HomeMy WebLinkAboutStaff Report 2303-110813.Approval of Tenant Work Letter for Lease of 300 Homer Avenue Roth Building between
the City of Palo Alto and the Palo Alto Museum; CEQA Status--Not a Project
City Council
Staff Report
From: City Manager
Report Type: CONSENT CALENDAR
Lead Department: Administrative Services
Meeting Date: April 17, 2023
Report #:2303-1108
TITLE
Approval of Tenant Work Letter for Lease of 300 Homer Avenue Roth Building between the City
of Palo Alto and the Palo Alto Museum; CEQA Status--Not a Project
RECOMMENDATION
Staff recommends that the City Council approve and authorize the City Manager or their
designee to execute the Tenant Work Letter, Exhibit D to the lease agreement by and between
the City of Palo Alto and Palo Alto History Museum to rehabilitate the Roth Building to “Warm
Shell” condition.
EXECUTIVE SUMMARY
The Tenant Work Letter is the third and final necessary document for construction to begin the
Roth Building rehabilitation. Staff and the Museum have finalized the Tenant Work Letter to
define the parties’ respective funding contributions and roles and responsibilities during
construction. Both parties acknowledge that construction costs will continue to change and
therefore acknowledge that the total project cost will increase, however, the federal earmark
of $3 million is expected to support the rehabilitation and restoration of this facility and assist
in ensuring the project is funded. The Museum most recently estimated construction to
commence in May 2023 and expects to open its doors to the public at the end of 2024 or early
2025.
BACKGROUND
At the December 12, 2022 meeting (Item 6 – CMR 15017)1, the Council approved the lease and
license agreement with the Palo Alto Museum for the Roth Building at 300 Homer Avenue.
Those two documents have been executed and the Palo Alto Museum has assumed
responsibility for the property. The parties mutually agreed to the extension of the lease term
requiring the completion of the Tenant Work Letter within 60 days of completion of the lease
agreement. All documents remain in full effect.
1 https://www.cityofpaloalto.org/files/assets/public/agendas-minutes-reports/agendas-minutes/city-council-agendas-
minutes/2022/20221212/20221212pccsm-amended-linked.pdf
ANALYSIS
The Tenant Work Letter (Attachment A) is the third and final document and is now before
Council for consideration. The Tenant Work Letter for the Roth Building Warm Shell
rehabilitation, referenced as Exhibit D to the Lease Agreement, sets forth the terms and
conditions for planned Phase 1 “warm shell” rehabilitation of the building and capital
improvements to the site, including project funding. Below is a summary of selected terms
included and recommended for approval in this item. The agreement, containing the full terms
and conditions, can be found in the attachment. This document was delayed as the Museum
and staff worked with the Federal government in the requirements for the $3 million federal
earmark secured by Congresswoman Eshoo. This grant is a critical funding source to ensure this
project can proceed and parties have worked to meet the requirements and adjusted terms
and conditions to provide sufficient time for these funds to be made available.
Summary of Selected Terms Included in Tenant Work Letter:
•Communications:
o Museum will keep the City updated on progress and significant developments by
informal communication in addition to scheduled meetings and reports
o Museum will provide a weekly written report via e-mail summarizing progress
made in preceding week
•Funding:
o City’s contribution of funding from sources such as restricted impact fees and
grant funding is in reliance on the Museum’s commitment to comply with the
applicable conditions associated with those funding sources
o City will contribute $10.02 million – 20% to be deposited after the museum has
provided evidence of required funds/pledges for project construction followed
by periodic disbursements for progress payments by Museum to general
contractor.
o After funds from the City contribution have been exhausted, the museum
anticipates using pledge funding and the Federal HUD funds to pay for remaining
construction costs
▪Museum is solely responsible for complying with HUD grant conditions
and consequences of any failure to comply and the City will make all
reasonable efforts to support the museum in this work.
•Prior to Construction:
o Museum to provide written proof that it has entered into construction contract
with general contractor that meets requirements in TWL
o Museum to obtain all necessary permits and authorizations (the City will
reimburse the museum of permit costs of $100,000)
o Funding schedule to be updated with final Guaranteed Maximum Price contract
amounts
o Project schedule to be updated based on updated construction contract details
•During Construction:
o Museum is solely responsible for construction administration services during
construction and closeout
o Vance Brown will serve as the general contractor; contract will be a guaranteed
maximum price contract and include all subcontracts and a 10% construction
contingency
o All work will be done in accordance with design documents and construction
contract and in compliance with all applicable laws (including City ordinances,
rules, and regulations)
o A preconstruction conference will take place before any work begins on the
project and weekly meetings will continue through construction
FISCAL/RESOURCE IMPACT
The City and the Museum spent significant resources to reach all three agreements. Staff
dedicated significant staffing resources and outside legal support to the negotiation process. A
FY 2023 Mid-Year budget amendment funded the legal contractual services needed to
complete these documents. Under the City’s supervision, the Museum is responsible for
rehabilitating the Roth Building at a total estimated cost of $11.9 million, which is budgeted in
the Roth Building Rehabilitation capital project (PF-23001).
The Tenant Work Letter reflects revised funding allocations which recognize and allocate
additional grant funding from the County of Santa Clara and most significantly, an additional $3
million received through a federal earmark with the assistance of Congresswoman Anna Eshoo.
These federal funds are to be used for the restoration and rehabilitation of the Museum and
will be critical to enabling the completion of this Phase 1 “warm shell” of the project.
STAKEHOLDER ENGAGEMENT
Staff met with representatives of the Museum including their counsel to discuss and negotiate
the Tenant Work Letter terms.
ENVIRONMENTAL REVIEW
Council action on this item is not a project as defined by the California Environmental Quality
Act (CEQA) in that approval of the Tenant Work Letter is a government fiscal activity which does
not involve any commitment to any specific project which may result in a potentially significant
physical impact on the environment. (CEQA Guidelines section 15378(b)(4)).
The rehabilitation and restoration work to the Roth Building is categorically exempt from the
CEQA review in that the work to be performed is limited to maintenance, repair, stabilization,
rehabilitation, restoration, preservation, conservation or reconstruction of historical resources
in a manner consistent with the Secretary of the Interior’s Standards for the Treatment of
Historic Properties with Guidelines for Preserving, Rehabilitating, Restoring, and Reconstructing
Historic Buildings (1995), Weeks and Grimmer. (CEQA Guidelines Section 15331)
ATTACHMENTS
Attachment A: Tenant Work Letter, 300 Homer Ave “ROTH Facility”
APPROVED BY:
Kiely Nose, Assistant City Manager
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TENANT WORK LETTER
FOR
ROTH BUILDING WARM SHELL REHABILITATION
EXHIBIT D
TO
LEASE AGREEMENT
BY AND BETWEEN
CITY OF PALO ALTO
AS LANDLORD
AND
PALO ALTO HISTORY MUSEUM
AS TENANT
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TABLE OF CONTENTS
Recitals ...................................................................................................................................3
Terms and Conditions
1. Definitions and Purpose..................................................................................................4
2. Party Representatives and Relations..............................................................................7
3. Term................................................................................................................................8
4. Project Funding...............................................................................................................8
5. Conditions for Commencement of Project Construction ...............................................11
6. Project Construction......................................................................................................12
7. Maintenance and Repair...............................................................................................17
8. Utility Service ................................................................................................................17
9. Insurance ......................................................................................................................17
10. Damage to Project ........................................................................................................19
11. Project Records.............................................................................................................19
12. Disclaimers....................................................................................................................20
13. Default...........................................................................................................................20
14. Notice............................................................................................................................21
15. Miscellaneous Provisions..............................................................................................21
Attachment A Project Funding
Attachment B Project Schedule
Attachment C Insurance Requirements (Architect)
Attachment D Insurance Requirements (General Contractor)
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TENANT WORK LETTER
FOR
ROTH BUILDING WARM SHELL RENOVATIONS
EXHIBIT D
TO
LEASE AGREEMENT BETWEEN
CITY OF PALO ALTO AND
PALO ALTO HISTORY MUSEUM
This Tenant Work Letter (“Tenant Work Letter”) is made this ___ day of April, 2023
(“Effective Date”), and supplements the Lease Agreement dated December 12, 2022
(“Lease”) between the City of Palo Alto (“City”) and the Palo Alto History Museum
(“Museum”) (individually, a “Party” and, collectively, the “Parties”), in reference to the
following facts and circumstances:
RECITALS
A.Pursuant to the terms of the Lease, Museum is leasing the Premises.
