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SR-10-01-1985-11ECM:LCB:dvm City Council Meeting 10/1/$5 TO: Mayor and City Council FROM: City Staff l®-~ OCT 1 1985 f` / Santa Monica, California SUBJECT: Recommendation to Authorize City Manager to Execute Agreement with Santa Monica Convention and Visitors Bureau Introduction This report recommends that the City Manager be authorized to execute an agreement with the Santa Monica Convention and Visitors Bureau for promotional activities of benefit to the City. Background The City and the Bureau have had a prior agreement which was in effect from November 15, 1982 until June 30, 1985. City staff. and Bureau representatives have met and discussed potential amendments to the previous agreement. These discussions are concluded and the agreement being proposed is substantially the same as the previous agreement. The two principal modifications are noted below: 1) The term of the agreement is a minimum three years with automatic extensions unless the City gives notice to terminate. It should be noted that there is some disagreement over the option clause included in the proposed agreement. - 1 - ®,~ OCT ~ 1985 The copy attached to this report reflects the Bureau's proposal. It states: "Notwithstanding the foregoing, upon the expiration of each contract year ( July 1 through June 30) the term of this Agreement shall be automatically extended for an additional year unless prior to expiration of the contract year, the City Manager gives the Bureau written notice indicating that the term of this Agreement shall not be automatically extended as provided herein." Basically, this would result in a 2 year termination notice. A supplemental staff report from the City Attorney addresses his concerns with this proposal. 2) The formula for annual City contribution to the Bureau is adjusted to more closely track one percent of the flow of transient occupancy tax revenues into the City. Budget/Fiscal Impact The current year's allocation of $302,863 called for in the agreement is provided for in the 1985 - 86 City operating budget, account #01-700-274-000-622. Recommendation It is recommended that the City Council determine the desired option clause in the agreement and that the City Manager be authorized to execute the agreement with the Santa Monica - 2 - Convention and Visitors Bureau £or terms as presented in this report. Prepared by: Lynne C. Barrette Assistant City Manager Attachment (SMCVB) promotional services with - 3 - This Agreement is made and effective this day of October, 1985, by and between THE CITY OF SANTA NiONICA, a California Charter City (hereinafter referred to as " City") and the SANTA MONICA CONVENTION & VISITORS BUREAU, INC., a California nonprofit corporation (hereinafter referred to as "Bur eau") with reference to the following facts: R E C I T A L S A. City desires Bureau to provide services designed to advertise and promote the interests of the City of Santa Monica and its citizens by methods which, in the judgement of the Bureau, will be of the greatest benefit to the people of the City. B. Bureau is willing to undertake the services hereinafter set forth on behalf of the City for the purpose of promoting tourism and travel to the City of Santa Monica. NOW, THEREFORE, in consideration of the mutual promises and agreements of the parties hereto, it is hereby agreed by and between the parties as follows: - 1 - 1. The Bureau hereby agrees to provide the following services to the City of Santa Monica: (a) To maintain suitable quarters and employ competent personnel to carry on the promotional activities enumerated herein. (b) To promote and invite trade and business meetings, celebrations and conventions whereby businesses and individuals from outside the City may become acquainted with the advantages and opportunities available in the City. (c) To encourage City-wide celebrations as are determined by the Bureau and the City Council to be of promotional benefit to the City. (d) To operate a Convention & Visitors Bureau or Visitor Center for the purpose of inviting, attracting and welcoming tourists to the City, through the cooperative efforts of the Bureau and the private and public sectors, through advertising and promotion, and through services normally provided for conventions. (e) Cooperate with the City to utilize City facilities to the fullest extent feasible. - 2 - (f) Promptly answer all correspondence relative to convention and visitor facilities in the City of Santa Monica, and disseminate information by correspondence, newspaper publicity and personal contacts favorably advertising such advantages and opportunities. (g) Prepare articles and news stories, compile data, gather and assemble news items, photographs, printed materials and brochures descriptive of the City's resources whereby businesses and individuals outside of Santa Monica may be encouraged to visit the City. (h) To review the facilities and services, both public and private, in the City of Santa Monica necessary to support convention and visitor's activities and to advise the City of problems and needed improvements for support of convention and visitor activities. (i) Generally, to promote convention and visitor activities that will bring additional revenue to the City and to businesses within the City. (j) Furnish to the City Manager for his review and approval an annual line-item budget for its entire operation. (k) Furnish to the City an annual activity plan containing programs and specific tasks. Said plan shall contain - 3 - time-tables for the accomplishment of specific objectives for each fiscal year. (1) Furnish to the City an annual management effectiveness report detailing the .extent to which the annual activity plan for the previous year had been met. The annual management effectiveness report shall be furnished to the City on or before September 1st of each year. (m) Furnish to the City quarterly disbursement statements for the Bureau. These statements shall be submitted no later than October 31, January 31, April 30, and July 31. 