SR-6-H (78)
itiN 2 2 1C;.~:'
;.1 ,.
(oH
I CCS as JM F \CCSADMN\SHARE\BEACH\CONCESS\srlease wpd
Council Meetmg June 22, 1999 Santa Monica, California
TO Mayor and City Council
FROM City Staff
SUBJECT Recommendation to Authorize City Manager to Negotiate and Execute
Beach Concession Agreement with Perry's Beach Cafe and Rentals
Introduction
This report recommends that the City Council authorize the City Manager to negotIate
and execute a Lease and Concession Agreement with Chaos Enterprises d b a Perry's
Beach Cafe and Rentals (Perry's) for operation of four beach concessions at Santa
MOnfca State Beach
Background
The CIty of Santa MonIca leases a number of concessIons on the State Beach under
the City's Operating Agreement with the State of Callforma The Concession
Agreement With the current operator, Perry's Beach Cafe and Rentals, expired In 1993
OperatIon continued on a month to month basIs
The City received approval from the State LegIslature for the solicitation of proposals
for five beach conceSSIons, for a term of five years, With a mInimum rental requirement
of 20% of gross sales This provided an opportumty for the CIty to test the market for a
number of new amenities for the beach-going public A notice was published In both
the Los Angeles Times and The Outlook on December 9 and December 16, 1996 A
lOH
'UN 2 2 1".~n
J I ~:-,..
.
I total of 27 Interested parties received the Request for Proposals (RFP) A Pre-Proposal
Conference and Tour was held on December 19, 1996 which was attended by
representatives from 14 firms, proposals were due on January 14, 1997
Discussion
The City received only one proposal, from the current operator, Chaos Enterprises
d b a Perry's Beach Cafe and Rentals Staff followed up with prospective proposers
and learned that the 20% rent requirement set by the State Legislature was seen as
prohibitive for businesses that would need time to establish at the beach While 20% IS
at the high end of the rent scale for thiS type of beach conceSSion, the current
conceSSIonaire has been paYing thIS amount of rent since 1990 Staff recommends
awarding the Concession Agreement to Perry's Beach Cafe and Rentals based on the
proposal submissIon whIch satisfIes the criteria outlmed In the proposal abIlity to
finance, strong credit record, Similar business experience, ability to perform, sound
management and operatIon plan, and meetmg the percentage rent requirement
Perry's has been operating the beach concessions since 1987 The success of their
efforts to Improve the quality and vanety of food concessions and services IS seen In
the continued growth In gross sales each year
Since the time the State Legislature approved the proposed rental terms, there have
been changes In the State concession gUidelines which proVide greater fleXibility In
setting the term and rent requirement At the next concession lease opportunity. the
2
.
City will be able to submit a proposal package for approval to the State Legislature
which may have a lower rent requirement and/or a longer lease term and generate
more competitive proposals
The proposed lease term IS five years, effective July 1, 1999 Perry's proposal
mcludes a minimum annual fIxed rent of $200,000 or 20% of gross sales for the four
eXisting conceSSions, whichever IS higher The permItted uses Include food and non-
alcoholic beverage sales, and rental and sales of beach equipment such as two-
wheeled bicycles and skates The lease requires that 1 5% of annual gross receipts be
used for repair and renovation of the concessions The State Department of Recreation
and Parks has approved the proposed award of the Lease and ConcessIon Agreement
to Perry's Beach Cafe and Rentals
There are currently five concessIon locatIons Since 1993. only four have been In
operation These four stands sell fast food such as hamburgers, hot dogs, and pizza.
and rent and sell skates and bicycles The fifth, located at 1100 Pacific Coast Highway,
has not been Viable economically primarily because of Its close proximity to the
concession stand at 1200 PaCific Coast Highway However, given ItS location adjacent
to the bike path and Within walking distance from the Santa Monica Pier, the site has
potential as a casual Sit-down cafe ThiS use IS permitted under ProposItion S Perry's
proposal also responded to the longer-term pOSSIbility of renovatIng the 1100 PaCIfic
Coast Highway location as a casual restaurant/cafe Since thiS concept was Included In
3
.
the competitive proposal process, staff will pursue negotIatIons with Perry's for the
.
rehabilitation and operation of this location subject to all State and local regulatory
approvals, Includmg City CounCil approval
Another concession amemty Included In the RFP IS a limited food service cart program
A cart program to enliven public spaces was suggested by a number of Boards and
Commissions dUring the public review penod of the beach portion of the Beach
Improvement Group (B I G ) Project The proposed lease prOVides for the additIon of
food service carts, the number and location of which must be approved by the City
A concession amemty not contemplated In the RFP IS the Installation of two vending
machines and lockers at each of the four locations The vending machInes Will be
Installed by Coca Cola which Will proVide a bank of 35 lockers for day use by the public
The lockers Will be housed between the two vending machines In an enclosure
consIsting of a surfboard shaped roof and two Sides The vending machines Will have a
beach activity graphiC and the Coca Cola name only The lockers Will be secured by a
roll-up metal door dunng the hours the concessions are closed The key operated
lockers Will be available for hourly or dally rental dunng Perry's bUSiness hours, the
procedures Will be the same as those used for skate and bike rentals which requIre a
license or passport be left as secunty until the patron returns The locker program will
help meet the many requests received over the years from the publiC for a place to
store valuables and shoes while enJoYing beach actlvltles Staff IS recommending that
4
"
.
the vendmg machme and locker program be Implemented on a pIlot basIs
.
Budget/Fiscal Impact
The proposed FY 1999-00 Budget Includes projected revenue of $280,000, the same
as the estimated actual for FY 1998/99 No additional budget action IS necessary
Recommendation
Staff recommends that the City Council authonze the City Manager to negotiate and
execute a Lease and Concession Agreement with Chaos Enterpnses d b a Perry's
Beach Cafe and Rentals for four beach conceSSions, limited food service carts, and a
pilot vending machine and locker program
Prepared by Barbara Stinchfield, Director
JudIth MeIster, Beach Manager
Department of Commumty and Cultural Services
5