HomeMy WebLinkAbout10/17/2006, C5 - EXTENSION TO LEASE AGREEMENT WITH THE HISTORICAL SOCIETY FOR THE PROPERTY LOCATED AT 696 MONTEREY S council M
October 17 2006
j acEnba RepoRt S
CITY OF SAN LUIS OBISPO
FROM: Shelly Stanwyck, Assistant CAO
Prepared by: Brigitte Elke,Principal Administrative Analyst
SUBJECT: EXTENSION TO LEASE AGREEMENT WITH THE HISTORICAL SOCIETY
FOR THE PROPERTY LOCATED AT 696 MONTEREY STREET
(CARNEGIE LIBRARY)
CAO RECOMMENDATION
Approve an extension to the existing Lease Agreement with the Historical Society for operation
of the County Historical Museum at the Carnegie Library for an additional five-year term and
authorize the CAO to execute the Agreement.
DISCUSSION
Background
For almost 50 years, the City maintained a lease with the County that allowed the original
Camegie Library to be used as the County Historical Museum. The County, in turn, had an
agreement with the San Luis Obispo County Historical Society to operate the museum. In 2000
the City completed a$1.3 million renovation to the building in order to bring the building up to
various standards, including seismic and those of the Americans with Disabilities Act. Based on
past maintenance issues with the County and to assure proper care of the newly renovated
property, City staff worked with the County and representatives of the Historical Society to
develop a new property lease directly between the Historical Society and the City. County staff,
in turn, agreed to recommend renewing its agreement with the Historical Society that addresses
standards for the museum's program in return for an operational subsidy from the County. The
renewal was for period of 20 years, with an option to extend for an additional 20 years. That
agreement was approved by the Board of Supervisors on April 10, 2001. Consequently, the City
entered into a lease agreement with the Historical Society for the lease of the property at 696
Monterey Street. The initial lease agreement was entered into for five years, with the option to
extend for 15 years, and subsequent five-year increments up to 40 years.
New Lease Agreement
The first five years of the agreement ended in April 2006 and, in mutual agreement of both
parties, the lease extension needs to be executed. Upon review of the original extension clause,
staff suggested the first extension term to be changed from 15 yearsas originally stated to five
years. The agreement can then be extended for additional five-year periods up to 40 years in total.
The lease would effectively expire in April of 2041. The Historical Society agreed to this change,
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Council Agenda Report—Historical Society Lease Page 2
keeping the agreement more flexible. It was further agreed on that all utility service accounts
associated with the Historical Society's operations are updated to reflect the Historical Society as
the sole recipient of service and the party solely responsible for payment.
FISCAL IMPACT
The lease requires a $1.00 per year rent from the Historical Society, consistent with other leases
with non-profit organizations such as the San Luis Obispo Little Theater and the Children's
Museum.
The City will continue to assume the maintenance expected of most landlords, since the annual
cost to the City is small compared to the potential repair expense that could occur from improper
maintenance of a historically significant building with new, sophisticated systems.
ATTACHMENTS
1. Extension of Lease
2. Original Lease
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J O ATTACHMENT 1
EXTENSION OF LEASE FOR USE OF CITY PROPERTY
AT 696 MONTEREY STREET
This Extension of Lease for Use of City Property at 696 Monterey Street is entered into
between the San Luis Obispo County Historical Society (``Historical Society"} and the City of
San Luis Obispo ("City") this day of September, 2006.
WHEREAS, the parties entered into a Lease Agreement for Use of City Property at 696
Monterey Street ("Lease") on April 10`s, 2001; and
WHEREAS, section 3 of the Lease provides for extension of the Lease for an additional
term of fifteen (15) years upon the mutual agreement of the parties; and
WHEREAS, the parties wish to extend the Lease term for five (5) years from April 10,
2006 through April 9, 2011,
THE PARTIES HEREBY AGREE AS FOLLOWS:
1. The term of the Lease is extended for five (5) years.
2. Consistent with the provisions of paragraph 6 of the Lease, and within thirty (30)
days from the date of execution of this Agreement, the Historical Society shall ensure
that any and all utility service accounts associated with Historical Society's
operations are updated to reflect the Historical Society as the sole recipient of service
and the party solely responsible for payment.
