COUNTY OF SAN MATEO

Inter-Departmental Correspondence

County Manager's Office

DATE:

July 19, 2002

BOARD MEETING DATE:

August 6, 2002

TO:

Honorable Board of Supervisors

FROM:

Paul T. Scannell, Assistant County Manager

SUBJECT:

Agreements with the City and County of San Francisco and PALCARE for Child Care Services

Recommendation

Adopt a Resolution authorizing the President of the Board of Supervisors to:

1.

Execute an agreement with the City and County of San Francisco, through the Airport Commission, guaranteeing revenue for child care services from July 1, 2002 through June 30, 2003;

2.

Execute an agreement with PALCARE guaranteeing revenue received from the City and County of San Francisco, through the Airport Commission, for child care services from July 1, 2002 through June 30, 2003; and

3.

Execute a 20-year operating agreement with PALCARE for the County-owned facility located at 945 California Drive in Burlingame.

Background

In April 1991, the County entered into collaborative agreements with the City and County of San Francisco, through its Airport Commission, ("Airport") and PALCARE for the provision of 24-hour child care services for Airport employees and the community. The County purchased a two-story building at 945 California Drive in Burlingame previously owned by SAMTRANS to accommodate the new child care facility. PALCARE currently utilizes the first floor of the facility for child care services and pays the County rent at below market rates. The Airport guarantees revenue to cover a portion of PALCARE's operating costs and PALCARE guarantees that one-half of its available slots (to a maximum of 134) are available for Airport employees. The monthly reimbursement for operating costs range from $35,000 to $40,000.

The County renewed its agreements with the Airport and PALCARE in May 1998 and in December 1999. The 1998 agreements provided for the Airport's reimbursement of second floor renovation costs to accommodate additional child care slots. The monthly reimbursement for the renovation of the second floor is $10,909 (or 676,358 for 62 months). The 1999 amendments extended the terms of the agreements by an additional two years to allow PALCARE the opportunity to obtain financing to renovate the second floor of the child care facility. The existing agreements will expire on June 30, 2005.

Discussion

Due to budgetary constraints, the Airport is unable to continue its previous level of financial support to the County for PALCARE's child care services. However, the Airport wishes that funds previously provided to the County under previous agreements continue to be used for PALCARE's childcare services. These funds, originally set aside for the renovation of the second floor, will now be used to offset operational costs. The County will no longer invoice the Airport for these operational costs since the "Fund" (which includes revenues previously received for the second floor renovation project) is maintained by PALCARE.

PALCARE will be required to submit monthly statements to the County and the Airport and in no event will monthly payments from the Fund exceed $30,000. Any monies remaining in the Fund upon termination of the agreement will be returned to the Airport. The term of the agreements will be for one year. The Airport has given no indication whether it will continue its financial support beyond this term.

PALCARE has requested that the County provide it with a long term operating agreement in order to allow it to continue to raise funds to cover costs associated with the second floor renovation project. As a result, the operating agreement with PALCARE will be for a 20-year period. The County has the option to terminate the operating agreement if construction of the second floor renovation project does not commence within five years, if PALCARE loses its child care facility license, or if insurance coverage is not provided.

PALCARE currently occupies 11,146 sq. ft. and is charged $.86 per sq. ft., which is well below the current market rate. Annual adjustments will continue to be made based on the Bay Area CPI. Within six months of PALCARE completing the second floor, the County will begin to charge rent. The amount that will be charged will be negotiated before or during that six month time period.

Vision Alignment

The County's agreements with the Airport and PALCARE keep the commitment of developing and fostering partnerships to enhance and preserve our quality of life. Specifically, the agreements contribute to goal #23: "Leaders throughout the County provide the impetus for broader regional solutions in land use, housing, child care, education, health and transportation."

Fiscal Impact

Revenue received from the operating agreement with PALCARE is deposited in the Non-Departmental Budget. PALCARE will pay the County $115,000 in FY 2002-03. This amount will be used to cover child care scholarships provided to qualifying County employees whose children attend Marin Day Schools - Our Place campus.

cc: Steve Alms, Real Property Manager