After two years of uncertainty, the City of Palo Alto and the Palo Alto Unified School District have reached a breakthrough on new lease terms for the Cubberlely Community Center, the sprawling campus whose future has been in limbo while the deal was being hashed out.

The terms of the new agreement, which school district Superintendent Max McGee announced at a special meeting Wednesday morning, are scheduled to be ratified by the City Council on Nov. 17 and by the district's Board of Education on Nov. 18. The current lease was set to expire at the end of December.

At Wednesday's meeting, school trustees indicated that they will support the terms, which include the scrapping of the controversial "covenant not to develop" in the existing agreement.

The long-standing covenant has been the main sticking point in negotiations. Adopted in 1989, a time of falling student enrollment, the covenant obligates the city to pay the school district about $1.86 million annually not to develop several school properties throughout the city. With enrollment now rising, the properties occupied by schools, and the district not nearly as financially needy as it was in 1989, the City Council and City Manager James Keene have persistently argued that the basis for the covenant's adoption no longer exists.

The council formally declared its intent in February to remove the provision from any new lease and followed that up in June by stripping the payment for the covenant from the city's 2015 budget.

While school officials had long maintained that a $1.86 million annual loss would be a bitter pill to swallow, on Wednesday morning they indicated that they are willing to do so in the spirit of compromise. Under the terms McGee outlined, the covenant will be dropped and the $1.86 million in city funds will instead be used to "repair, renovate and/or improve" the dilapidated center in south Palo Alto. The school district and the city will also move jointly to come up with a master plan for the entire Middlefield Road campus, in keeping with a recommendation from a community stakeholder group known as the Cubberley Advisory Committee. The master plan is to be completed within five years.

Both sides in the negotiations praised the deal as a victory, despite the compromises each will have to make. School board member Dana Tom called the agreement a "significant step for both the city and the school district" and said it "reflects the changing landscape we experience as a school district and as a community in the many years since the first agreement." Board member Melissa Baten Caswell said the terms "show good work to find a common interest between ourselves and the city."

Yet both she and board member Camille Townsend also raised concerns about the loss of operating revenue because of dropped covenant. Caswell said she was "disappointed" by the need to reduce the budget. But she also said that some concessions were expected and thanked staff from both sides and the large community group for bridging the gap.

"When you have two organizations working together, you can each say what you want and then get louder and louder and see who can win," Caswell said. "But the big gorilla thing doesn't work great for ongoing work together."

Keene told the Weekly that the breakthrough was reached after several productive meetings in recent weeks with McGee, who took over as the district superintendent in August after the resignation of Kevin Skelly. Keene called the agreement "a reflection of how anyone can get things done when you realize that we all have a shared interest in this town."

"Once we got to talking, it was actually pretty easy for us to get to where we are," Keene said of his meetings with McGee. "Clearly, they have some perspectives that are still different from the city's, but the lease I think represents our shared interest in the site."

In a joint press release, McGee lauded the agreement.

"Cubberley is an important community resource. We are indebted to the strong foundation the Cubberley Community Advisory Committee (CCAC) laid for us in their final report and presentation in both substance and tone," McGee stated.

"It is clear that when the PAUSD Board of Education and the City Council can resolve apparent differences through compromise and collaboration, the entire community benefits," he said.

One issue that was less than ideal from the city's perspective is the length of the new lease -- five years -- which is far shorter than the city had hoped for. For the school district, the relatively short term affords flexibility to re-examine its options for Cubberley if district enrollment trends change or new priorities are identified.

Even with the short lease, the deal does offers some relief to existing users of Cubberley Community Center, a diverse group that includes artist studios, physicians, playing-field users, dance studios and Foothill College, which is preparing to depart Cubberley.

The lease also includes a provision that allows the two parties to reconfigure or relocate, by mutual consent, the 8-acre parcel of Cubberley currently used by Foothill. It obligates the city to increase lease payments by 3 percent per year and specifies that the two sides will evenly split either the revenues or the losses stemming from Foothill's replacement by a new tenant.

While the terms have yet to be approved, Keene said he is confident that the council will do so when it meets next week. The council has already discussed the proposed terms in two recent closed sessions. Councilman Larry Klein said Wednesday that he is "delighted about where we are." Though Klein told the Weekly he would have preferred a 10-year plan, he said he is not troubled by the shorter term.

"I think the five-year term will put more pressure on the city and the school district to come up with a long-term plan if at all possible," Klein said.

Related content:

• Palo Alto firms up stance in Cubberley negotiations

• Palo Alto looks to scrap Cubberley covenant

• City, school district at odds over Cubberley provision