Cotati City Council
Agenda Staff Report
Item type: REGULAR AGENDA (ACTION)
To: City Council
Subject: City of Cotati License Agreement for Use of the Cotati Veterans Building Facilities
Date: June 27, 2023
Written by: Ashley Wilson, Recreation Manager
Recommendation
It is recommended that the City Council approve a resolution authorizing the City Manager to execute a license agreement between the City of Cotati and the County of Sonoma for use of the Cotati Veterans Building.
Background
The County of Sonoma owns, operates, and maintains the Cotati Veterans Building, which includes the building and connecting parking lots.
The City of Cotati has a desire to bring more recreation programs, events, and private rental spaces to the community and believes that the Cotati Veterans Building is an ideal location to do so. The City owns the Cotati Room, which is often booked out months in advance, not being able to meet the needs of the community for rental spaces. The Cotati Veterans Building is larger than the Cotati Room and is currently under-utilized and under-marketed by the County of Sonoma. City staff believe that with the City taking over the operations of the facility, life can be brought to the Cotati Veterans Building, offering easier access of use to the community.
Under the proposed license agreement with the County of Sonoma, the building and parking lots would be managed and maintained by City of Cotati staff and its contractors.
Analysis/Discussion
The proposed license agreement with the County of Sonoma is a 1-year license agreement, with the option for extensions if requested by the City and approved by the County. The license agreement with the County will be beneficial to the City because it will offer more space to run City sponsored events and classes/programs as well as a large event space available to the public for private rentals. The space will also be available to businesses for public events through the rental process.
City staff, in conjunction with the County, have developed a draft license agreement with terms that include the City paying for utilities associated with the Cotati Veterans Building and routine maintenance of the building and the landscaping. The County would remain responsible for larger repairs and infrastructure updates; generally anything over $5,000, which is the City’s threshold when maintenance becomes a capital project.
Staff are proposing this as a 1-year trial period, with the goals of developing higher utilization by the community, understanding the staff time commitment to manage the facility and at least break even on costs. The general financial terms, as described more fully below, are that City staff time to manage the facility are not reimbursable, but that all utility costs and maintenance expenses (direct expenses where we get an invoice from a third party) are offset by rental revenue. Rental revenue that exceeds contractor expenses is shared 50/50 with the County. The City must use the County’s rental rates and rental forms and allow for certain priority County and veteran uses. If approved by the City Council, the City will assume management of the facility after July 1, 2023.
The draft license agreement, attached to the resolution, contains the terms in greater detail.
Financial Considerations
The initial costs to the City include a damage deposit in the amount of ten-thousand dollars ($10,000.00) for the period of the initial agreement (one-year). The deposit is to be funded with budget availability within the City Managers Department of the General Fund. It is anticipated that the full deposit will be returned at the end of the term.
Other expenses incurred related to this license agreement include the required staff time to promote and manage bookings at the facilities as well as any public works staff time required for maintenance efforts (only if a maintenance contractor is unavailable). No additional staff is proposed to be added to support this agreement during the initial one-year term. Therefore, by utilizing existing City staff, it will reduce their availability to perform other duties. Other expenses that are paid out for services or supplies are all reimbursable through revenue recapture, provided there is sufficient revenue to cover the costs, as described in the license agreement.
After the City reimburses itself for its out of pocket, direct maintenance, repairs, utilities and upkeep costs, the County and City will each be entitled to a 50% share of net revenues derived from all rental uses of the Premises during the Term. With respect to classes offered at the Premises, and after first reimbursing itself for payment of instructor fees, the City will retain 70% of attendance payments for classes conducted at the Premises and the County shall be entitled to 30% of said fees.
The current rental rates and facility fees were set by the County Board of Supervisors and cannot be updated without BOS approval. During the initial one-year license agreement, the County is requiring the City to continue to use their set fees, which are included in the attachments. The County does not anticipate any updates to the fee schedule during the license term but if any updates do take place, adjustments will be made to match the BOS approved fees.
With the current demand for use of the Cotati Room at the Civic Center, it is anticipated that the Veterans Building, with significant access to parking and larger capacity for multiple types of functions, will be desirable to renters in the area. At the current light rental usage, the City evaluated the County’s rental income and believes that it is close to covering direct expenses.
With increased usage, staff believes we can achieve at least a net break even on direct expenses in the 1 year pilot period. If revenue exceeds direct expenses, net excess will be split with the County and benefit the General Fund.
Environmental Issues
This action is exempt from the California Environmental Quality Act (CEQA) because it is not a project which has a potential for resulting in either a direct physical change in the environment, or a reasonably foreseeable indirect physical change in the environment, pursuant to CEQA Guideline section 15378.