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HomeMy WebLinkAboutc4sloartscouncilleaseagreement FROM: Shelly Stanwyck, Parks and Recreation Director Prepared By: James Bremer, Recreation Supervisor SUBJECT: BY RESOLUTION, APPROVE A LEASE AGREEMENT WITH THE SAN LUIS OBISPO COUNTY ARTS COUNCIL FOR THE USE OF 1123 MILL STREET OFFICE SPACE. RECOMMENDATION By Resolution, approve a lease agreement between the City and the San Luis Obispo County Arts Council (SLO Arts Council), for a period of five years with a renewal option of an additional five years, in the initial annual amount of $1,551 annually for the use of City owned property located at 1123 Mill Street and authorize the Mayor to execute the agreement. DISCUSSION Background On December 13, 2011 the City entered into a lease agreement with SLO Arts Council for the use of office space at 1123 Mill Street in San Luis Obispo. The terms of that lease of the City’s 660 square foot of office space was at the rate of $1.96 a foot or $1,294 annually. This amount was determined from historic 2007 annual maintenance and utility costs (less janitorial services) on a prorated basis. The agreement also contained a one year renewal option. The lease was renewed for an additional year in 2012 and is set to expire on December 31, 2013. The tenant desires to continue to lease the premises and the arrangement has worked out for both the City and the community. General Plan and Economic Development Strategy This use of the office space by the SLO Arts Council is consistent with an office/medium density residential use and is compliant with the Zoned Public Facility use as determined by the Community Development department. A Public Facility designation is intended to provide for public uses and specifies that public uses are those conducted by governmental or nonprofit agencies. The proposed lease agreement with the SLO Arts Council is consistent with this zoning regulation. In 2012, the Council adopted an Economic Development Strategic Plan, which includes policies to promote and enhance the San Luis Obispo quality of life. Two of the top attributes that added to the quality of life and that attracted and kept people in San Luis Obispo were performing and visual arts and arts education groups. The City has approached development from a holistic perspective taking into account how much and what type of growth can be sustained both environmentally and economically. San Luis Obispo’s historic context, environmental setting, and cultural fabric all drive City policy including the General Plan and specific plans. Support of non-profit agencies, such as the SLO Arts Council is consistent with this strategy. Meeting Date Item Number Dec. 10, 2013 C4 - 1 SLO ARTS COUNCIL LEASE AGREEMENT Page 2 City Policy Regarding Leasing to Non Profits The City's Financial Management Manual, Section 475-C (Property Management and Disposal) provides guidance regarding the leasing of City-owned buildings and real properties as referenced on page 475-10: Leases of City-Owned Buildings and Real Property The following guidelines apply to leases of City-owned buildings to outside parties. Leases with Non-Profit Organizations 1. Requests for the long-term use of City property by non-profit organizations should generally follow the same review procedures as the sale or lease of City property by private for-profit entities. 2. The proposed use should be consistent with the goals and objectives of the City's General Plan and not conflict or preclude any existing or planned City use. 3. Any development or operations directly related to the proposed use should have a clear and measurable community benefit in alignment with City goals, policies, and plans. 4. Any lease agreements for the use of City property by non-profit organizations that charge a less than market rate for the City property should include a provision for community access and/or City use, or operate in close partnership in the delivery of City services. 5. Lessees will be responsible for all property related use taxes that may be assessed. Proposed Lease Agreement The proposed lease agreement with the SLO Arts Council is provided as attached (Attachment 3) and is consistent with the City’s guidelines for leases of City-owned buildings and real property. The annual rent is proposed at a slight increase of $2.35 per square foot or $1,551 annually which includes increased maintenance and reflects a prorated share of the annual maintenance and utility costs (excluding janitorial service, which will not be provided) for the Ludwick Community Center. Staff recommends an initial agreement term of five years expiring on December 31, 2018 (with an annual Consumer Price Index (CPI) evaluation of the base rent occurring each November). Additionally, staff recommends the agreement to have an option to renew for an additional five years upon mutual consent of both parties. In continuing with past practice, parking spaces will not be included with the lease amount as parking behind the Ludwick Community Center is used by other groups renting the facility and street parking is readily available for free in the area. FISCAL IMPACT The proposed annual lease rate of $1,551 in year one, as discussed above, is based on a prorated share of the annual costs to maintain the Ludwick Community Center less janitorial services. The lease annual fee (the prorated share for maintenance and utilities based on a cost of $2.35 per square foot) will be adjusted by the current CPI during the initial lease term. If an extension of an additional five years occurs the square footage costs that are prorated will be recalculated and adjusted to create a new “base” annual fee which would be then indexed annually. C4 - 2 SLO ARTS COUNCIL LEASE AGREEMENT Page 3 ALTERNATIVES 1. Rent the facility to the SLO Arts Council at the full market rate. The City Council could amend the proposed lease and approve a lease agreement at the full market rent presently estimated to be $18,612 per year to the SLO Arts Council. This alternative is not recommended as the building’s use continues to provide support to the community through public art enhancement. The City Council previously determined that the proposed use by the SLO Arts Council has a clear and measurable community benefit in alignment with City goals. 2. Rent the Facility to the SLO Arts Council at a predetermined value. The City Council could modify the proposed lease and approve a lease agreement with the SLO Art Council in the amount less than the staff recommended rate of $1,551 annually. This alternative is not recommended as the current proposal is already below market rate value. Additionally, the SLO Arts Council has committed this level of funding for the leasing of this space. 