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HomeMy WebLinkAbout2023-01-24; City Council; ; Request for $228,411 in Additional City Funding for the New Village Arts Tenant Improvement ProjectCA Review ___AF___ Meeting Date: To: From: Staff Contact: Subject: District: Jan. 24, 2023 Mayor and City Council Scott Chadwick, City Manager Curtis Jackson, Real Estate Manager curtis.jackson@carlsbadca.gov, 442-339-2836 Request for $228,411 in Additional City Funding for the New Village Arts Tenant Improvement Project 1 Recommended Action Consider New Village Arts request for $228,411 in additional city funding for the New Village Arts Tenant Improvement Project, discuss options and provide direction to staff. Executive Summary The City Council approved a new 10-year lease agreement for the former Bauer Lumber Building at 2787 State St. with New Village Arts, or NVA, in 2021. The lease and the construction agreement approved along with it provided for the city to contribute an amount not to exceed $573,000 for work on the building, $103,000 for installation of solar panels and $470,000 for exterior improvements to its south and east walls. At the time, NVA anticipated that the total tenant improvement costs for the property would exceed $2,000,000. Under the terms of the lease and the construction agreement, NVA is responsible for the total cost of the tenant improvement project, but may receive reimbursement of up to $573,000 from the city for the installation of solar panels and certain exterior improvements. NVA is now requesting $228,411 in additional city funding for the New Village Arts Tenant Improvement Project (Exhibit 1). This new request would require the City Council’s approval. If it is approved, staff will then need to develop either an amendment to the lease and the construction agreement or a grant agreement and resolution for the City Council’s approval. Explanation & Analysis Lease agreement history The Carlsbad Redevelopment Agency acquired the former Bauer Lumber Building, on the northeast corner of State Street and Christiansen Way in the Village, for the city in 1997 with Jan. 24, 2023 Item #14 Page 1 of 4 proceeds from tax exempt bonds issued in 1993.1 The bonds used to purchase the property will reach their maturity date and be paid off by September 2023. The building is 9,400 square feet and was divided into two suites, 6,300 square feet in the rear of the building for theater performances and 3,100 square feet in front on State Street for an arts incubator. NVA has leased the rear 6,400 square-foot space from the city since 2006 and has been the sole occupant of the entire property since 2009. On July 27, 2021, the city and NVA entered into a new 10-year lease agreement with two five- year extension options, and a rental rate of one dollar ($1.00) per year (Resolution No. 2021- 182). As part of the new lease agreement, NVA agreed that improvements to the interior and exterior of the property would exceed $2 million. The city agreed to reimburse NVA up to $470,000 for certain exterior improvements to the south and east walls of the building and $103,000 toward installation of solar panels as part of this tenant improvement project, for a total of $573,000. The City Council also allocated $40,000 for the city to contract with a construction manager to ensure the project was being built to city standards and following city protocol. The lease also required a construction and reimbursement agreement between the city and NVA which detailed the terms by which NVA could receive reimbursement of up to $573,000 for the cost of the tenant improvement project, with the understanding that the city was not responsible for the cost of the overall tenant improvement project, including possible cost overruns. Maintenance of property • As part of the fiscal year 2017-18 budget process, the City Council approved a project to replace the roof and repair and replace siding on the south and west walls of the building leased (Capital Improvement Program Project No. 4739). • In early 2019, Alex Goodman, NVA’s Managing Director, requested revisions to the proposed scope of work, including deleting renovation of the south wall. • On July 28, 2020, the City Council approved plans and specifications and authorized advertisement for bids to repair the building’s roof and refurbish the western wall (Resolution No. 2020-160). • On Sept. 22, 2020, the City Council approved a contract to commence the repairs and to increase the budget for the renovations an additional $60,000, from $253,626 to $313,626 (Resolution No. 2020-192). • Repairs and renovations to the building were completed in January 2021. The total cost of the roof and west wall renovation project was $292,637. Cultural Arts grants to NVA Since 2013, the city has supported NVA with the award of 27 art grants totaling $206,638, which includes $50,000 for a new mural on the west wall of the building, which has recently been completed. 1 The Carlsbad Redevelopment Agency was dissolved in 2012, as required by state law. Jan. 24, 2023 Item #14 Page 2 of 4 NVA’s request for additional funding NVA requested an additional $228,411 in city funds to support NVA’s tenant improvement project in a letter the city received Jan. 3, 2023 (Exhibit 1). Both the lease and the construction and reimbursement agreement specify that the tenant improvement project is NVA’s sole financial responsibility. The terms of the agreements only authorize the city to reimburse NVA for a portion of the costs of the improvements, not to exceed $470,000 for the exterior improvements and up to $103,000 toward installation of solar panels, for a total of up to $573,000. NVA is responsible for the overall cost of the project, including any cost overruns. No allowance for the city to reimburse NVA for cost increases due to inflation, prevailing