HomeMy WebLinkAbout2001-03-19 City CouncilCity of Palo Alto
City Manager’s Report
TO:
FROM:
DATE:
SUBJECT:
HONORABLE CITY COUNCIL
CITY MANAGER DEPARTMENT:
MARCH 19, 2001
AMENDMENT NUMBER
ADMINISTRATIVE
SERVICES
CMR:156:01
ONE TO SUBLEASE WITH SANTA
CLARA VALLEY TRANSPORTATION AUTHORITY (VTA) TO
PROVIDE .FOR IMPROVEMENTS TO UNIVERSITY AVENUE
DEPOT, 95 UNIVERSITY AVENUE
RECOMMENDATION
Staff recommends that Council approve the attached Amendment No. 1 to the lease
between the City of Palo Alto and VTA for the University Avenue Depot. The
amendment provides for a one-time reduction in rent equal to which ever is less: two
years rental or $195,359, in exchange for improvements to the Depot.
BACKGROUND
On July 31, 1981, Stanford and the City amended the E1 Camino Park Lease to add the
University Avenue Depot and 2.5 acres of land to the Leased area. Simultaneously, the
City and VTA (formerly the Santa Clara County Transit District) entered into a thirty-two
year sub-lease of the 2.5 acres of land and the Depot, with the VTA assuming all the
City’s responsibilities under the amended El Camino Park lease, including rent and taxes.
VTA used the 2.5 acres of land to create the University Avenue bus transit center. The
current terms of the sub-lease require VTA to pay an annual rental, which is adjusted
.according to the Consumer Price Index (CPI) and each 5th year by its appraised value.
The current annual rent is $94,531, which is equal to the rent that the City pays Stanford
for the Depot.
The sub-lease with VTA requires the VTA to be responsible for all maintenance for the
bus terminal and the depot. The VTA removed its ticket agent from the depot and its
current use is limited to 24 hour access to the restro0m by the bus drivers and morning
use of the restroom by bus passengers.
CMR: 156:01 Page 1 of 4
In 1995, architect Gil Sanchez, FAIA, prepared a historic survey and. a conditional
assessment for the Depot.. The building has deteriorated over the years, and there were a
numb+r of items identified in Mr. Sanchez’s assessment that need to be addressed in
order to historically preserve the building, meet current code requirements and improve
the general condition of the building. Mr. Sanchez estimated that the cost to make all of
the improvements would be about $908,000. The VTA has limited funds available for
historic restoration given other priorities and its limited use of the building. In fact, the
VTA is requesting that the City take back the Depot portion of its lease once the
rehabilitation work has been completed.
DISCUSSION
In a letter dated December 16, 1999, Peter Cipolla, VTA General Manager, suggested the
possibility of applying for the Federal Transit Administration Transit crdaancemcnt funds
if the City and Stanford could provide the 20 percent matching funds ($195,359). It was
also suggested that the City’s and Stanford’s contribution be made by waiving the rent for
.two years in an amount that would be nearly equal to the 20 percent match. This would
allow the VTA to use the funds budgeted for rental payments to make the 20% match.
The rent Stanford charges the City is equal to the amount that the City charges the VTA;
therefore, the City and Stanford would share equally in the cost; the City, by waiving the
rent the VTA would normally pay to the City for a one year period; and Stanford, by
waiving the rent that the City would pay to Stanford for a .one year period; and City
would also waive the rent paid by the VTA for the second year. Stanford has agreed to
waive the second year’s rent.
The City has already paid the rent due to Stanford for fiscal year 2000-2001. The VTA,
in anticipation of the proposed rent waiver, has not paid its rent this year. Staff proposes
to address the second year waiver of rent by Stanford and the loss of revenue from the
VTA as part of the 2001-2002 budget process. Waiver of the rent by the City and
Stanford would be subject to the condition that the VTA actually receive the FTA grant
funding.
Staff does have some concerns with regard to the VTA’s request that the City take back
responsibility for the Depot once the restoration is complete. The main concern is taking
on a portion of the annual rent, the cost of janitorial and maintenance. The VTA is
currently responsible for maintenance and janitorial at the Depot. The VTA estimates that
the restoration will take at least two years to complete. Staff recommends that the
Council wait until the restoration is complete and staff can provide accurate estimates on
the costs associated with maintaining the Depot before a final decision is made for the
City to take on this facility.
