06/23/21: Temporary Funding to Complete the Performing Arts Center

TO: Board of Education
FROM: Randall Booker, Superintendent
DATE: June 23, 2021
RE: TEMPORARY FUNDING TO COMPLETE THE PERFORMING ARTS CENTER

I. SUPPORT INFORMATION

Background: The Performing Arts Center

In 2016, Piedmont voters approved a $66 million school facilities bond to modernize and improve Piedmont Unified School District facilities to better support educational programs. This includes, but is not limited to, construction of a Performing Arts Center with a new Alan Harvey Theater; green room with dressing rooms; Acting classroom; Visual and Performing Arts Department office; and conference room. The Performing Arts Center is the final project of the 2016 facilities bond program.Â

Added and unforeseen costs, including expenses directly related to the Covid-19 pandemic, increased the overall program costs by roughly $3.885 million. (For more information about the bond program objectives and budget, see the March 24, 2021 Measure H1 Bond Program Update.) A significant portion of these added costs have been offset through value engineering and deferrals that are not expected to impact students. Nonetheless, the District continues to face a shortfall of roughly $1.8 million. To complete the Performing Arts Center and remain within the overall program budget, the District would have to make further cuts that will impact the educational program and the student experience.Â Â Â

The District anticipates that it will receive at least $1.8 million in additional funding for the Performing Arts Center, although the timing is uncertain. This funding is expected from at least one of two possible sources. First, the District is partnering with members of the Piedmont community to create a capital campaign. This campaign will raise funds to avoid further cuts and deferrals from the Performing Arts Center, restore features that were previously deferred, and make other improvements to school facilities. This capital campaign may take several years to complete. Second, the District is eligible to receive an estimated $4 to $6 million in State modernization funds that may be used for the Performing Arts Center, but receipt of these funds depends on the approval of a statewide school construction bond by State voters.Â Â Â

Piedmont Education Foundation Support for PUSD Schools

The Piedmont Education Foundation, a community-based 501(c)3 non-profit corporation, is dedicated to providing sustained financial support to the District through fundraising and community engagement. PEF contributes approximately 10% of the District annual budget and stewards an endowment fund of more than $9 million.

Consistent with its mission to support the District, PEF agrees to provide the District with the temporary use of up to $1.8 million in endowment funds, so the District may complete the Performing Arts Center without further cuts to the project scope. The District agrees to return these funds to PEF when the District receives sufficient money from either the capital campaign or State modernization funds, or a combination of these two sources.

Memorandum of Understanding with PEF Concerning Temporary Funding to Complete the Performing Arts Center

Subject to approval by the Board of Education, the District and PEF agree to the following: When final payments are due to Overaa, and if the District determines that temporary use of PEF endowment funds is the lowest overall cost option, PEF would provide the District with up to $1.8 million in endowment funds to cover the cost of completing the Performing Arts Center. The District would use these funds solely to pay for six categories of expenses agreed upon with PEF. These are the expenses that would have otherwise been cut or deferred in order to complete the Performing Arts Center within the overall program budget. The District would return these funds to PEF when the District receives sufficient money specifically allocated for capital expenditures, from either the capital campaign, State modernization funds, or other sources.Â Â

II. RECOMMENDATION: REVIEW AND APPROVE

Review and approve the proposed Memorandum of Understanding between the Piedmont Unified School District and the Piedmont Education Foundation concerning temporary funding to complete the Performing Arts Center.

MEMORANDUM OF UNDERSTANDING

Temporary Funding to Complete the Performing Arts Center
Agreement Between theÂ Piedmont Unified School District and the Piedmont Education Foundation

June 2021

Funding to Complete the Performing Arts Center. In 2016, Piedmont voters approved a $66 million school facilities bond to modernize and improve Piedmont Unified School District facilities to better support educational programs. This includes, but is not limited to, construction of a Performing Arts Center with a new Alan Harvey Theater; green room with dressing rooms; Acting classroom; Visual and Performing Arts Department office; and conference room. The Performing Arts Center is the final project of the 2016 facilities bond program.Â

Piedmont Education Foundation Support for PUSD Schools. The Piedmont Education Foundation, a community-based 501(c)3 non-profit corporation, is dedicated to providing sustained financial support to the District through fundraising and community engagement. PEF contributes approximately 10% of the District annual budget and stewards an endowment fund of more than $9 million.

