SR-301-001-01 (8)
y)A
Council Meeting: April 12, 2005
APR 1 2 2005
Santa Monica, CA
To:
City Council
From:
City Staff
Subject:
Authorization to Execute Master Facilities Use Agreement and Related
Supplemental Use Agreements with Santa Monica-Malibu Unified School
District (SMMUSD)
Introduction
This report conveys the proposed Master Facilities Use Agreement through which the
City will provide unrestricted revenue to the Santa Monica-Malibu Unified School District
in return for City use of school facilities in Santa Monica and requests authorization for
the City Manager to execute the agreement and related Supplemental Use Agreements
for City programs at school sites.
Backqround
Last spring, the Board of Education and the City Council agreed to basic terms for a
multi-year agreement, the stated intent of which was to maximize revenue to the District
in return for use of school facilities for community programs. The multi-year agreement
represents a significant change from the year-to-year approach previously observed,
substantially increasing the base payments to the District, applying a cost-of-Iiving
escalator annually, establishing points at which other adjustment to the base payments
will be considered and providing greater certainty to the District about the flow of lease
revenue. As with previous agreements, the specific uses the City will make of school
facilities will be governed by supplemental use agreements - specifically for the
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operation of Playground Partnership and CREST programs at elementary school sites
and Youth Sports Leagues and Sports Camps at middle school sites.
A Master Facilities Use Agreement reviewed by the City Manager and Superintendent
was agendized by the Board of Education early this year and was referred to the
District's Financial Oversight Committee. The Committee submitted its comments to the
Board which, at a subsequent public meeting, asked that the City consider those
comments in finalizing the agreement. City staff has reviewed those comments in light
of the previously agreed terms and conferred with District staff about their effect.
Discussion
The discussion below addresses the proposed agreement text (Attachment 1) and the
comments of the committee (Attachment 2).
Recitals
The attached agreement references the shared interest of the District and City in regard
to serving community youth, while not blurring the distinct roles and responsibilities of
the institutions. The recitals suggested by the Financial Oversight Committee seek to
substantially broaden the purpose of the agreement, could obscure the State's principal
role in supporting public education in California and hence in Santa Monica, may cause
public confusion about the distinct roles and responsibilities of the parties and are not
germane to the financial terms previously agreed to by the Board and City Council.
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Should the Council wish to add to the recitals, the City Attorney is prepared to assist
with wording that preserves the City's interests.
Community Use
Language has been included in the proposed agreement to acknowledge that
"community use" extends beyond uses the City itself will make under supplemental use
agreements, and encompasses uses the District may permit by non-profit agencies. It
provides the City first refusal of use of school facilities when not required for the
District's own programs. A similar courtesy of first refusal has long been extended by
the City to the District in regard to access to City fields and facilities.
Techn~alCmrifications
Paragraph 1 re: Options to Extend Term: District and City staff concur with the
committee's suggestion that the optional extension of the agreement by the parties is
best implemented in three- and two-year increments and the agreement reflects this
change to the previously agreed terms.
Paragraph 5A re: Annual Payments: The financial implications of the timing of
payments to the District were specifically addressed by the parties during the course of
negotiation of terms. The City offered a single payment at the start of the fiscal year in
lieu of a higher base payment amount. The District negotiator specifically opted for the
higher base and that decision is reflected in the agreement. The District has not
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historically requested payment from the City until the second half of the fiscal year in
any event.
Paraqraph 5B re: Annual CPI Adiustment: The language suggested by the Financial
Oversight Committee could be substituted in the agreement and may assist readers in
understanding the period over which CPI increase is calculated and the date on which
the comparison is made.
If timely preparation of the District's budget is better served by calculating CPI growth
from January to January rather than February to February, City staff has no objection to
employing that schedule. This will be further discussed with District staff prior to
Council consideration of the proposed agreement.
As to the parenthetical observation of the committee regarding the particular index
employed, while eventual standardization to use of a single index in City contracts
would be a convenience, City staff has no objection to substituting the All Urban
Consumers index for the All Urban Wage Earners and Clerical Workers. Each index
has been employed in City agreements over time. District staff has not expressed a
preference for a different index.
Paraqraph No. 5C(1) re: Adiustment Considerations: In the course of negotiations I
District staff proposed no factors to consider regarding the District's financial status.
The stated intent of the agreement incorporated in the terms adopted by the Board and
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Council is "to maximize the exchange of value - community use of District facilities
within the City and revenue flow to the District." The conferees will presumably
welcome maximum flexibility in their task while being cognizant of the intent. Staff
recommends retaining a consideration of the status of all three factors with no additional
specificity imposed on the conferees.
This section serves to introduce the use of the conference as a means to determine
periodically whether a recommendation should be made to modify lease payments in a
manner other than that provided for annual adjustment. The succeeding sections
detail circumstances under which payments may be adjusted upward (5C(3)) or be
adjusted downward, be held constant or not be adjusted by the annual CPI (5C(4)) and
5C(5)). The committee's question regarding "holding payments constant for 2007/08" is
answered by Section 5C(4).
The committee is concerned that there is no date certain by which recommendations
made by the conferees must reach the Board and City Council. City staff believes that
providing the conferees with an early objective (March 1) for providing
recommendations is sufficiently directive. Given the responsibilities of the parties to the
conference, there is every reason to anticipate that they will take the objective seriously
while welcoming some flexibility should the circumstances faced be complex. Staff
recommends that the time point for submitting recommendations remain an objective.
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Paraoraph 5C(3) re: Adiustment Formula for Hioher Growth Revenue Years: The
committee's observation about the CPI period is apt. While the annual adjustment is to
be made based on the February to February CPI, the intent of the parties for the
periodic reevaluation conference was to compare actual revenue growth over the
specified (fiscal year) period(s) with the increase in the CPI over the same period(s).
Language is proposed in the attached agreement to clarify this.
Paraoraph 5C(5) re: Adiustment Formula for Slower Growth Revenue Years: Proposed
language in the attached agreement should clarify that there is a two-pronged test for
the circumstances contemplated in 5C(3). Only one, actual revenue compared to the
CPI increase from July 2004 to July 2006 is applicable to 5C(4) and 5C(5).
