City Council
Staff Report
From: City Manager
Report Type: CONSENT CALENDAR
Lead Department: Community Services
Meeting Date: September 28, 2026
Report #:2609-6757
TITLE
Approval of a Term Sheet with Friends of the Recreation Wellness Center to Advance a PublicPrivate Partnership for a New Recreation Wellness Center at the Cubberley Site; CEQA status – Mitigated Negative Declaration Approved on May 19, 2026.
RECOMMENDATION
Staff recommend the City Council approve and authorize the City Manager to execute a Term Sheet (Attachment A) with the Friends of the Recreation Wellness Center to advance a publicprivate partnership for a new Recreation Wellness Center at the Cubberley site.
EXECUTIVE SUMMARY
City staff and the Cubberley Ad Hoc committee are coordinating with community partners to advance certain elements of the Cubberley project using a public-private partnership model. A Letter of Intent with the Friends of the Recreation Wellness Center was approved by the City Council in December 2024 to demonstrate the City’s commitment to provide the land for a new Recreation Wellness Center and the Friends’ commitment to raise donor funds for its construction. Staff is recommending that the City Council approve a Term Sheet (Attachment A) with the Friends to further advance this commitment at the Cubberley site.
BACKGROUND
The City is advancing a plan to redevelop a 15-acre portion of Cubberley, guided by the Cubberley Conceptual Master Plan and associated CEQA environmental document adopted by the City Council on May 18, 20261. The City and the Palo Alto Unified School District (PAUSD) have a memorandum of understanding that would enable the City to purchase seven acres to support a reimagined community center and fund school improvements. The City currently owns eight acres at Cubberley; acquiring an additional seven acres would create an opportunity 1 City Council, May 18, 2026; Agenda Item #13; SR #2512-5750, https://recordsportal.paloalto.gov/WebLink/DocView.aspx?id=88082&dbid=0&repo=PaloAlto to update the aging facility for the benefit of the community. Funding the land purchase and site improvements could be possible through a combination of funding sources including a ballot measure, nonprofit partnerships, philanthropy, grants, and fees from new development.
On June 8, 20263, the City Council voted to place a ½ cent (0.50%) Sales Tax (Transactions and Use Tax) measure on the November 3, 2026 ballot. A simple majority (50% plus 1) vote is required to pass. The Council also adopted advisory spending guidelines for proceeds of the Transactions and Use Tax. Resolution No. 102964 states the Council plans to allocate the proceeds to purchase the seven acres and implement part of the first phase of the Cubberley Conceptual Master Plan to modernize aging buildings, expand the amount of green space, and invest in spaces that provide recreation and culture. The City plans to leverage other funding sources, including investments from community partnerships and fees from new development along with this new revenue to advance the project. It is likely that the City will issue certificates of participation (COPs) or similar financing mechanisms to advance funds for land acquisition and to enable construction to proceed within the first few years after passage of the measure.
More information on Measure J is available at https://www.paloalto.gov/Departments/CityClerk/Municipal-Elections/November-3-2026-Ballot-Measure-J.
City staff and the Cubberley Ad Hoc committee are coordinating with community partners to advance elements of the Cubberley project using a public private partnership model. Letters of Intent (LOI) have been approved by the City Council with the Friends of the Recreation Wellness Center, December 2, 20245 and with TheatreWorks Silicon Valley for a performing arts complex, February 9, 20266. Additionally, Staff will be recommending that Council approve Letters of Intent with Avenidas, HeartFit for Life, and Palo Alto Community Child Care in October. These LOIs are intended to demonstrate the City’s commitment to advance certain elements of the Cubberley project through partnering with organizations that provide a community benefit and share in project costs. Additional agreements will be necessary to establish the City’s and partners’ commitments as plans develop.