B.The purpose of this Tenant Work Letter is to set forth the terms and conditions
for planned Phase 1 “warm shell” rehabilitation of the Building (the “Project”), including the
terms and conditions for funding Project costs.
C.The Museum has retained the architectural firm Garavaglia Architecture, Inc.
(“Garavaglia”), to develop the design documents, dated October 10, 2008, for construction of
the Project (“Design Documents”), which were submitted for City approval and issuance of a
building permit for construction of the Project.
D.The City issued Building Permit # 16000-03285 on February 26, 2019 for
construction of the Project pursuant to the Design Documents (“Permit”). The Permit was
extended to June 25, 2023.
E.The Museum has retained Vance Brown, Inc., as the general contractor
(“General Contractor”) pursuant to a construction contract dated August 29, 2022, as
amended, to construct the Project pursuant to the Design Documents and as authorized by
the Permit (as amended, “Construction Contract”).
F.Prior to execution of this Tenant Work Letter, the Museum has estimated the
cost to construct the Project based on the Construction Contract’s “Guaranteed Maximum
Price” (“GMP”) of $11,513,075. However, the Museum anticipates that the GMP will increase
prior to commencement of construction on the Project, and this Tenant Work Letter will be
updated prior to Project commencement to reflect the final GMP for the Construction
Contract.
G.The City has agreed to contribute funds derived from various funding sources,
including restricted impact fees and certain grant funding, toward the Museum’s cost to
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construct the Project, as further specified herein, in reliance on the Museum’s commitment to
comply with the applicable conditions associated with those funding sources, as set forth in
the Lease.
H.The City has agreed to provide the City Contribution to apply to payment for
the Construction Cost in reliance on the Museum’s representations that the Museum will have
sufficient additional funds for the Museum Contribution to complete the Project, based on (i)
pledged donations for the Project (“Museum Donations”), and (ii) use of federal Community
Project Funding (“CPF”) grant funds pursuant to written notice from the Department of
Housing and Urban Development (“HUD”) confirming that the HUD CPF Form HUD-7015.15,
"Request for Release of Funds and Certification" has been received by the HUD Community
Planning and Development Western Region Officer.
I. Use of funds from the HUD Grant for the Museum Contribution is subject to
compliance with applicable grant conditions, including those set forth in HUD’s FY 2022
Community Funding Grant Guide (“CPF Grant Guide”), which, among other things, provides
that the provisions of 2 CFR Part 200 apply to all CPF awards, including the procurement
requirements set forth in 2 CFR §200.317-327.
IN CONSIDERATION OF the foregoing and the following covenants, terms and
conditions, the Parties agree as follows:
TERMS AND CONDITIONS
1. DEFINITIONS AND PURPOSE.
1.1 Recitals Incorporated. The foregoing Recitals are expressly incorporated
into this Tenant Work Letter.
1.2 Definitions. Capitalized terms used in this Tenant Work Letter have the same
meaning as provided in the Lease for those terms unless otherwise specified herein. The
following terms used in this Tenant Work Letter, including the Recitals, have the meanings
set forth in this Section 1.2:
“Architect” means the architectural firm retained by the Museum to provide
architectural design services for the Project.
“City” means the City of Palo Alto, a California chartered municipal
corporation, acting by and through its City Council.
“City Agents” means individuals or entities acting within their capacity as duly
authorized agents of the City for the Project, including, but not limited to,
members of the Construction Liaison Team.
“City Contribution” is the amount the City has agreed to contribute toward the
Construction Cost as further detailed in Section 4.2 and Attachment A (Project
Funding).
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“Commencement Deadline” means the date by which construction of the
Project must commence as stated in Section 4.3, including any duly authorized
amendments thereto, if any.
“Conditions Deadline” means the date by which the conditions precedent for
commencement of construction set forth in Section 5 must be met, as further
specified in Section 5.1.
“Construction Contract” means the contract between Museum and the
General Contractor for construction of the Project as stated in Recital E.
“Construction Cost” means the amount the Museum must pay to the General
Contractor to construct the Project based on the GMP in the fully executed
Construction Contract, at the time that Attachment A is revised with updated
construction costs, if applicable, pursuant to Section 5.4, including the costs for
all subcontracts, and including, unless otherwise indicated by the context,
authorized change orders, if any, and the Contingency Funds included in the
Construction Contract.
“Construction Liaison Team” has the meaning provided in Section 2.1.
“Contingency Funds” means the amount set forth in line 44 of Exhibit B
(Schedule of Values) to the Construction Contract, based on 10 % of the total
Construction Pricing, which may be used, if needed, to cover increases in the
cost to construct the Project as further specified in Section 4.4.
“County” means the County of Santa Clara.
“County Grant Agreements” has the meaning provided in the Lease.
“CPF Grant Guide” has the meaning provided in Recital I.
“Design Documents” means the design documents described in Recital C,
including, unless otherwise indicated by the context, any modifications
pursuant to duly authorized change orders.
“Effective Date” has the meaning set forth in the introductory paragraph to this
Tenant Work Letter.
“General Contractor” means the general contractor referenced in Recital E, or
any replacement contractor, if any, approved by the Parties pursuant to
Section 6.3 to construct the Project.
“GMP” has the meaning provided in Recital F, the amount of which is subject
to update prior to commencement of construction pursuant to Section 5.4.
“HUD Funds” has the meaning provided in Attachment A (Project Funding).
“HUD Grant” means the $3,000,000 CPF grant (Consolidated Appropriations
Act, 2022) approved as Grant number B-22-CP-CA-0071.
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“Laws” means all applicable local, state, and federal laws, regulations, rules,
codes, ordinances, permits, orders, and the like enacted or imposed by or
under the auspices of any governmental entity with jurisdiction over the
Project, including labor, health and safety requirements.
“Museum” means the Palo Alto History Museum (aka, the “Palo Alto
Museum”), a nonprofit corporation.
“Museum’s Agents” means individuals or entities acting within their capacity
as duly authorized agents of the Museum for the Project, which includes the
employees and contractors of Museum.
“Museum Contribution” is the amount the Museum has agreed to contribute
to pay for the Project as further specified in Section 4.3 and Attachment A
(Project Funding).
“Museum Donations” has the meaning provided in Recital H and as further
specified in Attachment A (Project Funding).
“PAMC” means the Palo Alto Municipal Code.
“Permit” has the meaning provided in Recital D above, including any City-
authorized amendments or extensions thereto, if any.
“Project” has the meaning provided in Recital B above, and as further
specified in the Design Documents and as authorized by the Permit.
“Project Account” means the account jointly maintained by the City and the
Museum into which the City Contribution will be deposited in specified
increments for the Museum to pay for progress payments for the Construction
Contract until the City Contribution is exhausted.
“Project Representative” means the individual(s) designated by City to serve
as the primary point of contact for communications with the City regarding
Project construction and as further specified in Section 2.1.
“Project Schedule” means the planned time for construction of the Project as
set forth in Attachment B (Project Schedule), which is subject to update prior to
commencement of construction pursuant to Section 5.2.
“Recital” means the recitals set forth at the beginning of this Tenant Work
Letter.
“Section” means a section or subsection of this Tenant Work Letter, unless
otherwise indicated.
“Site” means the area or areas being used for construction of the Project,
including any staging area(s).
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“Tenant Work Letter” means this Tenant Work Letter regarding construction
of the Project.
“Term” has the meaning provided in Section 3.
1.3 Purpose of Tenant Work Letter. The purpose of this Tenant Work Letter is
to provide for the General Contractor’s construction of the Project, including terms and
conditions for funding, change orders, Project completion, and acceptance.
2. PARTY REPRESENTATIVES AND RELATIONS.
2.1 City’s Representatives.
A.Construction Liaison Team. The City’s representatives for
administration of this Tenant Work Letter are the Director of Administrative Services or
his or her designee(s), the Director of Public Works or his or her designee(s), the City
Manager’s Office representative(s), and the Project Representative (collectively, the
“Construction Liaison Team”). The Construction Liaison Team will be the City’s
representative for all purposes of administering and implementing this Tenant Work
Letter, including approval of change orders on behalf of the City, subject to the limits
of authority granted by the City Council. The Construction Liaison Team will be
responsible for efficient coordination of internal City review and approval procedures,
and for direct communications with the Museum’s representative(s) identified in
Section 2.2, below.
B.Project Representative. The Project Representative will be the
Construction Liaison Team’s primary point of contact for routine communications
concerning the Project. The Project Representative will not have independent
authority to accept, reject, direct, or stop work on the Project; to modify the approved
design; or to approve change order requests on behalf of the City. The Project
Representative may attend the pre-construction conference and weekly progress
meetings, and will be present on the Site during construction.
