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HomeMy WebLinkAbout1999-07-12 City CouncilTO: FROM: C ty City of Palo Alto Manager’s Report HONORABLE CITY COUNCIL 13 CITY MANAGER DEPARTMENT:CITY MANAGER’S OFFICE DATE: SUBJECT: JULY 12, 1999 CMR:276:99 TRANSMITTAL OF FEASIBILITY STUDY FOR A DOWNTOWN CHILD CARE CENTER AT RAMONA STREET AND CHANNING AVENUE AND APPROVAL TO SUBMIT A REQUEST FOR PROPOSALS TO SELECT A CENTER DEVELOPER AND OPERATOR REPORT IN BRIEF As part of the development agreement for the Palo Alto Medical Foundation (PAMF) Urban Lane Campus, the City has been provided with a 12,500 square foot parcel of land at Channing Avenue and Ramona Street for 35 years for the establishment of a child care center. A consultant study found that an economically viable center is feasible at this site and suggested a conceptual design and operating plan. The benefits of developing a child care center at this site include: addressing the shortage of care for infants, toddlers and preschoolers; facilitating the provision of a valued service to local businesses and residents; meeting Comprehensive Plan goals related to child care; and providing an important tool to assist the City in its efforts to recruit and retain qualified staff. Staff seeks to issue a Request For Proposals (RFP) to select one or more entities to develop and run the center. Depending .on responses to the RFP, the City may select one entity (to both build and operate the center) or two entities (one to develop the center and another to operate it). Contracts between the City and the center’s developer and operator would be carefully negotiated to ensure the implementation of quality child care. The contributions the City could bring to the implementation of the center include cost-free land and the services of an architectural design consultant and exempted fees to help the center’s developer through the City’s design review process. This staff report transmits the feasibility study and seeks Council’s approval to issue the RFP. CMR:276:99 Page 1 of 7 RECOMMENDATION Staff recommends that Council: 1) Approve the issuance of a Request for Proposals to select a developer/operator of a downtown child care center at Ramona Street and Channing Avenue. 2)Authorize the City Manager to enter into a land lease to provide the selected developer/operator with the property at Ramona Street and Channing Avenue, without cost, for 35 years. BACKGROUND The City of Palo Alto has a long history of commitment to child care. The City’s Office of Human Services provides citywide coordination of child-care related issues and promotes quality child care through staff support, funding, and partnerships with the community. Examples of the City’s commitment to child care include: a full-time child care and family services manager; administration of, and reduced rental rates for, on-site school age child care programs at the Palo Alto Unified School District’s 12 elementary school sites; funding to enable Palo Alto Community Child Care (PACCC) to provide subsidized comprehensive child care services to income-eligible families who live in Palo Alto; and maintenance and distribution of listings of licensed and accredited child care centers and family child care homes in Palo Alto. In addition, the City established the Child Care Advisory Committee (CCAC) in 1995. The mission of the CCAC, which is made up of local child care providers and community members, is to advise the City Manager on child care issues. The committee has explored a variety of topics, including land use policies, in its efforts to increase the supply of quality child care in Palo Alto. The City’s commitment to child care is clearly delineated in the recently adopted Comprehensive Plan. ’Under Goal C-3, which calls for "improved quality, quantity and affordability of social services, particularly for children, youth, seniors and people with disabilities," there are six policies that speak specifically to the issue of child care. Among these, Policy C-16 calls on the City to "identify existing or potential locations for child and/or senior care in public facilities and actively promote the establishment of such facilities." To support Goal C-3, the Implementation Plan of the Comprehensive Plan states the City’s intent to work with the CCAC to develop standards to assess the impact of development projects on the demand for child care. In addition, in 1992, a Child Care Tr~st Fund was created as a repository for financial contributions by developers and others toward child care in Palo Alto. DISCUSSION In 1991, the Palo Alto Medical Foundation (PAMF) made a significant contribution to the CMR:276:99 Page 2 of 7 City’s efforts to address child care needs. As part of the development agreement for its Urban Lane Campus, PAMF committed to lease a 12,500 square foot site to the City for 35 years, at the cost of one dollar per year, for the purpose of putting in place a child care center. This contribution has been incorporated into the South of Forest Area (SOFA) Coordinated Area Plan that will soon be reviewed by Council. The site, currently used for a private parking lot, is located at the comer of Channing Avenue and Ramona Street. Child Care Need in Palo Alto and the Downtown The need for additional child care capacity in Palo Alto is widely acknowledged. The Comprehensive Plan notes an increased demand for quality child care services in Palo Alto due to an increasing number of families with children and women in the workforce. The Comprehensive Plan further states, "As transportation and traffic issues demand more comprehensive solutions, the provision of child care close to homes and/or work places will emerge as one of the components of a multi-faceted program to reduce traffic congestion." The need for child care has been found to be particularly acute for infants, toddlers and preschool age children.. Local child care agencies report significant waiting lists for existing infant, toddler and preschool child care programs. As noted in the Comprehensive Plan, there was a waiting list in 1997 of over 1,000 children, most at the infant and preschool levels. It is hard to draw concrete conclusions from an absolute number such as this, given the difficulty that centers face in maintaining current, unduplicated waiting lists. Nonetheless, the existence of such lists clearly