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HomeMy WebLinkAboutItem 5c. Authorize Assignment of Facility Ground Lease for 1020 Southwood Drive to Channel Islands YMCA (formerly SLO County YMCA) Item 5c Department: Parks and Recreation Cost Center: 7002 For Agenda of: 11/7/2023 Placement: Consent Estimated Time: N/A FROM: Greg Avakian, Parks & Recreation Director Prepared By: Devin Hyfield, Parks and Recreation Manager Brendan Pringle, Business Analyst SUBJECT: AUTHORIZE ASSIGNMENT TO AND ASSUMPTION BY THE CHANNEL ISLANDS YMCA OF AN EXISTING FACILITY GROUND LEASE BETWEEN THE SAN LUIS OBISPO YMCA AND THE CITY OF SAN LUIS OBISPO RECOMMENDATION Approve the assignment to and assumption by the Channel Islands YMCA of an existing facility ground use agreement between the San Luis Obispo County YMCA and the City of San Luis Obispo for the use of a portion of Johnson Park, located at 1020 Southwood Drive, through February 28, 2050, and authorize the Mayor to execute t he agreement. POLICY CONTEXT The City of San Luis Obispo Partnership and Foundation Policy states that “City resources can be used in partnership with others to create opportunities for otherwise unfeasible projects or programs.” The San Luis Obispo County YMCA has a long-standing relationship with the City and is recognized as a community partner, as memorialized in a separate recreation partnership agreement, adopted by Council on February 21, 2017 (Attachment A). The Parks & Recreation Department works collaboratively to offer programming together and avoid duplication of efforts. DISCUSSION Background On December 31, 1977, the City of San Luis Obispo and the San Luis Obispo County YMCA entered into a 50-year ground lease for a portion of Johnson Park, which commenced on March 1, 1978 (Attachment B). The leased property contains the YMCA’s headquarters facility, from which the YMCA has operated a variety of programs, ranging from health and fitness to childcare to family activities and community development. Over the last four decades, this ground lease has been amended three times, most recently in 2021, extending the lease through February 28, 2050. The purpose of this lease Page 15 of 231 Item 5c extension was to provide assurance to donors that philanthropic gifts for facility maintenance and modifications could be used by the YMCA through their projected useful life. Proposed Assumption of Lease by Channel Islands YMCA Earlier this year, San Luis Obispo County YMCA (SLO YMCA) notified the City that they had merged with the Channel Islands YMCA. This merger essentially allows for administrative and other program efficiencies while maintaining a local advisory board that can work with the Channel Islands YMCA to ensure community and leadership connections. On September 12, 2023, Eric Linkugel, Chair of the Board of Directors and Chief Volunteer Officer for the SLO YMCA, notified the City of the SLO YMCA’s request to assign the lease to Channel Islands YMCA (Attachment C). No material changes to the lease agreement are requested by either party; should Council agree to assignment, SLO YMCA’s rights and obligations under the existing lease will be transferred in their entirety to Channel Islands YMCA under the same terms and conditions of the 1978 lease as amended. As required under the original 1978 ground lease, SLO YMCA’s request to assign the lease includes a statement of Channel Island YMCA’s qualifications to assume the lease, and the proposed Assignment agreement (Attachment D) includes an express assumption by the assignee (Channel Islands YMCA) of all covenants, conditions, terms, and obligations of this lease. Previous Council or Advisory Body Action On December 31, 1977, the City of San Luis Obispo and the SLO YMCA entered into a 50-year ground lease, which commenced on March 1, 1978. On May 21, 1996, the City Council approved Amendment No. 1 to the Ground Lease, which confirmed the annual rent as $1 per year for the ground lease and noted that outstanding debt was forgiven in its entirety. On November 21, 2000, the City approved Amendment No. 2 by resolution, which extended the lease for five years to February 28, 2033. The amendment instituted several “clean-up” amendments to the lease agreement, including updating the language to reflect contemporary uses of the facility, allowing the YMCA to change its fee structure, and adding the City’s non-discrimination policy. On November 29, 2021, the City approved Amendment No. 3 by resolution, which extended the lease by another 17 years, to February 28, 2050. CONCURRENCE N/A Page 16 of 231 Item 5c ENVIRONMENTAL REVIEW As this is a request to assume an existing ground lease agreement with no adjustments to the type of usage or any foreseen environmental