Item No. 11
Town of Atherton
CITY COUNCIL STAFF REPORT – REGULAR AGENDA
TO: HONORABLE MAYOR AND CITY COUNCIL
GEORGE RODERICKS, CITY MANAGER
FROM: ROBERT OVADIA, PUBLIC WORKS DIRECTOR
DATE: JULY 17, 2024
SUBJECT: CONSIDERATION OF KNOX PLAYSCHOOL LEASE
AMENDMENT
RECOMMENDATION
It is recommended that the Council consider an amendment to the current lease with Knox Playschools, Inc., adjusting payable rent and extending the lease term through August 31, 2025, and two additional one-year renewal options with associated payable rent adjustments.
BACKGROUND
Knox Playschools Incorporated operates a playschool in Holbrook-Palmer Park in facilities leased from the Town. The current lease was initially executed in 2001 and has been amended eleven (11) times, most recently in August 2024.
Amendment No. 11, approved by the City Council in July 2023, extended the lease to the Knox Playschool by one year with a rental amount based on enrollment. The amendment is coming to an end, expiring August 30, 2024.
Knox has advised that while they are no longer affected by Covid restrictions, enrollment at Playschool continues to be a challenge due to a variety of factors including: a reduced birth rate since 2020, young families moving out of the area, and most 4-year-olds attending transitional kindergarten (TK) at local public schools.
The Playschool has been adapting its program offerings in an attempt to attract more families. For the 2023-24 school year, they added extended care from 2:00- 5:00 pm, Mon-Thurs, to make it a nearly full-time program for preschoolers. They also added a 2 morning/week class (Tuesdays and Thursdays from 8:30-12:00) for the 2024-25 school year for those families who want a part time program.
Knox Playschools appreciates the support previously provided by the Council and is requesting Knox Playschool Lease Amendment
JULY 17, 2024
similar consideration, continuing the linkage between the rental rates and enrollment, as were approved in the most recent lease amendments.
ANALYSIS
The current lease provides for payable rent based on school enrollment as follows:
• $125 per student per month, both during the academic year (September 1, 2023, through May 31, 2024), and the summer term (June 1, 2024, through August 30, 2024).
This was increased from $100 per student per month during the academic year (September 1, 2022, through May 31, 2023) and adjusted from $134 per student per month during the summer term (June 1, 2023, through August 30, 2023).
Knox Playschools is proposing an increase to payable rent from $125 per student per month to $135 per student per month for the September 1, 2024, August 30, 2025, lease extension. **Estimated revenue during the academic year (September 1, 2024 through June 30, 2025): 46 children for school year = $6210/month and during the summer camp months (July 1, 2024 through August 31, 2024) 32 children for summer = $4320/month
If the two 1-year options are approved by the Council, Knox Playschools is proposing an annual increase to payable rent of $10 per student per month each year. This would result in payable rent as follows:
• $145 per student per month, both during the academic year (September 1, 2025, through May 31, 2026), and the summer term (June 1, 2026, through August 30, 2026). • $155 per student per month, both during the academic year (September 1, 2026, through May 31, 2027), and the summer term (June 1, 2027, through August 30, 2027).
Knox Playschools is also asking to maintain termination cause approved in the most recent amendments, which allows for termination with a 30-day notice.
FISCAL IMPACT
Current enrollment estimates are 46 students per month during the upcoming academic year, and approximately 32 students per month during the summer term. The payable rent for the current lease year has been approximately $5,000 per month during the academic year and $4,000 per month during the summer term. The proposed rent for the lease extension, would be approximately $6,210 per month during the academic year and $4,320 per month during the summer term, a net increase of approximately $11,000 for the year, inclusive of the anticipated enrollment increases during the academic year.
GOAL ALIGNMENT
This Report and its contents are in alignment with the following Council Policy Goals:
Knox Playschool Lease Amendment
JULY 17, 2024
• Goal Area A – Maintain Fiscal Responsibility
• Goal Area B – Preserve Small Town Character and Quality of Life
POLICY FOCUS
Knox Playschool has been an asset to the Town. Susan has rented the Playschool for 26 years and the proposed rent adjustments would allow Susan to rent the facilities in the park for another year (or three years if the two 1-year options are approved).
PUBLIC NOTICE
Public notification was achieved by posting the agenda, with this agenda item being listed, at least 72 hours prior to the meeting in print and electronically. Information about the project is also disseminated via the Town’s electronic News Flash and Atherton Online. There are approximately 1,200 subscribers to the Town’s electronic News Flash publications. Subscribers include residents as well as stakeholders –to include, but be not limited to, media outlets, school districts, Menlo Park Fire Protection District, service provides (water, power, and sewer), and regional elected officials.
COMMISSION/COMMITTEE FEEDBACK/REFERRAL
This item has not been before a Town Committee or Commission
ATTACHMENTS
1. Knox Playschools Request Letter