09 Staff Report - Lease Agreement with Los Gatos-Saratoga Recreation
MEETING DATE: 11/1/04 ITEM NO. DATE: COUNCIL AGENDA REPORT October 19,2004 9 TO: FROM: SUBJECT: MAYOR AND TOWN COUNCIL DEBRA J. FIGONE, TOWN MANAGER ADOPT A RESOLUTION AUTHORIZING
THE TO MANAGER TO EXECUTE A LEASE AGREEMENT WITH LOS GATOS-SARATOGA COMMUNITY EDUCATION AND RECREATION RECOMMENDATION: Adopt a resolution (Attachment 1) authorizing the Town Manager
to execute a lease agreement with Los Gatos-Saratoga Community Education and Recreation. BACKGROUND: Los Gatos-Saratoga CommunityEducation and Recreation (hereafter "Recreation Department")
has leased the building at 123 East Main Street from the Town since the late 1960s. The facility serves as the Recreation Department's administrative offices, and provides some space
for classes. The most recent lease agreement ran from July 1996 through June 2001, and allowed for a month-tomonth lease after that term. DISCUSSION: As the Recreation Department wishes
to continue to use the facility, and as it would be prudent to update the terms of the most recent lease agreement under which the lease arrangements are now governed, staffrecommends
that a new lease agreement be executed. The two issues to be addressed in this agreement are: amount of rent and landscaping services fees. RentAmount The most recent lease agreement
charged the Recreation Department 10% of the Town's most current lease rate, adopted as part ofthe Town's Fee Schedule. At the time the last lease agreement PREPARED BY: Regina A. Fal
,e N:\CSD\TCRPTS\Rec Dept Lease 2004.wpd .... ,' Reviewed by: .Town Town Attorney __Clerk._I.£_ mance __Commumty Deve:vpment Revised:
10/19/04 10:26 am Reformatted: 5/30/02
PAGE 2 MAYOR AND TOWN COUNCIL SUBJECT: LEASE AGREEMENT WITH LOS GATOS-SARATOGA COMMUNITY EDUCATION AND RECREATION October 19, 2004 was signed, the Town's adopted lease rate was $1.00
per square foot per month; the Recreation Department was charged $0.10 per square foot per month. The current adopted lease rate is $1.75 per square foot per month; 10% of thisrate would
be $0.175 per square foot per month. During the 2004/05 budget development process, the topic of cost recovery was discussed, and specifically the determination ofwhen cost recovery
is or is not appropriate. Staff suggests that in the case of the Recreation Department, it is appropriate to maintain the lease rate at 10% of the current adopted lease rate. This discounted
lease rate is in recognition of the Recreation Department's position as the Town's partner in providing services to the community. The Recreation Department would still experience an
increased monthly rent, as the Town's adopted lease rate has increased. Assuming a lease rate of of 10% of the current adopted rate would result in a monthly charge of $1,133.83 per
month ($13,605.90 per year). Staffrecommends thatthis rate be adjusted by CPI each year, as was provided for in the previous lease agreement. The following table displays the existing
and proposed lease amounts: Monthly Rate Annual Rate Existing Lease $647.90 $7,774.80 (10% ofprevious lease rate; $1.00/square foot/month) Proposed Lease $1,133.83 $13,605.90 (10% of
current lease rate; $1.75/square foot/month) Full Cost $11,338.25 $136,059.00 (100% of current lease rate; $1.75/square foot/month) Staffdoes not recommend thatthe Recreation Department
be charged the full current lease rate, for the reasons outlined above. In addition, such an increase in its lease rate would have a substantial impact onthe Recreation Department budget,
which would be addressed by raising fees orby pulling from capital fund reserves. Landscaping Service Fees The Town has historically provided landscaping services at the facility, including
maintenance of trees, shrubs, lawn, and irrigation equipment. The Recreation Department pays a landscape service fee for these services, separate from its rent amount. In the most recent
lease agreement, the landscape service fee was set at $210 per month, but was subj ect to the 10% offee discount outlined above for the rent amount, resulting in an effective fee of$21
per month. This fee was to be adjusted by CPI each year. Staff believes that it would be appropriate for the Town to recover its costs of providing these
PAGE 3 MAYOR AND TOWN COUNCIL SUBJECT: LEASE AGREEMENT WITH LOS GATOS-SARATOGA COMMUNITY EDUCATION AND RECREATION October 19, 2004 services. The Parks and Public Works Department estimates
its costs at $200 per month to provide basic landscape maintenance services. Staffrecommends that the new lease agreement include this fee in full, subject to an annual CPI increase.
