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RTC#02-193

May 21, 2002

SUBJECT:

Award of Contract to Operate Public Use of Fremont High School Swim Pool

REPORT IN BRIEF

Staff is recommending Council approve a 63 months (5 ¼ year) agreement (please see Attachment A) with California Sports Center to provide for operation of the public’s use of the Fremont High School 50-meter swim pool. The general framework of the proposed agreement is similar to that in effect for the Las Palmas Tennis Center and specific terms of the proposed agreement are consistent with the approach shared by staff during Council’s joint study session with the Parks and Recreation Commission on February 4, 2002. (Please see Attachment E.) The Parks and Recreation Commission reviewed the proposed agreement and held a public hearing on May 15, 2002.

BACKGROUND

  • April 20, 1999, Fremont Union High School District contacted City regarding joint development of a 50-meter pool.

  • June 15, 1999, Council directed staff to proceed with a pool partnership feasibility study.

  • May 2, 2000, Council endorsed the concept of a joint use agreement between the City of Sunnyvale and the Fremont Union High School District for a 50-meter pool, and requested the City Manager consider this item in his recommendation at the upcoming budget workshop in June.

  • June 20, 2000, Council authorized the City Manager to enter into a joint use agreement with the Fremont Union High School District to construct and operate the 50-meter pool and adopted budget for FY 2000/2001

  • July 18, 2000, an agreement was entered into by both the City and District, for the joint development/use of a 50-meter pool.

  • February 26, 2001, City issued a request for proposals (RFP) to manage the public’s use of the pool. The two proposals received were rejected by staff.

  • May 14, 2001, City issued a second request for proposals (RFP) to operate the public use of the Fremont High School pool. Staff subsequently began negotiating with the most qualified proposer.

  • February 4, 2002, Joint Study Session conducted by Council and the Parks and Recreation Commission regarding pool fees and use schedules.

This report presents for Council’s consideration, a proposed contract for managing the public’s use of the Fremont High School 50-meter swim pool, as provided for in the City/District Agreement of July 18, 2000.

EXISTING POLICY

Council Policy 7.1.2 – Contract Services A.3:

Aim for Economy. Cost Comparison. When private performance is feasible and no overriding factors require in-house performance, the citizens of the City of Sunnyvale deserve and expect the most economical performance and, therefore, rigorous comparison of contract costs should be used, when appropriate, to decide how the work will be done.

Fiscal Sub-Element

  • 7.1A.1I: Establish user charges and fees at a level closely related to the cost of providing those services.
  • 7.1B.10c: The costs of each enterprise, including the transfers from the General Fund, shall be offset by user charges and fees derived from the enterprise activity. "Costs" shall mean all operating, capital, debt service, contingency and administrative costs.

Recreation Sub-Element

POLICY C.3. Utilize available pricing and promotional tools in order to maximize participation and/or use related to programs, facilities, and services without jeopardizing the integrity and infrastructure of related facilities.

  • C.3.a. Utilize market-based pricing in the establishment of fees, and continually evaluate the effectiveness of pricing strategies.

DISCUSSION

The framework of the proposed contract is similar to the existing Tennis Center agreement. It is in keeping with the City’s enterprise fund philosophy and associated policies of market-based services, as well as the City’s policies for working with private contractors. While specific details are imbedded in the contract document, some of the more noteworthy terms of the agreement call for;

  • A consistent, year round adult lap swimming program;
  • monitoring of contractor’s performance by the City;
  • resident discounts;
  • use of the City’s fee waiver program for the economically disadvantaged;
  • approval of pool fees and use schedules by the City and;
  • the City’s right to ask the contractor to remove (for cause) any objectionable employee.

Throughout this project, it has been the intention of staff to explore the use of a contracted service provider to operate the City’s use of the new pool. The public bid process used to obtain a private operator resulted in several proposals. Staff reviewed the proposals and negotiated with the most qualified proposer, California Sports Center. California Sports Center has over 14 years experience in offering recreational programs to the public. For over 9 years California Sports Center conducted swimming programs at Blackford High School, including running public swimming programs for the City of San Jose. In addition, the California Sports Center proposal included an excellent business plan; a clear and well described sense of marketing, promotions and customer service; acceptance of maintenance responsibilities and those associated costs for the swim building; and provided a higher financial return to the City than other providers.

