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1998-0818_BOYS & GIRLS CLUB OF CAPISTRANO VALLEY_H1a_Agenda ReportAGENDA ITEM August 18, 1998 TO: George Scarborough, City Manager FROM: Al King, Jr., Community Services Director SUBJECT: Consideration of Proposed Memorandum of Understanding for the Development of a Youth Services Facility at the San Juan Capistrano Community Center Site (Boys & Girls Club of Capistrano Valley, Inc.) RECOMMENDATION: It is recommended that the City Council approve the proposed Memorandum of Understanding between the City of San Juan Capistrano and the Boys & Girls Club of Capistrano Valley for the development of a proposed youth services facility to be located at the San Juan Capistrano Community Center. SITUATION: A. Background Having received City Council direction to proceed with the concept of the Boys & Girls Club of Capistrano Valley proposal to construct nearly 11,000 square feet of youth services facility at the San Juan Capistrano Community Center site, staff was directed to develop a proposed Memorandum of Understanding to address important issues associated with the Club's proposal. Representatives from the Club and the City have been meeting and the City Attorney has prepared the draft MOU. Further, the Club has suggested several revisions. Key issues addressed in the proposed Memorandum of Understanding include: 1. Fund-raising levels the Club must reach prior to the initiation of a lease agreement with the City, namely, that the Club shall raise through its fund-raising drive the total sum of money equal to one-third (1/3) the cost of constructing the Club facility ($13,8003,000). 2. Club performance standards. 3. The establishment of a City Council review process to address management, operational and performance related matters in conjunction with the Club's operation of the facility. 4. Site specifications, purposes and uses associated with the Club's proposed facility. 5. Default Matters r `�%' Agenda Item -2- August 18, 1998 The attached proposed Memorandum of Understanding is now jointly recommended by the City staff and Club representatives. If approved by the City Council, the Memorandum of Understanding shall be in effect for a maximum period of two (2) years or until the Club reaches its funding commitment level of $600,000, which is one-third of the cost required to construct the proposed Boys & Girls Club of Capistrano Valley facility, whichever occurs sooner. Upon reaching this one-third cost requirement level, the Club shall provide written verification to the City, and then negotiations can begin for the purpose of consummating a leasehold agreement between the parties. It is anticipated that by the consideration of this proposed Memorandum of Understanding the City has concluded its review process on the project and that public and Commission comments along with final design requirements have been addressed and incorporated in a companion report. B. Overview of the Agreement A key provision of the Agreement provides that City will begin good faith negotiations for a lease of City owned land (approximately 11,000 square feet) at the sports park to the Club when the Club has obtained a funding commitment of at least '/s of the projected cost of construction of the project i.e., a $600,000 funding commitment. (See Section 3 of the Agreement) The term of the MOU shall be 2 years, or until mutually rescinded, whichever occurs sooner. Obviously, if a lease is executed, and implemented, then the MOU would serve no further purpose. (See Section 4 of the Agreement) The Agreement also addresses potential future operational problems by providing a mechanism by which the City can focus upon and deal with significant operational problems once the Club is constructed. The methodology entails a focusing process by the City Council through a public hearing process with the potential for an interim assumption of day-to-day management by City under a worse case scenario. (See Section 5 of the Agreement) It is again emphasized that the MOU merely sets the foundation for a negotiation process to begin with regard to consummating a leasehold relationship. The MOU in no way mandates the completion of a lease. This is because discretion is left to the parties to come up with the significant policy choices regarding a complete leasehold relationship. In short, mutual agreement must be reached as to a number of issues that must be addressed in formulating a lease arrangement. In conclusion, our City Attorney has developed this MOU in conjunction with Club officials. It is now ready for Council review and action. Agenda Item -3- COMMISSION/BOARD REVIEW, RECOMMENDATION: August 18, 1998 The San Juan Capistrano Community Center Master Plan amendment process utilized to evaluate the Boys & Girls Club of Capistrano Valley youth services facility proposal has been reviewed by both the Parks, Recreation and Equestrian Commission and Planning Commission as public hearings and with substantial notification to the community. Both Commissions have recommended approval of the Club's proposal to construct an 11,000 square foot youth services facility at the San Juan Capistrano Community Center site. Additionally, public comments received during this project review process have also been positive and supportive of the Club's proposal. The Parks, Recreation and Equestrian Commission has requested that staff provide to them a copy of the City Council approved and adopted Memorandum of Understanding for their information. Staff would plan on accomplishing this at the September 1998 Commission meeting. FINANCIAL CONSIDERATIONS: The Boys & Girls Club of Capistrano Valley has estimated construction costs for the new 11,000 square foot youth services facility to be $1.8 million. The proposed Memorandum of Understanding specifies that upon reaching a funding commitment equal to one-third of this estimated cost of construction (equivalent to $600,000), the City and Boys & Girls Club of Capistrano Valley would begin negotiations for the development of a leasehold agreement associated with the Club's proposal. The Boys & Girls Club of Capistrano Valley has already raised substantial dollars toward the project prior to the start of its formal capital campaign and is optimistic of reaching the $600,000 level in the very near future. NOTIFICATION: Jim Williams, Executive Director Boys & Girls Club of Capistrano Valley 31371 El Camino Real San Juan Capistrano, CA 92675 Jim Sieger, Principal Marco Forster Middle School 25601 Camino Del Avion San Juan Capistrano, CA 92675 Ken Friess, Board Member Boys & Girls Club of Capistrano Valley 31371 El Camino Real San Juan Capistrano, CA 92675 Agenda Item -4- August 18, 1998 ALTERNATE ACTIONS: 1. Approval of staff recommendation. 2. Approval of staff recommendation with modifications. 3. Request additional information regarding the proposal and continue the item for additional discussion and consideration. RECOMMENDATION: It is recommended that the City Council approve the proposed Memorandum of Understanding between the City of San Juan Capistrano and the Boys & Girls Club of Capistrano Valley for the development of a proposed youth services facility to be located at the San Juan Capistrano Community Center. Respectfully submitted, Al King, Jr. Community Services Director AK:jtb Attachments c:-..%wpdocsU33Wccmou.ak