3. Request For Proposals to All Local Non-Profits. Over the years non-profits have expressed interest in leasing various City properties for reduced rents. The property at 1123 Mill Street is zoned Public Facility and therefore a public agency or quasi-public agency must be the tenant. However, Council could direct staff to issue a Request For Proposals to qualified non-profits and offer them an opportunity to propose an appropriate rental amount for the facility as well as modification to the zoning. ATTACHMENTS 1. Vicinity Map 2. Resolution 3. Lease Agreement, SLO Arts Council 4. Council Agenda Report, December 13, 2011 \\chstore4\team\council agenda reports\2013\2013-12-10\slo arts council lease agreement (stanwyck-bremer)\car resolution lease agreement between city and slo arts council.docx C4 - 3 Attachment 1 C4 - 4 R _____ RESOLUTION NO. _____ (2013 Series) A RESOLUTION OF THE CITY OF SAN LUIS OBISPO APPROVING THE TERMS FOR THE LEASE OF 1123 MILL STREET WITH THE SAN LUIS OBISPO COUNTY ARTS COUNCIL AND AUTHORIZING THE MAYOR TO EXECUTE THE LEASE AND ALL NECESSARY SUPPORTING DOCUMENTS WHEREAS, the San Luis Obispo County Arts Council offers support to the City’s Public Art program and desires to lease the office space located at 1123 Mill Street; and WHEREAS, the City of San Luis Obispo owns the commercial property located at 1123 Mill Street (adjacent to the Ludwick Community Center); and WHEREAS, the City of San Luis Obispo has agreed to lease this space to the San Luis Obispo County Arts Council for a period of 5 years expiring December 31, 2018; and WHEREAS, the City has adopted policies on leasing City owned property as part of its Property Management Manual; and NOW, THEREFORE, BE IT RESOLVED by the Council of the City of San Luis Obispo to: SECTION 1. The City Council hereby finds as follows: A. The San Luis Obispo Arts Council provides an important public service and significant public benefits to the community through its labor and investments to advance the visual, literary and performing arts through programs that promote public access to the arts, arts in educational settings, local arts planning and collaboration, and opportunities for artists and arts organizations. B. The San Luis Obispo Arts Council’s purpose and programs are consistent with and support City quality of life, cultural, civic, and economic development goals and objectives as set forth in the City’s General Plan and Economic Development Strategic Plan. SECTION 2. In consideration of the public benefits set forth herein, the City Council approves the five year lease agreement between the City of San Luis Obispo and San Luis Obispo County Arts Council and authorize the Mayor to execute the lease agreement and all necessary supporting documentation to effectuate the lease. Upon motion of _______________________, seconded by _______________________, and on the following roll call vote: AYES: NOES: ABSENT: C4 - 5 Resolution No. _____ (2013 Series) Page 2 The foregoing resolution was adopted this _____ day of December, 2013. ____________________________________ Mayor Jan Howell-Marx ATTEST: ____________________________________ Anthony Mejia City Clerk APPROVED AS TO FORM: _____________________________________ J. Christine Dietrick City Attorney C4 - 6 San Luis Obispo County Arts Council Lease Agreement Page 1 FACILITY LEASE AGREEMENT BETWEEN THE CITY OF SAN LUIS OBISPO AND SAN LUIS OBISPO COUNTY ARTS COUNCIL FOR LEASE OF PROPERTY AT 1123 MILL STREET This agreement entered into this _____ day of December, 2013 is made by and between the City of San Luis Obispo ("City") and The San Luis Obispo County Arts Council (“SLO Arts Council), a non-profit California corporation. RECITALS WHEREAS, the City owns the premises commonly described as the Mill Street Office Space at the Ludwick Community Center, located at 1123 Mill Street in the City of San Luis Obispo, California ("1123 Mill Street Office Space"); and WHEREAS, the City wishes to provide to SLO Arts Council the occupancy and use of the 1123 Mill Street Office; and WHEREAS, 1123 Mill Street is designated as Office/Medium Density Residential in the City’s General Plan and is Zoned Public Facility (PF); and WHEREAS, City Property Management Manual 475-C provides guidance for the leasing of City-owned buildings and real properties and permits the Council to evaluate proposed uses consistent with City policy objectives on a case by case basis; and WHEREAS, City Property Management Manual guidelines provide that the proposed use should be consistent with the goals and objectives of the City's General Plan and not conflict or preclude any existing or planned City Use; and WHEREAS, at its December 10, 2013 meeting the City Council considered the request to renew the SLO Arts Council to lease space in the City facility, and determined that the SLO Arts Council's request should be approved, and because of the unique status and circumstances of the SLO Arts Council and because the City Council finds that the proposed use has a clear and measurable community benefit in alignment with City goals; and WHEREAS, the City Council authorized the City Manager to negotiate and execute a lease agreement with the SLO Arts Council, and Now, therefore, the parties agree as follows: LEASE PROVISIONS 1.Term of Agreement. The term of this agreement shall be for a period of five years. The agreement shall begin upon execution by both parties and shall expire on December 31, 2018. By mutual written consent of both parties, the term of this agreement may be extended for a period of up to five years. 2.Rent. For use of the approximately 660 square feet of office which is located exclusively on the ground floor of the Mill Street side of the building and which address is 1123 Mill Street Office ("the Premises"), Arts Obispo shall pay the City a rent of $1551.00 per year. The lease annual fee (the prorated share for maintenance and utilities based on a cost of $2.35 per square foot) will be adjusted by the current Consumer Price Index during the initial lease term. If an extension of an additional five years occurs the square footage costs that are Attachment 3 C4 - 7 San Luis Obispo County Arts Council Lease Agreement Page 2 prorated will be recalculated and adjusted to create a new “base” annual fee which would be then indexed annually. 3.Extent and Condition of the Premises. SLO Arts Council shall accept the Premises "as is". This agreement shall not obligate the City to guarantee the condition of the Premises, the suitability of the Premises for SLO Arts Council'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, Arts Obispo shall have no recourse against the City for any loss incurred. 4.Cost of Operations. SLO Arts Council shall bear the entire cost of its operations on the Premises, including: A.Paying the cost of any maintenance for which SLO Arts Council is responsible; B.Paying any taxes and fees related to its occupancy of the Premises, including all possessory interest taxes which may be imposed. 5.Maintenance of the Premises. SLO Arts Council agrees to perform all "housekeeping tasks" as well as any routine repairs to the premises. Housekeeping tasks shall generally include routine emptying of wastebaskets, cleaning of windows and doors, removal and or reporting of graffiti, sweeping of sidewalks in front of the premises, vacuuming and spot cleaning of carpets, and cleaning of any window blinds. 6.Alterations to Building. SLO Arts Council agrees that it shall have no right to make alterations to the building during the term of its lease. 7.Fire Inspection. A fire inspection will be completed by the City's Fire Department annually, and more frequently if necessary. SLO Arts Council shall be responsible for complying with any corrective notice resulting from such inspections in its portion of the premises. 