its fund raising efforts to undertake current maintenance and planned capital improvement projects; 2) the new lease will serve to assure that MOAH will continue its operation at the present location for years to come. According to the City’s Policy and Procedures 1-11/ASD (Attachment B) regarding leased use of City land, there are two ways to award long term leases. The first method is through a formal Request for Proposal and the second is by providing a public notice that the City intends to award a lease to a particular tenant and conducting a public hearing to elicit public comment. Traditionally staff has used this second process for awarding leases to non-profit agencies that provide local community services. The City Charter limits the City to a fifty (50) year lease term. Consistent with P&P 1-11/ASD, the City issued such public notices in the local newspaper (Palo Alto Weekly) on December 18 and 25 of 2015 and a copy of the public notices were sent to property owners and tenants within 300 feet of the subject property. There were no inquires or requests for the 351 Homer Street location other than MOAH. Consistent with the terms and conditions of the proposed new Lease (Attachment C), MOAH will assume all responsibility for the maintenance, repair, upkeep and the cost of capital improvement for the premises at 351 Homer Street during the term of the new lease. Please refer to Appendix A of Attachment A for a copy of MOAH’s 2014 balance sheet. TIMELINE The new lease will go into effect following the expiration of the existing lease between the City and MOAH. City of Palo Alto Page 4 RESOURCE IMPACT At this time there is no budget impact from this report. The City will continue to lease the Property to MOAH at the annual rate of one ($1.00) a year. MOAH is responsible for maintenance and capital projects of the property, garden and the improvements. POLICY IMPLICATIONS Entering into a new Lease Agreement is consistent with policies and programs in the Comprehensive Plan promoting City and non-profit collaboration and the effective provision of community services. ENVIRONMENTAL REVIEW Extension or re-negotiation of an existing lease and agreement is exempt from the California Environmental Quality Act (CEQA) under 15061 of the CEQA Guidelines. Related Staff reports: CMR: 326:91 CMR: 608:93 CMR: 103:92 CMR: 113:94 CMR: 188:92 CMR: 139:94 CMR: 208:92 CMR: 206:94 CMR: 435:92 CMR: 286:94 CMR: 286:94 CMR: 508:95 CMR: 493:92 CMR: 292:96 CMR: 305:93 CMR: 442:97 CMR: 332:93 CMR: 557:03 CMR: 446:93 CMR: 560:93 Attachments:  Attachment A: Letter PAHM to City 2015 Lease Extension (PDF)  Attachment B: City Land and Building Leasing Policy (PDF)  Attachment C: General Terms of the Lease 2016 (DOCX) ATTACHMENT A ATTACHMENT A ATTACHMENT A ATTACHMENT A ATTACHMENT A ATTACHMENT B ATTACHMENT B ATTACHMENT B ATTACHMENT C 1 Terms of the Lease LESSOR: City of Palo Alto TENANT: The Museum of American Heritage, a non-profit benefit corporation. PREMISES: 351 Homer Avenue, Palo Alto, commonly known as the Williams property PURPOSE: The purpose of the lease is to allow the Museum of America Heritage to continue operating a park and museum, open to the public, according to the terms and conditions of the lease. TERM: The term of the lease is 25 years. USES: A. REQUIRED: Throughout the term of the lease, the tenant shall provide the following services and activities: 1. Attention, supervision, maintenance and care of the house, doctor’s office and preservation of the garden, with the house, doctor’s office and garden to be open to the public; 2. Displays and exhibits of mechanical and electrical artifacts and local history; 3. Decent-led and self-guided tours of the displays and exhibits and of the restored house, garden, kitchen and doctor’s office; 4. Workshops, classes and lectures associated with Museum purposes; and 5. All required activities shall be open to the public. B. PERMITTED: In addition to the required uses, the following uses shall also be permitted, but only as incidental to the required uses: 1. Administrative offices and storage space to support the required services, activities and uses above; 2. Fund raising activities only to support the required services, activities and uses, including but not limited to sales of goods and gifts related to the museum use and the hosting of benefits and social activities; and ATTACHMENT C 2 3. Periodic rental of rooms and other portions of the premises by community groups and individuals, but in no event shall such rental be for commercial purposes and in no event shall such rental interfere with or limit the required services, activities and uses as set forth above. C. OPTIONAL: Subject to the prior written approval of the City Manager, the tenant may provide additional service and uses which are ancillary to and compatible with the required uses above. D. PROHIBITED: Any use not authorized herein or in Rhona Williams’ will. CONSIDERATION/RENT: A. MONETARY: One Dollar ($1.00) per year, payable upon execution of the lease and thereafter on each anniversary date of the lease. B. NON-MONETARY: Development and operation of a park and museum consistent with the purpose and causes of the lease, at no cost to the City. SECURITY DEPOSIT: A $10,000 security deposit is required which can be cash, assignment of savings account, certificate of deposit or letter of credit. REQUIRED IMPROVEMENTS TO BE MADE BY TENANT: Driveway repair (Either gravel removal, grading, and asphalt application, or, application of additional crushed rock, leveling, and sealing) Interior hardwood floor restoration  Dry rot repair to both exterior decks and to multiple windows  Exterior painting  Skylight maintenance  Flat roof repair CONSTRUCTION OR ALTERATION BY TENANT: Tenant may not make any changes to the property without prior City review and approval. MAINTENANCE AND REPAIRS: ATTACHMENT C 3 Tenant shall be responsible of all maintenance and repairs in accordance with the City- approved maintenance program to preserve historic features of the house and garden. ASSIGNMENT/SUBLETTING: Any assignment or encumbrance of the lease (with the exception of subletting in accordance with the proposal) must receive prior City approval. TAXES, ASSESSMENTS AND UTILITIES: Tenant shall be responsible for all costs for utilities and taxes and assessments for the property. INSURANCE: The tenant shall maintain insurance meeting the City’s standard requirements for insurance protection. LEGAL BOILERPLATE: The lease terms shall be consistent with the City’s updated lease template.