The criteria included in 5C(3), 5C(4) and 5C(5) are to be used by conferees in
determining whether to recommend establishing a new higher base payment, holding
base payments constant or establishing a new lower base payment on a going forward
basis. There was no contemplation in negotiations by the parties of "restoration" of
base. The addition of such a provision would confer a benefit unintended by the
negotiators.
Paraoraph 5C(6) re: The 2009 Adiustment Conference: Language is proposed to
clarify the ambiguity cited by the committee. The second point is moot as the contract
extensions have been modified to three years and two years.
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Paraaraph SA re: Valuation of District Facilities: This reference is important and has
been included in each of the single year Master Facilities Use Agreements to-date.
Because no attempt has been made by the parties to place an exact value on the
facilities used by the community, and the parties acknowledge simply that the exchange
of value is considered by them to be reasonable and fair, the payments to the District for
their use can be flexible and change over time by the methods specified in the
agreement. (In discussions leading to approving the terms, the City Council specifically
expressed an expectation that if payments to the District could increase during specified
periods when the City's revenue position, as defined in the agreement, is strong, similar
provision should be made to adjust the payments downward when it is weak.)
Paraaraphs SA. 13 and 1S re: Modification bv Mutual Aareement: Redundancies
referenced by the committee have been removed from the proposed text, with the
provision now appearing only in clause 13.
As to the committee's final observations and suggested additional language:
. The City Attorney reviewed the document in draft and considers the language
sufficiently clear as to covering the use of District facilities within the City to
preclude a claim that payments under its terms would be due to any separate
District that might be formed by Malibu because under the express terms of the
agreement the City is paying the District for the right to use facilities within the
City of Santa Monica only.
. Nothing in the agreement as drafted suggests that the District does not control its
facilities.
. Nothing in the agreement as drafted suggests that the District is restricted in any
way in the use of the lease payments made under its terms.
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BudQet Financial Impact
Provision has been made in the City's FY 2004/05 budget for payments under the terms
previously adopted by the Board and Council. Clarifying the terms of the agreement as
noted above will not increase the City's anticipated obligation.
Recommendation
It is recommended that the City Council discuss the proposed Master Facilities Use
Agreement considering the comments of the Financial Oversight Committee of the
SMMUSD and authorize the City Manager to execute the agreement and negotiate and
execute supplemental use agreements that provide for specific City program use of
school facilities,
Prepared by: Susan E. McCarthy, City Manager
Steve Stark, Director of Finance
Attachments: 1) Proposed Master Facilities Use Agreement
2) SMMUSD Financial Oversight Committee Comments
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Reference:
Contract No. 8462 (CCS) -Master Facilities Agreement
Contract No. 8463 (CCS) - CREST
Contract No. 8464 (CCS) - Playground Partnership
Contract No. 8465 (CCS) - Middle School Programs
Attachment 1
PROPOSED
MASTER FACILITIES USE AGREEMENT
THIS MASTER FACILITIES USE AGREEMENT ("Agreement") is entered into this _
day of , 2005, by and between the CITY OF SANTA MONICA, a municipal corporation
and charter city ("the City"), and the SANTA MONICA-MALffiU UNIFIED SCHOOL DISTRICT,
a unified school district ("the District"), each duly organized and existing under the laws of the State
of California.
RECITALS:
A. The City and the District share mutual goals in assisting in preparing youth to become
productive members of society and support each other's efforts in that regard.
B. Many of the City's projects and programs for children, youth and their families and
certain activities provided by Santa Monica youth-serving non-profit organizations take place at
public parks, playgrounds, play fields, and other City-owned recreational facilities.
C. However, the City's playgrounds, play fields, and recreational facilities are limited in size
and are not sufficient to accommodate all of the current recreational needs of the community's
children and youth and their families,
D. Opportunities to create new parks and recreational facilities are limited because the
City's total land area is very small- approximately eight square miles - and the City is fully built-
out.
E. Additionally, land values are very high within the City and are rising.
F. The District owns and operates school sites within the City which include playgrounds,
play fields, recreational facilities and buildings which are under-utilized during non-school hours.
G. The City and District desire to enter into a master agreement which will allow City and
community use of school facilities within the City to meet certain recreational and other needs during
hours when the facilities are available for such use, allowing the District to benefit from such use of
the facilities through the generation of revenues for the maintenance of the District's education
programs.
H. It is the intent of the City and the District to maximize the exchange of value -
community use of District facilities within the City and revenue flow to the District.
I. It is recognized by the City and the District that new and ongoing resources are desired
and necessary to fully support the strategic planes) and the community's expectations of both
organizations.
1
PROPOSED
AGREEMENT
NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties hereby agree as follows:
1. TERM.
The term of this Agreement shall be five years commencing on July 1, 2004, and ending on
June 30, 2009, unless otherwise terminated pursuant to this Agreement.
By mutual agreement the City and District may extend the Agreement in 2009 for an
additional 3 years (ending June 30, 2012) and in 2012 for an additional 2 years (ending June 30,
2014).
2. SUPPLEMENTAL USE AGREEMENTS.
, Supplemental Use Agreements, governing specific programs and projects, are contemplated
by the parties and shall be executed pursuant to this Master Facilities Use Agreement. This
provision shall not be construed to prevent the City and the District from entering into other
agreements relating to school sites and facilities within the City not specifically mentioned herein, or
as the parties may desire.
3. PREMISES.
The premises governed by this Agreement ("the Premises") shall consist of playgrounds, play
fields, and structures available for City and community use at the District's school sites in Santa
Monica. The particular facilities which the City will use at each site shall differ for each program or
project and shall therefore be specified in Supplemental Use Agreements governing specific
programs and projects operated by the City on District property. However, in general, in making its
facilities available pursuant to this Agreement and the various Supplemental Use Agreements, the
District shall give the City priority over other non-District users.