illustrates that demand exceeds capacity and highlights the challenges parents face in locating care. In fact, centers report that many parents sign up on waiting lists before their children are born, in anticipation of having difficulty finding a slot in the centers of their choice. A snap shot survey conducted by the PACCC in early 1997 found that the vacancy rate for infant and toddler care throughout the city was less than one half of one percent. At present, thei’e are approximately 2,425 child care slots in licensed centers for infants, toddlers and preschoolers. These slots are filled by Palo Alto residents and by children whose parent(s) work in Palo Alto. Many working parents with young children in child care prefer to use child care close to work, rather than in their home communities, so they can reach their children easily during the day. This issue has been identified as an important one for employees of the City of Palo Alto, many of whom face long commutes to work. In light of the City’s recent experience with staff turnover and the difficulty filling vacant positions, the City Manager talked with staff members in all departments to better understand their concerns. The availability of child care in close proximity to work was suggested as a worthwhile tool to enhance recruitment, retention, productivity and morale for City employees. While the number of young children, employed residents and jobs in Palo Alto have increased substantially in the 1990s, the number of child care slots for infants, toddlers and CMR:276:99 Page 3 of 7 preschool age children has remained relatively constant. Local child care agencies that operate infant, toddler and preschool care programs have been unable to expand to meet the demand due to physical constraints at existing center locations. The demand for infant, toddler and preschool care can be expected to continue as the number of both employed residents and jobs in Palo Alto continues to rise. The Santa Clara County Planning Office estimates that there were 36,900 employed residents and 90,260 jobs in Palo Alto in 1995. These figures are expected to climb throughout the next 20 years. By the year 2000 alone, the numbers of employed residents and jobs in Palo Alto are projected to be 39,400 (a 6.8 percent increase) and 97,990 (a 8.6 percent increase) respectively. While unmet child care needs exist throughout the city, child care capacity is particularly lacking in the downtown area. As noted in the South of Forest Avenue (SOFA) area planning process, there are no child care centers in the SOFA area and very few facilities serving the downtown in general. (See Attachment A.) As a result of development activity in the planning area, City planning staff estimate an additional 107 children will need child care. This will increase the demand on already-strained existing facilities. Consequently, the development of a child care center in the SOFA area was supported by the PAMF/SOFA Working Group. Feasibility. Study for Downtown Child Care Center Given the pressing need and broad support for child care in Palo Alto and the downtown area, City staffhired a consultant to explore the feasibility of establishing a child care center for infants, toddlers and preschoolers on the land provided in the PAMF development agreement. Information was gathered regarding the ways other municipalities have facilitated the provision of child care. These municipalities, included the cities of Thousand Oaks and Irvine, the City and County of San Francisco, the County of San Mateo and the Valley Transportation Authority. Support provided by these entities has included financing construction, providing the land and building at no cost, and subsidizing center operations. With input from local experts on the CCAC and the consultant’s extensive regional and national experience, a feasibility study was completed (see Attachment B). In the feasibility study, certain assumptions were made regarding staffing ratios, group size, parent fees and other factors to establish guidelines consistent with the City’s commitment to quality child care and the realities ofPalo Alto’s current child care market. Based on these assumptions, the study puts forth a conceptual design and operational plan for a high quality center serving 81 infants, toddlers, and preschoolers. The study finds that such a center could be economically viable, with a short start-up period in which expenses could be expected to exceed revenues. The center’s ability to operate in the black depends on a variety of factors, including; choices made by the center’s operator (e.g. staffing, fees); the size of payments required for financing costs to construct the center; and how quickly the center achieves full enrollment. The feasibility study maximizes the space for children, and CMR:276:99 Page 4 of 7 hence the potential for economic viability, by placing administrative offices upstairs and establishing off-site parking. Options for off-site parking are currently being explored in the context of other development agreements. Request for Proposals to Select a Child Care Center Developer/Operator Staff does not foresee the City seeking to enter the business of building child care facilities or being the direct provider of child care services. There are several important Capital Improvement Program (CIP) projects that require the focus of City staff and limited CIP funds. However, it is consistent with the City’s past practice and the commitments made in the Comprehensive Plan, for the City to facilitate the provision of child care. The City is in a position to use its resources to add value and leverage the resources of others to enhance child care services in Palo Alto and transform PAMF’s contribution of land into a downtown child care center. Staff requests Council approval to issue an RFP to select one or more entities to develop and operate a child care center at Ramona Street and Channing Avenue. (A scope of services for this RFP is included in Attachment C.) Depending on the responses to this RFP, the City may select one entity to both build and operate the center or two entities: one to build the center and another to operate it. Once the entity (or entities) have been selected, the City will explore and formalize the terms of the partnership, which might include the items summarized below. Potential