PCS Facilities Negotiation: Overview

Background

Effective March 31, 2004 PCS and Santa Cruz City Schools created a Facilities Use Agreement for the 47,000 sf, 9.4 acre Natural Bridges Elementary School property. The agreement extended for five years, with an option to renew for an additional three years.

Payment under the agreement was $200,000/year, graduated from $140,000 to $275,500 over the five year period. [Source: Charter School Facilities Use Agreement, PCS website (note: no longer available from PCS site)]

The option to renew was exercised by PCS, per the agreement, in October 2007. Their opening offer to renew the lease was $125,000. [Source: Santa Cruz Sentinel] Santa Cruz City Schools sought $420,000 for the renewal. [Source:Santa Cruz Sentinel]

Per the Facilities Use Agreement, the parties are to negotiate for six months, take into account current market conditions and enrollment of district students.  If the parties are unable to reach agreement on price, the agreement would not be extended. The negotiations window closed on April 1, 2008 without an agreement on price. PCS has repeatedly called for a return to the table, but has never indicated a willingness to enter negotiations with a different figure.

In June,  PCS set aside $800,000 of their cash reserve into a restricted reserve building fund. But there was some concern about how that might play out: [PCS Board Member]: … concerned that use of public money toward facilities will require the COE be on the title.”

[Source: June 2008 PCS Board packet, minutes of the May meeting: Budget Report Discussion, page 9]

On October 1, 2008 PCS was expected to apply for facilities through the Proposition 39 process.

Analysis

When the original facilities use agreement was negotiated 5 years ago, Prop 39 was brand new and untested.  In the intervening years, districts and charters have clarified their respective obligations under the law. Prop 39 agreements bear requirements on the parts of both the charter and the district. In seeking a facility use agreement outside of the Prop 39 process, PCS seeks, and has sought, to select only those aspects of the law that serve their needs, e.g. the reduced use fee for in-district students, but not the other aspects, e.g. annual renewal, accounting of residency, shared facilities, allocation of space based on district class sizes, etc. Proposition 39 in particular and the Ed Code in general are “all-in” propositions. The education code is not a menu from which charter schools and districts may select the options which serve their needs in the moment while ignoring the full obligations of the law.

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