There has been extensive foundational work completed to support the advancement of the Cubberley Project, including several actions by the City Council. Attachment B shares a summary of actions to date and the history of the Cubberley site. 3 City Council, June 8, 2026; Agenda Item #14; SR #2603-6081, https://recordsportal.paloalto.gov/WebLink/DocView.aspx?id=887096&dbid=0&repo=PaloAlto 4 City Council Resolution No. 10296,
https://recordsportal.paloalto.gov/WebLink/DocView.aspx?id=887259&dbid=0&repo=PaloAlto 5City Council, December 2, 2024; Agenda Item #18; SR #2410-3634, https://recordsportal.paloalto.gov/WebLink/DocView.aspx?id=83117&dbid=0&repo=PaloAlto 6City Council, February 9, 2026; Agenda Item #11; SR #2512-5774, https://recordsportal.paloalto.gov/WebLink/DocView.aspx?id=85859&dbid=0&repo=PaloAlto
ANALYSIS
A Letter of Intent with the Friends of the Recreation Wellness Center (Friends) was approved by the City Council on December 2, 2024 to demonstrate the City’s commitment to provide the land for a new Recreation Wellness Center and the Friends’ commitment to raise donor funds for its construction. The Recreation Wellness Center was incorporated into the Cubberley Conceptual Master Plan adopted by the City Council in May 202611. The Recreation Wellness Center would be located on the portion of Cubberley owned by the City and would consist of indoor recreation and wellness program space for community use. The Term Sheet (Attachment A) builds upon the LOI previously approved by Council, identifies Cubberley as the location for the Recreation Wellness Center, and details further terms necessary to engage donors and advance this element of the Cubberley project. Key terms include:
• The City will provide approximately one (1) acre of City-owned land at the Cubberley site for a Recreation Wellness Center.
• The Friends will fundraise 100% of the costs to design and construct the Recreation Wellness Center, which is estimated to be $40 million. If the project exceeds that amount, or if the Friends are unable to raise the funds within two years, the parties shall meet to discuss next steps, including alternate funding sources. • The Friends capital campaign will be conducted in a timely manner and be independent of other fundraising efforts for the Cubberley project except partnering with other health, wellness and recreational focused organizations. • The Friends will engage licensed and qualified contractors and other necessary consultants in compliance with City procurement and contracting procedures, as applicable.
• The Friends design team will coordinate with other parties engaged in work adjacent to the Recreation Wellness Center.
• The City and the Friends will negotiate and execute a long-term Operating Agreement governing the use, operation, and maintenance of the Project prior to the commencement of construction.
Additional agreements will be required as the project timeline progresses and could include a Mutual Cooperation and Support Agreement or similar, Option to Lease Agreement, Construction Agreement, and Services Agreement. These are examples and the actual agreement type(s) necessary will be determined by the City and the Friends and will require City Council approval.
FISCAL/RESOURCE IMPACT
There is no fiscal impact associated with approval of this Term Sheet, as it is not a legally binding agreement. Future agreements would be brought forward to Council for review and 11 City Council, May 18, 2026; Agenda Item #13; SR# 2512-5750, https://recordsportal.paloalto.gov/WebLink/DocView.aspx?id=88082&dbid=0&repo=PaloAlto consideration as the project develops. Implementation of the terms described would have a significant beneficial fiscal impact for the City, enabling the development of a major new recreational asset for the community.
STAKEHOLDER ENGAGEMENT
Community outreach and stakeholder engagement efforts for the project have been extensive and remain a central component of the overall process. Engagement with community partners has been ongoing and is intended to understand which community organizations may have an interest in contributing financially to development of the site while bringing community programs and events to Cubberley.
A gym/wellness facility was ranked as the second highest priority for indoor space during the first community meeting as part of engagement of the Cubberley Conceptual Master Plan.
ENVIRONMENTAL REVIEW
The Council adopted an Initial Study/Mitigated Negative Declaration for the Cubberley Conceptual Master Plan on May 19, 2026 (SCH Number 2026030129).
ATTACHMENTS
Attachment A: Term Sheet with the Friends of the Recreation Wellness Center Attachment B: Cubberley Project Background
APPROVED BY:
Kristen O'Kane, Community Services Director