3. All other terms and conditions of the Lease shall remain in full force and effect.
CITY OF SAN LUIS OBISPO HISTORICAL SOCIETY OF SAN LUIS
OBISPO
By: By-
Ken Hampian Fesi�le -
City Administrative Officer Soy i21y �'�u✓t^ �
ATTEST:
Audrey Hooper
City Clerk
APPROVED AS TO FORM:
J nath . Lowell
City Attorney -- -
G:\Agreements\Miscellaneous\Historical Societylease Agr.Extension.06.9.26.doc , 3
ATTACHMENT2
LEASE AGREEMENT BETWEEN THE CITY OF SAN LUIS OBISPO AND
THE SAN LUIS OBISPO COUNTY HISTORICAL SOCIETY
FOR USE OF CITY PROPERTY AT 696 MONTEREY STREET
This lease Agreement is entered into this �v day of 20011
between the City of San Luis Obispo (herein referred to as "City" and the San Luis
Obispo County Historical Society, a non-profit organization (herein referred to as "the
Historical Society").
WITNESSETH
WHEREAS, the City is the legal owner of the property located at 696
Monterey Street in the City of San Luis Obispo as shown on Exhibit A ("the
Premises); and
WHEREAS, the City has allowed the Historical Society to operate a history
museum on the Premises since November 1954; and
WHEREAS, the City considers continued use of the Premises by the Historical
Society to be in the public interest and an appropriate complement to Mission Plaza
and its activities;
NOW, THEREFORE, in consideration of the mutual covenants, conditions,
promises, and agreements herein set forth, the City and the Historical Society hereby
agree to the following terms and conditions for use of the Premises:
TERMS
1 . Use of the Premises. The City will allow the Historical Society to use
the Premises to operate a history museum for the term of this agreement.
2. Purpose of Agreement. The Historical Society agrees to lease the
Premises and to develop and operate a history museum on the Premises for the term
of the lease. The City shall have no obligation for development, or operation of the
proposed museum. Any costs incurred for development, or operation of the museum
shall be the sole responsibility of the Historical Society.
3. Term of Agreement. The term of this agreement shall commence
upon execution by both parties for the purposes outlined in the Purpose of
Agreement and shall extend for a period of five (5) years. The agreement may be
extended for an additional term of fifteen (15) years upon the mutual agreement of
the parties. Provided all terms of the agreement continue to be met, the parties
may then agree to additional consecutive five (5) year terms not to exceed a total
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of forty (40) years from the commencement of this agreement. The Historical
Society shall submit any notice of interest in an extended term in writing no less
than six (6) months prior to termination of the base term of the lease agreement.
The term of this agreement .shall be subject to the termination provisions of
Paragraphs 14 and 15.
4. Extent and Condition of the Premises. The Historical Society shall
accept the Premises "as is" and the City makes no warrantee on the condition of the
Premises, the suitability of the Premises for the Historical Society's intended use, the
duration that the Premises may be safely occupied, or the availability of alternate
facilities. Should any occurrence (such as fire, earthquake, flood or the need to
repair, improve or use the Premises) necessitate closing the Premises or a portion of
the Premises to the public, the Historical Society shall have no recourse to the City
for any loss incurred.
5. Rent. In recognition of the benefits the Historical Society provides the
community, the City agrees to provide the Historical Society with the use of the
Premises for $1 per year, payable on the anniversary date of this agreement each
year.
6. Cost of Operations. The Historical Society shall bear the entire cost of
its operations on the Premises, including all utility bills (including, but not limited to
water, sewer, electricity, trash, etc.) and any taxes and fees related to its occupancy
of the Premises, including, but not limited to possessory interest taxes; if any. The
cost of dedicated phone lines to the elevator and sprinkler alarms and monthly
monitoring fees for the elevator and fire alarms systems will be paid by the City and
are not included in the definition of utility expenses.
7. ADA Compliance. The Historical Society agrees to comply with the
requirements of the Americans with Disabilities Act in all its programs and services.
8. Maintenance by the City. The City agrees to perform all "craft
maintenance tasks" and repairs as defined in Exhibit B.
9, Maintenance by the Historical Society. The Historical Society agrees to
perform all "housekeeping tasks", as defined in Exhibit C, as well as any routine
repairs. The Society also agrees to perform all "landscape maintenance tasks" as
defined in Exhibit D for all newly landscaped property, including the entire bank on
the parking lot side of the building. .
