Agenda Item A.7
CONSENT CALENDAR
Meeting Date: September 19, 2023
TO: Mayor and Councilmembers
FROM: Matthew R. Fore, General Services Director
CONTACT: Cassidy Le Air, Management Analyst
SUBJECT: Utility Cost Sharing at the Goleta Community Center RECOMMENDATION:
Approve the methodology to share utility costs among the City and its tenants at the Goleta Community Center based on square footage occupi ed by each tenant , effective retroactively to January 1, 2023.
BACKGROUND
On February 24, 2022, City Council approved a plan for the City to assume direct management of the Goleta Community Center (GCC), effective January 1, 2023, and to negotiate new lease agreements with the current tenants . On December 20, 2022, City Council approved 18 -month lease agreements with Community Action Commission (CommUnify), Rainbow Childhood Education (Rainbow School), and Kevin Long Fitness.
In December of 2022, staff began transferring various utility services (e.g., gas, water, wastewater, electricity) from the Goleta Valley Community Center non -profit entity (GVCC), the former operator of the GCC, to the City. The change was effective January 1, 2023 . However, d ue to lengthy billing delays from Southern California Edison and questions surrounding the basis for apportioning utility bills in the past, the City has not yet invoiced tenants for utility costs incurred since January 1, 2023.
DISCUSSION:
The Goleta Community Center Campus comprises five buildings, four of which share various utility services, including water , sewer, electricity, and gas. The Boy’s and Girl’s Club building has its own utility meters, and the Club pays for its own utilities. Therefore, the Boys and Girls Club is excluded from further discussion in this agenda report.
The City’s commercial lease agreements at GCC authorize the City to recover a proportional share of utility costs from its tenants.
“10. Utilities. Tenant shall pay its proportional share, as determined by Landlord, of all electrical charges for the Premises. Tenant shall be invoiced 1 Meeting Date: September 19, 2023
for such electrical charges and such invoices shall be paid together with Rent in the month following receipt. Landlord reserves the right to invoice Tenant for any additional utilities and services furnished to or used by Tenant upon the Premises, including, without limitation, gas service, water, trash, janitorial, cable service, telephone services, security or alarm system and all connection charges…”
The Goleta Community Center campus totals approximately 33,653 square feet, which is leased to the following tenants and/or occupied by the City:
Table 1
Occupant Sq Ft Percentage of
Total Sq Ft
CommUnify 4,933 15%
City of Goleta (Main Building) 19,607 58%
City of Goleta (Senior Center) 1,211 4%
Rainbow School 7,195 21%
Kevin Long 707 2%
Total 36,653 100%
Cost Recovery Methodologies Comparison
Previously, the GVCC invoiced its tenants for their share of utility costs based upon the percentages shown in Table 2. However, after speaking with GVCC staff and reviewing existing documentation, City staff are unable to determine the original basis for these percentages.
Staff recommends sharing utility costs based upon the square footage leased or occupied by tenants and the City. Square footage is a clear and transparent means of apportioning utility bills. If approved, this approach would be applied to utility bills retroactive to January 1, 2023, and the City would invoice tenants accordingly.
Former GVCC Method: (Gas + Electric + Water/Sewer allocated by GVCC-Derived Percentages)
Recommended Square Footage Method: (Gas + Electric + Water/Sewer allocated by Square Footage Leased or Occupied)
Table 2 – Percentage Comparisons
Occupant GVCC
Percentages
Square Foot
Percentage
City of Goleta 25% 62%
CommUnify 34% 15%
Kevin Long 6% 2%
Rainbow 35% 21%
2 Meeting Date: September 19, 2023
On September 6, 2023, City staff met with the tenants of the Goleta Community Center to discuss the billing methodology and proposed change. The tenants unanimously supported the proposed methodology for billing from January 1, 2023, onward.
Outcome
The recommended methodology will increase the City’s payment of utility costs while all tenant payments will decrease. This outcome results because the City occupies the largest share of physical space of the G CC. As addressed in the next section, utility submetering would allow the City to apportion costs based on actual amou nts used by the occupants. In the interim, and prior to the ability to apportion based on usage, utilizing square footage in allocation of utility bills reasonably and transparently apportions costs.
Future Refinements
The current lease agreements end on June 30, 2024 . The next reiteration of lease agreements will likely be informed by a market value analysis of the available spaces and a related fee study to assist in reevaluating lease rates and rental fees, which may also inform the treatment of utility charges at the campus. Moreover, a s capital improvement projects are undertaken at the GCC, staff will explore the feasibility of installing utility submeters for each building as part of any utility upgrade. The submeters would: (1) allow the tenants to manage their own utility accounts, thus eliminating the City’s administrative burden related to invoicing and managing utility accounts , and (2) allow the City to apportion costs for utility fees based on usage rather than square footage. Though square footage provides a clear methodology, it may underestimate the actual usage of utilities by the occupants.
FISCAL IMPACTS:
Sufficient funding is available for to cover the City’s portion of utility charges at the Goleta Community Center. No additional appropriations are requested with this Council action.
Expense Account FY 23/24 Budget $
Utilities - Gas 217-60-6510-51051 9,000
Utilities - Electric 217-60-6510-51052 44,000
Utilities - Water & Sewer 217-60-6510-51053 32,500
ALTERNATIVES:
Council may direct staff to apportion utility costs based upon the former GVCC percentages or to develop additional methods for sharing costs for Council consideration.
3 Meeting Date: September 19, 2023
Reviewed By: Legal Review By: Approved By:
___________________ ___________________ _________________ Kristine Schmidt Megan Garibaldi Robert Nisbet
Assistant City Manager City Attorney City Manager
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