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HomeMy WebLinkAbout11/17/1992, 4B - EXTENSION OF AGREEMENT WITH THE SAN LUIS OBISPO LITTLE THEATER (SLOLT) FOR THE LONG TERM USE OF CITY OWNED PROPERTY LOCATED AT 1010 NIPOMO STREET MEETING OA city of saris OBispo �r. ; ;, diiZ COUNCIL AGENDA.REPORT ITE"NUMBER: r ' FROM: Ken Hampian, Assistant City Administrative, Prepared By: Deb Hossli, Administrative Analyst I' SUBJECT: Extension of agreement with the San Luis Obispo Little Theater (SLOLT) for the long term use of City owned property located at 1010 Nipomo Street CAO RECOMMENDATION: Authorize the Mayor to execute an agreement with SLOLT that sets out the terms under which SLOLT will construct a 300 seat community theater on City owned property located at 1010 Nipomo Street. . DISCUSSION: Background In January of 1990, the City entered into an agreement with SLOLT to allow construction of a 300 seat community theater on City owned property located at 1010 Nipomo Street. Under the terms of the present agreement, SLOLT had planned to collect $1.1 million (80% of the construction budget) by early 1992 so that construction of the theater could begin in the summer of 1992 and conclude by summer of the following year. Since execution of the agreement, however, SLOLT has concluded that the original fundraising and construction schedule was too ambitious, and as such, has requested the City to extend the agreement. Consequently, City staff and SLOLT representatives have been working over the last several months to develop a revised agreement for City Council consideration that establishes the summer of 1998 as a more realistic groundbreaking target for the project. Concurrent with this process, City staff has been working with the Children's Museum to extend their agreement for the interim use of the same Nipomo Street property. The Children's Museum has had authorization from the City since 1990 to use the Nipomo Street site to operate a "hands on" museum for children. The property has been provided with the understanding that the Museum will relocate to a new site once SLOLT is ready to begin construction of the theater. Given SLOLT's request to forestall the theater's groundbreaking date until 1998, staff has negotiated an extension to the Children's Museum agreement that basically allows the Museum continued use the property until SLOLT is ready to break-ground on the theater in 1998. The revised agreement has been negotiated with the full concurrence of SLOLT and is discussed more thoroughly in a separate item on this same agenda. SLOLT Progress To Date Since the execution of the current agreement with SLOLT, the group has been proceeding on a dual track to fulfill the terms and conditions; one devoted to raising the $1.5 million necessary to construct the facility (the original construction budget has been increased from $1.3 million to $1.5 million to reflect adjustments for inflation as the theater is not Pro Iu��y��NIII�I � U city of san ms OBISp0 l COUNCIL AGENDA REPORT proposed to be built until 1998) and the other devoted to designing the facility and securing the appropriate approvals to begin construction. With respect to fundraising, the group has raised slightly over 10% ($154,450) of the monies needed to construct the theater. Of the $154,450 committed to date, $29,250 represents in-kind donations that include such items as design services and specialty theater equipment, $54,350 represents collected donations, $50,000 represents a committed grant from the Mary Jane Duvall Trust, and $20,850 represents donations that have been pledged, but not yet collected. It is important to note that SLOLT has raised an additional $41,000 in project donations. However, these monies have been contributed to the Community Theater Foundation to cover the costs of hiring a professional fundraiser that has been on board since the spring of 1991. The Community Theater Foundation was created during 1991 to take the lead in coordinating fundraising efforts for the theater project. Given the challenge associated with raising $1,5 million, SLOLT felt they could be more successful in securing grants and corporate donations and coordinating larger scale local fundraisers with an experienced fundraising position as opposed to their past approach of relying solely on volunteers. SLOLT is now in the process of evaluating whether this is the most effective approach to fundraising for the theater and has committed as part of the revised agreement (discussed later in the report) to resolve this issue through the development of a long-term fundraising plan for the project by June of 1993. With respect to design and permit processing for the facility, SLOLT has completed the first major step in the design process (preparing schematic plans) and