ALTERNATIVES TO STAFF RECOMMENDATION
If Council chooses not to allow for the rent reduction, improvements to the depot will
continue on a piecemeal basis as resources are made available.
CMR: 156:01 Page 2 of 4
RESOURCE IMPACT
VTA’s rent for Fiscal Year 2000-2001 and 2001-2002 is estimated to bc about $192,855,
slightly less than the 20 percent local match for the grant. It is anticipated that the VTA
will make up any adjustment. Approval of the attached amendment to the City’s sublease
with VTA to provide the rent reduction will result in a decrease in revenues for fiscal
year 2000-2001 and 2001-2002 of approximately $192,855. This is a one-time loss of
revenue. Since revenues are not appropriated in thesame manner as expenditures, no
¯Budget Amendment Ordinance is required at this time. The City anticipates returning to
Council with an amendment to the E1 Camino Park lease waiving the rent payment to
Stanford for fiscal year 2001-2002. Waiver of the rent to be paid Stanford will be noted
in the 2001-2002 budget documents.
POLICY IMPLICATIONS
Improvements to leasehold premises by the tenants in exchange for a reduction in rent
have been approved by Council in the past, the most recent being the exterior painting at
Cubberley by Foothill College.
ENVIRONMENTAL REVIEW
The improvements to be made at the depot are exempt from the provisions of the
California Environmental Quality Act (CEQA), pursuant to Section 15301 of the CEQA
guidelines.
ATTACHMENTS
Attachment A:
Attachment B:
December 16, 1999 letter from Valley Transportation Authority
Amendment No. 1 to Valley Transportation Authority
CMR: 156:01 Page 3 of 4
PREPARED BY:
WILLIAM W. FELLMAN
Manager, Real Property
DEPARTMENT HEAD APPROVAL:
Director, j~dministrative Services
CITY MANAGER APPROVAL:
HARRISON
Assistant City Manager
cc: VTA
Facilities Management
CMR: 156:01 Page 4 of 4
~ATTACHMENT A
SANTA CLARA
Volley Transportation Authority
December 16, 1999
Ms. June Fleming, City Manager
City of Palo Alto
250 Hamilton Avenue
Palo Alto, CA 94301 ’
Over the past few years, the City Of Palo Alto and VTA have worked cooperatively to
improve the Palo Alto Depot and the adjacent transit facilities. VTA completed a
painting project for the depot,, began planning for a new transit center and developed
several Caltrain projects that will bring additional service and improvements to the
station. Palo Alto has opened the bike station, improved signage and pursued cleaning
up the tunnels. However, the long needed major renovation of the depot building has
been delayed until sufficient funding could be .identified.
The VTA ha~ recently ,d.eve.loped aset of ~r0jedts for our, grant a.-Ppiicatious tothe
Federa~"Transit A~~fion: ,(FrA). One categorY of funds.is called Transit
Enhan~:~ments. These funds argto beused forprojects that typically donot receive FI’A
funding,, yet contribute to the overall environment at transit stations. Historical .
renovations, landscaping, urban upgrades and other similar projects typically rece2,ve this
funding.
After reviewing transit needs throUghout Santa Clara County,.we determined that a
m~jor.renovation of the PaSoAlto Depot would be an appropriate candidate project. On
December 3, VIA staff met with Bill Fellman, the City’s Real Estate Manager and Our
long time contact for depot matters..We proposedthat VTA re, commend to.the VTA
Board ¯of Directors that the Depot Renovation be includedin our grant submittalto the
FlA. We als0 discussed whether the City of Palo Alto could provide the local match for
this project. ETAiprovides 80% of the project expenses with a 20% local match.
Currently there is $781,434 in lVI’A funds available for this project, that would require a
local match of $195,359 for a total amount of $976,793. Mr. Fellman indicated that this
approach seemed reasonable and requested that VTA send a letter to you to formalize ’
the request~ ~
Th.e..opp0rtunity to obtain the.necessarYi0.c~ funds from Stanford and City sources was
discussed. Mr.Felhhan m_enti’0n.ed ..that the City could also pursue having Stanford waive
t~0 tot three years of the l~asgamoun~ that VTA pays for the rent on the t~an~itcenter
and the d~p0t:.~.The resultant sa..vings to VTA would then be used by VTA to provide the
necessary local match~
3331 North First Street. San Jese~ CA 95134:1906. Administration 408.321.5555. Customer Service 408.321.2300
It was also suggested and agreed upon by our staffs that at completion of the renovation
project, the Depot should be removed from.the lease VTA has with the City. This has
been a long staading desire of VTA. The City would then have complete local control
over the Depot and its future.
