"The potential for three votes to renew the lease was always there, I don't think it's present any more," said Councilman Jeff Wieler declaring an end to negotiations with the Monday night. "The city is going to take over the pool."
Though in January the city and the club seemed to have reached compromise over the major hurdles of rent and the lease term, new discord cropped up around hazardous materials insurance, legal protection for the city, and how routine maintenance would be handled under a new lease.
The parties simply ran out of time to sort out those issues as the to the hour when either the club would have to ramp up a membership drive to assure the revenues necessary to meet its lease obligations or the city would have to gear up to operate a pool facility for the first time ever.
Without the three votes needed to move forward with a new lease, the council instructed Recreation Director Mark Delventhal Monday to start making plans for the municipal takeover come July 1.
"I think that both sides have tried to give-up certain things, and it hasn't been easy," said Councilwoman Margaret Fujioka. "Sometimes change needs to happen."
Eleven months ago, the Swim Club made its initial offer to the city to lease Piedmont's pool facility for another 15 years, rent free. The city came back with a proposal for 10-year lease including the payment of cash rent. For months the negotiations stalled there.
The club said it couldn't afford rent and needed a longer lease in order to attract new members given the hefty price of initiation fees. The city said it couldn't wrap up public land for years on end without some money going back into the municipal coffers.
The parties came back to the table in the fall, and talks intensified in recent weeks as the club's original Dec. 31 deadline for an agreement came and went without one.
Grudgingly, the city bought into an idea for a 15-year term with an added provision allowing it to terminate the lease after five years with a year's notice so long as it reimbursed members who had belonged to the club for less than 15 years a prorated portion of their initiation fees.
The club conceded to contributing $33,333 annually to a capital improvement fund, which would cover maintenance and upgrades for the pool facility, in lieu of rent–just $4,867 less than what they had been paying in cash rent between 1993 to 2008.
With the rent and the term worked out, City Attorney Tom Curry returned red-lined versions of the lease with amendments to other sections aimed at modernizing the contract. It was those changes that ultimately doomed the chances for an agreement.
Arguing that existing boilerplate had been sufficient to keep the pool facility in good shape throughout its history, the club struck revisions that would allow the city to judge whether it was in "satisfactory condition" and send the club the bill for whatever repairs or upgrades it found necessary. Provisions added to the capital improvement fund clause on Jan. 21 were furthermore unacceptable, the club said, because they would allow the city to deny approval for the use of the funds, holding on to the money and forcing the club to further increase member fees to pay for obligatory upkeep. The club rejected new language compelling it to pay the legal fees for both sides in the case the lease was challenged. And, lastly, the club balked at a new requirement that it procure a million dollars worth of hazardous materials insurance, agreeing to do so only if such insurance proved affordable and common among similar swimming facilities.
The dispute over haz mat insurance in particular appeared Monday night to be the straw that broke the camel's back.
In explaining his revisions Monday, Curry said that liabilities for property holders regarding hazardous materials had become "extremely onerous" since the city and the club last negotiated a new lease nearly 20 years ago.
"The recommendations were not to do anything other than to try to bring the lease into 2011 and what the real risks are today," Curry said.
Councilman John Chiang was willing to be flexible in taking on some of the risk in order to avoid the city having to subsidize the operation of the pool facility with an estimated $100,000 to $300,000 from the general fund each year. But Wieler, Fujioka, and Mayor Dean Barbieri fell in line with Curry. (Councilman Garrett Keating had to recuse himself from the decision as a member of the club.)
"I think we would be breaching our fiduciary responsibilities to enter into a 15-year lease, for no rent, and for the Swim Club not enter into and agree to terms that our city attorney deems appropriate and necessary to protect the city of Piedmont and its residents," Barbieri said.
As he lamented the end of the Swim Club's 46-year run of managing the pool facility which his family helped construct, the mayor hoped out loud that the change would inspire new benefactors to step forward to build a better one for the myriad swimming interests in town wanting more water time.