HomeMy WebLinkAboutStaff Report 14500
City of Palo Alto (ID # 14500)
City Council Staff Report
Meeting Date: 8/1/2022 Report Type: Consent Calendar
City of Palo Alto Page 1
Title: Approval of Amendment Number 2 to Lease between Ada's Cafe and
City of Palo Alto for the Community Center Cafe at Mitchell Park for 5 Years
at $500.00 per Month on January 1, 2023 with Annual 3% Increases
Thereafter
From: City Manager
Lead Department: Administrative Services
Recommendation
Staff recommends that the City Council authorize the City Manager to execute the attached
Amendment Number Two to the Lease between City of Palo Alto and Ada’s Café for the
Community Center Cafe at the Mitchell Park Center located at 3700 Middlefield Road. The
amendment retroactively extends the term of the lease for five years from December 6, 2019
to December 5, 2024 at a base rent of $500.00 per month beginning on January 1, 2023, subject
to annual 3% increases every January 1st thereafter.
Background
On February 6, 2012, the City Council approved a lease agreement with Ada’s Café for a portion
of Mitchell Park Library and Community Center at 3700 Middlefield Road for a five year term
with one five year option to extend (CMR 2398). The City Council adopted Amendment Number
One to the lease with Ada’s Café on December 15, 2014 to modify the term and reimburse
Ada’s Café for expenses related to completion of Mitchell Park Library and Community Center
(CMR 5401). The original term of the lease expired on December 5, 2019. The City has not
received rent from Ada’s Café since mid-2018, and has worked with Ada’s through a number of
financial difficulties. Ada’s Café rent due has been $650.00 per month commencing on
December 6, 2014 with annual CPI increases. The total rent from July 2018 through the
expiration of the original term, based on the terms of the original lease, is $12,395.43. On
January 22, 2020, Ada’s Café notified the City that it desired to retroactively renew the lease for
an additional five years commencing on December 6, 2019 and expiring on December 5, 2024.
Discussion
Due to rising labor costs and impacts from the COVID-19 pandemic, Ada’s Café is requesting
rent forgiveness for the period from July 1, 2018 through December 31, 2022. In response, staff
has negotiated an amendment to the lease to modify the terms of the agreement with the
significant terms listed below. The agreement recognizes the community benefit of the café
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amenity to Mitchell Park users, Ada’s Café’s nonprofit status and their service to the
community, including dedication to hire, train, and empower people with disabilities. Key
terms of the agreement include:
1. Ada’s will continue to have exclusive access to the approximate 533 square foot
Community Center Café and the roughly 45 square foot storage room at the Mitchell
Park Community Center, along with non-exclusive access to use approximately 600
square feet of outdoor space adjacent to the Café.
2. Ada’s Café will need to obtain the prior written consent from the City’s Community
Services Department Director or their designee for non-exclusive access to use the
Property’s Catering Kitchen from 4:00 am to 8:00 am, as available.
3. Rent will be retroactively adjusted to $1.00 per year starting on July 1, 2018 through
December 31, 2022, for a total of $5.00 during this period to be paid by Lessee upon its
execution of the amendment. Starting on January 1, 2023, the rent will adjust to
$500.00 per month, subject to annual 3% increases every January 1st.
Timeline
Upon full execution of the amendment, the term of the lease will be retroactively extended for
five years from December 6, 2019 to December 5, 2024.
Resource Impact
The rent in the original lease was $650.00 per month, subject to annual CPI adjustment, and
Ada’s Café would also be charged $250 per month for shared used of the catering kitchen. The
proposed amendment retroactively adjusts the rent to $1.00 per year starting on July 1, 2018
through December 31, 2022. Starting on January 1, 2023, the rent will adjust to $500.00 per
month, subject to annual 3% increases every January 1st. Under this amendment, there will be
no charge to use the catering kitchen during the hours of 4:00 am to 8:00 am, upon the City’s
approval. This new lease will not significantly impact budgeted revenue estimates in FY 2023, so
no adjustments are necessary; however, staff will incorporate revenue estimates from the new
lease into the development of the FY 2024 budget.
Policy Implications
The proposed amendment is consistent with Policy and Procedures 1-11, Leased Use of the
City’s Land/Facilities. Ada’s Café provides non-monetary public benefits to the citizens and
taxpayers of Palo Alto by demonstrating the value of community through hiring and training
adults with disabilities and empowering their employees to learn new skills and live
independently. It should be noted that the City Council will soon consider recommendations
from the Policy & Services Committee regarding the City Auditor’s audit of non-profit
agreements. Implementation of audit recommendations may place additional obligations on
the City and Ada’s Café in the future.
Stakeholder Engagement
The City and Ada’s Cafe collaborated on development of the amendment.
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Environmental Review
This does not constitute a project for purposes of the California Environmental Quality Act
(CEQA).
Attachments:
• Attachment A: Amendment Number Two of Lease Between the City of Palo Alto and
Ada's Cafe
Page 1 of 5
AMENDMENT NUMBER TWO
TO LEASE BETWEEN CITY OF PALO ALTO AND
ADA’S CAFÉ FOR THE
CAFÉ SPACE AT MITCHELL PARK LIBRARY AND COMMUNITY CENTER
This Amendment No. 2 (this “Amendment”) to the Lease Between the City of
Palo Alto and Ada’s Café dated March 12, 2012 as amended by Amendment No. 1 to Lease
dated December 6, 2014 (collectively, the “Lease”), is made and entered into on
______________, by and between the CITY OF PALO ALTO, a California municipal
corporation of the State of California (“City”), and ADA’S CAFÉ, a 501(c)(3), non-profit
California corporation (“Lessee”).
