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OPINION -- City Held Tax Revenues Hostage, School District Left Millions on the Table

By Nikki Kolhoff and Ann Thanawalla

May 14, 2018 -- In 2016, Santa Monica residents generously voted to increase our taxes to support affordable housing and our public schools.

Although the combined measures (GS/GSH) were “advisory” transaction and use taxes, voters were told to trust our City Council to pay the revenue over to the School District. Both measures passed and in each case voters told our government to give half of these tax increases to our public schools.

Despite this clear mandate from the voters and the legal ability for the City to pay the tax revenues over to the School District, the City wanted more.

It refused to release the GS/GSH sales tax proceeds residents voted for with no strings attached to the School District unless the School District gave the City something it wanted in return. In April, both the City Council and School Board approved a princely ransom paid to the City in the form of School-District owned Los Amigos Park.

The district fell prey to this same maneuver in 2011 when pro bono district representation negotiated the release of Measure Y/YY money by offering the use of Samohi facilities to the City.

The City already had a separate agreement with the District for leasing our facilities that began in 2005. For transparency’s sake, that contract should have remained an independent, arms-length transaction and the City should have released the tax proceeds in compliance with law.

Instead, the two concepts have been combined to blur the lines of the City spoils when simply honoring the will of the voters was what we expected of them.

At the same time, the City Council and School Board approved amendments to Supplements to the Master Joint Use Agreement. With no additional payments required by the City the City gained more use of Lincoln and JAMS as well as the elementary campuses through City-run and private after school programs and playground access for most hours that school is not in session.

Here are just a few reasons why these were terrible deals, both monetarily and procedurally:

* Contrary to what the City Council and School Board said, statutes, case law and our Local Control Funding Formula all support the principle that no additional consideration is required for the City to hand the sales tax revenues from Y/YY and GS/GSH to the School District.

* Even if additional consideration were required, the tremendous campaign assistance from the school community, which provided he City $16 million in additional revenue in 2017 for public safety and affordable housing, combined with educating 11,000 students annually, should be plenty of consideration.

* The School Board and Superintendent claim to have been provided with a legal opinion of District counsel (in addition to relying on the City Attorney who represents the other side) but so far they have not provided us a copy of such opinion after stating they would do so.

* School Board President Richard Taldaverian-Jesswein asked City Council to agendize the City’s approval during spring break when the school community was not available to participate in the public process. Richard works for Santa Monica College, which also takes advantage of our District’s facilities.

* City Council doesn’t even read the agreements but instead authorizes the City Manager to enter into the agreements, so how can they know what they are voting on?

* The School Board and Superintendent did not present the Joint Use Agreements as Discussion Items in a separate meeting prior to the vote for purposes of soliciting feedback and revisions, which took place in 2011 for YY. Instead they skipped straight to the Action Item final vote. To counter the public’s vocal and written objections to failed procedure, Taldaverian-Jesswein said it wasn’t worth delaying simply because the public was questioning the legal requirement for the consideration because he wasn’t going to second guess the advice he had received in consultation with “the electeds.” Oscar de la Torre tried to ask what certain code references in the agreement meant and Laurie Lieberman immediately jumped in to rush things along by saying they weren’t “relevant to the agreement particularly.”

* The public hearing was such a sham that even an amendment supported in concept by all School Board members that was beneficial to the School District did not pass because Lieberman said, “I don’t think we should change language from the dais.” Nevertheless, she stated, “This is a public process. The City Council had a hearing. We had a hearing.”

* The School Board has a Financial Oversight Committee (FOC) with a specific charge of overseeing the Joint Use Agreements, yet these agreements were never presented to the FOC for review. Schools superintendent Dr. Ben Dr. Drati said “they are advisory so there is no legal requirement to go through the FOC to bring things forward.”
Jon Kean attempted to distinguish that the FOC was there to review the Master Joint Use Agreement but not the YY or GSH Joint Use Agreements, however at the July 19, 2017 meeting, the School Board adopted the FOC’s Annual report which stated that one of the responsibilities of the FOC includes “review of the City of Santa Monica Joint Use Agreement, the City of Malibu Joint Use Agreement...” and because the City was attempting to commingle all of the joint use revenue streams, review and advice from the FOC was absolutely warranted. Lieberman, Kean and Craig Foster are the board liaisons for FOC. The pro bono, Santa Monica-based land use attorney who negotiated with the City for YY money in 2011 was appointed to the FOC four months later, and advised the District again on the GSH agreement. This attorney is in a law partnership with Ms. Lieberman’s husband.

* The School Board has a Facilities District Advisory Committee (FDAC) that also was not shown the agreement prior to the vote. Lieberman and Ralph Mechur are the board liaisons for FDAC.

* The Master Joint Use Agreement requires an annual review and two public hearings by March 12th each year to review the payment owed by the City and to make sure they were paying the correct amount. In 2018, these meetings did not take place which is a breach of the contract that neither party addressed, even when raised by parents at the City Council and School Board meetings. The School District’s decision to amend the contracts while they are out of compliance may be a deemed waiver of any default by the City and block the School District from collecting any past-due amounts owed under the agreements.

* With these agreements, the District has given the City access to all remaining District properties and failed to secure the Civic Center Sports Field from the City in return. The District lost any leverage it had by entering into these agreements prior to finalizing the Sports Field, requiring the City to submit it to the Coastal Commission for approval, and requiring full inclusion of the Sports Field in the Local Coastal Program.

Immediately upon learning these new plans for joint use (from a City Council agenda and not from any School District outreach), concerned parents reached out to the School Board and Superintendent asking to meet privately and discuss our findings. Unfortunately, both the City and School Board meetings moved ahead without without any prior meeting with parent stakeholders.

So parents are left with no choice but to inform themselves and educate other parents about the facts so that we, as a body, may effectively advocate.

In this case, ill-informed and economically bad decisions have been made by our School Board that waste our resources and negatively impact our kids. Money is fungible and millions of dollars were just left on the table, yet the District will expect the public to unquestioningly open our wallets the next time we’re asked.

What will we do? Perhaps that depends on whether or not we believe the District is acting as responsible fiduciaries of our existing assets.


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