CITY OF HALLANDALE BEACH

MEMORANDUM

DATE:                        August 25, 2009                     

TO:                 D. Mike Good, City Manager

FROM:            Andrea Lues, General Services Division Director

SUBJECT:     An Ordinance of the City of Hallandale Beach, Florida, Approving and Authorizing a Contract Lease of up to 90,000 square foot portion of the City owned property to Broward County for Library purposes.  (Second Reading)

PURPOSE:

To adopt on Second Reading an Ordinance Approving and Authorizing a Contract Lease of up to 90,000 square foot portion of the City owned property to Broward County for Library purposes. 

BACKGROUND:

Section 23-32(a), Leases and Franchises, of the City Code, requires that leasing of City public grounds be authorized by ordinance.  At the August 19, 2009 meeting the City Commission approved the Ordinance on First Reading and further directed staff to:

a) Research Public-Private Partnership (PPP) opportunities for the administration of the Public Library and provide recommendations.

b) Reduce the lease contract term from twenty (20) years to ten (10) years.

c) Include a reciprocal termination clause.

Second Reading of the Ordinance was scheduled for September 16, 2009. 

DISCUSSION:

As directed by the City Commission, staff has conducted research on the possibility of a Public-Private Partnership (PPP), to operate a City-owned library. There are private library management companies that are responsible for the long range planning, library operations, library program development and implementation and staff development. However, these private companies do not set policies for operations or acquire library assets (i.e. books, computers, fixtures, furniture, etc). These companies also seek long-term agreements (5 years or more), which would require a consistent and known source of funding to support the agreement.

Potential benefits include:

- Cost savings - Cost savings can be realized by sharing the operation and maintenance of the facility and services. Private partners may be able to reduce the cost of operating or maintaining the facility by applying economies of scale, innovative technologies, and/or by reducing overhead.

-     Risk sharing - Risks could include cost overruns, inability to meet schedules for service delivery, difficulty in complying with environmental and other regulations, or the risk that revenues may not be sufficient to pay operating and capital costs.

-     Improved levels of service or maintaining existing levels of service - PPP can introduce innovation in how service delivery is organized and carried out. It can also introduce new technologies and economies of scale that often reduce the cost or improve the quality and level of services.

-     Enhancement of revenues - fees may be set that reflect the true cost of delivering a particular service. The opportunity to introduce innovative revenue sources that would not be possible under conventional methods of service delivery may be introduced.

-     Economic benefits - Increased involvement by the City in PPP can help to stimulate the private sector and contribute to increased employment and economic growth. Local private firms that become proficient in working in PPP can “export” their expertise and earn income outside of the region.

Following are some of the potential risks with PPP:   

- Loss of control by local government - This often leads to concerns about who controls the delivery of services.

- Increased costs - Not all local governments consider the true costs of providing services when establishing their pricing policies for fees for services. For example, the costs of overhead or administration and depreciation of assets are often not included in the pricing of individual services. In some cases, there are explicit subsidies for specific services. The delivery of services through public private partnerships requires pricing policies and fees to reflect all relevant costs. This can have the effect of increasing user fees for specific services.

- Unacceptable levels of accountability - Certain local government services are more sensitive than others in terms of public demand for accountability and responsiveness. With public private partnerships, the lines of accountability for the provision of services are less clear to the public than under conventional service delivery. This may result in public criticism of the partnership arrangement and the private partner, or require increased involvement of the local government in ensuring compliance and responding to public demands.

- Unreliable service – not continuing with the services as they are provided today would mean not having the ability to share the libraries resources.  Having access to all of Broward County’s libraries and its services would be unavailable.

Currently, Broward County is responsible for retaining staffing levels and expertise, library day-to-day operations, inventory, programs, technological upgrades, building improvements, property maintenance, utilities and other services. Operating a City-owned library would result in the City/CRA to bare expenditures and operational expertise, such as:

Ø Personnel Cost

Ø Operational funding sources

Ø Building/Property Maintenance

Ø Technological Improvements and Maintenance

Ø Program Level of Service

Ø Insurance/Liability Coverage

Ø Library Assets (i.e. books, computers, furniture, fixtures etc.)

The City entered into a lease agreement with Broward County in 1979 for a term of thirty (30) years from October 1, 1979 through September 30, 2009.

The following terms of the lease agreement were revised as requested by City Commission on August 19, 2009:

1) The term was reduced from a twenty (20) year contract to a ten (10) year term.  The term is from 10-1-2009 through 9-30-2019.

It is in the best interest of the citizens of the City of Hallandale Beach to provide the library services and grant authority for the lease of space through the adoption of an ordinance.  The term of the lease agreement is from October 1, 2009 through September 30, 2019. 

RECOMMENDATION:

1) Pursuant to Section 23-32 (a), Hallandale Beach Code, the City Commission approve an Ordinance on Second Reading authorizing a ten year (10) lease agreement with Broward County for the period October 1, 2009 through September 30, 2019.

2) Authorize the City Manager to continue negotiations with Broward County, in the best interest of the City for enhanced programs and equipment as economically feasible.

3) Authorize the City Manager to renew for a 2^nd ten (10) year term in the best interest of the City.

Reviewed:

_______________________________                                                   __________

D. Mike Good, City Manager                                                                           Date

_____Approved                _____Disapproved                _____Hold for Discussion

Comments:

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