This week the Escondido City Council will vote on the draft contract with Library System & Services (LS&S), a controversial ten-year agreement to give over the operations of the Escondido Public Library to the Maryland-based corporation. The city would still own the property, building, books and archives.
By the time you read this article in the paper, the decision will already have been made—but we will be posting this article online before Wednesday’s city council meeting.
Meanwhile, the opponents of the outsourcing and the city attorney are engaged in a back and forth as to what the contract actually says—see below.
The opposition, the Save Escondido Library Coalition, was planning to rally hundreds of people in front of City Hall an hour before the meeting commences at 4:30 p.m. in their words “with signs, banners, and chants” as they have for the last several city council meetings. This demonstration may well be the largest so far since this is crunch time on the vote.
The question, of course, is whether anyone on the city council will have changed his or her vote from August, when the vote to negotiate a contract was three yes votes, including Mayor Sam Abed, Deputy Mayor John Masson and councilmember Ed Gallo and two no votes, including Olga Diaz and Mike Morasco. In the intervening weeks, the city has negotiated a contact with LS&S that, while for ten years, has several escape clauses, according to the city attorney.
Abed is the most vocal of the trio, and has made the case repeatedly, most recently at the Mayor’s Town Hall meeting, that the city faces a fiscal crisis due to the accelerating increase in CalPERS pension obligations. At that meeting the mayor said that while the 2017-2018 budget will be balanced, the city faces a $40.3 million deficit in four years based on pensions, health care and workers compensation.
Contracting with LS&S will save an estimated $400,000 annually without borrowing or raising taxes because LS&S won’t be required to pay library staff the benefits the city does, Abed said.
A member of the Save Escondido Library coalition, Roy Garret, has argued that the city does not have the jurisdiction under California’s Ed Code to contract with LS&S to run the library because that authority, he insists, rests only with the library board of trustees.
California Education Code Section 18910 reads: “The public library shall be managed by a board of library trustees, consisting of five members, to be appointed by the mayor, president of the board of trustees, or other executive head of the municipality.”
Whether California law does require this, it is also true that currently the Riverside Board of Supervisors and Shasta County Board of Supervisors have contracted to LS&S for its services.
City Attorney Michael McGuinness in September issued an 11-page letter that addressed this legal point, and wrote that although the law prevents a city from abolishing a city library or a Library board of trustees, that nothing prevents the city from “fulfilling its longstanding practice- one accepted by and benefitting the board-of providing a stream of labor to implement the Board’s mission. Indeed, the Escondido Municipal Code specifically empowers the city to hire the services of professionals to provide city services.”
This week Garret sent a three-page letter to the city that critiqued the proposed ten-year contract, which he claims doesn’t include an escape clause that wouldn’t cost the city a $500,000 buyout.
Asked to address the issue of whether the city can get out of the contract before ten years, McGuinness told The Times-Advocate: “The draft contract includes a provision for termination for breach of performance, (See, Section 11.A.) That is, if LS&S fails to perform its contractual obligations, the city may terminate the contract after giving LS&S 30 days to cure the defect. All costs associated with curing the defect are borne solely by LS&S (See, Section 1.B.)”
McGuinness added, “The City may also terminate the contract if the City does not appropriate money for the upcoming fiscal year for the contract regardless of the reason for the failure or refusal to appropriate money (Section 11.C) and in the event CalPERS or a court determines that the former city employees are still considered city employees for PERS contributions (Section 23.G).”
Opponents also point out that the contract is unanimously opposed by the city’s Library Board of Trustees, which has asked the city to look into joining the County’s library system, or, alternatively, to allow the trustees to run the library.
The critics also claim that other California cities that contract with LS&S included a clause that allows termination “with or without cause” and have asked the council to insist that this clause be added.
According to the coalition, “The contract that Mayor Abed would like to sign does NOT contain this clause, and would subject the City of Escondido to penalties of up to $500,000 if we chose to terminate the contract prior to the 10-year minimum term.”
That comes from Garret’s letter, which states: “Except for a $500,000 termination fee, it will last for the 10 years unless we, the city of Escondido, are willing to buy LS&S out of the contract. The cost of the buyout will be $500,000. (page 9)”
McGuinness denies that the contract says that. “The only reference to $500,000 on page 9 of the contract relates to the limitations of liability,” he wrote The Times-Advocate.
The clause reads: “Here, the parties agree that (1) neither party shall be responsible for consequential damages for breaches of contract and (2) liability for claims under to the agreement related to causes of action is the lesser of actual damages or $500,000.”
“In other words,” wrote the city attorney, “if either party breaches the agreement creating recoverable damages to the other party, the relative monetary responsibility for that breach is limited by actual damages or a fixed amount. The exclusion of Section 19.B in the second portion of Section 18 relates only to the city’s obligation to indemnify for its breaches of the agreement.”
McGuinness added, “There is no monetary penalty for a termination because that termination is not a breach of the agreement it is instead, specifically provided for in the agreement.”