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Home My WebLink About0361.095• TO: FROM: DATE, SUBJECT, . BWUESI City of Palo Alto City Manager's Report HONORABLE CITY COUNC[L CITY MANAGER JULy 2&,1995 DEPARTME.'U: ADMlN1SfRATIVE SERVICES CMR:361:95 SUBLEASE RENTAL RATE FOR WHAR DANCE COMPANY AT CUBBERLEY This is an infonnational repart and no Council action is required. EXECL'TM SUMMARY On October 11, 1994, staff received the City Council's authoriz.ation 10 provide six mooths free rent, a five-year sublease and a five-year option IOnmew 10 the Zohar Dance Company at Cubberley (CMiN52:94). The owners e>f Zobar Dance Ccmpany bave.ro=ntly applied for nonproli! status and ba •• requested the City r<'duce its rental rate, in anticipolion of apjlCOVlIl of that re<jUe3t. to the cmrent nonprofit rental rate previously established and approved by Cooocil OIl October 1 G, 1991 (CMR:44591) and reaffumed by Council on June 2, 1994 (CMR:28S:94). Zobar's current non-subsidized rental rate is SI.14fsquare fooIImonth, and the nooproli! suOsi<!ized rental rate being requested is currently S.70lsquare fooIImoolh. a savings 10 Zohar of approximately S20,OOOIyear. Because this request. along v.itb oIber anticipated changes 10 CUbbcrley long-term tenant rental n:quirernents, .. ill result in the City no longer being ablOIa meet the "pass through" lease payment 10 the Palo Alto Unified School District (pAUSD), staff will return in the faIl 10 Council ",ilb a comprehensive report and recommendation on Cubberley long-term \easing. DISCUSSION In 1991, staffpresented to Cooncil a sublease rental rate plan 1ha! would, in 'ggJegate, rover the c<>St oflhe"pass Ihroullh" lease paym..-nt due PAUSD in connectioo with the Lease and .. , , ',- '--':: •. >-"' ~-. '-'\. . 10--- .--,'~ -. o Cove!l8Dl Not 10 Dc:velop. The initial "pass through" amount in 1990 was $1 million, which increases annually in accooIance with !he \o<'..aI Coosurner l'ri« Index (CPT). AI1hough thls is refcmd to as "pass dJrough" rent, the City is obligated to pay it regardless ofhow m""h !ea.<e inrome the City actually realizes at Cubberley. The paytnent, currently at approximately $1.2 million, is being met by A combination of exclusive use leased areas and howly rentalllSC5. In addition 10 receiving Zobar's request for • rental reduction, ~ long-term _ has verbally requested I rental reduction in anticipation of its losing a Jarge spoosOr and fund"mg scurcc. If the rents for these two tenants were 10 be reduw!, the City would no longer be able to meet the "pa.<s throogh" kase revenue requirement. There are also _eral other nonprofit tenants, who bave expressed coocern aboot their rental rates in C<lmparison 10 neighboring aniSl! and tenants who pay substantially less than Illey do for similar space. The reduction in rent L'>at Zobar is requesting is based upro the original 1991 subsi<ftZed nooprofillda.~ rate of $.6S1 square fool {month, wbk:b bas been increased annually by the CPt This rate was e.><peeted 10 be made available 10 the nooprofit dance cooperative Il1at was expected to occupy the majority of the L.wing. and • few nonprof.t ;xganizations which would be solicited via Request for Proposals. There is approximately 83,000 sq. ft. of ne( rentsble space II Cubberley. ofwhich approximately 30,000 sq. ft. is leased 10 artists and nonprofit groups at rents below SI.OO/sq.Il!!OO!l1h. The remaining 53,000 sq.ft. was anticipated to be leased at the mablisbed non-subsidized rero.ta1 rates ofSI.09 \0 5139, in order 10 meintain III • minimum the leas¢ m'elluc nw:ssay \0 meet the "pass through" rent due PAUSD. Exhibit A summarizes !he various user groups md their respective renlal mes, and identifies those groups requesting. teC\'aJuation of their rental rates. Prior 10 returning'" Cooncil with • recommendation on • rental reduction for Zobar Dance CooJpany, sW'fwould like 10 reevalualellle following: " Appropriateness ofllle designation of uses in each wing. " Rental rate structure and ways in whicl! !he Cit!' might be able to generale additional revenues at the site. " Subleases and sublease rentai rates for olller nonprofit subtenants at Ill. site. Staff will return 10 CounciJ in Ille fall with I recommendation ()( request for Council dIrection. CMR:J61:95 • '. "l , .I F • \ > AlTACHMENT ExbibitA PREPARED BY: Mar1ha Milkr, Financial Analysl CITY MANAGER APPROVAL, CC:n!a · . @ fl!H!SlYA ® -..... ~~III..,nt. --II.! I!lI!<ItOE a>JIIILl .......... JH5IIITE!) 'TDIAIIT'I f'M* ,M:IO """ .... -Of, 2;" , ... au .. S2,1013 125,111 N8!'I TI'IfIc ~ DC no '1.82 $1,f" J'4,t11. F_ M,I,J,e. P~.-3IlZ" 'Ul2 S17.D50 ........ OIfra,'MW.,lERO -' ,Q,a:3 $111,lSl P-"'" S1.!1 ..... .... ,.., '""'"ThII1'biPftlft P A ~ ScNar HU '12H4 .... 'l,ot; 13.no ....... 1I.'8f'OYAL ""'"" --........ rJOWIROmS -AdoIeIoIrt ~ SoIr6ceI FH "'OG ,1.'4 11.1.&0 113,eao -,...,. "' ..... 1It:udIr1I Roota '" OF H4 on 11.14 " .. ".m U. 0IIchr1,,1n'll SctoDar ...., 11110 suo '~,1J7'O '22.440 --l "00 SO.7I '1,145 '13,74(1 StJIITODL_ em -I>o\YCo\Ie ~~('I«rl"become~ S;T1 1772 'lUI ,1J,osa $'~.m -n. Good': ~MDrMuofI "' ..... ..,., .e .. .. .... 'n~ IUBTQtAi. DAYCAAE ,,, .. ---.....,....., ... ,.. 11.104 .... ...... """"-.... .,30 "21 -".004 ---" 37"" 11.12 14.1. ... ,.. -~ U "40 51.12-11.94!il 123.'" IUBTOtAI. 00UiCE -....... ..,.".,. ~ """ ... ..... .... t;2,1tl1 <:.~ "'EB ... ..... " .. 11".12 I. """' U'I "" so .. $221 .. .... P."'" '" us ..., SO .. 12>7 ...... ,,-... ,128 '" ..... SI!1 ".., ,.-EI 720 ..... »0' $3,t102 s._ ,,--m ..... S334 ".000 .. -,/2 L'5 "" "' .. "'7 '1,731 a_ D <OIl ..... "'" .... , .-...." "40 so .... .... ... "., L'-,12,. ... SO .. "'" 12 .... .. -1.12 FS ... .... '''0 .. , ... w_ '/2 u:! ... .... ""' .. ... L_ E' "'" 10." .... 13.'" .. -ft. ... ... $G.O $217 12..,. L_ U4 720 .... 13" 13.'" it-a ... "' .. -...... A. T,.,. Vlf5 300 $0.4' "63 ",1/158 ...... -., 000 $0.49 -... w R_ ~'U7 "" .... ''''' 13 .... _row. """"" ,,... ,",112 _ .... -Ii ~IiJiIllU