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SR-308-002-02 (2) e It 7-/1 3CJ 1--- 002- 02 JUL 1 7 '990 Santa Monica, California JUL 3 1 1990 AUG i 1990 CM:LCB:dvm City Council Mtg. 7/l7/90 (pchuse) TO: Mayor and City council IW8 ';' 1990_ FROM: City staff SUBJECT: Information Regarding Termination of the Sand and Sea Club Concession Agreement Introduction At the July 10 City Council meeting, Staff was requested to provide information regarding the impact of termination of the month-to-month concession agreement with the Sand and Sea Club in order to open the site for public access. FOllowing is a response to various questions raised by Councilmembers. Date of Eviction The suggestion by Councilmember Katz of Club closure to members immediately following Labor Day represents the end of the summer peak usage season. As the Club has been on a month-month status for several years, the possibility of imminent eviction has been well-understood by both the operator and the members. It might, however, be reasonable to provide the operator one additional month in which to vacate the premises after closure to members. The september-october closure timeframe would also provide city staff adequate time to prepare for re-opening of the facility prior to the peak of the following season. Potential Interim Uses - 1 - July 17 agenda ""Z-A990 JUl.. 11 1990 rt l~gl1 JUl 3 (;990 The staff report prepared for Item 11 - C on the Aqq - e e (p. 31 - 36 attached) discusses the - option of a city-operated public beach facility utilizing the existing buildings and parking lots for both day-use beach-related activities and meeting space. The assumptions utilized in that analysis projected a minimal entrance fee of $2.00 plus parking. To bring the operation into a break-even position, daily use fees would have to be approximately $9/per person plus $5.00 parking. In order to provide the city with the existing level of revenue from the site, daily use fees would need to rise to nearly $12 per person. It is important to note that it would be necessary to refine some of the assumptions if interim implementation were to proceed. For example, the capital improvement estimates would most likely be reduced and special event rental revenues might be added. However, these refinements should not be expected to significantly change the conclusions of the analysis. The result is that interim operation would be feasible but the costs to users would be high. It is recommended that if this option is desired by Council, that staff pursue operation of the facility both by city staff or awarding of a professional service agreement to an outside operator. Budget/Fiscal Impact As indicated, it is potentially possible to provide a break-even operation~ however, that would be dependent on aggressive marketing of the facility to produce a substantial revenue flow. - 2 - e e This marketing would need to reflect a balance between high use fees and preserving the economic diversity of users. State Budget Language The Council also requested information on the status of state budget language regarding this sLte. Senator Rosenthal and Assemblyman Hayden have introduced the following language into the proposed 1990 - 91 state budget: Notwithstanding any other provLsLon of law the Department of Parks and Recreation or the City of Santa Monica acting on behalf of the department, shall not require the current concessionaire located at 415 Pacific Coast Highway to vacate the property until all zoning and other required permits have been obtained for converting the property to a new use in accordance with the final agreement between the city of Santa Monica, the state Department of Parks and Recreation, and the new concessionaire chosen to operate said new use. If the current concessionaire remains past December 31, 1989, the concessionaire shall pay rent of $20,833 per month beginning January 1, 1990 and shall be prepared to immediately vacate the property when final zoning and other permits are obtained to avoid delays in constructing new facilities. This language is identical to language proposed in 1989 - 90 which was vetoed by the Governor who stated: I am deleting provision l, which restricts the right of City of Santa Monica to evict the current concessionaire from 415 Pacific Coast Highway, because it contravenes the city's authority as a state agent to expedite development of the site for the purpose of increasing public access. The proposed language has been approved by both budget committees and is anticipated to be before the Governor in the next week. - 3 - e e It should also be noted that the city Attorney has expressed some question regarding the applicability of this type of language to the City. Prepared by: Lynne C. Barrette, Assistant City Manager Attachment - 4 - e e Public Beach Facility Comparative Analysis On May 30th, the Planning Commission asked the City Council to examine more closely a project alternative that would convert the existing site i~provements to a public beach facility. The commission requested a comparative analysis between the proposed project and this alternative in the following areas: o potential revenue to City o City operating costs o capital cost (to City) o net income to City o number of "public" visitors to site o traffic/parking o overall public benefits To perform this comparative analysis, staff developed a series of working assumptions about the potential number of visitors, operating costs and net revenue that might be realized at a City-run public beach facility at 415 Pacific Coast Highway. These assumptions are based upon a physical conversion of the facilities currently on site. No programming efforts or City sponsored events are included in the calculations. In all cases, staff assumed that the public demand for the physical facilities and access to the site/beach would be quite high. potential Revenue Source. Based upon the existing facilities on site, staff identified four potential revenue sources: community room rental rates in the North House, daily visitor use fees, cabana daily use fees, and parking. It was assumed that any food service would be operated as a break-even operation in order to maintain affordability to public. e e Hourly Meetinq Room Rates Based upon discussions with the city's Cultural and Recreation services Department, staff projected a high demand for the North House community rooms. staff estimated that North House could provide two community meeting rooms that could be reserved for two hour blocks, three times every weekday, and four times a day every saturday and sunday. Based on maximum occupancy 365 days a year and room rental rates of $20 for 2 hours, the annual gross revenue would be $47, 840. Oaily Use Fees The existing Sand & Sea Club facilities were desiqned to accommodate a private beach facility that would generate revenue from annual membership dues. Conversion to a public beach facility eliminates this membership fee revenue stream, currently estimated to be over $1 million annually. In an attempt to recover this revenue at a public beach facility, staff looked at Charging a daily per person use or admission fee. A survey of Southern California cities found none that had comparable public peach clubs; however, of the public facilities located on the beach, none charge a daily use fee other than hourly meeting room rental rates and court/field reservation fees. To help offset facility maintenance and operating costs, could charge a minimal daily use fee of $2 per person. would allow visitors access to the eXisting showers, pool and paddle tennis courts. the City This fee lockers, staff estimates that as many as 85,042 persons would visit a public beach facility at the site every year. This number reflects the average parking space occupancy rates of 3 north beach parking lots (#530, #810 and #930) and the #1550 lot located just north of the Pier. The north lots were chosen for their relative proximity to the project site. The average space occupancy tor the #1550 lot was also used because it is a high turnover (high income) lot due to its location next to the Pier as a destination attraction in addition to the beach. Using these per space averages, staff estimates that 34,017 cars would park in the 276 space lot every year.