10. Maintenance Inspection. Formal inspections, involving representatives
of the City of San Luis Obispo and the Historical Society, shall be implemented to
ensure that all housekeeping and landscape maintenance is performed to the
standard of the City of San Luis Obispo for all its buildings. Inspections shall occur
quarterly, within the first week of each quarter. The City of San Luis Obispo shall
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assume responsibility for scheduling maintenance inspections. A copy of the
inspection shall be provided quarterly to the County of San Luis Obispo.
11 . Failure to Properly Perform Maintenance. Should the Historical Society
fail to properly perform all housekeeping and landscape maintenance tasks to the
standards of the City of San Luis Obispo, the City, after notice to the Historical
Society and a reasonable opportunity for correction, may, at its sole discretion,
elect either to assume these responsibilities and charge the Historical Society for
the direct costs incurred to perform the tasks with City employees or contractors or
terminate the lease for cause pursuant to Paragraph 14.
12. Alterations to the Premises. The City shall be notified before any
alterations are made to the Premises. Alterations shall include affixing anything to
the walls or ceilings or running any surface wiring for phones or other purposes.
No alterations of any kind shall be made to the ceiling and decorative trim of the
ceiling at the top of the stairs. The Historical Society shall comply with all
applicable City requirements, all applicable building codes and the Americans with
Disabilities Act in making any alterations to the building's structural, electrical,
plumbing, interior and/or exterior systems and finishes. Any alterations must also
be consistent with the historical character of the Premises and must be approved
by the City's Cultural Heritage Committee.
13. Parking Spaces. As part of this agreement, the Historical Society is
authorized to use two parking spaces in City parking lot #9 for staff or volunteers.
14. Termination of this Agreement by the City. The City reserves the right
to terminate this agreement without cause by notifying the Historical Society in
writing six months prior to termination, should the City need the property for
official City business. Additionally, should the agreement between the Historical
Society and the County of San Luis Obispo for operation of the County Historical
Museum cease, this agreement shall also be terminated, unless the parties mutually
agree that it should remain in effect. Upon termination, all improvements shall
become the property of the City or the Premises shall be delivered free and clear of
all improvements.
Each of the terms, covenants and conditions of this lease are mutual and
dependent, and any breach of any of the said terms, covenants or conditions shall
constitute grounds for the termination, cancellation or forfeiture of this lease.
15. Termination of this Agreement by the Historical Society. The Historical
Society may terminate this agreement by notifying the City in writing six months
prior to termination. If the Historical Society exercises this option, all permanent
improvements (excluding removable exhibits specifically related to operation of the
museum) shall become the property of the City.
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16. Labor .Code Requirements. The Historical Society certifies that it is
aware of the provisions of the Labor Code of the State of California, which require
every employer to be insured against liability for workers compensation or to
undertake self-insurance in accordance with the provisions of that Code, and it
certifies that it will comply with such provisions throughout the term of this
agreement.
17. Non-discrimination of Lessee. There shall be no discrimination against
or segregation of any person or group of persons on account of race, religion, sex,
sexual orientation, national origin, age, physical, mental or economic status in the
construction, operation, lease, use, occupancy, tenure or enjoyment of the
Premises or the improvements thereon, or any part thereof, and the Historical
Society, or any person claiming under or through it, shall not establish or permit any
such practice of discrimination or segregation with reference to the construction of
improvements to the Premises,' or the selection, location, number, use or
occupancy of employees, contractors, subcontractors, laborers or materialpersons,
tenants, lessees, subtenants, sublessees, invitees or vendees of the Premises or the
improvements thereon, or any part.thereof.
The Historical Society shall not restrict access or use of the Premises or the
improvements thereon, or any portion thereof, on the basis of race, religion, sex,
sexual orientation, national origin, age, physical, mental or economic status of any
person.
18. Relationship of Parties. Under this agreement, the City shall be solely
and exclusively a lessor, and the Historical Society shall be solely and exclusively a
lessee. The Historical Society shall not be considered a partner, agent, officer or
employee of the City.. The Historical Society's officers, members, affiliates,
volunteers, employees and independent contractors shall not be considered agents,
officers or employees of the City.
19. Assignment. The Historical Society shall not assign this agreement to
another party without the City's prior written consent.
20. Subrogation Waiver. The City and the Historical Society release and
relieve each other and waive their entire rights of recovery against each other for
damage from perils covered by their property insurance, whether due to the
negligence of the City, the Historical Society, or their respective agents, officers,
employees or guests.
