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SR 10-22-2019 3N 301-001-06 / 405-002 City Council Report City Council Meeting: October 22, 2019 Agenda Item: 3.N 1 of 4 To: Mayor and City Council From: Karen Ginsberg, Director, Community & Cultural Services Subject: Approval of First Modification to Ground Lease with Santa Monica College (SMC) for Early Childhood Lab School (ECLS) Recommended Action Staff recommends that the City Council: 1. Authorize the City Manager to negotiate and execute a first modification to Ground Lease Agreement #10079 in the estimated amount of $1,161,304 with the Santa Monica Community College District, a California-based company, for the operation of the Early Childhood Lab School. This will result in an amended agreement with a new total estimated amount of $7,822,894, with future year funding contingent on Council budget approval. 2. Authorize budget changes as outlined in the Financial Impacts and Budget Actions section of this report. Summary The City and Santa Monica College, in a unique partnership dating back almost 20 years, are building an Early Childhood Lab School (ECLS) that will both serve our youngest community members and enable teachers-in-training to develop crucial expertise under the guidance of SMC’s award-winning, accredited Early Childhood Education Department. Scheduled to open in fall 2020, the ECLS will serve up to 110 infants, toddlers, and preschoolers in line with the City’s vision of expanding access to high quality early education. The ECLS reflects progress in multiple outcome areas of the City’s Council-adopted Framework, including Connected and Engaged Community, Economic Opportunity, Learning, and Place & Planet. The school is owned by Santa Monica College through a ground lease with the City. Staff seek to modify this lease agreement in order to disburse $1,161,304 of pre - approved funding to SMC for costs related to the start-up and operation of the ECLS. These funds include $450,000 approved in the City’s Capital Improvement Program 2 of 4 budget and $711,304 are funds remaining from the 2000 development agreement with RAND. Timely disbursement will enable the ECLS to open on schedule and fund tuition subsidies for qualifying low-income Santa Monica residents. Discussion The ECLS will be owned by SMC on City property located at the Civic Center. Following an RFP process, SMC selected Growing Place, a local non-profit child development center and longtime collaborator of the SMC Teacher Academy, to operate the ECLS. The construction of the school is financed through a combination of funds provided by the City and SMC. The City’s contribution was funded in part with Child Care Linkage Fees collected by the City from development projects. RAND contributed $500,000 for “the purpose of supporting a future early childhood development center in the Civic Center District” as part of its development agreement with the City in 2000. Those funds were deposited in an interest-bearing account with an estimated current total of $711,304. The City, RAND, and SMC have agreed that the original principal amount of $500,000 will be used exclusively for tuition assistance in service of meeting the ground lease requirement that a minimum of 15% of enrolled children will be low-income Santa Monica residents. The interest that has accrued since RAND’s original contribution (a current estimated total of $211,304) may be used for tuition assistance or start-up costs incurred prior to ECLS’ receipt of tuition revenue in its first year of operation. As part of the FY 2019-21 Biennial Budget adopted on June 25, 2019, Council approved $450,000 in Capital Improvement Program funds towards the purchase of furniture, fixtures, and equipment necessary for the ECLS to obtain state child care licensing. The $1,161,304 detailed in this report, in conjunction with SMC’s contribution of $24,265,095 to the ECLS, reflect the commitment of the local community to the wellbeing of our youngest citizens. Staff recommends these funds be added as a modification to the existing ECLS ground lease in order to transmit the funds to SMC . 