REPORT TO THE CITY COUNCIL
DATE: Regular Meeting of January 23, 2024
TO: Mayor and Members of the City Council
VIA: Dante Hall, City Manager
SUBMITTED BY: Patrick Tang, City Attorney
SUBJECT: Consider Approval of a Resolution Authorizing the City Manager to Enter into an Agreement with the Hercules Historical Society to Extend the Trailer Acquisition and Lease Agreement; and Review and Provide Direction Regarding a Policy for Lease of City Properties RECOMMENDED ACTION:
Adopt a Resolution authorizing the City Manager to execute an amendment to the Trailer Acquisition and Lease Agreement between the City of Hercules and the Hercules Historical Society (HHS), to continue the lease for an additional five (5) years with an option for a five (5) year extension. A lease provision providing for payment by HHS of an annual amount of $100 to cover utility costs is included as an option for Council to consider.
Review and discuss a draft Lease Policy and provide direction to staff.
BACKGROUND:
On February 14, 2023, the City Council considered an extension of a Trailer Acquisition and Lease Agreement Between the City of Hercules and the Hercules Historical Society (the “Agreement”) for continued use of a surplus trailer located adjacent to City Hall. The original Agreement was for five years, with a five-year extension, which expired February 14, 2023.
The HHS has not been required to pay rent or utilities, but as reported to Council on February 12, 2013, HHS incurred the expense of acquiring the trailer from William Scotsman Inc., who originally leased the trailer to the City, thus relieving the City of its obligation to pay the monthly rent owed for the structure. HHS is also required to purchase and maintain liability insurance coverage naming the City as additionally insured, and is responsible for the maintenance of the trailer.
At the February 14, 2023 meeting the Council deferred action on the proposed lease extension agreement. Instead, Council: 1) Directed staff return to Council with additional information regarding rental and/or lease arrangements with other non-profit groups using City property; 2) Discussed whether a nominal annual payment of $100 should be made by HHS to cover utility costs; and 3) Because the Original Agreement was set to expire, directed staff to enter into a temporary month-to-month lease agreement with HHS until the matter could be brought back to Council for further discussion.
At the Regular Council Meeting of May 9, 2023, staff brought back the proposed Amendment to Extend the Trailer Acquisition and Lease Agreement and reported to Council that a temporary month-to-month lease had been executed by the Parties. Staff provided the additional information requested by Council regarding rental and lease arrangements with other non-profit groups. After hearing and discussing the report, the City Clerk took a roll call vote on the motion by Council Member Bailey to defer action on the lease amendment, continue the month-to-month lease with HHS, and request staff to come back at a future meeting with information regarding a comprehensive policy for leasing of City properties that could be applied to non-profit organizations. The motion was approved by unanimous vote of the Council.
DISCUSSION:
1. Lease Status. An interim month-to-month lease was entered into on or about February 23, 2023 per Council direction and is now in effect, see Attachment 2. Included with the agenda materials is a proposed lease extension agreement that provides an option for a $100 annual payment intended to compensate the City for utilities, see Attachment 3. A Resolution authorizing the City Manager to execute the draft amendment to the original Trailer Acquisition and Lease Agreement is provided for Council consideration as Attachment 4.
2. Lease Arrangements with Other non-profit Groups. The information being provided in this section of the Staff Report was compiled by Parks and Recreation Director Christopher Roke and was previously provided to the Council in the May 9, 2023 report. According to Director Roke, with respect to rental and/or lease arrangements with other non-profit groups for use of City property or facilities, the arrangements vary depending on circumstances. Currently there are 14 City Recognized Nonprofit Groups. City recognized non-profit groups receive two hours of facility space at no charge per week, or eight hours per month. The two hours a week of facility space is usually used for hosting regular meetings of the non-profit groups. Each recognized non-profit group must contribute 80 hours of volunteer time to the City per year. The City typically gets assistance from the non-profit groups at annual events including Fourth of July, Tree Lighting, Trunk or Treat, and Cleanup Day.
Those City recognized nonprofits that have additional arrangements with the City for use of City space are as follows:
The Community Garden. Operates on City property within a fenced-in area at Ohlone Park. There is a water meter for the entire park but not specifically for the garden, so the cost of water used at the Community Garden is included in the usage for the entire park. No other utilities are used on the Garden property. There is no lease agreement for the operation of the Community Garden.
The Friends of the Hercules Library. This nonprofit has a room within the library dedicated for the sale of used books and does not pay rent for this use. All libraries in the County were built with a dedicated room (the size of a small office) to act as a book store. The book store is run by volunteers, and in the case of Hercules, it is staffed by volunteers from the Friends of the Hercules Library. They do not pay rent or any utilities. Additionally, the Friends of the Hercules Library hold a semi-annual book sales event, and use the Large Library conference room for this event. They do not pay any fees for the use of the conference room for the book sale events.
The other City recognized nonprofits do not lease or occupy City property on an ongoing or continuing basis but do benefit from the reduced facility rental fees afforded these recognized nonprofits. A brief description of nonprofit activities on City property follows:
Friends of Hercules Senior Center (FHSC) Runs up to 4 events a year at the Senior Center, and staffs the front desk with volunteers 5 days a week.
Bayfront Chamber - Banner & facility rentals at nonprofit rates. Holds events, City sponsored with special contract.
Boy Scouts: Troop 76 - 2hr/week meeting space.
Chinese Association - Mainly facility rental at nonprofit rates.
Democratic Club - No use yet (only 2 years as City Recognized Nonprofit group) Hercules Education Foundation (HEF) - Banner & facility rental at nonprofit rates. Holds fundraising events for schools.
Library Foundation – Takes donations, holds fundraisers, writes grants.
Sister City Association - Occasional banner space.
Rotary - Occasional banner space or meeting space.
Senior Citizens Club of Hercules - Mainly facility rental or meeting space West Contra Costa Youth Soccer League (WCCYSL) – Banner and field space rental at Hanna Ranch Based on the above analysis, there are currently no lease arrangements within the City comparable to the HHS trailer lease.
3. Discussion Whether to Adopt a Citywide Lease Policy.
At the May 9, 2023 regular council meeting, the Council requested that staff bring back for discussion a uniform policy for the leasing of city owned public properties. A draft policy derived from a review of lease policies from other cities is provided as Attachment 5 for Council discussion and consideration. The draft policy would provide for a uniform policy for the valuation, bidding, and leasing of public buildings and facilities. Under the proposed policy the City shall seek to obtain market value for the lease of its properties. The policy provides that all leases of City property must be approved by the City Council. All leases beyond six months duration must be awarded to the highest responsible bidder unless an alternative is justified based on certain specified criteria, such as leasing to another governmental agency, leasing to a non-profit tax-exempt civic or charitable organization, or other special circumstances.
FISCAL IMPACT:
There is no fiscal impact associated with this agenda item.
ATTACHMENTS:
1A- May 9, 2023 Staff Report (with Attachments)
1B- February 14, 2023 Staff Report (with Attachments)
2 - February 2023 Interim Month-to-Month Agreement
3 - Revised Proposed First Amendment to the 2013 Agreement 4 - Resolution Authorizing Amendment to the Agreement
5 – Draft Citywide Lease Policy