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HomeMy WebLinkAboutEstablish-Provide Seed Funding 4yr. Stand Alone CSU Campus in Palm DesertSTAFF REPORT CITY OF PALM DESERT ECONOMIC DEVELOPMENT DEPARTMENT MEETING DATE: March 12, 2020 PREPARED BY: Wayne Olson, Senior Development Analyst* REQUEST: Establish and provide seed funding to a public benefit corporation for the purposes of future and current strategic initiatives, including securing a four year, stand-alone California State University campus in Palm Desert. Recommendation By Minute Motion: 1) Authorize the establishment and formation of a 501 c4 organization for the implementation of City and regional future strategic initiatives, including securing a four year, stand-alone California State University (CSU) Campus in Palm Desert; 2) Authorize the appointed Palm Desert City Council members (Harnik, Jonathan) of the University Planning Subcommittee to review and approve the incorporation of the 501c4, including bylaws; 3) Authorize the Finance Director to appropriate $100,000 from the unobligated Economic Development Reserve Fund to provide seed capital for the 501 c4; 4) Authorize the City Manager to execute documents of incorporation that will be required to establish and form the 501 c4 Executive Summary The creation of a 501 c4 exempt organization provides the City with operational flexibility to pursue current and future strategic initiatives by providing the ability to work in concert with community organizations and their collective resources, on selected issues, including securing a stand-alone four year CSU Campus located in Palm Desert. Backqround In 1994, the CSU and the City of Palm Desert entered into a Memorandum of Understanding initiating a process by which CSU would study the feasibility of relocating their operations from leased space at College of the Desert to land owned by the City's Redevelopment Agency. Following execution of the MOU, both parties formed a Coachella Staff Report CSU Expansion Campus — 501 c4 Authorization March 12, 2020 Page 2 of 5 Valley Center Master Plan Advisory Committee, which developed and adopted the Master Plan for the CSU San Bernardino (CSUSB) Permanent Coachella Valley Off -Campus Center in 1997. In 1999, CSU and the former Redevelopment Agency (now SARDA) formalized a Disposition and Development Agreement in which CSU committed to construct and equip facilities on land donated by the City, raising funds through a capital campaign and a private/public partnership sponsored by CSUSB, with CSU recognizing that "such a facility would yield significant educational, cultural, and economic benefits to the Coachella Valley region." The Redevelopment Agency recognized the "benefit to the region and its citizens of having CSU acquire and develop the Site," while CSU recognized "that it is in the best interest of the state and its citizens to develop the Site for purposes of its higher education mission." In subsequent executed agreements and Memoranda of Understanding in 1999, 2000, and 2015, 170 acres of land was conveyed to CSU at no cost for the development of the campus, an approximate value of $22.9M (2019 comparative valuation). Then, CSU established a University Planning Committee comprising five members identified by Palm Desert, five members identified by the President of CSU, and two identified by the Chancellor of the University of California, Riverside, with all three entities jointly appointing a 13th member to serve as Chair. In 2014 through 2018, the City of Palm Desert updated its General Plan, and CSU created a new Master Plan for the Palm Desert Campus. Both planning exercises were undertaken with full involvement and cooperation of both institutions, and reflect the development of an 8,000-student campus surrounded by housing, commercial, and business parkland uses specifically tailored to meet the needs of the students, faculty, and staff of the future university. Current Analysis In 2019, the Governor approved a budget which included $4 million for the CSU to retain a consulting team to assess the capacity of their existing system and the potential for developing a 24111 standalone campus at one of five locations in the state. The sites under consideration include San Mateo County, Chula Vista, San Joaquin County (Stockton), Concord, and the City of Palm Desert. The consultants were tasked with assessing key issues including: 1) the local and regional educational and workforce development ecosystems, 2) the socio-economic context of current and/or potential future CSU students and their families, 3) the regional economy, and 4) the available physical sites and infrastructure suitable for CSU facilities. The consultants spent February 28, 2020 visiting the Coachella Valley for a single day, and met with stakeholders and interested parties to inform a report to be presented to the Chancellor's Office of CSU. From the Chancellor's office, the report will be provided to the Governor's office by July 1, 2020, whereupon a decision may be made about funding an independent stand-alone campus at one of the five sites listed above. G \Econ DevelopmentMayne 0IsoMCSU1SR\CSU SR 3 12 20 FINAL doc Staff Report CSU Expansion Campus — 501 c4 Authorization March 12, 2020 Page 3 of 5 It is the belief of staff that the Palm Desert campus is the best choice for CSU to focus efforts towards achieving their educational mission for several reasons. Primary among those reasons are the availability of land and the relative state of readiness of the infrastructure improvements already in place (e.g., immediate vs. 2-5+ years in Stockton or another site); the relative isolation and lack of four year college educational opportunities in the Coachella Valley; and the poverty levels and cultural values that prevent students from many parts of the Valley from pursuing college. Education attainment levels for several areas in the Coachella Valley show that the percentage of residents with Bachelor's degrees is far below state averages and the rates seen in the other areas under consideration for CSU expansion. The relative isolation of the Coachella Valley is also key to this issue. The nearest full four- year college to the Palm Desert Campus is 61 miles away, which does not include Mexico. Each of the four other locations under consideration has a number of options for higher education within the same distance: Chula Vista has six, Stockton has seven, and Concord and San Mateo each have more than twenty. The remoteness of the Coachella Valley and the financial and cultural restrictions noted above mean that no amount of excess capacity in existing institutions located outside of Coachella Valley will benefit the region; students lack the means to commute 120 miles (or more) round trip to attend college. Further, the poverty level and cultural values of many students in the Coachella Valley are such that moving away from home to attain a higher education is impractical. According to a 2018 article in the Los Angeles Times, 39% of the population of the east end of the Valley live in poverty, more than twice the state's rate. Latino and Hispanic cultures are known for placing a strong value