staff report.rent relief
Reviewed by: Town Manager, Town Attorney, and Finance Director
110 E. Main Street Los Gatos, CA 95030 ● (408) 354-6832
www.losgatosca.gov
TOWN OF LOS GATOS
COUNCIL AGENDA REPORT
MEETING DATE: 03/21/2023 ITEM NO: 9
DATE: March 16, 2023
TO: Mayor and Town Council
FROM: Laurel Prevetti, Town Manager
SUBJECT: Approve Partial Rent Relief for Los Gatos-Saratoga Recreation and the New
Museums of Los Gatos (NUMU) for Fiscal Year (FY) 2023/24, Using Available
American Rescue Plan Act (ARPA) Dollars.
RECOMMENDATION:
Approve partial rent relief for Los Gatos-Saratoga Recreation (LGS Rec) and the New Museums
of Los Gatos (NUMU) for Fiscal Year (FY) 2023/24, using available American Rescue Plan Act
(ARPA) dollars.
BACKGROUND:
In 2020, the Town Council agreed to lease abatements for both tenants. These are scheduled
to expire at the end of June 2023. As each tenant assessed their financial outlooks, during the
Strategic Priorities discussion, both NUMU and LGS Rec presented proposals for reduced or
zero rent. Attachment 1 contains the NUMU proposal and Attachment 2 contains the LGS Rec
proposal.
DISCUSSION:
The Town has provided reduced rents to both tenants as well as other support. Below is
information regarding the depth of the existing subsidy for both entities. Please note that the
data does not include community grants for specific programs which are awarded on a
competitive basis and outside of the lease arrangements.
NUMU
The table below shows the market value of the rent and free utilities, yielding a subsidy over
$500K.
PAGE 2 OF 6 SUBJECT: Approve Partial Rent Relief for Los Gatos-Saratoga Recreation and the New Museums of Los Gatos (NUMU) for Fiscal Year (FY) 2023/24, Using Available American Rescue Plan Act (ARPA) Dollars) DATE: March 16, 2023
DISCUSSION (continued):
Graphically, the chart below shows that the Town is subsidizing the space at a rate of 95%.
The Town made significant capital investments on behalf of NUMU at Tait, Forbes Mill, and
Town Hall to maintain the structures and prepare Town Hall for the museum’s occupancy, as
shown in the table below.
Market Price Per Square Foot/Month*$3.7
Square Footage 10,630
Value of Rent- Annual $474,230
Utilities - Annual $53,386
Total Rent Value and Other Expenses $527,616
Rent Paid to Town - Annual (Under Current Lease Agreement)$25,000
Utilities Paid - Annual $0
Total Value of Annual Town Donation/Subsidy $502,616
NUMU (LG Museums)
110 E. Main St
10-Year Lease
PAGE 3 OF 6 SUBJECT: Approve Partial Rent Relief for Los Gatos-Saratoga Recreation and the New Museums of Los Gatos (NUMU) for Fiscal Year (FY) 2023/24, Using Available American Rescue Plan Act (ARPA) Dollars) DATE: March 16, 2023
DISCUSSION (continued):
Los Gatos Recreation
The table below shows the market value of the rent for the Adult Recreation Center, yielding a
subsidy of approximately $289K. The reduced rent was in exchange for the provision of senior
services.
Graphically, the chart below shows that the Town is subsidizing the space at a rate of 55%.
Market Price Per Square Foot/Month*$3.7
Square Footage 12,000
Value of Rent- Annual $527,537
Utilities - Annual N/A
Total Rent Value and Other Expenses $527,537
Rent Paid to Town - Annual (Under Current Lease Agreement)
45% of Market Value $237,537
Utilities Paid - Annual Paid Directly to Utilities
Elevator Maintenance $510
Total Value of Annual Town Donation/Subsidy $289,490
Adult Recreation Center
208 E. Main St.
20-Year Lease
PAGE 4 OF 6 SUBJECT: Approve Partial Rent Relief for Los Gatos-Saratoga Recreation and the New Museums of Los Gatos (NUMU) for Fiscal Year (FY) 2023/24, Using Available American Rescue Plan Act (ARPA) Dollars) DATE: March 16, 2023
DISCUSSION (continued):
The Town had made and continues to make capital investments in the Adult Recreation Center
as shown in the table below.
In terms of the Youth Recreation Center, the market value of the rent yields a subsidy of
approximately $256K.
PAGE 5 OF 6 SUBJECT: Approve Partial Rent Relief for Los Gatos-Saratoga Recreation and the New Museums of Los Gatos (NUMU) for Fiscal Year (FY) 2023/24, Using Available American Rescue Plan Act (ARPA) Dollars) DATE: March 16, 2023
DISCUSSION (continued):
Depicted graphically, Town is subsidizing the space at a rate of 89%.
The Town had also made capital investments in the Youth Recreation Center as shown in the
table below.
Market Price Per Square Foot/Month*$3.7
Square Footage 6,479
Value of Rent- Annual $289,044
Utilities - Annual N/A
Total Rent Value and Other Expenses $289,044
Rent Paid to Town - Annual (Under Current Lease Agreement)
10% of Market Value $28,905
Utilities Paid - Annual Paid Directly to Utilitites
Landscaping Services Paid - Annual $4,206
Total Value of Annual Town Donation/Subsidy $255,933
Youth Recreation Center
123 E. Main St.
PAGE 6 OF 6 SUBJECT: Approve Partial Rent Relief for Los Gatos-Saratoga Recreation and the New Museums of Los Gatos (NUMU) for Fiscal Year (FY) 2023/24, Using Available American Rescue Plan Act (ARPA) Dollars) DATE: March 16, 2023
DISCUSSION (continued):
CONCLUSION:
Based on this information, it is recommended that each entity receive an 84% subsidy for the FY
2023/24 rent. For LGS Rec, this is a subsidy of $200,000 and LGS Rec would pay the Town
$38,088 for the ARC and full rent of $33,111 for the YRC. For NUMU, this subsidy would be
$21,000 and NUMU would pay the Town $4,000. All provisions of both leases remain
unchanged.
COORDINATION:
The preparation of this report was coordinated with the Finance Director, Town Manager, and
Town Attorney.
FISCAL IMPACT:
Through the use of ARPA funds, the additional year of rent relief will have minimal impact on
the Town’s budget.
ENVIRONMENTAL ASSESSMENT:
This is not a project defined under the California Environmental Quality Act, and no further
action is required.
Attachments:
1. NUMU Proposal
2. LGS Rec Proposal