secured the appropriate zoning and environmental approvals necessary for the project. The City Council approved a General Plan amendment in February of 1990 that changed the land use from "Office" to 'Public Facility with an Historic Overlay" and accepted the environmental determination for the project. SLOLT has also completed schematic plans for the theater and received schematic approval from the Architectural Review Commission (ARC). Schematic approval represents a conceptual approval of the building form, style and site plan. The tasks remaining that SLOLT must still complete in order to construct the theater will take approximately two and one half years to finish and include: ■ completing design plans and receiving final approval from the ARC (SLOLT estimates that this will take approximately four months to accomplish); ■ completing working drawings (SLOLT estimates that this will take approximately five months to accomplish); ■ securing a building permit (SLOLT estimates that this will take approximately 5 months to accomplish); and Z.10' city of san I is oBispo i COUNCIL AGENDA REPORT ■ bidding and constructing the project (SLOLT estimates that this will take 15 months to accomplish). Overview of Proposed Agreement with SLOLT When the existing agreement with SLOLT was adopted, staff acknowledged that the fundraising and construction schedule for the theater was ambitious, and as such, anticipated that it may be necessary to develop an extension to the agreement at some point in the future. Given the state of the economy and the intense competition for limited fundraising dollars, it was clear that raising $1.5 million to construct the theater would be a considerable challenge for SLOLT. At the same time, however, meetings with SLOLT representatives have revealed that after nearly three years of effort, fundraising is progressing at a much slower pace than originally envisioned. Staff is concerned that if progress continues at this pace, it is not likely SLOLT will be in the position to construct the theater any time in the near term. Therefore, negotiations to develop the agreement extension have focused on establishing structured and explicit goals for raising the$1.5 million budget and constructing the facility within a timeframe acceptable to the City. The recommended agreement contains a more. realistic fundraising and construction schedule and establishes project scheduling and fundraising performance targets that will be regularly reviewed. This will help to insure that SLOLT is progressing at a pace acceptable to the City, and allows the City to terminate the agreement if the pace is unacceptable. The balance of the agreement, which primarily addresses operational issues related to the theater, has been left as I originally negotiated. Highlights of the changes to the recommended agreement include: ■ SLOLT will be required to prepare a fundraising plan by June 30, 1993 that demonstrates to the City's satisfaction the group's plans for raising the $1.5 million needed to begin construction of the theater by mid-1998 and conclude by June of 1999. This provision will help to assure the City that SLOLT has a well thought out and realistic plan for raising the needed monies by 1998. ■ SLOLT will be required to adhere to interim fundraising performance targets that have been established in the agreement. SLOLT will raise $500,000 by 1996, $850,000 by 1997, and the full construction budget of $1,500,000 by 1998. The City will have the ability to review SLOLT's fundraising progress of each established interval, and if SLOLT has not made satisfactory fundraising progress, the City will have the option to terminate the agreement. This provision will help to insure that SLOLT is making adequate progress in attaining their fundraising goals. I 411111111111pl 11 city of san L..is oBispo HiZCOUNCIL AGENDA REPORT ■ SLOLT will be required to design, obtain necessary permits and construct the theater by June of 1999. Intervals for completing design, preparing working drawings, obtaining a building permit, and starting and finishing construction of the theater have been specifically set out in the agreement in accordance with the fundraising schedule. ■ SLOLT will be allowed to develop a revised construction cost estimate for the project once the facility design is complete and approved by the ARC. The City will then review the revised estimate, and if it provides sufficient funding to construct a quality facility, the City will modify the fundraising targets established in the agreement to reflect the cost changes. The provision has been to included to acknowledge the fact that the current estimate of $1.5 million to construct the theater represents the "higher end" of needed funding. It includes monies for state-of-the-art