How much money should Palo Alto spend in the present and the future in order to establish a museum that would tell the story of the city's past?

That's the question that the City Council agonized over on Monday night as it considered the latest request from the nonprofit Palo Alto History Museum, which for years has been trying to establish a museum in the historic Roth Building next to Heritage Park. The downtown project has been in limbo for years, though now History Museum staff believes the museum can be up and running in the fall of 2016. Provided, that is, it gets a little help from the city.

This week, the council considered the museum's requests for $1 million in public funds to fix up the back wall of the 82-year-old Roth Building and for another $1.65 million as a grant that would be matched by other donors. The History Museum also asked the council to designate the Roth Building at 300 Homer Ave. as a "sender site," which would allow the city to raise money for the building's rehabilitation through sales of transfer of development rights (TDRs). Developers who purchase these rights effectively buy themselves density bonuses at projects elsewhere downtown.

After a long discussion, the council ultimately agreed to go along with two of the three proposals. By a 6-1 vote, with Larry Klein dissenting and Mayor Nancy Shepherd and Marc Berman recusing themselves, the council agreed to begin the process for selling the TDRs for the Roth Building.

Though the museum's financial plan estimates the sale to bring in about $1 million for the building's restoration, officials expect the figure to be considerably higher because of the sizzling real-estate market. By the same vote, the council directed staff to identify funding sources to pay for the reconstruction of the damaged back wall.

The request for a grant proved a tougher sell, with the council ultimately voting 7-0 not to go along with it at this time. Council members agreed to reconsider it next year when staff is also scheduled to provide an update on the TDR sale.

The council majority agreed that because the Roth Building is a public facility, it would be appropriate to spend public money to rehabilitate it.

"This is a city-owned asset," Councilman Pat Burt said. "Whether it's the Historical Museum or otherwise, we own this building and we'll own the appreciation of the asset as a result of improvements to it."

Councilwoman Karen Holman, who has previously served as a director at the History Museum (her involvement ended more than two years ago), spoke in favor of rehabilitating the Birge Clark-designed building.

Vice Mayor Liz Kniss concurred, saying, "Regardless of whether this actually comes to pass or not, I think the rehabilitation and seismic work need to be done."

Klein vehemently disagreed. He called requests from the History Museum "inappropriate" and contrary to the deal that the city had struck with the museum in 2007, when it agreed to let the nonprofit use the Roth Building with the proviso that the museum would take care of the rest.

After making these arguments, Klein voted against all three requests. He noted that when the council adopted its infrastructure plan in June and surveyed the public about its priorities, the level of support for the history museum was relatively low. Approving public funds for the project would be an "end run around the infrastructure plan," he said.

He also said he was not impressed with the museum's fundraising effort thus far. Museum Board President Rich Green said the group has received $400,000 in gifts and has $2.5 million in pledges for the rehabilitation, which will cost an estimated $9.1 million.

While Green said the museum has more than 500 donors, Klein said, the "only big funder I can see is the City of Palo Alto."

"I think this is just a way for the city to waste money," Klein said.

Others were more open toward contributing city funds toward a history museum, which would be built in two phases under the current plan. The first phase would repair the building to make it functional. The second phase would fund the installation of exhibits, creation of education programs and transfer of the city's historical archives into the building. Green said the goal is to open the museum as soon as possible after the first phase is complete and to "make it a community asset as quickly as possible."

The vision of the Palo Alto History Museum is to create a facility that would "showcase the remarkable heritage of Palo Alto through the careful collection, preservation and continued social engagement with precious local artifacts and documents," according to the nonprofit's website.

The vision statement for the organization declares that the space design "will inspire community participation, attracting the diversity of our local history-makers while reaching out to the next generation of inquisitive school children."

The council's votes on Monday bring the museum closer to reality, though a considerable gap remains. Council members specified that the TDRs should be sold at a price no lower than $200 per square foot. With 9,592 square feet of TDRs available, this means the sale would fetch at least $1.9 million for the rehabilitation. This would still however leave the History Museum with a shortfall of more than $3 million for construction in the first phase and a gap of $9 million for the second phase's build out of the exhibits and programs.