8.Relationship of Parties. Under this agreement, the City shall be solely and exclusively a lessor, and SLO Arts Council shall be solely and exclusively a lessee. SLO Arts Council shall not be considered a partner, agent, officer, or employee of the City. SLO Arts Council's officers, members, affiliates, volunteers, employees, and independent contractors shall not be considered agents, officers or employees of the City. 9.Use of Facilities by Outside Parties. In recognition of the below market lease rate, SLO Arts Council agrees: A.To use due diligence in encouraging other non-profit groups and organizations to utilize the facilities whenever not in use by SLO Arts Council. First consideration for use by others will be given to local non-profit groups. Use of the facility by other groups will be coordinated with the SLO Arts Council schedule. B. To prepare an annual report for the City that summarizes the facility's use statistics for the calendar year and provides an assessment of whether SLO Arts Council is allowing public use of the facility consistent with the terms of this agreement. This report shall be due to the City prior to December 31st of each year. 10.Operations Manager. SLO Arts Council will designate a full or part- time operations manager who will be responsible for meeting the terms of this agreement and assuring the fullest Attachment 3 C4 - 8 San Luis Obispo County Arts Council Lease Agreement Page 3 community use of the facility. 11.Assignment. SLO Arts Council shall not assign this agreement to another party without the City's prior written consent. 12.Waiver. Without affecting any other rights or remedies, Lessor and the Lessee each hereby release and relieve the other, and waive their entire right to recover damages against the other, for loss of or damage to its property arising out of or incident to the perils required to be insured against herein. The effect of such releases and waivers is not limited by the amount of insurance carried or required, or by any deductibles applicable hereto. The Parties agree to have their respective property damage insurance carriers waive any right to subrogation that such companies may have against Lessor or Lessee, as the case may be, so long as the insurance is not invalidated thereby. 13.Hold Harmless and Indemnification. SLO Arts Council agrees to defend, indemnify, protect and hold the City and its agents, officers and employees harmless from and against any and all claims asserted or liability established for damages or injuries to any person or property, including injury to the Lessee’s employees, agents or officers which arise from or are connected with or are caused or claimed to be caused by the acts or omissions of the Lessee, and its agents, officers or employees, arising from or related to the use or occupation of the Premises under this Agreement, and all expenses of investigating and defending against same; provided, however, that the Lessee's duty to indemnify and hold harmless shall not include any claims or liability arising from the established sole negligence or willful misconduct of the City, its agents, officers or employees. Without limitation, from and after the date of execution of this Agreement, the SLO Arts Council shall also indemnify and defend City, using counsel approved by City in its absolute discretion, from any and all third party challenges to this Agreement or any related entitlement or approval contemplated hereunder. 14.Insurance. SLO Arts Council shall procure and maintain for the duration of the contract insurance against claims for injuries to persons or damages to property that may arise from or in connection with the use or occupation of the Premises hereunder by SLO Arts Council, its agents, representatives, employees, or sub-contractors as defined in Exhibit 1. 15.Termination. If the City determines that SLO Arts Council is not faithfully abiding by any term or condition of this agreement, the City may send written notification giving SLO Arts Council a 15-calendar day notice to cure the deficiency. If SLO Arts Council has not cured the deficiency within the 15 days specified in the notice, that failure shall constitute a breach of the agreement, and the City may give written notice to terminate the agreement effective 30 calendar days from receipt of the notice. If the City determines that it needs to use the property at 1123 Mill Street for municipal government purposes, the City may give written notice to SLO Arts Council to terminate the agreement effective 30 calendar days from receipt of the notice. 16.Cooperation upon Termination or Expiration. In the event of termination or expiration, SLO Arts Council shall fully cooperate by relocating its operations before the termination or expiration date and by entering into this Agreement waives any claim or right to relocation assistance from the City. By midnight on the termination or expiration date SLO Arts Council shall remove from the Premises all property in its possession or custody and shall leave the Premises in a condition as good as when received, excepting normal wear and tear. Any property remaining on the Premises after the termination or expiration date shall be deemed abandoned and shall become the property of the City of San Luis Obispo. The Lessee has no right to retain possession of the Premises or any part thereof beyond the Attachment 3 C4 - 9 San Luis Obispo County Arts Council Lease Agreement Page 4 expiration or termination of this Lease. In the event that Lessee holds over, then the rent hereunder shall be increased to 150% of rent specified herein applicable immediately preceding the expiration or termination. Nothing contained herein shall be construed as consent by Lessor to any holding over by Lessee. 17.Notices. All official notices required under this agreement shall be given in writing and submitted by certified mail, postage prepaid and addressed as follows: City:City Manager City of San Luis Obispo 990 Palm Street San Luis Obispo, CA 93401 Lessee:San Luis Obispo County Arts Council Executive Director P.O. Box 1710 San Luis Obispo, CA 93406 18.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. 19.Entirety and Integrity of Agreement. This document represents the entire and integrated agreement between the City and SLO Arts Council. This document supersedes and negates all prior negotiations, representations, agreements, and amendments, either written or oral, regarding the Premises and the operation of a community performing arts theater on the Premises. This document may be amended only by written instrument executed by both the City and SLO Arts Council. All provisions of this agreement are expressly made conditions. This agreement shall be governed by the laws of the State of California and any action hereunder shall be venued in the San Luis Obispo Superior Court in the City of San Luis Obispo, California. This agreement is executed by the following authorized representatives: ATTEST: CITY OF SAN LUIS OBISPO, A Municipal Corporation __________________________ _____________________________ Anthony J. Mejia, City Clerk Jan Howell Marx, Mayor APPROVE AS TO FORM: SAN LUIS OBISPO ARTS COUNCIL _____________________________ _____________________________ J. Christine Dietrick, City Attorney Executive Director Attachment 3 C4 - 10 Page 5 Exhibit 1 Insurance Requirements 1.SLO Arts Council's personal property, fixtures, equipment, inventory and vehicles are not insured by the City against loss or damage due to fire, theft, vandalism, rain, water, criminal or negligent acts of others, or any other cause. SLO Arts Council is to carry its own property insurance to protect it from any such loss. 2.In addition, SLO Arts Council will carry liability insurance in an amount of not less than $1,000,000.00. SLO Arts Council's liability insurance shall name the City and the City's agents as additional insured. 