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HomeMy WebLinkAbout2002-07-15 City Council (3)City of Palo Alto City Manager’sReport TO:HONORABLE CITY COUNCIL 2 FROM:CITY MANAGER DEPARTMENT:CITY MANAGER’S OFFICE DATE: SUBJECT: JULY 15, 2002 CMR: 340:02 MEMORANDUM OF UNDERSTANDING WITH .ART CENTER FOUNDATION TO CREATE. THE. ART CENTER CHALLENGE GRANT-. PRO GRAM RECOMMENDATION Staff recormnends that the City Council approve the Memorandum of Understanding for a public/private partnership with the Art Center Foundation to renovate and expand the Art Center. BACKGROUND At the June 17,City Council meeting, as part of the Council discussion of options for a November bond measure, staff was asked to return to the Council with additional information on two issues related to the City’s proposed commitment of matching funding to the Art center renovation and expansion project. The first involved options for disbursing the City’s matching contribution to the Art Center to facilitate incremental progress on the project; the second was a request for additional information on how the City would provide the-S5 million in matching funds. DISCUSSION Attachment 1 is the Memorandum of Understanding between the City of Palo Alto and the Palo Alto Art Center Foundation which establishes the "Art Center Challenge Grant Program." The MOU stipulates that the City will match deposits made into the fund created by the City on a dollar-for-dollar basis. The City will appropriate $1.0 million per fiscal year, which will be transferred into the fund periodically, to. match funds deposited by the Art Center Foundation. The City has the option of contributing more than $1.0 million in a given year. The City and Art Foundation have the option, should CMR:340:02 Page 1 of 3 circumstances warrant, of renegotiating the agreement if, for example, the City’s financial position makes the $1.0 million annual appropriation difficult in a particular year or if the fundraising campaign extends beyond 5 years. The City and the Art Center Foundation will jointly agree on any project disbursements that will be made from the fund. Staff previously indicated that $2.3 million could be reallocated from the Infrastructure Reserve to serve as matching funds. This. money represents rehabilitation costs in the ten-year Infrastructure Management Plan for Mitchell Park Library, Mitchell Park Community Center, Children’s Library and the Art Center2 The Art Center Foundation has expressed concern about using the $858,000 in the IMP as part of the funding for the renovation and expansion project Since the money was intended to be used for basic repairs for the entire facility, including parts of the facility that may not be involved in the Art Foundation’s renovation and expansion plans. If the amount re-allocated from the Infrastructure Reserve is reduced by $858,000, this would leave approximately $1.5 million to be committed to the public/private partnership: ~rhe remaining $3.5 million to make up the $5 million commitment to the public/private partnership can be made available by reallocating other funds in IMP. The IMP included $21.6 million for street work~. Of this, $800,000 per year was allocated from the General Fund as part of the commitment related to passage of the Utility Users Tax and the remainder was to come from the Infrastructure Reserve. Over the past 3 years of the Infrastructure Plan implementation; the City’s annual commitment to street repair and resurfacing has been substantially augmented by one-time funding from Measure A&B monies ($2.5 million) and County TEA-21 funds ($1 million). That additional outside funding has enabled theCity to significantly accelerate the work that has been don.e for street repair. Staff believes it is appropriate to recognize the $3.5 million in street work paid for by state and county dollars as part of the overall commitment to citywide infrastructure work for.streets and to re-allocate the $3.5 million within the IMP from street repair to the Art Center commitment. ~rhe combination of the re-allocated rehabilitation costs for the community facilities that will be debt financed if the bond measure, is successful and the street repair funds provided by other agencies will offset the $5 million matching commitment to the Art Center Foundation. POLICY IMPLICATIONS This recommendation is consistent with existing City policy. CMR:340:02 Page 2 of 3 Prepared By: City Manager Approval: .Frank Benest, Cit~ Manager Attactiment 1"Memorandum of Understanding Between the City of Palo Alto and the Palo Alto Art Center Foundation which establishes the "Art Center Challenge Grant Program." CMR:340:02 Page 3 of 3 ATTACHMENT i MEMORANDUM OF UNDERSTANDING BETWEEN THE CITY OF PALO ALTO AND THE PALO ALTO ART CENTER FOUNDATION ESTABLISHING THE ART CENTER IMPROVEMENT FUND This MEMORANDUM OF UNDERSTANDING ("MOU") is entered into