Partnership Terms with the Selected Developer The City could explore a variety of contributions to facilitate construction of a high quality child care center. These benefits might include a no-cost land lease for 35 years and the services of an architectural design consultant and fee exemptions to help the center’s developer through the City design review process. The role of this consultant would be to facilitate neighborhood issues and internal review, thus increasing effectiveness and saving time for the developer.. Providing such assistance will enable staffto ensure that the center’s design is conducive to high quality child care and is consistent with community architectural design expectations. This type of assistance is consistent with the public/private partnership policy adopted by Council in February 1994. Responsibilities of the center’s developer could include: ¯Financing and managing the construction ¯Agreeing to a certain construction timeline and cost °Adhering to quality standards in the design and construction resulting in a high quality child care center ¯Providing a warranty against major defects ¯If the developer and operator are not the same entity, specifying reasonable lease payment terms for the child care operator (i.e. to enable the repayment of construction financing with a reasonable return, while not endangering the economic viability of the center operator) CMR:276:99 Page 5 of 7 Potential Partnership Terms with the Selected Operator Expectations for the child care center operator could include: .Planning and managing the center autonomously and without subsidy ¯Providing ongoing services and demonstrating high quality care as a condition of contract renewal Giving priority enrollment to the child~’en of City employees for a certain number of child care slots ¯If the operator and developer are not the same entity, making timely lease payments (to enable the developer to cover the repayment of construction financing) ALTERNATIVES TO STAFF RECOMMENDATION As an alternative to issuing an RFP to select a center developer/operator, the City could chose to construct and/or operate the center itself. Such an option would strongly demonstrate the City’s commitment to child care and would increase the City’s ability to directly ensure the successful implementation of the center. This option, however, would require an ongoing commitment of capital and operating expense and would represent an expansion of the City’s current programmatic activities. The development of the center would compete for limited CIP funds and staff attention that are otherwise required to address citywide infrastructure priorities. Staff feels it would be more efficient and effective for the City to partner with others to leverage outside resources and expertise. RESOURCE IMPACT It is anticipated that the City’s negotiations with the selected center developerand operator will identify City resources that might be leveraged to help facilitate the implementation of the center. Staff expects that the City will provide a land lease at no.cost to the developer of the center. Since the land has been provided by PAMF for 35 years for the purpose of a child care center, it does not represent a real cost to the City to provide the land without expectation of payment. Staff also expects that it will be valuable to the center developer, and to the City’s interest in insuring the construction of a quality child care center consistent with Palo Alto’s design standards, to provide the developer with assistance in navigating the City’s design review process. This assistance, possibly including consultant services and the exemption from City fees, is estimated to cost $30,000 and will likely be funded through the City’s existing Child Care Trust Fund. Staff estimates that the annual cost to be incurred by the center’s operator to repay debt financing incurred by the center’s developer will be approximately $200,000. The ultimate size of this cost may be higher or lower and will depend on many factors. These factors include: the total cost incurred by the developer to construct the center; the interest rate at which construction financing is issued; and the return and repayment period required by the CMR:276:99 Page 6 of 7 developer. Under the staff recommendation, this annual cost is to be recouped through the center’s operating revenue. Given the narrow margins faced by most child care operations, staff will conduct additional research to identify possible ways to lower this cost, if appropriate, to ensure that the high quality of care expected by the City is not compromised. POLICY IMPLICATIONS Facilitating the provision of child care in Palo Alto is consistent with existing City policy. TIMELINE Upon receiving Council approval, staff will issue the RFP, hold a bidder’s conference and review proposals, with the goal of selecting a developer and operator in.late 1999. ENVIRONMENTAL REVIEW Issuing an RFP is not a project under the California Environmental Quality Act (CEQA). The appropriate environmental review will be conducted before any building plan is approved. ATTACHMENTS A. Map of Child Care Centers in Palo Alto B. Child Care Feasibility Study C. Draft Scope of Work for an RFP to Develop/Operate a Child Care Center PREPARED BY: Audrey Seymour, Senior Executive Assistant CITY MANAGER APPROVAL: cc: Child Care Advisory Committee HARRISON Assistant City Manager CMR:276:99 Page 7 of 7 Attachment A r o0 O~ 0 ) Attachment B REPORT TO CITY OF PALO ALTO ON THE FEA~SABILITY OF DEVELOPING A CHILD CARE CENTER AT RAMONA AND CHANNING SUBMITTED BY INTERNATIONAL CHILD RESOURCE INSTITUTE 1581 LEROY AVENUE BERKELEY, CA 94708 TABLE OF CONTENTS Introduction 1-2 Findings 3 Conceptual Design Review 4-7 Financial Review A. Site Costs B. Start Up Costs C. Ongoing Costs Start Up Cost Review Year Two and Beyond Review 8-9 10 11-13 14-16 Other Considerations A. Parking Issues B. Planning and Zoning Issues C. Funding and Financing Considerations 17 18 19-20 INTRODUCTION The International Child Resource Institute was contracted by the City of Palo Alto to develop conceptual designs and a financial review of the feasibility of building and operating a child care facility to be located on a lot at the comer of Ramona and Channing in Palo Alto. The considerations to be reviewed were: a. Whether a child care center for 75 