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  12.A.       
Meeting Date: 08/21/2019  
From: Scott Bauer

RECOMMENDATION
  1. Authorize the City Manager to lease from MONTEREY CAPITAL, LLC and DAVID GASH (LANDLORD) the property located at 542 Lighthouse Ave., Pacific Grove, CA (The Holman) for temporary library services during the Library Renewal Project construction period for $136,800, which amount includes a $40,000 tenant improvement allowance.
  2. Authorize a 30% contingency on the $40,000 tenant Improvement allowance.
DISCUSSION
Why is a Temporary Location Needed?
The Library Renewal Project will close the Library building for at least 10 months.  An alternative location to provide Library services during this period is a priority. Factors to evaluate possible locations include:

Choosing a Temporary Location
  • Size: There is no space available in Pacific Grove that matches the Library’s 12,500 sf footprint. The larger the space available, the more open and accessible it is for library patrons, the better library patron’s experience will be (and the less library materials and furniture that will need to be stored elsewhere).
  • Staff Space and Public Space: Not only is space for library patrons needed, but space for library staff is needed as well. The more flexible the space is, the easier it will be to find the right balance of these needs.
  • Location: A space near the Library’s current location will help to minimize disruptions for library patrons.
  • Condition: The better the condition of the building and the more amenities it provides, the less tenant improvements will be needed.
  • Cost: Less money needed for leasing a space and preparing it for the library use provides more money directed towards our own building’s remodel.
Many Locations Considered:
Nearly a dozen different locations were evaluated as possible locations for the temporary library. These have included retail locations, churches, senior living facilities, service clubs and other City buildings. All of them involve trade-offs of various kinds; none of them is ideal. But one location comes closest to checking off the boxes: 542 Lighthouse Ave, aka “The Holman”.
Size: The Holman provides nearly 6,500 sf of contiguous space, over 50% of the space in the Library’s building. Of other sites considered, only the American Tin Cannery had more total space available, and that was not contiguous.
Staff/Public Space: The Holman space is easily configured into space for the public and “back of house” space for Library staff. Other locations could provide staff space only in areas separated from the public area, making it difficult to deploy additional staff to assist the public during busy times.
Location: The Holman is literally one block up Fountain and Grand from the Library. Most other locations evaluated were much further away.
Condition: Newly remodeled, the space at The Holman is in the better condition than all other locations considered.
Cost: This is the only area where The Holman trails other locations – it is hard to beat “free” (or close to that, using other City facilities) and The Holman lease costs, because of the amount of space involved, are the most expensive of the alternatives examined. That said, because of the amount of space at The Holman, it is able to fit almost everything currently at the Library (albeit not as effectively), greatly reducing the cost of storage required.

Weighing all of these factors, The Holman offers the best value despite the higher cost. 

Lease Summary:
The full text of the lease is attached to this report. In summary the major details of the lease are:
  • 6,429 square feet
  • $11,400/month rent for one year, with 12-months pre-paid*
  • An allowance from the developer of $40,000 towards tenant improvement costs
  • Ability to extend the lease on a month-to-month basis if needed.
*Note:  Pre-payment of the lease will allow the developer to make tenant improvements and other general improvements to the property and surrounding area.  While the Library Renewal Project will close the Library building for at least 10 months, it is anticipated that a 12 month temporary location lease will be required to allow adequate time for the transition from and back to the Library building.

Alternatives Analysis:
If the City does not approve the lease:
  1. The City can seek alternative location(s) for temporary Library use. This would mean starting over again as many of the spaces looked at initially may no longer be available. The additional time needed would almost certainly result in having to delay the start of the Library Renewal Project construction as well.
  2. The City can operate from a portion of the library, such as children’s room, while the remodel is underway. Although this would expose library staff and patrons to the dust and noise of the construction in the other areas of the building, require staging the construction in phases (extending the time required to complete the remodel, and likely increasing the cost of the project), and require a large majority of the library’s books, other materials and equipment to be stored off site, incurring additional storage costs as well.
  3. The City can provide limited/no physical library service during the remodel. While the Library could invest additional funds in online resources such as eBooks, streaming media, databases, virtual library services and greater outreach in the community, none of these can replace having a physical location with library staff available to help patrons face-to-face. It is doubtful that the community would look on this option favorably.
OPTIONS
Do not approve the lease and:
  1. Seek alternative location(s) for temporary Library use.
  2. Operate from a portion of the library, such as children’s room, while the remodel is underway. 
  3. Provide limited/no physical library service during the remodel.
FINANCIAL IMPACT:
The following costs are associated with leasing space at The Holman for the temporary location of the Library:
  • 1-year lease for 6,429 sf of space on the 1st floor of The Holman for a total of $136,800.
  • City Staff is requesting allocation of a 30% contingency on the $40,000 tenant improvements.  The initial $40,000 Tenant Improvements are built into the total lease amount.  This additional $12,000 of contingency funding will cover any additional, necessary occupancy improvements.
  • Moving expenses of $55,000. The quote is for moving of the Library’s books and other library materials both to-and-back from The Holman building. Library, IT, and Public Works staff will do the moving of furniture, shelving and equipment.
Funds have been allocated in the Fiscal Year 19/20 Budget to support the relocation of the Library.   The community has raised $2,662,000 for the Library Renewal Project, which includes the $400,000 in City contributions.  The funds for the library relocation will come from the City's share of matching contributions.
  
GOAL ALIGNMENT: City Asset Stewardship: Repair, maintain and improve City assets, including streets, sidewalks, sewer systems, buildings, and parks and trails.
Attachments
LibraryLease
Presentation


    

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