We will be seeking approval fo.r our FI’A grant programming from the VTA Board of
Directors at the December 16 Administration and Finance Committee meeting and then
at the full Board meeting on January 6. WhileI realize that a firm commitment from the
¯ City in this time frame may not be possible, I would like to get your indication that this
course of action has merit.
Please contact me at your earliest convenience at (408)321-5559. Jim Pierson, Director
of Planning aud Development at (408) 321- 5757 or Jim Unites, Operations Planning
Manager at (408)321-7032 can also be contacted for.further details on-this project.
Thank you for consideration of this request that can achieve goals that both our
organizations have for the Palo Alto Depot.
Sincerer. ¯
Peter M. Cipolla
General Manager
Jim Unites, VTA
Attachment B
AMENDMENT NO.1
TO SUBLEASE BETWEEN CITY OF PALO ALTO AND SANTA CLARA VALLEY.
TRANSPORTATION AUTHORITY FOR UNIVERSITY AVENUE TRAIN DEPOT
AND RELATED TRANSPORTATION FACILITY
This Amendment No. 1 to the sublease ("Lease") between the City of Palo Alto.
("LESSOR") and the Santa Clara Valley Transportation Authority ("TENANT"), is made and
entered into this __ day of ,2001.
RECITALS
¯WHEREAS, On July 31, 1981, LESSOR and TENANT entered into a Sublease
agreement ("Lease"), under which LESSOR subleased to TENANT certain property (the
"Demised Property"), owned by Stanford University (the "University") and leased by the
University to Lessor, in order to provide for the rehabilitation of the University Avenue historic
train depot ("Depot") and to provide for a commuter transfer facility and other transit related
activities, as are more particularly described in the Lease.
WHREAS, TENANT is prepared to commence construction of the rehabilitation
and improvements to the Depot, as described in the Lease.
WHEREAS, Section 5 of the Lease requires TENANT to pay an annual rental,
which for the fiscal year 2000-2001 is $94,537 and rental for fiscal year 2001-2001 is estimated
to be $98,312.
WHEREAS, TENANT has requested that rental be-waived for fiscal years 2000-
2001 and 2001-2002 so that funds otherwise budgeted for rental payment can be used by
TENANT to meet 20% local matching funds, in order to qualify for a Federal Transit
Administration Transit (FTA) Enhancement Grant, which would be used to finance the work on
the Depot.
WHEREAS, LESSOR and TENANT agree it is appropriate that TENANT’s rent
be waived for fiscal years 2000-2001 and 2001-2002, and that TENANT apply for FTA
Enhancement Grant Funding and use its budgeted rental payment funds for improvements to the
Depot.
NOW, THEREFORE, in consideration, of their mutual covenants, the parties
hereto agree as follows:
SECTION 1. Section. 5 A-1 is hereby added to the Lease, to read as follows:
"A-1. Base Rent for Fiscal Years 2000-2001 and Subsequent Years.
Attachment B
Fiscal Years 2000-2001 and 2001-2002. LESSOR agrees that TENANT may skip the
Base Rent payment for Fiscal Year 2000-2001, which has beencalculated to be $94,531 and-for
Fiscal Year 2001-2002, which amount has not yet been calculated, up to a maximum rental
waiver for the two fiscal years of $195,359, subject to the following conditions: (i) that
TENANT apply rental fimds towards a required 20% local match necessary to obtain a grant of
Federal Transit Administration Transit Enhancement Funds; (ii) that if the grant is approved,
TENANT shall use the grant funds to improve the University Avenue Depot; and (iii) that if the
grant is not approved, TENANT shall pay to LESSOR the actual amount of rent otherwise due."
SECTION 2. Except as herein modified, all other provisions of and exhibits to the sub-lease shall
remain in full force and effect.
IN WITNESS WHEREOF, the parties hereto have executed this Amendment the day and year
first above written.
CITY OF PALO ALTO
SANTA CLARA VALLEY
TRANSPORTATION AUTHORITY,
Assistant City Manager
APPROVED AS TO FORM:
By:
Its:
Senior Assistant City Attomey
APPROVED:
Director of Administrative Services