theatrical equipment and furnishings and contingencies to address unanticipated needs and inflation. Given the challenges associated with raising $1.5 million, it may be necessary to forestall some of.the "would be nice" additions to the facility until after construction is completed, thereby reducing the cost of the project. Highlights of the remainder of the agreement that have not been changed from the original agreement include: ■ SLOLT acknowledges that the City is providing the site to support art activities of all kinds and, as such, will make diligent efforts to share the facility with other groups to insure maximum community benefit. ■ SLOLT will be responsible for all costs to construct and operate the theater (including the costs of an operations manager). The City will, .in turn, provide the site for $1 per year. ■ The lease will run for forty years and the SLOLT will have the first option to extend the lease for an additional fifteen years (the maximum allowed by law). At the end of the lease, ownership of the property and all improvements revert back to the City. ■ SLOLT will allow the City and other groups to use the theater for a minimum of ten weeks per year. ■ A seven member committee will be established to review the community use of the theater to insure that the intent of this agreement is met. The Committee will consist of representatives from the SLOLT, City Administration, City Council, the BIA, the Chamber of Commerce, and County Arts Council. �� I�NIII�i�lll City O� San - ,IS OBISPO COUNCIL AGENDA REPORT ■ If the SLOLT ceases operation before the term of the lease expires, the City has the option to buy the theater improvements at a depreciated cost schedule. If the City chooses not to exercise its option, SLOLT would sell the theater to a city- approved buyer. CONCURRENCES: SLOLT has reviewed and concurs with the contents of this staff report and agreement. FISCAL IMPACT: Under the recommended agreement, the City will receive $1 annually from SLOLT in exchange for the use of the property (valued at $325,000 in 1990) for the next 55 years. The City will, however, own the theater at the end of the lease period and will also benefit from the potential sales tax generated from increased visitors in the downtown. ATTACHMENTS: Agreement with SLOLT J:\slo.agr I AGREEMENT BETWEEN SAN LUIS OBISPO LITTLE THEATER AND THE CITY OF SAN LUIS OBISPO FOR LEASE OF CITY PROPERTY AT 1010 NIPOMO STREET This agreement entered into this day of 1992, by and between the City of San Luis Obispo (hereinafter referred to as "City") and San Luis Obispo Little Theater, a non-profit California corporation (hereinafter referred to as "SLOLT"). INTENT WHEREAS, the City is the legal owner of property located at 1010 Nipomo Street, in the City of San Luis Obispo as shown on Exhibit "A"; WHEREAS, the City is desirous of encouraging development of a live, non-profit community theater facility in the Mission Plaza area to enhance the downtown's vitality, and, as such, is willing to lease the Nipomo Street site to SLOLT for this purpose; WHEREAS, the City considers the development of a live, non-profit community theater on the proposed property to be a benefit to the community at large, and therefore is willing to lease the Nipomo Street site to SLOLT at a below market rate; NOW, THEREFORE in consideration of mutual covenants, conditions, promises and agreements herein set forth, the City and SLOLT hereby agree to the following terms and conditions: LEASE TERMS 1 . SLOLT agrees to lease the subject property and to develop and operate a facility on the proposed site for the term of the lease, which will serve to meet the intent of this agreement. The City will have no obligation for development and/or operation of the proposed facility. Any costs incurred for development and operation of facility shall be the sole responsibility of SLOLT. 2. SLOLT will lease the property for forty (40) years beginning with the start of construction and ending forty years later on the anniversary of said date. 3. SLOLT will reserve the first right to negotiate an additional term upon mutual agreement of City and SLOLT not to exceed fifteen (15) years for purposes outlined in the intent of this agreement. SLOLT shall submit any notice of interest in an extended term no less than one (1) year prior to termination of the base term of the lease agreement. �8' l Page 2 SLO Little Theater Agreement 4. The lease may not be assigned except by prior written approval of the City. Such approval shall not be unreasonably withheld if consistent with the purposes and intent of this agreement. 