2.2 Museum’s Representative. The Museum’s authorized representative for
administration and implementation of this Tenant Work Letter, including coordination and
direct communications with the Construction Liaison Team, is Richard C. Green, Board
President, or such other person designated by the Museum from time to time.
2.3 Communications.
A.Duty to Update. Beginning one week after the Effective Date, the
Museum will keep the Construction Liaison Team updated on progress and significant
developments concerning Project construction by informal communication in addition
to the scheduled meetings and reports required in this Tenant Work Letter.
B.Pre-Construction Meetings. In addition to the weekly construction
meetings in Section 6.7, prior to commencement of construction of the Project, the
Parties will schedule regular meetings at mutually convenient times, to keep the
Construction Liaison Team informed and updated on the progress of funding the
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Museum Contribution, meeting other conditions for commencement of construction
pursuant to Section 5, and any other pre-construction issues.
C.Weekly Reports. The Museum will submit a weekly written report,
distributed by email to all members of the Construction Liaison Team, summarizing
the progress made during the preceding week, including funding, schedule and cost
updates, and identifying any significant issues or concerns relating to the Project.
3. TERM.
The Term of this Tenant Work Letter will begin upon the Effective Date and will remain
in effect until a notice of completion has been recorded following City acceptance of the
Project, as further specified in Section 6.13, unless the Tenant Work Letter is terminated
sooner pursuant to Sections 5.1 or 13.
4. PROJECT FUNDING.
4.1 Project Costs. The anticipated costs for all work and services to be
performed to construct the Project, including, but not limited to, the Construction Cost, is set
forth in Attachment A (Project Funding), subject to updating pursuant to Section 5.4.
4.2 City Contribution. The City will contribute funds toward the Construction
Cost as further specified in Attachment A (Project Funding), including both direct funding and
reimbursements, and including funds from the County Grant Agreements (collectively, the
“City Contribution”). The City Contribution includes reimbursement of permit and processing
fees from the City’s general fund, as authorized by the City Council on November 15, 2021.
However, Museum is solely responsible for payment of any utility fees that are due and
payable to any of the City’s enterprise funds or any other fund separate from the City’s
general fund. The City Contribution may not be used for any purpose other than the
Construction Cost in accordance with the terms of this Tenant Work Letter.
A.Limitations. Except as set forth in Section 4.4 and Section 6.8 below,
the City Contribution may not be used for additional costs due to changes or additions
to the scope of work set forth in the Construction Contract and Design Documents
unless and only to the extent that the City agrees in writing in advance to contribute to
the added costs resulting from any such added or changed work. The City has no
obligation to provide any funds for the Project in addition to the City Contribution
unless and only to the extent agreed pursuant to Section 4.4(B) below in a writing
memorialized pursuant to Section 15.1.
B.Payment of City Contribution. Within 30 days after the Museum has
provided evidence, to the Liaison Team’s reasonable satisfaction, that the Museum
has sufficient liquid and reliably pledged funds pursuant to Section 4.3, the City will
deposit 20% of the total City Contribution into the Project Account. Thereafter, once
Project construction has commenced, within 30 days after receiving a copy of the
most recent Museum-approved monthly progress payment application from the
General Contractor, the City will deposit the amount approved for the progress
payment into the Project Account for the Museum to draw on to pay the General
Contractor until the City Contribution is exhausted, at which point the Museum will be
solely responsible for paying the General Contractor for its work on the Project.
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C.County Grant Funding. The portion of the City Contribution derived
from the County Grant Agreements will be specifically and solely allocated for the
particular uses specified in each of the respective County Grant Agreements. The
Museum will ensure that all eligible costs that are funded through the County Grant
Agreements are separately invoiced and documented, to ensure compliance with the
requirements of the individual County Grant Agreements.
4.3 Museum Contribution. The “Museum Contribution” will consist of the
amounts set forth in Section 1 of Attachment A, which are intended to be sufficient to
complete construction of the Project after the City Contribution has been exhausted. The
Museum Contribution will include the cost of those utility and permit costs and fees for the
Project that are not expressly waived or reimbursed by the City. The Museum will use
reasonable efforts to obtain contributions from the community in the amount of the Museum
Donations identified in Section 1 of Attachment A in order to commence construction of the
Project (as evidenced by commencement of labor for the Project at the Premises) no later
than 270 days following the Effective Date (“Commencement Deadline”).
A.Evidence of Sufficient Funds for the Museum Donations. Within 90
days following the Effective Date, the Museum will provide evidence satisfactory to the
City that (i) the Museum holds sufficient liquid funds in the amount of at least ninety
percent (90%) of the Museum Donations and (ii) that funds in the amount of the
remaining ten percent (10%) of the Museum Donations have been reliably pledged to
pay for construction of the Project pursuant to the terms of the Construction Contract.
Within six months following the Effective Date, Museum will provide evidence
satisfactory to the City that any such pledged, but unfunded portions of the Museum
Donations have been funded to the Museum and will be available to timely pay the
General Contractor for construction of the Project.
B.HUD Grant Funds and Compliance. The Parties acknowledge that the
Museum Donations alone will be insufficient to pay all costs to complete the Project
after the City Contribution has been exhausted. The Museum represents that it is
authorized to use the HUD Funds to pay for completion of the Project pursuant to the
terms of the Construction Contract, and for Project-related costs, including required
environmental review. Within 270 days following the Effective Date, the Museum will
provide evidence satisfactory to the City that sufficient HUD Funds will be available on
a timely basis to complete construction of the Project after funds from the City
Contribution have been exhausted. The Museum will use commercially reasonable
efforts to satisfy all applicable conditions and requirements of the HUD Grant,
including the requirements set forth in the CPF Grant Guide, so as to enable the HUD
Funds to be available to pay for construction of the Project as soon as reasonably
possible, and, the City will use commercially reasonable efforts to cooperate with the
Museum to satisfy those requirements. The Museum is solely responsible for
complying with the HUD Grant conditions and for the consequences of any failure to
so comply, including additional costs due to delay from failure to timely secure
adequate funding or for penalties or repayment obligations for failure to comply with
the HUD Grant funding conditions, including the applicable requirements of the CPF
Grant Guide and the federal regulations referenced therein. The Museum represents
that the Construction Contract is exempt from the competitive procurement
requirements included in those federal regulations because the Construction Contract
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pre-dates award of the HUD Grant. The Museum will indemnify, hold harmless, and
defend City against any claim, damages, or liability incurred due to any actual or
alleged failure by Museum to comply with the applicable HUD Grant funding
conditions. The Museum’s obligations in this paragraph will survive expiration or
termination of this Tenant Work Letter.
4.4 Contingency Funds.
A.General. The Contingency Funds are solely intended for unforeseeable
increases to the Construction Contract cost that arise after construction commences,
including costs increases that arise during construction due to changes in the work
authorized pursuant to Section 6.8. The Museum will provide an accounting of any
use of Contingency Funds to the City when such funds are used.
B.Insufficient Funds. If the Contingency Funds will be inadequate to
complete the Project following exhaustion of the City Contribution, the Museum will
complete the Project using the remaining funds from the HUD Grant. If, following
exhaustion of the City Contribution, it becomes evident that the combined
Contingency Funds and funds from the HUD Grant will be insufficient to pay for
unforeseen costs that arise before the Project is completed, at the request of either
Party, the Parties will meet and confer in an endeavor to mutually agree on a plan to
address the shortfall and complete the Project in a manner that is consistent with the
objectives of this Agreement, which may include change of Project scope, value
engineering, or other cost saving measures.
4.5 Project Account. Within 30 days after the Effective Date, the Parties will
establish the Project Account at a mutually acceptable financial institution with an office within
the City of Palo Alto. If a minimum deposit is required to establish the account, the City will
provide the necessary amount from the City Contribution. The City will deposit the City
Contribution into the Project Account as further specified in Section 4.2, above, which the
Museum may then draw from to pay for the Construction Contract, provided that the Project is
timely commenced as specified in Section 5, including any mutually agreed extensions to the
Commencement Deadline. Funds in the Project Account may only be used for costs
authorized by this Tenant Work Letter. Any unauthorized use by Museum of City Contribution
funds constitutes a default subject to the terms of Section 13, below.
A.General. The Museum will administer and coordinate the receipt and
disbursement of such funds for all costs and expenses related to the Project,
consistent with the terms of this Tenant Work Letter, including the most current
version of Attachment A (Project Funding). Deposits into and withdrawals from the
Project Account will be made by the Parties in accordance with this Tenant Work
Letter. The cost of the Project Account will be shared equally by the Parties. Any
earnings from the investment of funds in the Project Account, if any, will remain or be
deposited in the Project Account and be applied toward construction of the Project.
