For three years Santa Rosa has been undercharging a preschool that rents a city-owned building in Northwest Community Park.
Instead of the $750 called for in its lease, the Community Child Care Council of Sonoma County has been paying the city just $600 per month for use of the Marlow Road facility.
The lease is the latest example of the city undercharging — or in some cases charging nothing — for rental of city owned property.
A new lease with the group requiring it to pay the full $750 — but not the back rent — heads to the City Council today.
The Willow Creek Child Care Center, which serves mostly low-income children, has operated in a corner of the park since 1999. The city charged the center just $1 per year until the previous operator went out of business in May of 2007.
Community Child Care Council of Sonoma County reopened the center two months later, signing a three-year lease in July of 2007 for $600 per month. After June 30, 2010, the lease was supposed to become a "holdover tenancy" paying a month-to-month lease of 125 percent of the old rent, or $750.
But staff in the city's Parks and Recreation Department misinterpreted the lease as having expired, and instead issued the organization a permit to continue renting the building for $600 per month, said Nanette Smejkal, the department's new director.
"It was kind of our error," Smejkal said.
A closer review of the contract performed over the summer by the city attorney's office as part of a broader review of the leases of city buildings revealed the "holdover" provision, Smejkal said.
The non-profit Community Child Care Council of Sonoma County, also known as 4Cs, operates 10 preschools in Sonoma County.
In a letter to the city last month the group's finance director, Maya Labourdette, apologized for the "oversight." But she said it would be a "considerable hardship" for the organization to repay the back rent of $5,400.
She asked the city to forgive the debt, noting that the program has become increasingly difficult to operate in the past five years because of state budget cuts.
Smejkal said the group shouldn't be required to repay back rent since Parks and Recreation Department staff authorized the $600 rent through the permit.
The new lease calls for the center to be allowed to continue operating through June of 2014 at monthly rent of $750. This will give the city time to evaluate the deferred maintenance on the building and decide whether to demolish it, Smejkal said.
The building needs "hundreds of thousands of dollars" of work, including a new roof, Smejkal said.
4Cs has said it doesn't have that kind of money and likely will find a new location for the pre-school after next July, Smejkal said.
The city said it isn't in a position to make the upgrades, either. "We can barely take care of buildings that are occupied for government uses, let alone for things we've partnered on," Smejkal said.
The city continues to evaluate what to do with several city-owned properties where tenants have been paying well below-market rates for years.
Two families who were living for free in rural homes on Walker Avenue are being evicted and the homes slated for demolition. Three properties on Occidental Road, McMinn Avenue and Burbank Avenue, have tenants, two of them city employees, paying $500, $200 and $100 rent per month respectively. Those tenants also have been informed their leases are ending, but no decisions have been made about whether new leases will be signed or what will become of the homes, said City Manager Kathy Millison.