4. USE OF PREMISES.
The Premises shall be used by the City to provide supervised and unsupervised recreational
opportunities, child care, enrichment classes, and other services. Specific programs and projects
shall be governed by Supplemental Use Agreements that establish operating guidelines for said
programs and projects. Premises may also be made available by the District for use by non-profit
organizations providing programs and activities for Santa Monica youth and other users to the extent
the uses and scheduling are not in conflict with the provisions of the Supplemental Use Agreements
pursuant to this Section.
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PROPOSED
5. COMPENSATION.
A. In consideration of City and community use of School District facilities in Santa Monica
and its associated benefits, the City shall pay the District for use of the Premises described in this
Agreement initial Annual Base Payments totaling Six Million Dollars ($6,000,000). Payment shall
be made in two equal installments, one half by December 31 st and one half by June 30th, In
determining compensation, the City and District have not appraised the value ofthe Premises and do
not assert that $6,000,000 represents the precise value ofthe facilities the City may access under this
Agreement. During the term of this Agreement, the base payment may be adjusted as described
below in this Section 5.
B. Annual Adjustments Based on the Consumer Price Index. Annual Base Payments will be
adjusted by the Consumer Price Index for all urban wage earners and clerical workers for LNLB
SMSA (CPI), as measured from February to February with a minimum 2% and a maximum 4%
adjustment.
C. Periodic Adjustments Based on Facility Use and Revenues.
(1) In January 2007 the parties will convene an adjustment conference to assess the state of
community use of the Premises and the fiscal status of the two organizations with the
objective of adjusting the current payments for the use of said facilities upward or downward
by a maximum of$1 ,000,000,00, or holding payments constant for the fiscal year beginning
July 2007. The adjustment conference participants ("conferees") will consist ofthe following
persons: the City Manager, Superintendent of Schools, the Finance officers of both the City
and the District, the Mayor, and the School Board President. The conferees will participate in
the adjustment conference with the objective to have recommendations before the City
Council and School Board by March 1, 2007.
(2) In assessing the fiscal status ofthe City in order to establish the payments for the use of
the Premises, the total of the following "Big Eight" General Fund revenue sources will be
used: 1) property tax, 2) sales tax, 3) utility users tax, 4) transient occupancy tax (TOT), 5)
business licenses tax, 6) real property transfer tax, 7) parking facilities tax, and 8)
fines/forfeitures.
(3) Ifthe actual growth ofthe "Big Eight" revenues (see subsection (2) above) over the two-
year period July 2004 to July 2006 exceeds the increase ofCPI for the same period by 4%
and the increase in each of the years July 2004 to July 2005 and July 2005 to July
2006exceeds the CPI for the same periods by at least 1.25%, the conferees will discuss
adjusting the base payments by an additional % of 1 % of the average of the actual "Big
Eight" revenues for the fiscal year beginning July 2004 and the fiscal year beginning July
2005 to a maximum of$1 ,000,000.00 effective July 2007. While the result ofthe discussions
cannot be predetermined, the conferees will be mindful of the intent of this Agreement in
approaching the discussion.
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PROPOSED
(4) If the actual growth ofthe "Big Eight" revenues over the two year period July 2004 to
July 2006 exceeds the increase in CPI for the same period but does not reach the level
specified in subsection (3), above, the conferees will discuss whether to recommend ifthere
should be any adjustment to base payments effective July 2007 above that specified in
Section B above. While the result ofthe discussions cannot be predetermined, the conferees
will be mindful of the intent of this Agreement in approaching the discussion.
(5) Ifthe actual growth of the "Big Eight" revenues over the two year period July 2004 to
July 2006 does not increase by at least the increase in the CPI for the same period, the
conferees will discuss whether: 1) base payments should be held constant, 2) the CPI
contemplated in Section B, above, withheld, or 3) base payments reduced by some amount
which in no case would exceed $1,000,000.00 effective July 2007. While the result of the
discussions cannot be pre-determined, the conferees will be mindful of the intent of this
Agreement in approaching the discussion.
(6) In January 2009, the adjustment conference described above will be convened to assess
the state of community use ofthe Premises and the fiscal status ofthe two organizations and
discuss whether to recommend that this Agreement should be extended for an additional 3
years (ending June 30, 2012). Ifso, the procedures described in subsections (3), (4) and (5)
above, will be used to set the FY 200912010 base payments, except that the periods of actual
revenue and CPI increase comparison will be July 2006 to July 2008 and the previously
adjusted maximum will again be adjusted by the change in CPI for the same period,
providing a new maximum cap on any adjustment upward or downward.
(7) In January 2012, the adjustment conference described above will be convened to assess
the state of community use ofthe Premises and the fiscal status ofthe two organizations and
discuss whether to recommend that this Agreement should be extended for an additional 2
years (ending June 30, 2014), using the formula described in subsections (3), (4) and (5)
above to set the FY 201212013 base payments, except that the periods of actual revenue and
CPI increase comparison will be July 2009 to July 2011 and the then current maximum on
any adjustment upward or downward will again be adjusted by the change in CPI for the
same period, providing a new maximum cap.
(8) Notwithstanding the foregoing provisions of Section 5.C., if in each of any two
consecutive fiscal years over the term ofthis Agreement the actual growth ofthe total "Big
Eight" revenues exceeds 7.5%, the conferees will meet in January to discuss adjusting
payments above the then applicable cap effective July 1 ofthe same calendar year. Ifin each
of any two consecutive fiscal years over the term ofthis Agreement the actual revenue from
the total "Big Eight" revenues declines by 7.5%, the City may convene the conference to
discuss temporarily suspending this Agreement.
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PROPOSED
6. RESPONSIDILITIES OF THE PARTIES.
A. The City's Director of Community and Cultural Services shall be responsible for the
direction and supervision of the City's programs and projects on the Premises.
B. The Superintendent ofthe District or his or her designee, and the Director of Community
and Cultural Services, or his or her designee, shall jointly establish a Master Calendar for the City's
use of the Premises for the ensuing fiscal year no later than the 1 st day of July of each year.
Revisions may be made throughout the year upon mutual agreement of the Superintendent of District
and the Director of Community and Cultural Services.
C. The District shall ensure that clean and conveniently located restroom facilities are open
and available for use by participants in all City operated programs and projects.