5. The lease rate shall be fixed at $1 per year. USE AND OPERATIONS 6. In recognition of the below market lease rate, SLOLT agrees to make the facilities available without fee to the City for official or city-sponsored uses. In addition, the City shall have first right of use for uncommitted time periods consistent with the requirements of SLOLT's own use and other provisions of this agreement. 7. SLOLT is encouraged to promote the use of the facility to the fullest extent possible. First consideration for use by others will be given to the City and to local non-profit groups. The City and other performing groups and organizations shall be assured use of the facility at least ten (10) weeks per fiscal year (July 1 to June 30) which will be coordinated with the SLOLT performance and rehearsal schedule. The City shall allow SLOLT to assess use charges for the facility. In turn, SLOLT agrees to set the use charges at a rate which generally reflects the costs to amortize costs and maintenance of the building. However, the City does encourage SLOLT to develop affordable use charges for non-profit organizations. Arrangements for allowing other groups to use the facility and associated use charges shall be subject to City approval. Such approval shall not be unreasonably withheld if consistent with the purposes and intent of this agreement. 8. A minimum of sixty (60) annual performances and offerings which are open to the public will be provided by the SLOLT. If at any time SLOLT is unable to maintain this level of operation, the City may issue a one hundred twenty (120) day notice of early cancellation to terminate the lease agreement. 9. SLOLT will use due diligence in encouraging other performing groups and organizations to utilize the facilities whenever not in use by SLOLT. 10. The SLOLT will provide a full or part time operations manager who will be responsible for meeting the terms of the agreement and assuring the fullest community use of the facility. 11 . Review of the public use and benefit of the facility consistent with the intent of this agreement and the rights and obligations stated therein will be Page 3 SLO Little Theater Agreement conducted annually by a seven member committee including: ■ two members of SLOLT ■ the Mayor and City Administrative Officer (or designees) ■ one representative of the Business Improvement Association ■ one representative of the Chamber of Commerce ■ one representative of the County Arts Council At the conclusion of the annual review each year, the Committee will prepare a report for the City Council that summarizes the facility's use statistics for the prior year and provides an assessment of whether SLOLT is allowing public use of the facility consistent with the terms of this agreement. OTHER PROVISIONS 12. SLOLT acknowledges that the City has entered into a separate agreement with Children's Museum to use the subject property until such time that the SLOLT has accumulated sufficient funds (as set out in this agreement) to construct a theater. As such, SLOLT agrees to attend a minimum of two meetings annually between the Children's Museum, SLOLT, and the City (that the City will schedule) to share fundraising progress reports and discuss other appropriate issues related to the construction of the theater. This will help to insure that the Children's Museum has ample time to anticipate and plan for their eventual relocation. 13. SLOLT agrees to accept the condition of the property "as is" except for unknown subsurface toxic or hazardous materials. The City shall be responsible for cost of any required clean up of the site due to toxic or hazardous materials. If the cost exceeds $10,000, apportionment of the costs shall be subject to negotiations between the parties. If no accommodation can be reached, at the City's option, the lease shall terminate and the site shall be returned to its pre-lease condition less structural improvements, at the sole expense of SLOLT (excluding cosi of site clean up of toxic and hazardous material). 14. SLOLT agrees to take responsibility for obtaining and complying with all required approvals (e.g., use permit, architectural review), and compliance with zoning and parking requirements, including payment of in-lieu fees or securing all- "ED Page 4 SLO Little Theater Agreement off-site parking, shall be the sole responsibility of SLOLT. It is noted that the subject property lies partially in a Flood Hazard Zone and that new or remodeled structures may require flood-proofing. 