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HomeMy WebLinkAboutStaff Report 2601-5854CITY OF PALO ALTO Policy & Services Committee Special Meeting Tuesday, March 10, 2026 6:00 PM     Agenda Item     1.Nonprofit Partnership Workplan: Follow-up Recommendation on Winter Lodge Tennis lease extension and Status of Phase I Grant Funding Process. CEQA Status: Not a Project. Presentation Policy & Services Committee Staff Report From: City Manager Report Type: ACTION ITEMS Lead Department: City Manager Meeting Date: March 10, 2026 Report #:2601-5854 TITLE Nonprofit Partnership Workplan: Follow-up Recommendation on Winter Lodge Tennis lease extension and Status of Phase I Grant Funding Process. CEQA Status: Not a Project. RECOMMENDATION Staff recommends the Policy & Services Committee: (1) continue discussion of Nonprofit Workplan Phase II (Long-Term Leases framework) and recommend Council extend the Winter Lodge tennis lease, (2) Receive a status update on Nonprofit Workplan Phase I grant funding process refinement next steps. EXECUTIVE SUMMARY This item continues Policy & Services Committee discussion of the Nonprofit Partnership Workplan (NPW) Phase II, long-term lease framework, and consideration of a lease extension for Winter Lodge tennis courts. Phase II focuses on establishing policy criteria for evaluating long-term nonprofit leases, emphasizing public benefit, financial transparency, partnership sustainability, and Council priorities, in alignment with 2022 City Auditor’s recommendations. Building on prior discussion of leases for Gamble Garden, Winter Lodge, and the Palo Alto Lawn Bowls Club, the Committee previously supported moving forward with extending the Gamble Garden’s lease and directed staff to return with additional information regarding public access and pricing structures for Winter Lodge and Lawn Bowls to better define community benefit. This report provides additional analysis and recommendations for the Winter Lodge tennis lease. The report also provides a status update on NPW Phase I, which established a structured process for evaluating nonprofit funding requests outside existing programs. While the FY 2026 pilot successfully funded 17 organizations and addressed prior concerns about ad hoc funding decisions, the Committee identified the need to clarify Phase I’s purpose and its relationship to the Human Services Resource Allocation Program (HSRAP) before relaunch for FY 2027. Staff will return to Council with refined policy options and an updated implementation timeline for further direction. BACKGROUND NPW Phase I Funding Requests Nonprofit Lease Agreements Nonprofit Multi-year Service Agreements Comprehensive review of all grant programs including Human Services Resource Allocation Process (HSRAP) and Community Development Block Grants (CDBG) 1, the Policy & Services Committee discussed NPW Phase II, beginning with upcoming lease extensions with Gamble Garden, Winter Lodge, and the Palo Alto Lawn Bowls Club. The report outlined a framework for considering nonprofit leases based on public benefit, financial relationship and partnership sustainability, consistent with the guiding principles and recommendations in the 2022 City Auditor’s report on Nonprofit Management. The intent was not to evaluate lease term details but rather establish a framework by which long-term lease partnerships are evaluated and aligned with existing real estate policy. The three nonprofit leases were used as leading examples as their leases will soon expire, though all have holdover clauses to continue on a month-to-month basis. 1 November 19, 2025 Policy & Services Committee Meeting: https://cityofpaloalto.primegov.com/meetings/ItemWithTemplateType?id=9499&meetingTemplateType=2&comp iledMeetingDocumentId=17629 Additionally, the Policy & Services Committee discussed NPW Phase I refinements at its January 14, 2026 meeting3. The overall sentiment was that the process produced positive outcomes by funding 17 nonprofit organizations, four of which were new partnerships to provide services to the Palo Alto community. The pilot was intentionally iterative but revealed structural and policy issues, which require refining prior to resuming in FY 2027. Staff presented a set of process improvements