3 of 4 Past Council Actions Meeting Date Description 10/24/00 (Attachment A) Ordinance approving the Development Agreement between the City and RAND Corporation 06/21/11 (Attachment B) Adoption of the FY 2011-13 Biennial Budget included $1 million in CIP funding for FY 2011-12 and identified $4 million in FY 2012- 13 General Funds for construction of the ECLS. 06/09/15 (Attachment C) Authorization to negotiate and execute a ground lease with the Santa Monica Community College District for the ECLS. 06/14/16 (Attachment D) Adoption of the FY 2016-18 Biennial CIP Budget included appropriation of $1,098,598 in Childcare Linkage Fee revenues for construction of the ECLS. 06/25/19 (Attachment E) Adoption of the FY 2019-21 Biennial Budget included $450,000 in CIP funding to support ECLS furniture, fixtures, and equipment startup costs. Financial Impacts and Budget Actions Staff seeks authority to approve FY 2019-20 budget changes to the accounts listed below to increase the amount of the ground lease with the Santa Monica Community College District for the Early Childhood Lab School by $1,161,304. • Appropriate $500,000 from restricted fund balance account 10.365201 (RAND Development Agreement funds) to FY 2019-20 expenditure account 10400001.532370. • Appropriate the remaining balance of account 10.365201 ($211,304 as of 9/9/19) (interest accrued on RAND Development Agreement funds) to FY 2019-20 expenditure account 10400001.532371. • Modify existing lease agreement #10079 as follows: Lease Agreement Modification Request Agreement # Current Authorized Amount Modified Request Amount FY 2019-20 Budget Dept/CIP Account # Total Revised Contract Amount 10079 $6,661,590 $450,000 C0105460.689000 $7,822,894 $500,000 10400001.532370 $211,304 10400001.532371 Future year funding is contingent on Council budget approval. 4 of 4 Prepared By: Anne Deasey, Executive Administrative Assistant Approved Forwarded to Council Attachments: A. Oct 24, 2000 Ordinance approving the RAND DA - Web Link (https://www.smgov.net/departments/council/agendas/2000/20001024/s20001 02 408-A.html) B. Jun 21, 2011 Staff Report - Web Link (https://www.smgov.net/departments/council/agendas/2011/20110621/s2011062 108-Ba.htm) C. Jun 9, 2015 Staff Report - Web Link (https://www.smgov.net/departments/council/agendas/2015/20150609/s2015060 909-A.pdf) D. Jun 14, 2016 Staff Report - Web Link (http://santamonicacityca.iqm2.com/Citizens/Detail_LegiFile.aspx?Frame=&Meeti ngID=1065&MediaPosition=&ID=1667&CssClass=) E. Written Comments from 10/15/2019 Mtg. F. Jun 25, 2019 Staff Report - Web Link (http://santamonicacityca.iqm2.com/Citizens/Detail_LegiFile.aspx?Frame=&Meeti ngID=1184&MediaPosition=&ID=3438&CssClass=) G. Written Comments 1 Vernice Hankins From:zinajosephs@aol.com Sent:Tuesday, October 15, 2019 12:07 AM To:councilmtgitems Cc:zinajosephs@aol.com Subject:City Council 10/15/19 agenda item 3-G October 14, 2019  To: City Council  From: Zina Josephs  RE: 10/15/19 agenda item 3-G  Page 2 of the staff report for 10/15/19 agenda item 3-G includes this statement:  “As part of the FY 2019-21 Biennial Budget adopted on June 25, 2019, Council approved $450,000 in Capital Improve funds towards the purchase of furniture, fixtures, and equipment necessary for the ECLS to obtain state child care licens The June 2018 Santa Monica College bond fund financial audit includes the following:  Measure S -- $25 million remaining  Measure AA -- $46 million remaining  Measure V -- $179 million remaining  TOTAL: $250 million remaining  SMC still has millions in facilities bond funds.  SMC has already done telephone polling for its next facilities bond measure.  The ECLS will be owned by SMC, not the city.   Two questions:  Item 3-G 10/15/19 1 of 7 Item 3-G 10/15/19 2   Why did the City Council give SMC $450,000 from the city’s CIP funds for “furniture, fixtures, and equipment” Childhood Lab School?  Is SMC going to pay for furniture, fixtures, and equipment for the new City Services building?    Zina Josephs    ****************************************************    City Council 10/15/19 -- Agenda item 3-G    Recommended Action Staff recommends that the City Council:  1. Authorize the City Manager to negotiate and execute a first modification to Ground Lease Agr Monica Community College District, a California-based company, for the operation of the Early new total estimated amount of $7,822,894, with future year funding contingent on Council bud 2. Authorize budget changes as outlined in the Financial Impacts and Budget Actions section of        Staff Report Printout    a. Oct 24, 2000 Ordinance approving the RAND DA - W (https://www.smgov.net/departments/council/agend   b. Jun 21, 2011 Staff Report - Web Link (https://www. Ba.htm)    c. Jun 9, 2015 Staff Report - Web Link (https://www.sm   d. Jun 14, 2016 Staff Report - Web Link (http://santamonicacityca.iqm2.com/Citizens/Detail_   e. Jun 25, 2019 Staff Report - Web Link (http://santamonicacityca.iqm2.com/Citizens/Detail_ Item 3-G 10/15/19 2 of 7 Item 3-G 10/15/19 1 Vernice