or more children could be located on the site b. What the cost of constructing a building on the site would be c. What the cost of operating a center on the site would be d. In what manner such a facility could be financed e. What special considerations were involved in the development of such a prograrr~ ASSUMPTIONS The following assumptions were made in the development of the fiscal and programmatic review of child care center feasibility: Staffing A. Start Up- During year one of center operation, the staff’would include: ¯a director who is involved full time in program administration o an assistant director who is involved half time in the classroom an administrative assistant who works full time and will collaborate with the director and be involved in management, record keeping, and communications ¯5 lead teachers who are involved full time in program activities ¯5 additional staffwho are involved full time in program activities to maintain designated adult to child ratios. one additional half time floating staffwho assures appropriate ratios at all times B. During the on going operation of the center, the staffwould include: ¯a director who is involved full time in program administration ¯an assistant director who is involved half time in the classroom ¯an administrative assistant who works full time and will collaborate with the director and be involved in management, record keeping, and communications .6 lead teachers who are involved full time in program activities ~9 additional staffwho are involved full time in program activities ¯one additional half time floating staffwho assures appropriate ratios at all times C.In both the start up phase and for year two and beyond, an administrative allocation fee was based upon the amount which would be charged by a child care operator for bookkeeping, payroll, administrative oversite, and other related costs. o o Fee Structure/Program Income From information provided by similarly situated local child care centers in the City of Palo Alto, the average cost for the size and age configuration of the Child Care Center was set at $1000.00 per child per month. This figure represents a projected cost of care, which would also be reasonable when a center of this type opens in the future. Staff Benefits A. Medical, dentaL, and life insurance coverage were calculated at $200 per month per employee, with 13.5 employees during the start up phase, and 18.5 employees for year two and beyond. B. Retirement benefits were calculated by taking 2% of the staff salary including substitute salary. It should be noted that this approach to retirement funding is practiced by other local child care providers. C. A child care fee reduction for parents who are employees of the child care center is provided in this budget. The reduction of 40% was included with a usage level by parent employees estimated at two children during the start up phase, and three children for year two and beyond. Budgetary Assumptions In both the year one start up and year two and beyond budgets and income and expenditure reviews, the following assumptions are made: Income is reviewed at both the 90% and 100% enrollment levels. Expenditures are maintained to assure statTmg at 100% levels even when enrollment is at 90%. Staffing levels in the budget detail are provided on a staggered basis (1.0) or an augmented basis (1.1). On a staggered basis, staffbegin their shifts as more children arrive, so that appropriate ratios are maintained at all times. On an augmented basis, staffare available for the full child care day, even if their presence causes the adult to child ratio to be better than the ratio established by the Center. 2 FINDINGS Based upon a site and fiscal review of the feasibility of establishing a child care center at the comer of Ramona and Channing in Palo Alto, the following findings can be made: A.It is feasible to develop a two story child care center at the site for 81 infant, toddler, and preschool age children. This conclusion is based upon the assumption that there would be no on-site parking. Drop-off parking and space for one special care parking (for emergency doctor trips) at the comer of Ramona and Channing will be developed. All administrative activities would be carried out on the second floor of the Center. B. A center for an average of 53 children could be effectively established during the first year start up phase of child care center operation. During the first year, the Center would operate at a deficit, given the high staff salary and benefit package. Depending upon staff salaries, fee structure, and staff coverage patterns, the Center could achieve financial equilibrium after one year of program operation (see Start Up Cost Review). C. A center for 81 children could be effectively operated after the Start Up phase is completed and by year two of program implementation. After the Center is fully under way, the surplus could be utilized to repay loans, which may be procured in order to construct the facility at the Ramona and Channing location (See Year Two and Beyond Review). D. There are a variety of potential funding sources which would require careful exploration and proposal development in order to procure financing for the building of the Center (see Funding and Financing Section). E.After funding is procured, a child care center at the Ramona and Charming site could be fully developed within a one year period. CONCEPTUAL DESIGN REVIEW DESIGN STATEMENT This design demonstrates the feas~ility of a child care center on this site. It is intended to accommodate a program for a maximum of 81 children with administrative facilities on the second floor. A child drop-off area will be provided along Ramona Street and Channing Avenue. The placement of administrative functions on the second floor allows for the largest number of children in the program and more extensive administrative facilities than would be found in a one-story scheme. The two story layout does require additional space for stairways and an elevator, which a typical one-story center would not need. Both the size of the program and the extent of the administrative facilities can be scaled down to change the character of the program and the cost of building construction. This design is based on a stringent interpretation of the current California Building Code. It is possible that a dialogue with the local building official may lead to some reduction in requirements. Exterior elevations are included in order to show the anticipated mass of the building and the possibility of expressing it as a group of smaller components. These are scaled to the character of the neighborhood, the administrative draft plan for the neighborhood, and the child-oriented nature of the program. Z Z Z Z,< Z z / / ! FINANCIAL REVIEW SITE COSTS - BUILDING AND EQUIPMENT BUILDING ESTIMATED COSTS Child Care Center Palo Alto, California ICRI/Harley E. Jensen Architect AIA The following costs are based upon a feasibility study: Building area:7901 s.f. 984 s.f. Elevator: Covered area: 5,649 s.f. 1/3 in concrete paving @$5.50/s.