B.Investment Limitations. Except to the extent otherwise approved in
writing by the Parties, funds in the Project Account may only be invested in (1)
immediately available funds (cash and cash equivalents), (2) fully insured FDIC
certificates of deposits with daily trading liquidity, or (3) treasury bonds in tranches
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with the objective to hold to maturity and have sufficient liquidity to pay construction
obligations when due.
C.Disbursements. The Museum will promptly provide the Construction
Liaison Team with a copy of each Museum-approved payment application from the
General Contractor, but disbursements from the Project Account for the Museum’s
payments to the General Contractor, will not be subject to prior approval by the City.
D.Closure. The Parties will take action to close the Project Account once
the City Contribution has been exhausted and all proceeds from the City Contribution
paid out from the Project Account.
5. CONDITIONS FOR COMMENCEMENT OF PROJECT CONSTRUCTION.
The Parties recognize that while time is of the essence for commencing work on the
Project, it would be undesirable to commence Project construction before conditions have
been met to ensure successful and timely completion of the Project, including firm contracts,
required permits and authorizations, and adequate funding to ensure the Project can be
timely completed by the Museum after the City Contribution is exhausted. The terms and
conditions set forth in this Section 5 are intended to supplement the general requirements set
forth in Section 12 of the Lease.
5.1 Conditions Precedent to Construction Commencement. Project
construction may not commence until all of the conditions precedent to construction set forth
in this Section 5 have been satisfied. The Museum will ensure that all of the conditions in this
Section have been met to the City’s reasonable satisfaction within 150 days following the
Effective Date (”Conditions Deadline”). The Museum will notify the Construction Liaison
Team in writing when the Museum believes that all of the conditions set forth in this Section 5
have been met. Within 30 days following receipt of this notice, the Construction Liaison Team
will either (i) notify the Museum in writing that the City is satisfied that all of the Section 5
conditions have been met such that construction may commence; or (ii) notify the Museum in
writing identifying any Section 5 conditions that have not been met to the City’s reasonable
satisfaction, such that construction may not yet commence.
A.Conditions Deadline. If the Museum is unable to meet the conditions
set forth in this Section 5 by the Conditions Deadline, the Museum’s Representative
will meet with the Construction Liaison Team to develop a plan for timely
commencement of the Project consistent with the terms and objectives set forth in
Section 3 of the Lease, which may include value engineering, scope reduction,
phasing, or other cost saving measures so that the Project or an amended version of
the Project can be timely completed with available funds.
B.Commencement Deadline. If construction of the Project has not
commenced by the Commencement Deadline (within 270 days following the Effective
Date), this Tenant Work Letter will terminate unless the Parties mutually agree to
extend the Commencement Deadline.
5.2 Construction Contract and Project Schedule. As a condition precedent to
commencement of construction, the Museum will provide written proof to the Construction
Liaison Team that it has affirmed or entered into a completed and up-to-date Construction
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Contract with the General Contractor that meets the requirements specified in this Tenant
Work Letter, including, but not limited to, Sections 6.3, 6.4, 6.7, 6.10, and 9. The written proof
required for satisfying this condition includes delivery of fully executed copies of the final
Construction Contract and subcontract agreements. If needed, the Parties will revise and
update the Project Schedule set forth in Attachment B (Project Schedule) to ensure that it
reflects the most current as-planned schedule available prior to commencement of
construction. The revised Project Schedule will be dated, memorialized pursuant to Section
15.1, and will supersede the original Attachment B.
5.3 Permits and Authorizations. As a condition precedent to commencement of
construction, the Museum will provide written proof to the Construction Liaison Team that in
addition to the Permit, all necessary permits and approvals for the commencement of
construction from any and all agencies having jurisdiction over the Project, including the City,
have been authorized and will remain in effect during construction, including, as applicable,
street opening permits, encroachment permits, utility encroachment permits, and health
permits.
5.4 Project Funding Update. As a condition precedent to commencement of
construction, Attachment A (Project Funding) will be amended to reflect the final GMP for the
Construction Contract and to adjust the amount of the Museum Contribution commensurate
with any adjustment to the GMP. The revised Attachment A will be dated, memorialized
pursuant to Section 15.1, and will supersede the original Attachment A. The Museum has an
ongoing obligation during the Term to promptly notify the Construction Liaison Team in writing
of any increases in the Construction Cost from the amount stated in Attachment A.
6. PROJECT CONSTRUCTION.
6.1 Project Administration. The Museum will be solely responsible for
construction administration services as needed during Project construction and closeout,
including administration of the Construction Contract, review and response to requests for
information, change order proposals, shop drawings, addressing any claims, if any, and
preparation of record documents.
6.2 Architect. The City hereby approves of Garavaglia as the Architect for the
Project. If, for any reason, the Museum wishes to substitute a different firm to serve as
Architect for the Project, the substitution will be subject to the City’s prior written approval of
the proposed firm, which approval shall not be unreasonably withheld.
A.Design Services. The Museum will continue to engage and pay for the
services of its Architect to handle any architectural services needed during
construction of the Project, at the Museum’s sole expense.
B. Insurance. Museum will require the Architect to provide and maintain
insurance coverage, including professional liability insurance, that meets the City’s
standard requirements for design professional insurance as further specified in
Section 9, below.
6.3 General Contractor and Construction Contract. The City hereby approves
of Vance Brown, Inc. to serve as the General Contractor. If the Museum wishes to substitute
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a different contractor to serve as General Contractor for the Project, the substitution will be
subject to the City’s prior written approval of the proposed contractor, which approval shall
not be unreasonably withheld.
A.Construction Contract. The Construction Contract between the
Museum and its General Contractor will provide for a GMP, including the cost for all
subcontracts and the 10% Construction Contingency Funds. The Construction
Contract must also include provisions to ensure the following:
1.No Default. The Construction Contract will provide that the
General Contractor will not take any action or fail to take any action which
would cause the Museum to be in default under this Tenant Work Letter or the
Lease, including, but not limited to, compliance with requirements pertaining to
Site security, and compliance with Laws.
2.Compliance. The Construction Contract will require the General
Contractor to construct the Project as specified in the approved Design
Documents, which must be attached or incorporated therein, and in
accordance with all applicable permits and authorizations. The Construction
Contract will also require the General Contractor to construct the Project in
compliance with applicable Laws, including prevailing wage and Labor Code
requirements.
3.Bond and Insurance Requirements. The Construction Contract
will include all applicable requirements for a payment and a performance bond,
each for 100% of the Construction Cost, using bond forms provided or
approved by the City and in compliance with Laws, including Civil Code
section 9550 and PAMC section 2.30.500. The Construction Contract will also
require the City’s standard insurance requirements applicable to the General
Contractor as further specified in Section 9, below.
4.As-Built Drawings. The Construction Contract will require the
General Contractor to prepare and maintain as-built drawings showing any
changes from or details not shown in the Design Documents, suitable for
preparation of record drawings.
5.Representation as to Form. The Museum represents that the
Construction Contract complies with applicable Laws and the terms of this
Tenant Work Letter, and, as applicable, any funding conditions associated with
the HUD Grant, and the Museum agrees to indemnify, defend, and hold City
harmless against any alleged or actual noncompliance with those
requirements, including, but not limited to, noncompliance with prevailing wage
laws. The Museum’s obligations in this paragraph will survive expiration or
termination of this Tenant Work Letter.
6.4 Compliance. The Museum will require its General Contractor to accomplish all
associated work required to complete the Project in accordance with the Design Documents
and Construction Contract, and to comply with all conditions that are imposed on the Project
during the City’s approval process. The Museum will require its Architect and General
Contractor to ensure that the Project is constructed and completed in accordance with all
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applicable Laws, including City ordinances, rules, and regulations, governing construction
noise, traffic controls, and dust control, as may be set forth in the PAMC and the City’s
Department of Public Works’ Standard Drawings and Specifications for construction projects
and other related construction rules and regulations. The City Contribution will not be
increased to cover any added costs resulting from change order work required for code
compliance requirements that apply generally in the City, unless and only to the extent the
City Council has authorized an increase to the amount of City Contribution for that purpose.
The Museum will require the General Contractor to arrange for the placement of portable
restrooms at the Project Site to the extent required for work to be performed on the Project.
