School District Lacks Funds to Finish ECCL

Cost Overruns Leave District Exposed:

School District Scrambles to Buy 

Tables & Chairs

Rumblings of Selling More Bonds

News Analysis
Some have warned this date would come....
At its Wednesday August 26^th School Board meeting, the Emery Unified School District wrung its hands with worry about how they would find the money to complete the District/City Hall joint project, the Emeryville Center for 'Community' Life (“ECCL”).

Imaginary Typical Chair
Cost to School District: $335
Nexus Partners fee per chair: $36.85
Nexus to District:
'Imagine a chair.
Thanks....
Now send us $36 because
that's all you have money for.'

With the costs to complete the work on the community swimming pool coming in significantly higher than estimated, Board Members expressed concern over whether they would even have enough money to purchase the furnishings, fixtures, and equipment (“FFE”) needed to make the ECCL usable for students and the community.  “FFE” is defined as “moveable furniture, fixtures or equipment that have no permanent connection to the structure of the building, landscape, or infrastructure.” Current estimates place the total FFE cost at about $2.7 million. Board President John Affeldt suggested that the City's $21 million contribution to the ECCL was inadequate and that instead now maybe, “Everyone [the District & the City] takes care of their own FFE.” and “We are not obligated to pay for the City's' FFE.” Mr Affeldt later elaborated on his view by explaining that the message to the City would be, “Hey, if you want chairs, you know, you guys, just letting you know, you need to figure that out.” 

How did the District end up in this situation?
While it would be convenient for the District to claim that no one could have anticipated cost overruns and to place the blame for this shortfall there, long-time readers of the Tattler may be able to fathom a different explanation.


Where did all the money go? (Partial List)

Amount	Details
$8,717,265*	Nexus Partners (fee based on 11% of total project cost, including FFE) for architectural/design services including “Full Service Community Task Force”
$1,750,000	Lease (and extend lease to) Santa Fe Elementary from Oakland Unified rather than use vacant Ralph Hawley site
$1,733,467	Clean up of toxic waste found in ECCL site soil. (Who could have guessed?)
$1,100,000	Swinerton Builders for construction project oversight after Roy Miller's resignation
$208,800	National Equity Project, Children's Aid Society, MIG, and Partners in School Innovation for “program development”
$20,607	iPads, iPad covers, and iPad software purchased in September 2011 and additional iPad software and iPad imaging cart purchased in June 2012. All iPads purchased have now been stolen, lost, or rendered obsolete.
$17,000	Davis & Associates for a Communications Plan, including a “rapid response team” for responding to the Tattler.
$Who knows?	Potentially questionable bond fees paid to firms that other districts are suing for conflict of interest and breach of fiduciary duties.

*The architectural/design services fees item is included not because the District could have done without this entirely, but because, as the linked Tattler article explains, Nexus Partners were paid $168,650 in February 2013 to conduct a Full Service Community Task Force in which they led a few community meetings that were then abruptly canceled (did we get any refund for the canceled meetings?) and because Nexus sent us a bill for $479,151 in May 2013, simply because the total cost of the project had increased and their fee is percentage-based.  This means the District literally payed Nexus Partners 11% of the estimated cost of FFE that we now cannot afford to actually buy.  This method of invoicing is so fantastic it takes a degree in architecture to understand it.

School Board President John Affeldt
Ooops!  We're out of money...
we'll just hit up the City for more.
 They're our partners in this
& they've got deep pockets.
What are they gunna do?
Turn us down?

Nearly two years ago, on November 24, 2013, after a series of high-profile EUSD staff resignations, the Tattler asked, “Have staff (finally) looked at the financials and realized that there is neither enough money to build the Board's K-12 vision, nor to operate this Taj Majal complex within the realities of our available bond funds and general fund dollars?”
 
The Tattler has consistently ridiculed the District's outsized payouts to consultants and its over-spending when less costly alternatives were available. Were we just being miserly?  No.  It was in anticipation of this day.  The reason for Board of Trustees to spend taxpayer money in fiscally responsible ways is because otherwise you end up here....with a half-built project that we cannot afford to finish or furnish.  The above chart contains places where $2-3 million could easily have been saved and which the Tattler and concerned residents urged the District at the relevant times not to spend.


