TO: Board of Supervisors
FROM: Ryan J. Alsop, Chief Executive Officer
REPORT BY: Daniel Sanchez, Senior Management Analyst
SUBJECT: Amendment No. 2 to Agreement 250244C with Le Petit Elephant Nursery and Preschool
RECOMMENDATION
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Approve and authorize the Chief Executive Officer to sign Agreement No. 250244C, Amendment 2 with Miss Milli, LLC, dba Le Petit Elephant Nursery and Preschool, and Miss Mama, LLC, to loan an additional $150,000 for crucial pre-construction expenses and add 15 months to the ten-year period the minimum childcare spots must be maintained; approve a Budget Amendment; request the City of Napa provide immediate financial relief to the applicant; and request staff identify other opportunities to incentivize development of additional affordable infant and childcare spaces in unincorporated Napa County. (Fiscal Impact: $150,000 Expense; General Fund; Not Budgeted; Discretionary)
[4/5 vote required]
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BACKGROUND
Napa County entered into Agreement No. 250244C with Miss Milli, LLC, doing business as Le Petit Elephant Nursery and Preschool (LPE), to provide a forgivable loan of $1.2 million for purchasing the property at 15 Chapel Hill Drive to be operated as a childcare center. Amendment No. 1 to the Agreement added Miss Mama, LLC, as a borrower because Miss Mama holds title to the property. The loan was provided in return for preserving or creating 198 childcare spots consisting of a minimum of 39 spots for infants (0-24 months) and 159 spots for non-infants for a minimum of 10 years. The property was purchased, but the use permit for the childcare center issued by the City of Napa was delayed by litigation with neighbors. The Agreement gives the Chief Executive Officer the authority to reduce the number of required childcare spots, but no lower than 128 childcare spots without an amendment to the Agreement.
The lease at the existing location of the Le Petit Elephant Nursery & Preschool is expiring at year’s end, so Miss Milli needs to immediately begin improving the new property in preparation of relocating the childcare center. Miss Milli has requested an increased loan from the County to cover pre-construction expenses while awaiting state grant funding and a small business loan that are both a few months delayed. The County proposes lending the requested funds on the condition that the minimum childcare spots be maintained for an additional 15 months, which is proportional to the original $1.2 million loan and requirement to maintain the childcare spots for ten years. For each year the minimum childcare spots are maintained, $120,000 of the loan is forgiven. This arrangement is memorialized in proposed Amendment No. 2 to the Agreement. LPE will use the additional funding for operating expenses which will allow them to continue providing childcare and successfully complete the relocation to 15 Chapel Hill Drive.
Funding for the original $1.2 million to purchase the facility was from the American Rescue Plan Act (ARPA). Funding for this additional $150,000 is from the Tobacco Master Settlement Agreement (MSA), which is a subdivision of the General Fund.
The City of Napa is requiring the applicant to pay various development fees. These fees place a significant financial burden and barrier to entry for the applicant and on the project. With this agenda item the County has provided the applicant $1.35 million to retain and increase childcare and requests the City of Napa also invest in the project with direct fiscal support.
The Forgivable Childcare Facility Loan program has concluded, and ARPA funds are not available to extend the program. It has successfully retained and increased the number of childcare slots across the county; however, many more are needed to meet the workforce’s demand. State and local jurisdictions regulate childcare facility placement and operation, including permits and inspections. Staff should identify additional opportunities to incentivize affordable childcare spaces in County unincorporated areas for future Board considerations.
Requested Actions:
1. Approve and authorize Amendment No. 2 of Agreement No. 250244C to add $150,000 to the loan amount and 15 months to the childcare spot requirement, bringing the total loan amount to $1,350,000 and extending the childcare requirement to eleven years and three month;
2. Approve a Budget Amendment to appropriate $150,000 of Tobacco Settlement for a community grant from designated fund balance;
3. Direct letter to the Napa Mayor and City Council requesting their consideration of providing immediate financial support for the Le Petit Elephant Nursery & Preschool; and
4. Request staff identify opportunities to incentivize development of additional affordable infant and childcare spaces in unincorporated Napa County.
FISCAL & STRATEGIC PLAN IMPACT
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Is there a Fiscal Impact? |
Yes |
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Is it currently budgeted? |
No |
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Where is it budgeted? |
General Fund, Tobacco Settlement 1055000 |
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Is it Mandatory or Discretionary? |
Discretionary |
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Discretionary Justification: |
The Board has established that childcare is a high priority. Without this agreement Napa County is at risk of losing a substantial number of scarce childcare spots. |
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Is the general fund affected? |
Yes |
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Future fiscal impact: |
There is no future fiscal impact. The funding is coming from Tobacco Settlement designated funds, a subdivision of the General Fund. |
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Consequences if not approved: |
Napa County is at risk of losing a substantial number of scarce childcare spots. |
ENVIRONMENTAL IMPACT
ENVIRONMENTAL DETERMINATION: This action is not a project as defined by 14 California Code of Regulations 15378 (State CEQA Guidelines) and therefore CEQA is not applicable.