Any additional landscaping services, such as installing new plantings, would be paid for separately, at a price to be determined between the Town and the Recreation Department, and would
be subj ect to the Town'sjudgementregarding availability ofstaff and related resources. CONCLUSION: Staffrecommends that Council adopt the attached resolution (Attachment 1) authorizing
the Town Manager to execute a new lease agreement (Exhibit A to Attachment 1) with the Recreation Department. Town staff has worked with Steve Rauwolf, Executive Director of the Recreation
Department, to develop the new agreement, which represents cooperative work by both parties to the agreement. The Recreation Department's Board will meetto approve and execute the agreement
onNovember 4. Staffrecommends that the Manager's authority to execute the agreement allow for any minor, non-substantive changes made by the Recreation Department Board. The agreement
would run for three years, through June 2007. The draft resolution also would authorize the Town Manager to sign any amendments. to the lease agreement, if they were in compliance with
the adopted Town budget. ENVIRONMENTAL ASSESSMENT: The recommended action is not a project defined under CEQA, and no further action is required. FISCAL IMPACT: The revised lease amount
would result in slightly higher revenue to the Town's Building Maintenance Internal Services Fund (Program 6695). This fund receives revenues from all leases of Town property, and is
in turn used to fund building maintenance and repairs. The Operating Budget 'Yould be adjusted to show this revenue increase. Attachments: 1. Draft Resolution of the Town Council of
the Town of Los Gatos authorizing the Town Manager to execute the Lease Agreement by and between the Town of Los Gatos and Los Gatos-Saratoga Community Education and Recreation (Exhibit
A) Distribution: Steve Rauwolf, Executive Director, Los Gatos-Saratoga Community Education and Recreation
Attachment 1 RESOLUTION NO. 2004-RESOLUTION OF THE TOWN COUNCIL OF THE TOWN OF LOS GATOS AUTHORlZING THE TOWN MANAGER TO EXECUTE THE LEASE AGREEMENT BY AND BETWEEN THE TOWN OF LOS GATOS
AND LOS GATOS-SARATOGA COMMUNITY EDUCATION AND RECREATION WHEREAS, the Town of Los Gatos is the owner of property at 123 East Main Street, Los Gatos, CA; and, WHEREAS, Los Gatos-Saratoga
Community Education and Recreation is a long-term tenant ofthat property, and desires to continue its lease arrangement with the Town; and, WHEREAS, Los Gatos-Saratoga Community Education
and Recreation is a valued partner in the Town's effort to provide services to the Los Gatos community; and, WHEREAS, the Town Council wishes to execute a new lease agreement with Los
Gatos-Saratoga Community Education and Recreation for the property at 123 East Main Street. NOW,THEREFORE, THETOWNCOUNCIL OFTHETOWNOFLOS GATOS DOES HEREBY RESOLVE THAT THE TOWN MANAGER
IS AUTHORIZED TO EXECUTE: 1) The Lease Agreement by and Between the Town of Los Gatos and Los Gatos-Saratoga Community Education and Recreation for the period October 1,2004, through
June 30, 2007, attached as Exhibit A, and allowing for any minor, administrative changes; and, 2) Future amendments to the Lease Agreement so long as they conform to the1
adopted Town budget. PASSED AND ADOPTED at a meeting of the Town Council of the Town ofLos Gatos, California, held on the day of , 2004 by the following vote: COUNCIL MEMBERS: AYES:
NAYS: ABSENT: ABSTAIN: SIGNED:MAYOR OF THE TOWN OF LOS GATOS LOS GATOS, CALIFORNIA ATTEST: CLERK OF THE TOWN OF LOS GATOS LOS GATOS, CALIFORNIA N:\CSD\TCRPTS\Resolutions\Rec Dept Lease
2004 Reso.wpd 2
, WHEN RECORDED MAIL TO: (SPACE ABOVE THIS LINE FOR RECORDER'S USE) DOCUMENT TITLE 27361.6 EXHIBIT A SEPARATE PAGE, PURSUANT TO GOVT. CODE
LEASE AGREEMENT BY AND BETWEEN THE TOWN OF LOS GATOS AND LOS GATOS-SARATOGA COMMUNITY EDUCATION AND RECREATION This LEASE is entered into by and between the TOWN OF LOS GATOS, a municipal
corporation of the State of California, hereinafter referred to as "TOWN," and Los GatosSaratoga Community Education and Recreation, a Joint Powers Authority, hereinafter referred to
as "TENANT," this __day of ,2004. RECITALS WHEREAS, TOWN owns the premises and the structure, hereinafter referred to as "Building," located at 123 East Main Street, Los Gatos, California,
95030, and wishes to lease the Building to nonprofit community service organizations that will assist the TOWN in serving the needs of its residents; and WHEREAS, TENANT desires to use
the Building for the purpose of providing educational and recreational services to Los Gatos area residents; and WHEREAS, the TOWN recognizes the need and desirability of such a community
organization; and WHEREAS, the TOWN incurs operating costs and expenses in maintaining the Building which are due in part to tenant operations; and, WHEREAS, TENANT agrees to pay TOWN
for use of the Building. IT IS MUTUALLY AGREED by the parties as follows: 1. Leasing: TOWN hereby leases to TENANT, and TENANT hereby leases from TOWN, the property consisting of six
thousand four hundred seventy-nine square feet (6,479 s.f.) located at 123 East Main Street, Los Gatos, Santa Clara County, California, for exclusive use ofTENANT. 2. Term: The lease
term shall commence on October 1,2004, and extend through June 30, 2007 and continue from month to month thereafter, subject to the termination provisions set forth in this Lease. 3.