informed by stakeholder feedback for the Committee to consider. The Committee suggested several administrative improvements but also expressed the need to clarify and refine Phase I’s policy purpose. This report serves as a status update on recommended next steps for Committee review and Council consideration. ANALYSIS 3 January 14, 2026 Policy & Services Committee Meeting: https://cityofpaloalto.primegov.com/meetings/ItemWithTemplateType?id=10664&meetingTemplateType=2&com piledMeetingDocumentId=18259 Using Guiding Principles and the 2022 Audit on Nonprofit Management, the framework looks at various dimensions which communicate the value of the long-term resource: Public Benefit of the Partnership- The development and operation of facilities on City-owned property should advance public use and provide a tangible community benefit. When evaluating partnerships, the City should consider the organization’s capacity to construct (if applicable), operate, and maintain the proposed facilities and services throughout the term of the agreement. Guiding Principles: Service Alignment- Programs should align with City Council priorities and community needs, ensuring that services provided by nonprofit partners directly benefit the public. Impact-oriented Focus- Partnerships should prioritize unmet community needs and include clear, measurable outcomes for accountability. Audit Recommendations: The actual benefit to the City should serve as a basis for reduction of rent amount when lease agreements are renewed. Financial Relationship- The financial structure of each partnership should consider both monetary and non-monetary contributions to ensure fairness and transparency. Guiding Principles: Fairness and Equity: Financial allocations must prioritize accessibility and inclusivity, particularly for underserved populations. Encourages transparency and consistency in resource allocation processes. Audit Recommendations: Lease agreements with significantly reduced rent amounts should include performance and reporting requirements for services being provided on the premises. High-risk agreements should include a project manager for overseeing performance. Stability of the Partnership- Long-term nonprofit relationships help preserve community resources while providing stability for both the City and its partners. Multi-year service and lease agreements promote predictability, support program continuity, and protect public resources. When considering lease terms, quantitative measures such as rent, appraised value and cost saving could be considered but should be balanced by the opportunity cost of the public benefit provided. coterminous with the Winter Lodge skating lease, consistent with the City’s real estate lease policy and present to Council for approval. 5 The separate leases are a result of property expansion and development of tennis courts, and contract award through a competitive process. Winter Lodge seeks to make the tennis lease coterminous with the existing skating site lease, as stated in its original lease (CMR 221.95).6 The tennis courts are fully maintained by Winter Lodge and are operated by the Kim Grant Tennis Academy, serving youth and adults of all abilities with a policy of no player is ever turned away. While Winter Lodge does not pay rent for use of the property, they fully maintain and operate the rink and courts at no cost to the City. 5 2009 Winter Lodge Tennis Lease: https://www.paloalto.gov//files/assets/public/v/1/city- manager/misc/la/winter-lodge-tennis-agreement.pdf 6 1995 Winter Lodge Tennis Lease, Section IV, PDF page 53: https://www.paloalto.gov//files/assets/public/v/1/city-manager/misc/la/winter-lodge-amendment-no.