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'Fair' Is The Operative Word In Burgess Pool Negotiations

Uploaded: May 13, 2015

Menlo Swim and Sport's (MSS) contract with the city is back before the city council, but this time, the question of who will be running the pool is not at issue. The current lease agreement does not end until May 2016, but at the May 5, 2015 city council meeting, the council unanimously agreed with a Parks and Recreation Commission recommendation that the city negotiate with MSS to extend their lease agreement for city aquatics operations rather than embark on a formal Request for Proposals process.

There are several key contractual issues, however, that are up for discussion.
First up: the amount of rent MSS will be required to pay the city. The 2011 contract had a provision that a lease agreement could be extended after five years but that rent would need to be reassessed to a fair market value (FMV) with "consideration given to":
? gross revenues for the Burgess Pool
? the fixed costs of operating the Burgess Pool
? the profitability of the Burgess Pool operations
? the rental rate for similar facilities, and
? the other terms and conditions of the current lease.

According to the contract provision, the FMV rental rate is to be determined by mutual agreement, or by a neutral third party arbitrator if the city and MSS cannot agree.

MSS (which currently operates the Belle Haven pool year round despite only being contractually required to do so for 10 weeks during the summer) initially paid the city $3,000 a month in rent but their rent has increased over the past four years (pursuant to the US Department of Labor's Consumer Price Index (CPI)) to $3253 /month. A yet to be determined CPI increase will be added in June.

The key factor to determining a FMV rental rate will be the third bullet point: determining profitability and what is a "fair return" to the operator. Staff reports have placed General Fund savings (achieved by not having to operate the pools) since May 2006 between $450,000 -- $500,000. Very little, however is publicly known about what revenue the renovated pools are capable of generating. In fact, it is unclear how profitability for the 2011 contract was calculated and how the various revenue streams for the many programs run through Burgess were calculated. Outsourcing pool operations may still put city finances far ahead when pension costs, etc. are factored in, but having a clear picture of the trade offs is critical to making sound choices.

Given the civic engagement surrounding the 2011 contract and RFP process?including calls for transparency and requests that the financials be reviewed by an independent auditor or a finance committee? opening up that process so that the public has more information on both the revenue and operational costs would be an important next step towards garnering greater public trust towards these types of public/ private partnerships.

Another key point that has already sprung to the forefront: SOLO swim team's access to pool space as part of the new contract. At the May 5th council meeting, dozens of parents and children attended to take to the microphone and ask the city to ensure the team has "fair access at a fair price." According to speakers and head coach Tom McRae, the team has 90 members packed into 8 lanes for an hour and a half Monday - Friday, and their team will drop down to 4 lanes for those 90 members during the summer. (Note: SOLO was offered space at the Belle Haven pool in 2011, but declined that space at the time.) Council members directed staff to work with both parties on a solution as part of the development of a new contract.

SOLO's access seems part of a bigger question of choice that has surfaced this negotiation go-around. SOLO families repeatedly spoke to how important the issue of choice is, and that point has also been underscored in a February 25, 2015 memo to the Parks and Recreation commission from Community Services Manager Derek Schweigart. He wrote: "The business model implied in the lease allows for competition in order to provide the highest quality programs, whether provided by the operator directly, by a rental group or additional contractor, or by both. Competition and choices allow participants options and meets the diverse needs of the community."

In forgoing the RFP process, the city saves time and money and rewards MSS for providing a strong level of service over the last four years. Doing so does, however, skip a step in the public access/ transparency process that can hopefully be made up through vigilant city efforts to be more open with information than last time; specifically, understanding how much revenue the city owned pools are capable of generating. As the city heads into another contract negotiation involving Burgess pool, the one thing that seems clear is that "fairness" is emerging as the operative word.
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Comments

 +   5 people like this
Posted by Fairness warrants scrutiny, a resident of Menlo Park: Allied Arts/Stanford Park,
on May 14, 2015 at 5:09 am

Excellent article! The arrangement needs to be fair to us taxpayers who are paying annually for the "new" facility. It should never have been the intent to give monopoly programming power to one organization, or to ignore the profit potential, which the last contract did. A popular, high quality program like SOLO shouldn't be allowed to be squeezed out. Use of the facilities should favor residents, in available time and cost.
By most accounts, MSS runs a good operation. But MSS isn't the only programs game in town. Both the programming and return to Menlo park taxpayers should be scrutinized well. That's only fair.