impact. Lease extension under the existing terms will not result in any impacts and is exempt under Cal. Code Regs. ti t. 14 § 15378 (b) 5 as the action constitutes an administrative action that will result in any direct or indirect physical changes to the environment. FISCAL IMPACT Budgeted: N/A Budget Year: 2023-2024 Funding Identified: N/A Fiscal Analysis: Funding Sources Total Budget Available Current Funding Request Remaining Balance Annual Ongoing Cost General Fund N/A N/A $ N/A State Federal Fees Other: Total $ $ $ N/A Under the existing agreement, the YMCA is charged $1.00 per year. The City is not requesting any changes to these terms, so there is no fiscal impact to this action. ALTERNATIVES Terminate the existing lease. This is not recommended, as the leased property contains the San Luis Obispo County headquarters for the Channel Islands YMCA and runs many existing programs. The organization is also a community partner. ATTACHMENTS A - Recreation Partnership Agreement with the San Luis Obispo County YMCA B - Original Ground Agreement with YMCA and City of San Luis Obispo with Three (3) Amendments C - Request from SLO YMCA to assign lease D - Draft Assignment and Assumption of Ground Lease Page 17 of 231 Page 18 of 231 Page 19 of 231 Page 20 of 231 Page 21 of 231 Page 22 of 231 Page 23 of 231 Page 24 of 231 Page 25 of 231 Page 26 of 231 Page 27 of 231 Page 28 of 231 AMENDMENT NO. 3 GROUND LEASE BETWEEN THE CITY OF SAN LUIS OBISPO AND THE SAN LUIS OBISPO COUNTY YMCA The Ground Lease, dated December 31, 1977, between the City of San Luis Obispo, a municipal corporation, hereinafter referred to as “City” and the San Luis Obispo County YMCA hereinafter referred to as “Lessee” is hereby amended as follows: WITNESSETH: WHEREAS, on December 31, 1977, the City and Lessee entered to a Ground Lease. Attached hereto as Attachment A is a copy of the Original Ground Lease; and WHEREAS, the Original Ground Lease’s Article XXII. Miscellaneous Provisions section 22.10 states that modification to the Ground Lease must be made in writing. WHEREAS, on May 21, 1996, the City and Lessee entered into an Amendment No. 1 to the Ground Lease to amend Article VI Rent in the Original Ground Lease. Attached hereto as Attachment B is a copy of the Amendment No. 1; and WHEREAS, on December 1, 2000, the City and Lessee entered into an Amendment No. 2 to the Ground Lease to amend Article II - Term of Lease and Extension of Lease Term, Article III - Use and Occupancy and Article V - Rates in the Original Ground Lease. Attached hereto as Attachment C is a copy of the Amendment No. 2; and WHEREAS, the City and Lessee now seek to further modify Article II - Term of Lease and Extension of Lease Term, Article III - Use and Occupancy, Article IV - Operating Schedule and Article XIII - Insurance in the Original Ground Lease; and NOW THEREFORE, in consideration of their mutual promises, obligations and covenants hereinafter contained, the parties hereto agree as follows: 1. Article II – Term of Lease and Extension of Lease Term is hereby amended to read as follows: ARTICLE II. TERM OF LEASE AND EXTENSIONS OF LEASE TERM 2.02 The TERM “commencement date” as used in this Lease means March 1, 1978. On December 1, 2000, City and Lessee executed Amendment No. 2 to the Ground Lease agreeing to extend the TERM of this to February 28, 2033. The City and Lessee now agree to extend the TERM of this Lease for an additional seventeen (17) calendar years beyond the amended TERM. Accordingly, the TERM shall expire at midnight on February 28, 2050, unless sooner terminated in accordance with the provisions of this Lease. 2. Article III – Use and Occupancy is hereby amended to read as follows: ARTICLE III. USE AND OCCUPANCY 3.01 During the TERM of this Lease, Lessee shall, at Lessee’s sole expense, construct, occupy and operate on the LEASED LAND a public facility which will include, but is not limited to fitness studios, gym space, fitness equipment, locker room and restroom facilities for women, men and families, staff offices, a child watch area and other programs and activities that further the interests of the Lessee͘ථ Furthermore, Lessee may use the facilities for programs related to health and fitness, child watch, youth-senior programs, family programs, and staff development/training. Lessee shall have the right to provide facilities if desired for a snack bar and alcoholic beverages for on-premises͕ĞǀĞŶƚĐŽŶƐƵŵƉƚŝŽŶŽŶůLJ͘ථdŚĞ plans and specifications for all the above-mentioned facilities must be submitted for approval as required in the usual permit procedures of the City before construction may begin. 