SR-308-002-02 (5)
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APR 2 8 1981
CM:LCB:dvm
city council Meeting 4/28/87
Santa Monica, California
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TO: Mayor and City Council
FROM: city Staff
SUBJECT: Request for Proposals for Beach Concessions stands
INTRODUCTION
This report presents the city council with information on the
status
of
the
City's
current
agreement
wi th McDonald's
Corporation for beach food concession service and requests
authorization for the City Manager to issue a Request for
Proposals and take other necessary actions to insure continuous
food service.
BACKGROUND
On April 10, 1984, the City Council awarded a five year agreement
for operation of five beach concession stands to McDonald's
corporation. Their proposal included summer season food service
with a $200,000 annual rent payment to the city.
Several factors over time have led to J.1cDonald' s desire for a
reconsideration of their agreement.
Most noteworthy are an
underestimate on their part of the cost of initial capital
improvements to make the stands operable; lower than anticipated
gross sales; and restrictions on signage and other operational
constraints.
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APR 2'J981
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rent. The city can, and has indicated a willingness to consider,
operational changes, to enhance public awareness of the stands.
PROPOSAL
Staff initiated discussions with state Parks and Recreation
Department officials several month ago about alternative
solutions to the concerns raised by McDonald's. On February 18,
city staff presented the following proposal to McDonald's: The
City would agree to rebid the agreement over the next few months
in exchange for McDonald's agreeing to provide uninterrupted food
service until the new agreement was in place. McDonald's has
agreed to this proposal
Several factors entered into development of this recommendation:
1) McDonald I s has been a good lessee. In spite of a lack of
profitability of these stands, they have consistentlY met
their rental obligations and been responsive to city requests
for action, such as painting out graffiti on the side of the
stands.
2) The history of the beach concession stands has been fraught
with instability, lack of consistency in standards and 1m'/"
rent generation. In the past few years, with the upgrade of
the stands this trend has been altered. It is hoped that the
city can continue to have successful pUblic/private
partnerships for the these concessions in the long term.
3) It is highly desirable to maintain food service during the
upcoming summer months. McDonald's has agreed to open the
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stands and continue operations until the transition occurs to
a new agreement and possible new concessionaire. It is hoped
that any break in service would be limited to one to two days,
if at all.
4) The Request for Proposals is being handled as a
competitive bid process in accordance with state
guidelines. The availability of the RFP will
advertised statewide.
standard
and city
be widely
REQUEST FOR PROPOSALS
The RFP being prepared is generally similar to the 1984 document
with the following significant changes:
1. Proposals may be submitted for one or any combination of
the stands.
2. The term of the contract may be changed from 5 years
without an option to five years with a five-year option
which cannot be unreasonably denied by either the state or
the city. Respondents would have to justify the necessity
of the option based on capital investment made.
3 . Based upon the individual gross income figures for each
stand over the last 3 years, the fixed rent minimum
payment would be reduced to $125,000 from $200,000. The
minimum percentage rental would be 16% of the gross sales.
The City would be paid the greater amount of these
figures.
TIME SCHEDULE AND APPROVALS
In conjunction with the State Department of Parks and Recreation,
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an expedited time line for bidding has been developed.
Upon
receipt of council approval, staff will issue the RFP by May 1,
1987. Bids would be due on June 2, 1987. In the meantime, the
state Public Works Board will meet on May 22 to review the issue
and act on a recommendation to concur with the approach being
taken. The state Parks and Recreation Commission will be briefed
on June 5.
If there are no unforeseen delays, City staff will make
recommendations on the proposed concession agreement to the city
Recreation and Parks Commission on June 18. The City Council
will consider the recommendation on June 23. City action will be
subject to approval by the state Attorney General and the state
Director of General Services. staff has been advised that those
approvals may take up to six weeks.
Resolution of the matter is anticipated in early August.
RECOMMENDATION
staff recommends the City council authorize the city Manager to
issue a new Request for Proposals to operate the beach food and
beverage concessions and to negotiate and execute any necessary
agreement with McDonald's Corporation to insure continuous food
service during the summer of 1987.
Prepared by: Lynne C. Barrette, Assistant city Manager
Donald T. Arnett, Dir. Recreation and Parks
(Bchcon)
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