6.5 Access. The Project Representative and City Agents, including City
inspectors, will have reasonable access during normal business hours to the Site during
construction of the Project in order to perform their respective duties following 24 hours prior
notice to the Museum, except in the event of an emergency or for meetings scheduled
pursuant to Sections 2.3.B or 6.7. Any such access shall be subject to the Museum’s and the
General Contractor’s written reasonable security and safety protocols, which will be provided
to the Construction Liaison Team within 30 days following the Effective Date. Nothing in this
Tenant Work Letter will be construed to limit the City’s right to enforce contractual or legal
requirements intended to protect workers, the environment, or public or worker health, safety
and welfare.
6.6 Project Schedule. The Parties’ planned schedule for construction of the
Project is set forth in the Project Schedule, attached as Attachment B (Project Schedule)
hereto, subject to updating pursuant to Section 5.2. Each Party will exercise its reasonable
efforts to perform its respective obligations in a manner to ensure timely completion of the
Project consistent with the Project Schedule to the extent it is possible to do so. The Museum
has an ongoing obligation during the Term to promptly notify the Construction Liaison Team
of any changes or impacts to the Project Schedule that may delay substantial completion (as
set forth in Section 6.11) by two or more weeks.
6.7 Construction Meetings.
A.Pre-Construction Conference. The Parties will schedule a pre-
construction conference to take place before any work begins on the Project. The pre-
construction conference will be attended by the Project Representative; members of
the Construction Liaison Team; other City Agents with responsibilities relating to
construction of the Project; the Museum’s representative; the General Contractor’s
representatives, including the General Contractor’s designated project representative
and superintendent(s); the Architect; the designated inspector(s); and any other
individuals whom the Parties mutually agree should be in attendance. The Project
Representative and the Museum’s representative, in consultation with the General
Contractor, will mutually develop an agenda for the pre-construction conference,
which must include communication protocols to ensure efficient and effective
communications throughout the construction process; safety requirements;
environmental considerations; scheduling; submittals; change order procedures; traffic
management; noise management; security; parking; and authorized staging area(s).
B.Weekly Meetings. In addition, the Parties will schedule weekly
meetings for the duration of the Project, which will be attended by the General
Contractor and each Party’s designated representative(s). The weekly meetings will
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focus on Project progress, including updates on construction, schedule, costs, change
orders, and other construction-related issues, such as changes in design, changed
conditions, inspection, testing, and similar matters. The General Contractor will be
responsible for preparing and distributing agendas and minutes for the pre-
construction conference (based on the agenda developed pursuant to Section 6.7.A)
and the weekly meeting to all meeting participants with copies to the Construction
Liaison Team.
6.8 Change Orders. The Museum may authorize change orders to the
Construction Contract without City approval, except under any of the following circumstances,
each of which requires prior written approval by the Construction Liaison Team:
A.Violation of Lease Requirements for Funding Conditions. The proposed
change would likely have a material adverse effect on the ability of the Museum to
satisfy the required services and uses specified in Section 3 the Lease.
B.Material Scope Change. The proposed change would materially alter
the approved Project scope, including, but not limited to, size, footprint, appearance,
or impact on normal operations and use of Heritage Park.
C.Building Impacts. The proposed change would significantly reduce the
quality, functionality, or life-expectancy of the improvements or constituent
components or the current or future value of the Building.
D.Maintenance Impacts. The proposed change would materially increase
the City’s costs to operate, repair, or maintain the Public Parkside Restroom, or
future cost to operate, repair, or maintain the Building.
E.Conflict. The proposed change would conflict with or be inconsistent
with the provisions or objectives of this Tenant Work Letter, including, but not limited
to, the indemnity and insurance requirements set forth herein.
F.Governmental Approval. The proposed change would require new or
amended governmental approval, including amendments to any required permit(s).
G.Insufficient Funds. The cost of the proposed change would likely result
in insufficient funds to complete the Project as approved, including exhaustion of the
City Contribution, the Contingency Funds, and the HUD Grant funds.
6.9 Contractor’s Licenses. The General Contractor, its subcontractors, and any
other Museum’s Agents who will perform construction work for the Project will obtain and
maintain all current licenses required by the State of California before performing any work on
the Project.
6.10 Prevailing Wages. Each worker performing Work under this Contract that is
covered under Labor Code sections 1720 or 1720.9, including cleanup at the Project site,
must be paid at a rate not less than the prevailing wage as defined in sections 1771 and 1774
of the Labor Code. Pursuant to Labor Code section 1773, the general prevailing rate of per
diem wages and the general rate for holiday and overtime work in this locality for each craft,
classification, or type of worker needed to perform the work for the Project may be obtained
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at the Purchasing Office of the City of Palo Alto. The Contractor must post a copy of the
applicable prevailing rates at the Project site. Before entering into the Construction Contract
to perform work on the Project and at all times while performing work on the Project, the
General Contractor and its subcontractors must be registered with the California Department
of Industrial Relations (“DIR”) to perform public work under Labor Code section 1725.5. All
contractors and subcontractors for the Project must comply with the provisions of Labor Code
sections 1775, 1776, 1777.5, 1810, and 1813. The General Contractor must also comply with
the provisions of Labor Code sections 1771.4, 1776 and 1812 and all implementing
regulations, which are fully incorporated by this reference, including requirements for
electronic submission of payroll records. The Construction Contract will be subject to
compliance monitoring and enforcement by the DIR, pursuant to Labor Code section 1771.4.
6.11 Substantial Completion. For purposes of this Tenant Work Letter, the
Project will be deemed substantially completed when all of the following have occurred, as
confirmed by the Construction Liaison Team:
A.Written Notice. The General Contractor has delivered a written
statement to the Construction Liaison Team stating that the Project is substantially
completed in accordance with the Design Documents and Construction Contract.
B.Approvals and Inspections. The Museum has obtained all necessary
City final inspections of and approvals for the Project.
C.Punch List. All work has been completed in conformance with the
Construction Contract with the exception of minor punch list items.
D.Site Restoration. All equipment, materials, and garbage have been
removed from the Project Site and any staging area(s).
E.City Access. The City has been provided with the necessary access,
including keys or codes, for those portions of the Building to be used for City
purposes, including the Public Parkside Restrooms, the City Archives Room, and
Community Rooms.
6.12 Record Drawings. Upon completion of the Project, the Architect will prepare
the record drawings and provide the City’s Director of Public Works with one PDF of a red-
lined set of the Design Documents reflecting the actual construction of the Project based on
the Contractor’s as-built drawings. Submission of such complete and accurate record
drawings is a condition precedent to City acceptance of the Project.
6.13 Completion and Acceptance. Once the Project has been completed in
accordance with the Design Documents and the terms of this Tenant Work Letter, the City will
accept the Project as complete in accordance with standard City procedure, and will notify the
Museum of acceptance of the Project, subject to the following conditions:
A.Punch List Completion. All punch list items have been completed and
the Project site completely restored by the removal of all equipment, fencing, job
trailers, and the like.
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B.Record Drawings. The City must receive the record drawings pursuant
to Section 6.12.
7. CONSTRUCTION SITE MAINTENANCE. At all times during construction of the
Project, the Museum is solely responsible for maintaining the Project Site, including any
staging area(s), in a commercially reasonable, clean and safe manner in compliance with all
permits, the Lease, and applicable Laws. The Museum or the Museum Agents will provide
approved containers for trash generated during construction of the Project and arrange for
regular disposal of such trash.
8. UTILITY SERVICE. The City’s obligation under Section 18 of the Lease to pay for all
utilities for the Public Parkside Restrooms will be suspended once construction of the Project
commences and will be reinstated upon City’s acceptance of the Project. During that time,
Museum will be solely responsible for all utility services to the Building, including the Public
Parkside Restrooms.
9. INSURANCE.
9.1 Coverage Requirements. In addition to the insurance requirements set forth
in the Lease, the Museum must require its Architect to obtain and maintain during the Term
the insurance coverage described in Attachment C (Insurance Requirements (Architect)).
The Museum must require the General Contractor to obtain prior to beginning and to maintain
throughout construction of the Project, up to the date of Project acceptance, the insurance
coverage described in Attachment D (Insurance Requirements (General Contractor)).
9.2 General Requirements. The insurance must remain in full force and effect
during the Term, commencing on the Effective Date, except as otherwise specified for the
General Contractor in Section 9.1, above. Each builder’s risk insurance policy must be
endorsed to name the City of Palo Alto as a loss payee. With the exception of workers’
compensation, employer’s liability, and professional liability insurance, each insurance policy
required by the Tenant Work Letter must contain the following clauses or endorsements:
A. “Coverage will not be suspended, voided, canceled by either party,
reduced in coverage or in limits except after 30 days’ prior written notice by certified
mail, return receipt requested, has been given to the City.”
