News

Palo Alto firms up stance in Cubberley negotiations

City eliminates funding for contested 'covenant' provision from new budget

After publicly declaring its intention to stop paying the Palo Alto school district annual fees in exchange for the district's commitment not to sell or redevelop certain properties, the City Council on Monday night put its money where its mouth is by stripping the payments from the city's upcoming budget.

In tentatively adopting fiscal-year 2015 budget as a whole, which begins July 1, the council largely followed the recommendations of City Manager James Keene and the council's Finance Committee.

But the council also made two last-minute changes: It agreed to not set aside any money for the "covenant not to develop," a contentious provision in the city's long-standing lease of 27 acres of Cubberley Community Center from the Palo Alto Unified School District; and separately, the council added grant money for local nonprofits.

The covenant, originally penned in 1989 as a way to help cash-strapped schools deal with a financial crisis brought on by declining enrollment, essentially transferred city funds to the needy school district in exchange for the district's promise not sell off or redevelop unused school sites throughout the city. Currently, the city pays $1.8 million a year as part of the covenant, even though those school sites now being used as schools or are lucratively leased by the district.

The council's move fortifies its position on the main sticking point in its negotiations with the school district over the lease, which is up for renewal. In February, the council adopted as one of its guiding negotiating principles the abolition of the covenant.

From the city's viewpoint, the covenant is no longer necessary. During the February discussion, Keene said he sees "no public-policy reason why anyone would expressly agree to do something for which they're no longer receiving the intended benefit or result."

A community advisory group, which issued a report on Cubberley last year, also voted 18-0 to scrap the covenant from the new lease.

School district officials, meanwhile, have been loath to give up the provision, which they say is a key funding source for the district. On Monday night, just after the council voted on the budget, Keene told the council that the two sides remain far apart on this issue.

"We have not been able to reach any agreement on the elimination of the covenant not to develop and elimination of that payment under the lease. ... That was our first priority, and we've been unable to come to an understanding, let alone an agreement, on why that is necessary and makes sense," Keene said.

Talks have been more fruitful on other council priorities, including retaining existing child care services and possibly reconfiguring the city-owned 8-acre portion of Cubberley, a sprawling campus at 4000 Middlefield Road made up of playing fields, artist studios and a campus of Foothill-DeAnza College, which plans to leave in two years. The 25-year lease is set to expire at the end of this year.

Keene said he and school Superintendent Kevin Skelly have also been considering a lease with "significantly different terms" that were not within council's direction and had not been publicly disclosed. After the discussion, the council entered into a closed session with Keene to further discuss the status of negotiations.

But even before Keene made his update, the council reasserted its position about eliminating the covenant. Toward the end of a long conversation about the proposed budget, Councilman Larry Klein made a motion to remove funds for the covenant payment. Keeping it in the budget sends a "mixed message," he said, about the city's position on the issue.

"I want to give a clear message that the city will not spend money on the covenant not to develop," Klein said.

Mayor Nancy Shepherd agreed, noting that the council had already adopted as its official position the desire to eliminate the covenant. Council members have offered to instead use the covenant money to spruce up the dilapidated center, a project which staff estimates will cost about $18 million.

"I'd really like to see our capital improvements start to flow into Cubberley," Shepherd said. "That's really important to me -- that we make improvements."

The council voted 7-1, with Greg Schmid dissenting and Greg Scharff absent, not to allocate funding for the covenant after Jan. 1.

The 2015 budget, which the council plans to formally adopt next week, includes $171 million in General Fund expenditures, about 7.3 percent more than in 2014. About $103 million of the new budget will be devoted to salaries and benefits, which are rising despite the council's recent cost-sharing agreements with its labor unions over pensions and health care.

Among the beneficiaries will be local nonprofits. Councilman Marc Berman, who chairs the Finance Committee, recommended raising the funding for the city's grant program, known as the Human Services Resource Allocation Process, by about $68,000, which along with last month's addition of $32,000 brings the total increase to nonprofit funding to about $100,000 in the coming year. The council voted 7-1, with Klein dissenting, to raise the grant allotment and to add another $50,000 into a new reserve fund for human services.