3. Article IV – Operating Schedule is hereby amended to read as follows:          Page 29 of 231 ARTICLE IV. OPERATING SCHEDULE 4.03 Lessee's facilities may be opened to the public from 5:00 A.M. - 10:00 P.M on weekdays and 7:00 A.M. - 9:00 P.M. Saturdays and Sundays. Lessee will maintain a schedule of weekly class offerings and child watch. Lessee may adjust and expand its opening and closing times as Lessee’s needs requires, in Lessee’s sole discretion. 4. Article XIII – Insurance is hereby amended to read as follows: ARTICLE XIII. INSURANCE 13.01 If the Leased Premises or any other part of the Leased Premises is damaged by fire or other casualty resulting from any act or negligence of Lessee or any of Lessee 's agents, employees or invitees, rent shall not be diminished or abated while such damages are under repair, and Lessee shall be responsible for the costs of repair not covered by insurance. Without limiting Lessee’s indemnification of City, and prior to commencement of Ground Lease, Lessee shall obtain, provide and maintain at its own expense during the term of this Agreement, policies of insurance of the type and amounts described below in a form satisfactory to Agency. a. General liability insurance. Lessee shall maintain commercial general liability insurance with coverage at least as broad as Insurance Services Office form CG 00 01, in an amount not less than $1,000,000 per occurrence, $2,000,000 general aggregate, for bodily injury, personal injury, and property damage. The policy must include contractual liability that has not been amended. Any endorsement restricting standard ISO “insured contract” language will not be accepted. If alcohol is sold during the permitted activity, coverage must include full liquor liability. Agency, its officers, officials, agents, and employees shall be included as additional insureds on the policy. b. Property insurance. Upon commencement of construction of Lessee improvements and betterments, or installation of equipment, with approval of City, Lessee shall obtain and maintain insurance on Lessee’s buildings, improvements, and betterments. Policy shall be provided for replacement value on an "all risk" basis. There shall be no coinsurance penalty provision in any such policy. c.Proof of insurance. Lessee shall provide certificates of insurance to City as evidence of the insurance coverage required herein, along with a waiver of subrogation endorsement for workers’ compensation. Insurance certificates and endorsements must be approved by City’s risk manager prior to commencement of performance. Current certification of insurance shall be kept on file with City during the term of this contract. City reserves the right to require complete, certified copies of all required insurance policies, at any time. d. Duration of coverage. Lessee shall procure and maintain for the duration of the contract insurance against claims for injuries to persons or damages to property, which may arise from or in connection with the performance of the Work hereunder by Lessee, his agents, representatives, employees, or subconsultants. e. Primary/noncontributing. Coverages provided by Lessee shall be primary and any insurance or self-insurance procured or maintained by City shall not be required to contribute with it. The limits of insurance required herein may be satisfied by a combination of primary and umbrella or excess insurance. Any umbrella or excess insurance shall contain or be endorsed to contain a provision that such coverage shall also apply on a primary and non-contributory basis for the benefit of City before the City’s own insurance or self-insurance shall be called upon to protect it as a named insured.          Page 30 of 231 f. Agency’s rights of enforcement. In the event any policy of insurance required under this Ground Lease does not comply with these specifications or is canceled and not replaced, City has the right but not the duty to obtain the insurance it deems necessary, and any premium paid by City will be promptly reimbursed by Lessee or City will withhold amounts sufficient to pay premium from Lessee payments. In the alternative, City may cancel this Agreement. g. Acceptable insurers. All insurance policies shall be issued by an insurance company currently authorized by the Insurance Commissioner to transact business of insurance or is on the List of Approved Surplus Line Insurers in the State of California, with an assigned policyholders’ Rating of A- (or higher) and Financial Size Category Class VII (or larger) in accordance with the latest edition of Best’s Key Rating Guide, unless otherwise approved by the City’s Risk Manager. h. Waiver of subrogation. All insurance coverage maintained or procured pursuant to this agreement shall be endorsed to waive subrogation against City, its elected or appointed officers, agents, officials, employees, and