B. “All rights of subrogation are hereby waived against the City of Palo
Alto and its elected and appointed officials, officers or employees, when acting within
the scope of their employment or appointment.”
C. “The City of Palo Alto, its elected and appointed officials, officers,
employees, agents and volunteers are to be covered as insureds as respects: liability
arising out of activities performed by or on behalf of the insured; products and
completed operations of the insured; premises owned, occupied or used by the
insured; or automobiles owned, subleased, hired or borrowed by the insured. Except
for the waiver of subrogation contained in Section B, the coverage will contain no
special limitations on the scope of protection afforded to the City, its elected and
appointed officials, officers, employees, agents or volunteers.”
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D. “For any claims related to the Tenant Work Letter, the insured’s
insurance coverage will be primary insurance as respects the City of Palo Alto, its
elected and appointed officials, officers, employees, agents and volunteers. Any
insurance or self-insurance maintained by the City, its elected and appointed officials,
officers, employees, agents or volunteers will be in excess of the insured’s insurance
and will not contribute with it.”
E. “Any failure to comply with reporting or other provisions of the policies,
including breaches of warranties, will not affect coverage provided to the City of Palo
Alto, its elected and appointed officials, officers, employees, agents or volunteers.”
F. “The insured’s insurance will apply separately to each insured against
whom a claim is made or suit is brought, except with respect to the limits of the
insurer’s liability.”
9.3 Sufficiency. All insurance required of the Museum, the General Contractor, or
the Architect will be provided by insurance carriers with a current A.M. Best’s rating of not
less than A-VII. The certificates of insurance required for the Architect must be submitted
electronically, on or before the Effective Date. The certificates of insurance required for the
General Contractor must be submitted electronically to the Project Representative for review
by the City’s risk manager, no later than 21 calendar days before commencement of
construction. If the Museum does not provide evidence of required coverage at least 30 days
prior to the expiration of any existing insurance coverage, the City may purchase such
insurance coverage for not more than a six-month period, on behalf of and at the sole cost
and expense of the Museum. The City retains the right to review the coverage, form, and
amount of the insurance coverage required by this Tenant Work Letter and require the
Museum to alter the coverage, or coverage requirements for the Architect or General
Contractor as appropriate. The City’s requirements to alter the coverage, if any, will be
reasonable and will be designed to assure protection from and against the kind and extent of
risk which exists at the time a change in insurance is required. A failure by the Museum to
provide acceptable insurance policies or certificates to the City, incorporating any such
changes, within 30 days of receipt of such notice will constitute a default under this Tenant
Work Letter. Such default will constitute a material breach and will be grounds for termination
of this Tenant Work Letter by the City. The procurement of such required insurance will not
be construed to limit the Museum’s liability hereunder or to fulfill the indemnification
requirements in the Lease. Notwithstanding the policy or policies of insurance, the Museum
will be responsible for the full and total amount of any uninsured damage, injury, or loss
occurring during the Term that is caused, directly or indirectly, by the willful or negligent acts
and/or omissions of the Museum or the Museum’s Agents.
9.4 Subrogation. On behalf of itself and its insurers, all rights of subrogation are
hereby waived by the City against the Museum and its managers, members, employees, and
the Museum’s Agents when any of them is acting on behalf of the Museum in the
performance of this Tenant Work Letter.
10. Damage to Project.
10.1 General. In the event any part of the Project is damaged by fire, other peril, or
any other cause, before the Project has been accepted by the City, the Museum will promptly
direct its General Contractor to take appropriate measures to secure the Building and Project
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Site to avoid further damage or unsafe conditions; and prepare and submit a claim to its
insurer(s) for funds to repair and rebuild all insured loss pursuant to the applicable insurance
coverage required under Section 9. Both Parties will cooperate to expedite recovery of
insurance proceeds to cover the insured loss.
10.2 Project Construction. The Museum will make reasonable efforts to complete
the Project on schedule, if reasonably possible depending on the scope and nature of the
damage. The Museum will promptly apply the insurance proceeds to pay for repair,
replacement, or restoration of damaged components of the Project. Construction of the
Project will be suspended, in whole or in part, to the extent necessary to ensure worker and
public safety or to limit the cost to repair and complete the Project.
10.3 Insufficient Funds. The Museum will notify City in writing if the Museum
determines that it is unable to secure sufficient insurance proceeds to pay for the full cost of
repair. The Parties will arrange to meet and confer within ten days following such notice to
develop a mutually acceptable approach to addressing the uninsured loss, which may include
securing additional funds, phased completion, reduction in scope and/or other reasonable
efforts to complete the Project in furtherance of the purpose set forth in Section 1.3, above. If
the Parties are unable to develop a mutually acceptable solution for completing the Project
despite the uninsured loss, either Party, within 180 days of the date of the notice of uninsured
loss, may terminate the Tenant Work Letter by giving 60 days written notice to the other
Party; provided, however, that the Museum may not exercise the right to terminate if the City
agrees to provide the additional funds needed by the Museum to pay for the uninsured loss. If
the Tenant Work Letter is terminated because of insufficient funds to complete the Project
following damage to or destruction of the Project while it is under construction, once all
outstanding payments have been made, including any payments due to the General
Contractor, any remaining amount of the City Contribution remaining in the Project Account, if
any, will be returned to the City.
11. PROJECT RECORDS.
The Museum will maintain, or cause to be maintained by its General Contractor and
subcontractors, if any, books and records relating to the Project for three years following
City’s acceptance of the Project. The City may inspect, audit, and copy the Museum’s books
and records pertaining to its obligations imposed by this Tenant Work Letter upon 30 days’
prior written notice from the City at any reasonable time during the Term and for three years
following City acceptance of the Project or earlier termination of the Tenant Work Letter,
whichever occurs first. The Museum will retain such books and records at accessible
locations during that three-year period. This provision will survive the expiration or termination
of this Tenant Work Letter.
12. DISCLAIMER.
Nothing in this Tenant Work Letter 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 the City be liable for any loss caused by the Museum in the
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course of its performance hereunder, except as expressly provided herein; or any alleged or
actual debts, obligations or liabilities of the Museum, whether due or to become due.
13. DEFAULT.
13.1 Remedies for Museum Default. In addition to any remedies available under
the Lease or Laws, if the Museum defaults in the performance of any covenant, term or
condition contained in this Tenant Work Letter and such default is not corrected within 30
days of receipt of a written notice of default from the City (or such longer period as may be
reasonably required to cure such default so long as the Museum commences to cure such
default within such 30-day period and thereafter diligently pursues such cure), the City retains
the right, but not the obligation, to elect any of the following rights and remedies. The
following rights and remedies are cumulative and the exercise of one right or remedy will not
impair the right of the City to exercise any or all other remedies.
A.Termination. In the case of a material default, such as wrongful
suspension, termination, or abandonment of the Project; uncorrected or repeated
violation of Laws; or refusal or failure to construct the Project as required by the
Design Documents or this Tenant Work Letter, City may terminate this Tenant Work
Letter and all rights of the Museum and its consultants and contractors, if any, as
further specified in Section 13.4. Upon termination, City will have no further obligation
to deposit any outstanding portion, if any, of the City Contribution into the Project
Account.
B.City Contribution. Unless otherwise specified in the City’s notice of
default, (i) the Museum’s right to withdraw funds from the Project Account is
suspended until or unless that right is reinstated by the City upon timely cure of the
default, (ii) the City’s obligation to deposit portions of the City Contribution into the
Project Account will likewise be suspended pending timely cure of the default and (iii)
the City will have the right to withdraw all unexpended portions of the City Contribution
from the Project Account, and City will have no further obligation to deposit any
outstanding portion, if any, of the City Contribution into the Project Account.
C.Cure at Museum’s Expense. The City may cure any default of the
Museum by any act, including payment of money, and the cost and expense thereof,
plus all reasonable administrative costs, will become immediately due and payable by
the Museum to the City.
D.Legal Action. The City may initiate an action or suit in law or equity to
enjoin any acts which may be unlawful or in violation of the City’s rights hereunder.
E.Other. The City may pursue any other right or remedy available under
Laws, the Lease, or this Tenant Work Letter.
13.2 Opportunity to Cure. Notwithstanding the foregoing, in the event of default
which cannot reasonably be cured within 30 days, the Museum will have such additional
period of time as is reasonably necessary to cure the default, provided the default can be
cured.