Councilwoman Gail Price said she wished the city could be even more generous with local nonprofits, which often get overlooked for other types of grants because of their location in Palo Alto.

"They are not looked at very sympathetically by the funders," Price said. "It's very clear that the cost of providing services continues to go up and without additional support they will continue to lag behind."

In dissenting, Klein argued that "funding charities is not one of our main purposes." The city has many long-term financial challenges, including employee pensions and retiree health care, and he said increasing the grant program would send the wrong message to the labor unions at a time when the city is involved in negotiations.

"It makes us feel good, but I think it's inconsistent with what our main obligations are," Klein said.

Comments

 +   Like this comment
Posted by Resident
a resident of Another Palo Alto neighborhood
on Jun 10, 2014 at 8:14 am

I don't pretend to understand any of this, but it sounds like robbing Peter to pay Paul. PAUSD and City of PA are just bookkeeping differences, this is one town and we have to do what makes sense, not have scraps between siblings.

PAUSD is in the business of educating children, not Real Estate.

Cubberley should be reopened as a school asap to counteract all the new building in this part of town and prevent our schools from getting too big.


 +   Like this comment
Posted by Anonymous
a resident of Another Palo Alto neighborhood
on Jun 10, 2014 at 8:51 am

Good. Now I can stop paying the extra fee on my utility bill which was supposed to pay PAUSD.


 +   Like this comment
Posted by Kocziusko
a resident of Old Palo Alto
on Jun 10, 2014 at 9:15 am

Sounds like a bunch of bull-oney to me.


 +   Like this comment
Posted by Wayne Martin
a resident of Fairmeadow
on Jun 10, 2014 at 9:38 am


Measure B (1987) Ballot Language For Utility Tax:
Web Link

The ballot language presented to the voters that resulted in the authorization of the Utility Tax does not mention the purpose of the tax. Many people have claimed many things about why the tax was proposed, and why the voters saw fit to agree to the tax. However, the ballot language is legally binding on the City, and that language says nothing about giving the money to the PAUSD.

The Utility Tax could be revisited by placing it one the ballot again. The City seems intent on trying to tax people's cell phones, and it would probably come as no surprise if they tried to tax people's Internet connections at some point. Having this tax reauthorized by the voters every ten years, or so, would seem like a democratic thing to do.

> In dissenting, Klein argued that "funding charities is not one
> of our main purposes." The city has many long-term financial
> challenges, including employee pensions and retiree health care,
> and he said increasing the grant program would send the wrong
> message to the labor unions at a time when the city is involved
> in negotiations.

Finally, Larry Klein gets one right. I hope he sticks to his guns on this one.


 +   Like this comment
Posted by Cedric de La Beaujardiere
a resident of Barron Park
on Jun 10, 2014 at 10:56 am

Cedric de La Beaujardiere is a registered user.

Around about the 1970's or so, Palo Alto's demographics had shifted to an aging population and fewer children, and the school district was selling off school properties to be typically (always?) redeveloped as housing. My mom was one of the people going to Council and I suppose School Board meetings protesting this practice and the plan to sell off Jordan, arguing that it was short-sighted and foolish to ignore the likelihood that the older generation would die off and be replaced with school age children again. Fortunately those espousing this argument won and Jordan was not sold, and now it is a bustling middle school again.

Admittedly, I have not studied the financials of the district to take a fully informed position. However, understanding the origin of this covenant, I'm a little nervous to hear of it being rejected. Yes the district earns income from leasing unused campuses, but it would also get a lot of money from selling them. How do these options balance out say over 30 years? Will there be a financial incentive for the district to sell excess campuses, and could we get Palo Alto into a pickle again in a future ebb and flow of student population? I'm concerned of our loss of leverage, as well as our reduction in support for the school district, whose quality is one of the main draws for families to move to Palo Alto.