on family with large, close-knit families, frequently living with two or three generations together. A university situated in the Valley is the only practicable way for students who share such values to live at home while achieving the education necessary to elevate themselves beyond poverty. To that end, it is the recommendation of staff that a new, exempt, public benefit corporation be formed, with the City as the incorporating sponsor. In doing so, the Council will create the ability to share these facts and other relevant data to the widest audience and to vigorously pursue securing a stand-alone four year campus in Palm Desert that serves the region's future higher educational needs. The 501 c4 Organization There are other statewide and national cases where cities have created stand-alone organizations for the receipt of additional resources, resources that may not otherwise be secured, for strategic initiatives that benefit both the city and region in which the organization exists. Examples of initiatives include securing a professional sports team, securing national or international events such as an Olympics or Super Bowl, and other such initiatives that require considerable community resources and organization of disparate community partners which may be otherwise difficult to manage within municipal organizational structure. Other examples of the utility of an exempt organization could be to accept legacy gifts from citizens via estate donations, or to create and offer scholarships to G \Econ DevelopmentMayne Olson\CSU\SR\CSU SR 3 12 20 FINAL doc Staff Report CSU Expansion Campus — 501 c4 Authorization March 12, 2020 Page 4 of 5 future higher education candidates, in particular those attending local colleges and four-year universities. The purpose of the Palm Desert 501 c4 would be to allow for the greatest operational flexibility in pursuing strategic initiatives, while also still maintaining transparency via Brown Act requirements for meeting notifications. Activities of the organization may include public outreach efforts, public relations campaigns, intensive data gathering, community organizing, and lobbying efforts within various state institutions, including the Governor's office. The proposed mission of the organization is to enhance the education, arts, environment and economic resources of the region for the residents and guests of the Greater Coachella Valley. To create a 501 c4, the City sponsors incorporation documents that are drafted by the City Attorney, along with bylaws that govern the operation of the organization, which will be reviewed by Palm Desert Councilmembers of the University Planning Subcommittee. It is proposed that City staff direct the efforts of the organization for this particular initiative. Once incorporated, the organization may begin to accept contributions from other regional partners. The advantage of a 501 c4 structure (over other exempt organizational structures) is that corporate and business donors can write off contributions as business expenses, a considerable benefit to potential community contributors. In addition, the other institutional organizations will be more likely to participate if given the opportunity for direct oversite through the (proposed) structure of the board, allowing for greater participation in decision making about directing resources. Ultimately the organization demonstrates the region's ability to build goodwill efficiently and quickly, and coalesce around legacy issues that may not otherwise occur if solely a City initiative. One of the factors the Chancellor's office and the Governor's office may include in their decision making is a region's ability to support an independent four year campus, via donors in particular, and a demonstration of this commitment through a community organization would contribute to strengthening that factor. And while the current initiative the organization will primarily focus on in the near term is the strategic implementation of efforts toward securing a four year campus in Palm Desert, it will have the flexibility to broaden its efforts toward future, currently unidentified, endeavors. The structure of the organization will include a "working" Board of Directors, along with an Advisory Board, which will serve to guide the vision and mission of the organization. The working Board should include seats for the CVB, Coachella Valley Association of Governments, Coachella Valley Economic Partnership, and the City Manager of Palm Desert. It may be possible to include two unreserved seats for future use. The Advisory Board will include local, state, and possibly federal elected officials, along with community partners of influence including the Agua Caliente Band of Cahuilla Indians Tribal leaders, along with leadership from donor corporations as well as leaders from Sunline, Southern California Edison, and other community utilities and water agencies. G IEcen DeveiopmerMayne 01somCSU\SRICSU SR 3 12 20 FINAL. doc Staff Report CSU Expansion Campus — 501 c4 Authorization March 12, 2020 Page 5 of 5 Timeline Once Council authorizes the incorporation, the Palm Desert Councilmembers of the University Planning committee will gather to review the incorporation documentation, including bylaws during the week of March 16, 2020. Once bylaws are established, and a board is convened, other administrative actions can take place that are required for the organization to become operational. Once operational, the organization can develop the strategic initiatives that will be employed until July of 2020, in concert with its newly appointed Board. If all proceeds as planned, the bulk of the strategic work for the current initiative will be underway by early April, 2020. In the meantime, staff will be pursuing ongoing efforts that do not require extraordinary resources, including coordination of a community wide letter writing campaign. Following this current initiative, the Board and Advisory Committee will develop other funding and strategic initiatives that satisfy the mission of the organization. Fiscal Impact The organization will require $100,000 to seed start up activities. This action requests that the Council direct the Finance Director to appropriate $100,000 from the Economic Development General Fund Reserves for the purposes of founding the 501 c4 organization. Other organizations, such as the CVB, are reviewing pledges of matching funds to kick start the overall funding. It is anticipated with this seed capital, the organization will be able to collect contributions from other currently unapproached community partners and individuals. Resources will be focused on engaging partners both in the region and in Sacramento for this initiative. LEGAL REVIEW DEPT. REVIEW FINANCIAL REVIEW ASSISTANT j CITY MANAGER Marti Alvarez �t s- W Director of J et M. Moore �.ssistant ndy Firestine Hargreaves Economic Director of Finance City Manager City Attorney Development _ _ r - City Manager Lauri Aylaia'i: *Note: Staff wishes to thank Tom Kirk and the Coachella Valley Association of Governments staff for their contributions to this report. G \Econ Development\Wayne Olson\CSU\SR\CSU SR 3 12 20 FINAL doc