Hankins From:Nikki Kolhoff <nhkolhoff@yahoo.com> Sent:Tuesday, October 15, 2019 11:02 AM To:councilmtgitems; Rick Cole Subject:City Council Item 3G - OPPOSE Spending on SMC Lab School City Council and City Manager - I write to oppose spending another $1,161,304 of City funds on the SMC Lab School. Why is the City giving SMC money during a pension crisis and why is SMC's student child care located on our public land? According to the staff report, there are two transfers. First is $450k from the City's capital improvement budget. This adds to the $6.6mm already contributed by the City for construction, plus the child care linkage fees questionably diverted to the Lab School, and the $24,265,095 contributed by SMC from our bond funds. So that is at least $32,415,000 to build this preschool. Furthermore, the June 2018 Santa Monica College bond fund financial audit includes the following: Measure S -- $25 million remaining; Measure AA -- $46 million remaining; Measure V -- $179 million remaining. TOTAL: $250 million remaining. Why is the City paying for any SMC construction during a pension crisis when SMC has $250 million in available funds? City funds should never have gone to this (and neither should the free land), and this additional capital spending is a misuse of City funds. The second transfer is $711,304, which staff says is the current value of Rand's contribution of $500k to its tuition reduction fund in 2000 under its Development Agreement. Why is the fund being turned over to SMC? Why wouldn't the City want to verify that low-income Santa Monica residents are given spots at the center before giving funds to the Growing Place? Are any procedures being put in place to ensure that these funds are used for tuition reduction for SM residents? These funds should not be transferred and instead should be held for transparent and verifiable tuition assistance for Santa Monica residents. Finally, while not on the agenda, Council should ask Staff why SMC is being allowed to market spots at the Lab School to its students, including tuition reduction. SMC's website states that no child care is available on campus but lists the Lab School as an alternative. SMC is also sending out the following email to students: "Dear SMC Student, Exciting News! Santa Monica College (SMC) in partnership with the City of Santa Monica will be opening the Early Childhood Lab School in Fall 2020. The Lab School is currently under construction and is located at the Santa Monica Civic Center, 1802 4th Street, one (1) mile from SMC's Main Campus. When enrolled to capacity, the state-of-the-art facility will provide up to 110 children - infants, toddlers, and preschoolers - with full-day childcare by 2021. Santa Monica College selected Growing Place to operate the facility. Growing Place is a nonprofit child development program with two current centers located in Santa Monica dedicated to providing exceptional early education in the critical early years of life. Through this collaboration, the Santa Monica Early Childhood Lab School will benefit future generations of families with inspiring leading-edge approaches, a diverse setting, and family focus. The Lab School will enable students enrolled in SMC's Early Childhood Education Program with applied learning opportunities to develop expertise under the guidance of leading education professionals on site. Item 3-G 10/15/19 3 of 7 Item 3-G 10/15/19 2 To support student access to this child care option, SMC will continue to provide tuition assistance for eligible, low-income SMC student families. These subsidies are available through SMC's Early Childhood Education program and the Santa Monica College Foundation. In order to plan for the tuition assistance program for SMC students interested in enrolling their children at the Lab School, we are asking students to complete a 5-minute survey. Your answers to the survey will be kept confidential, and no one will have access to your answers... If you have any questions about the Lab School, please contact Gary Huff, Department Chair of Early Childhood Education at huff_gary@smc.edu. If you have questions about the survey, please email research@smc.edu. Click here to take the survey: SMC.ChildcareStudents.sgizmo.com/s3 Thank you in advance for participating in the survey! Lizzy Moore Dean, Institutional Advancement Santa Monica College Moore_Lizzy@smc.edu" Most SMC students are not Santa Monica residents so this tuition reduction is not aimed at Santa Monica residents, which is how the City typically markets the Lab School. It is entirely