volunteers or shall specifically allow Lessee or others providing insurance evidence in compliance with these specifications to waive their right of recovery prior to a loss. Lessee hereby waives its own right of recovery against City and shall require similar written express waivers and insurance clauses from each of its subconsultants. i. Enforcement of contract provisions (non estoppel). Lessee acknowledges and agrees that any actual or alleged failure on the part of the City to inform Lessee of non- compliance with any requirement imposes no additional obligations on the City nor does it waive any rights hereunder. j. Requirements not limiting. Requirements of specific coverage features or limits contained in this section are not intended as a limitation on coverage, limits or other requirements, or a waiver of any coverage normally provided by any insurance. Specific reference to a given coverage feature is for purposes of clarification only as it pertains to a given issue and is not intended by any party or insured to be all inclusive, or to the exclusion of other coverage, or a waiver of any type. If the Lessee maintains higher limits than the minimums shown above, the City requires and shall be entitled to coverage for the higher limits maintained by the Lessee. Any available insurance proceeds in excess of the specified minimum limits of insurance and coverage shall be available to the City. k. Notice of cancellation. If any required insurance coverage is subject to cancellation due to nonrenewal or nonpayment, the Lessee will contact the City in writing to coordinate and secure continuous coverage. l. Additional insured status. General liability policies shall provide, or be endorsed to provide, that City and its officers, officials, employees, agents, and volunteers shall be additional insureds under such policies. This provision shall include endorsement covering liabilities arising out of the Lessee 's "operations" in the leased space. This provision shall also apply to any excess/umbrella liability policies. m.Prohibition of undisclosed coverage limitations. None of the coverages required herein will comply with these requirements if they include any limiting endorsement of any kind that has not been first submitted to City and approved of in writing. n. Separation of insureds. A severability of interests provision must apply for all additional insureds ensuring that Lessee insurance shall apply separately to each insured against whom claim is made or suit is brought, except with respect to the insurer’s limits of liability. The policy(ies) shall not contain any cross-liability exclusions.          Page 31 of 231 o. Pass through clause. Lessee agrees to ensure that its subconsultants, subcontractors, and any other party involved with the project who is brought onto or involved in the project by Lessee, provide the same minimum insurance coverage and endorsements required of Lessee. Lessee agrees to monitor and review all such coverage and assumes all responsibility for ensuring that such coverage is provided in conformity with the requirements of this section. Lessee agrees that upon request, all agreements with consultants, subcontractors, and others engaged in the project will be submitted to City for review. p. Agency’s right to revise specifications. The City reserves the right at any time during the term of the contract to change the amounts and types of insurance required by giving the Lessee ninety (90) days advance written notice of such change. If such change results in substantial additional cost to the Lessee, the City and Lessee may renegotiate Lessee’s compensation. q. Self-insured retentions. Any self-insured retentions must be declared to and approved by City. City reserves the right to require that self-insured retentions be eliminated, lowered, or replaced by a deductible. Self-insurance will not be considered to comply with these specifications unless approved by City. r. Timely notice of claims. Lessee shall give City prompt and timely notice of claims made or suits instituted that arise out of or result from Lessee’s performance under this Agreement, and that involve or may involve coverage under any of the required liability policies. s.Additional insurance. Lessee shall also procure and maintain, at its own cost and expense, any additional kinds of insurance, which in its own judgment may be necessary for its proper protection. Lessee’s personal property, fixtures, equipment, inventory and vehicles are not insured by City against loss or damage due to fire, theft, vandalism, rain, water, criminal or negligent acts of others, or any other cause. IN WITNESS WHEREOF, the parties hereto have caused this instrument to be