History museum may seek corporate tenants

Palo Alto mulls allowing for-profit institutions to lease space in historic Roth Building

Palo Alto's drive to turn the famous Roth Building on Homer Avenue into a history museum has a long and twisted history of its own.

The 1932 building, which once housed the Palo Alto Medical Clinic and which is listed on the National Register of Historic Places, has long been envisioned by city officials as a perfect site for a history museum or another "public facility." But as city officials learned Tuesday night, turning this dream into reality may have to involve private investors leasing offices at the new museum.

The Palo Alto History Museum, a nonprofit group raising money for the new museum, asked the City Council's Finance Committee for permission to sublease part of the building at 300 Homer Ave. to a for-profit organization. The move is driven by the project's financial needs. The nonprofit group needs to raise more than $6 million for the project and has already acquired about $4.5 million, board members told the committee Tuesday.

The group hopes to get another $800,000 or so through the "Federal Historic Tax Credit" program, which provides tax credits to private entities as an incentive to rehabilitate historic structures. This would leave with another $800,000 that it has to raise by other means, a goal that members said they believe they can accomplish in the next nine or ten months.

But the federal program comes with a bundle of strings attached, including a requirement that the project generate profits and bring a 3 percent return on investment -- a tall order for a nonprofit group. To meet this requirement and to give itself some financial breathing space, the group urged the committee Tuesday to back away from the city's current position, which calls for the building to be occupied solely by nonprofit groups.

The four-member committee deferred the decision on whether to allow for-profit businesses to lease space in the Roth Building until a future meeting, though they unanimously supported the Palo Alto History Museum's proposal to pursue the tax-credit program.

Margaret Feuer, a board member at the Palo Alto History Museum, highlighted the group's recent fundraising efforts but noted that times are tough for nonprofit groups. The group has already received about $560,000 in grants, Feuer said. But having no building and, hence, no programs, makes acquiring funds particularly difficult, she said.

"We all know nonprofits face funding challenges," Feuer said. "This is really the reason we ask you to allow us to rent to a for-profit entity. That would give us a cushion to fall back on."

If the group were to succeed in launching the museum, it would complete a journey nearly a decade in the making. The city bought the Roth in 2000 and sought proposals from local nonprofits to occupy it. The Palo Alto History Museum proposed in 2003 to restore and preserve the dilapidated building, and the council accepted the proposal. Since then, the council had extended its option agreement with the group several times and had approved $150,000 to repair leaks and drainage problems in the building.

Last year, the museum group's latest contract expired, and the city extended it until the end of 2013. As a condition, the group had to submit a business plan within the first six months of the year. By presenting its plan Tuesday night, the group met its condition.

Council members, for their part, reasserted their commitment to the project, though they stopped short of approving the museum's group's entire request.

"I want the History Museum to succeed, and I want it to go forward," Vice Mayor Greg Scharff said. "I think it will be a great thing for Palo Alto."

But Scharff and other council members voiced major concerns about the proposal to let corporate offices lease space in the Roth. One major issue is zoning. The site is zoned "public facility," which does not allow most for-profit office uses. Senior Assistant City Attorney Cara Silver said some such uses, including cafes and restaurants, could be developed at the site through a conditional-use permit. But corporate offices of the sort envisioned by the group would likely require a zone change, Silver said.

The committee agreed to delay its decision on allowing for-profit institutions to give city staff and the museum group's consultant more time to analyze the zoning issues involved in the switch.

Despite the unresolved financing issues, the complicated project has seen a recent surge of momentum. The Historic Resources Board and the Planning and Transportation Commission have both voted to support the museum, which would include gallery space, staff offices, a community meeting room, a gift shop, a café, an archive-storage space, and offices for future subtenants.

Local resident Crystal Gamage attended Tuesday's meeting and urged the committee during the public-comment period to support the Palo Alto History Museum.

"It's an important step for the city, and it will reflect on our history," Gamage said. "You want the best museum possible."

Gail Wooley, former mayor and current vice president of the Palo Alto History Museum, said that while the process of getting a historical tax credit is complex, it's "probably worth the effort" for the city. She noted that while the city hasn't pursued this financing mechanism in the past, many local developers, including Charles "Chop" Keenan and Roxy Rapp, have gone through this process as they rehabilitated historical buildings downtown.

"It's an opportunity to make a public-private partnership, which makes it possible to bring in private money for a public benefit," Wooley said.


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Posted by Wayne Martin
a resident of Fairmeadow
on Jun 20, 2012 at 8:53 am

This enterprise is going to have financial problems, given that Palo Alto was mostly farm land during its history, and has little to offer that is truly "historic", relative to the East Coast, or to the 4,000-6,000 years of "history" in the great centers of urban activity around the world. Without Stanford and the rise of the technology industry, there really isn't much history that can be found here.

With a technology museum in Mountain View, it's difficult to envision the operators of this site being able to create a museum that will attract people from all over the world, so that it will be self-sustaining.

They could seek to partner with organizations like Stanford, SLAC, and NASA Ames, Xerox, and other companies that have had a presence here in Palo Alto, at one time, or another. That vision does not seem to have taken hold here, although it could.