-4- 0221.095-tennis-lease.pdf Activity Winter Lodge- one rate for all City of Palo Alto- Resident Rates Delta Open Court Use First come-first- served reservation- $40/hr First come-first- served, no reservation allowed- at no cost Both first-come-first- served basis $40/hr cost for WL courts Youth Group Lessons $37-$70 (varies by instructor) $28-$42 (depending on level) 24%-40% higher at Winter Lodge Adult Group Lessons $37-$70 (varies by instructor) $28-$42 (depending on level) 24%-40% higher at Winter Lodge Private Lessons $100-$200 (varies by instructor) $100-$125 (varies by instructor) 0-60% higher at Winter Lodge Winter Lodge charges the same rates for Palo Alto residents and non-residents. The City could request that Winter Lodge adopt separate rates for residents and non-residents. However, this would likely result in the current all-purpose rate becoming the resident rate and the non- resident rate being slightly higher, rather than the resident rate being lower than the current all-purpose rate. While the table shows a price comparison for tennis lessons, it should also be noted that the City significantly subsidizes its recreation programs at a rate that Winter Lodge would not be able to meet in order to stay operationally self-sufficient. Winter Lodge will be undergoing a significant capital expense of resurfacing the courts prior to its summer season for an estimated cost of $90,000. Staff seeks the Policy & Services direction on the potential policy updates to the nonprofit long-term lease framework to ensure optimal public benefit and pricing to Palo Alto residents. Nonprofit Partnership Phase I Improvements The Nonprofit Partnership Workplan Phase I process was developed to establish a structured framework for Council to evaluate nonprofit budget requests that fall outside of existing City funding processes. Phase I was not intended to function as a new grant program. At its January 14, 2026 meeting, the Committee acknowledged that the process addressed prior concerns regarding inconsistent, one-time funding decisions; however, members indicated that refinements are needed prior to relaunch in FY 2027. Staff presented a series of proposed improvements, including clarifying application eligibility requirements, establishing funding priorities, defining nonprofit service categories, enhancing application design and nonprofit engagement, and clarifying roles between the Finance Committee and the Policy and Services Committee. The Committee provided feedback across several of these areas but concentrated its discussion on two structural elements requiring further refinement: (1) clarifying the purpose of Phase I, and (2) defining Phase I’s relationship to the Human Services Resource Allocation Program (HSRAP). FISCAL/RESOURCE IMPACT STAKEHOLDER ENGAGEMENT ENVIRONMENTAL REVIEW ATTACHMENTS APPROVED BY: ATTACHMENT A Nonprofit Service Agreements of $10K or More, as of FY 2026 Funding Source Current Contract Start Responsible Service ContractNo.Nonprofit Organization Name Contract End Date Total Contract Amount FY26 Contract Amount Anticipated FY27 Amount Purpose HSRAP CDBG Phase I HSRAP ‐ Disability services. Provides Community Services advocacy, inclusion, and1AbilityPath7/1/2025 6/30/2027 $145,245 $67,556 $69,583 X/Human Services independence for people with developmental disabilities and their Community Services HSRAP ‐ Employment opportunities2Ada's Cafe 7/1/2025 6/30/2027 $122,550 $57,000 $58,710 /Human Services for adults with developmental Nonprofit Phase I grant recipient for eventsAda's Cafe City Manager x Community Services HSRAP ‐ Services to lesbian, gay,Adolescent Counseling Services $46,479 X/Human Services bisexual, transgender, queer and HSRAP ‐ Various program for low‐ Community Services income youth and seniors /Human Services5Alta Housing 7/1/2025 6/30/2027 $94,338 $43,878 $45,194 Alta Housing (formerly Palo Alto Housing Administration of the Below Market Rate program. Community Services Senior programs (formerly part of 6 5/19/2023 6/30/2025 $356,556 $178,278 $225,300 Planning Avenidas $3,186,528 X/Human Services HSRAP) Urban forestry professional services, and education8Canopy10/6/2025 10/6/2028 $1,236,366 $400,000 $412,000 Public Works HSRAP ‐ Outreach services for school‐ based mental health counseling for students in the community. HSRAP ‐Provide transportation to access in‐person therapy, basic food needs, and clinician recommended therapy supplies for families with CASSY (Counseling and Support Services Youth) Community Services Services X Community Services Services10 Children's Health Council 7/1/2025 6/30/2027 $21,102 $9,815 $10,109 children ages 5‐22 with Medi‐Cal Nonprofit Phase I grant recipient for11 Children's Health Council Environmental Volunteers 7/1/2025 6/30/2026 $10,000 $10,000 $0 City