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HomeMy WebLinkAboutStaff Report 198-06TO: ATTN: FROM: DATE: SUBJECT: City of Palo Alto City Manager’s Report HONORABLE CITY COUNCIL POLICY AND SERVICES COMMITTEE CITY MANAGER DEPARTMENT: COMMUNITY SERVICES APRIL 26, 2006 CMR: 198:06 DIRECTION TO UPDATE PUBLIC/PRIVATE PARTNERSHIP POLICY RECOMMENDATION Staff requests that the Policy and Services Committee provide direction to staff to update the existing Public Private Partnership Policy (Attachment A) and return to Council for approval. BACKGROUND In 1994, Council approved a Public!Private Partnership policy that was intended to encourage the development of public/private partnerships between the public and local government. A public/private partnership is defined as cooperation between the City and private sector or nonprofit organizations in providing services, facilities, or capital projects for community benefit. There have been a number of recent public/private partnerships that have highly successful. The Friends of the Children’s Theatre conducted a fundraising campaign that culminated in the construction of the Magic Castle stage located at the Children’s Theatre. Not only did the Friends raise most of the required capital, they also managed the construction project by leasing the land from the City and returning it to the City when the project was complete. Through a partnership with TheatreWorks, the Community Theater was improved with new stage curtains, newly upholstered seating and the installation of an air conditioning system. TheatreWorks found the grant funding to make this project a reality. Through an agreement with the Friends of the Junior Museum and Zoo, improvements were made to the interior of a Junior Museum classroom facility without the use of City funds and City staff resources. Additionally, there are two recent major public/private partnership initiatives in process. One partnership is with the Art Center Foundation which is raising funds to replace antiquated electrical and HVAC systems and build a Children’s education wing at the Art Center. The other is with the Friends of the Junior Museum and Zoo, which have requested the formation of a partnership to rebuild the aging Junior Museum. DISCUSSION Staff is bringing this request to the Policy and Services Committee because the economic environment has greatly changed since the policy’s inception and staff now has a working CMR 198:06 Page 1 of 3 familiarity with the existing policy. A number of questions and concerns have been raised that staff believes merit discussion and incorporation in some form into the policy. Given the economic outlook, public-private partnerships may hold an even greater benefit to leverage increasingly scarce City resources. Having a clearly defined policy would enhance future opportunities and at the same time make the most efficient use of staff and community resources by filtering proposals and setting guidelines before extensive Council and staff time are utilized. Staff has identified questions and concerns and requests that the Policy and Services Committee provide comments and prior to preparing a policy amendment. 1.There are at least two ways in which public/private partnerships are initiated; the first, and the most prevalent, can arise when an organization is prepared to make a commitment of funds or provides in-kind services to improve an existing, or construct a new City facility. Some issues that may require policy clarification are: o At what funding percentage of the proposed project should the organization be prepared to commit before the proposal would be given consideration? o What measurement standards apply to an organization to assure success of the project? Areas of concern would be stability of the board of directors, experience in fundraising, sound management and fiscal history, etc? o Whether any portion of the private funding should be committed before the partnership can be formalized? o Should the organization submit a business plan detailing project justification, funding sources, proposed timelines, future maintenance costs, etc.? o How will project cost overruns be dealt with? Are costs shared equally or is it the responsibility of the requesting partner or the City? The second type of partnership can arise when the City actively seeks partnerships with the private sector to accomplish projects or programs. An example of this might be a project where the City has 80 percent of the required funding and seeks a partner who could provide pro bono services or funding to accomplish the project. One consideration is whether the City can offer benefits to the potential partner, for example, naming rights, exclusive use agreements, etc. 2. Many of these types of partnerships may have a direct impact to the Infrastructure Reserve. Groups perceive the Infrastructure fund as a viable way to "seed" a fundraising campaign. For instance, if an improvement project is presently funded in the Infrastructure Management Program for $800,000 to replace aging electrical systems, a group may suggest that those funds be allocated to a larger project that will not only accomplish the upgrade, but also make improvements requested by the user group. The questions are: o Is this an appropriate use of Infrastructure Management Program funds? o Does the City wish to limit the amount of Infrastructure Management Program funds available to a project, so the fund is not substantially drawn down, impacting future planned projects? 