D, Responsibility for maintenance, repairs, custodial services, utility payments, staffing and
security relating to the City's use of the Premises for particular programs and projects shall be
specified in Supplemental Use Agreements.
E. The District's responsibility for providing equipment and improvements for specific City
programs and projects shall be specified in Supplemental Use Agreements. Except as so specified,
necessary improvements and equipment shall be purchased, owned, installed, maintained and
repaired by the City.
7 . ACCOUNTABILITY.
The parties agree that the best interests of the public will be served if the benefits of this
Agreement as well as the financial status ofthe two organizations are well understood. To that end,
the City Manager and Superintendent will prepare an annual report on the status ofthis Agreement
for presentation to the City Council and Board of Education in conjunction with the annual budget
cycles ofthe organizations. The City and the District will make the annual report and their proposed
and adopted budgets available at public libraries and on-line and will continue to seek ways to make
complex financial information more understandable to the community. Both organizations will
observe the provisions ofthe Brown Act in regard to this Agreement, as in all matters of governance
subject to the terms ofthe Act. The District will continue to benefit from the advice of its Financial
Oversight Committee during the term of this Agreement.
8. TERMINATION OF RIGHTS.
The City and the District may mutually agree to terminate this Agreement. In that event,
District shall have the option of purchasing from the City, all or any part ofthe fixed improvements,
of any kind or nature whatsoever, installed by the City on the Premises. In the event the District
elects not to purchase all, some or any of said improvements, the City shall remove those items not
purchased from the Premises. In such event, the City shall restore the grounds in the area of such
removal operations to a neat, clean and acceptable condition.
5
PROPOSED
In the event the District intends to dispose of the Premises, the City shall have the right of
first refusal to purchase or lease said site or facility to the extent permissible by law. Any such
purchase shall be at a price negotiated by the parties or, ifthe purchase is pursuant to the Naylor Bill
or any state law providing City the right to purchase District land at a price other than fair market
value, then at such price as is determined using the provisions of state law, The City shall provide
written notice to the District of its intent to purchase or lease the Premises, or any part thereof,
pursuant to this Section within 90 days of agreement to terminate, or within such other time as is
required by state law if the Premises is purchased pursuant to state law.
The City and District understand that if any initiative is approved by the voters that would
adjust or amend the City Charter for the purposes offunding educational programs, this Agreement
is no longer binding.
9, MUTUAL INDEMNIFICATION.
A. Indemnification by the District. The District hereby agrees to defend, indemnify and hold
harmless the City of Santa Monica, its City Council, boards and commissions, officers, agents,
employees, and volunteers (collectively "City") from and against all claims, damages, losses,
expenses, demands, liability, lawsuits, and judgments including, but not limited to, attorney's fees,
arising directly or indirectly from or in any manner related to the District's possession, occupancy or
use of the Premises pursuant to this Agreement or arising from or in any manner connected to the
District's business, activities, operations, services or work conducted in, or about the Premises,
except as otherwise expressly stated herein. For purposes of this paragraph, District use of the
premises shall also include use by any organization, entity or individual other than the City and the
City's agents. However, the District shall not be required to indemnify the City where such claim
arises from the negligence or wrongful misconduct ofthe City. The City shall promptly notify the
District of any claim and cooperate with the District in connection with the defense of such claim.
B. Indemnification by the City. The City hereby agrees to defend, indemnify and hold
harmless the District, its Board of Education, committees, officers, agents, employees, and
volunteers (collectively "District") from and against all claims, damages, losses, expenses, demands,
liability, lawsuits and judgments including, but not limited to, attorney's fees arising directly or
indirectly from or in any manner related to the City's possession, occupancy or use of the Premises
pursuant to this Agreement or arising from or in any manner connected to the City's business,
activities, operations, services or work conducted in or about the Premises, except as otherwise
expressly stated herein. The City's indemnification extends to all City uses and any community user
groups pursuant to Supplemental Use Agreements. However, the City shall not be required to
indemnify the District where such claim arises from the negligence or wrongful misconduct ofthe
District. The District shall promptly notify the City of any claim and cooperate with the City in
connection with the defense of such claim.
C. Survival of Section. This Section shall survive the expiration or earlier termination of
this Agreement.
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PROPOSED
10. INSURANCE.
Prior to execution of this Agreement, the District and the City shall procure and thereafter
maintain insurance against claims for injuries to persons or damage to property arising from or in
connection with use ofthe Premises pursuant to this Agreement as specified in Attachment A. The
acquisition and maintenance of such insurance shall not affect the obligation of indemnity
established by Section 9 of this Agreement.
11. COMPLIANCE WITH LAW.
All activities undertaken pursuant to this Agreement shall be in accordance with all
applicable ordinances, resolutions, statutes, rules and regulations of any federal, state or local
governmental agency of competent jurisdiction.
12. NOTICES.
All notices, demands, requests or approvals to be given under this Agreement shall be given
in writing and conclusively shall be deemed served when delivered personally or on the fifth
business day after deposit in the United State mail, postage prepaid, registered or certified, addressed
as follows:
All notices, demands, requests or approval from the District to the City shall be addressed to
the City at:
Department of Community and Cultural Services
City of Santa Monica
1685 Main Street
Santa Monica, CA 90401
Attn: Director
All requests for payment shall be addressed to:
Department of Finance
City of Santa Monica
1717 4th Street, Suite 250
Santa Monica, CA 90401
Attn: Director
All notices, demands, requests or approval from the City to the District shall be addressed to
the District at:
Santa Monica-Malibu Unified School District
1651 16th Street
Santa Monica, CA 90404-3891
Attention: Asst. Supt. of Fiscal and Business Services
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PROPOSED
13. AMENDMENTS TO AGREEMENT.
In recognition of the fact that economic and other circumstances affecting the parties'
participation in this Agreement are subject to fluctuation and change, the parties expressly note and
agree that this Agreement may be amended or modified at any time by agreement of the parties. Any
amendment to or modification ofthis Agreement shall be in writing and shall be effective only upon
approval of the City Council of the City and the Board of Education of the District.
14. INTERPRETATION OF AGREEMENT.
The terms of this Agreement shall be construed in accordance with the meaning of the
language used and shall not be construed for or against either party by reason of the authorship of
this Agreement or any other rule of construction which might otherwise apply. The section headings
are for purposes of convenience only.