Manager xyouth mental health services Program at Foothills Preserve$10,780 Community Services x Irrigation, maintenance, and reporting 13 Grassroots Ecology 3/14/2024 3/14/2027 90,000 $30,000 $30,000 Public Works Habitat Restoration at Pearson Preserve restoration at Foothills 14 Grassroots Ecology 7/1/2024 10/1/2023 7/1/2025 1/1/2024 10/1/2025 6/30/2029 612,027 529,459 $121,653 $50,000 $149,000 $115,475 $125,719 Community Services Services x 15 Grassroots Ecology Nature Preserve & Adobe Creek Community Services HSRAP ‐ Winter shelter for women Services experiencing homelessness Services Shelter staffing for the Overnight 16 Heart & Home Collaborative Heart & Home Collaborative JED Foundation X X/Human Services Warming Location (OWL) mental health services including support, youthCity Manager Nonprofit Phase I grant recipient for development19 JobTrain 7/1/2025 6/30/2026 $45,000 $45,000 $0 City Manager x Community Services HSRAP ‐ Grief support Services Services HSRAP ‐ outreach to connect families 20 Kara 7/1/2025 6/30/2027 $61,275 $28,500 $29,355 X 21 Karat School Project Karat School Project /Human Services living in RVs to essential services. Phase I grant recipient for engagement andCity Manager HSRAP ‐ Nutrition program for Community Services persons 60 years of age or older. Services23 La Comida LifeMoves 7/1/2025 6/30/2027 $126,635 $58,900 $60,667 X Community Services HSRAP ‐ Food services for homeless /Human Services and very low‐income Palo Alto ATTACHMENT A Nonprofit Service Agreements of $10K or More, as of FY 2026 Funding Source Current Contract Start Responsible Service ContractNo.Nonprofit Organization Name Contract End Date Total Contract Amount FY26 Contract Amount Anticipated FY27 Amount Purpose HSRAP CDBG Phase I Staff for the Homeless Outreach Team HOT goes out into theCommunity Services Services25 LifeMoves LifeMoves 7/1/2023 6/30/2027 $972,377 $251,301 $261,076 X community to connect unhoused Services Center. Provide one‐stop, multi‐ day drop‐in center for critical services Phase I grant recipient for and food resources for experiencing homelessness Planning & Development Services/CDBG 6/30/2026 $39,155 $39,155 $39,000 x 27 LifeMoves 7/1/2025 City Manager x HSRAP ‐ Meals on Wheels; fully‐ prepared meals delivered to vulnerable seniors Community Services/Human Services 28 Loaves and Fishes Family Kitchen $24,463 X Nonprofit Phase I grant recipient for programming for people of abilities.29 Magical Bridge Foundataion MidPen Media Center Momentum for Health 7/1/2025 3/31/2026 7/1/2025 6/30/2026 $150,000 $150,000 $150,000 Community Serivces x Cablecasting, production and Administrative Services streaming services x Nonprofit Phase I grant recipient for cold season protection and hygiene to individuals experiencingCity Manager x Neighbors Abroad provides32 Neighbors Abroad Neighbors Abroad 9/30/2019 12/31/2021 $30,000 $30,000 $45,000 City Manager Manager xadministrative support to help with Phase I grant recipient for hosting services 3rdThursday Support & Economic Support to Businesses 34 Palo Alto Chamber of Commerce 6/20/2024 6/30/2026 $95,000 $50,000 TBD*City Manager Management of City's childcare program (formerly part ofCommunity Services Services35 Palo Alto Community Child Care 7/1/2025 6/30/2030 $3,228,146 $606,794 $624,998 X Management of the City’s archives facilitate public access to and materials relating to 36 Palo Alto Historical Association (PAHA)Library Monthly activations, previously known Third Thursday, from April 2026 to 2026 on California Ave to business vibrancy as Transportation Association for Palo Alto ‐ On‐site support services for disabled adults living a residential program 37 Palo Alto Recreation Foundation Alto Transportation Management TBD 12/31/2026 $40,000 $40,000 $0 City Manager x Based on annual budget387/1/2023 6/30/2026 $242,000 $400,000 Transportation xAssociation Parents and Advocates of Remarkable and Adults (PARCA) Community Services Services39$58,211 $122,243 $15,000 X Community Services HSRAP ‐ Tutoring for low income40 Pathwise (formally DreamCatchers) Pathwise (formally DreamCatchers) /Human Services middle school students Nonprofit Phase I grant recipient for training and mentorship and engagement ‐ Provide basic needs through ‐based services that target immediate health needs of hard Phase I grant recipient for to trauma‐informed healthcare marginalized populations including City Manager x Community Services Services42 Peninsula Healthcare Connection Peninsula Healthcare Connection 7/1/2023 6/30/2025 $268,521 $120,711 $128,530 X City Manager ATTACHMENT A Nonprofit Service Agreements of $10K or More, as of FY 2026 Funding Source Current Contract Start Responsible Service ContractNo.Nonprofit Organization Name Contract End Date Total Contract Amount FY26 Contract Amount Anticipated FY27 Amount Purpose HSRAP CDBG Phase I Operating and Management to operate the Animal 44 Pets In Need 4/1/2024 3/31/2029 7,373,516 $1,370,000 $1,411,100 Community Services Services x Resource provider for youth and teen health45 Project Safety Net 9/1/2020 6/30/2025 $521,604 $100,000 $100,000 x Community Services Landlord‐Tenant Mediation Program46 Project Sentinel Project Sentinel 7/1/2024 6/30/2027 $240,859 $81,561 $84,008 X/Human Services & (formerly part of HSRAP) Fair Housing Services. Provide fair services including complaint ‐ Health services for low x Ravenswood Family Health Center Clinic) Community Services income, uninsured Palo Alto residents Services487/1/2025 6/30/2027 $145,527 $67,687 $69,718 X Planning & Development Services/CDBG Create safe and healthy homes in Palo allowing the most vulnerable especially lower income ‐ Legal Assistance to Elders 49 Rebuilding Together Peninsula Community Services/Human Services 50 Senior Adults League Assistance (SALA) Housing and Emergency Services. low‐income individuals and in search for affordable, housing Planning & Development Services/CDBG 51 Silicon Valley Independent Living Center Partner Agreements (West Bay 7/1/2025 6/30/2026 $20,067 $20,067 $20,000 x Facility agreements for use of Lucie Community Services Stern Theatre and payment of ticket surcharge to City ($4/ticket sold)52 1/1/2025 6/30/2027 $50,000 $50,000 $55,000 xOpera, Palo Alto Players, TheatreWorks) Nonprofit Phase I grant recipient for 53 UNAFF City Manager film festival focused on human rights year‐round screenings and panels ‐ Empowers individuals who blind or visually impared to life through evaluation, education and training ‐ Senior fitness programming financial assistance for senior x Community Services/Human Services Vista Center for the Blind or Visually54 7/1/2023 6/30/2025 $127,523 $59,313 $61,092 X Community Services/Human Services Community Services/Human Services 55 YMCA of Silicon Valley 7/1/2025 6/30/2027 $36,765 $17,100 $17,613 X HSRAP ‐ Youth well‐being and program services through service projects 56 Youth Community Services Youth Community Services (Youth 57 Connectedness Community Services Funding for the Youth Connectedness Services Initiative6/30/2026 $50,000 $50,000 $50,000 x Initiative) TOTAL $22,298,966 $6,091,949 $6,117,036 *TBD Pending FY26 Reconciliation ATTACHMENT B DRAFT FY 2027 Phase I Revised Timeline Date Activity Hearing Body March 23 Council approval of P&S Phase I purpose and improvements City Council March- early April Phase I website updated: application timeline and requirements posted April 14 Nonprofit information session on FY27 Phase I updates and requirements April 13- May 1 Application period open (3 weeks) April 21 Nonprofit workshop on application goals and budget May 4-8 Application intake May 5-6 FY27 Phase I target budget set Finance Committee May 14 Application Review and Recommendations HRC May Special Meeting Applicant Interviews Policy & Services Committee June 9 FY27 Phase I award recommendations Policy & Services Committee June 15 FY27 Phase I awards approved City Council March 10, 2026 www.paloalto.gov NONPROFIT PARTNERSHIP WORKPLAN: Follow-up Recommendation on Winter Lodge Tennis Lease and Status of Phase I Process 2 Recommendation Staff recommends the Policy & Services Committee: 1.continue discussion of Nonprofit Workplan Phase II (Long -Term Leases framework) and recommend Council extend the Winter Lodge tennis lease 2.Receive a status update on Nonprofit Workplan Phase I grant funding process refinement next steps 3 Policy & Services Committee Referral Refinement of the nonprofit guiding principles, as they relate to policy adjustments and new process and procedures: 1.Impact-oriented Focus and Accountability: Partnerships will identify intended outcomes and prioritize unmet needs, and incorporate appropriate measures and reporting, while reflecting the nature of the engagements and avoiding unnecessary administrative processes. 