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Board hears about right‑of‑way lease clause that lenders say is making a landmark property uninsurable
Summary
A board member raised concerns about a right-of-way lease on a designated property that includes a clause allowing the city to remove an encroachment with 10 days' notice; the city attorney said staff is working with the owner and their agent to find a solution and that the board lacks authority over leases.
Chelsea Castellano raised a matter Feb. 5 about a right-of-way lease affecting a landmark property (referred to in discussion as "213020 Second Street" in the meeting transcript) that the owner says is making the property uninsurable.
Castellano read from an email describing the lease language: “the lease agreement includes language stating that the city has the right to destroy the section of the landmark property in the right of way without cause and with only 10 days notice.” She said the clause was placed when the property became a landmark and that the owner and their real-estate agent are having difficulty selling the property because insurers have declined coverage.
City Attorney (on record as Chris) told the board city staff are aware of the issue and are working with the owner and their agent toward a resolution. He said that even if the city revoked a right-of-way lease, any work that would affect a landmark would still go through the regular landmark alteration certificate process. He also cautioned that leases are governed by other procedures and that the Landmarks Board does not have authority to approve or deny right-of-way leases.
Board members and staff discussed possible remedies and noted practical consequences: purchasing the right-of-way was described as an option with a cost cited by a board member (roughly $10,000), and staff observed that the insurance market has become more constrained in recent years. The city attorney called the situation a case to be resolved by staff and said this was the first time he had seen that particular clause raise the specific insurance problem.
Why it matters: A lease clause that permits rapid revocation or removal of encroachments can create legal and insurance barriers for owners of designated properties. Staff said it will work with the owner and the city attorney’s office to identify options; the board has no direct authority over lease language but asked staff to note the issue so program guidance can flag the risk for future cases.