£ Miscellaneous conc. Curbs 2/3 in grass, sand, groundcover, bark @$2.50/s.f. Trees 25 @$150 Fencing 500 1.f. @$25 Play Structures 4 @$15,000 Water feature Benches 5 @$500 Landscaped area: Low @$130/s.£ $1,027,130 $35,000 @$60/s.£ $59,040 $10,253 $2,500 $9,462 $3,75O $12,500 $60,000 $5,0OO $2,500 High @$160/s.£ $1,264,160 $35,0O0 @$8O/s.£ $78,720 Drainage 350 1.f. @$20 $7,000 Catch basins $4,000 Signage $2,500 Storage shed $10,000 Garbage enclosure $5,000 Miscellaneous $20,000 Total landscaping $154,465 $175,000 Total budget (not including design fees, public sidewalk landscaping~ city fees, etc.): $1,275,635 $1,552,880 Low High EQUIPMENT - START UP COSTS The following are provided as a summary review of start up costs for a child care center serving 81 children: Consumables Art and daily room supplies Paper, plastic, and food supplies Office supplies Consumable toys, games, and educational materials Housekeeping supplies First aid/health supplies Subtotal 10,000 5,000 2,500 6,000 2,500 1 000 27,000 Non-consumable Educational/development equipment Toys, games, and manipulatives Chairs, tables, and shelving Indoor play lofts Kitchen equipment Staff lounge furnishings Office furniture Housekeeping equipment Computer equipment Subtotal TOTAL 6,000 25,000 35,000 20,000 5,000 5,000 5,000 2,000 3,’000 106,000 133,000 10 Estimated Operating Budget - Start Up - Year One at $1000 average fee per child Palo Alto Child Care Center Estimated Income Monthly Rate: Number of children 53 @$1000.00 per month (average fee per child) Other income to be used to meet operating costs Total estimated income Estimated Operating Cost Componsation & Temp. Labor Salary Enrollment at 100% 363,024 $636,000.00 Enrollment at 90% Substitute Payroll Taxes Administrative Allocation Insurance medical, dental and life (at $200 per month with 13 employees for 12 months) Retirement (2% of salaries) Insurance workers comp 8OOO 44523 37,620 31200 7420 7OO0 Total Care and Services Meal, snack Indoor and outdoor equipment Art supplies First aid supplies Transportation/Field trip Total 498,787 19,875 12,OO0 7,200 1,200 3,600 43,875 Facility Rent Insurance-property damage and liability Taxes and Fees Repair & maint.-building Repair & maint.-equipment Security Alarm services- Janitorial services Janitorial supplies Utilities-Electric/Gas Water Garbage Phone Office supplies 0 6000 0 6O00 5OOO 2400 15000 1200 5OOO 1200 2400 240O 24OO Total Other Expenses Advertising Staff Development and Education/Tuition Reimbursement Staff Child Care Fee Reduction (2 children @40% reduction) Miscellaneous Total Total Expenses Total Income (Loss) $572,400.00 49000 1200 24OO 96OO 1200 14400 606,062 29,938 43,662 12 ~00o0~ ~00 Z Zi11 Estimated Operating Budget - Year Two and Beyond II at $1000 average fee per child Palo Alto Child Care Center Estimated Income Monthly Rate: Number of children 81 @$1000.00 per month (average fee per child) Other income to be used to meet operating costs Total estimated income Estimated Operating Cost Compensation & Temp. Labor Salary Substitute Payroll Taxes Administrative Allocation Insurance medical, dental and life (at $200 per month with 18 employees for 12 months) Retirement (2% of salaries) Insurance workers comp Total Care and Services Meal, snack Indoor and outdoor equipment Art supplies First aid supplies Transportation/Field tdp Total Facility Rent Insurance-property damage and liability Taxes and Fees Repair & maint.-building Repair & maint.-equipment Secudty Alarm services Janitorial services Janitorial supplies Utilities-Electric/Gas Water Garbage Phone Office supplies Total Other Expenses Advertising Staff Development and Education/Tuition Reimbursement Staff Child Care Fee Reduction (3 children @40% reduction) Miscellaneous Total Total Expenses Total Income (Loss) Enrollment Enrollment at 100% $972,000.00 at 90% 480,752 12000 59,130 37,620 43,200 9855 9,400 651,957 28,875 12,000 7,200 1,200 3,600 52,875 102,368 0 6000 0 6000 5000 240O 15000 1200 5000 1200 2400 2400 2400 49000 1200 1800 1~400 1200 18600 772,432 199,568 $874,800.00 15 o~ 0r- ,# OTHER CONSIDERATIONS PARKING ISSUES A series of parking concerns should be addressed before proceeding with the development of the site at the comer of Ramona and Channing. Since the location is too small to accommodate on-site parking and the requisite number of children, some creative solutions must be sought. At issue are such considerations as the need for emergency parking for at least one vehicle in the designated drop-offarea and the development of a staff-parking plan. Since a city owned parking lot is nearby, and a church parking lot is within two blocks, either could adequately serve staff parking needs. However, dispensation must be made for handicapped staff and for foul weather. The construction of an underground parking lot was investigated as a possible alternative to the issues ofparking at the site. Estimated cost for an underground parking lot would be between $250,000 to 300,000. Given the great cost to build such a structure (especially as compared to all other site development costs), it was concluded that underground parking would be economically unfeasible, and consequently not an adequate solution to the parking problem. A bussing or vanpool program has been discussed in relation to the site. This would require a separate study of the costs and considerations related to pick-up and drop-off from the staff parking area. This report does not include such cost information on parking alternatives. The City ofPalo Alto,-through its planning staff, has indicated a willingness to work with the child care planning group to alleviate the parking concerns. Any further development of a child care site at this location must have the full cooperation and involvement of the City and local neighborhood groups who are concerned about parking. 