15. INTEGRATION OF AGREEMENT.
It is understood that there are no oral agreements between the parties hereto affecting this
Agreement and the subject matter thereof and this Agreement supersedes and cancels any and all
previous negotiations, arrangements, oral agreements and understandings, if any, between the parties,
and none shall be used to interpret this Agreement.
16. SEVERABILITY.
In the event that part ofthis Agreement shall be declared invalid or unenforceable by a valid
judgment or decree of a court of competent jurisdiction, such invalidity or unenforceability shall not
affect any of the remaining portions of this Agreement which are hereby declared as severable and
shall be interpreted to carry out the intent ofthe parties hereunder unless the invalid provision is so
material that its invalidity deprives either party of the basic benefit of their bargain or renders this
Agreement meaningless.
17. ATTORNEY'S FEES.
If a party to this Agreement is required to initiate or defend, or is made a party to, any action
or proceeding in any way connected with this Agreement, the prevailing party in such action or
proceeding, in addition to any other relief which may be granted, whether legal or equitable, shall be
entitled to reasonable attorney's fees.
18. APPLICABLE LAW.
This Agreement shall be construed and interpreted under and governed and enforced
according to the laws of the State of California.
8
PROPOSED
IN WITNESS WHEREOF, the parties have executed this Master Use Facilities Agreement as
of the day and year first above written.
CITY OF SANTA MONICA,
a municipal corporation
ATTEST:
By
MARIA STEWART
City Clerk
SUSAN E. MCCARTHY
City Manager
SANTA MONICA MALIBU UNIFIED SCHOOL
DISTRICT, a unified school district
APPROVED AS TO FORM:
By
MARSHA JONES MOUTRIE
City Attorney
Title:
9
PROPOSED
ATTACHMENT A
THE DISTRICT'S INSURANCE OBLIGATION
The District shall secure before execution ofthis Agreement the following types and amounts
of insurance:
Minimum Limits of Insurance.
The District shall obtain insurance of the types and in the amounts described below:
(1) Commercial General Liability Insurance:
The District shall maintain commercial general liability insurance or self-insurance
(CGL) with a limit of not less than Five Million Dollars ($5,000,000) each occurrence/Five Million
Dollars ($5,000,000) in the annual aggregate.
(2) Business Auto Liability Insurance:
The District shall maintain business auto liability insurance or self-insurance with a
limit of not less than One Million Dollars ($1,000,000) each accident.
(3) Workers' Compensation and Employer's Liability:
The District shall maintain workers' compensation insurance or self-insurance as
required by the State of California and Employer's Liability Insurance in the amount of One Million
Dollars ($1,000,000) per accident for bodily injury or disease.
Minimum Scope of Insurance.
(1) CGL insurance shall be written on Insurance Services Office Form CG 0001
(or a substitute form providing equivalent coverage) and shall cover liability arising from premises,
operations, independent contractors, products-completed operations, personal injury and advertising
injury liability assumed under an insured contract (including the tort liability of another assumed in a
business contract).
(2) Business Auto Insurance shall cover liability arising out of any auto (including
owned, hired, and non-owned autos). Coverage shall be written on Insurance Services Office Form
CA 00 01, CA 0005, CA 00 12, and CA 00 20, or a substitute form providing equivalent liability
coverage. If necessary, the policy shall be endorsed to provide contractual liability coverage
equivalent to that provided in the 1990 and later editions of CA 00 01,
1
PROPOSED
Other Insurance Provisions.
The general liability and automobile liability policies are to contain, or be endorsed to
contain, the following provisions:
(1) The City of Santa Monica, members of its City Council, boards and commissions,
officers, agents, employees and volunteers are to be covered as insureds with respect to liability
arising out of automobiles owned, leased, hired or borrowed by or on behalf ofthe District; and with
respect to liability arising out ofthe District's possession, occupancy, or use of the Premises pursuant
to this Agreement. Under the CGL policy, using the Insurance Services Office additional insured
endorsement form CG 20 10 or a substitute providing equivalent coverage. City and other additional
insureds mentioned in this paragraph shall not, by reason of their inclusion as additional insureds,
become liable for any payment of premiums to carriers for such coverage.
General Liability. Workers' Compensation and Employer's Liability.
The insurer shall agree to waive all rights of subrogation against the City of Santa Monica,
members of its City Council, boards and commissions, officers, agents, employees and volunteers for
losses arising from activities and operations ofthe District in the performance of services under this
Agreement.
All Coverages,
Each insurance policy required by this Agreement shall be endorsed to state that coverage
shall not be canceled except after thirty (30) days prior written notice by certified mail, return receipt
requested, has been given to the City at the following address:
Department of Community and Cultural Services
City of Santa Monica
1685 Main Street
Santa Monica, California 90401
Attention: Director
Acceptability of Insurers.
Insurance is to be placed with insurers with a current A.M. Best's rating of no less than A:6,
unless otherwise approved by the City's Risk Manager.
2
PROPOSED
Verification of Coverage.
District shall furnish the City with original certificates of insurance and amendatory
endorsements affecting coverage required by this Agreement. The certificates and endorsements for
each policy are to be signed by a person authorized by that insurer to bind coverage on its behalf. The
certificates and endorsements are to be on forms provided by the City or on other than the City of
Santa Monica's forms, provided those forms and endorsements conform to the requirements. All
certificates and endorsements are to be received and approved by the City before this Agreement
commences. The City reserves the right to require complete, certified copies of all required
insurance policies, including endorsements affecting the coverage required by these specifications at
any time.
THE CITY'S INSURANCE OBLIGATION
The City shall secure before execution ofthis Agreement the following types and amounts of
Insurance:
Minimum Limits of Insurance.
The City shall obtain insurance of the types and in the amounts described below:
(1) Commercial General Liability Insurance:
The City shall maintain commercial general liability insurance or self-insurance
(CGL) with a limit of not less than Five Million Dollars ($5,000,000) each occurrence/Five Million
Dollars ($5,000,000) in the annual aggregate.
