DEPARTMENT: Human Services
DEPARTMENT HEAD: Melody Woosley
COUNCIL DISTRICTS IMPACTED: City Wide, Council District 1, Council District 3, Council District 5
SUBJECT:
A Lease Amendment with, and a Sub Ground Lease agreement to, North East Independent School District relating to the Col. Victor Ferrari Learning Center; and lease agreements of the Margarita Huantes Learning Center and Bob and Jeanne Billa Learning Center to San Antonio Independent School District.
SUMMARY:
This ordinance authorizes the negotiation and execution of:
A. An amendment to an original Ground Lease agreement authorized by City Ordinance 95614 between North East Independent School District (NEISD) as landlord and the City as tenant
B. A Sub Ground Lease "lease back" agreement with NEISD for NEISD to operate and maintain the facility located at 107 W. Rampart, San Antonio, Bexar County, Texas 78216
C. A lease agreement with San Antonio Independent School District (SAISD) for SAISD to operate and maintain the facility located at 1411 Guadalupe, San Antonio, Bexar County, Texas 78207
D. A lease agreement with SAISD for SAISD to operate and maintain the facility located at 1033 Ada St., San Antonio, Bexar County, Texas, 78223
BACKGROUND INFORMATION:
The construction of the City's adult learning centers were initially financed with proceeds derived from a $46 million 1989 voter approved Libraries/Learning Centers bond issuance. Through collaborations with San Antonio Independent School District (SAISD), North East Independent School District (NEISD), and Education Service Center, Region 20, adult education classes were provided by these three agencies at each of the seven Learning Centers operated by the Department of Human Services (DHS).
The City of San Antonio's Fiscal Year 2014 Adopted Budget included the transition of seven DHS operated Adult Learning Centers to other purposes. DHS operations ended on December 20, 2013, after completion of the Fall 2013 semester. After discussions with education partners, both NEISD and SAISD have requested lease agreements with the City of San Antonio for three facilities to continue delivering adult education instruction at the centers. Both parties agree to continue bond eligible activities.
In April 2002, City Council approved Ordinance 95614, a 25 year ground lease agreement with an option to renew for an additional 15 years with NEISD for the construction and operation of the Col. Victor J. Ferrari Learning and Leadership Development Center on NEISD owned property located at 103 E. Rampart for a base rental rate of $1.00 a year. Upon completion, the City of San Antonio operated and maintained the Ferrari center until December 20, 2013. NEISD has expressed interest in operating the Ferrari center to continue providing adult education instruction at that location. The City of San Antonio proposes to lease the Ferrari center to NEISD to minimize disruption in services and remain in compliance with municipal bond requirements.
SAISD has expressed an interest in purchasing both the Margarita Huantes Learning Center and Bob and Jean Billa Learning Center. Until proposals for purchase can be fully considered, SAISD is requesting to lease the space to continue providing adult learning and minimize disruption for a period of one year.
ISSUE:
NEISD will retain its ownership of the land located at 103 E. Rampart and the City will maintain ownership of the building constructed at the site location. Beginning January 1, 2014, the City will lease the property back to NEISD at an annual base rent of $1 per year so that adult learning activities may continue at the site and to continue to meet bond compliance requirements. NEISD has agreed to continue provision of adult education services at the same location under a Sub Ground Lease agreement. The original Ground Lease agreement will also be amended to remove the 15 year extension option, keeping the initial term as written, or until the bond debt is fulfilled, whichever is later.
The City desires to lease the Huantes and Billa centers to SAISD so that adult learning activities continue at the sites and to continue to meet bond compliance requirements. The centers will be leased for a base annual rent of $1 for the term of January 1, 2014 - December 31, 2014.
ALTERNATIVES:
If the City does not authorize the negotiation and execution Sub Ground Lease agreement with NEISD, the City must determine a way to continue providing adult learning activities at the Ferrari center or face possible termination of the original Ground Lease and possible involuntary transfer of possession of the building. If possession were transferred, the City may suffer adverse consequences associated with the City's bond covenants depending on NEISD's use of the building.
If the City does not authorize the negotiation and execution of Lease agreements with SAISD, a disruption in services will occur while SAISD works to identify new locations to conduct adult learning related activities. The Huantes and Billa centers would remain vacant until alternative uses are identified.
FISCAL IMPACT:
There is no fiscal impact to general fund.
RECOMMENDATION:
Staff recommends approval of this ordinance authorizing the negotiation and execution of an amendment of the Ground Lease agreement and a Sub Ground Lease agreement between the City of San Antonio and North East Independent School District, and the negotiation and execution of Lease agreements between the City of San Antonio and San Antonio Independent School District.