More Bond Money?
Never fear; in addition to the crisis around these extra costs for the pool and the FFE revealed at Wednesday's School Board meeting, the Board heard a presentation from bond advisor (and top Measure J contributor), Caldwell Flores, about how the District could go out for even more expensive bonds (and pay more fees to Caldwell Flores) in a last-ditch effort to close the District's funding gap.  That's right.  Who will be picking up the tab for this District's spendy ways?  Emeryville taxpayers...you guessed it.  Your bill is in the mail.

Contract of the Day: Program Development

The Emery School District and the City of Emeryville is entering into many contracts with consultants and builders for the Emeryville Center of 'Community' Life.  The money spent on these contracts is public and the public has a right to know.  Large contracts and small, the ECCL Contract of the Day will highlight what your money is being spent on.

Today's Featured Contract(s):

 $208,800 to National Equity Project, Children's Aid Society, MIG, and Partners in School Innovation 

for program development

approved February 2012.

In January of 2012, the School District's then-Director of Youth & Community Engagement presented a proposed contract in the amount of $194,900 for an "ECCL Program Design/K-12 Incubation Process."  This proposal was met with outright anger from City Council members as they received the information at the January 2012 City Schools Committee meeting.  Councilmember Ruth Atkin, in particular, expressed the view that they had done this work already for years and, from the documents presented, she could see no reason to do such work again.  "Back sliding", she called it.

The proposed contract contained some items only a long-time public consultant could dream up.  First item on their list was a "Listening campaign" to take 15 days, including planning time, and to cost $22,500.  The Tattler might be better known for talking than listening, but at a rate of $1,500/day, even we could be persuaded to simply sit and listen to people talk about the ECCL.

Then there was $38,600 for "Transitional Leadership Team: Development and Capacity Building" and another $40,800 for "Organizational Capacity Building."  It's unclear what all this "capacity building" was supposed to be about, but apparently the District needed $79,400 worth of it.  The Tattler has long had concerns about the capacity of the ECCL site, given all the buildings the District plans to put on the site, but there is reason to doubt that this was the sort of capacity problem the consultants hoped to address.

After a thorough drubbing, the District staff assured the City Schools committee that the message had been heard loud and clear and a revised proposal focused on critically needed services would be presented to them at the February meeting.

It takes a special kind of hubris to do what the District staff did next.  They returned to the February meeting with a group of four contracts for "Program Development" that totaled $208,800--more than the contract amount proposed in January!  These contracts provided for $57,600 to National Equity Project, $72,000 to Children's Aid Society, $32,000 to MIG, and $47,200 to Partners in School Innovation.

The services described and the deliverables in each contract are virtually identical, and each so trivial or devoid of meaning as to leave one uncertain whether a deliverable has ever been delivered.  For example, Page 8 of the Partners in School Innovation contract shows that they are paid roughly $4,000 per day to sit in a room with other people and "collaborate" and "comment as requested" on the design components of the over-arching program.  Each of the contract's deliverables contains "relationship building."  How does one know when a relationship is sufficiently "built" so as to be "delivered"?

Why does the District need to pay someone thousands of dollars so that District and City staff can sit in a room and talk to one another?  Are we so dysfunctional that we should also bring in boxing gloves and a referee?  And isn't the "program" of the ECCL largely to educate students?  Do we not already know how to do that or at least have in-house expertise on how to do so that wouldn't be so costly?

At this February meeting, the School District's Deputy Superintendent, Anakarita Allen, spoke at length to the Committee on the pressing need for these contracts, without ever mentioning to them that she serves on the Board of Trustees of the National Equity Project.

The City School Committee was beaten down by the District's insistence that this was the only way for them to plan for the ECCL and approved the use of joint City and School District funds for these contracts.  Enjoy these ECCL Contracts of the Day!

ECCL Contract of the Day: Solar Power

The Emery School District and the City of Emeryville is entering into many contracts with consultants and builders for the Emeryville Center of 'Community' Life.  The money spent on these contracts is public and the public has a right to know.  Large contracts and small, the ECCL Contract of the Day will highlight what your money is being spent on.

Today's Featured Contract:

 $2,090 to Integral Engineering 

for a solar panel feasibility analysis

approved March 2013.

This contract calls for the consultant to send an email to the School District detailing how many solar panels could be placed on the roofs of up to five buildings on the ECCL site, how much energy would be produced, an estimated cost, and recommendations on how large a system to get and how to mount it.

