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)