 +   8 people like this
Posted by Got rent?, a resident of Menlo Park: Menlo Oaks,
on May 14, 2015 at 8:08 am

can't even rent a 2 bedroom apartment in town for that rental price..what a deal!
our tax dollars that built the pool are going to subsidize a profitable private business.


 +   5 people like this
Posted by Stu Soffer, a resident of Menlo Park: Linfield Oaks,
on May 14, 2015 at 9:45 am

Stu Soffer is a registered user.

Excellent article, Erin.

And 'Fairness warrants scrutiny' is also correct.


 +   5 people like this
Posted by former burgess swimmer, a resident of Menlo Park: Central Menlo Park,
on May 14, 2015 at 12:28 pm

I used to use the pool for lap swimming and was always frustrated by the limited lanes and the limited hours available for lap swimming. I understand that after 4pm is prime time for school age swimmers, but it is also prime time for working folks. While MSS is providing a good swim program for our community, it is at the expense of other community use. I finally went to another pool which has better access but not as convenient or affordable.


 +   7 people like this
Posted by Another former burgess lap swimmer , a resident of Menlo Park: Allied Arts/Stanford Park,
on May 14, 2015 at 1:16 pm

Former burgess swimmer,

It is not just the kids' swim teams that impact lap swim. Sheeper's masters program owns the pool on weekend mornings and you can't get a lap swim in before 10am unless you pay $80 a month to join his masters. But you can go Rinconada pool in Palo Alto and lap swim starting at 6am on Sat and 7am on Sun.


 +   9 people like this
Posted by lessons learned, a resident of Menlo Park: Felton Gables,
on May 14, 2015 at 2:10 pm

lessons learned is a registered user.

I am not a swimmer, but some of my best friends, most of whom don't reside in MP, are members of Tim's program. By all accounts he is an inspiring, charismatic coach. This is not a good reason to hand him a new(ish) public facility essentially for free.

The city's cost-saving arguments are specious at best. Around the time the pool was being completed, a city staffer researched and published a comparison of all local public aquatic facilities. All except Menlo Park were breaking even +/- 5%. Instead of questioning MP's failure to manage a pool without losing money, the council readily handed the pool off to Tim Sheeper, no questions asked.

That's history, and Tim & company have had a very sweet deal for a long time. His program is great, for those who belong. For the rest of us, it feels like a private club, and if we try to take our families there, we're shunted into a corner. Moving forward, two changes must occur:

* The city needs to do a better job of negotiating non-master's access with Tim (or whoever operates the facility). His programs should not always take priority.

* The facility should be subject to annual audits, with the operator charged a usage fee based on revenues. The current rent is a joke.

Most of us taxpayers and residents would like to see better stewardship of city resources, and it's shocking that it hasn't already occurred.


 +   9 people like this
Posted by Mike Keenly, a resident of Menlo Park: Allied Arts/Stanford Park,
on May 15, 2015 at 10:57 am

Erin, excellent article!

Regardless of whether a Menlo Park resident uses the pool or not, if one is a homeowner, they're paying for the renovated facility through their property taxes.

It is the City Council's responsibility, with assistance from City Staff, to ensure that the taxpayers are getting a fair deal from whoever operates the facility.

With so much historical financial data now available, the Council should require the current operator to open up their books as a prerequisite to any contract renewal consideration.


 +   2 people like this
Posted by Tired, a resident of Menlo Park: other,
on May 16, 2015 at 1:40 pm

Erin,

I'd like to make a few points.