It's hard to believe that Palo Alto is large enough, and historically significant enough to be able to support this museum. It's a real fear for most taxpayers that our hard-earned dollars will sooner-than-later be used to subsidize the operations, or capital expenditures, need to keep the doors of this facility open.

Therefore, it makes sense to allow them to seek funding where they can. Leasing space to corporate clients is one way for them to easily acquire funding. Client selection might be controversial in this town, that has been openly anti-corporate in its public views and postures. As long as the corporate tenants don't generate a lot of traffic, or other disruptions, this appears to be one way for this organization to survive for a few years until the value of a history museum in Palo Alto can be established.

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Posted by JLC
a resident of University South
on Jun 20, 2012 at 10:28 am

(There may be some confused readers out there who may vaguely be aware of the relatively popular Museum of American Heritage, also on Homer but across the street.)

A local history museum is a great idea, but it's primarily a museum for local residents maintained by local residents. Local residents will need to pay for it themselves, either through local charitable contributions or tax revenue. Maintaining a museum in a location with very high value as real estate may be an impediment to the museum's goals in the long-term.

It makes a lot of sense to seek a revenue stream for the site separate from the PAHM. This building is also across a street from a large new commercial building also on Homer. A special zoning designation to allow commercial use seems reasonable. (But this brings the discussion back to issues involving non-residential parking near residential homes.)

In my opinion, anything would be an improvement over the current state of the building. I've lived in this neighborhood for several years, and it comes across as a minor eyesore given its current condition.

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Posted by History Major
a resident of Old Palo Alto
on Jun 20, 2012 at 10:57 am

When Steve Jobs passed away (RIP), I hoped we might soon be hearing that the Jobs family had generously donated some of his personal effects, along with a check to spruce up the Roth Building (just enough to nicely display them and various other local artifacts of the early days of technology). Instead, it seems that our community leaders have more grandiose plans in mind for the Palo Alto History Museum -- perhaps more akin to the Smithsonian Institute than a local history museum usually found in a town our size.

Six-plus million dollars? What for? Isn't one white elephant (the massively overbuilt Main Library) enough?

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Posted by JLC
a resident of University South
on Jun 20, 2012 at 11:17 am

@HM - I'm curious about what all that money is for too.

@Gennady - The article mentioned a business plan submitted to the City on Tuesday. Do you know if the business plan is posted somewhere online? Thanks!

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Posted by to History Major
a resident of Midtown
on Jun 20, 2012 at 11:25 am

The massively overbuilt library (aka childcare location) is the Mitchell Park branch, not Main.

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Posted by Maria
a resident of Duveneck/St. Francis
on Jun 20, 2012 at 12:13 pm

What "massively overbuilt main library" are we talking about? There hasn't been any improvement/building on the Main Library on Road in ages. Are you confusing it with the Mitchell Park one on Middlefield?

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Posted by History Major
a resident of Old Palo Alto
on Jun 20, 2012 at 12:33 pm

Thanks to THM and Maria for the correct reference to the Mitchell Park location! As best as I can tell from the drawings, the Main Library renovation is at a entirely appropriate and gracious scale -- I'm looking forward to its completion. It would nice if the designers of the Palo Alto History Museum took the same approach.

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Posted by Tom
a resident of Professorville
on Jun 20, 2012 at 1:25 pm

It's very difficult to attract investors to a vague pie in the sky vision.

The Palo Alto History Museum needs to open as a museum -- somewhere, anywhere, even peripatetically -- and demonstrate its value to the community beyond being a rehab project for a decrepit old city building. Had it done that in the beginning I bet it would be putting the final coat of paint on its permanent home this year.

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Posted by PAHM Supporter
a resident of Crescent Park
on Jun 20, 2012 at 4:25 pm

The History Museum project is actually a pretty modest project, on par with what the Main Library renovation is going to be. Unfortunately, the restoring and basic improving of the museum requires work that is quite costly. It is by no means a fancy project, but construction costs are high these days, and they are shooting for LEED certification, which also brings the cost up. Anyway - it's going to be a great project with a very appropriate use of that building, and anyone criticizing here simply isn't familiar with the plans.

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Posted by Outside Observer
a resident of another community
on Jun 20, 2012 at 4:42 pm

My prediction:

5 years from now, the History Museum will finally open. In the old Downtown Post Office building.

In the mean time, the City will buy the old post office, and it will sit vacant, deteriorating, and become a haven for bums.

After the History Museum moves in, the decrepit, structurally unsound Roth building will be demolished and the space added to the adjacent park.

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Posted by moi
a resident of Another Palo Alto neighborhood
on Jun 20, 2012 at 4:55 pm

Please, not a restaurant.

Also, is this going to turn into another Squire House? City/tax/grant/charitable funds to rehabilitate the property, then some private entity makes a financial killing?

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Posted by lazlo
a resident of Old Palo Alto
on Jun 21, 2012 at 9:30 pm

Sell all city amenities to the highest corporate bidder is the new city charter the city manager and city council are promoting. While all city services are being cut, the city manager continues to receive a $500,000 pay and benefit package. Where is our taxpayer "reserve" dollars being spent? The city manager continues to promote cuts in police, fire, animal services, etc. meanwhile, his city management staff salaries have increased 500% in three years. Perhaps it is time for a change in city management and city council who continue to sell out city services.

Sorry, but further commenting on this topic has been closed.

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