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SR-012709-8a~~ City Council and ~~tv ~~ Redevelopment Agency Report Santa MonicxtID Redevelopment Agency Meeting: January 27, 2009 Agenda Item: 8A To: Mayor and City Council Chairperson and Redevelopment Agency From: Barbara Stinchfield, Community and Cultural Services Director Andy Agle, Housing and Economic Development. Director Subject: Authorization for City Manager to Negotiate and Execute a .License Agreement with Cirque du Soleil for Use of a Portion of the 1550 Lot and Approval of Short-Term Lease between the Redevelopment Agency and the City of Santa Monica for a Portion of the Agency-owned Property in the Civic Center located at 1700 Main Street Recommended Action Staff recommends that the Redevelopment Agency ("Agency'): 1) hold a public hearing for consideration of a short-term lease between the Agency and City of Santa Monica; 2) approve the temporary use of a portion of the Agency-owned Civic Center property located at 1700 Main Street; and 3) authorize the Executive Director to negotiate and execute ashort-term lease with the City of Santa Monica for the purpose of the City subleasing the site to allow temporary public parking related to the Cirque du Soleil, a cultural event that will generate revenue for future park improvements as outlined in the Civic Center Specific Plan. Staff recommends that the City Council ("City"): 1) authorize the City Manager to execute ashort-term lease with the Agency; and 2) authorize the City Manager to negotiate and execute the proposed License Agreement with Cirque du Soleil for use of a portion of the 1550 PCH lot for theatrical performances and a Sublease Agreement for a portion of the 1700 Main Street property for public parking operation from September 14 through December 31, 2009.. Executive Summary Following the December 9,2008 adoption of the revised Extended Commercial Events Policy and Guidelines for the beach parking lot at 1550 Pacific Coast Highway (1550 Lot), Cirque du Soleil (CdS) submitted a proposal for the presentation of a new production, "Kooza," from October 16 through December 20, 2009. The total occupation period, including move in and tear down, was proposed from September 14 through December 31, 2009. Staff recommends shortening the end of the occupation period to December 22 to provide full use of the 1550 Lot during most of the holiday period, pending City approval of an acceptable lot restoration plan. The proposed rental fee to the Beach Fund for the portion of the 1550 lot for this period is $953,000. Additional anticipated economic benefits to the City include patron parking revenues at the Civic Center parking structure and 2030 Beach lot, purchase of local supplies and services by CdS for its operation, and collateral spending by CdS visitors in local restaurants and businesses. A critical component to minimizing CdS' parking and traffic related impacts is the provision of adjacent replacement parking for the spaces that will be occupied by the Cirque in the 1550 Lot. On November 14, 2006, City Council adopted a policy to permit short-term leasing of Civic Center property owned by the Redevelopment Agency for the purpose of generating revenue to support the planning and design of Palisades Garden Walk. The lease between the Agency and the City of Santa Monica will allow the City to sublease a portion of land at 1700 Main Street on an interim basis for public parking operation by CdS during the period of its occupancy in the 1550 Lot with for an anticipated $50,000 in revenue to the City. Background The Cirque du Soleil first performed next to the Santa Monica Pier in 1987. The company views its return to Santa Monica on its 25~" Anniversary as a tribute to its beginnings and an opportunity to partner in the celebration of the Pier Centennial. At the time of its last visit to Santa Monica in 2000, the size of its footprint in the. 1550 Lot had become problematic since it displaced much of the parking in the lot. It seemed unlikely that the Cirque would be able to return to the beachfront location unless a replacement parking site was identified. The Redevelopment Agency owns approximately 11 acres of land within the City's Civic Center. The City seeks to lease approximately 2.5 acres of the area identified in the Civic Center Specific Plan as the future Palisades Garden Walk. This area is bounded by Main Street to the east, Ocean Avenue to the west, the extended Olympic Drive to the south, and the Santa Monica freeway to the north. Attachment A illustrates the boundaries of the proposed leased area which will be subleased to Cirque du Soleil to serve as replacement parking during its occupation