BOARD MEETING DATE: November 7, 2003
AGENDA NO. 35

Approve Childcare Center Lease

SYNOPSIS:

The lease with National Pediatric Support Services to operate an on-site childcare center will end January 2, 2004. Staff has solicited proposals from area childcare center operators and proposals have been evaluated. This action is to execute a lease agreement for operation of AQMD’s on-site childcare center beginning January 3, 2004.

COMMITTEE:

Not Applicable

RECOMMENDED ACTION:

Authorize the Board Chair to execute a lease agreement with Lasanthi and Maximus Kurera, owners and operators of Towne and Country Early Education Center in Placentia, for operation of AQMD’s childcare center and to set aside revenue from the lease for the purpose of needed renovations.

Barry R. Wallerstein, D.Env.
Executive Officer

Background

AQMD contracts with an operator to provide childcare services at its on-site center for children aged six weeks through preschool. AQMD employees are given priority in enrolling their children and a discounted tuition rate. The center is also open, as space is available, to building tenants, those working in the area, and to the general public.

At the October 2003 Board meeting, the Board discussed the current lease agreement with National Pediatric Support Services (NPSS) for operation of the center. During public comment on this item, a representative of NPSS informed the Board that the company was giving a 90-day notice of its intent to terminate the lease effective January 2, 2004. The Board voted to accept the 90-day notice for ending the lease and directed staff to begin a search for a new childcare center operator.

Because of the short notice from NPSS, the difficulty finding childcare operators willing to commit the resources required to operate the center, and the need for the new operator to meet licensing requirements and to make all the necessary preparations to assume responsibility for the center on January 3, 2004, staff recommends AQMD enter into a lease agreement without a formal bid process to allow the center to continue in operation without interruption. The Procurement Policy allows AQMD to enter into a sole source contract when specific circumstances make it in the best interest of AQMD (Section VIIIB2d). In this case, the best interests of AQMD require entering into a lease with a new center operator to quickly provide continuity of care. Circumstances do not allow the formal bid process due to timing constraints.

Outreach

Staff made personal contact with area childcare center operators and with those listed on Los Angeles County’s Child Care Vendor List to solicit interest in operating AQMD’s on-site center. Several of those contacted indicated they were either not interested in the opportunity or required AQMD to commit substantial financial resources to the center in order to take over the responsibility or to realize their company’s target profit margin.

Bid Evaluation

Five written proposals were submitted. Two required substantial commitment of financial resources from AQMD, and one required AQMD to commit to a minimum lease term of 20 years in order to recoup investment costs and achieve an acceptable profit. Of the remaining two, the proposal from Lasanthi and Maximus Kurera, owners and operators of Towne and Country Early Education Center in Placentia, offered a curriculum that more closely matched AQMD parent expectations. The term of the lease would be three years, with an option to extend for two additional years. The owner has agreed to be a daily on-site presence at the center and to make the full annual lease payment of $35,340 at the beginning of the term of the lease. With the Board’s approval, the lease payment could be put in a special account for use renovating the center.

The panel evaluating proposals included five AQMD employees, including two representatives selected by AQMD parents currently using the center—a Systems Analyst and an Office Assistant—and the Business Services Manager, the Plant Engineer, and the Affirmative Action Officer. Of the five panel members, two are Caucasian, one is Hispanic, and two are African-American; two are male and three are female.

After reviewing proposals and conducting site visits, panel members evaluated proposals based on the following factors: demonstrated interest in and commitment to establishing and maintaining a quality center, quality of other centers operated, curriculum, experience successfully operating similar types of facilities, availability of adequate resources, costs to parents and to AQMD, ability to meet licensing requirements, and plans for communicating with parents and for addressing parent concerns.

The evaluation panel recommends the contract be awarded to Lasanthi and Maximus Kurera, owners and operators of Towne and County Early Education Center.

Fiscal Impacts

Under the lease agreement, the monthly lease payment for the childcare center would be $2,945, for an annual AQMD revenue of $35,340. The monthly rent represents a charge of 21¢ per square foot, based on the 14,287 square feet of property covered by the lease agreement.

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