First you call for transparency from MSS but you forego mentioning that you have had a long-term relationship with SOLO and were solidly behind their proposal to take over Burgess Pool at the time of the last RFP (I am admittedly an MSS supporter). While you're not a journalist for the Almanac, you do have a privileged editorial position as a community blogger so I'd have thought you would have mentioned upfront the potential for bias in your comments. In addition, the only group calling for transparency surrounding pool operations and finance in 2011 were SOLO supporters--an easy position to take since MSS would have been the only party to be giving up PRIVATE information. It's also, in my opinion, a ridiculous request to make an entity using a space to divulge their private financial statements---it is the onus of the landowner to establish and negotiate a fair price for their resources. I cannot think of any rental relationship that operates as you suggest, with the renter divulging private information on their finances so as to enable the landlord to precisely determine how much they can squeeze out of the renter.

Second, I completely disagree with your comment that the third bullet point, "the profitability of the Burgess Pool operations" is "the key factor to determining a FMV rental rate". What about the fourth bullet point, "the rental rate for similar facilities"? Why would the profitability be more important than what the market price for similar facilities are for determining rent? The fact is, MSS is the best aquatic program organizer I've ever seen. As a result they should enjoy greater profit than other lackluster programs. Why do you think penalizing them with higher rent just because they might have the resources to pay that cost is at all fair? You do realize we are living in the U.S. and not a socialist country I hope!


 +   2 people like this
Posted by Get the facts, a resident of Menlo Park: Linfield Oaks,
on May 16, 2015 at 2:06 pm

Another former Burgess Lap Swimmer-

What a crock! Please actually check the lap swim times for Burgess -- there are lanes for lap swimmers starting at 6AM Monday-Friday in the Instructional pool and at 6:45AM Mon-Fri in the performance pool. Yes---on the weekend the early swims are completely taken by Master's swimmers---who are swimming 5-8 swimmers / lane. This is an enormously efficient use of the pool. If you get anymore than 2 lap swimmers in a lane it's a disaster as lap swimmers I've run into never seem to realize they should try and get into a lane with swimmers of a comparable speed.

Web Link


 +   5 people like this
Posted by Erin Glanville, a resident of Menlo Park: other,
on May 16, 2015 at 4:10 pm

Tired,

Thank you for your comments. A few points:

I have been a supporter of the SOLO program and am glad they put together an RFP in 2011 so that the city could have a choice in vendors. I believe both RFPs were more competitive as a result. I currently do not have a child swimming for SOLO but do have one child at another program in a different city and one that swims for Menlo Mavericks.

Regarding your conclusion that the only community members concerned with transparency are involved with the SOLO program-- I don't know how you make that leap. At the recent council meeting, I did not hear a single SOLO supporter mention that as an issue or concern-- and many spoke.

I understand your third point regarding the city looking at the rental rate for similar facilities, but that is problematic because this is a public / private partnership and, as such, fairly new ground. There are not local examples to look to and that is part of what makes this difficult. What other examples would you have the city draw a comparison from?

Lastly, I am not advocating for higher rent -- just transparency into how it is calculated based on the contract the city laid out. The "public" part of the public/ private partnership warrants that, in my opinion. You seem to feel differently.


 +   9 people like this
Posted by lessons learned, a resident of Menlo Park: Felton Gables,
on May 17, 2015 at 11:42 am

lessons learned is a registered user.

I don't swim and my kids don't swim. Not all of us who want accountability are aligned with Solo. Can we give that argument a rest?

This isn't about a report card for Sheeper, much as his groupies would like to make the discussion be all about him. It's whether any private entity or individual should be handed public property without any public input or oversight.

If Tim Sheeper is doing such a great job, why are the Sheeples so afraid of an audit?


 +  Like this comment
Posted by Lessons?, a resident of Menlo Park: Central Menlo Park,
on Jun 7, 2015 at 4:45 pm

Lessons: Do you know what an audit is? If so, please define it in the precise way you would as it relates to the facts of this issue. looking forward to it.


 +  Like this comment
Posted by abderaouf, a resident of Menlo Park: Linfield Oaks,
on Dec 26, 2015 at 3:28 pm

abderaouf is a registered user.

Erin, excellent article!

Web Link


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