21 . Proof of Insurance. The Historical Society shall provide proof of
insurance in accordance with the requirements established in Attachment E.
22. Indemnification. The Historical Society shall indemnify and save
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harmless the City, its officers, agents, and employees against:
A. Any and all claims and demands which may be made against the City, its
officers, agents or employees by reason of any injury or death of any person or
corporation caused by any act or omission of the Historical Society under this
agreement or of the Historical Society's employees or agents;
B. Any and all damage to or destruction of the property of the City, its
officers, agents, or employees, occupied or used by or in the care, custody, .or
control of the Historical Society, or in proximity to the site of the Historical
Society work, caused by any act or omission of the Historical Society under
this agreement;
C. Any and all claims and demands which may be made against the City, its
officers, agents, or employees by reason of any injury to or death of or damage
suffered or sustained by an employee or agent of the Historical Society under
this agreement, however caused, excepting, any such claims or demands
which are the result of the sole active negligence or willful misconduct of the
City, its officers, agents, or employees;
D. Any and all claims and demands which may be made against the City, its
officers, agents or employees by reason of infringement or alleged infringement
of any trademark or copyright rights or claims caused by the use of any
apparatus, appliance, or materials furnished by the Historical Society under this
agreement; and
E. Any and all penalties imposed or damages sought on account of the
violation of any law or regulation or of any term or condition of any permit,
when said violation of any law or regulation or of any term or condition of any
permit is due to an act or omission on the part of the Historical Society.
The Historical Society, at its own costs, expense, and risk shall defend any and all
suits, actions, or other legal proceedings that may be brought against or for
employees on any such claim or demand of such third persons, or to enforce any
such penalty, and pay and satisfy any judgment or decree that may be rendered
against the City, including attorneys fees and costs, its officers, agents, or employees
in any such suit, action, or other legal proceeding, when same were due to an act or
omission of the Historical Society.
23. Enforcement Costs and Attorney's Fees. The prevailing party in any
action between the parties to this agreement, brought to enforce the terms of this
agreement, may recover from the other party its reasonable costs and attorney's fees
in connection with such an action.
24. Entirety and Integrity of this Agreement. This document represents the
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ATTACHMENT 2
entire and integrated agreement between the City and the Historical Society. This
document.supersedes and negates all prior negotiations, representations, agreements
and amendments, either written or oral, regarding the Premises and the operation of a
history museum on the Premises. Both parties also recognize that some issues may
not have been anticipated or addressed herein, and that changes to the agreement
may be warranted. This agreement may be amended upon written consent of both
parties, to the approval of the City Administrative Officer and the City Attorney and
as provided by law.
This Agreement is executed this day of 2001;
in the City of San Luis Obispo, State of California.
For The HISTORICAL SOCIETY
President
For The CITY j
Mayor
Attest:
City Clerk
Approved as to form:
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council memoRAnbum
qty of in Luis osispo, a6mmistaatlon bepautment
DATE: October 17, 2006 RECEIVED
TO: City Council OC 1 17 2006
FROM: Ken Hampian, City Administrative Officer SLO CITY CLERK
Prepared by: Brigitte Elke, Principal Administrative Analyst
SUBJECT: C-5 Fair Market Value for Lease of Carnegie Library to the Historical Society
As part of the consideration to extend the City's current lease of the Carnegie Library to the Historical
Society, Council member John Ewan has asked for an estimation of the fair market rent value.
In consultation with the City's Economic Development Manager we have determined appropriate rent
ranges, based on appraisals of comparable space, as follow:
Ubrary Square Low Range for fligh Range for
Footage Downtown Location Downtown Location
4,724 $1.50 per sq.ft $2.30 per sq.ft
Monthly Rent $7,086.00 $10,865.20
Value
Yearly Rent $85,032.00 $130,382.40
Value
5-year Lease $425,160.00 $651,912.00
Term Value
The lease agreement allows for extensions of 5-year increments for a total of 40 years (April 2041).
The above presented rent calculations show a range of the current fair market value for the property
and a competitive rent evaluation for a similar property and location in Downtown San Luis Obispo.
Because of the long term nature of the lease, an appropriate valuation is likely closer to the middle of
the range (longer terms often result in discounted rents) but the building's excellent condition and
continued maintenance on behalf of the tenant by the City increases the fair market rent value.
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