The Tattler has said publicly that we think the ECCL should have solar panels on its roofs.  However, no one has to pay for estimates, which is what this feasibility study amounts to.  If the District wants to pursue solar panels, and it should, then all it needs to do is issue an Request For Proposal (RFP) and they will suddenly receive multiple emails from expert installers explaining how many solar panels could be placed on the roofs of up to five buildings on the ECCL site, how much energy would be produced, an estimated cost, and recommendations on how large a system to get and how to mount it.

Just as an aside, $2,090 would more than cover the cost of after-school care as part of the City's Recreation program for one needy child for an entire school year.
As another aside, Measure J taxpayer funds may only be spent on needy consultants, not children.

ECCL Contract of the Day

Announcing a new feature of the Tattler: the ECCL Contract of the Day.  The Emery School District and the City of Emeryville is entering into many contracts with consultants and builders for the Emeryville Center of 'Community' Life.  The money spent on these contracts is public and the public has a right to know.  Large contracts and small, the ECCL Contract of the Day will highlight what your money is being spent on.

Today's Featured Contract:

 $6.5 Million to Nexus Partners 

for design services

approved April 2012.

We'll start the new feature with a big one, the $6.5 million overall contract for the architects for the ECCL design process, Nexus Partners. Nexus Partners is an architectural/design team comprised of the firms MKThink, dsk, and Concordia. This contract includes 11% mark up for 'fixtures, furniture and equipment', meaning the architects will get money from the School District for every desk and chair and other equipment the District buys.

The early ECCL design phase was covered by an agreement made in January 2010 between the City, the former Redevelopment Agency, and the District called MOU #1. That agreement called for Nexus and other consultants to be paid $615,000 for architectural services for their work on the project during 2010 and 2011.

Under a subsequent contract, approved in April 2012 as part of MOU #2, Nexus will be paid $6,564,798. This 74-page document is notable for several reasons.  First, on pages 3-9 it contains the architects "Conceptual Opinion of Cost" of the ECCL construction as well as the furnishings, fixtures, and equipment ("FFE").  This figure comes to $58,325,000 and does not include many expected costs, and mostly estimates costs based on expected costs per square foot, but it nonetheless provides the most detailed budget for the ECCL construction yet provided.

Also of note is what the document does not include.  A detailed specification of what individuals will work on the design, at what rates, and for how many hours is not relied upon.  Instead, the $6,564,798 compensation is apparently based on an 11% rate of compensation based off of the "Conceptual Opinion of Cost" of the construction and FFE costs.

Under a percentage-based compensation structure, such as this, one might expect that the arrangement covers every conceivable aspect of the design work.  Not so.  As was the case with earlier agreements with Nexus, numerous change orders have already been approved for additional work outside the defined scope of work, partially summarized here:

Date Approved	Amount	Details
01/19/2010	$448,060	MOU #1 Architectural Services ($615,000 total*)
Sep. 2010	$103,850	Addendum 1
Jan. 2011	$111,376	Addendum 2 (partially replacing amounts in MOU #1)
May 2011	No additional charge	Addendum 3
Aug. 2011	$341,850	Addendum 4
01/09/2012	$174,585	Addendum 5
02/27/2012	$168,700	Addendum 6
04/16/2012	$6,564,798	Overall Design Contract
10/22/2012	$137,495	$48M feasibility study
02/13/2013	$168,650	Full Service Community Task Force
02/13/2013	$18,750	Space utilization update
05/22/2013	$479,151	11% fee for increased project scope
Partial sub-total	$8,717,265	(approximate)

Typical Chair
Cost to School District: $335
Nexus Partners take: $36.85

*Some of this amount from MOU #1 went to other consultants.

The amendment approved by the School District on May 22, 2013 is of particular interest.  Among a few other small changes, the project's scope was increased to have a construction, furnishings, fixtures, and equipment cost of $62,699,375, up from the prior $58,325,000.  So, Nexus sent an additional invoice for approximately 11% of the increase, adding $479,151 to their coffers.

This is a particularly lucrative way of doing business, particularly given that the compensation percentage is based off a total that includes the furnishings, fixtures, and equipment.  Just imagine, whenever our School District buys a chair, a desk, a table, or a bookcase, Nexus collects 11% of the cost of that item.  See page 70 of the overall design contract which explains, "FFE includes moveable furniture, fixtures or equipment that have no permanent connection to the structure of the building, landscape, or infrastructure."

That's what makes this contract, and its amendments, the Tattler's ECCL Contract of the Day!

Thanks to Brian Carver for providing research for the Contract of the Day