Lease Fees a. Rent: Upon commencement of the lease term, the rent shall be One Thousand One Hundred Thirty-Three Dollars and Eighty-Three Cents ($1,133.83) per month. Said rent is calculated
according to the agreed-upon rate of One Hundred Seventy-Five Thousandths of a Dollar ($0.175) per square foot, multiplied by the square footage occupied by the TENANT, for a total of
Thirteen Thousand Six Hundred Five Dollars and Ninety Cents ($13,605.90) for the lease year. On each July 1 following the commencement of the lease term, the rent amount shall be increased
by a percentage equal to the percentage increase, if any, in the Consumer Price Index (CPI) -All Urban Consumers, for the San FranciscoOakland-San Jose, CA area, from the June the previous
year to the June
immediately previous. b. Landscaping Services: The Town shall provide weekly landscaping services for the Building, consisting of maintenance of the lawn, trees, shrubbery, and irrigation
system. Upon commencement of the lease term, TENANT shall pay the Town Two Hundred Dollars and No Cents ($200.00) to TOWN for these services. Additional services requested by TENANT,
such as new plantings, may be performed at TOWN's discretion, at an additional price to be agreed upon by TOWN and TENANT. On each July 1 following the commencement of the lease term,
the landscaping services fee shall be increased by a percentage equal to the percentage increase, if any, in the Consumer Price Index (CPI) -All Urban Consumers, for the San Francisco-Oakland-San
Jose, CA area, from the June the previous year to the June immediately previous. c. Payment: Payment of rent and landscaping services fee shall be due and payable on the first day of
each Ii1onth. Payment shall be made payable to "Town of Los Gatos," and mailed to: Town of Los Gatos, Accounts Receivable, P.O. Box 697, Los Gatos, CA, 95031. Should the rent payment
be thirty-one (31) or more days in arrears, a late fee of Fifty Dollars and No Cents ($50.00) per day shall be assessed for each day payment remains outstanding, in addition to the amount
of rent and landscaping services fee due. 4. Possessory Interest Property Tax: Pursuant to Revenue and Taxation Code section 107.6, TENANT is hereby notified that the property interest
created by its lease may be subject to property taxation due to TENANT's possessory interest in the Building. In such an event, TENANT is liable under this Lease for payment of such
property tax. 5. Use of Premises: TENANT shall use said premises only for the purpose ofproviding educational and recreational services to Los Gatos area residents, and in connection
therewith, shall comply with all governmental laws and regulations. Anticipated uses included recreational and infoD;l?i3.tional activities, social events, and informal gatherings. No
alcohol may be served on the premises at any time without the prior written consent oftheTOWN. 6. Signs: TENANT shall not place or permit to be placed in, upon, about or outside of said
premises or any part of the building any sign without the prior written consent of the TOWN. All existing signs at the time ofthe commencement of this Agreement are considered approved
at the signing of this lease Agreement. 7. Illegality Clause: TENANT shall not use the premises or suffer or permit anything to be done in or about the premises or the property which
will be in conflict with any law, statute, zoning restriction, ordinance or governmental law, rule, regulation or requirement ofpublic authority now in force or which may hereafter be
enforced. TENANT shall not commit any private or public nuisance or any other act or thing which might or would disturb the quiet enjoyment of surrounding property. TOWN at
its option may terminate this Lease by giving ten (l0) days written notice of its election to terminate for any and all violations of the provisions contained herein. 8. Entry: TENANT
shall permit TOWN, its agents or assigns to enter the premises at any time to inspect the premises or make repairs. 9. Assignment and Sub-Leasing: The terms and conditions ofthis Lease
are based upon the unique and specific services to be offered by the TENANT and the TENANT's record of service in the community. TENANT shall neither assign this Lease, nor sublet the
whole or any part thereof, without the prior written consent ofTOWN. 10. Utilities: TENANT shall pay for all utilities including, but not limited to, water, gas, and electricity; but
not including garbage removal and recycling services. TOWN shall contract for garbage removal and recycling services for Building, at no charge to TENANT. 11. Maintenance: TENANT shall
maintain the interior of said premises. TENANT shall not make any structural alterations to the premises without the prior written consent of the TOWN. TOWN shall maintain the exterior
of said premises and the grounds thereof, as agreed to in section 3 above. However, if repair is necessary due to the action or negligence of TENANT, its agents, assigns or clients,
TENANT shall obtain those repairs at its own expense or pay the TOWN to repair at a charge to the TENANT of time and one-half for services rendered, and for the actual cost of materials.