(2) Business Auto Liability Insurance:
The City shall maintain business auto liability insurance or self-insurance with a limit
of not less than One Million Dollars ($1,000,000) each accident.
(3) Workers' Compensation and Employer's Liability:
The City shall maintain workers' compensation insurance or self-insurance as required
by the State of California and Employer's Liability Insurance in the amount of One Million Dollars
($1,000,000) per accident for bodily injury or disease.
Minimum Scope of Insurance.
(1) CGL insurance shall be written on Insurance Services Office Form CG 00 01
(or a substitute form providing equivalent coverage) and shall cover liability arising from
premises, operations, independent contractors, products-completed operations, personal injury
and advertising injury liability assumed under an insured contract (including the tort liability of
another assumed in a business contract).
3
PROPOSED
(2) Business Auto Insurance shall cover liability arising out of any auto (including
owned, hired, and non-owned autos). Coverage shall be written on Insurance Services Office Form
CA 00 01, CA 00 05, CA 00 12, and CA 00 20, or a substitute form providing equivalent liability
coverage. If necessary, the policy shall be endorsed to provide contractual liability coverage
equivalent to that provided in the 1990 and later editions of CA 00 01.
Other Insurance Provisions.
The general liability and automobile liability policies are to contain, or be endorsed to
contain, the following provisions:
(1) The Santa MonicalMalibu Unified School District, members of its Board of
Education, advisory committees, officers, agents, employees and volunteers are to be covered as
insureds with respect to liability arising out of automobiles owned, leased, hired or borrowed by or
on behalf of the City; and with respect to liability arising out ofthe City's possession, occupancy, or
use ofthe Premises pursuant to this Agreement. Under the CGL policy, using the Insurance Services
Office additional insured endorsement form CG 20 10 or a substitute providing equivalent coverage.
The District and other additional insureds mentioned in this paragraph shall not, by reason oftheir
inclusion as additional insureds, become liable for any payment of premiums to carriers for such
coverage.
General Liabilitv. Workers' Compensation and Emplover's Liability.
The insurer shall agree to waive all rights of subrogation against the District, members of its
Board of Education, committees, officers, agents, employees and volunteers for losses arising from
activities and operations ofthe City in the performance of services under this Agreement.
All Coverages.
Each insurance policy required by this Agreement shall be endorsed to state that coverage
shall not be canceled except after thirty (30) days prior written notice by certified mail, return receipt
requested, has been given to the District at the following address:
Santa Monica-Malibu Unified School District
1651 16th Street
Santa Monica, CA 90404-3891
Attention: Asst. Supt. of Fiscal and Business Services
4
PROPOSED
Acceptability of Insurers.
Insurance is to be placed with insurers with a current A.M. Best's rating of no less than A:6,
unless otherwise approved by the District's Risk Manager.
Verification of Coverage.
The City shall furnish the District with original certificates of insurance and amendatory
endorsements affecting coverage required by this Agreement. The certificates and endorsements for
each policy are to be signed by a person authorized by that insurer to bind coverage on its behalf. The
certificates and endorsements are to be on forms provided by the City. All certificates and
endorsements are to be received and approved by the District before this Agreement commences.
The District reserves the right to require complete, certified copies of all required insurance policies,
including endorsements affecting the coverage required by these specifications at any time.
5
Attachment 2
Financial Oversight Committee of the
Santa Monica-Malibu Unified School District
February 14,2005
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Ms Emily Bloomfield, President
and Members of the Board of Education
Santa Monica-Malibu Unified School District
1651 16th Street
Santa Monica, CA 90404
SANTA MOi'JICA-~,1~r\usu LSD
SUPERINTENDHIT'S OFFiCE
Re: Draft Master Facilities Use Agreement With City of Santa Monica
Dear Ms Bloomfield and Board Members:
The Financial Oversight Committee (FOe) offers the following comments on the draft
Master Facilities Use Agreement ("Draft Agreement") between the Santa Monica-Malibu
Unified School District ("District") and the City of Santa Monica ("City"), dated January 18,
2005, in response to a request from the Board of Education ("Board") during its February 3
meeting. The FOC discussed the Draft Agreement at length at its January 25 and February 7,
2005 meetings. In framing these comments we also considered background information
provided by Superintendent Deasy regarding the negotiation process that resulted in the current
draft, a letter prepared by the Harding, Larmore et al. law firm, comments by members of the
public during our February 7 meeting, and our members' individual familiarity with the public
record of discussion about this issue before the Board and the City Council.
In keeping with the Board's request, we have organized our comments into three general
categories: (1) material inconsistencies we see between the Draft Agreement and the Term Sheet,
dated May 5, 2005, which was agreed to by both the Board and the City Council, and which was
supposed to be the basis for preparing the Draft Agreement; (2) errors in mathematical formulas
or other calculation factors that are central to the financial commitments embodied in the Draft
Agreement; and (3) ambiguous language that could cause confusion among the parties as they
implement the Draft Agreement in future years,
Material Inconsistencies With the Term Sheet
One of our most significant concerns) about the Draft Agreement is that it focuses much
too narrowly on City use of School District facilities, rather than "community use of school
facilities," as clearly stated in the Term Sheet (Term Sheet, para. 1), and "community use of
school facilities when they are not required for District use," as stated in the City staff report2
that transmitted the term sheet to the City Council (Staff Report, p. 1).
1 The FOC is also very concerned about the basic structure of the Draft Agreement as an exchange of City
funds for use of District facilities, whereas the history of the public discussion about this issue, and the public record
of the apparent intent of the parties to the Draft Agreement is clearly much broader. We understand, however, that
this structure is based on a strongly held City position, which the Board has chosen to accept.
2 Memorandum to Mayor and City Council from City Staff, Request for Direction to Staff Regarding
Proposed Terms for a New Contract Providing Payments to the Santa Monica-Malibu Unified School District in
Exchange for Community Access to School Facilities, May 11,2005 Council Meeting. (Hereinafter "Staff Report").
Page 1
Ms. Emily Bloomfield, President
and the Board of Education
February 14,2005
We recommend the following specific changes to more accurately reflect the intentions
of the parties, as stated in the Term Sheet and the Staff Report:
1. Title. The title of the Draft Agreement itself should be modified to simply say,
"Agreement."