15. SLOLT agrees to prepare a fundraising plan by June 30, 1993 that will demonstrate to the City's satisfaction SLOLT's plans for raising the $1 .5 million needed to construct the theater within the timeframe set out in this agreement. This plan will set out the steps SLOLT will take to raise: ■ a total of $500,000 by January 1 , 1996; ■ a total of $850,000 by January 1, 1997; and ■ the total construction budget of $1 ,500,000 by January of 1998; At each interval established above, the City will meet with SLOLT to review fundraising progress. If SLOLT does not demonstrate to the satisfaction of the City that it has raised or otherwise has funds committed at the levels set out above, then the City shall have the right to terminate or extend this agreement, at its sole option and.discretion. SLOLT acknowledges that construction of the theater cannot commence until a minimum of 80% of the construction budget has been raised ($1 .2 million) and all permits have been secured. The City acknowledges that the current estimate to construct the theater of $1 .5 million represents the "higher end" of needed funding as it includes monies for state-of-the-art theatrical equipment and furnishings and significant contingencies for unanticipated needs and inflation. Therefore, SLOLT will be allowed to develop a revised cost estimate for the project once the design is complete and final approval of the plans is received from the Architectural Review Commission. The City will review the revised cost estimate, and if it still provides sufficient monies to construct a quality facility consistent with the intent of this agreement, the City will modify the fundraising targets established above to reflect the cost changes. 16. SLOLT agrees to the following schedule for carrying out the design and construction of the theater: ■ final design approvals will be secured no later than by April of 1997; ■ working drawings will be completed no later than by October of 1997; Page 5 SLO Little Theater Agreement ■ the building permit will be secured no later than by March 1998; and ■ construction will begin no later than June of 1998 and conclude by June of 1999. The City reserves the right to grant time extensions or to cancel this agreement for failure to progress on this schedule. 17. If at any time SLOLT is unable to complete development, the lease will be terminated, and, at the City's option, all improvements will become the property of the City or the site shall be delivered free and clear of all improvements. 18. In the event of early cancellation of this agreement after completion of construction, the City shall have the option to buy out improvements at the proportional rate of 90% of actual construction costs if cancellation is within the first 5 years, 70% betweeh 6 and 15 years, 50% between 16 and 25 years, and nothing thereafter. If the City chooses not to exercise its option, SLOLT shall sell their improvements to a City-approved successor. 19. The relationship that will exist between the City and SLOLT in this matter will be that of lessor and lessee. Under no circumstance will SLOLT be considered an employee, officer or agent of the City under this agreement or the lease. Conversely, the City is not an agent or extension of SLOLT and is acting solely in its landlord capacity. 20. The SLOLT agrees to provide proof of insurance in accordance with- the requirements established in Exhibit "B" attached hereto and incorporated herein by reference. 21 . The SLOLT 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. 22. The SLOLT hereby agrees to indemnify and save harmless the City, its officers, agents, and employees against: Page 6 SLO Little Theater Agreement 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 negligent act or omission of the SLOLT under this agreement or of the SLOLT'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 SLOLT, or in proximity to the site of the SLOLT work, caused by any negligent act or omission of the SLOLT 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 SLOLT under this agreement, however caused, excepting, any such claims or demands which are the result of the 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 patent rights or claims caused by the use of any apparatus, appliance, or materials furnished by the SLOLT 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 negligence on the part of the SLOLT. - T The SLOLT, 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 judgement or decree that may be rendered against the City, its officers, agents, or employees in any such suit, action, or other legal proceeding, when same were due to negligence of the SLOLT. 23. SLOLT will maintain the buildings, features of the theater and formal landscaping surrounding the theater development in first-class condition at all times (shown as unshaded area of Exhibit "A"), and in conformance with applicable permits and regulations. The City will maintain the natural Page 7 SLO Little Theater Agreement vegetation along the creekbank (shaded area of Exhibit "A"). Failure to so maintain in City's reasonable opinion shall, at the City's option, constitute a material breach of the lease. 