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Agenda Item 16.
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| City Council Meeting |
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| Subject: |
| Brea-Olinda Unified School District Building Utilities and Services Agreement for Fiscal Years 2023-2028 |
| RECOMMENDATION |
Staff recommends that the City Council take the following action:
- Approve a five-year Building Utilities and Services Agreement with the Brea-Olinda Unified School District for Fiscal Years 2023-2028; and
- Amend the City's General Fund (110) Operating Budget to:
- Appropriate $137,919.00 in Fiscal Year 2023-24 and $153,090.09 in Fiscal Year 2024-25 in additional revenue from the new negotiated Agreement terms; and
- Amend the City's Building Maintenance Fund (490) Operating Budget to:
- Un-appropriate $94,287.00 in Fiscal Year 2023-24 and $94,287.00 in Fiscal Year 2024-25 in revenue due to the new Agreement no longer based on the City's operating budget.
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| BACKGROUND/DISCUSSION |
Since 1980, the Brea-Olinda Unified School District (School District), has occupied a 9,300 square foot office space in Brea's Civic and Cultural Center. The School District has occupied this office space through a 48-year lease agreement which established the lease rate of $1.00 per year and is set to expire on June 30, 2028. As a companion to the aforementioned lease agreement, the City and School District also executed a Building Utilities and Services Agreement (Agreement). Components of this Agreement include, but are not limited to the following:
- School District's use of the Council Chambers twice per month for School Board meetings
- Assigned and reserved parking spaces at the Civic and Cultural Center
- Utilities and janitorial services
The current Agreement expired on June 30, 2023. Under this Agreement and previous Agreements, the annual maintenance and operations fees have been based on a percentage of the Civic and Cultural Center's operating budget. For reference, the average fees paid by the School District for Fiscal Years 2017-2022 was $85,636.58 ($9.21 per square foot annually). The estimated amount for Fiscal Year 2022-23 is $94,287.13 ($10.14 per square foot).
At this time, it is recommended that the City enter into a new five-year Building Utilities and Services Agreement (included as Attachment No. 1) with the School District, utilizing a calculation method based on the open market trends for commercial rentals rather than the City's operating budget. Staff compared the square footage rate of approximately 21 commercial lease spaces in Brea (comparison included as Attachment No. 2). Based on these market trends, City staff and School District staff reached a tentative agreement on the proposed annual building utilities and services fee, which starts at $14.83 per square foot annually in Year One and increasing by eleven percent (11%) annually thereafter.
On June 15, 2023, the new five-year Agreement was reviewed and approved by the Brea-Olinda Unified School District Board. |
| COMMISSION/COMMITTEE RECOMMENDATION |
| The Finance Committee reviewed this Agreement at their July 11, 2023 meeting and recommended proceeding to Council for approval. |
| FISCAL IMPACT/SUMMARY |
This new Agreement will generate $137,919.00 in additional revenue in Year One of the five-year agreement (an increase of approximately 46% over the Fiscal Year 2022-23 Agreement). The fees for the next five years are proposed as follows:
- July 1, 2023 - $137,919.00 annually ($11,493.25 per month)
- July 1, 2024 - $153,090.09 annually ($12,757.51 per month)
- July 1, 2025 - $169,930.00 annually ($14,160.83 per month)
- July 1, 2026 - $188,622.30 annually ($15,718.53 per month)
- July 1, 2027 - $209,370.75 annually ($17,447.56 per month)
Based on this new calculation method and negotiated rate, the Agreement will have a positive effect on the General Fund revenues for the next five years. |
| RESPECTFULLY SUBMITTED: |
William Gallardo, City Manager
Prepared by: Marie Dao, Management Analyst, Community Development Department
Concurrence: Melissa Davis, Community Development Manager and Jason Killebrew, Community Development Director |
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