3.SLO Arts Council prior to occupancy of the premises shall provide a certificate of insurance establishing SLO Arts Council's compliance with this insurance requirement. The City shall maintain liability insurance insuring the City, but not the SLO Arts Council in an amount sufficient to cover the replacement of the premises. 4.SLO Arts Council is advised to carry business interruption insurance in an amount sufficient to cover its rental obligation to the City. 5.Both the City and SLO Arts Council's release each other and waive their respective rights to subrogation against each other, for loss or damage covered by insurance. Attachment 3 C4 - 11 councIl aq€nba R€PORt CITY OF SAN LUIS OBISPO FROM: Shelly Stanwyck, Parks and Recreation Director Meeting Oat" 12/13/] 1 SUBJECT: LEASE OF 1123 MILL STREET BY SAN LUIS OBISPO COUNTY ARTS COUNCIL RECOMMENDATION Give staff direction to finalize the negotiations of a lease agreement for 1123 Mill Street by San Luis Obispo County Arts Council in the amount of $1,294 for one year and authorize the City Manager to execute the finalized agreement subject to approval by the City Attorney and receipt by the tenant of a use permit. DISCUSSION Background As part of the City's 2011-13 Financial Plan, the Parks and Recreation Department proposed leasing a portion of the Ludwick Community Center (LCC), 660 square feet of office space referred to as 1123 Mill Street (Attachments 1), for lease as a revenue enhancement of approximately $11,000 per year. On November 28, 2011 the City received and distributed to Council the attached letter (Attachment 2) froin San Luis Obispo County Arts Council. San Luis Obispo County Arts Council is a Countywide Arts Council that supports the visual, literary, and performing arts community of San Luis Obispo County. The organization in the past has provided input and support to the City's Public Art Coordinator on public art projects. At this time, San Luis Obispo County Arts Council is asking to lease the portion of 1123 Mill Street presently offered for lease by the City for $1,294 per year. This amount reflects the prorata share of maintenance costs for the 660 square-foot office at the LCC. Direction by Mayor to Place Item on Agenda In accordance with Council Policies and Procedures the Mayor can direct staff to place items on future Agendas. On December 2, the Mayor directed staff to place an item on the December 13, 2011 agenda regarding a lease with San Luis Obispo County Arts Council for 1123 Mill Street for Council's consideration. City Policy Regarding Leasing to Non Profits The City's Property Management Manual, Section 475-C (Property Management and Disposal) provides guidance regarding the leasing of City-owned buildings and real properties. It states specifically at page 475-10: B3-1 C4 - 12 Approval of Lease of 1123 Mill Street LEASES OF CITY-OWNED BUILDINGS AND REAL PROPERTY The following guidelines apply to leases of City-owned buildings to outside parties. Leases with Non-Profit Organizations Page 2 I. Requestsfor the long-term use of City property by non-profit organizations should generally follow the same review procedures as the sale or lease of City property by private for-profit entities. 2. The proposed use should be consistent with the goals and objectives of the City's General Plan and not conflict or preclude any existing or planned City use. 3. Any development or operations directly related to the proposed use should have a clear and measurable community benefit in alignment with City goals, policies, and plans. 4. Any lease agreements for the use of City property by non-profit organizations that charge a less than market rate for the City property should include a provision for community access and/or City use, or operate in close partnership in the delivery of City services. 5. Lessees will be responsible for all property related use taxes that may be assessed Because the City "disposes" of property infrequently the most appropriate process will vary in each case depending on the circumstances. The guidelines in the Real Property Management manual state that they are "intended to provide the City with a framework for assessing the best approach on a case-by-case basis. It is not intended to limit the approaches available to the City: the overarching principle that should always apply is using an approach that will best accomplish the City's objectives given the circumstances at the time." There are five basic approaches that the City usually takes: request for proposals, broker services, exclusive negotiations, competitive sealed bids or auction (or a combination of these approaches), which are determined by the Council on a case-by-case basis depending on the circumstances. Ultimately the most appropriate course of action is a policy decision of the City Council. Proposed Lease Terms Should Council wish to enter into a lease with SLO Art Council, a draft Facility Lease for a term of one year with a one year option to extend is attached (Attachment 4). The amount of rent proposed is $1,294. That amount is reflective of the annual maintenance and utility costs (excluding janitorial services, which will not be provided) for this space under consideration at the LCe. Those costs are $29,812 per year or approximately $1.96 per square foot. The prorata share for 1123 Mill Street (660 square feet) would be $1,294 per year. San Luis Obispo County Arts Council would be responsible for all janitorial services in the leased premises. Parking was not included in the rent amount sought as the parking behind the LCC is often used by large groups renting the LCC and street parking is readily available for free in the area. An equivalent parking spot in a long term metered space or lesser used parking structure would cost approximately $480 to $720 a year. Upon receipt by San Luis Obispo Arts Council of a use permit B3-2 C4 - 13 Approval of Lease of 1123 Mill Street Page 3 and approval by the City Attorney of the proposed agreement, the City Manager (if authorized by Council tonight) would execute the final facility lease agreement. General Plan Consistency Determination & Administrative Use Permit The property is designated Office/Medium Density Residential in the General Plan and is Zoned Public Facility (PF). The property has a split land use designation, with the frontage facing Santa Rosa Street designated Office. Community Development staff has made