of the 1550 Lot. 2 Discussion Cirque du Soleil Proposal On December 9, 2008, the City Council approved revisions to the policy for licensing extended commercial use of the 1550 lot to provide more flexibility in event selection. The Council also adopted extended commercial event selection guidelines (staff report and supplemental staff report). CdS has submitted the first proposal under the revised guidelines which provide for an ongoing application process for review of extended commercial events on a first-come, first-serve basis during the six to twelve month period prior to the event start date. Highlights of CdS' proposal are as follows: • Occupation Period was proposed from September 14 to December 31, 2009. (see Attachment C for staff recommendation). • Performance Period is from October 16 to December 20, 2009, with one show per day on Tuesdays through Thursdays, and two shows on Fridays, Saturdays, and Sundays, with an option to add eight additional Thursday shows at the discretion of the Cirque. • Rent for the portion of the 1550 lot and Deauville site is $953,000 for the 3.5 month period. • CdS will occupy 721 of the total 1017 spaces in the 1550 lot as indicated in Attachment B. CdS proposes to sublease and provide temporary improvements on a minimum of 2.5 acres of the former Rand property, and operate approximately 400 spaces for public parking during the occupation period. There will be pedestrian access to Ocean Avenue; vehicular access will be from Main Street. • In addition to providing replacement parking, CdS will provide incentives to its patrons to purchase discounted parking in the Civic Center Parking Structure or 2030 South Beach Lot at the time of ticket purchase. • CdS will provide shuttles to run from the Civic Center Structure and the 2030 South Beach Lot on a schedule developed with the Big Blue Bus that provides an appropriate level of service for the performance schedule. • Strong cross promotion with the PRC and Pier tenants will provide value-added offers (i.e. restaurant promotions and rebates) on the CdS website during the 3 entire sales period, beginning March 2009, along with email bulletins sent to the 490,000 CdS Club members in California and 1.6 million worldwide. • Sustainability practices will include a recycling program in public areas and employee work space, composting of food residue in the employee cafeteria, replacement of plastic souvenir gift bags with oxibiodegradable bags, and products made with organic cotton and bamboo. • CdS will pay all City costs and services associated with the event including police services for crowd/traffic control, fire safety officers, event licensing/liaison and location supervision, parking staff, utility charges, sanitation services, and custodial/maintenance services. Review Process and Public Outreach The CdS proposal has been reviewed by the Extended Events Review Committee as set forth in the Extended Commercial Event Policy. The Review Committee includes staff from all concerned City departments as well as representatives from the Pier Restoration Corporation, Convention and Visitors Bureau, Bayside District Corporation, and Chamber of Commerce. The proposal was evaluated against criteria established in the Extended Commercial Event Policy. Key considerations include the degree to which an event offers a unique cultural or entertainment experience, demonstrates clear measurable economic benefit to the City and local businesses, including Pier lessees, contributes to the Beach Fund, addresses traffic and parking impacts through the provision of nearby replacement parking and parking shuttles, and minimizes environmental impacts. The Review Committee asked for more specific information and raised a number of issues in several key areas including marketing and promotion, parking and transportation, and neighborhood impacts. Based on CdS's responses, staff has determined that the proposal is responsive to the key criteria that will, overall, provide clear economic benefit to the City and local businesses -- contingent upon full execution of the recommended license agreement conditions and mitigations as outlined in Attachment C. 4 In accordance with the public review process outlined in the Extended Commercial Event Policy, staff worked with the Pier Restoration Corporation to schedule a special meeting that included Board members, Pier lessees, local businesses and neighbors on January 14, 2009, to discuss the proposed event and hear concerns from community members. Notices were sent to over 150 residents and businesses in the area. More than thirty people attended the PRC special meeting. Most of the public comments were very supportive