Findings. The Piedmont Unified School District Board of Education finds:

To complete the Performing Arts Center within the program budget, further cuts and deferrals would be needed that would have a negative impact on educational programs and the student experience.Â Â
The roughly $1.8 million in contemplated cuts and deferrals (such as the stage floor, acoustic panels, and theatrical equipment) would balance the bond program budget in the short term. Nonetheless, â€œadding backâ€ these items after the Performing Arts Center project is completed would be logistically complicated and significantly, disproportionately more expensive.Â Â Â Â Â Â
It is reasonable to expect that the District will receive at least $1.8 million in capital improvement funds — from either the capital campaign or State modernization funds — that may be used for the Performing Arts Center, although the timing of receipt is uncertain.Â Â
The additional funds would not be needed until final payments are due to Overaa Construction in the winter or spring of 2022 (during the 2021-22 school year). When final payments are due to Overaa, there will likely be various options for financing the temporary budget shortfall until either capital campaign funds or State modernization funds are available.Â Â
In consultation and partnership with PEF, the District will seek the lowest overall cost option for financing. The temporary use of PEF endowment funds to complete the Performing Arts Center project would mean the loss of interest earnings that would otherwise accrue to PEF and eventually be used to make grants to (or otherwise for the benefit of) the District. Nonetheless, based on the cost of financing and a savings analysis, the District may determine that the temporary use of PEF endowment funds is the lowest overall cost option, in part because of the uncertain timing of capital campaign funds and State modernization funds.

Agreement. The Piedmont Unified School District Board of Education and PEF agree:

When final payments are due to Overaa, working in consultation with PEF, the District will identify and evaluate the various financing options. The options may include: deferral of the Districtâ€™s final payments to Overaa under the terms of the lease-leaseback agreement; tax exempt financing options; and temporary use of PEF endowment funds. Any consideration of the temporary use of PEF endowment funds will take into account the loss of interest earnings that would otherwise accrue to PEF on those funds. The District will share its evaluation and analysis with PEF.Â Â
Following consultation with PEF, the District will determine the lowest overall cost option for financing.Â Â
If the District determines that temporary use of PEF endowment funds is the lowest overall cost option, PEF will provide the District with up to $1.8 million in endowment funds to cover the cost of completing the Performing Arts Center. PEF will provide these funds for timely payment of these obligations.
The District will use these funds solely to pay for the following six categories of expenses agreed upon with PEF. These are the expenses that would have otherwise been cut or deferred in order to complete the Performing Arts Center within the overall program budget:
– Category 1: Casework, wood stage floor, window shades
– Category 2: Concrete and steel trellis, wood slat ceiling
– Category 3: Acoustic paneling
– Category 4: Theatrical equipment including orchestra shell, rigging, and drapes
– Category 5: Insulation, theatrical AV, site concrete, low voltage electrical system
– Category 6: Carpeting, seating, lobby floor, theatrical fixtures and installation
The District will return these funds to PEF when the District receives sufficient money specifically allocated for capital expenditures, from either the capital campaign, State modernization funds, or other sources.Â Â

Understandings. The Piedmont Unified School District Board of Education and PEF understand that:

Liability. No liability will arise or be assumed between PEF and PUSD and their respective staff and officers as a result of this MOU. This MOU shall be construed in accordance with the laws of the State of California.
Conflict Resolution. Should a conflict arise between PEF and PUSD regarding this MOU or activities of mutual interest, PEF and PUSD will work together diligently toward its resolution. If needed PEF and PUSD should appoint an independent conflict resolution expert to mediate resolution.
Modification. This MOU may be amended or supplemented by mutual consent of PEF and PUSD by the issuance of a written modification, signed and dated by authorized officials.
Termination/Severability. If any provision of this MOU is found to be invalid or unenforceable for any reason, the remaining provisions will continue to be valid and enforceable. Either party, upon ninety (90) days written notice, may terminate the agreement in whole, or in part, at any time before the date of expiration.
Prior Memorandum Superseded. This MOU constitutes the entire MOU between PEF and PUSD relating to this subject matter and supersedes all prior or simultaneous representations, discussions, negotiations, and MOUs, whether written or oral.

This Memorandum of Understanding constitutes the entire agreement between the District and PEF with respect to temporary funding to complete the Performing Arts Center. This Memorandum supersedes all prior discussions and agreements, written and oral, between the parties on this issue.

______________________	______________________
Charlotte Ero, Treasurer Piedmont Education Foundation Board of Directors	Cory Smegal, President Piedmont Unified School District Board of Education
______________________	______________________
Heather Frank Executive Director Piedmont Education Foundation	Ruth Alahydoian CFO Piedmont Unified School District