HomeMy WebLinkAbout07/17/1990, C-9 - AMENDMENT TO THE PERFORMING ARTS CENTER DEVELOPMENT AGREEMENT i
MEETINGDATE:
o� ►�H�ahlll[I�p � N city of sm LUIS OBIS1307-17-3o
COUNCIL AGENDA REPORT 1T°"'NUMBER:
FROM: John Dunn, City Administrative Officer
Prepared by: William C. Statler, Director of Finance
SUBJECT: AMENDMENT TO THE PERFORMING ARTS CENTER DEVELOPMENT
AGREEMENT
CAO RECOMMENDATION
Approve an amendment to the Performing Arts Center Development
Agreement reflecting a cost ceiling on the State's share of the
project of $15, 643, 000.
DISCUSSION
On November 13 , 1989, the City of San Luis Obispo, Cal Poly, and
the Foundation for the Performing Arts entered into a Development
Agreement for a performing arts center to be located at Cal Poly.
Under the terms of the agreement, the cost of designing and
constructing this project is to be shared as follows:
Original
Percent Project
Share Estimate
City (one-sixth) 17% $ 31333, 300
Foundation (one-sixth) 17% 31333 , 300
Cal Poly (two-thirds) 66 13 ,333 ,400
Total 100% $20, 000, 000
Since approval of this agreement in November of 1989, a major
milestone has been achieved with legislative approval of
preliminary planning funds for the project. Based on past state
policy, approval of preliminary planning funds is the critical
decision-making step in the funding of construction projects.
With this legislative action, a ceiling on state participation is
established in the amount of $15,643, 000 computed as follows:
■ Two-thirds share (66%) of current
estimated project costs ($23 ,100, 000) $15,278, 000
■ All (100%) of current estimated
costs of classrooms 365, 000
$15,643 ,000
The purpose of the recommended amendment to the Development
Agreement is to recognize this ceiling, which will be adjusted at
the time of award of bid by changes in the Engineering News Record
(ENR) cost index (a standard industry guide to construction cost
increases) . A letter from the President of Cal Poly requesting the
City approval of this amendment is provided in Attachment A.
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���H���►►�IIIIIIIIII ��IN city of San Luis OBlspo
COUNCIL AGENDA REPORT
FISCAL IMPACT
Approval of the amendment retains the basic agreement; the combined
State and Foundation share of project costs remain at 5/6's with
the City's contribution at 1/6. The sole purpose of the amendment
is to limit the State's contribution to a total project cost
(subject to increases in the ENR) of $23 . 1 million. If actual
construction costs exceed this estimate, then the City's level of
participation may exceed its one-sixth share; funding the balance
would have to be subsequently negotiated between the City and the
Foundation. However, staff believes that this is a reasonable cost
estimate, and accordingly, recommends Council approval of this
amendment.
Under the revised project cost estimates, overall funding for the
project is estimated as follows:
Current
Percent Project
Share Estimate
City (one-sixth) 17% $ 31911, 000
Foundation (one-sixth) 17% 3 , 9111000
Cal Poly (two-thirds) 66% 15. 278, 000
Center Total 100% 23 , 100, 000
Cal Poly - Classrooms (all) 365, 000
Project Total $23,465, 000
While this modification has the effect of potentially increasing
the City's and the Foundation's costs, four factors make this a
fair arrangement for both the City and the Foundation for the
following reasons:
■ When we initially entered into the Memorandum of
Understanding, the State's share of the total project
cost was unknown at that time. We were later very
gratified to learn that the State would be providing 2/3
of the project's costs based on the rationale that it
was a shared project and that non-State resources would
provide a substantial part of the project funding.
■ The initial project financing was for the building
itself, and did not include the cost of equipping the
building. The latest State approval and funding does
include the cost of equipping the building. Though this
action increases the costs for all three parties, it
would provide for a fully-equipped building, and will
eliminate the difficult issue of later developing and
funding the cost sharing for the equipment. Providing
proper equipment for a Performing Arts Center is
expensive, as a modern facility consists of elaborate
staging, acoustical, lighting, electronic, seating and
furnishings in order to meet the diverse needs of a
multi-use theater.
�,m� NVhIIIII��pnNu►�III�UI city of San tuts OBISpo
COUNCIL AGENDA REPORT
■ The previous agreement had a fixed total cost, and there
was no provision to track increases in' the cost of
construction. The modified agreement does provide a
mechanism for increased State funding based on annual
changes in the ENR cost-of-construction index.