Fees

One of the more controversial issues surrounding the new 50-meter pool partnership with the Fremont Union High School District has been the establishment of user fees. This was the topic of much discussion during Council’s public hearing on May 2, 2000, and staff has spent a good deal of time reviewing and refining its position on this matter since that date. Staff has met with the public and the proposed pool operator to discuss related issues and is pleased to present the fees proposed by Attachment B.

As indicated above, the proposed agreement calls for pool fees to be approved by the City. It does not however, specify whether that approval will be provided by City staff or Council. Given the high public profile of this project to date, staff is recommending that Council be the approving authority for the initial Fremont High School pool fee schedule (Attachment B). Staff has also attached a copy of the City’s 2002 Swim Fees for its other five pools so that comparisons can be made (please see Attachment C).

Staff is also recommending that Council authorize staff to approve future Fremont High School pool fee schedules administratively. This recommendation is based on an interest in:

  • Maintaining a consistent approach:

The only recreation fees currently approved by Council are golf "greens fees". Golf lesson, rental, cart, driving range and sales fees are all set administratively. All other recreation fees (classes, trips, tennis, swimming, youth camps, drop-in activities, dance, sports leagues, pottery, facility rentals, etc.) are set administratively and are done so with a market based pricing methodology that includes; value of the service provided; comparison of like services; prime use times and/or facilities; and the participants willingness to pay for specific service levels.

  • Promoting flexibility:

Fees that are set administratively are more flexible and can adjust to market conditions more quickly. This allows staff to offer new classes or activities or make changes in existing programs; and offer price reductions for such purposes as stimulating participation or group discounts; and reduced fees for specific programs or population groups (such as the Columbia Pool subsidized recreation swim program and the summer 2002 Lakewood Pool Is On Sale program); and respond to sudden increases in cost (such as utilities).

Staff is aware that there continues to exist some dissatisfaction with the proposed fees by some members of the public. Known areas of concern are identified below, with staff’s justification for what has been proposed.

  1. $42.00 punch-card for resident lap swimmers. This option has not raised concern but is presented as important background for Council and Commission’s consideration. Resident lap swimmers would have the option of purchasing a punch card good for 12 swims. The cost per swim, therefore, would be a set $3.50. As a point of reference, this is no more than Sunnyvale currently charges drop-in lap swimmers at its other facilities, and only 50 cents more than it charges its current punch-card holders per swim! Please keep this option in mind as you consider the concerns identified below.

  2. $5.00 drop-in fee for resident lap swimmers. This is perceived as too high by some. However, Council will recall that at the public hearing on May 2, 2000, members of the public were asked how much they were currently paying to swim, and what they would be willing to pay were Council to approve the development of a new 50-meter pool. Answers came from residents who were paying non-resident fees elsewhere (up to $5 and $6) and who indicated they would be willing to pay that much to swim in an adequate facility in Sunnyvale. It is important to note that most users of the facility are not expected to choose to pay "drop-in" fees given the wide range of other, less expensive options (i.e., "punch card" option discussed above). Drop-in fees are simply an option for those who are visiting the community, those who swim infrequently, or those simply wishing to test the waters before committing to more regular visits. It should also be noted that this drop-in fee is "per day." That is, someone could choose to swim three times (morning, noon and night) in one day for only $5.

  3. $50.00 monthly pass for resident lap swimmers. This too is perceived as too high by some. However, the value of this option is going to depend entirely on the number of times a particular swimmer visits the facility—for some it will make a lot of sense to purchase a monthly pass, and it would represent a real bargain (e.g., if you swim 4 times a week it will cost you less than $3.25 per swim). For others (if you intend to swim only 2 times a week), this option would not be attractive to you, but it is after all just an option, and all lap swimmers will be able to compare this option against the punch-card option ($3.50 per swim) described above. This option should not be confused with a masters’ swim fee that could be higher or lower, depending on several factors including number of hours available and staff/coaching hours.

  4. Lifeguard training costs. While some concern has been registered regarding staff’s proposed costs for lifeguard training, these fees are consistent with the City’s existing charges for this service.