I am sympathetic to wanting those payments to be used for needed capital improvements, but then the logical action would be to put that money into a fund for capital improvements, sending the message to the district that we are serious in our desire for these improvements. It doesn't make sense to me to put the money anywhere else, at least given my constrained knowledge of these affairs.


 +   Like this comment
Posted by Chris
a resident of University South
on Jun 10, 2014 at 11:09 am

The school district does not have the same boundaries as the city. PAUSD includes Stanford and part of Los Altos Hills, plus some other smaller differences. PAUSD also educates some students from East Palo Alto.


 +   Like this comment
Posted by anon
a resident of Monroe Park
on Jun 10, 2014 at 11:58 am

and not all of Palo Alto is in PAUSD. Some of us are lucky enough to pay taxes to LASD while also paying the utility tax that was sold primarily as a way to pay the Cubberley lease.


 +   Like this comment
Posted by Wayne Martin
a resident of Fairmeadow
on Jun 10, 2014 at 12:55 pm

> I am sympathetic to wanting those payments to be
> used for needed capital improvements, but then the logical action
> would be to put that money into a fund for capital improvements,

There is no legal authority to do this, although presumably the City could pass whatever ordinances it deemed necessary to allow the depositing of these funds into some sort of account that would be targeted only for infrastructure use.

> It doesn't make sense to me to put the money anywhere else,
> at least given my constrained knowledge of these affairs.

What makes sense, and what is legal, or likely, are more often than not two difference things. The money the City owes the PAUSD comes from the general fund. The fact that the UUT revenue is about 50% larger than that owed the PAUSD is fortuitous, but none of the UUT money is legally bound for use in infrastructure. If the UUT were to somehow exact less than the amount due the PAUSD, the difference would have to come from the General Fund. No doubt some of it does get used for infrastructure, but the City does not track expenditures based on partial revenue sources.


 +   Like this comment
Posted by Judy
a resident of Palo Verde
on Jun 10, 2014 at 3:15 pm

This is a good deal for both the City and the School District. The School District wants to expand Terman Middle School into the Bowman International School site and make Terman the same size as JLS and Jordan. The Bowman School wants at least 8 acres somewhere else in Palo Alto.

If Cubberley isn't tied up in a covenant not to develop Bowman could then be relocated to the Cubberley site and the School District hopefully could get the Bowman site back.

Many years ago the PAUSD sold the Bowman site to Bowman now they want it back. Selling off some of our valuable School sites was a dumb move.


 +   Like this comment
Posted by anymouse
a resident of Charleston Meadows
on Jun 10, 2014 at 5:22 pm

Cubberley High School. Repair, re-open. If the property is ever sold off to developers, another site will never be found should school enrollments increase. We are not completely aware of the details of this article, yet we are not oblivious to the idea regarding Jordan's almost demise and now up and running again. Many former students of Cubberley know the school is in poorly maintained, so spruce it up and allow for various schooling situations to enjoy the grounds. Don't get us started on how the pool was covered by asphalt.


 +   Like this comment
Posted by Cur Mudgeon
a resident of Greenmeadow
on Jun 10, 2014 at 7:59 pm

anymouse, I well remember when the pool was filled and paved over. A loss for recreation, although at the time it was said extensive repairs were needed.


 +   Like this comment
Posted by please
a resident of Fairmeadow
on Jun 10, 2014 at 11:34 pm


Bring back the pool. :)


 +   Like this comment
Posted by Cougar
a resident of Midtown
on Jun 11, 2014 at 7:28 am

Cubberley is the essential asset here. Getting it up and running again in time for the impending high school enrollment peak is the essential goal. PACC and PAUSD can agree on that much.


 +   Like this comment
Posted by Crescent Park Dad
a resident of Crescent Park
on Jun 11, 2014 at 6:22 pm

Building a new competition pool (presumably for the new HS) will cost $2mil. Then you have to heat it, clean it and manage the chemicals. Not a trivial undertaking.


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