inappropriate to have turned our Civic Center into SMC's satellite campus and child care service center, which should have been incorporated into SMC's master plan, and could have been placed on the YWCA property recently purchased by the college adjacent to the main campus. Regards, Nikki Kolhoff Item 3-G 10/15/19 4 of 7 Item 3-G 10/15/19 1 Vernice Hankins From:Tricia Crane <1triciacrane@gmail.com> Sent:Tuesday, October 15, 2019 11:42 AM To:councilmtgitems; Ted Winterer; Kevin McKeown Fwd; Gleam Davis; Terry O’Day; Greg Morena; Sue Himmelrich; Ana Maria Jara; Clerk Mailbox; Rick Cole; Denise Anderson-Warren Subject:Letter to Council re Agenda Item 3G (10/15/2019) - OPPOSE $1 million transfer and increase to ECLS lease agreement To: Santa Monica City Council  From: The Board of Northeast Neighbors  Re: Agenda Item 3G (10/15/2019) $1,161,304 Increase to Lease Agreement with ECLS    City Council should NOT approve the proposed spending of an additional $1 Million of City funds on the Early Childhood Lab School at the Civic Center.    Given the current pension crisis, the City should NOT give Santa Monica College these additional funds.    More than $32 Million has been spent on this Lab School, which is located far from the Santa Monica College Campus it proports to serve. And now the Council is being asked to transfer additional funds:  1. $450,000 from the City's capital improvement budget. (This adds to the plus the child care linkage fees already being diverted to the Lab School.)  2. $711,304, which staff says is the current value of Rand's contribution of $500k to its tuition reduction fund in 2000 under its Development Agreement.  Many residents fought this project when it was first proposed and objected to the use of our tax dollars on an exclusive childcare facility planned on public land at the Civic to serve RAND and City employees.   Many told the Council that the facility should have been built on the College campus where land was readily available and SMC students had access.   But the project proceeded. Concessions were made by the City to devote a percentage of the spaces to the children of residents and yet it appears there is no procedure in place to ensure that the School offers this promised access and tuition reduction to the children of Santa Monica.  There’s more.  $24,265,095 of bond funds approved by taxpayers for the College are proposed to be diverted to the programs at the Lab School.  City Council should NOT approve these transfers.    Item 3-G 10/15/19 5 of 7 Item 3-G 10/15/19 2 Sincerely,  Tricia Crane, Chair  On behalf of the Board of Northeast Neighbors      Item 3-G 10/15/19 6 of 7 Item 3-G 10/15/19 1 Vernice Hankins From:Elizabeth Van Denburgh <emvandenburgh@gmail.com> Sent:Tuesday, October 15, 2019 12:10 PM To:councilmtgitems Subject:October 15, 2019 City Council, Agenda Item 3-6 -- Santa Monica College is a third-party; deny donations to it by City Mayor Davis and City Council Members,     It has come to my attention in tonight’s consent item that the City is continuing to donate money to Santa Monica  College, via the ECLS which the College owns.  The ECLS gurantees no child care slots to Santa Monica residents, with  child care only being offered to City of Santa Monica employees, Santa Monica College students and staff (assumed) and  Rand employees (who provided a $500,000 contribution to ECLS’s tuition reduction fund under the Development  Agreement; this fund is being turned over to SMC which is also not appropriate).  The current proposed donation of  $450,000 from the City’s capital improvement fund (for ECLS furniture, fixtures and equipment) added to the $6,600,000  donated by the City for construction, plus the questionable child care linkage fees diverted to ECLS and the $24,265,095  diverted from SMC bond funds means that residents have provided at least $32 million to build this preschool that  currently has NO guarantee that ANY Santa Monica residents’ children will be able to attend the ECLS.  Santa Monica  College is a third‐party to the City of Santa Monica and should not receive City funds for projects that only support it  from the City.  Finally, Santa Monica College has over $250 million in remaining bond funds from previous measures that  have been approved by voters.    As noted by my friend Zina Josephs, is Santa Monica College going to pay for furniture, fixtures and equipment for the  new City Services building?  Please deny the use of City funds to a third‐party, Santa Monica College.     