  5. Negotiable fees for groups such as the Swim Club. There is some concern regarding the lack of specificity which "negotiable" implies. These fees are listed as "negotiable", simply because it is impracticable at this time to determine the lanes which will be available at a particular time of year and day, and different rates will apply for "prime" times as opposed to "non-prime" times. Different rates will also apply for groups that can provide their own lifeguards. Groups that use the facility consistently over a period of time may negotiate a fixed fee for a specific time frame as opposed to "per lane" charges. Also, the contractor is unable to identify all potential costs and revenues prior to negotiating staff salaries, developing a users’ schedule and establishing operational finances. Therefore, the price of service or pool time can be expected to change as the contractor becomes familiar with operations and programming at the new pool. The Sunnyvale Swim Club has met with staff on a couple of occasions to discuss how this may affect them. While staff is unable at present to negotiate in this regard with the Club, once a contract is approved there will be nothing stopping the Club and others from negotiating specific schedules and use fees with the operator. In the meantime, the Swim Club understands why the fees are listed as "negotiable", and staff understands the Swim Club’s reluctance to endorse the fee schedule until negotiations can begin and it knows what that means to them financially. To help alleviate concern in this regard, staff has added an Alternative Course of Action for Council’s consideration, which reads "#9. Direct staff to return to Council for approval of initial group fees (for example, Masters Swim Group, Sunnyvale Swim Club, etc.) once those fees have been negotiated." Staff does not, however, recommend this course of action. Please see more below regarding these groups.

Overall, staff feels very good about the fees proposed and believes they are quite reasonable. Staff also believes that one of the biggest benefits of its proposal is the large number of fee options it provides the consumer (i.e., lap swimmers can choose from several different options). The reality is that each swimmer will need to decide for him/herself which option suits them best, and care should be taken in dismissing any of the options on the basis that it does not suit a particular individual or two. For others, it may represent the best option.

Pool Use Schedule

In accordance with the approach shared by staff during Council’s February 4, 2002, joint study session with the Parks and Recreation Commission, the proposed agreement calls for use schedules to be developed and reviewed administratively, with the following priority rankings;

  1. Serve adult needs first – particularly the establishment of a consistent, year round lap swim program.

  2. A broad array of other recreational community uses, governed first by the City’s enterprise fund philosophy and a market-based approach and then by Council’s policies governing co-sponsored use.

The proposed agreement supports this direction, requiring the contractor to provide, to the degree possible, within the context of market based programming, a broad array of swim opportunities such as lap swim, masters programs, swim opportunities for children in grades K-12, swim lessons for all ages, and recreational/family swim opportunities, diving, water exercise classes, safety and training classes, as opposed to a narrow scope of programs. (Please reference sections 3 B and C of the proposed agreement.)

As soon as the initial swim pool schedule is created, copies will be distributed to Council and public.

Sunnyvale Swim Club

The Sunnyvale Swim Club has met with staff and communicated in writing on several occasions regarding its desire to expand and to gain access to the new 50-meter pool, due both to its growing membership and a desire for use of long-course (50-meter) lanes. The main points of discussion in all these communications have revolved around two issues: fees and specific use schedules. The Swim Club sent its most recent communication (please see Attachment D) to the Parks and Recreation Commission and Council and reiterated its concerns during the Parks and Recreation Commission’s public hearing on this matter.

During its testimony at that hearing, the Swim Club requested further clarification of staff’s priorities regarding scheduling of the pool, specifically querying why the Swim Club should receive consideration for use of the pool only after adult swim needs are met and a market-based approach to providing a broad array of other swim opportunities is pursued (Council will recall that this has been staff’s approach since the inception of this project. In fact, negotiations with the proposed contractor were put on hold for a month in order to allow the Council to hold a joint study session with the Parks and Recreation Commission focused on staff’s approach to setting fees and pool use schedules/priorities). In essence, the Club indicated it understood the City’s reasoning for serving adult needs first, given the origins and history of this project, but it did not understand why its money would not be considered on an even playing field with other groups seeking to use the pool in a market-based approach. Staff offered the following clarification:

  • The Swim Club’s money is as good as any other groups when it comes to negotiating use of the pool under market conditions and within the enterprise fund philosophy. However, what that means is that it will be competing with all other groups wishing to use the pool in a competitive market environment. An even playing field means that the Swim Club will receive no less consideration than any other group, but it also means that it will receive no special privileges in this regard.