■ We now have a budget for the Performing Arts Center of
$23, 100,000 instead of the previous $20, 000, 000. This
figure,is more realistic and livable, and will allow for
the design of a center which will meet the twin
requirements for a functional and an attractive facility.
CONCURRENCES
The proposed amendment has been reviewed by the City Attorney, and
he concurs with the CAO's recommendation.
SUMMARY
Recent legislative approval of preliminary planning funds for the
performing arts center represents a significant milestone in the
achievement of this project. Limiting the State's participation
in the project - consistent with the current funding formula - to
a maximum project cost (excluding classrooms) of $23. 1 million is
a condition of State funding approval. As such, it is recommended
that the Council approve an amendment to the Development Agreement
for the Performing Arts Center limiting the State's contribution
to the project to $15,643,000 (66% of estimated project costs plus
loot of classroom construction costs) .
ATTACHMENTS
1. Request from Cal Poly for City approval of an amendment to the
Development Agreement.
2. Amendment to the Development Agreement for the Performing Arts
Center.
AGR\AMENDPRF.YPF
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CSL POLY
_ _
C.ALIFORNI.A POLYTECHNIC STATE UNIVERSiiY
,P..`;. CIS �_)315i0. CA Q 31�'
I.)FF:CF. OF THE PRES:CE?'T,.
May 25. 1990
The Honorable Ron Dunin
Manor of the City of San Luis Obispo
P.O. Box 8100
San Luis Obispo, CA 93403-8100
Dear Ron:
As a follow-up to my recent letter on the status of the legislative
actions relative to the Performing Arts Center funding. I shared with
you that the Legislature had placed a ceiling on the State's share of the.
Project Cost and indicated that the Development Agreement would likely
need to be amended. It is our understanding that the actual budget
bill, language will also contain a provision that will require that the
Development Agreement be amended prior to the time that the Public
JWorks Board approves the preliminary plans.
I am attaching for your consideration a proposed Amendment to the
Development Agreement that would reflect the Legislative action with
regard .to the State's share of the Project Cost. The sections affected
are 5.01, 5.04 and 5.07.
I have signed the enclosed four : copiesof the Amendment and would
request that you take whatever steps are necessary to sign the
Amendment on behalf of the City of San Luis Obispo and forward it to
Warren"Sinsheimer for review and signature on behalf of the Foundation
for the Performing Arts Center.
Sincerely,
Warren J. Baker
President _- —
Enclosures
cc: Warren Sinsheimer
John Dunn
Dour (;erair•d
Attechment Z -_
AMENDMENT TO DEVELOPMENT AGREEMENT
PERFORMING ARTS CENTER
The following is an amendment to the Development. Agreement
for the Performing Arts Center entered into on December 5 , 1989
by the Chancellor of the California State University, the
President of California Polytechnic State. University, the Mayor
of San Luis Obispo and the President of the Board of Directors ,
Foundation for the Performing Arts Center.
Section 5 . 01 . is amended to read:
"The parties estimate the project cost of the
Performing Arts Center is $23 ,465 , 000 ( at Engineering
News Record Index of 4828) , including classroom space .
The three parties agree to work together on the scope
of the project to stay within the estimate. ' Project
cost ' means the sum required to design, construct and.
equip the Performing Arts Center. Project cost
includes, but is not limited to: "
Section 5 . 01 . 1 . through 5 .01..8 . remain as originally
written.
section 5 . 04 . is amended to read:
"Trustees have received legislative approval of the
initial phase, preliminary planning funds , for the
project . At the same time, the Legislature established
that the state' s share of the Project Cost are not to
exceed $15 , 643 , 000 ( adjusted only for ENR changes) ,
which includes $365 , 000 for classroom space . Trustees
shall commit the amount approved by the Legislature for
the design and construction of the project .. Trustees
shall not be bound to proceed with the design and
construction of the project should the legislature not
allocate sufficient funds for the State ' s share of the
working drawings and construction phases of the
project . "
Section 5 . 07 . is amended to read:
"Based upon legislative action, the California State
University and Cal Poly' s share of the total project
cost is limited to $15 , 643 , 000 at ENR cost index of
4828 to be adjusted only for changes in that index . "
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Date : 1990 THE CALIFORNIA STATE UNIVERSITY
By:
Date : jC' 1990 CALIFORNIA POLYTECHNIC STATE
UNIVERSITY, SAN LUIS OBISPO
By:
,
Date: , 1990 CITY OF SAN LUIS OBISPO
By:
Date : 1990 FOUNDATION FOR THE PERFORMING
ARTS CENTER
By:
Z