executed on the ____ day of _______________, 2021. CITY OF SAN LUIS OBISPO A Municipal Corporation _____________________________________________________ Mayor Erica A. Stewart LESSEE: _____________________________________________________ By: Monica Grant Its: Chief Executive Officer ATTEST: _____________________________________________________ Teresa Purrington, City Clerk _____________________________________________________ By: Cheryl Cuming Its: Board Secretary APPROVED AS TO FORM: _____________________________________________________ J. Christine Dietrick, City Attorney               Page 32 of 231          Page 33 of 231          Page 34 of 231          Page 35 of 231          Page 36 of 231          Page 37 of 231          Page 38 of 231          Page 39 of 231          Page 40 of 231          Page 41 of 231          Page 42 of 231          Page 43 of 231          Page 44 of 231          Page 45 of 231          Page 46 of 231          Page 47 of 231          Page 48 of 231          Page 49 of 231          Page 50 of 231          Page 51 of 231          Page 52 of 231          Page 53 of 231          Page 54 of 231          Page 55 of 231          Page 56 of 231          Page 57 of 231          Page 58 of 231          Page 59 of 231          Page 60 of 231          Page 61 of 231          Page 62 of 231 SAN LUIS OBISPO COUNTY YMCA 1020 Southwood Drive, San Luis Obispo, CA 93401 P 805 543 8235 F 805 543 6202 www.sloymca.org Page 63 of 231 Page 64 of 231 ASSIGNMENT AND ASSUMPTION OF GROUND LEASE THIS ASSIGNMENT AND ASSUMPTION OF GROUND LEASE Assignment is dated as of _________________ Effective Date among THE CITY OF SAN LUIS OBISPO, a municipal corporation Landlord SAN LUIS OBISPO COUNTY Y.M.C.A., a California Nonprofit public benefit corporation Assignor CHANNEL ISLANDS YOUNG MEN'S CHRISTIAN ASSOCIATION, a California Nonprofit public benefit corporation DBA Channel Islands YMCA Assignee with respect to the following: RECITALS A. Landlord and Assignor (by and through its predecessors-in-interest) have previously entered into that certain Ground Lease dated December 31, 1977 as amended May 21, 1996, December 1, 2000 and November 21, 2021 (collectively, Lease regarding the Property located at 1020 Southwood Dr, San Luis Obispo, CA (the Property ularly described in the Lease. Unless otherwise defined herein, all capitalized terms used in this Assignment shall have the same meanings as set forth in the Lease. A complete copy of the Lease is attached to this Assignment as Exhibit A. B. Assignor and Assignee are each California non-profits, designated as charitable organizations by the Internal Revenue Service under Section 501(c)(3) of the Internal Revenue Code of 1986, each providing programs and services to their respective memberships and participants in keeping with their respective missions. C. Assignor, as Transferor, and Assignee, as Transferee, have entered into that certain Asset Transfer Agreement dated as of July 1, 2023 (as amended, the "Transfer Agreement") and have agreed to a transfer of assets from Assignor to Assignee, together with a commitment by Assignee to thereafter provide facilities, programs and services to the Assignor's program area (the "Transaction "); D. As part of the Transaction, Assignor has agreed to assign to Assignee, and Lease pursuant to the terms and conditions set forth below. NOW THEREFORE, in consideration of the foregoing Recitals and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Landlord, Assignee and Assignor hereby agree as follows: 1.Assignment and Assumption. Assignor hereby assigns, conveys, transfers and sets over unto Assignee any and all right, title and interest of Assignor in and to and duties and obligations under the Lease, and Assignee hereby accepts said the Lease commencing as of the date this Assignment is fully executed by the parties. Page 65 of 231 Assignee hereby assumes and accepts such assignment and delegation and agrees to keep, perform and be bound by all terms, covenants, conditions and to discharge all obligations under the Lease Agreement which arise, accrue or are incurred on or after the date hereof. 