2.Service Alignment: Programs and services should align with the Council's priorities and identified community needs. 3.Fairness, Open Access, Equity, and Inclusion: The City will maintain visibility and consistency in its partnership processes, to both the nonprofit community and public at large. Resource allocations will consider and prioritize accessibility of the resulting services to all community members, with particular attention to underserved and vulnerable populations. 4.Flexibility for Special Circumstances: The City Council will need the ability to act quickly when needed to respond to special circumstances. 4 Nonprofit Workplan Major Areas of Work •NPW Phase I Funding Requests •Nonprofit Lease Agreements ➢TONIGHT: Continue discussion on Phase II and provide direction on Winter Lodge Tennis lease extension • Nonprofit Multi-year Service Agreements •Comprehensive review of all grant programs including Human Services Resource Allocation Process (HSRAP) and Community Development Block Grants (CDBG) 5 Long-Term Lease Agreements Framework for evaluating and considering nonprofit long -term lease agreements: Public Benefit of the Partnership Financial Relationship Stability of the Partnership 6 Winter Lodge Tennis Lease •Community Skating Inc. (Winter Lodge) operates two City leases: ice rink expires 2040 and tennis courts expires 2026 •1995: City granted lease option to upgrade and operate public tennis facility •Original intent: Tennis lease to be coextensive with Winter Lodge rink lease •2001: Winter Lodge selected through competitive process; 15-year lease + 10-year extension •Winter Lodge continues operations and full maintenance of tennis courts •$90K court resurfacing planned prior to summer season. 7 Winter Lodge Tennis Public Access & Pricing Activity Winter Lodge- One rate for all City of Palo Alto- Resident Rates Delta Open Court Use First come-first-served By reservation 7AM-Dusk $40/hr First come-first-served no reservation allowed 7:30AM-10PM No Cost •Both first-come-first-served basis •Tennis courts not lit at WL •Reservations allowed (WL) •$40/hr at WL Youth Group Lessons $37-$70/hr (varies by instructor) $28-$42/hr (depending on level)•24%-40% higher at Winter Lodge Adult Group Lessons $37-$70/hr (varies by instructor) $28-$42/hr (depending on level)•24%-40% higher at Winter Lodge Private Lessons $100-$200/hr (varies by instructor) $100-$125/hr (varies by instructor)•0-60% higher at Winter Lodge •Winter Lodge lease terms allow for pricing of goods and/or services be comparable to market pricing and it allow for the accumulation of funds for continued maintenance and capital improvements 8 Nonprofit Workplan Phase I Improvements Next Steps Council Study Session on April 6, 2026: ➢Further refinement needed on (1) purpose of Phase I and (2) defining Phase I’s relationship to the Human Services Resource Allocation Program (HSRAP) ➢Provide feedback on Policy & Services recommendations on Phase I improvements 9 Draft Timeline City Council approval of P&S Phase I Improvements April 6 April 14 Nonprofit information session on FY27 Phase I updates and requirements Application Period Open April 13 – May 1 April 21 Nonprofit workshop on application goals and budget Application review May May 5-6 Set Phase I FY 2027 target Budget (Finance Committee) Applicant Interviews (Policy & Services) May Special Meeting June 8 Phase I FY 2027 award recommendations (Policy & Services) Phase I FY 2027 awards approved (City Council) June 15 April Phase I website application timeline & req’s posted May 14 Application Review and Rec. (HRC Committee) 10 Recommendation Staff recommends the Policy & Services Committee: 1.continue discussion of Nonprofit Workplan Phase II (Long -Term Leases framework) and recommend Council extend the Winter Lodge tennis lease 2.Receive a status update on Nonprofit Workplan Phase I grant funding process refinement next steps Lupita Alamos, Assistant to the City Manager March 10, 2026