2. In consideration of the services enumerated in paragraph 1 above, the City shall make the following payments to Bureau: (a) For fiscal year 1985/1986 and each fiscal year thereafter, the City shall pay to Bureau the annual sum of $256,612.50 (herein called the Bureau annual sum) augmented by an amount equivalent to a growth factor. The growth factor is determined as follows: The growth factor is a fraction. The numerator shall be the difference between the forecast transient occupancy tax revenue received by the City pursuant to Santa Monica Municipal Code 6600 et seq. for the budgeted fiscal year and the actual transient occupancy tax revenue received by the City during fiscal year 1984/1985. The denominator shall be the - 4 - actual. transient occupancy tax revenue .received. by the City during fiscal year 1984-85 divided by the Bureau Annual Sum. If the forecast transient occupancy tax is less than the 1984/1985 transient occupancy tax, then the growth factor is zero. (b) For fiscal year 1985/1986, the growth factor is stipulated to be $46,250. (c) All payments made by the City to the Bureau shall be made in equal quarterly payments not later than July 10, October 10, January 10, and April 10, of each year, or on such other basis as agreed to by the parties. (d) All such funds shall be expended by the Bureau for Bureau activities only as enumerated herein. 3. The Bureau shall not engage in any real property development activities or any other activities not expressly enumerated herein without the written approval of the City Council. 4. Bureau shall not accept funding from sources other than the City without the written approval of the City Council. 5. Nothing in this Agreement shall prevent: the Bureau from requesting the appropriation of additional sums, or the City from appropriating such sums, for specific projects which the City may - 5 - desire to have performed by the Bureau and which the Bureau is willing to perform. 6. One of the sources of general revenue the City contemplates using to fund this Agreement is that provided for in Municipal Code, Section 6bOlA. At its election, the City may withhold any payments otherwise required by Paragraph 2 herein or may immediately terminate this Agreement if a lawsuit is filed against the City challenging the validity of Municipal Code, Section 6610A. Notwithstanding the foregoing sentence, the City shall pay to the Bureau such funds as are necessary to cover all expenditures made or liabilities incurred by the Bureau pursuant to its obligations under this Agreement and prior to receiving written notice from the City of its election to withhold payments or terminate this Agreement. 7. All records of the Bureau shall be open to inspection by the City upon reasonable notice and during normal business hours. Additionally, all minutes and other documents related to Board meetings shall be available to the public. 8. The term of this Agreement shall be three years, commencing on July 1, 1985, and ending on June 30, 1988, unless terminated earlier as provided herein. Notwithstanding the foregoing, upon the expiration of each contract year (July 1 through June 30) the term of this Agreement shall be - 6 - automatically extended for an additional year unless prior to expiration of the contract year, the City Manager gives the Bureau written notice indicating that the term of this Agreement shall not be automatically extended as provided herein. 9. (a) Prior to giving Bureau .written notice of termination as contemplated in subparagraph (b) below, City shall give to Bureau written notice of default specifying the nature of the default and demanding cure thereof within 30 days, or in the case of defaults not susceptible of being cured within said 30 day period, the notice of default shall request the Bureau to take and continue action to cure such default with all reasonable diligence until the same is cured but for not more than 90 days from such notice. In tine event a default is cured within the time provided in the notice of default, then no notice of termination shall be given by the City to the Bureau. In the event any default specified in a notice from City is not cured within the time provided therefor, then City may terminate this Agreement as provided in subparagraph (b). (b) This Agreement may be terminated by either party by giving six months written notice to the other party of intent to terminate. Such notice to terminate may be given by the City or the Bureau for good cause only and, in such event, the Agreement shall continue in force for the balance of the fiscal year during - 7 - which the notice to terminate is given. Any uncommitted or unexpended budget funds at the end of such fiscal year shall be returned by the Bureau to the City. 10. The Bureau acknowledges and agrees that it shall not enter into any activity, transaction or undertaking which may be construed, implied or inferred that the Bureau is acting in a capacity of an agent or representative of the City. The Bureau agrees to and shall hold the City, its officers, its agents, employees and representatives harmless from and against any and all claims, demands, losses, causes of action or liabilities which may be based upon or arise out of, or in connection caith, any claim by a third party that the Bureau has acted as the agent or representative of the City thereby giving rise to a claim against the City. City agrees that the Bureau is not now, nor shall it ever be, the agent or representative of the City in any activity, transaction or undertaking. 