On January 12, 2000, IVGID executed a 30-year ground lease with three (3) 23-year options for 1.5 acres of land (later amended to 2.36 acres) within the Incline Park property. The ground lease was for $1 per year and contingent upon PTCF operating a non-profit center on the site. Subsequently, PTCF raised approximately $14 million to construct and furnish the Donald W. Reynolds Community Non-Profit Center. The 31,500 +/- square foot building was completed in 2002. Since that time, Parasol Tahoe Community Foundation (PTCF) has operated the non-profit center consistent with the lease terms.
On March 17 2017, PTCF sent a letter to the Board of Trustees indicating an interest in possibly modifying the exiting ground lease. PTCF is interested in focusing more of their energies on their core mission which is functioning as a non-profit public charity dedicated to supporting service agencies in the Lake Tahoe region. They would like to shift both monetary and financial resources, which are dedicated to bricks and mortar functions, and dedicate those resources to their core mission. Freeing up these resources would increase the amount of financial support that PTCF could provide to the region. Under this scenario, they would no longer serve as the landlord for the Donald W. Reynolds Community Non-Profit Center. They would financially support their grantees' office space costs instead of granting them space. Consequently, they would no longer meet the land use requirements of the ground lease.
As a follow up to this letter, IVGID approached PTCF and learned more about their interest in modifying the lease. PTCF is interested in focusing more of their energies on their core mission which is functioning as a non-profit public charity dedicated to supporting service agencies in the Lake Tahoe region. They would like to shift both monetary and financial resources, which are dedicated to bricks and mortar functions, and dedicate those resources to their core mission. Freeing up these resources would increase the amount of financial support that PTCF could provide to the region.
Under this scenario, PTCF would no longer serve as the landlord for the Donald W. Reynolds Community Non-Profit Center. They would financially support their grantees instead of granting them space. Consequently, they would no longer meet the land use requirements of the ground lease. PTCF has proposed that the leasehold improvements, which include the building and other improvements to the real property, be transferred to the possession and control of the property owner (IVGID) and the lease would be modified to reflect this transfer. PTCF would like to remain as a tenant in the building and has offered to assist IVGID in facilitating service agencies' access to the shared-use facilities in the building. While PTCF would also like a small portion of the building to continue as a non-profit center, the majority of the space in the building could be used by IVGID for District programming and administrative office space needs.
As part of the lease modification, PTCF would like to receive $5.5 million in consideration for the value of their investment in real property leasehold improvements. Currently, the value of the leasehold improvements made has been appraised at $9.6 million, not including furniture, furnishings, and equipment (FF&E) or any other personal property located on the site or in the building.
Stated simply, PTCF would like to sell to IVGID, at a price of $5.5 million, the building known as the Donald W. Reynolds Non-Profit Center.
PTCF has emphasized that this request for a lease modification is simply a proposal. While PTCF believes that this change in mission is for the betterment of the community, it is dependent upon the land owner (IVGID) agreeing to mutually beneficial terms and conditions. If IVGID is not amenable to a lease modification, PTCF will continue to operate its non-profit center consistent with the terms of the existing Ground Lease.
IVGID is in the process of assessing its programming and facility needs via the Community Services Master Plan. Both the current plan and the previous plan that was adopted in 2000 identified the need for more programming space and District office space. The PTCF proposal could potentially be a very cost-effective means to address IVGID's current deficiencies for both District programming and office space. At the April 13, 2017 Board of Trustees Meeting, in response to the request for this lease modification request, the Board of Trustees directed Staff to provide a summary report on the feasibility of the proposed modification. The Feasibility Study, along with a number of source documents as requested by the IVGID Board of Trustees, was provided and discussed at the April 25, 2017 Board Meeting. At that meeting, the IVGID Board of Trustees directed Staff to conduct additional research and schedule a special public comment period for the May 10, 2017 IVGID Board of Trustees Meeting. All documents presented at the April 25, 2017 IVGID Board of Trustees meeting are available below.
April 25, 2017
D.W. Reynolds Non-Profit Feasibility Report
Attachment 1 – Letter from PTCF to IVGID Board of Trustees (March 17, 2017)
Attachment 2 – Original Lease between PTCF and IVGID
Attachment 3 – Amendment to lease between PTCF and IVGID
Attachment 4 – 2009 Business Plan for the D.W. Reynolds Community non-profit center
Attachment 5 – IVGID Board of Trustees Policy Number 7.1.0
Attachment 6 – Appraisal dated January 16, 2017
Attachment 7 – PTCF Unaudited Preliminary Statement of Financial Position (December 31, 2016)
Attachment 8 – Draft first page of the agenda for May 10, 2017 – Item C. Special Public Comment Section
May 10, 2017
Memo (Presentation, Response to additional research requests, proposed lease amendment agreement, legal authority, Potential conflict of interests, Administrative building alternatives, Financial Analysis)
Administration Building Replacement Evaluation
Grant Deed, CCR’s, and Amendment to CCR’s
May 24, 2017
Memorandum – Response to additional research requests ad directed at the May 10, 2017 IVGID Board of Trustees Meeting
Attachment A – Proposal to provide appraisal service for 948 Incline Way
Attachment B – Proposal to provide consulting services addressing commercial lease and current commercial property listing
Attachment C – Scope of Work and Fee schedule – Exhibit “A”
Attachment D – IVGID Executive Summary Special Revenue Fund Balance Stress Test
Attachment E – Draft Lease Amendment Agreement between IVGID and PTCF