12. Abandonment: IfTENANT abandons or vacates the premises for any period in excess of thirty (30) days, TOWN may, at its option, terminate this Lease and take possession of the property.
13. Insurance: TENANT shall procure and maintain with a reputable insurance company, insurance as set forth in Exhibit A, attached, and incorporated herein by reference. 14. Property
Insurance: TOWN mayor may not choose to obtain property insurance for the Building. However, TENANT is solely responsible for obtaining insurance to protect any personal property that
it may choose to place in the Building under this Lease, and the TOWN shall not provide such insurance on this Lease. 15. Destruction of Premises: a. If the structures on the leased
premises are destroyed to an extent ofmore than fifty percent (50%) of the total floor area existing prior to the destruction, either party is entitled to terminate this Lease Agreement
and TOWN is under no obligation to repair, replace, or restore any portion of the leased premises. Termination ofthis Lease shall be by giving written notice of the termination to either
party no later than ninety (90) days after the event causing the damage or
destruction. The termination shall be effective on the date specified in the notice. Upon termination of the Lease Agreement pursuant to this section, all insurance proceeds payable
because ofthe damage or destruction ofthe structures on the leased premises shall be paid to and be the property ofTOWN. b. If because of the destruction or damage to the leased premises,
the leased premises are entirely unsuitable or inadequate for the use specified in Paragraph 5 above, all monthly rent shall temporarily abate effective the date of the destruction or
damage. If the damage or destruction to the leased premises only makes a portion of the leased premises unsuitable or inadequate for such use, then the monthly rent shall only be abated
so that the rent then due and payable shall be an amount equivalent to the floor area of the structures on the leased premises usable for the use specified divided by the total floor
area of all structures prior to the damage or destruction, and then multiplied by the monthly rent in effect just prior to the damage or destruction. c. Under no circumstances does the
TOWN have any obligation to provide the TENANT with an alternative property to conduct its operations. d. TENANT agrees to fully cooperate with the TOWN in investigating the cause of
any damage or destruction of the leased premises, and in permitting and allowing any repair or reconstruction to occur. 16. Indemnification: TENANT shall indemnify, save harmless, and
defend TOWN from all liability from loss, damage, or injury to persons or property in any manner arising out of or incident the performance of this Lease, including without limitation
all consequential damages, whether or not resulting from the negligence of the TOWN or its agents, officers or employees. 17. Surrender of Premises: TENANT shall promptly surrender said
premises to TOWN at the expiration ofthe term of this Lease, or any sooner termination thereof, in the same condition it was received, in good order and repair, reasonable wear and tear
and damage by the elements excepted. . 18. Termination: Either party may terminate this Lease without cause one hundred and eighty (180) days advance written notice. Such termination
notice shall be sent to: TOWN Debra J. Figone, Town Manager Town of Los Gatos P.O. Box 949 Los Gatos, CA 95031 TENANT , Steve Rauwolf, Executive Director Los Gatos-Saratoga Community
Education & Recreation 123 East Main Street Los Gatos, CA 95030
19. Scope of Lease: This Lease constitutes the entire agreement between the parties. This Lease may not be modified except by an agreement in writing signed by the party against whom
the enforcement of any waiver, change, modification or discharge is sought. The covenants and conditions in the Lease shall bind the successors in interest of the party. 20. Disputes:
In any dispute between the parties over this Lease, the prevailing party shall be entitled to costs and attorney's fees. 21. Equal Access and Opportunity: TENANT warrants that it shall
comply with all applicable regulations and laws governing equal access to its programs and equal employment opportunity. Neither TENANT nor any of its officers, employees, volunteers,
or agents shall discriminate in the employment in or access to any of TENANT's programs because ofrace, color, national origin, ancestry, physical or mental disability, marital status,
sex, sexual orientation, or age unless based on a bona fide occupational qualification defined under the California Fair Employment and Housing Act. .
IN WITNESS WHEREOF, the parties have executed this Lease this__day of , 2004. TOWN OF LOS GATOS Debra J. Figone, Town Manager APPROVED AS TO CONTENT: Regina A. Falkner, Community
Services Director APPROVED AS TO FORM: Orry P. Korb, TownAttorney ATTESTED TO: Marian V. Cosgrove, Town Clerk LOS GATOS-SARATOGA COMMUNITY EDUCATION AND RECREATION Steve Rauwolf, Executive
Director
EXHIBIT A: Town of Los Gatos Insurance Requirements N:\CSD\Agreements\LG Rec Dept Lease 04.doc