a preliminary determination that the proposed use is consistent with the intent of General Plan policies. Attachment 5 includes relevant General Plan policies for the General Plan designation of Office. Public Facility (PF) Zone The property at 1123 Mill Street is zoned PF. Community Development staff have reviewed San Luis Obispo County Arts Council's correspondence and have preliminarily concluded that it qualifies as a government office, and is therefore a conditionally allowed use in the PF zone. In making the determination, staff reviewed the State designation of San Luis Obispo County Arts Council as the Local Arts Planning Agency and its partnership with the County per Board of Supervisor's resolution. Typically, non-profit general offices are not allowed in the PF zone unless they qualifY as a "Government Office" and perform quasi-governmental services. Government offices are the only type of offices allowed in the PF zone, subject to prior approval of an Administrative Use Permit. If the City Council authorizes negotiation and execution of a lease for 1123 Mill Street, it would be subject to the condition that the San Luis Obispo County Arts Council obtains the requisite use permit. If a use permit application is approved through the City's normal review processes, the lease with the Arts Council can be executed allowing the Arts Council to occupy the space. San Luis Obispo County Arts Council as a Government Office The designation of San Luis Obispo County Arts Council as a "government office" is unique, but based on legislative acts and designations by state and county bodies. The San Luis Obispo County Arts Council has been designated by the County Board of Supervisors and the State of California as the Local Arts Planning Agencyl under the State-Local Partnership Program2 designed to encourage local cultural planning (see Attachment 3). It is this unique and officially designated collaboration with the County and State Legislature that qualifies the Arts Council as a government office. The purpose statement of the PF zone reads, that the "P F zone is intended to provide for public uses and that public uses are those conducted by governmental or nonprofit agencies3 ." Non-profits that receive State or local funding only would not qualifY under this determination unless they carry out quasi-governmental functions. Staff does not believe this 1 A local arts agency is a nonprofit organization, or agency of city or county government, officially designated to provide financial support, services, andlor other programs to a variety of arts organizations., 2 The State-Local Partnership Program fosters cultural development on the local level through a partnership between the California Arts Council and the designated local arts agency' of each county. This partnership includes funding, cooperative activities, infonnation exchange, and leadership enabling individuals, organizations, and communities to create, present, and preserve the arts of all cultures to enrich the quality of life for all Californians. 3 17.36.010 Purpose and application. B3-3 C4 - 14 Approval of Lease of 1123 Mill Street Page 4 determination sets a precedent because of the circumstances unique to the San Luis Obispo County Arts Council. FISCAL IMPACT The approximately 660 square feet of office at 1123 Mill Street was proposed as a revenue enhancement and "budget balancer" in the 2011-13 Financial Plan by the Parks and Recreation Department. Revenues were projected at $11,000 per year from 1123 Mill Street in each year of the 2011-13 Financial Plan. The fiscal impact of this lease at below market rent is $9,706 in lost revenues annually. As a point of information the property was marketed for lease at a Market Rate of $1.75 per square foot or $13,860 annually, which represented rent as well as the added maintenance and utilities costs projected from this use (since the facility is not separately metered). ALTERNATIVES 1. Full Market Rent to the San Luis Obispo Connty Arts Council. Council could modify the proposed lease and approve a lease agreement with San Luis Obispo County Arts Council at full market rent or approximately $13,860 per year consistent with the market rate the property was listed for rent. 2. $1.00 per Year. Council could modify the proposed lease and approve a lease agreement with San Luis Obispo County Arts Council in the amount of $1.00 per year. 3. Request For Proposals to All Local Non-Profits. Over the years many nonprofits have expressed interest in leasing various City properties for reduced rents. No nonprofits were contacted when staff "listed" 1123 Mill Street for lease because the property was proposed to be leased for added revenues, it is zone Public Facility and therefore a public agency or quasi-public agency must be the tenant. However, Council could direct staff to issue a RFP to qualified Non-Profits and offer them an opportunity to propose an appropriate rental amount for the facility as well as modification to the zoning. 4. Continue to Seek a Tenant at Market Rate. If San Luis Obispo County Arts Council does not want to pay Market Rent, and Council desires that the property be leased at the current market rate, Council could direct staff to not lease to San Luis Obispo County Arts Council and continue to seek an appropriate Tenant for market rent. ATTACHMENTS 1. "For Lease Flyer" 2. Letter of Interest from San Luis Obispo County Arts Council 3. Board of Supervisors Resolution 2011-127 4. Proposed Lease Agreement 5. General Plan Policies T:\Council Agenda Reports\Parks & Recreation CAR\2011 P&R CARs\ Arts Obispo Lease 1123 Mill CAR B3-4 C4 - 15 ATTACHMENT j IIIIIP.I city o~ </.& san lUIS OBISpO paRks anb R€CR€atlOn b€paRtm€nt Premier downtown location. Close to government buildings, restaurants and shopping. Suite size 660 Sq. Ft. with two offices, conference room, kitchenette, restrooms and fiber optic service. Call for more details. Corner of Mill and Santa Rosa Street adjacent to the Ludwick Community Center. Total Space Available: 660 SF Rental Rate: $1.75/SF/Year Min. Type: Public Facility, Sub·type: Office Building Parcel info 002·325·001 Zoning PF Last Verified 8/30/2011 Contact: James Bremer (805) 781-7295 jbremer@slocity.org 1 Space Available Display Rental Rate $1.75/SF/Year $13860.00 Amt/Year $1155.00 Amt{Month Space Available: 660 SF Rental Rate: ($1.75) /SF/Month Space Type: Office Building Lease Type: /SF/Month $1155.00 {YearS 13860.00 Parking Spaces subject to negotiation B3-5 C4 - 16 ARTS OBISPO Son LU;5 Obhpo County Arts CouncH PH Box 1710 San Luis Obispo, CA 93406 Phone: (80S) 544··9251 Fax: (805) 544-1522 office@artsobispo.org Wv.-v.'.artsobispo.otg Board of DirectoJ'$ Mary Kay J-Iarrirtgton President Julie frankel 'vice~Prt'!>idem Jane Voigts Secretary JanoKray TtL"a!!Urer Gordon Fuglie CrisS;l. Hewitt Richard Mortensen Kathleen Waddell J!lflct Wallace H(j1/orary .