24. The City of San Luis Obispo reserves the right to enter the property to construct and maintain retaining walls, slope banks, creek channel, Nipomo Street Bridge and other related items both as they exist today and as they may be modified, changed or replaced in the future. The City reserves the right of the public to pass over and for the City to construct and maintain "Mission Plaza" improvements on property outside of the footprint of the building approved by the City (shown as shaded area of Exhibit "A"). 25. Both parties also recognize that some issues may not have been anticipated or addressed herein, and that changes to the agreement may be warranted. Thus, 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 1992 in the City of San Luis Obispo, State of California. SAN LUIS OBISPO LITTLE THEATER THE CITY OF SAN LUIS OBISPO Director Mayor Ron Dunin v Director City A inistrative Officer Director tto ey r+'Q� Director Community Dee pment Director ATTEST: Diane Gladwell, City Clerk dbit "A" �.oKr�ti srn�'r n f '•�Y✓1Yv �r l f •:ate:.'.!i '.''*;;r�.��`'..:,�''• , .h .y u +�. �•��' .1�\ �•�__ '• .fir' . • ' 1M 4�GAO LrMA T1fNUa SME PLAN �_. C�DYI•R[1KRfl1 .o.s:rr�es INSURANCE I UIREIVIENTS FOR LESSEES 0 kUTO RISKS) 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 Lessee's operation and use of the leased premises. The cost of such insurance shall be home by the Lessee. Minimum Scope of Insurance Coverage shall be at least as broad as: 1. Insurance Services Office Commercial General Liability coverage (occurrence form CG 0001). 2. Workers' Compensation insurance as required by the State of California and Employer's Liability Insurance (for lessees with employees). 3. Property insurance against all risks of loss to any tenant improvements or betterments. Minimum Limits of Insurance Lessee shall maintain limits no less than: 1. General Liability: $1,000,000 per occurrence for bodily injury, personal injury and property damage. If Commercial General Liability or other form with a general aggregate limit is used, either the general aggregate limit shall apply separately to this project/location or the general aggregate limit shall be twice the required occurrence limit. 2. Employer's Liability: $1,000,000 per accident for bodily injury or disease. 3. Property Insurance: Full replacement cost with no coinsurance penalty provision. Deductibles and Self-Insured Retentions Any deductibles or self-insured retentions must be declared to and approved by the City. At the option of the City, either the insurer shall reduce or eliminate such deductibles or self-insured retentions as respects the City, its officers, officials, employees and volunteers; or the Lessee shall procure a bond guaranteeing payment of losses and related investigations, claim administration and defense expenses. Other Insurance Provisions The general liability policy is to contain, or be endorsed to contain, the following provisions: 1. The City, its officers, officials,employees,agents and volunteers are to be covered as insureds as respects: liability arising out of premises owned, occupied or used by the Lessee. The coverage shall contain no special limitations on the scope of protection afforded to the City, its officers, official, employees, agents or volunteers. 2. The Lessee's insurance coverage shall be primary insurance as respects the City, its officers, officials, employees, agents and volunteers. Any insurance or self-insurance maintained by the City, its officers, officials,employees, agents or volunteers shall be excess of the Lessee's insurance and shall not contribute with it. 3. Any failure to comply with reporting or other provisions of the policies including breaches of warranties shall not affect coverage provided to the City, its officers, officials, employees, agents or volunteers. 4. The Lessee's insurance shall apply separately to each insured against whom claim is made or suit is brought, except with respect to the limits of the insurer's liability. S. Each insurance policy required by this clause shall be endorsed to state that coverage shall not be suspended,voided,cancelled by either party, reduced in coverage or in limits except after thirty(30)days' prior written notice by certified mail, return receipt requested, has been given to the City. Acceptability of Insurers Insurance is to be placed with insurers with a current A.M. Best's rating of no less than A:VII. Verification of Coverage Lessee shall furnish the City with a certificate of insurance showing maintenance of the required insurance coverage. An original endorsement effecting general liability coverage required by this clause is also to be provided. The endorsements are to be signed by a person authorized by that insurer to bind coverage on its behalf. All endorsements are to be received and approved by the City before the lease commences. . 17 EXHIBIT B