When Palo Alto agreed 25 years ago to lease most of Cubberley Community Center from the school district, both sides had plenty to gain from the arrangement.
For the district, which owns the sprawling community center at 4000 Middlefield Road, the deal represented an annual financial windfall at a time of declining enrollment and revenue. Between 1989 and 2013, the school district has received about $136 million from the city. For the city, the agreement created 27 acres of space for community services (the city owns the remaining 8 acres of Cubberley) and an assurance that the school district won't sell the five school sites (Ohlone, Garland, Greendell, JLS and Jordan) listed in a "covenant not to develop" that accompanied the lease.
The agreement is set to expire at the end of the year and as the two sides close in on the final stage of a long negotiating process, the covenant stands out as a sticking point in negotiations, according to a new report from City Manager James Keene that the City Council will consider Monday. The covenant, which comprises about $1.8 million of the $7.16 million that that the city will pay to the school district for Cubberley in 2014, has become a reliable funding source for the school district, which no longer faces the types of enrollment or financial pressures that it did in 1989. But for the city, it is an obsolete relic drawing on city funds that would be better spent on improving the center.
A specially appointed Cubberley Community Advisory Committee, which included stakeholders from the city, the school district and the broader community, wrote in a March 2013 report that the school district's long-term plans presume that the covenant will be extended and alludes to the district's "dependency" on city funds.
"The School District is counting on robust increases in property tax revenue and the renewal of the Lease and Covenant Not to Develop to balance budgets for the 2014-2019 time frame," the task force reported.
Yet the task force also took a unanimous position that the covenant is now obsolete and should be scrapped from any new agreement. All the sites listed in the covenant are now occupied by schools, the task force noted, which makes a potential sale of these properties a moot point. The task force voted 18-0 to recommend eliminating this provision.
"It is the City's promise to pay the District in return for the District not selling its land," the task force wrote. "This is no longer an immediate issue as the school sites identified in the Covenant are now all in use."
City Council and staff share this view. In his report, Keene wrote that the City "sees no rationale for continuing to pay for a purpose no longer necessary," particularly when funding is needed for infrastructure repairs at the community center. He pointed out, however, that the District "does not want to lose the money provided through the Covenant terms."
"Both parties see great value in developing a new lease and an agreement seems within reach on a number of terms," Keene wrote. "We have not been able to reach tentative agreement yet at staff level regarding the Covenant Not to Develop."
The removal of this clause is one of eight recommendations that Keene is recommending for council's consideration when it comes to renegotiating the Cubberley lease. Others include eliminating the "Consumer Price Index" annual increases; exploring a potential "reconfiguration" of the 8 acres of Cubberley owned by the city; continuation of the child-care program at Cubberley; and a longer-term lease to accommodate long-term planning for the city-owned site, facility improvements and public access to the playing fields at the community center.
If reached, the new agreement would mark the latest in a series of dramatic transformations that Cubberley has undergone since it opened in the 1950s as a high-school site. Cubberley High School closed in 1979, one of several schools to shut down because of financial pressures and declining enrollment. Since the city leased Cubberley, it has become home to a Foothill College campus, playing fields, child-care facilities and artist studios. In 2012, Foothill announced plans to move to Sunnyvale, throwing another wildcard into the Cubberley mix. The school board, meanwhile, is now once again looking at Cubberley as a potential school site.
In its 2013 report, the advisory group acknowledged the critical importance of Cubberley to a wide variety of stakeholders, including artists, youth soccer players and students. The report characterized the new negotiations as an "opportunity so important, so significant, and so far-reaching that it will profoundly impact future generations of the greater Palo Alto community."
In addition to eliminating the covenant, the task force recommended a long-term plan for shared use of Cubberley between the city and the school district and an investment in repairing the center's aged infrastructure.
The Monday discussion will give the City Council its first opportunity in almost a year to publicly discuss a topic that been limited to closed-door talks since last May. At its May 13 meeting, the council publicly stated its intention to renew the lease, subject to significant revisions. These include elimination of the covenant and a reallocation of funds toward infrastructure maintenance.
"We have a tremendous opportunity here to show how well we can work together -- the school district, the City of Palo Alto, and community members -- to come up with an innovative, creative and noteworthy resolution," Councilwoman Gail Price said at the May 13 meeting.