\nnRo;.'llm Staff Charlotte Alexander fixl'mliiJ: Dire.1or Jennll Hartr.cll Pro,x,mm [)ir?dor Ba-rbarJ. Radm;ch ArU in F..d"adWn Coardin4lor November 23, 2011 To the members of the San Luis Obispo City Council: The San Luis Obispo County Arts Council, also known as ARTS Obispo, is seeking approval to lease office space owned by the City of San Luis Obispo at 1123 Mill Street in downtownSan Luis Obispo. At this time we understand from City staff that the zoning of the property allows for our organization's occupancy and use of the site. Assuming we receive approval to lease the space, we are asking for consideration of a reduction in the advertised rental rate, perhaps similar to that received by other City cultural partners, including the San Luis Obispo Museum of Art. It was determined less than a month ago that we must leave our current office/gallery space in the Creamery in downtown San Luis Obispo no later than December 31,2011. We have been actively seeking alternative space since then, so expedited consideration of this request would be greatly appreciated. We put the word out to our extensive network of creative people that we are in need of approximately 600 sq. ft. of office space (donated if possible), and the availability of 1123 Mill Street was brought to our attention. Please note that we are NOT seeking gallery space at this time -only general office space to house edministrative and program staff. This property seems ideal in terms of size, facilities, and location in the downtown area of the County seat. The San Luis Obispo County Arts Council has long partnered with the City of San Luis Obispo to advance the arts, including the very popular Art After Dark and Open Studios Art Tour, as well as the collaborative Art in Public Places program. We contribute to the richness of the City's cultural activities as well, helping to bring tourist dollars into the community. We are a 501 (c)3 not-for-profit public benefit organization dedicated to advancing the visual, literary and performing arts in San Luis Obispo County, specifically in the areas of arts in education, public access to the arts and opportunities for artists. The County of San Luis Obispo has designated us as the County's Local Arts Planning Agency for the purpose of acting as a comprehensive community arts organization. We act in partnership with the California Arts Council to foster cultural development on the local level through funding, cooperative activities, information exchange, and leadership -enabling individuals, organizations, and communities to create, present, and preserve the arts of all cultures to enrich the quality of life for residents and visitors. As we begin celebrating 30 years of service to San Luis Obispo County in 2012, the Board of Directors of the Arts Council is re-visiting our vision and mission statements. With an emphasis on collaboration and partnership, the Board is looking to create a sustainable operating model in 2012 and develop a long-term strategic plan to better serve the needs of the visual, literary and performing arts community. Please consider partnering with us to make that happen in 2012 and beyond. Sincerely, . // . ~ / -/ltUt7f/~~~J~C Mary K H~, President Board f Directors cc: Katie Uchtig, City Manager Advancing the Arts in San Luis Obispo County ATTACHMENT 2 B3-6 C4 - 17 IN THE BOARD OF SUPERVISORS COUNTY OF SAN LUIS OBISPO, STATE OF CALIFORNIA Tuesday May 3 2011 PRESENT: Supervisors Frank Mecham, Bruce S. Gibson, Paul A. Teixeira, James R. Patteraon and Chairperson Adam Hill ABSENT: None RESOLUTION NO. 2011-127 RESOLUTION OF THE BOARD OF SUPERVISORS OF THE COUNTY OF SAN LUIS OBISPO APPROVING PARTICIPATION IN THE 2011-12 STATE·LOCAL PARTNERSHIP PROGRAM DESIGNAnNG THE LOCAL ARTS PLANNING AGENCY AND APPROVING AND AUTHORIZING EXECUTION OF A GRANT CONTRACT WITH THE CALIFORNIA ARTS COUNCIL The following resolution is now offered and read: WHEREAS, the Caldornia Arts Council and the California Legislature have established a State-Local Partnership Program (the "Program") designed to encourage local cultural planning and decisjon~makjng and to reach previously underserved constituencies; and WHEREAS, the State-Lo.cal Partnership Program requires a mandatory match, at a level of 1: 1, which may be from either public or private sources; and WHEREAS, pursuant to the 1980-81 Program Guidelines, the Board of Supervisors of the County of San Luis Obispo (the "Board of Supervisors") designated the San Luis Obispo County Arts Council as the Local Arts Planning Agency under the Program for the purpose of acting as a comprehensive community arts organization; and WHEREAS, said plan was finalized by Board Resolution No. 84-113 and approved by the State of California; and WHEREAS, the Board of Supervisors and the San Luis Obispo County Arts Council (together defined as the "Local Partner") are now eligible to apply for and receive a grant for continued planning and input from interested citizens in local arts program activities. NOW, THEREFORE, BE IT RESOLVED AND ORDERED, by the Board of Supervisors of the County of San Luis Obispo, Slate of Caldornia as follows: Section 1: The Board of Supervisors hereby approves participation by the Local Partner designated for 2011-12 as itself and the San Luis Obispo County Arts Council, in the 2010-2011 State-Local Partnership Program. Section 2: The Board of Supervisors hereby authorizes and directs the Arts Council Administrator, San Luis Obispo County Arts Council, to execute the Grant Contract on behalf of the Local Partnership and submit said contract to the State-Local Partnership . Program Grant Review and Advisory Panel. Section 3: During the County's annual budget hearings, the Board of Supervisors may consider funding for the San LuiS Obispo Arts Council in an amount up to $41,000 or on an equal match basis. B3-7 C4 - 18 Upon motion of Supervisor ...,M"e"'c"'h"'am"'--__________ , seconded by Supervisor Gibson , and on the following roll call vote, to wit: AYES: Supervisors Mecham, Gibson, Teixeira, Patterson and Chairperson Hill NOES: None ABSENT: None ABSTAINING: None the foregoing resolution is hereby adopted. Chairman of the Board of Supervisors ATTEST: Julie L. Rodewald Clerk of the Board of Supervisors By ~lt~ DePUtYefk APPROVED AS TO FORM AND LEGAL EFFECT: WARREN R. JENSEN County Counsel By: Is/Rita L. Nea' Assistant County Counsel Date: 4120/2011 ,.,_ ............... m."~~ .. H ........ ,~ •• __ •••••• M ••• H ..... M~n.............. . ...... M ............ M .... " ............ , i STATE OF CAUFORNIA) 55, ! COUNTY Of SAN lUIS OBISPO ! I, JULIE L. RODEWALD. County Clerk of the above entitled 1 County, and Ex..()fflclo Clerk of the Board of Supervisors j thereof, do hereby certify the foregoing to be a full, true ! and correct copy of an order entered in the minutes of said I Board of Supervisors, and now remaining of record in my . office. 1 Wltne~s, my hand and seal of said Board of Supervisors this ! 