3.Should there be a process developed that will streamline public-private partnerships so that there are pre-determined methods to use pro-bono services or, if necessary, lease City facilities to the partner during construction periods. With the Policy and Services Committee’s direction and comments, staff will draft an updated policy and return to the Policy and Services Committee for further discussion and approval. CMR 198:06 Page 2 of 3 RESOURCE IMPACT Public/private partnerships can be beneficial by providing a way to leverage City funds, however careful consideration must be made to the use of the Infrastructure Management Fund, and future impacts on staff and maintenance resources. POLICY IMPLICATIONS This report envisions a change in City policy as described above. ENVIRONMENTAL REVIEW This recommendation is not a project under the California Environmental Quality Act. ATTACHMENTS Attachment A: Policy and Procedure 1-25, PUBLIC/PRIVATE PARTNERSHIP PREPARED BY: JAMES Community Services CITY MANAGER APPROVAL: EMILY HARRISON Assistant City Manager CMR 198:06 Page 3 of 3 POLICY AND PROCEDURES 1-25/MGR Revised: March 2003 PUBLIC/PRIVATE PARTNERSHIPS POLICY STATEMENT It is the policy of the City of Palo Alto to encourage the development of public/private partnerships for public benefit. A public/private partnership is defined as cooperation between the City and private sector or nonprofit organizations in providing services, facilities or other capital projects to the community. This policy and its implementing procedures were approved by the City Council on February 28, 1994. Public/private partnerships may take different forms. Two of the most common include: Cooperative partnerships: This approach assumes cooperation between the public and private or nonprofit sectors in order to achieve mutually shared objectives. Examples include construction of the expansion to the Children’s Theatre and the City’s relationships with the Senior Center and the Palo Alto Housing Corporation. ¯Inducements: In this approach, the City structures incentives that change the market environment in which the private sector operates in order to achieve social goals. An example would be the PARTNERS program in the Utilities Department. City Role in Partnership Formation The City has historically acted primarily as a passive recipient of proposals for public/private partnerships. It is the intent of this policy, however, to promote the active participation of the City in the formation of such partnerships. "Active participation" could include: ¯Facilitation of proposals through the City’s regulatory process (e.g. Downtown Childcare Center); ¯Solicitation of proposals for public/private ventures (e.g., Tower Well site, Chuck Thompson site); ¯Waiver of fees by the City Council for construction of facilities to be owned, or controlled, and operated by the City (e.g. Hoover Park Restroom, Rebuilding Together); ¯Use of facilities/subsidized rent (e.g., Cubberley). PROCEDURE Proposals for a public/private partnership opportunity are normally received by City staff from private sector or nonprofit organizations. They may also be referred by the City Council to staff for review and recommendation. Page 1 of 2 POLICY AND PROCEDURES 1-25/MGR Revised: March 2003 An important component for facilitating public/private partnerships is the ability of the City to react quickly and comprehensively to a proposal. Also of importance for some proposals is the impact of City processing fees. The following procedures establish a mechanism to obtain prompt and comprehensive initial City review of a proposal and consideration of requests for waiving City fees. Public/Private Committee A Public/Private Review Committee shall be appointed by the City Manager, with representation from all major City departments, as well as the City Attorney’s Office. As appropriate, staff from other departments who are involved in a public/private proposal may also participate on the Committee. The Committee shall be chaired by the Assistant City Manager. The Committee shall meet as required to review public/private proposals. Pros and cons of a proposal will be identified and discussed. A summary of each private or non-profit sector proposal will be forwarded to the City Council, accompanied by a recommendation from the City Manager to the City Council on whether the City should participate. The summary and recommendation to the City Council will be prepared whether or not the City staff support the proposal as a public/private partnership. Fee Waiver The Public/Private Committee may recommend, as part of its review of a proposal, that any normal City processing or use fees under the Municipal Fee Schedule, not including fees and charges levied by City of Palo Alto Utilities, be waived as a part of the City’s participation in appropriate public/private partnerships. Waiver of fees shall be by the City Council and limited to those fees associated with a construction or capital project which, upon its completion, results in a new or improved public facility, building or park, or some portion thereof, that will be solely owned or controlled by the City. In the event that only some portion of a construction or capital project will result in a new or improved City facility, building or park, or some portion thereof, then the City Council may only waive that portion of any associated fees directly relating to the construction, improvement or enhancement of the City facility, building or park. If appropriate, the summary and recommendation report to the City Council will include a recommendation on waiving fees, and the Council can approve or deny the waiver recommended by staff. NOTE.Questions and/or clarification of this policy should be directed to the Assistant City Manager. Page 2 of 2