2. Recital A. Recital A should be modified to read as follows: "For many years, the
City and District have worked together to promote the health and welfare of the
community's children and youth by providing recreational opportunities and
programs which foster good citizenship and facilitatinl! the provision of such
opportunities and prOl!rams bv Santa Monica's manv youth-servinl! non-profit
orl!anizations."
3. Recital B. Recital B should be modified to read as follows: "Many City and non-
profit programs for children, youth and their families take place at public parks,
playgrounds, play fields, and other City-owned recreational facilities."
4, Recital F. Recital F should be modified to read as follows: "The District owns and
operates school sites within the City which include playgrounds, play fields,
recreational facilities and buildings. Many recreational prOl!rams servinl! youth in
the community, includinl! City-run prOl!rams and prOl!rams provided bv non-
profit orl!anizations, take place on District school campuses in Santa Monica."
5. Recital G, Recital G should be modified to read as follows: "The City and District
desire to enter into a master agreement which will allow City and community use of
school facilities within the boundaries of the City to meet certain recreational and
other needs during hours when the facilities are available for City and community
use and will allow the District to benefit from the community's use of the facilities
through the generation of revenues for the maintenance of the District's education
programs."
6. Paragraph No.3. The heading ofthis paragraph should be modified as follows:
"COMMUNITY USE OF SCHOOL DISTRICT PREMISES."
7. Paragraph No.4, The heading ofthis paragraph should be changed to read, "AFTER
HOURS USE OF SCHOOL DISTRICT PREMISES," The first sentence of this
paragraph should be revised as follows: "The Premises shall be used by the City and
community (includinl! non-profit youth-servinl! orl!anizations) to provide
supervised and unsupervised recreational opportunities, child care, enrichment
classes, and other services."
Although it is not specifically addressed by the Term Sheet, the FOC believes that the
Draft Agreement fails to express the parties' (and community's) clear intent in supporting City
funding of the District, as demonstrated by the public record of discussion before the Board and
the City Council -- the critical importance of having excellent public schools to the overall
quality of life in Santa Monica, including attracting quality businesses, increased property tax
Page 2
Ms. Emily Bloomfield, President
and the Board of Education
February 14,2005
and other local revenues, among others. Recitals should be added to express this intent, because
they are important in guiding the periodic renegotiation conferences required by the Draft
Agreement.
Accordingly, we recommend that the following additional recitals be added to the Draft
Agreement:
. The City Charter reco!!nizes the value of public schools in Santa Monica bv
providin!! for the establishment of a Board of Education. and bv specifvin!! the
City's authority to financiallv assist local public schools. The City has increased
its expenditure limits in part for the purpose of allowin!! financial aid to the
public schools.
. The City and community receive substantial benefits from havin!! excellent
public schools in Santa Monica. Excellent public schools prepare students to
become civic. cultural. academic and business leaders. help attract Quality
businesses to the community. increase property values. !!enerate local tax
revenues. help to deter criminal activity. reduce community problems such as
poverty. dru!! use and teen pre!!nancv. help provide an educated work force. and
contribute to the overall Quality of life in Santa Monica.
. The overall purpose of this A!!reement is to enable and ensure that the City
provides the School District with stable financial support on an on-!!oin!! basis.
This A!!reement is intended to ensure that the children of the community and the
public institution that most directlv affects and shapes their lives. the public
schools. share directlv in the prosperity of the City.
For related reasons, the FOC also recommends that the first sentence of the
Compensation paragraph be revised as follows:
Paragraph No. 5.A. "In consideration of City and community use of School District
facilities in Santa Monica and the many other City and community benefits derived
from havin!! excellent public schools (includin!! increased City tax revenues). tThe
City shall pay the District initial base payments totaling Six Million Dollars ($6,000,000)
annuallv,"
Calculation and Other Technical Issues
The FOC recommends that the Board request revisions or further clarifications about the
following calculation and other related technical issues in the Draft Agreement which concern
the amount of funding to be provided to the District.
1. Paragraph No.1 re: Options to Extend Term. Although the Term Sheet states that the
initial five-year term of the agreement has two 2.5-year options to extend, we are
concerned that the even split ofthe total five years of extension complicates both
Page 3
Ms. Emily Bloomfield, President
and the Board of Education
February 14,2005
consideration of periodic increases, and the timing of payments to the District. We
recommend, instead, one three-year extension and one additional two-year extension,
both defined in terms of fiscal years.
2. Paragraph No, 5A re: Annual Payments. The Compensation paragraph calls for
payments to the District to be in two equal installments payable on December 31 and
June 30. This is inconsistent with District expenditure patterns, and given the scale of
City fund balances each year, does not appear to be required for City cash flow reasons.
The FOC recommends, instead, an annual lump sum payment on July 1. If funds must be
paid in two equal installments, we recommend half on July 1, the beginning of the fiscal
year, and half on January 1, the beginning ofthe second half ofthe fiscal year.
3, Paragraph No. 5B re: CPI Adiustment. This paragraph should be revised as follows,
primarily in order to correct an ambiguity as to whether the second payment each year
(assuming it remains after February) is subject to CPI adjustment:
"Adjustments Based on the Consumer Price Index. The Annual Base Payment
for each fiscal year. be!!innin!! in the fiscal year commendn!! July 1.2005.
shall be increased by an amount eaual to the percenta!!e chan!!e in the
Consumer Price Index For All Urban Wage Earners and Clerical Workers for the
Los An!!eles-Riverside-Oran!!e Conntv. CA MSA ("CPI") between Februarv
of the precedin!! calendar year to Februarv of the calendar year in which
such fiscal year commences. except that such increase shall not be less than
two percent and not more than four percent."
We note, parenthetically, that the Term Sheet and the Draft Agreement use the wage
earners and clerical workers version ofthe CPI, and not the more general measure of
inflation reflected in the All Urban Consumers version of the CPI. It is unclear why the
wage earners and clerical workers version was selected for use in assessing changes in
City revenues.3
4. Paragraph No, 5C(n re: Adiustment Considerations. The periodic adjustment conferees
are told to look at three factors: the "state" of community use of school facilities, the
fiscal status of the City and the fiscal status of the District. However, the conferees are
instructed about how to evaluate only one ofthese factors: the fiscal status of the City.