4th day of May I 2011. I JULIE l. RODEWALD. County Clerk and Ex-Officio Clerk of the Board of Supervisors By: 9nntt~ t"l~~ L ..... n~ .... _ .... H''' ... ''.'H ... =~m_ .. ~:'~,~_ ..... ~ .... __ .n.n_ .... _,. .. H.".HN ....... ~..! B3-8 C4 - 19 ATTACHMENT 4 DRAFT FACILITY LEASE AGREEMENT BETWEEN THE CITY OF SAN LUIS OBISPO AND SAN LUIS OBISPO COUNTY ARTS COUNCIL SAN LUIS OBISPO COUNTY ARTS COUNCIL FOR LEASE OF PROPERTY AT 1123 MILL STREET This agreement entered into this day of , 2011 is made by and between the City of San Luis Obispo ("the City") and The San Luis Obispo County Arts Council, a non-profit California corporation" WHEREAS, the City owns the premiSeSG~~W;OnIY des~;i~~~ias the Mill Street Office Space at the Ludwick Community Center, loc~lteilijat 1123 Mill StreEHiJ"l.t~e City of San Luis Obispo, California ("1123 Mill Street Office SpaG~"); and "" WHEREAS, the City wishes to provide to SanLl.li~nDbispo County Arts Council the occupancy and use of the 1123 Mill StneetOffice; and ;;. , ,. WHEREAS, 1123 Mill Street is d~~ignat~cfiOffice/Medium Density Residential in the General Plan and is ZonedJluI~lic FacilityWf); and'; <fifi WHEREAS, citYil~r:operty;Mflmageme~tiiM~WJ~jl ~~~~miProvides guidance for the leasing of City-owned buildingsandi,real pr<'jperties andH~~rmits the Council to evaluate proposed uses consistent with City policy d~~~ti\(e~i:0,lljgcase 6~IQilSe basis; and " ;;lill! :;~T· lllHllilWJJ!:Hlliw:;", ill;L WHlijmWA~:,i8itY'pr~pert~i~~/lage~~\'iiM~~1l~1 guidelines provide that the proposed use should be (lo'nsistent with"thegoals B'l11d. objectives of the City's General Plan and not conflict or preclude anye)(i~ting or planned CityWse; and WHEREAS',at its December 13, 2011 meeting the City Council considered the request of the San Luis Obisp(li~rts Couliil:;tI to lease space in the City facility, and determined that the San Luis Obispo Arts C~1Uncil'sJ~qllest should be approved, subject to approval of an Administrative Use Permit;:6eQalirse of the unique status and circumstances of the San Luis Obispo Arts Council and because the City Council finds that the proposed use has a clear and measurable community benefit in alignment with City goals; and WHEREAS, the City Council authorized the City Manager to negotiate and execute a lease agreement with the San Luis Obispo Arts Council, subject the Arts Council applying for and obtaining and Administrative Use Permit, and subject to final lease approval by the City Attorney; and WHEREAS, the San Luis Obispo Arts Council has submitted an application for and received approval of an Administrative Use Permit for its proposes use of the City facility; and B3-9 C4 - 20 ATTACHMENT 4 Arts Obispo New Lease Agreement Page 2 WHEREAS, the Community Development Director has determined that the proposed use is consistent with the City's General Plan; and WHEREAS, the Community Development Director has determined that the proposed use is consistent with Section 17.36.010 of the City of San Luis Obispo Municipal Code. Now, therefore, the parties agree as follows: LEASE PROVISIONS 1. Term of Agreement. The term of this agreement shall start upon execution by both parties and expire on Dece·mber 31,2012. By mutual written consent of both parties, the term of this agreement may be extended a period of one year. 2. Rent. For use of the approximately 660 square feet of office which is located exclusively on the ground floor of the Mill Street side of the building and which address is 1123 Mill Street Office ("the Premises"), Arts Obispo shall pay the City a rent fixed at $1,294 per year (the prorate share for maintenance and utilities based on a cost of $1.96 per square foot) for the lease term. 3. Extent and Condition of the Premises. San Luis Obispo County Arts Council shall accept the Premises "as is". This agreement shall not obligate the City to guarantee the condition of the Premises, the suitability of the Premises for San Luis Obispo County Arts Council'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, Arts Obispo shall have no recourse against the City for any loss incurred. 4. Cost of Operations. San Luis Obispo County Arts Council shall bear the entire cost of its operations on the Premises, including: A. paying the cost of any maintenance for which San Luis Obispo County Arts Council is responsible; B. paying any taxes and fees related to its occupancy of the Premises, including all possessory interest taxes which may be imposed. 5. Maintenance of the Premises. San Luis Obispo County Arts Council agrees to perform all "housekeeping tasks" as well as any routine repairs to the premises. Housekeeping tasks shall generally include routine emptying of wastebaskets, cleaning of windows and· doors, removal and or reporting of graffiti, sweeping of sidewalks in front of the premises, vacuuming and spot cleaning of carpets, and cleaning of any window blinds. B3-10 C4 - 21 Arts Obispo New Lease Agreement p~V~~HMENT 4 6. Alterations to Building. San Luis Obispo County Arts Council agrees that shall have no right to make alterations to the building during the term of its lease. 7. Fire Inspection. A fire inspection will be completed by the City's Fire Department at least annually, and more frequently if necessary. San Luis Obispo County Arts Council shall be responsible for complying with any corrective notice resulting from such inspections in its portion of the premises. 8. Relationship of Parties. Under this agreement, the City shall be solely and exclusively a lessor, and San Luis Obispo County Arts Council shall be solely and exclusively a lessee. San Luis Obispo County Arts Council shall not be considered a partner, agent, officer, or employee of the City. San Luis Obispo County Arts Council's officers, members, affiliates, volunteers, employees, and independent contractors shall not be considered agents, officers or employees of the City. 9. Use of Facilities by Outside Parties. In recognition of the below market lease rate, San Luis Obispo County Arts Council agrees: A. To use due diligence in encouraging other groups and organizations to utilize the facilities whenever not in use by San Luis Obispo County Arts Council. First consideration for use by others will be given to local non-profit groups. Use of the facility by other groups will be coordinated with the San Luis Obispo County Arts Council schedule. B. To prepare an annual report for the City that summarizes the facility's use statistics for the calendar year and provides an assessment of whether San Luis Obispo County Arts Council is allowing public use of the facility consistent with the terms of this agreement. 10. Operations Manager. San Luis Obispo County Arts Council will designate a full or part- time operations manager who will be responsible for meeting the terms of this agreement and assuring the fullest community use of the facility. 11. Assignment. San Luis Obispo County Arts Council shall not assign this agreement to another party without the City's prior written consent. 12. Subrogation Waiver. The City and San Luis Obispo County Arts Council 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, San Luis Obispo County Arts CounCil, their agents, their officers, their employees, or their guests. 