RECITALS
WHEREAS, the original term of the Lease expired on December 5, 2019; and
WHEREAS, the City has not received from Lessee any Monthly Rent due since July 1,
2018; and
WHEREAS, on January 22, 2020, Lessee notified City that Lessee desires to
retroactively renew the Lease for an additional five (5) years commencing December 6, 2019 and
expiring on December 5, 2024; and
WHEREAS, due to Lessee’s rising labor costs and impacts from the COVID-19
pandemic, as well as to recognize Lessee’s nonprofit status and dedication to hire, train, and
empower their employees with disabilities, Lessee desires from City rent forgiveness for the
period from July 1, 2018 through December 31, 2022 and modification of Monthly Rent to
$500.00 commencing January 1, 2023; and
WHEREAS, the Parties mutually agree to retroactively renew the Lease for an additional
five (5) years, pursuant to Section 2.2 of the Lease, effective December 6, 2019 and expiring on
December 5, 2024, to continue providing food and beverage service to visitors of Mitchell Park
Center and the surrounding area.
NOW, THEREFORE, in consideration of their mutual covenants, the Parties hereto agree
as follows:
Item 1. Section 1 (“Premises”) of the Lease is hereby amended in its entirety to read as
follows:
“1. PREMISES.
City hereby leases to Lessee, the approximate five hundred thirty-three (533) square
foot Community Center Café and the approximate 45 square foot storage room
(herein the “Premises”) located within the Mitchell Park Center at 3700 Middlefield
Road, Palo Alto, CA (herein the "Property"), and more particularly described in
Exhibit A attached hereto and incorporated herein by reference. Lessee accepts the
Premises “as-is” on the date of execution of this Lease.”
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Item 2. Section 2.3 (“Termination”) of the Lease is hereby amended in its entirety to read
as follows:
“2.3 Termination.
City or Lessee may terminate this Lease upon on hundred twenty (120) days written
notice.
Item 3. Section 3.1 (“Monthly Rent”) of the Lease is hereby amended in its entirety to
read as follows:
“3.1 Rent.
The Rent to be paid by Lessee, shall be as shown below without deduction or offset.
Period Rent
1st Day of Retail Operations –
6/30/2018
$650.00 per month, subject to annual CPI
adjustment on each anniversary of the
Delivery Date. The local CPI for the
quarter ending prior to the lease date is
established as the base index.
7/1/2018 – 12/31/2022 $5.00, to be paid by Lessee upon its
execution of this Amendment
1/1/2023 – 12/5/2024 $500.00 per Month, subject to annual 3%
increases every January 1st.
Rent shall be payable on the first day of each and every month commencing on the first
(1st) day of retail operations, unless otherwise noted, at a place (or places) as may be
designated in writing from time to time by City. For the purposes of this provision, the
first month of retail operations means the first day that Lessee began providing service
to the public.”
Item 4. Section 3.2 (“Annual Increase”) of the Lease is hereby amended in its entirety to
read as follows:
“3.2 Reserved.”
Item 5. As of the effective date of this Amendment, Exhibits A and D are replaced in their
entirety with the Exhibits A and D in this Amendment.
Item 6. Except as herein modified, all other provisions of and exhibits to the Lease shall
remain in full force and effect.
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IN WITNESS WHEREOF, the parties hereto have executed this Amendment the day and
year first above written.
City: CITY OF PALO ALTO Lessee: ADA’S CAFÉ
_________________________ By:_____________________________
City Manager
Its:_____________________________
APPROVED AS TO FORM:
_________________________
Assistant City Attorney
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Executive Director and Founder
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EXHIBIT A
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EXHIBIT D
OPERATIONAL REQUIREMENTS
1. Catering Kitchen: Lessee shall obtain the prior written consent from the City’s
Community Services Department Director or their designee for non-exclusive access to use the
Property’s Catering Kitchen from 4:00 a.m. to 8:00 am, as available and as approved and
scheduled at the sole discretion of the Mitchell Park Community Services Department Director
or their designee. The consent by City to use the Catering Kitchen shall not constitute a consent
to any subsequent or successive use by Lessee. The City shall attempt to allow Lessee use of the
Catering Kitchen from 4:00 a.m. to 8:00 a.m., but, there may be rentals of the space that will
require exclusive use of the kitchen so will not be available to Lessee. The Parties will jointly
develop guidelines to address such shared use. Additional use outside of the designated use
period of 4:00 a.m. and 8:00 a.m. shall be billed according to the non-profit hourly room rate
adopted in the Palo Alto Municipal Fee Schedule. Lessee will maintain and clean the kitchen
after each use and leave it ready for use by other authorized users.
2. Patio Space: Lessee shall have non-exclusive access to use approximately six hundred
(600) square feet of outdoor space adjacent to the Community Center Café for food and beverage
service and customer dining. Such use shall not interfere with any access to the Center and any
outdoor furniture shall be consistent with the City’s planned finishes. Lessee may place up to
twenty one (21) tables with forty seven (47) chairs as well as heaters, sunshade umbrellas and
similar customer service equipment in the patio area and to store such equipment outdoors in
accordance with City approval and in accordance with all applicable laws and regulations. Any
expansion of use of the patio or courtyard with tables and chairs for Ada’s customers will be
subject to review and the prior written approval of the Community Services Department Director
or their designee on a weekly basis. The City’s approval for one week shall not be deemed to
render unnecessary the obtaining of City’s approval of any subsequent expansion of use of the
patio or courtyard. City shall have the right, in City’s sole discretion, from time to time, to make
changes to the size, shape, and location the patio space. The City shall have the right, from time
to time, to develop, modify, and enforce guidelines at City’s sole discretion for the use of such
outdoor space and Lessee’s approval to use such space shall be subject to such guidelines. City
shall not be responsible to Lessee for the failure of other persons complying with the guidelines.
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