13.3 Remedies for City Default.
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A.Cost to Complete. If City wrongfully stops or suspends work on the
Project, other than as authorized herein or pursuant to exercise of the City’s police
powers, City will be responsible for additional costs, if any, reasonably incurred by
Museum to complete the Project as a direct result of such wrongful stoppage or
suspension. As used in this paragraph, “wrongful” and “wrongfully” refer to actions
that constitute a material breach of this Tenant Work Letter, but exclude City’s
reasonable exercise of its police powers.
B.Remedies. Except as otherwise provided in the Lease or this Tenant
Work Letter, in the event of any material default by City that is not cured within 30
days of written notice of default from the Museum, or such additional period of time as
is reasonably necessary to cure the default, the Museum may pursue any rights or
remedies provided by law or equity to enforce the Tenant Work Letter.
13.4 Termination. If this Tenant Work Letter is terminated by the City for uncured
default by the Museum because of the Museum’s refusal or failure to complete the Project in
accordance with the terms of this Tenant Work Letter or pursuant to Section 5.1, in addition to
any other available remedies, the City will be immediately entitled, but not obligated, to use
any remaining funds in the Project Account to complete the Project, including a modified or
reduced version of the Project.
13.5 Restoration. In case any suit, action or proceeding to enforce any right or
exercise any remedy is brought or taken and then discontinued or abandoned, the Parties will
be restored to their former positions, rights and remedies as if no such suit, action or
proceedings had been brought or taken.
14. NOTICES.
In addition to the notice requirements set forth in the Lease, or as otherwise specified
herein, a copy of any notice required or given pursuant to the terms of this Tenant Work
Letter must be concurrently transmitted to the City’s Director of Public Works in the manner
specified in the Lease.
15. MISCELLANEOUS PROVISIONS.
15.1 Entire Tenant Work Letter; Amendment. This Tenant Work Letter
represents the entire agreement between the Parties with respect to construction of the
Project and supersedes all prior negotiations, representations and contracts, whether written
or oral, except for the applicable terms and conditions of the Lease. This Tenant Work Letter
and the attachments hereto may only be amended as specified in the Lease.
15.2 Attachments. All Attachments referred to in this Tenant Work Letter are by
such references incorporated herein and made a part hereof, including the following:
Attachment A Project Funding
Attachment B Project Schedule
Attachment C Insurance Requirements (Architect)
Attachment D Insurance Requirements (General Contractor)
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15.3 Modification for Lack of Funds. The City Contribution is subject to the fiscal
provisions of the Charter of the City of Palo Alto and the PAMC, and the Tenant Work Letter
will be modified to exclude or reduce the City Contribution under the following circumstances:
at the end of any fiscal year, if funds for the City Contribution are not appropriated for the
following fiscal year; or at any time within a fiscal year if funds are only appropriated for a
portion of the fiscal year and funds for the City Contribution are no longer available, provided
that the City will not be excused from using funds previously appropriated for the City
Contribution. This provision will take precedence in the event of a conflict with any other
covenant, term or condition of this Tenant Work Letter.
15.4 Severability. If a court of competent jurisdiction finds or rules that any
provision of this Tenant Work Letter, the Attachments, or any amendment thereto, is void or
unenforceable, the unaffected provisions of this Tenant Work Letter, the Attachments, or any
amendment thereto, will remain in full force and effect.
15.5 Consent. When either Party is required to give its consent to the other Party,
the Party whose consent is required will not unreasonably withhold or delay that consent,
unless it is specifically stated that it is within the Party’s sole discretion to give or withhold its
consent.
[Signature page follows.]
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IN WITNESS WHEREOF, the Parties by their duly authorized representatives have
executed this Tenant Work Letter.
CITY OF PALO ALTO
_______________________________
City Manager
APPROVED AS TO FORM:
_______________________________
City Attorney
APPROVED:
_______________________________
Director of Administrative Services
_______________________________
Director of Public Works
PALO ALTO HISTORY MUSEUM, a
California nonprofit public benefit
corporation
_______________________________
Board President
_______________________________
Treasurer
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ATTACHMENT A
PROJECT FUNDING
This Attachment A details the Parties’ respective funding commitments for construction of the
Project, based on the estimated Construction Cost set forth in Recital F, which is subject to
amendment prior to commencement of Project construction. Pursuant to Section 5.4, this
Attachment A will be amended based on the final GMP, as a condition precedent to
commencement of Project construction.
1.Museum Contribution. The Museum is contributing $1,828,825.00 to pay for
certain hard and soft costs for the construction of the Project as further specified in
Section 4.3, which is comprised of the following:
A. The Museum will contribute $335,750.00 to pay for all construction
phase soft costs, including, without limitation, all permit and utility fees that are
not expressly waived or reimbursed by the City and the premiums for the
Builder’s Risk insurance for the Project.
B. The Museum will contribute $1,493,075.00, based on the difference
between the City Contribution and the estimated amount of the GMP as of the
Effective Date.
The Museum Contribution shall be funded by pledged and received donations in the
amount of $850,000.00 (the “Museum Donations”) and, to the extent available and
subject to Section 4.3 of the Tenant Work Letter, funds from the HUD Grant in the
amount of $978,825.00 (the “HUD Funds”). Notwithstanding the foregoing, the
amounts set forth herein are subject to amendment pursuant to Section 5.4 to reflect
the final GMP and commensurate adjustments to the final amount of the Museum
Contribution as a condition precedent to commencement of Project construction.
2.City Contribution. The City Contribution is comprised of the following
contributions and reimbursements for construction of the Project, for a total City
Contribution of $10,020,000, provided the Museum meets its funding obligations and
timely complies with the conditions for Project commencement set forth in this Tenant
Work Letter:
A. The City will contribute $4,900,000.00 from transferable development
rights and City general funds.
B. The City will contribute $2,000,000.00 from Stanford University Medical
Center development agreement funds.
C. The City will contribute $653,000.00 from funds received pursuant to
the County Grant Agreements, which is to be allocated solely for the
improvements specified in the County Grant Agreements, and conditioned
upon the Museum’s compliance with the terms and conditions of the County
Grant Agreements, as may be further specified in the Lease.
Tenant Work Letter
Roth Building Warm Shell Renovations
D. The City will contribute $1,650,000.00 from Community Center Impact
Fees, toward construction cost for the community room facilities in the
Building, provided those facilities are available for public community center use
as further specified in the Lease.
E. The City will contribute $350,000.00 from Park Impact Fees toward
construction costs for the restroom facilities on the northeast side of the
Building, provided those facilities are available as the public restrooms serving
Heritage Park as further specified in the Lease.
F. The City will contribute $300,000.00 from Library Impact Fees toward
construction costs for the City Archive Room, provided the City Archive Room
is available and accessible for City archives as further specified in the Lease.
G. The City will reimburse the Museum in the amount of $100,000.00 for
permit fees previously assessed for the Project.
H. The City will contribute $67,000.00 to offset the cost for the General
Contractor’s procurement of a payment bond and a performance bond.
Tenant Work Letter
Roth Building Warm Shell Renovations
ATTACHMENT B
PROJECT SCHEDULE
Pursuant to Section 6.6 of the Tenant Work Letter, the attached schedule, dated
<________>, constitutes the planned schedule for construction of the Project.
Tenant Work Letter
Roth Building Warm Shell Renovations
ATTACHMENT C
INSURANCE REQUIREMENTS (ARCHITECT)
Rev. 2017
ATTACHMENT “C”
INSURANCE REQUIREMENTS (ARCHITECT)
CONTRACTORS, AT THEIR SOLE EXPENSE, SHALL FOR THE TERM OF THE CONTRACT OBTAIN AND
MAINTAIN INSURANCE IN THE AMOUNTS FOR THE COVERAGE SPECIFIED BELOW, AFFORDED BY
COMPANIES WITH AM BEST’S KEY RATING OF A-:VII, OR HIGHER, AUTHORIZED TO TRANSACT
INSURANCE BUSINESS IN THE STATE OF CALIFORNIA.
MINIMUM LIMITS
REQUIRED TYPE OF COVERAGE REQUIREMENT EACH
OCCURRENCE AGGREGATE
YES WORKER’S COMPENSATION
YES EMPLOYER’S LIABILITY
STATUTORY
YES GENERAL LIABILITY, INCLUDING
PERSONAL INJURY, BROAD FORM
PROPERTY DAMAGE BLANKET
CONTRACTUAL, AND FIRE LEGAL LIABILITY
BODILY INJURY PROPERTY
DAMAGE
BODILY INJURY & PROPERTY
DAMAGE COMBINED.