wage requirements, supply chain challenges or any other reason was included in either agreement. Fiscal Analysis The fiscal impact of this item depends upon the direction the City Council provides. If the City Council chooses to approve the request, staff will return with appropriate funding recommendations, with one being an allocation from the City Council Contingency Fund. The current available balance of the City Council Contingency Fund in fiscal year 2022-23 is $492,223. Options Although the city is not required to reimburse NVA for the requested $228,411 in additional funds as requested, if the City Council would like to consider providing NVA with additional funding, staff provide two potential funding options below. Staff provide the following three options for the City Council’s consideration: 1. Approve New Village Arts’ request for up to $228,411 in additional city funding for the New Village Arts Tenant Improvement Project and direct staff to return to the City Council in closed session to discuss the price and terms of a lease amendment, and a subsequent amendment to the construction and reimbursement agreement. 2. Approve New Village Arts’ request for additional city funding for the New Village Arts Tenant Improvement Project and direct staff to return to the City Council with a grant agreement and resolution allocating up to $228,411 from the City Council Contingency Fund to NVA. 3. Deny New Village Arts’ request for additional city funding for the New Village Arts Tenant Improvement Project. Environmental Evaluation This action does not constitute a project within the meaning of the California Environmental Quality Act under California Public Resources Code Section 21065 in that it has no potential to cause either a direct physical change or a reasonably foreseeable indirect physical change in the environment. Next Steps Based on City Council direction, staff will proceed accordingly. Exhibits 1. New Village Arts request for additional city funding, letter dated Jan. 3, 2023 Jan. 24, 2023 Item #14 Page 3 of 4 Scott Chadwick City Manager 1200 Carlsbad Village Drive Carlsbad, CA 92008 January 3, 2023 Dear Mr. Chadwick, We are thrilled to share that we are about to re-open New Village Arts! We are proud to be achieving the goals set by the City to create evening entertainment and activities that encourage public interaction and positive pedestrian traffic in Carlsbad Village and help to revitalize the retail and dining environment with exciting entertainment opportunities. The grand re-opening of the Dea Hurston New Village Arts Center is scheduled for February 2023 and will coincide with NVA’s production of Jez Butterworth’s THE FERRYMAN. The show won the 2019 Tony Award for Best Play and NVA will be the first theatre company outside of New York and London to present this astonishing play. This will bring national attention to Carlsbad and we are proud to share it with our community. When the Dea Hurston New Village Arts Center re-opens, it will be a true cultural gathering space for our community. The robust plan for the Sahm Foundation Arts Education Center includes weekday classes for all ages from 9am to 9pm and weekend activities focused on the children in our community. The White Family Next Stage will bring music, poetry, discussion groups and more to the heart of Carlsbad Village. And New Village Arts will continue its highly acclaimed and award-winning professional theatre in the Conrad Prebys Theatre. It will also be a place where you can come for a cup of coffee and interact with local visual art and even be able to make your own art projects! When New Village Arts presented this project to the City of Carlsbad in May of 2019, the project was an estimated $1.2 million, with an anticipated final cost to NVA of $730,000 and cost to the city of $573,000. Three and a half years later, with a new construction company and architectural team, and with increases in market conditions and inflation, the same project scope is coming in at a total cost of $3.1 million. New Village Arts is requesting an increase of $228,411 in support from the City of Carlsbad. All of us at New Village Arts are incredibly grateful for the ongoing support of the City of Carlsbad and we certainly would not be able to do any of this without that support. We hope that the City will see the importance of finishing this project successfully and creating a thrilling cultural gathering space for our community. Please feel free to reach out to us with any questions or for any additional information. With gratitude, Kristianne Kurner Rae Henderson-Gray Founder and Executive Artistic Director Managing Director cc: Assistant City Manager Gary Barberio Real Estate Manager Curtis Jackson Assistant City Attorney Allegra Frost Public Works Manager John Maashoff Robert Polley, Senior Construction Manager, SchneiderCM Kristianne Kurner Executive Artistic Director Rae Henderson-Gray Managing Director Joan Cumming President Saundra Redmond-Moton Vice President Mary Kerr Treasurer Lauren Segovia Secretary Board Members at Large John Harelson Kristianne Kurner Katie Keller AJ Knox Robert Lin Sue Loftin Christy Rosa Mohler, M.D Milena (Sellers) Phillips Lou Storrow Scott L. White DeMilo Young NVA Advisory Board Rosemary Eshelman, Chair Ariel Bedell Mark Caruana Kathy Deering Fred Deutsch Haley DiDonato Mea Hall Walt & Sharon Hambly Pat Hansen Julie Nygaard Pat Hurley Emma Jadhav Chelsea Kaufman Richard Kuranda Cassie Langan Linda Ledesma Gina McBride Christine Ileto Pangan Justin Peek Shari Roberts Jay Sarno Don & Becky Sciglimpaglia NVA is a 501(c)(3) Non-Profit Organization Tax ID #52-2320930 New Village Arts, Inc. 2787 State St. Carlsbad, CA 92008 760.433.3245 info@newvillagearts.org www.newvillagearts.org Exhibit 1 Jan. 24, 2023 Item #14 Page 4 of 4 NEW VILLAGE ARTS