of CdS returning to Santa Monica. Representatives from Pacific Park and the Pier Aquarium expressed serious concern about the impact the loss of parking in the 1550 Lot will have on their business operations. After a thorough discussion of the proposal and identification of key elements the PRC would like to see included in the License Agreement, the PRC Board voted 7 to 1 to recommend that the City Council enter into negotiations with CdS and explore measures that might mitigate any demonstrated negative impact on Pier lessees during the CdS occupation period. If approved by the City Council, CdS will seek approval from the California Coastal Commission for the event, including the sublease of the Civic Center property for public parking License Agreement Conditions As a result of the extensive review process, including the internal Extended Event Review Committee and the public input of the PRC, Pier lessees, and community members, staff is recommending a full range of conditions and mitigations for inclusion in the License Agreement that respond to the challenges and complexity of CdS's return to Santa Monica. The specific conditions are outlined in Attachment C. Lease of a Portion of Civic Center Land On November 14, 2006, the City Council adopted a policy for short-term leasing of property in the Civic Center for cultural events to generate revenue for permanent park improvements as envisioned in the Civic Center Specific Plan (staff report). CdS has 5 proposed subleasing a portion of the Redevelopment Agency-owned land at the Civic Center from the City to provide public parking during its occupation from September 14 through December 31, 2009. Under California Redevelopment Law (CRL) Section 33430, the Redevelopment Agency may lease the 2.5 acres to the City. The Agency has fulfilled its public noticing requirements in accordance with CRL Section 33431 and may lease the property without public bidding. Two public notices were published in the Santa Monica Daily Press on January 9 and January 16, 2009; no oral or written comments were received. The Agency must approve the interim use of a portion of the Civic Center property and authorize the Agency's Executive Director to execute the short-term lease. In order for the City to utilize the site, and sublease it to the Cirque du Soleil for the period of its occupation, the City Council must authorize the City Manager to execute the short-term (ease. The lease will provide for payment to the City of 25% of gross revenues from the operation of the lot. Following the recovery of CdS' costs for improvements and operation of the lot, the City will receive 100% of any revenues. Staff is currently exploring the feasibility of extending the term of the lease to include public parking during the Pier Centennial events prior to CdS's occupation and may return to City Council at a later date with a recommendation. Environmental AnalVSis The License Agreement with CdS for use of a portion of the 1550 Lot and the lease and sublease of a portion of the Agency-owned property in the Civic Center located at 1700 Main Street for parking operations are categorically exempt from environmental review pursuant to the California Environmental Quality Act (CEQA) Guidelines, Section 15304(e), as these actions constitute minor temporary use of land having negligible effects on the environment. CEQA Guidelines specifically include uses such as carnivals and circuses. 6 Financial Impacts & Budget Actions Approval of CdS's proposal will generate $953,000 in Special Event revenue to the Beach Fund. A portion of this revenue will offset the estimated loss in parking revenue due to spaces occupied by the CdS in the 1550 Lot. Based on a three-year review of the parking revenues in the 1550 Lot, the average revenue per space per month has been calculated at $160 for the three and one-half month occupation period. The estimated total parking revenue loss is $379,820. Reduction in other revenues related to the 1550 Lot, such as staging for filming on the Pier or the beach, is expected to be minimal since alternative staging locations may be provided at the Beach Lot at 1640 Pacific Coast Highway or in the temporary CdS-operated Civic Center lot. Parking revenues at the 2030 South Beach Lot are projected to increase since this will be one of the locations to which Pier patrons will be directed with a discount incentive and free shuttle. Estimated parking revenues for this lot are $151,000. Parking usage in the Civic Center Parking Structure will increase since CdS patrons will be offered an incentive to park at this freeway accessible location. Based on preliminary estimates of the number of available