$1,000,000
$1,000,000
$1,000,000
$2,000,000
$2,000,000
$2,000,000
YES AUTOMOBILE LIABILITY, INCLUDING ALL
OWNED, HIRED, NON-OWNED
BODILY INJURY
-EACH PERSON
-EACH OCCURRENCE
PROPERTY DAMAGE
BODILY INJURY AND PROPERTY
DAMAGE, COMBINED
$1,000,000
$1,000,000
$1,000,000
$1,000,000
$1,000,000
$2,000,000
$2,000,000
$2,000,000
$2,000,000
$2,000,000
PROFESSIONAL LIABILITY,
YES INCLUDING, ERRORS AND OMISSIONS,
MALPRACTICE (WHEN APPLICABLE), AND
NEGLIGENT PERFORMANCE
ALL DAMAGES $2,000,000
YES THE CITY OF PALO ALTO IS TO BE NAMED AS AN ADDITIONAL INSURED: CONTRACTOR, AT ITS SOLE COST
AND EXPENSE, SHALL OBTAIN AND MAINTAIN, IN FULL FORCE AND EFFECT THROUGHOUT THE ENTIRE
TERM OF ANY RESULTANT AGREEMENT, THE INSURANCE COVERAGE HEREIN DESCRIBED, INSURING NOT
ONLY CONTRACTOR AND ITS SUBCONSULTANTS, IF ANY, BUT ALSO, WITH THE EXCEPTION OF WORKERS’
COMPENSATION, EMPLOYER’S LIABILITY AND PROFESSIONAL INSURANCE, NAMING AS ADDITIONAL INSUREDS
CITY, ITS COUNCIL MEMBERS, OFFICERS, AGENTS, AND EMPLOYEES.
I.ENDORSEMENT PROVISIONS, WITH RESPECT TO THE INSURANCE AFFORDED TO
“ADDITIONAL INSUREDS”
A.PRIMARY COVERAGE
WITH RESPECT TO CLAIMS ARISING OUT OF THE OPERATIONS OF THE NAMED
INSURED, INSURANCE AS AFFORDED BY THIS POLICY IS PRIMARY AND IS NOT
ADDITIONAL TO OR CONTRIBUTING WITH ANY OTHER INSURANCE CARRIED BY
OR FOR THE BENEFIT OF THE ADDITIONAL INSUREDS.
Rev. 2017
ATTACHMENT “C”
INSURANCE REQUIREMENTS (ARCHITECT)
B.CROSS LIABILITY
THE NAMING OF MORE THAN ONE PERSON, FIRM, OR CORPORATION AS INSUREDS
UNDER THE POLICY SHALL NOT, FOR THAT REASON ALONE, EXTINGUISH ANY
RIGHTS OF THE INSURED AGAINST ANOTHER, BUT THIS ENDORSEMENT, AND THE
NAMING OF MULTIPLE INSUREDS, SHALL NOT INCREASE THE TOTAL LIABILITY
OF THE COMPANY UNDER THIS POLICY.
C.NOTICE OF CANCELLATION
1.IF THE POLICY IS CANCELED BEFORE ITS EXPIRATION DATE FOR ANY REASON
OTHER THAN THE NON-PAYMENT OF PREMIUM, THE CONTRACTOR SHALL
PROVIDE CITY AT LEAST A THIRTY (30) DAY WRITTEN NOTICE BEFORE THE
EFFECTIVE DATE OF CANCELLATION.
2.IF THE POLICY IS CANCELED BEFORE ITS EXPIRATION DATE FOR THE NON-
PAYMENT OF PREMIUM, THE CONTRACTOR SHALL PROVIDE CITY AT LEAST A
TEN (10) DAY WRITTEN NOTICE BEFORE THE EFFECTIVE DATE OF
CANCELLATION.
Tenant Work Letter
Roth Building Warm Shell Renovations
ATTACHMENT D
INSURANCE REQUIREMENTS (GENERAL CONTRACTOR)
Rev. 2022
ATTACHMENT “D”
INSURANCE REQUIREMENTS (GENERAL CONTRACTOR)
CONTRACTORS, AT THEIR SOLE EXPENSE, SHALL FOR THE TERM OF THE CONTRACT OBTAIN AND MAINTAIN
INSURANCE IN THE AMOUNTS FOR THE COVERAGE SPECIFIED BELOW, AFFORDED BY COMPANIES WITH AM
BEST’S KEY RATING OF A-:VII, OR HIGHER, AUTHORIZED TO TRANSACT INSURANCE BUSINESS IN THE STATE OF
CALIFORNIA.
MINIMUM LIMITS
R
E
Q
UI
R
E
D
TYPE OF COVERAGE REQUIREMENT EACH
OCCURRENCE AGGREGATE
YES WORKER’S
COMPENSATION
YES EMPLOYER’S LIABILITY
STATUTORY
YES GENERAL LIABILITY,
INCLUDING PERSONAL
INJURY, BROAD FORM
PROPERTY DAMAGE
BLANKET
CONTRACTUAL, AND
FIRE LEGAL LIABILITY
BODILY INJURY
PROPERTY DAMAGE
BODILY INJURY & PROPERTY DAMAGE
COMBINED.
$5,000,000
$5,000,000
$5,000,000
$10,000,000
$10,000,000
$10,000,000
YES AUTOMOBILE LIABILITY,
INCLUDING ALL OWNED,
HIRED, NON-OWNED
BODILY INJURY
-EACH PERSON
-EACH OCCURRENCE
PROPERTY DAMAGE
BODILY INJURY AND PROPERTY
DAMAGE, COMBINED
$2,000,000
$2,000,000
$2,000,000
$2,000,000
$2,000,000
$2,000,000
$2,000,000
$2,000,000
$2,000,000
$2,000,000
YES POLLUTION LIABILITY ALL DAMAGES $2,000,000
YES BUILDERS RISK- Full Insurable
Value
YES THE CITY OF PALO ALTO IS TO BE NAMED AS AN ADDITIONAL INSURED: CONTRACTOR, AT ITS SOLE
COST AND EXPENSE, SHALL OBTAIN AND MAINTAIN, IN FULL FORCE AND EFFECT THROUGHOUT THE
ENTIRE TERM OF ANY RESULTANT AGREEMENT, THE INSURANCE COVERAGE HEREIN DESCRIBED, INSURING
NOT ONLY CONTRACTOR AND ITS SUBCONSULTANTS OR SUBCONTRACTORS, IF ANY, BUT ALSO, WITH THE
EXCEPTION OF WORKERS’ COMPENSATION, EMPLOYER’S LIABILITY AND PROFESSIONAL INSURANCE, NAMING
AS ADDITIONAL INSUREDS CITY, ITS COUNCIL MEMBERS, OFFICERS, AGENTS, AND EMPLOYEES.
II.ENDORSEMENT PROVISIONS, WITH RESPECT TO THE INSURANCE AFFORDED TO
“ADDITIONAL INSUREDS”
A.PRIMARY COVERAGE
WITH RESPECT TO CLAIMS ARISING OUT OF THE OPERATIONS OF THE NAMED INSURED,
INSURANCE AS AFFORDED BY THIS POLICY IS PRIMARY AND IS NOT ADDITIONAL TO OR
CONTRIBUTING WITH ANY OTHER INSURANCE CARRIED BY OR FOR THE BENEFIT OF THE
ADDITIONAL INSUREDS.
B.CROSS LIABILITY
Rev. 2022
ATTACHMENT “D”
INSURANCE REQUIREMENTS (GENERAL CONTRACTOR)
THE NAMING OF MORE THAN ONE PERSON, FIRM, OR CORPORATION AS INSUREDS UNDER THE
POLICY SHALL NOT, FOR THAT REASON ALONE, EXTINGUISH ANY RIGHTS OF THE INSURED
AGAINST ANOTHER, BUT THIS ENDORSEMENT, AND THE NAMING OF MULTIPLE INSUREDS, SHALL
NOT INCREASE THE TOTAL LIABILITY OF THE COMPANY UNDER THIS POLICY.
C.NOTICE OF CANCELLATION
1.IF THE POLICY IS CANCELED BEFORE ITS EXPIRATION DATE FOR ANY REASON
OTHER THAN THE NON-PAYMENT OF PREMIUM, THE CONTRACTOR SHALL
PROVIDE CITY AT LEAST A THIRTY (30) DAY WRITTEN NOTICE BEFORE THE
EFFECTIVE DATE OF CANCELLATION.
2.IF THE POLICY IS CANCELED BEFORE ITS EXPIRATION DATE FOR THE NON-
PAYMENT OF PREMIUM, THE CONTRACTOR SHALL PROVIDE CITY AT LEAST
A TEN (10) DAY WRITTEN NOTICE BEFORE THE EFFECTIVE DATE OF
CANCELLATION.