  • Staff will continue to implement Council’s co-sponsorship policy, which provides officially recognized groups such as the Swim Club priority use of City facilities when the City does not have a use for that facility itself. In other words, co-sponsorship by definition means that a group gets whatever use (if any) is left over. Bear in mind that under these conditions, the Swim Club currently enjoys a significant amount of use of the Sunnyvale Middle School Pool. And by administrative policy set by staff (not by virtue of Council’s co-sponsorship policy as was believed by the Club), it receives that use free of charge.

It appears to staff that a good deal of the angst over how to accommodate the Sunnyvale Swim Club is born of a desire to do more for it than is dictated by the Council co-sponsorship policy; that, in fact, some groups (not just the Swim Club) and policy-makers have grown to assume that co-sponsorship represents more than the basic relationship provided by the actual policy. In many cases, staff believe that both the groups and policy-makers assume that co-sponsored groups represent a City service and, semantics aside, that is not the case. In most instances, these groups provide services that the City would not choose to offer itself (that is, if the group dissolved, the City would not choose to replace the service itself). It is also critical to remember that co-sponsored groups are independent organizations with their own governing bodies and their own policies and procedures. The City maintains no oversight of these groups—it does not tell them how to run their businesses, nor does it involve itself in monitoring performance or setting service levels. It does not, for example, require that coaches be fingerprinted or review the fees these groups charge the public for appropriateness. It bears noting that every year staff fields a number of resident concerns about some aspect of co-sponsored groups’ activities, but the City does not take responsibility for resolving these concerns.

Staff has consistently indicated it believes there will be some opportunity for the Swim Club to access the new 50-meter pool. The question is how much access and how much will it pay. The answer remains that if the Club really wants to pay market rates on an even playing field, it can likely get as much time as it desires once adult swimming needs are met. Otherwise, it will need to negotiate at a somewhat reduced rate for less time (or time slots less preferred) than it feels are ideal.

This naturally concerns the Swim Club, as it may not have the financial resources to compete with any number of other groups that might wish to use the pool. Staff continues to understand and appreciate the Club’s dilemma, but that does not change the Council’s co-sponsorship policy or staff’s current direction in terms of pool fees and priorities.

Masters Swimming Groups

At its public hearing on May 15, 2002, the Commission also heard testimony from a representative of the Shoreline Aquatic Fitness group (Mountain View Masters Swim and Social Club), which has also indicated interest in using Sunnyvale’s new 50-meter pool to expand their masters program into Sunnyvale. Staff has previously communicated to this group in writing that once a contractor is approved by Council, the contractor will begin exploring options for establishing a masters swim program, and that staff will ensure the Shoreline Aquatics group is given an opportunity to present a proposal for that service.

Please keep in mind that staff is relying on a contractor to develop and operate swimming programs at this new pool, and that no contractor has been approved as of this date. While the proposed contractor has put a tremendous amount of time and energy into developing his proposal, negotiating with staff, and making tentative plans for possible implementation of his proposal, it clearly would not be prudent to actually hire staff, enter into negotiations with potential user groups, or perform any number of other tasks prior to being awarded a contract by the City. Masters swimming groups should find some solace in staff’s priority for meeting adult swimmer’s needs, however, as this will be among the first programs the City explores once a contract is awarded.

FISCAL IMPACT

This contract permits a private business to operate all public swim programs at the Fremont High School 50-meter swim pool, to collect and retain class and activity fees and requires that same business to pay all direct program related costs. In return for the exclusive right to operate the swim programs, the contracted business will, over the 63 months (5 ¼ years) of the agreement, pay the City the following:

Year 2002 (approximately 6 months) $0.00 paid to City

Year 2003 $13,000 paid to the City

Year 2004 $38,000 paid to the City

Year 2005 $51,000 paid to the City

Year 2006 $52,000 paid to the City

Year 2007 (8 months prorated) $32,000 paid to the City

The proposed agreement calls for no payment to the City for the first 6 months (End of July – December of 2002). This allows the contractor to make investment in equipment, supplies and staff training and to develop swim programs and create a customer base before making substantial payments for facility use. Payments increase over the following years to reflect growth in the swim programs and increasing revenues.

