Quick Take:

Negotiations between Live Oak School District and two local seniors organizations renting a district-owned property have hit a roadblock over the district’s requirement that the organizations publicly endorse a bond measure for teacher housing as part of the lease agreement. Community Bridges, which runs Meals on Wheels out of the building, has called the demand illegal and a violation of the California Education Code. The district says the requirement is a response to comments by Community Bridges staff that they would campaign against the bond unless the district agreed to the organization’s lease terms.

Drawn-out negotiations over the future of a two-year lease agreement between Live Oak School District and local seniors organizations have stalled over what the service providers are calling an “illegal” requirement by the district to support a planned bond measure to build teacher housing.

Meals on Wheels and Senior Network Services have been operating out of the property near Capitola Road and 17th Avenue since the 1970s. Live Oak School District purchased the building from the County of Santa Cruz in 2004 using funds from Measure E, a $14.5 million bond measure.

The 2004 bond measure included a nonbinding commitment that the school district allow the seniors services to keep renting the space. Meals on Wheels provides daily meals for about 1,500 older adults and Senior Network Services helps connect seniors with a range of services such as housing and medical care.

But in May of last year, the district served the two organizations an eviction notice as part of a plan to build workforce housing on the site, funded in part by a new bond measure the district hopes to place on the ballot sometime next year.

The parties have been in negotiations on extending a lease since then, and by last month appeared to be close to a two-year lease agreement, said Tony Nuñez, spokesperson for Community Bridges, a local nonprofit that runs Meals on Wheels. But then, he said, the district added a requirement to the lease that the seniors organizations publicly endorse the district’s planned teacher housing bond.

The district hasn’t yet voted on the amount or if it will pursue a bond measure, though in a recent poll nearly three-quarters of people surveyed said they would support a $42 million bond for workforce housing.

The “tenants agree that they will support the District in its pursuit of completing the [teacher housing] Project,” the district’s proposed lease agreement states, “… including but not limited to, the support publicly and endorsement of any [general obligation] bond election for the District which would provide partial funding for the Project.”

DeeAnne Gillick of law firm Sloan Sakai Yeung & Wong LLP, the attorney for Community Bridges, wrote in an Oct. 6 letter to Live Oak School District Superintendent Daisy Morales that this request was illegal under the California Education Code, which prohibits school districts from using public resources to support the passage of a ballot measure, including a bond. In this case, the public resource is the district-owned building (which the organization pays to rent) in exchange for the organization’s public support for the bond.

“It’s illegal to even make that proposal or put that into an agreement,” Nuñez said, “because you’re using public funds in order to advocate for the completion of a bond measure or the passing of a bond measure or any sort of political action.”

The district’s governing board president, Kristin Pfotenhauer, told Lookout that the district doesn’t believe the request is illegal. “That is not our understanding,” she said. “Our legal counsel said you can do that in the lease, and we did not tell [the senior organizations] they have to vote for [the bond].” (The district’s legal counsel is Pat Kernan, of Fagen Friedman & Fulfrost LLP, also known as F3law. Kernan did not return requests for comment.)

Pfotenhauer added that the district included the requirement in the lease agreement in response to comments made by staff from Community Bridges suggesting they would publicly campaign against the bond.

“Pretty much in every conversation we have had with them, there’s been an underlying threat that if they don’t get what they want, they’re gonna work against our bond,” she said.

A parcel at 1777 Capitola Road owned by Live Oak School District
Live Oak School District officials are in the early stages of developing workforce housing at a site the district owns, at 1777 Capitola Road. Credit: Kevin Painchaud / Lookout Santa Cruz

Pfotenhauer said while she couldn’t recall the exact wording, the organization’s leaders would make comments such as “you need our partnership” and would reference the importance of their partnership in the 2004 bond.

Nuñez said that while he wasn’t at every meeting, it’s inaccurate to describe statements from Community Bridges staff as threatening to “submarine [the district’s bond] campaign in 2024.”

Community Bridges asked Santa Cruz County District 1 Supervisor Manu Koenig to help the parties reach an agreement. In a Sept. 26 letter to Pfotenhauer, Koenig urged the school district to remove the requirement that the community organizations publicly endorse a bond. “Seniors services’ support should be earned through continued collaboration, not required,” he wrote. “This term has no place in a lease agreement.”

He added that the district risked losing community support for its bond if it didn’t work to support the seniors organizations. “No matter what the circumstances, I believe the community will blame the school district if it flips from the hero maintaining senior services, to the villain evicting them,” he wrote.

In an interview, Koenig said he felt it was important that the district continue to lease to the senior services because Santa Cruz County is the fastest-aging county in the state. He argues that the district should also continue leasing to the organizations because its successful 2004 Measure E encouraged community support partly on the premise that passing the measure would allow those senior services to stay open at the site.

While the 2004 measure didn’t legally bind the district to continue leasing to the organizations, Koenig said, “it is a community expectation that should be upheld if the district ever wants to pass another bond measure.”

Koenig told Lookout that he hasn’t received an official response from the district to his letter. Pfotenhauer told Lookout the board hasn’t responded to Koenig.

The district has been publicly discussing whether to develop the site at 1777 Capitola Rd. site for workforce housing since 2018. It estimates it can build between 60 to 70 housing units on the nearly 2-acre site across the street from Live Oak Elementary School.

The district board has until Dec. 9 to have completed filing to pursue a March election, or until Aug. 9 for a November election. This means the board needs to either vote in November for a March election, or vote in June to pursue a November election.

If it is successful with a bond measure, Pfotenhauer estimates that the district could break ground on a workforce housing project at the site as early as six months after the election.

While the tenants have been searching for new locations, they’ve also been trying to work with the district to allow them to temporarily stay until the district’s groundbreaking. The district’s eviction notice has been extended several times, most recently through Aug. 30. How long the organizations are allowed to stay, maintenance of the property and several other terms of the agreement, however, have all complicated the lease negotiations.

Pfotenhauer said the board doesn’t want to move forward with the most recently revised two-year lease agreement that Community Bridges produced, which removed the requirement that the organization publicly support a bond measure as well as several other changes.

While the district and Community Bridges had agreed to a two-year term, Community Bridges requested that the lease include allowing the organization to continue to use the property for an additional three years, or until the workforce housing project is shovel-ready — “whichever is later.”

The district proposed an end to the lease after the end of the two-year period so it could pursue developing its workforce housing project.

In response, the board has told the organization that the lease will continue as a month-to-month agreement. Senior Network Services is also continuing on a month-to-month lease.

“It has been challenging for all parties involved, but I think we all have a desire for everyone to get what they need,” she said Pfotenhauer. “But that has been difficult.”

Nuñez told Lookout that Community Bridges don’t know what its next steps are, and it’s still unclear if the organization would be included in a future development on the site. It has been searching for a new location for years and hasn’t found one that could accommodate its services.

“We want to have some sort of agreement in place that’ll keep us there for the next two years,” he said. “It’s a bummer, where we’re at in this situation.”

Pfotenhauer said the board hasn’t completely decided against a two-year lease. While the month-to-month remains in place, she added that board members haven’t decided on developing a new lease agreement in response to Community Bridges’ revisions — including the requirement to publicly support a bond.

“It would be a board decision,” she said. “At this point, we haven’t decided to do that.”

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After three years of reporting on public safety in Iowa, Hillary joins Lookout Santa Cruz with a curious eye toward the county’s education beat. At the Iowa City Press-Citizen, she focused on how local...