17 PLANNING AND ZONING The City of Palo Alto Planning Department will play a critical role in the final determination of the feasibility of establishing a child care~nter at the Ramona and Channing site. The ability to develop the site without on-site parking and the procurement of a drop-off zone with one special space (for emergency doctor visits from the center) will have a substantial impact on successful, cost-effective program operation. Parking and staff transportation concerns must be addressed through city planning and community dialogue. In regard to clearances from the State Department of Social Services, Community Care Licensing Division, there should be no licensing impediments in the development or operation of the Center. The conceptual design calls for more than sufficient interior space per child and sufficient exterior space per child. All other parts of the conceptual design comply with or exceed state licensing standards. The Child Care Center would be developed as part of the neighborhood development plan established by the City of Palo Alto in conjunction with its planning staff. This use appears compatible with the overall neighborhood plan. 18 FUNDING AND FINANCING CONSIDERATIONS There are several existing mechanisms which can be reviewed in the development of sufficient funding to build and initiate operation of a viable child care center at the Ramona and Channing location: State Department of Education, Child Development Division With the advent of the new federal guidelines for public assistance, known as TANF (Temporary Assistance to Needy Families), a series ofnew funding mechanisms have been developed (or are in process). These mechanisms include a no-interest revolving loan fired, funding for the purchase of relocatable buildingS, and fimding for expansion of infant, toddler, preschool and school-age child care programs. Each funding pool is announced by a Management Bulletin published by the California Department of Education- Child Youth and Family Services Branch. During the next year it is estimated that at least 200 million new dollars will be available through various State Department of Education Child Care funding initiatives. Most of these initiatives require that the majority of families served earn less than 75 % of the State median income. This restriction may preclude a number of Palo Alto families from participating in such a center. However, under certain circumstances the State may be willing to review proposals which provide for a greater blending of family income levels. Bo Build To Suit With Lease Back Option There is a child care real estate specialist with access to a builder who is willing to build child care center sites on a turn-key basis, in exchange for repayment through long term leasehold. This builder will construct the center using architectural plans approved by the City or incorporate the architectural package as part of their costs. The builder can provide a proposal at the request of the City. This approach may be feasible if the Center is able to operate at the surplus level indicated in the year two and beyond scenarios of the Financial Analysis cost section of this report. C.Agreements With Local Corporations To Sponsor The Center Partial to full funding of Center development may be procured in exchange for child care spaces to be made available to local corporations for employment ¯ related child care. Corporations could be given a specific fee proposal related to the number of spaces they would "purchase" in the center. Costs could be shared by more than one corporate entity in the development and operation of the Center. It is unlikely that one corporation may be willing to fund the entire cost of the development of the Center. However, numerous corporations throughout California have expended in excess of one million dollars on building and operating child care facilities. 19 D.Foundation Funding Various foundations have supported the development of community based child care facilities. The following are some foundations that have provided funding for child care center development in the Palo Alto area: S. H. Coweil Foundation- has provided extensive "brick and mortar" funding for child care centers, especially when open to lower income children. Morris Stulsafl Foundation- has supported child care related site funding in a wide variety ofmodalities, including work family programs, mixed age group child care, child care with enhanced family services, and numerous other approaches. Haas Foundations- including Miriam and Walter and Evelyn and Peter have funded a wide variety of child care sites and programs. San Francisco Foundation- has funded equipment purchase related to innovated site development. Koret Foundation- has funded some child care centers where the center (or parts thereof) can be named for the Koret family. Packard Foundation- continues to fund some child care centers in Santa Clara County where new theories and approaches can be tested. Kresge Foundation- is particularly interested in providing matching money when well-conceived fund raising campaigns for buildings are developed; This funder will often match other monies on a dollar for dollar basis. Conclusion: An active fund drive which could combine efforts to submit proposals to a number of the above funders may serve to assure the procurement of sufficient funding or financing for the development of the Center. 