Mention of the others raises questions:
] Although the two versions of the cpr generally move in a similar direction, albeit with different
absolute values, the spending habits of the two populations that are measured by each index can result in more
distinct differences over short time periods like those that apply to the periodic adjustment considerations in the
Draft Agreement. The Urban Wage Earners and Clerical Workers version of the cpr is based on the expenditures of
families living in urban areas who meet certain hourly employment criteria, and represents about 32% of the US
population. The All Urban Consumers version represents about 87% ofthe US population and is based on the
expenditures of all families living in urban areas. As its name suggests, the Urban Wage Earners and Clerical
Workers version is most often used as the inflation index for labor wage adjustments, or public agency expenditures
that are dominated by labor costs. "Big Eight" City revenues (e.g., property tax, sales tax, hotel bed tax, etc.), which
are the focus ofthe adjustment conferences, arguably change in response to more general inflation impacts,
Page 4
Ms. Emily Bloomfield, President
and the Board of Education
February 14, 2005
a. Are the conferees supposed to consider the extent of community use of facilities?
If so, how? If their use has not increased, is that supposed to lead to a potential
reduction in City funding? Iftheir use has significantly increased, is that
supposed to favor an increase irrespective of the City's fiscal status? Rather than
the three factors currently referenced, when it is really only the City revenues that
are relevant, it seems appropriate to focus instead on City revenues and the
purpose of the agreement as set forth in the Recitals, as modified by the
recommendations above.
b. When this paragraph speaks of "holding payments constant for 2007/2008,"
presumably there was no intent to delete the CPI adjustment, but only not to
further increase the base payment amount. This point should be clarified.
c. In addition to the "objective" to have recommendations to the City Council and
School Board by March 1,2007, the contract should require that such
recommendations be presented by April I, 2007, or whatever other date is
necessary in order to fit within the budgetary discussions of both entities. The
timing may be important because the District will need to know the amount which
will be funded during the next fiscal year before the City Council would normally
complete its budget approval in June. Therefore, the Agreement should require
the City Council to make that decision at this early stage, particularly when the
City's contribution is measured by financial results that will be available and not
subject to change between March and June.
5. Paragraph No. 5C(3) re: Adiustment Formula for Higher-Growth Revenue Years. In the
January 2007 meeting, the conferees will be looking at increases in the City's "Big Eight"
revenues for both a two-year and two one-year time periods and comparing those
increases with CPI increases. However, there seems to be a time mismatch. The two-
year revenue increases are apparently based upon a comparison of results from the
2003/04 fiscal year through the 2005/06 fiscal year. However, the Draft Agreement's
definition ofCPI uses February - February, which is inconsistent with the term of the two
fiscal years in question. The same issue is presented in comparing the annual increases in
revenue to the annual increase in CPI. These problems may reflect a lack of clarity about
annual CPI adjustments during the initial and subsequent base years, as distinguished
from CPI calculations applicable to the periodic adjustment calculations.
6. Paragraph No. 5C(5) re: Adiustment Formula for Slower-Growth Revenue Years, This
paragraph is not clear whether it is addressing the two-year period or the two fiscal years
individually, It starts out with the former by using the word "cumulative" (which seems
to be the logically correct result), but ends up with the latter by requiring that the increase
be "at least CPI in 2004/2005 and 2005/2006." Further, if the payments are reduced for
2007/08, there is no mechanism for restoring the decrease for 2008/09 other than the
7.5% super-increase specified in Paragraph 5C(7). It would seem that if City general
fund revenues are back on track, then the payments should be restored.
Page 5
Ms, Emily Bloomfield, President
and the Board of Education
February 14,2005
7. Paragraph No. 5C(6) re the 2009 Adiustment Conference. This paragraph suffers from
some of the same difficulties described above regarding the January 2007 adjustment
conference. In addition, the paragraph should be more specific about the details of the
formula to be used. Obviously, this conference will be looking at general fund revenue
increases in 2006/2007 and 2007/2008 rather than those from two years earlier.
Further, ifthe contract is extended for 2.5 years, the procedure for considering the second
extension should be spelled out. When does the conference committee meet given that
the contract would expire on December 31,2011? When would a decision be made
regarding funding for the second half of the fiscal year 2011/2012? The Draft Agreement
states that the conference committee would be only setting the 2012/2013 base funding
level.
Ambiguous Language
There are a few additional items in the Draft Agreement which the FOC believes should
be clarified in order to avoid any confusion or misunderstanding among the parties in
implementing the agreement.
Accordingly, we recommend the following:
1. Paragraph No. 5,A. re: Valuation of District Facilities. It is unclear why, in
Paragraph 5A, reference is made to the fact that the District has not appraised the value of
its facilities when this has no bearing on the compensation. We recommend that this
third sentence be removed,
2. Paragraph No. 5.A. and Paragraph No. 15 re: Amendments. Inasmuch as
Paragraph No. 13 covers this issue, the fourth sentence in Paragraph 5.A. and the last
sentence of Paragraph No. 15 appear to be redundant and could be deleted.
Finally, we also recommend that additional provisions be added to the Draft Agreement
to address the following issues:
. The agreement should not be affected by any withdrawal ofMalibu from the District.
. The agreement should specify that the District retains ultimate control over all of its
property, including decisions about their temporary or permanent closure, taking into
account safety, educational and financial needs.
. The agreement should specify that the District may expend the funds received
pursuant to the agreement in its sole and absolute discretion.
************
Page 6
Ms. Emily Bloomfield, President
and the Board of Education
February 14,2005
The FOC appreciates the opportunity to provide these comments on the Draft Agreement,
and we hope you find them useful in continuing your discussions with the City. I will be
available at the Board meeting on February 17 to respond to any questions you may have about
these comments.
Sincerely,
FINANCIAL OVERSIGHT CO
By:
cc: FOC Members
Superintendent Deasy
Page 7