School Closure Moratorium CommitteeSeptember 27, 2011

Leasing

Leases can be accommodated in surplus space.

Not-for-profit groups are exempted in the ACU calculation

1 year leases based on provincial regulation

Generated $3.37 million or 0.4% of the approved district budget of $831 million

The overall revenue does not recover operating costs

Does not provide additional funding for teaching and learning

Lease Categories

• There are a number of lease rate categories

• For-profit organizations pay a higher lease rate than those that are not for profit.

• Organizations that utilize the lease space less frequently pay a lower rate than those that utilize the space more frequently.

• For-profit tenants provide revenues which the district uses to keep not-for-profit rates lower.

 

Lease Category Examples

Category A Educational Services PartnershipsCategory B Not-for-Profit Pre-SchoolCategory C Not-for-Profit Child Care Category D For-Profit Child Care Category E Public SectorCategory G Direct Service to Students Category H Decentralized AdministrationCategory I Adult Daycare ProgramsCategory J Language Schools and ChurchesCategory K Charter Schools and Other Districts

Lease Rates

•September 2011 is the third year of Lease Rate and Revenue Distribution plan.

•There is no surplus revenue generated with the lease rates.

•All lease revenue is allocated to pay for school costs, utilities and capital investment to leased space.

•For-profit leases are pooled with revenue from Not-for-profit leases and redistributed to all schools at a standard rate of $1.95 per m2

Leases in Operational Schools

Year Number of Leases

m2 Leased Revenue

2006-2007 146 25,202 $1,191,050 2007-2008 154 26,709 $1,264,607 2008-2009 174 39,560 $1,597,044 2009-2010 200 45,801 $1,755,876 2010-2011 189 45,296 $1,986,202Percent Change

+29% +80% +67%

Leases in Operational Schools

Utility Rates

•A portion of rent revenue

•Utility cost are paid centrally

•District utility rates negotiated centrally

•Costs are averaged

•Older, less energy efficient buildings

Custodial Services

•Most lessees clean their space

•School custodial staff sometimes used

•School custodial costs are recovered from the tenant

•All custodial service funds collected are returned to the school providing the service

Capital Renewal Fund Deductions

•Capital upgrade funding cannot be used on leased space

•Retention of Capital Renewal Funds from lease revenue initiated in 2006-2007

One Leased Classroom - For

Profit Daycare (80 m2)

One Leased Classroom - Not For Profit Daycare

(80 m2)

Monthly Lease Rate(Effective September 2011)

$8.25/m2 $4.90/m2

Gross Monthly Lease $660.00 $392.00Deduction for Utilities(Paid centrally)

$96.80 $92.00

Deduction for Capital Renewal Fund (Paid centrally)

$407.20 $144.00

Net Lease Paid Monthly to School ($1.95/m2)

$156.00 $156.00

Example of For-Profit vs Not-for-Profit Daycare Lease Rates

Operational School Leases

District # Schools

# Leases

# Locations

Leased Area in m2

Edmonton Public

197 189 109 45296

Edmonton Catholic

87 102 57 19617

Calgary Board of Education

221 75 64 12431

Leases in Non-operational Schools

Year m2 Leased Revenue

2005-2006 11,440 $290,327 2006-2007 25,600 $645,515 2007-2008 25,769 $678,275 2008-2009 24,581 $650,257 2009-2010 28,252 $1,084,978 2010-2011 34,588 $1,391,212Percent Change +202% +379%

Leases in Non-operational Schools

• Closed schools housing Charter and Francophone schools will receive $1.00 per year as annual rent

• Loss of $856,000 per year by 2013-2014 school year

• PO&M funding will be provided to the lessee district

• The host district will be eligible for Infrastructure Maintenance Renewal Funding

Leasing ChallengesCommercial rates not realistic

Lease terms limited to 12 months (School Act-Disposition of Property Regulation)

The District cannot provide capital improvement incentives common in commercial rates

Urban Services zoning applied to public school sites

Leasing Challenges

• Significant changes can trigger unfunded building code upgrades

• Profit-taking through leasing could threaten property tax exempt status

• Joint Use Agreement relationship with several City of Edmonton departments

• Student safety

• Unfair competition with the private sector

New Initiatives

Leasing Database and Space Management System

Schedule D Tenant Improvements/Renovations ensure district standards are followedapproved vendors and productsensure that Maintenance Services has an

opportunity to bid on the workGreen Cleaning in Tenant SpacesLegal documents rewritten in plain languageSocial and ethical clause to reflect new Board

Policies

Questions