2.Consent to Assignment of Lease. Landlord hereby consents to the assignment of the Lease by Assignor to Assignee subject to the terms and conditions of this Assignment. Notwithstanding any provision in the Lease or this Assignment to the contrary, the consent of Landlord shall not be construed to modify, waive or affect any of the provisions of the Lease, or to waive any breach or default by Lessee under the Lease prior to the Effective Date. 3.Indemnity. (a) Assignor shall indemnify, defend, protect and hold harmless Assignee and its officers, employees, agents and assigns from and against all claims, demands, losses, costs (including attorney's fees and costs) or liabilities (a) arising under the Lease as a c under the Lease first accruing prior to the Effective Date, or as a result of any action, of its agents', contractors', employees', invitees' use or occupancy of the Property prior to the Effective Date, (b) to the extent arising under the Lease prior to the Effective Date as result of the negligence or willful misconduct of Assignor or its employees, agents, invitees or contractors, or (c) to the extent arising under the Lease prior to the Effective Date under a theory of strict liability. (b) Assignee shall indemnify, defend, protect and hold harmless Assignor and its officers, employees, agents and assigns from and against all claims, demands, losses, costs (including attorney's fees and costs) or liabilities (a) arising under the Lease as a c under the Lease first accruing prior to the Effective Date, or as a result of any action, of its agents', contractors', employees', invitees' use or occupancy of the Property on or after the Effective Date, (b) to the extent arising under the Lease on or after the Effective Date as result of the negligence or willful misconduct of Assignee or its employees, agents, invitees or contractors, or (c) to the extent arising under the Lease on or after the Effective Date under a theory of strict liability. (c) The foregoing indemnity provisions shall survive the expiration or termination of the Lease or this Assignment. 4.Miscellaneous . (a) Successors and Assigns. This Assignment shall be binding upon and inure to the benefit of the parties hereto, their respective heirs, successors-in-interest and assigns; provided, however, the consent by Landlord hereby shall not be construed Page 66 of 231 as a consent by Landlord to, or as permitting, any further or other assignment by Assignee, except as permitting by the terms of the Lease. (b) Severability. If any term or provision of this Assignment is, to any extent, held to be invalid or unenforceable, the remainder of this Assignment will not be affected, and each term or provision of this Assignment will be valid and be enforced to the fullest extent permitted by law. (c) Modification. No modification, waiver, amendment, discharge or change of this Assignment shall be valid unless the same is in writing and signed by the party against whom the enforcement of such modification, waiver, amendment, discharge or change is or may be sought. (d). In the event of any action between Assignor and Assignee seeking enforcement of any of the terms and conditions to this Assignment, the prevailing party in such action, whether by fixed judgment or settlement, shall be entitled to recover, in addition to damages, injunctive or other relief, its actual costs and expenses, ost- judgment motions, (b) contempt proceedings, (c) garnishment, levy and debtor and third- party examination, (d) discovery, and (e) bankruptcy litigation. (e) Counterparts. This Assignment may be executed in one or more counterparts, each of which shall be deemed an original and all of which shall constitute one and the same Assignment. Delivery of any signature page to this document may be transmitted by facsimile, or by email of a .PDF or .JPEG attachment, or electronically through DocuSign or comparable electronic document execution software, any of which shall be valid and enforceable to the same extent as an original signature, and the parties agree to accept the same and be bound thereby. (f) Headings. The section headings used herein are inserted for convenience only and shall not affect in any way the meaning or interpretation of this Assignment. (g) Governing Law. This Assignment shall be governed by and construed in accordance with the laws of the State of California without regard to its conflicts of law principles. [signatures on following page] Page 67 of 231 IN WITNESS WHEREOF, Assignor and Assignee have executed this Assignment as of the Effective Date set forth above. ASSIGNOR: SAN LUIS OBISPO COUNTY Y.M.C.A., a California Nonprofit public benefit corporation By: Name: Eric Linkugel Title: Chief Volunteer Officer By: Name: Cheryl Cuming Title: Board Secretary ASSIGNEE: CHANNEL ISLANDS YOUNG MEN'S CHRISTIAN ASSOCIATION, a California Nonprofit public benefit corporation By: Name: Margo Byrne Title: CEO By: Name: Bob Williams Title: Board Secretary The undersigned as Landlord under the Lease, hereby acknowledges and consents to this Assignment. LANDLORD: CITY OF SAN LUIS OBISPO, a Municipal corporation By: Name: Erica A. Stewart Title: Mayor ATTEST: ________________________________ Teresa Purrington, City Clerk APPROVED AS TO FORM: ________________________________ J. Christine Dietrick, City Attorney Page 68 of 231