Terms of Proposed Agreement

PROPOSED TERM SHEET: WORKING DOCUMENT PREPARED 5/5/2004 (1:40 p.m.)

CONDITIONS OF RELEASE: THIS DOCUMENT REPRESENTS THE JOINT WORK OF THE CITY MANAGER AND SUPERINTENDENT TO DATE AND IS PRESENTED FOR THE CONSIDERATION OF THE CITY COUNCIL AND BOARD OF EDUCATION. IT IS EXPRESSLY NOTED THAT THIS PROPOSED TERM SHEET HAS NOT BEEN REVIEWED BY LEGAL COUNSEL AND FURTHER CLARIFICATION AND DEFINITION MAY BE NECESSARY.

INTENT AND EXPECTATIONS OF THE PARTIES
1.) Intent of parties is to maximize the exchange of value - community use of school facilities and revenue flow to district. It is recognized by both parties that new and ongoing resources are desired and necessary to fully support the strategic plan(s) and the community’s expectations of both organizations. The parties understand that if any initiative is approved by the voters that would adjust or amend the City Charter for the purposes of funding educational programs, the contract is no longer binding.

TERM(S)
2.) Initial five Year term beginning July 1, 2004 and ending June 30, 2009 with two 2.5 year options to extend by mutual agreement.

BASE PAYMENTS
3.) Effective July 1, 2004 annual base payments will total $6,000,000.00.

ANNUAL ADJUSTMENT TO BASE
4.) Annual Base Payments will be adjusted by the Consumer Price Index for all urban wage earners and clerical workers for LA/LB SMSA (CPI), as measured from February to February with a minimum 2% and a maximum 4% adjustment.

OTHER ADJUSTMENTS TO BASE
Conference and Participation
5.) In January 2007 the parties will convene an adjustment conference to assess the state of community use of school facilities and the fiscal status of the two organizations with the objective of adjusting the current payments for the use of said facilities upward or downward by a maximum of $1,000,000.00, or holding payments constant for 2007/2008. The adjustment conference participants (conferees) will consist of the following persons: the City Manager, the Superintendent of Schools, the Finance officers of both the City and School District, the Mayor, and the School Board President. The conferees will participate in the adjustment conference with the objective to have recommendations before the City Council and School Board by March 1, 2007.

Revenue Sources
6.) In assessing the fiscal status of the City in order to establish the payments for the use of school facilities, the total of the following “Big Eight” General Fund revenue sources will be used: 1) property tax, 2) sales tax, 3) utility users tax, 4) transient occupancy tax (TOT), 5) business licenses tax, 6) real property transfer tax, 7) parking facilities tax, and 8) fines/forfeitures.

Trigger
7.) If the cumulative growth of the actual "Big Eight" revenues (see section 6. Revenue Sources) over the two-year period 2004/2005 and 200520/06 exceeds the increase of CPI by 4% and the increase in each of those years exceeds the CPI by at least 1.25%, the conferees will discuss adjusting the base payments by an additional 3/4 of 1% of the average of the actual "Big Eight" revenues for 2004/2005 and 2005/2006 by a maximum of $1,000,000.00 effective 2007/2008. While the result of the discussions can not be pre-determined, the conferees will be mindful of the intent of this contract in approaching the discussion.

8.) If the actual cumulative growth of the revenue sources found in the “Big Eight” exceeds CPI but does not reach the level specified in #7, above, the conferees will discuss whether to recommend if there should be any adjustment to base payments above that specified in #4, above. While the result of the discussions can not be pre-determined, the conferees will be mindful of the intent of this contract in approaching the discussion.

9.) If the actual cumulative growth of the revenue sources found in the “Big Eight” does not increase by at least CPI in 2004/2005 and 2005/2006, the conferees will discuss whether: 1) base payments should be held constant, 2) the CPI contemplated in #4, above, withheld, or 3) base payments reduced by some amount which in no case would exceed $1,000,000.00. While the result of the discussions can not be pre-determined, the conferees at the conference will be mindful of the intent of this contract in approaching the discussion.

CONTRACT EXTENSION and ADDITIONAL ADJUSTMENT

10.) In January 2009, the adjustment conference described above will be convened to assess the state of community use of school facilities and the fiscal status of the two organizations and discuss whether the contract should be extended for an additional 2.5 years, using the formula described in 7 and 8, above to set the 2009/2010 base payments, except that the $1,000,000.00 maximum will be adjusted for the change in CPI since the 2007/2008 adjustment, providing a new maximum cap. Should the second contract extension option be exercised, the same process would be followed to set the 2012/2013 base.

EXTRAORDINARY CONDITIONS

11.) If in each of any two consecutive fiscal years over the term of the contract the actual growth of the total "big eight" revenues exceeds 7.5%, the conferees will meet in January to discuss adjusting payments above the then applicable cap effective July 1 of the same calendar year.

12.) If in each of any two consecutive fiscal years over the term of the contract the actual revenue from the total "big eight" declines by 7.5%, the City may convene the conference to discuss temporarily suspending the contract.