this day of , 2002, by and between City of Palo Alto and Palo Alto Art center Foundation, a California nonprofit corporation, hereinafter referred to as "City"and "Foundation." A. City owns and operates the Palo Alto Art Center located at 1313 Newell Road. B. Foundation is a private, non-profit ormanization founded in 1973 to advise and support the Palo Alto Art Center. C. City and Foundation wish to fund renovation of and improvements to the Palo Alto Art Center in order to expand and enhance the opportunities for exhibitions, teaching programs for children, and community involvement with the arts. D. City and Foundation wish to cooperate in the creation and administration of a privately donated fund in order to leverage City capital improvement funds by matching private donations collected by Foundation. E. Foundation wishes to assist in the passage of one or more bond measures intended to secure voter approval of funding for Palo Alto library and community service facilities. NOW, THEREFORE, City and Foundation agree as follows: i. City will establish a fund in order to receive, hold and account for capital improvement funds for the Palo Alto Art Center. The fund will be known as the Art Center Improvement Fund ()’Fund"). 2. Ciny will receive and deposit into the Fund private donations collected by Foundation and paid by Foundation to City° City will use such private donations, and any interest earned on such private donations, solely for capital improvements to or renovation of the Palo Alto Art Center. 3. City will. also .deposit into the f.und monies appropriated by City to match the private donations collected and paid by Foundation. City commits to appropriate at least $i,000,000~00 (One Million Dollars) per fisca~ year for capital 02071] spc 0053074 improvements to or renovation of the Palo Alto Art Center. City will make its ~matching deposits to the Fund periodically, but no less often than needed to match each $!00,000.00 (One Hundred Thousand Dollars) paid by Foundation or once per fiscal year if less than $i00,000.00 has been paid by Foundation. City need not, but may, match Foundation payments of more than $i,000,000.00 (One Million Dollars) in any fiscal year, provided that City will match Foundation payments of more than $i,000,000.00 in any fiscal year if appropriations from prior fiscal years have not been fully matched by prior Foundation payments. City will continue to match the private donations ¯ until the earlier of either reaching a total of $5,000,000.00 (Five Million Dollars) in City deposits, or the fifth anniversary of the Effective Date of this MOU, unless this MOU is extended as provided below. 4. City and Foundation will cooperate through all available means, including but not limited to addenda to this MOU, to identify and develop opportunities for improvements to or renovation, of the Palo Alto Art Center. City’s city manager shall have the authority to enter :into operating memoranda that implement this MOU. City will retain the sole power and responsibility to determine which improvement or renovation projects may. proceed, but City will use ;its best efforts to cooperate with F0undatfon in determining which improvements or . renovations to undertake and the timing of such activities: If in any. fiscal year City is.unable to make the appropriations or deposits contemplated by this MOU, City and Foundation will meet and in good faith attempt to negotiate and implement financially feasible alternatives. 5. This MOU will become effective on January i, 2003 ("Effe6t&ve. Date") unless City fails~ for any re.ason to obtain. voter approval for a bond measure or measures at the election conducted on November 5, 2002, in which case this MOU will not . become effective. This MOU will remain in force and effect until December 31, 2007, and it will be automatically extended for successive one year periods, after that date and until City has made .$5,000,000.00 in deposits, unless either City or Foundation give notice to the other party of its desire not to extend, in which case. :it will. terminate on December 31 of the year in which such notice is given. Notwithstanding termination of this MOU, City will use private donations, and any interest earned on such private donations, solely for capital improvements to or renovation of the Palo Alto Art Center. 6. City and Foundation will each have the mutual right to audit the financial records of the other party with 2 020711 apc 0053074 respect to the collections, deposits and funds con’templated by this HOU. IN WITNESS WHEREOF, the parties have executed this agreement on the date and year first above written. CITY OF PALO ALTO PALO ALTO ART CENTER FOUNDATION Vic Ojakian Hayor Carolyn Tucher President ATTEST:AUTHORIZED BY RESOLUTION OF THE FOUNDATION BOARD City Clerk APPROVED AS TO FORM: By Ariel Pierre Calonne City Attorney 020711 ape 0053074 3