TO: HONORABLE MAYOR AND COUNCILMEMBERS

FROM: CITY MANAGER

DATE: JUNE 20, 2006

SUBJECT: PALOS VERDES ART CENTER LEASE AGREEMENT

RECOMMENDATION:
Continue the consideration of the lease agreement with the Palos Verdes Art Center to the Council meeting of July 5, 2006.

BACKGROUND:
On May 6, 2003 the City Council considered a request from the Palos Verdes Art Center to investigate the feasibility of converting the former Nike missile silos at the Upper Point Vicente site to museum use. The Art Center believed that the underground silos that formerly housed Nike missiles could be converted into gallery spaces with minimal investment.

On October 6, 2003 the firm of Jones and Stokes was authorized to perform a preliminary investigation of the entire 78 acre Upper Point Vicente Site. The report was completed in May 2004 and identified no fatal flaws in the proposed use plan, but recommended additional studies.

At their meeting of March 29, 2005 the City Council heard a proposal from Art Center representatives describing a concept under which the Art Center would construct a $15 million facility on City land, deed it to the City and lease it back through a long term lease arrangement. The City Council approved the plan in concept and encouraged the Art Center to continue its study of the site.

On May 31, 2005 the City Council approved a request from the Palos Verdes Art Center to perform the additional studies recommended in the 2003 Jones and Stokes Report. The Art Center recommended that the environmental review firm, PSI, perform the additional studies necessary to further refine the potential use of Upper Point Vicente for the proposed Art Center. The PSI Study was completed and forwarded to the City Council on August 29, 2005 with some relatively minor recommendations for remediation including the removal of underground storage tanks.

On February 1, 2006 the Art Center submitted a proposed lease agreement to the City. A copy of the Agreement was provided to the City Council at their February 4, 2006 Tactical Planning Workshop. The Council continued discussion of the proposed agreement to their meeting of April 18, 2006.
Staff responded to the Art Center staff with concerns about the proposed lease and Mayor Wolowicz, City Attorney Lynch and City Manager Evans met with the Art Center leadership to go over those concerns on March 7, 2006.

On April 6, 2006 Staff received a Memorandum of Understanding and Letter of Intent from the Art Center. In the letter, the Art Center indicated that they needed a commitment from the City regarding the lease of the civic center site by mid-May 2006.

April 7, 2006, during a meeting with Councilman Gardiner and Maude Landon, Art Center President, a list of concerns and recommended changes to the Art Center MOU proposal, prepared by the City Manager, was provided to the Art Center leadership. The Art Center leadership felt that the suggested MOU revisions were all negotiable with the exception with the term of the lease.

At their meeting on April 18, 2006 the City Council authorized the City Manager and City Attorney to work with the Palos Verdes Art Center to develop a draft lease agreement to enable the Art Center to move ahead with design of a facility on the Civic Center property.

DISCUSSION:
Due to vacations and illness of the Art Center Attorney, they have requested this matter be continued to the next Council meeting.

Respectfully submitted,

Les Evans,
City Manager