20 Attachment C DRAFT SCOPE OF WORK OF A REQUEST FOR PROPOSALS To Develop and/or Operate a Child Care Center at the Corner of Ramona Street and Channing Avenue in Palo Alto, California A. Introduction Through a development agreement, the City of Palo Alto has been provided with land for an approximately 35 year term at the comer of Ramona Street and Channing Avenue for the purpose of developing a child care center. The City is seeking to partner with one or more entities to develop and operate on this site a high quality, developmentally appropriate infant, toddler and preschool child care center to meet the needs of those who work and/or live in Palo Alto. The City will provide the land to be developed and will explore other methods of assisting the developer to assure the timely and efficient construction of the site. An outside consulting group conducted a feasibility study to determine the size of an economically viable child care facility and develop conceptual drawings for a center to be located at the site. The site is currently used as a private parking lot. It was concluded that a child care center for up to 81 children could be developed at the site, with administrative facilities provided on a second floor and off site parking. These specifications were determined to help ensure an economically viable center that would meet the City’s high standards and strong commitment to quality child care and maximize the number of children to be served. The enclosed Feasibility Study outlines an option for the size and configuration of the site. Responders may choose to present different options in their proposals. This Request for Proposal (RFP) requests responses for both the development and operation of the child care facility. Interested parties may submit either or both of the proposal packages requested below in Section D. B. Background The City of Palo Alto has a long history of supporting child care through public/private partnerships and involvement with the community. This support for child care comes in the following ways: Partnership with Non-Profit and Community Agencies The City provides approximately $400,000 annually for child care subsidies to income- eligible Palo Alto residents through a contract with a non-profit child care agency. The City provides this agency with rent-free space for its administrative offices; two of its child care centers are located on City-owned property. Page Partnership with Palo Alto Unified School Districtfor Provision of School Age Child Care Through a partnership with the Palo Alto Unified School District (PAUSD), the City administers after-school child care programs at each of Palo Alto’s 12 elementary school sites. PAUSD leases space at each elementary school site to the City which then sublets the space to a licensed and accredited child care provider at a reduced rental rate to ensure that the fees charged to parents remain affordable. These on-site school age programs currently serve 876 children. Citizens" Advisory Committee for Child Care The City of Palo Alto has a Child Care Advisory Committee which advises the City Manager on issues related to child care. This committee, comprised of local child care providers, parents, and community members, works to propose creative solutions to the current shortage of quality child care slots through land use policies and agreements with local developers. Full Time Permanent Position for Child Care Coordination Since 1989, the City has funded a permanent full-time coordinator to manage the City’s child care-related programs. In addition to areas described above, the child care coordinator also represents Palo Alto on county-wide issues through participation on the Santa Clara County Child Care Local Planning Council and the Silicon Valley Vision 2000 Initiative. C.Terms of Partnership The City seeks to enter into a partnership with one or more entities to both develop and ultimately to operate the center. Depending on the responses to this RFP, the City may select one entity (to both build and operate the center) or two entities (one to build the center and the other to operate it). Once the entity (or entities) has been selected, the City will explore and formalize the terms of the partnership, which might include the items reviewed below. 1.Potential Partnership Terms with the Selected Developer The City could explore a variety of ways in which to facilitate construction of a high quality child care center. In addition to a no-cost land lease for approximately 35 years, the City could also provide the services of an architectural design consultant and fee exemptions to help the center’s developer through the City’s design review process. Expectations for the developer include: Financing and managing the construction o Agreeing to a certain construction timeline and cost Page 2 Adhering to quality standards and best management practices in the center’s design and construction that are conducive to the provision of high quality child care Providing a warranty against major defects and the agreement to make repairs of same within a specified period of occupancy If the developer and operator are not the same entity, specifying reasonable lease payment terms required of the child care operator (i.e. to enable a repayment of the construction financing with a reasonable return on investment while not endangering the economic viability of the center operator) 2.Potential Partnership Terms with the Selected Operator Expectations for the child care operator include: o Planning and managing the center autonomously and without subsidy o Providing ongoing services and demonstrating high quality care as a condition of contract renewal If the operator and developer are not the same entity, making timely lease payments (to enable the developer to cover the repayment of construction financing) ~Giving priority enrollment to the children of City employees for a certain number of child care slots D. Submittal Requirements All applicants must submit the requirements listed in D 1. Applicants wishing to apply to develop AND operate the center must submit D2 AND D3. Applicants who wish to apply to develop the center only, but not operate it, must submit, section D2. Applicants who wish to apply to operate the center only, but not develop it, must submit D3. 