13. Hold Harmless and Indemnification. San Luis Obispo County Arts Council agrees to defend, indemnify, protect and hold the City and its agents, officers and employees harmless from and against any and all claims asserted or liability established for damages or injuries to any person or property, including injury to the Contractor's employees, agents or officers which arise from B3-11 C4 - 22 ATTACHMENT 4 Arts Obispo New Lease Agreement Page 4 or are connected with or are caused or claimed to be caused by the acts or omissions of the Contractor, and its agents, officers or employees, in performing the work or services herein, and all expenses of investigating and defending against same; provided, however, that the Contractor's duty to indemnify and hold harmless shall not include any claims or liability arising from the established sole negligence or willful misconduct of the City, its agents, officers or employees. Without limitation, from and after the date of execution of this Agreement, the San Luis Obispo Arts Council shall also indemnify and defend City, using counsel approved by City in its absolute discretion, from any and all third party challenges to this Agreement or any related entitlement or approval contemplated hereunder. 14. Insurance. San Luis Obispo County Arts Council shall procure and maintain for the duration of the contract insurance against claims for injuries to persons or damages to property that may arise from or in connection with the performance of the work hereunder by San Luis Obispo County Arts Council, its agents, representatives, employees, or sub-contractors as defined in Exhibit 1. 15. Termination. If the City determines that San Luis Obispo County Arts Council is not faithfully abiding by any term or condition of this agreement, the City may send written notification giving San Luis Obispo County Arts Council a 15-calendar day notice to cure the deficiency. If San Luis Obispo County Arts Council has not cured the deficiency within the 30 days specified in the notice, that failure shall constitute a breach of the agreement, and the City may give written notice to terminate the agreement effective 30 calendar days from receipt of the notice. If the City determines that it needs to use the property at 1123 Mill Street for municipal government purposes (such as civic center expansion), the City may give written notice to San Luis Obispo County Arts Council to terminate the agreement effective 30 calendar days from receipt of the notice. 16. Cooperation upon Termination or Expiration. In the event of termination or expiration, San Luis Obispo County Arts Council shall fully cooperate by relocating its operations before the termination or expiration date and by not seeking relocation assistance from the City. By midnight on the termination or expiration date San Luis Obispo County Arts Council shall remove from the Premises all property in its possession or custody and shall leave the Premises in a condition as good as when received, . excepting normal wear and tear. Any property remaining on the Premises after the termination or expiration date shall be deemed abandoned. 17. Notices. All official notices required under this agreement shall be given in writing and submitted by certified mail, postage prepaid and addressed as follows: To the City: City Administrator City of San Luis Obispo 990 Palm Street San Luis Obispo, CA 93401 B3-12 C4 - 23 Arts Obispo New Lease Agreement To San Luis Obispo County Arts Council: President San Luis Obispo County Arts Council P.O. Box 1710 San Luis Obispo, CA 93406 ATTACHMENT 4 Page 5 18. 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. 19. Entirety and Integrity of Agreement. This document represents the entire and integrated agreement between the City and San Luis Obispo County Arts Council. This document supercedes and negates all prior negotiations, representations, agreements, and amendments, either written or oral, regarding the Premises and the operation of a community performing arts theater on the Premises. This document may be amended only by written instrument executed by both the City and San Luis Obispo County Arts Council. All provisions of this agreement are expressly made conditions. This agreement shall be governed by the laws of the State of California. This agreement is executed by the following authorized representatives: ATTEST: City Clerk APPROVED AS TO FORM: City Attorney CITY OF SAN LUIS OBISPO, A Municipal Corporation Katie Lichtig, City Manager SAN LUIS OBISPO COUNTY ARTS COUNCIL B3-13 C4 - 24 Attachment S The following General Plan policies provide specific guidance on use of properties related to quasi-governmental and art facilities for properties designated in the General Plan as Office. 3.4 Offices 3.4.1 Purpose and Included Uses The City should have sufficient land for Office development to meet the demands of City residents and the specialized needs of County residents. Office development inc Iud e s professional and fin a n cia I s e r vic e s (such as doc tor s, architects, and insurance companies and banks) and government agencies. The City should retain the regional offices of state and federal agencies. Not all types of offices are appropriate in all locations. (See office location policies below. Also see the Public Facilities section). 3.4.2 Office Locations A. All types of offices are appropriate in the downtown General Retail district, but are discouraged at street level in storefronts of the commercial core. B. All types of office activities are appropriate in the Office district which surrounds the downtown commercial area, though offices needing very large buildings or generating substantial traffic may not be appropriate in the area which provides a transition to residential neighborhoods. C. Medical services should be near the hospitals, and may also be located in other commercial areas of the City. D. Government social services and the regional offices of state and federal agencies should be near the intersections of South Higuera Street, Prado Road, and Highway 101 (Figure 5); E. Offices having no substantial public visitation or need for access to downtown government services may be in Services and Manufacturing districts. F. Certain bus i n e s s and professional services having no substantial public visitation or limited need for access to downtown government services may be in Services and Manufacturing districts. Examples of such uses are computer services, utilities engineering and administration, architects and engineers, industrial design, advertising, building contractors, labor and fraternal organizations, veterinarians, and insurance and financial services that do not directly serve retail customers, G. Certain business and professional services with limited need for access to downtown g:MiITlTfft services may be located in areas that are away from the downtown, and designated Community Commercial. Appropriate types of offices inc Iud e those that provide direct "over-the-counter" services to customers and clients, Professional offices may also be appropriate, particularly above the ground floor. 5.1.9 Different Offices Government and private activities of types not listed in policies 5,1.4, 5.1,5, and 5.1,6 may be established in these identified areas, so long as they are compatible with and do not displace the government functions which should be located in the area 5.2.1 Cooperation The City should cooperate with other agencies and with community groups to help provide facilities for a library, and for arts and sciences which meet broad community cultural needs, 5.5 Community Arts Support The City will continue to support community arts programs through a variety of means, such as loans, grants, and help in obtaining sites. B3-14 C4 - 25 Page intentionally left blank. C4 - 26