More than two decades after Palo Alto's elected leaders began exploring the idea of building a history museum to celebrate everything from HP to the Grateful Dead, the project is finally on the cusp of transitioning from dream to reality.

Bolstered by a recent federal grant and newfound political support, the project hit a milestone this month when the City Council approved two of the three documents that needed to be finalized before the rehabilitation of the Roth Building can begin: a 40-year-lease lease with the Palo Alto Museum for the Homer Avenue building and a licensing agreement that establishes the city's right to move its historic archives to the new museum.

The third required document, a tenant work letter, is now being reviewed by Palo Alto staff with the expectation of approval in early 2023. If the plans move forward, construction will begin in the spring, Rich Green, president of the Palo Alto Museum board of directors, told this news organization.

The council's swift approval of the lease and the licensing agreement on Dec. 12 followed years of negotiations involving city staff, the museum and, more recently, a council ad hoc committee composed of Mayor Pat Burt and Council member Greer Stone. The agreements firm up Palo Alto Museum's control over the Roth Building, a property at 300 Homer Ave. that once housed a Palo Alto Medical Foundation clinic and that has been vacant and in disrepair since the city bought it in 2000.

The lease allows the nonprofit to use the facilities at a cost of $1 per year while requiring that the new museum be open to the public for at least 20 hours per week. The city, meanwhile, would have exclusive use of about 1,300 square feet of space in the building to house its historic archives, which are currently stashed in a bungalow at Cubberley Community Center and in storage areas at city facilities.

Palo Alto also would contribute 9.6% of the museum's operation and maintenance costs for the new building, accounting for its proportionate use of the facility, under the lease terms.

Green called the December vote a major milestone for the museum, both because of all the work that went into getting the agreements in place and because the museum needed to have the lease completed to meet a Dec. 14 deadline associated with a $250,000 grant that the project received from Santa Clara County.

"We're really grateful to get the lease and the license done and signed," Green said.

By approving the documents on its "consent calendar," with no discussion or dissent, the council provided an important boost to a project that has seen its fortunes wax and wane since 2003, when the city first signed an agreement with the nascent Palo Alto History Museum (as it was then known) for use of the Roth Building. The project struggled to get off the ground for various interrelated reasons, including the museum's fundraising challenges, the council's wavering support, the community's preference for other infrastructure priorities and the building's state of disrepair, which will require about $13 million of rehabilitation work.

The long-deferred project picked up significant momentum last year, when it received $3 million in federal funding as part of a package of community benefits that U.S. Rep. Anna Eshoo secured in appropriation bills. It scored another victory in November 2021, when City Council members reaffirmed their support for the museum and approved the parameters for lease negotiations. Project supporters, including Burt, Stone and Council member Tom DuBois, lauded at the time the educational value that the museum will bring and the benefits of rehabilitating a city asset that has been in disrepair for decades.

"It's really critical that we not only celebrate the incredible that we have in this community but also acknowledge a lot of the dark parts of our history," Stone said at the November 2021 meeting. "This museum is going to be able to do that."

The museum's fortunes further brightened in June, when the council approved a capital budget with $11 million for the rehabilitation of Roth Building, an expenditure that relies on impact fees, infrastructure reserve, grant funds and sales of "development rights." With the cost of materials and labor expected to rise by about $1.3 million since then, the city is also preparing to tap into the $3 million in federal funding to offset these rising costs and finalize construction of the museum's "warm shell," a completed but unfurnished building. Once that's finished, the museum would equip the building with furnishing and exhibits.

A key issue that the tenant work letter will address is: Who would be responsible for potential cost overruns and for the tenant improvements that would be needed to transform the warm shell into an actual museum? City Manager Ed Shikada wrote in a report to the council earlier this month that staff and the museum "are revising the tenant work letter to account for use of federal earmark of $3 million for project costs during the rehabilitation phase as needed."

Green said the finalization of the tenant work agreement is taking longer than anyone at the museum has anticipated. The organization had sent a draft to the city in October and is waiting for the city to finish reviewing and revising it. The length of time this has taken has proven costly, he said.

"Every week that we wait for these documents to get finished costs the museum about $3,600 in inflation alone," Green said. "It's about $108,000 a month we're losing by waiting."

He noted, however, that there's been a lot of back-and-forth between the two parties as they look to finalize all the details, he said. The tenant work agreement will spell out "the museum's responsibilities as a tenant to rehabilitate the building and set up and run a museum."

"The city wants to make sure that the museum we're building will benefit the city," he said. "There are community center spaces in the building and they want to make sure that these spaces harmonize with other community center spaces in town in terms of hours of operations and accessibility."

If all the required documents get approved in early 2023, construction could begin in the spring and stretch until spring 2024, Green said.

Both parties hope to address this question and finalize the document in the early 2023. Assistant City Manager Kiely Nose told this news organization that staff is preparing to bring the document to the council for consideration in January.

The lease agreement reflects the newfound sense of urgency. It explicitly states that parties will "endeavor in good faith to agree, within 60 days following the effective date of the lease, upon a mutually acceptable tenant work letter to document the parties' additional obligations related to the construction of the initial tenant improvements." If they fail to do so, the lease will automatically terminate.

While the museum was hoping to use the federal funding for exhibits rather than building rehabilitation, Green said he expects the city to use some of the funding for construction costs. If $1 million is used to address rising costs, that would still leave $2 million for exhibits, he said.

Regardless of how the federal funding would be used, Green said he expects the Roth Building to feature plenty of attractions when it opens to the public. This includes community center spaces, city archives and an entrance lobby with exhibits showcasing local history.

"There's going to be a lot of fun to be had at that building when we open the door," Green said.