parking spaces in the structure, an additional $231,000 in Beach Fund revenue may be generated by CdS patrons. Both projections are based on the discounted price for CdS patrons. The revised revenue projections will be included in the City's FY 2009-10 Budget. Additional revenues are expected to be generated in several areas. CdS is projecting to spend $2.2 million on the procurement of local services and supplies during its stay. This may yield approximately $130,000 in sales and transient occupancy tax revenue. A further economic benefit is the amount that CdS patrons will spend prior to and following their attendance at performances. CdS's studies have shown that live entertainment goers spend an average of $50 within a five mile radius of the event location. If only one-half of the projected 170,000 CdS patrons are new visitors to Santa Monica, this may result in over $4.2 million spent in Santa Monica. Staff is recommending that an economic impact study be conducted following the occupation period to evaluate 7 impacts and benefits. Funds for the estimated $25,000 cost of the study will be provided for in the City's FY 2009-10 Budget. All direct City staff time and expenses will be reimbursed by CdS to achieve full cost recovery by the City. Approval of the temporary use of the Civic Center property will not have an impact on the Agency's budget or resources as the City's approved sub-lessee will be required to pay for all direct services including licenses/permits and site improvements to facilitate proposed event parking use. The terms of the sublease with CdS require that 25% of gross revenues from parking operation be paid to City for the planning and design of the Palisades Garden Walk and 100% of gross revenues after CdS cost recovery is achieved. The minimum anticipated revenue projection of $50,000 will be included in the FY 2009-10 Budget. Prepared by: Judith Meister, Special Events Coordinator Approved: Barbara Stinchfield Director, Department Approved: Andy Agle Director, Housing & Economic Development Forwarded to Council: Cam' ""_ ` ~i° _ n mont Ewell ity Manager Attachment A: Proposed Civic Center Lease Area Site Map Attachment B: Proposed Cirque du Soleil Site Plan Attachment C: License Agreement Conditions 8 Attachment A Proposed Lease Area yn;; M o,.,v Site Map Attachment B '1 ® CIRQUE DU SOLEIL. SANTA MONICA BEACH C~ CIRQUE DU SOLEIL ~.`..~~. o. ~/k~PAT _W O ~ N PPtN ~ rv o ~ ~a ® t ,[jf e„ ``~~` o - ` LOT 1550 U ~ I -,` q a, ~, ~ ' 1017 TOTAL SPACES sruov 1 ~~~ ~a t,~ ~ I f. ~ o -` } z~ ~ g 8 0®ePP~ -990 GENERAL -27 DISABLED e. ~ ~ °' ' °" •' Q o ~ ~e3 ~ z~: 1 ~ i "~ ~ CDS SITE AREA g 1"- ' ,off 1'+ ra -- ' " ''. ; ° ~ ~ ± 14 417 sq.m. 721 CDS SPACES a t ,.,~ td~ ~ ~= ~y,+ j ~ ,,.~°'~°'' ' m (155,183sf) -7090ENERAL ~ 5 ~8 7 I / r~, -13 DISABLED i ~ -~ ~ ' ~ ~ `~ s i i 1~°' ~ ~. ~ tl° ~s,° ~ ~ ~- tnES~a ~ ~.• , ""` a e A 1` '~e ~ "' ~ ~ +. ~ 296 LEFT OVER SPACES -268 GENERAL -28 DISABLED i C ~ ~ ~. 1 q~ ~ b ~ ~ O ~ ~ i ~ ~:r~m ~~ f, 2 ®® ~ 1 0 1" 1 O g g n m -. r, n m ~ g ~ ~ a " '' , ~ ~ i CDS SITE AREA o ` s ~ ~ a>;~1~ 19 t ~ ~ q ;M \ =~~~;-~-~ ua ~ r ~ ~ t2186sq.m. (23 530 sf) ~ s m ~ r a ~ a ~ ~ s s f T~ a , i ~ ( l ~ 1 ~ ~ -- _~ 0 ~~ ~ ~ - t le~'(~T~r~f~T~C~,: S ~ '~ '~ ~ E ~ .>; ~ S LOT 1550 S ~ ~ = ° _ ~ -~' .,e _ € a o _ - ° ~ e ~ , e m '~ ~ ~ a ~ ~ ° d ~ g er~gg' ®I`I I I I I I I I I I I I I I I I I I1~1_-L ~~ I~ ~.,,~ I,YA,..I.f2~l _ -u- v ~^~., ~ ~ 61KEFaTR ~ OCEAN FRONT WAIX DCEAN FRDNTWALK ~ • ~ 1 ._._._ ._.-._.e ._.- O ~ ~ e ~ ~ - ..OCEAN FRONTWALK ~ _. ~ _. .... .. / p .~ y y w ' - Y _ ~ ~r 3,en'~ , ~E SERVICE BUILDING y ~ ~ _~ ° ~ I .. ~ tl I •- { LOT 1440 '- ~ ' '' ~ ~, ~` ~` ~ ~ ~ r ti t t ) . ,,, } ~ • i SWa Senta_MOnic~V ~ _ Bnutrg B'. N'A(poia_IA ra_X_ m ml1P,U9~luEy_Stnm_MMYJ._ 1 _ryl IWy_anlylAO _ Ow0 ureAtU'.1 ~IMiam Mm fB BevllN9 fl3i mBy'. msSe Lec~aM on Btt3W ~B: m tl Fm UKOU9dLE. xc. `SirE BB DRAFT Attachment C Proposed Key License Agreement Conditions and Mitigations Performance Schedule and Occupation Period • Provide the public with KOOZA performances from October 16 through December 20, 2009 with one performance each Tuesday, Wednesday and Thursday and two performances each Friday, Saturday and Sunday; consider an option to add eight additional Thursdays at the discretion of Cirque du Soleil (CdS). • Allow an occupation period from September 14 through December 22 instead of through December 31 to provide for full use of the 1550 lot for Pier and beach public parking during most of the holiday period (pending an acceptable lot restoration plan to be approved by the City). Economic Terms • Provide a rent payment of $953,000 to the Beach Fund for use of 1550 lot and Deauville