March 17, 2005

City negotiating new Memorandum of Understanding with district

District drafts limited five-year lease for sports complex, asks city
to reimburse legal fees, hire licensed contractors

By Sheila Sanchez
Staff Writer

The kind landlord, willing to rent valuable property for nothing, shortens the lease, encourages the finding of another home—in case eviction is necessary after five years—demands payment of legal bills and requires improvements to the land be done only by professionals.

The surprised tenants, who in this story are the city of San Jose and the nonprofit Almaden Youth Association, take the new rental agreement, study it and are still deciding whether to comply with new stipulations set forth by the landlord—the San Jose Unified School District.

In more layman’s terms, the ball is in the city’s court, during the latest match of this game of hurdles as the city and the AYA try to build a controversial sports complex in rural McKean Road.

The district’s new Memorandum of Under-standing, presented to city officials in December of 2004, stipulates that school officials will only lease the land, located in the South Almaden Valley Urban Reserve, for only 10 years from the completion of the complex’s construction, with the option of reassessing the project’s environmental impact after five years, when it could terminate the lease with “no cause.”

The 10-year window allows the district to review potential land use in the event there is a need to build a school, respond to the city’s anticipated master plan, or address future needs that may be more beneficial to the community, said Sonja Shurr, the district’s facility and property consultant.

The district is also asking the city to develop a plan for a comparable improved site at another location should it terminate the lease after five years to protect itself from frivolous lawsuits, which may arise over issues of termination.

The two government agencies found themselves in disagreement over the new issues at the end of last year when the district, suffering from huge budget problems, asked the city to reimburse about $50,000 in legal fees incurred by the hiring of attorneys to do legal work for them on behalf of the controversial project during approximately 10 years, Shurr said.

Lastly, the district is requiring that work performed on the site be done under a city contract, by a licensed contractor/construction company and that prevailing wages be paid. “This is not a volunteer construction project. This is a large project and the district must protect their asset against liability issues,” Shurr said, adding that if the new concerns are addressed, the district and the city can move forward.

A previous MOU ended Jan. 22, 2005, leaving both public agencies without the legal document in place to proceed with the project.

“The district is obligated to protect the long-term interests of the students and families it serves,” Shurr said.
The previous MOU and lease agreement gave the property away for $1 a year for a 20-year lease with five automatic lease renewals. The new MOU will still lease the property for $1 a year. Shurr explained the district currently leases land from the city for $1 a year where the Empire Elementary School is located.

“People keep wondering why we would lease this land for such a small amount, but they need to understand that the city also extends us the same courtesy,” Shurr said. “Government agencies work together.”

Shurr, however, clarified that the district contracted with an appraisal company in 1973 to provide a fair market value of the 75.86 acres located on McKean Road. The property was appraised at $956,000. The district entered into an agreement to acquire the property from Jim and Rose Caglia Feb. 7, 1974. No recent appraisal has been completed since the district has no intent to sell the property, she said.

Shurr added that the city and the district have been working together for years to provide constituents mutually beneficial land/facility lease use agreements and that it was the intent of the district to provide an opportunity for the community to have recreational access to urban reserve land until the district needed it to serve as a school site.

AYA President Dan Smyth said the nonprofit would like a 10-year lease with two automatic five-year renewals to facilitate its grant-writing process.

“Clearly, that’s not good for us (five year lease with no renewal language),” Smyth said. “We’re not going to put in a $5 million facility without some guarantees.”

Smyth said he resented a picture painted by project opponents of inexperienced moms and dads building the complex. “We’ve always planned to use licensed volunteer contractors,” Smyth said.

About the payment of legal fees to the district, Smyth said the nonprofit would be willing to foot the bill to avoid further stalling the project.

“This, to me, is not a huge deal. If I have raised $4 million or $4 million and $50,000, what the heck is the difference? This will probably be passed through to us,” he said.

Smyth remained optimistic that the district and the city could work out their differences.

San Jose City Attorney Rick Doyle said the district and the city would work hard to resolve the issues keeping them apart. “We’re still having a dialogue,” Doyle said. “Those discussions are still taking place and we don’t want to get into negotiations in the press. Hopefully we’ll resolve this in the next few weeks.”

For her part, Shurr said: “We’re always willing to work with the city on endeavors where we’re serving the same constituents, our children. We want to be good neighbors.”

Councilwoman Nancy Pyle’s chief of staff, Ana Maria Rosato, declined comment, saying all parties involved in the negotiations had agreed to refrain from making comments until a settlement could be reached.

The project’s first phase, which includes five acres of natural grass, 15 acres of artificial turf, roadway improvements and infrastructure will cost $5.2 million, Smyth said.

Stalled by the negotiations, Smyth said his nonprofit hasn’t done much fund raising, noting that the last hiccup in the project hasn’t deterred the hundreds of soccer parents who are lining up to sign their children up for sports activities this summer which they complain will be played on old, rundown and dangerous fields that are too scarce in the city.

“The community is still energized and ready to go,” Smyth said.

The city, the district and the AYA are defendants in a lawsuit filed Jan. 13 by the South Almaden Valley Rural Alliance and the Committee for Green Foothills to overturn the project’s final Environmental Impact Report (EIR) and the city’s general plan text amendment.

City officials, former San Jose Vice Mayor Pat Dando, the AYA and other sports organizations have been complaining for years about a deficiency in youth sports fields in South San Jose.

For the past decade, Dando worked hard to identify land to accommodate the local youth soccer, softball and little leagues. The dilemma led to the exploration of the 75.86 acres of district-owned land on McKean Road.

In November 2002 the city and the AYA discussed the potential to develop the youth sports fields in the unincorporated county land and the preparation of the necessary environmental documentation under the California Environmental Quality Act to build the fields.

The district, under the leadership of former SJUSD board member Gary Rummelhoff, now a member of the Santa Clara County Board of Education; former Superinten-dent Linda Murray and current Superintendent Don Iglesias agreed to lease portions of the property to the city for $1 a year as reflected in the previous MOU.

On Nov. 25, 2003, the city entered into an agreement with RBF Consulting to prepare the EIR. A draft EIR was prepared and released for public comment Aug. 13. The San Jose Planning Commission voted 5-2 on Nov. 29 against recommending a change to the city’s general plan, but certified the final EIR. The certification, however, was appealed to the San Jose City Council, which held a public hearing on the appeals on Dec. 7 upholding the document’s final certification.