Thank‐you for your time,  Elizabeth Van Denburgh  Item 3-G 10/15/19 7 of 7 Item 3-G 10/15/19 1 Vernice Hankins From:Wendy Dembo <wendydembo@gmail.com> Sent:Tuesday, October 22, 2019 10:29 AM To:councilmtgitems Subject:Item 3N Dear Counsel,  Please do not approve more spending of City funds on the SMC Lab School.  SMC is already getting an amazing deal on real estate -- no rent and an ocean view.  The money spent on the LAB school for the benefit of very few Santa Monica residents (maybe 30 per year) could be used to benefit all residents with a park.  Thanks for your time,  Wendy Dembo  Santa Monica Resident and Voter  Item 3-N 10/22/19 1 of 2 Item 3-N 10/22/19 1 Vernice Hankins From:Ann Maggio <annmaggio@gmail.com> Sent:Tuesday, October 22, 2019 11:12 AM To:councilmtgitems Subject:Agenda Item 3N - Spending public funds on lab school Dear City Council, We oppose the staff recommendation to allocate more public funding for a school built on our public land that fails to prioritize Santa Monica's children. Those funds should be directed to help our local kids thrive. Ann Maggio Thanawalla      Item 3-N 10/22/19 2 of 2 Item 3-N 10/22/19 1 Vernice Hankins From:Kathryn Jeffery <Jeffery_Kathryn@smc.edu> Sent:Tuesday, October 22, 2019 3:49 PM To:Council Mailbox; councilmtgitems Subject:Consent Item on Ground Lease with SMC     Dear Honorable Mayor Davis and Councilmembers,    Thank you for your support of early childhood education and for recognizing it as a priority in our  community.  The Santa Monica Early Childhood Lab School is a true symbol of the collaboration of institutions  in Santa Monica to best serve the needs of those who live here, as well as those who contribute to the fabric  of our community by working and pursuing their education here.    Thank you also for making the substantial financial commitment to the Early Childhood Lab School that allows  it to be under construction and well on its way to opening in the fall of 2020, operated by the well‐respected  nonprofit child development organization, Growing Place, which has two other successful sites in Santa  Monica, giving working parents access to the care and education that will help their infants, toddlers and  preschoolers thrive.     As you know, you have previously approved the funds that will enable the Early Childhood Lab School to  provide tuition assistance and cover necessary start‐up costs; the action before you tonight is to authorize the  City Manager to negotiate the details for conveying the money to SMC, and then on to Growing Place.     Details that might be helpful for you to know regarding our partnership and the steps that we are taking to  prepare for commencement of operations (in addition to those that you are taking):     SMC’s commitment for the construction of the project totals $23.8 million.     SMC is providing an additional $480,000 for furniture, fixtures and equipment needed for the infant,  toddler and preschooler rooms and outdoor spaces.     SMC is leading a joint fundraising effort by the partners (SMC, City, Growing Place) to identify other  funds to enable the project to bolster the dollars available for start‐up staffing and training, and for  additional tuition assistance.     The terms for transferring the City funds will include requiring reporting on how the funds are being  spent and how Growing Place will enroll and provide tuition assistance to Santa Monica families,  2 ensuring that 30% of those enrolled are from Santa Monica and that at least half of those, or 15%, are  from Santa Monica households of low‐income status.     The Lease between the City and SMC identifies the following groups for enrollment priority:  o Children of Santa Monica households of low‐income status  o Children of full‐time City employees  o Children of full‐time SMC employees  o Children of full‐time RAND employees  With the added priority agreed upon with Growing Place,  o Children with special needs     SMC students who are parents in need of full‐time child care are eligible to apply for spaces at the Early  Childhood Lab School, and, if they meet certain criteria, SMC has federal Department of Education grant  funds and SMC Associated Students funds that can help subsidize their child care costs.    I encourage and appreciate your support for the “Approval of Modification to Ground Lease with Santa  Monica College (SMC) for Early Childhood Lab School.    Sincerely,    Kathryn E. Jeffery, Ph.D.  Superintendent/President  Santa Monica Community College District      (sent via email; hard copies to be hand‐carried to Council as well)      REFERENCE: Modified Lease No. 10079 (CCS)