site. • Contribute 25% of gross parking revenues from the use of the Civic Center lot for public parking to be used for future park improvements with 100%of gross revenues to the City after documented Cd5 costs recovery of improvements and operation is achieved. • Provide significant direct financial and in-kind partnership support to the Pier Restoration Corporation for the Pier Centennial. • Cover all City costs and services associated with the event. Marketing and Promotion • Offer Pier merchants the first opportunity to develop special offers to Cd5 ticket holders. • Develop value-added destination packages to be sold through the Convention and Visitors Bureau. • Offer a Pacific Park opt-in package on the Santa Monica page of the CdS website for park entrance at a discounted price provided by Pacific Park. • Provide a message line about the Santa Monica Pier Centennial or the City of Santa Monica as a destination in CdS advertising material as size and format permits. • Develop reciprocal (inks on the Cd5 web site to the Pier and CVB. • Develop a process to allow for coordinated scheduling and planning with the PRC and Pier lessees in cases of overlapping large events. • Place a temporary ticket booth on the Pier deck. • Send e-messages to the 1.6 million worldwide Cirque Club members about Pier events as they relate to the CdS partnership with the Pier Centennial throughout the year. DRAFT • Target $300,000 of marketing funds for local media buys. • Develop a catering RFP for Pier tenants to serve the VIP functions; offer opportunities to Pier tenants to provide concession products and services. • Collaborate on public relations to include "build up" around the Pier Centennial, including special appearance by CdS performers on the Pier. Parking and Transportation • Improve a portion of Civic Center lot (former Rand lot) for public parking, including lighting and adequate pedestrian access to Ocean Avenue in compliance with the Americans with Disabilities Act. • Contract with City's parking contractor for operation of Civic Center lot and maintain hours and rates that are consistent with operation of 1550 lot. • Provide parking for special events and filming opportunities for PRC and Pier lessees in the Civic Center lot. • Incorporate prepaid, discounted parking for Cirque du Soleil (CdS) patrons with their online ticket purchases for parking at the Civic Center structure and the 2030 Beach lot. (note: City will provide the discount.) • Provide a shuttle service from Civic Center Structure and 2030 Beach lot at service levels that will incentivize use by CdS patrons; develop route and service levels in coordination with the Big Blue Bus; consider incorporating live performers on shuttles to expand the Cd5 experience. • Provide 14 traffic control officers 1'/: hours before and after the shows at 8 specified locations; adjustments may be made based on actual parking and traffic conditions. • Provide trailblazer signs for parking facilities, updated event parking information on the City's real time web site, message boards at three key locations to be determined by the City, and an employee to monitor and update the City traffic and parking radio stations with real time parking availability and congestion updates. • Provide final confirmation of final CdS patron parking locations by a-mail in the event of projected high parking demand due to overlapping Pier and CdS events. • Designate an area in the 1550 lot for attended bicycle parking (bike valet). • Jointly develop ashort-term closure plan for the Pier lot and the Civic Center lot immediately prior to the CdS performance times to ensure availability in these lots for general Pier and beach visitors. • Include transit, bicycle and walking access information on advance ticket purchase materials Neighborhood Impacts and Community Outreach • Prepare and distribute a Community Newsletter for neighbors, other community members and businesses. DRAFT • Establish a representative contact in Santa Monica on a regular basis beginning at the time of ticket sales and provide an onsite representative from the date of set-up to handle information requests and complaints. Monitor noise during the event period and provide a noise study with decibel readings. • Forge educational partnerships with organizations, including, but not limited to, the Pier Aquarium-Heal the Bay, to the benefit of local school children in keeping with CdS's long-time mandate to be a good/committed citizen of the community. Collaborate with the City regarding opportunities for performers to appear at targeted community events throughout the Centennial year. Reference Contract Nos. 9028 (CCS) and 9029 (CCS).