1. Submittal of Information for All Applicants All applicants must submit the following information: a) Name, address, and corporate status of your organization or business b) History and background of your organization c) Description of current services or operations of your organization d) Complete audited financials statements for the two years prior to submittal of response to this RFP prepared by a Certified Public Accountant. Include a balance sheet, income statement and complete Notes to the Financial Statements. e) Evidence of required insurance coverage (Part III, Form 650) Pa~e 3 2. Submittal of a Site Development Proposal For the submittal of a site development proposal please provide the following information: a) Information on previous child care center development projects (if applicable). b) Description of how you will finance the construction costs of the project. If applicable, please include the term of repayment and annual repayment amount you would expect in recouping construction costs. c) Information on your architectural planning capabilities and your ability to design a child care center at standards which will enable staff ratios and group size that contribute to a high quality, developmentally appropriate program which meets Palo Alto’s needs. d) A complete projected site development budget, including design, construction, construction management, landscaping and equipment for the center. This projection may be based on the conceptual design provided in the feasibility study or your own design for the site. If you are offering a different design approach, please indicate your assumptions regarding design and construction and how these assumptions differ from those in the feasibility study. e) ’ Information on your work with other cities or counties in the development of non- residential buildings or sites (if applicable). f) Timeline for the development and construction of the child care center. g) Three references from similar or related development projects, including contact name, address and telephone number. h) What other types of assistance from the City would be helpful. i) Any other information which you would deem to be helpful to the City in making its selection. D3. Submittal of Child Care Operation Proposal For the submittal of a child care operation proposal please provide the following information: a) Information on previous and current child care center operations. b) Information on your indoor and outdoor child care space planning capabilities and information that demonstrates how space planning will allow for appropriate adult to child ratios in each room and each area at all times. c) A complete projected Proforma Income Statement for the first year (start up) and first three years of operations. The Proforma Income Statement must include an estimated annual expense to be paid to the center’s developer to cover costs related to financing the construction of the facility. Please use $200,000 as an estimate of this annual Pate 4 expense. Please note that the actual expense is yet to be determined. It could be higher or lower and will depend on the cost of construction and related expenses incurred by the developer and the repayment requirements established by the developer. d) Information on your work with other cities or counties in the operation of child care centers (if applicable). e) The child development approach and curriculum which your program offers. f) The adult-to-child ratio for infants, toddlers, transitional age (2 to 3 years) and .preschool children. g) Your willingness to develop hours of operation that meet the needs of Palo Alto parents. h) Your proposed organizational structure for this program including information on staffing patterns in terms of maintaining adult to child ratios which promote high child care quality during the entire day. i) Information on employee titles, qualifications, salaries and benefits for each position, preferably in chart form. j) Suggested parent fee structure of program. k) Special services offered in the proposed program (i.e. child psychologist, speech therapist and other resources to enrich the program). 1) Your approaches to the following: ¯Behavior management ¯Nutrition (describe meal plans and how you will deliver) ¯Early childhood education and development ¯Staff-child interaction ¯Parent involvement ¯Children’s health ¯I11 child policy ¯Safety and.security of children ¯Parent visitation policies ¯Children with physical and other disabilities-knowledge of ADA requirements m) Current staff training and development plan, and what staff recruitment efforts you will undertake to ensure the effective and timely initiation of this center. n) A timeline for the start-up and implementation of this child care center. o) Qualifications of the staff who will be involved in administering the program. Is your group willing to incorporate City input into the hiring of a site director for the child care center? p) Description of your program evaluation and quality control strategies. Indicate what instruments or evaluation scales you use to assure child care program quality. q) Description of your financial strategy and indicate how you expect to finance your proposed program (e.g. parent fees, corporate sponsorships, etc.) Pa~e 5 r) Description of your ability to offer competitive or lower than market rates and special considerations to low-income families through, for example, subsidies, scholarships, government funds that you might bring to the program, sliding scales etc. s) Three references from similar or related child care operation projects, including name address and telephone number. t) What other types of assistance from the City of Palo Alto might be useful. u) Any other information which you feel would be helpful to the City in making a decision on the most appropriate child care provider. E. Proposal Evaluation Criteria Proposals will be evaluated using the following criteria: ¯Experience and qualifications of the organization ¯Financial stability of the organization ¯Budget and timeline for the center construction and/or operation ¯Ability to establish a l~igh quality design and/or operating plan ¯Knowledge of the environment for development and/or child operation in Palo Alto Completeness in responding to submittal requirements care center F. Timeline The timeline for selection of a child care facility developer and operator is as follows: July 8 July 28 July 30 August 13 September Sept.-Nov. Issue RFP Bidder’s Conference, 10:00 a.m. - 12:00 noon. (City of Palo Alto, 250 Hamilton Avenue, Palo Alto, Council Conference Room, First floor) Mail written responses to bidder’s questions Proposals due Select child care developer/operator Contract negotiation/Council approval DEADLINE FOR PROPOSAL SUBMISSION August 13, 1999 by 3:00 p.m. City of Palo Alto Purchasing and Contract Administration City Hall, First Floor 250 Hamilton Avenue, Palo Alto or mail to: P.O. Box 10250 Palo Alto, CA 94303 Page 6 Go Contact If you have questions regarding this RFP, please contact: Audrey Seymour, City of Palo Alto, City Manager’s Office, (650)329-2512. Paste 7