In accordance with the City/District pool use agreement, the City will be responsible for payment of on-going facility maintenance and infrastructure costs. This includes one-half of all costs incurred by the District for water, gas, electricity, chemicals, garbage, sewer, repairs and cleaning of the swim pool and deck areas. In addition, the City is solely responsible for all charges for water, gas, electricity, garbage and maintenance of the interior of the City’s shower/locker building. The total cost for all these maintenance-related expenses is estimated to be approximately $160, 000 per year. This proposed agreement, however, calls for the Licensee to assume responsibility for payment of water, gas and electric for the swim building (not the pool), garbage for City/Contractor programs and maintenance of the interior of the swim building. This reduces the City’s responsibility for maintenance related cost to approximately $140,000 per year.

PUBLIC CONTACT

Public contact was made through posting of the Council agenda on the City’s official notice bulletin board, posting of the agenda and report on the City’s web page, and the availability of the report in the City Clerk’s office, Community Center, Senior Center and Library.

Copies of this report were also given to the Friends of Fremont Pool and the Sunnyvale Swim Club.

ALTERNATIVES

  1. Council authorizes the City Manager to enter into the attached agreement with California Sports Center.

  2. Council rejects the attached agreement with California Sports Center

  3. Council neither approves or rejects the attached agreement but directs staff to pursue further negotiations on specific aspects of that agreement (to be determined by Council).

  4. Council approves the attached pool fee schedule.

  5. Council rejects the attached pool fee schedule.

  6. Council neither approves nor rejects the attached pool fee schedule but directs staff to pursue further negotiations on specific aspects of that schedule (to be determined by Council).

  7. Council directs staff to submit all future fee schedules for the public use of Fremont High School Swim Pool to Council for Council’s approval prior to changing any swim fees.

  8. Council directs staff to approve all future swim pool fees administratively, consistent with the City’s enterprise philosophy and associated policies of market-based pricing, including resident/non-resident fee differentials and other subsidies where appropriate.

  9. Direct staff to return to Council for approval of initial group fees (for example, Masters Swim Group, Sunnyvale Swim Club, etc.) once those fees have been negotiated.

  10. Other action as determined by Council.

RECOMMENDATION

The Parks and Recreation Commission held a public hearing on this matter on May 15, 2002. Following a good deal of public testimony, discussion and debate, the Commission voted to recommend to Council Alternatives 1 (without modification), 4 (without modification) and 7 (with modification). Specifically, the Commission voted to recommend that Council:

  • Authorize the City Manager to enter into the attached agreement with California Sports Center (Alternative #1 without modification).

  • Approve the initial fee schedule in accordance with Attachment B (Alternative #4, without modification), and

  • Direct staff to submit all future fee schedules for the public use of Fremont High School Pool to Council for Council’s approval prior to establishing and changing any swim fees (Alternative #7 with minor modification in bold).

Staff recommends Alternatives 1, 4 and 8. Staff concurs with the Commission’s recommendations to:

  • Authorize the City Manager to enter into the attached agreement with California Sports Center, and to
  • Approve the initial fee schedule in accordance with Attachment B.

Staff does not support the Commissions recommendation to direct staff to submit all future fee schedules for Council’s prior approval, for reasons previously cited on page 3 of this report (i.e., promoting flexibility and maintaining a consistent approach). Rather, staff recommends that
  • Council direct staff to approve all future swim pool fees administratively, consistent with the City’s enterprise fund philosophy and associated policies of market-based pricing, including resident/non-resident fee differentials and other subsidies where appropriate.

Prepared by:
John Lawrence
Leisure Services Manager

Reviewed by:
Robert A. Walker
Director, Parks and Recreation

Reviewed by:
Mary J. Bradley
Director, Finance

 

Approved by:
Robert S. LaSala
City Manager

Attachments

  1. Proposed Contract Agreement with California Sports Center

  2. Proposed Fee Schedule

  3. City of Sunnyvale Swim Fees, Summer 2002

  4. Letter from Sunnyvale Swim Club to City Council and Parks and Recreation Commission, dated May 15, 2002, Regarding Proposed Contract to Operate Public Use of Fremont High School Pool and Proposed Fees for Fremont High School 50 Meter Pool

  5. Memo from Robert Walker to City Council and Parks and Recreation Commission, dated February 7, 2002, Regarding Council Direction for Fremont Pool

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