11. Bureau shall maintain such insurance and in such reasonable amounts throughout the term of this Agreement as is sufficient given its obligations hereunder. All policies of insurance maintained by Bureau shall extend coverage to the City, its elected and appointed Boards, Commissions, officers, agents, employees and representatives. Bureau shall cause to be furnished to the City certificates of insurance confirming that - 8 - such insurance is in full force and effect and Bureau shall notify City at least thirty (30) days prior to written notice of cancellation, termination or modification of such insurance. 12. A11 written notices and demands of any kind which either party-may. be .required or may desire _to serve :upon the other in connection with the Agreement may be served either personally, by registered or certified mail, or by first class mail, postage prepaid addressed as follows: To City: Mr. John Jalili City Manager City of Santa Monica 1685 Main Street Santa Monica, Ca 90401 To Bureau: Santa Monica Convention and Visitors Bureau, Inc. 2219 Main Street Santa Monica, CA 90405 13. Neither the Articles nor the By-laws of the Santa Monica Convention and Visitor's Bureau, Inc. may be amended or otherwise changed without the written approval of the City Council. 14. This Agreement constitutes the entire Agreement between the parties hereto with respect to the subject hereof and may not be modified, amended or otherwise changed in any manner except by mutual consent of the parties. - 9 - 15. This Agreement shall be governed by and construed in accordance with the laws of the State of California. IN WITNESS WHEREOF, this Agreement has been executed by the parties as of the day and year first above indicated. CITY OF SANTA MONICA, a Municipal Corporation By_ JOHN JALILI City Manager Approved as to Form: ROBERT M. MYERS City Attorney SANTA MONICA CONVENTION & VISITORS BUREAU, INC., a California Non-Profit Corp. By ~~,~'~,..e.~ cam,, ~. ~, DONALD GIRAR President (cvbagree) - lU - CA:RMM:rmd079 City Council Meeting 10-7.-85 STAFF' RF.PQR"P j~ 1(-,~ Santa Monica. Calitornia TO: Mavor and C1 t.iT Council FRC)M: City Attorney St1BJEC"I': Agreement with Santa Monica Convention and Visitors Bureau "Phis Staff Reoort. outlines the concerns of the City Attorney pertaining to Paragranh 8 of the proposed agreement between the City and the Santa Monica Convention and Visitors Bureau. Paragranh 8 of the proposed rontrar..t provides: The term of this Agreement shall be three years, r..ommenr.,ing on July 1, 19£35, and ending on June 30, 19138, unless terminated earlier as provided herein. Notwithst.andina the foregoing, upon the expiration of each cont.racr year (July 1. through June 301, the term of this Agreement shall he autgmatir.ally extended for an additional year unless prior to the expiration of the contract, year, the City Manager gives the Bureau written i noT,ire indicating that the term of ~ 1 p '° ((- 4CT 1 1965 this Agreement shall not be automatically extended as provided herP.tn. The contract provides that at the end of ear.h contract year, uni.ess the City affirmaT.avely gf.ves notice to the Bureau, the contract is renewed as a three year contract, If theCi,t,y dyes give ngtifir_atian prior to the expiration of the contract. year; two more years remain on the r_ontract term. In effer.t, the term provision provides for a continuous contract subject to the right of the City to discontinue the r..ontract's continuity by what. amounts to two years notifacatipr~. Tn the context of City contracting, this term provision is hl.ghly unusual.. Most. of the option clauses that exist. in City contracts provide for an affirmative exercise by the City pf an option on or before a date c,iose to the contract termination date. This gives the City Council adeauate tame to review tha desi.reabilit.y of extending a contract. if the Ci.t..y Council; for anj number of reasons, desires not to extend the contract., it need not exercise the option. The proposed contract, however, provides that the contrar.T. is automatically renewed absent affirmat.i.ve City action tp the contrary. Moreover, the time period of making this determination i.s not toward the end of the contract term but toward the beginning. Thus, should the City at any point in time be dissatisfied with the contractor or believe that r..hanges in approach are required; it. must affirmatively act to avoid automatic contrar..t extension. Bi.aT when the City makes 2 this determination, there will sti:i.l be two years remaining in the contract period and City concerns that motivated the non-renewal of the cont,rart r.annot he promptly addressed. REC'Od4MF.NDATTON In order to ensure consistency with standard City cont.ract.ing procedures; it i.s recommended that the Gity Council consider either a fixed term contract or a contract providing for the affirmative exerr.ise of an option by the City near t_he end of the contra r, t. term. PREPARED BY: Robert M. Myers, City Attorney 3